AMSCO 7.10 The New Deal

Overview

AMSCO Topic 7.10, The New Deal, covers Franklin D. Roosevelt's response to the Great Depression: the relief, recovery, and reform programs of 1933-1938, the opposition they sparked from the left, the right, and the Supreme Court, and the lasting political realignment they produced. This chapter sits at the heart of Period 7 (1898-1945), picking up where the Great Depression chapter leaves off. The core idea to carry into the exam: the New Deal did not end the Depression, but it permanently expanded the federal government's role in the economy and built a Democratic coalition that lasted into the 1960s.

The Election of 1932 and FDR's New Deal Philosophy

Roosevelt won the 1932 election in a landslide because voters cared about one issue: who could end the Depression. Hoover, renominated by the Republicans, warned a Democratic win would make things worse. Almost 60 percent of voters disagreed. The Roosevelt-Garner ticket carried all but six states, and Democrats won large majorities in both houses of Congress.

A few details worth knowing:

• Lame-duck Hoover. Between the election and the March 1933 inauguration, the Depression kept worsening while Hoover was powerless. The 20th Amendment (ratified October 1933) fixed this gap by moving inauguration day to January 20.
• FDR the man. A distant cousin of Theodore Roosevelt (but a Democrat), FDR was paralyzed by polio in 1921 and never walked unaided again. His strengths were his warm personality, his skill as a speaker, and his ability to inspire people. As New York's governor he had already built welfare and relief programs.
• Eleanor Roosevelt became the most active first lady in history, writing a newspaper column, traveling the country, and serving as FDR's social conscience, pushing him to help minorities and the poor.

FDR had no detailed plan in 1932, just a willingness to experiment. His promise of "a new deal for the American people" took shape around the three R's: relief for the unemployed, recovery for business and the economy, and reform of economic institutions. For ideas he leaned on the Brain Trust, a group of university professors, plus political adviser Louis Howe. His appointments were the most diverse to that point in U.S. history, including Frances Perkins, the first woman in a presidential cabinet, as secretary of labor.

The First Hundred Days and the First New Deal

Sworn in March 4, 1933, FDR immediately called Congress into a hundred-day special session that passed every one of his requests, more major legislation than any single Congress in history. Most programs went by their initials (the "alphabet agencies").

Stabilizing the banks

Over 5,000 banks failed in 1933 alone, as many as in all the previous Depression years combined. FDR ordered a bank holiday on March 6, closing all banks. Congress passed the Emergency Banking Act on March 9, and sound banks reopened March 13. On March 12 FDR gave the first of his fireside chats on the radio, assuring listeners the reopened banks were safe. It worked: deposits exceeded withdrawals.

He also kept his campaign promise on Prohibition. The Beer-Wine Revenue Act legalized beer and wine for tax revenue, and the 21st Amendment repealed Prohibition entirely in 1933.

Relief programs

• FERA (run by Harry Hopkins) gave federal grants to states running soup kitchens and relief.
• PWA (run by Harold Ickes) funded state and local construction of roads, bridges, and dams.
• CCC employed young men on federal lands and sent small monthly payments to their families.
• TVA, a government corporation, hired thousands in the poor Tennessee Valley to build dams, run power plants, control flooding, and sell electricity at rates below the old private rates. It was a huge experiment in regional planning.

Financial recovery and reform

• The Emergency Banking Relief Act let the government examine and reopen sound banks.
• The Glass-Steagall Act limited how banks could invest customers' money.
• The FDIC guaranteed individual bank deposits.
• The HOLC and Farm Credit Administration refinanced home and farm mortgages to stop foreclosures.
• The U.S. left the gold standard for domestic purposes; the dollar was set at $35 per ounce, but paper dollars were no longer redeemable in gold.

Recovery for industry and farms

The NRA (National Recovery Administration), under Hugh Johnson, suspended antitrust laws so each industry could set codes for wages, hours, production, and prices, and it gave workers the right to organize. The AAA paid farmers subsidies to plow under acreage, cutting production to raise prices. Both were declared unconstitutional by the Supreme Court in 1935 (the NRA in Schechter v. U.S.).

Other first New Deal measures in 1933-1934: the CWA (temporary federal construction jobs), the SEC (regulating the stock market and requiring corporate financial disclosure to prevent another 1929-style crash), and the FHA (insuring bank loans for buying and building homes). Know the FHA's dark side: its "redlining" of African American neighborhoods meant nearly all FHA loans in the program's first thirty years went to White applicants, shaping the racial wealth gap.

The Second New Deal

After Democratic gains in the 1934 midterms, FDR launched the Second New Deal in summer 1935, shifting focus from recovery to relief and reform.

• WPA, run by Harry Hopkins, dwarfed earlier relief agencies, spending billions from 1935 to 1940. In its first year it employed 3.4 million people building bridges, roads, airports, and public buildings, and it paid artists, writers, actors, and photographers to create murals, histories, and plays. Its NYA branch gave part-time jobs to students.
• The Resettlement Administration (under Brain Truster Rexford Tugwell) gave loans to sharecroppers and tenant farmers and built camps for migrant workers.
• The Wagner Act (National Labor Relations Act, 1935) guaranteed workers' right to join unions and bargain collectively, outlawed unfair labor practices, and created the NLRB to enforce it.
• The REA loaned money to electrical cooperatives to bring power to rural areas.
• A 1935 revenue act sharply raised taxes on the wealthy.

The biggest legacy: the Social Security Act (1935), a federal insurance program funded by automatic payroll contributions from workers and employers. It paid monthly benefits to retirees over 65, plus unemployment compensation and aid to the blind, disabled, and dependent children. Together, these programs created a limited welfare state, a government that regulates the economy and aids the poor to provide economic security. AMSCO frames this as the basis of modern American liberalism.

Opponents: Left, Right, Demagogues, and the Court

Even though FDR was hugely popular, the New Deal drew fierce attacks from every direction. This is the push-and-pull the exam loves: radicals pushed FDR toward bolder action while conservatives tried to limit the New Deal's scope.

• From the left: Socialists and liberal Democrats said the New Deal did too much for business and too little for workers, minorities, women, and the elderly. Some charged it was just a way to save capitalism from revolution. FDR basically agreed; he wanted to reform the system, not replace it.
• From the right: Conservatives said programs like the WPA and Wagner Act bordered on socialism, and business leaders hated the regulations, the pro-union stance, and deficit financing (funding programs with borrowed money). Conservative Democrats like Al Smith joined Republicans in 1934 to form the American Liberty League.
• Demagogues: Father Charles Coughlin used radio broadcasts to call for nationalizing banks (his attacks grew anti-Semitic until the Catholic Church silenced him). Dr. Francis Townsend proposed $200 a month for everyone over 60, funded by a 2 percent sales tax; his plan's popularity pushed FDR toward Social Security. Huey Long, the Louisiana "Kingfish," promised a $5,000 minimum income for every family through his "Share Our Wealth" program. FDR considered him the most dangerous critic. Long announced a presidential run in 1935 but was assassinated.

The Court fight

After the Supreme Court killed the NRA and AAA in 1935, FDR read his 1936 landslide as a mandate to act. His 1937 court reorganization plan would have let him appoint an extra justice for each sitting justice over 70 and a half, up to six new justices. Critics called it "Court-packing" and an attack on checks and balances. Congress, including a majority of Democratic senators, handed FDR his first major legislative defeat. Ironically, the Court was already backing off, and in 1937 it began upholding New Deal laws.

The 1936 Election and the New Deal's Legacy

FDR beat Republican Alf Landon of Kansas in 1936, winning every state except Maine and Vermont and over 60 percent of the popular vote. The win confirmed a political realignment: the New Deal coalition of the Solid South, White ethnic city voters, Midwestern farmers, labor unions, liberals, and, crucially, African Americans who left the party of Lincoln for the Democrats. That coalition shaped politics into the 1960s.

Other late-1930s threads from the chapter to know:

• The recession of 1937-1938 hit when spending was cut back, strengthening the case made by economist John Maynard Keynes that deficit spending could stimulate a depressed economy.
• Labor surged: John L. Lewis and the CIO organized workers in mass-production industries, using tactics like the sit-down strike, and the Fair Labor Standards Act established a federal minimum wage and maximum hours.
• The Dust Bowl drought drove "Okies" off the southern Plains toward California, a migration John Steinbeck captured in The Grapes of Wrath. Many Americans carried a lasting "depression mentality" of economic caution.
• For Native Americans, the Indian Reorganization (Wheeler-Howard) Act reversed the Dawes-era assimilation policy and supported tribal self-government. African American figures like Mary McLeod Bethune and Marian Anderson gained national prominence, and A. Philip Randolph's pressure led to the Fair Employment Practices Committee as the nation moved toward war, a story that continues in the interwar foreign policy chapter.

Key Terms to Know

Practice and Next Steps

Pair these notes with the Topic 7.10 New Deal study guide for the College Board framing of the same material, and review the rest of the period on the AMSCO notes hub. If the causes of the crash feel shaky, back up to AMSCO 7.9 on the Great Depression first.

Then test yourself. Run New Deal multiple choice in guided practice, drill alphabet agencies with the key terms glossary, and try a Period 7 prompt with FRQ practice and instant scoring. The New Deal is one of the most-tested topics in APUSH, especially for causation and continuity-and-change questions about the role of government.