New Deal Programs

Why This Matters

The New Deal wasn't just a grab bag of alphabet agencies—it represented a fundamental transformation in the relationship between the federal government and the American economy. You're being tested on how these programs addressed the three R's of the New Deal: relief (immediate help for the unemployed), recovery (getting the economy moving again), and reform (preventing future depressions). Understanding which programs fit which category—and why FDR's administration chose those approaches—is essential for any question about 1930s America.

These programs also established precedents that still shape American life today. From the Social Security check your grandparents receive to the FDIC sticker on your bank's door, the New Deal created institutions we now take for granted. Don't just memorize what each agency did—know what problem it solved and what principle it established about government's role in the economy.

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Financial System Reform

The Great Depression began with a financial collapse—bank failures wiped out savings, and stock market speculation destroyed wealth overnight. These programs aimed to restore trust in American financial institutions by creating oversight and protection that hadn't existed before.

Federal Deposit Insurance Corporation (FDIC)

• Insured bank deposits up to $2,500 (now $250,000)—ending the panic-driven bank runs that destroyed thousands of institutions between 1929-1933
• Restored public confidence in the banking system by guaranteeing that ordinary Americans wouldn't lose their life savings if their bank failed
• Established ongoing bank regulation requiring member banks to meet federal standards, creating the stable banking system that supports economic growth today

Securities and Exchange Commission (SEC)

• Regulated stock market trading by requiring companies to disclose accurate financial information to investors
• Outlawed insider trading and fraud—the speculative practices that inflated the 1920s bubble and contributed to the 1929 crash
• Established the principle of market transparency, creating rules that made investing safer and restored confidence in capital markets

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Direct Employment Programs

With unemployment reaching 25%, the Roosevelt administration concluded that private industry alone couldn't absorb the jobless. These programs put federal money directly into workers' pockets through government-funded jobs, following the Keynesian principle that consumer spending drives economic recovery.

Works Progress Administration (WPA)

• Employed 8.5 million Americans between 1935-1943, making it the largest New Deal employment program
• Funded diverse projects beyond construction—artists, writers, and musicians created murals, guidebooks, and performances, preserving American culture during the crisis
• Stimulated consumer spending by putting wages in workers' hands, demonstrating the multiplier effect where government spending generates broader economic activity

Civilian Conservation Corps (CCC)

• Targeted young men ages 18-25—a demographic hit especially hard by unemployment and considered at risk for social unrest
• Combined relief with conservation through reforestation, park development, and erosion control—planting over 3 billion trees during its existence
• Required participants to send money home, spreading economic benefits to families and communities beyond the work camps themselves

Public Works Administration (PWA)

• Funded large-scale infrastructure including the Grand Coulee Dam, Lincoln Tunnel, and thousands of schools and hospitals
• Focused on long-term investment rather than immediate job creation—projects took years but modernized American infrastructure for decades
• Contracted with private companies rather than hiring workers directly, distinguishing it from the WPA's direct employment model

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Regional Development and Modernization

Some areas of the country lacked basic infrastructure that the private market had failed to provide. The New Deal experimented with comprehensive regional planning, using government power to bring entire regions into the modern economy.

Tennessee Valley Authority (TVA)

• Brought electricity to rural Appalachia where private utilities refused to invest—only 3% of Tennessee Valley farms had power before TVA
• Integrated multiple functions including flood control, navigation improvement, and economic development under one regional authority
• Demonstrated public power as an alternative to private utilities, creating a "yardstick" to measure whether private rates were fair—controversial then and now

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Agricultural Stabilization

Farmers faced a unique crisis: overproduction had collapsed prices, making it impossible to cover costs even with good harvests. The New Deal intervened directly in agricultural markets to raise prices and stabilize farm income.

Agricultural Adjustment Act (AAA)

• Paid farmers to reduce production—even destroying crops and livestock—to raise prices through artificial scarcity
• Funded by a tax on food processors, which the Supreme Court struck down in 1936 (United States v. Butler), though similar programs continued under different legal authority
• Established the precedent for farm subsidies that continues today, making agriculture one of the most government-managed sectors of the American economy

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Labor Rights and Worker Protection

The New Deal fundamentally shifted the balance of power between employers and workers by guaranteeing the right to organize. This wasn't just relief—it was reform designed to ensure workers could bargain for fair wages permanently.

National Labor Relations Act (Wagner Act)

• Guaranteed workers' right to unionize and engage in collective bargaining without employer interference or retaliation
• Created the National Labor Relations Board (NLRB) to investigate unfair labor practices and oversee union elections
• Sparked massive union growth—membership tripled between 1935-1940, giving workers unprecedented bargaining power and contributing to the rise of the middle class

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Long-Term Social Insurance

Beyond immediate relief, the New Deal created permanent programs designed to prevent future depressions from causing the same human suffering. These reforms assumed that economic insecurity was a systemic problem requiring systemic solutions.

Social Security Act

• Created old-age pensions funded by payroll taxes—workers and employers each contributed, establishing the principle of earned benefits rather than charity
• Included unemployment insurance administered by states, providing temporary income during job loss to maintain consumer spending
• Excluded many workers initially—agricultural and domestic workers (disproportionately Black and female) were left out, reflecting the political compromises needed to pass the bill

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Attempted Industrial Planning

The early New Deal experimented with government-business cooperation to stabilize prices and wages across entire industries. This approach proved legally and practically problematic.

National Industrial Recovery Act (NIRA)

• Allowed industries to set "fair competition codes" establishing minimum wages, maximum hours, and production limits—essentially legal cartels
• Declared unconstitutional in 1935 (Schechter v. United States) because it delegated too much legislative power to the executive branch
• Created the PWA as a lasting legacy—while the industrial codes failed, the public works funding mechanism survived and thrived

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Quick Reference Table

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Self-Check Questions

1. Which two programs both created jobs through public works but differed in their approach to hiring—one employing workers directly, the other contracting with private companies?

2. The FDIC and SEC both aimed to restore confidence in the financial system. What specific type of financial participant did each program protect?

3. If an FRQ asks you to explain how the New Deal addressed both immediate suffering and long-term economic security, which two programs would best illustrate that contrast?

4. Compare the AAA and Wagner Act: both intervened in private economic relationships, but one helped producers (farmers) while the other helped workers. How did each program change the balance of power in its sector?

5. Which New Deal program was declared unconstitutional, and what constitutional principle did the Supreme Court say it violated? How did the administration respond to Court opposition?