FDR's mandate as a first-term President was clear and challenging: rescue the United States from the throes of its worst depression in history. Economic conditions had deteriorated in the four months between FDR's election and his inauguration. Unemployment grew to over twenty-five percent of the nation's workforce, with more than twelve million Americans out of work. A new wave of bank failures hit in February 1933. Upon accepting the Democratic nomination, FDR had promised a "New Deal" to help America out of the Depression, though the meaning of that program was far from clear.

In trying to make sense of FDR's domestic policies, historians and political scientists have referred to a "First New Deal," which lasted from 1933 to 1935, and a "Second New Deal," which stretched from 1935 to 1938. (Some scholars believe that a "Third New Deal" began in 1937 but never took root; the descriptor, likewise, has never gained significant currency.) These terms, it should be remembered, are the creations of scholars trying to impose order and organization on the Roosevelt administration's often chaotic, confusing, and contradictory attempts to combat the depression; Roosevelt himself never used them. The idea of a "first "and "second" New Deal is useful insofar as it reflects important shifts in the Roosevelt administration's approach to the nation's economic and social woes. But the boundaries between the first and second New Deals should be viewed as porous rather than concrete. In other words, significant continuities existed between the first and second New Deals that should not be overlooked.

One thing is clear: the New Deal was, and remains, difficult to categorize. Even a member of FDR's administration, the committed New Dealer Alvin Hansen, admitted in 1940 that "I really do not know what the basic principle of the New Deal is." Part of this mystery came from the President himself, whose political sensibilities were difficult to measure. Roosevelt certainly believed in the premises of American capitalism, but he also saw that American capitalism circa 1932 required reform in order to survive. How much, and what kind of, reform was still up in the air. Upon entering the Oval Office, FDR was neither a die-hard liberal nor a conservative, and the policies he enacted during his first term sometimes reflected contradictory ideological sources.

This ideological and political incoherence shrank in significance however, next to what former Supreme Court Justice Oliver Wendell Holmes described as a "first class temperament," exemplified by the President's optimism, self-confidence, pragmatism, and flexibility. Above all, FDR was an optimist, offering hope to millions of Americans who had none. His extreme self-confidence buoyed an American public unsure of the future or even present course. This intoxicating mix made FDR appear the paragon of leadership, a father-figure who reassured a desperate nation in his inaugural address that "the only thing we have to fear is fear itself." FDR also brought to the White House a pragmatic approach to governance. He claimed he would try something to end the depression, and if it worked he would move on to the next problem. If it failed, he would assess the failure and try something else.

Lifting America out of the Depression was a large task. To help him, FDR depended on a sizable coterie of advisers to a degree unprecedented in the history of the presidency. FDR brought many veterans of his governorship to Washington. Raymond Moley, a professor of public law and a member of the "Brain Trust," joined the administration, as did Harry Hopkins, who ran New York's program for the unemployed. Francis Perkins, who had known FDR since their days in the state legislature, became the first women ever to hold a cabinet office, taking charge at the Department of Labor. In the main, these advisers were political liberals.

With this collection of advisers, FDR set up his White House staff. Eschewing a hierarchical form of organization, or even one with each aide given a clearly delineated duty, Roosevelt instead meted out tasks to his advisers, sometimes charging them with similar duties. Additionally, FDR often appointed advisers of clashing temperaments and beliefs to the same policy issue, leading to internal confrontations and squabbling. The benefits of this system were that FDR received political and policy advice from a range of advisers with different ideological predilections and political connections. It also left the President with an array of options and allowed him to forge a consensus within his own administration about the direction, both in terms of policy and politics, of his presidency. Finally, it produced a degree of flexibility in the policymaking process, which harmonized with Roosevelt's often experimental approach to the New Deal. The main drawback to this type of governance was that the New Deal often appeared to be moving in several directions, many of them contradictory, all at once.

The First New Deal: Saving Capitalism?

The First New Deal began almost immediately upon Roosevelt's assumption of the presidency. FDR invoked the "analogue of war" as he spurred Congress towards a flurry of legislative activity that became known as the "Hundred Days"—from March to June 1933—in which the new President won passage of numerous bills designed to end the nation's economic troubles. In general, the First New Deal looked to stabilize the U.S. financial system, provide relief and jobs to the suffering, and reenergize America's capitalist economy. He sought to achieve this last objective by building partnerships between business and government to resuscitate industrial production. In carrying forward this agenda, FDR began to recreate the role of the federal government in American economic and political life.

Banking and Finance

FDR's immediate task upon his inauguration was to stabilize the nation's banking system. On March 6, Roosevelt declared a national "bank holiday" to end a run by depositors seeking to withdraw their money from faltering banks. FDR also called Congress into emergency session where the legislature enacted, nearly sight unseen, the President's banking proposal. Under this plan, the federal government would inspect all banks, re-open those that were sufficiently solvent, re-organize those that could be saved, and close those that were beyond repair. On March 12, FDR went on the radio—giving the first of many "fireside chats"—to explain his plan to Americans and to assure them that their money would be safe in the re-opened banks. During the following weeks, Americans returned nearly $1 billion dollars to bank vaults.

FDR then won a significant number of other reforms related to the nation's financial sector. In May 1933, he signed the Securities Act, which required corporations and stockbrokers to release accurate information about stocks to investors. In June 1933, he signed the Glass-Steagall Act, which created the Federal Deposit Insurance Corporation, guaranteeing the savings of average citizens, and prevented commercial banks from engaging in investment banking, which they had been carrying on in scandalous fashion. In 1934, the Securities and Exchange Act created the Securities and Exchange Commission (SEC), which was charged with regulating financial markets.

Roosevelt in 1933 took America off the gold standard, and the Banking Act of 1935 gave the country a central banking mechanism for the first time. A reorganized Reconstruction Finance Corporation (RFC) spun off subsidiaries such as the Federal National Mortgage Association ("Fannie Mae") that, along with the Federal Housing Administration (FHA) made it possible for millions of Americans to buy or renovate homes. Taken together, these innovations, one write has said, marked the beginning of the end of Wall Street's domination of finance capitalism" and "represented the shift of economic power form the lower part of Manhattan, where it had been for over a century, to Washington."

Relief and Jobs

To meet the immediate crisis of starvation and the dire needs of the nation's unemployed, FDR established several public relief programs in 1933. The Federal Emergency Relief Administration (FERA) made direct cash allocations available to states for immediate payments to the unemployed.

The Civilian Conservation Corps (CCC) put 300,000 young men to work in 1,200 camps planting trees, building bridges, and cleaning beaches. Finally, the Civil Works Administration (CWA) spent almost $1 billion on public works projects, including airports and roads. Roosevelt shut the CWA after only four months, however, because it was so costly.

The benefits of these three programs were obvious: they provided relief for millions of Americans on the verge of outright starvation and gave unemployed Americans jobs. Conservative attacked relieve programs as handouts to the undeserving poor and derided the CCC and CWA as "make work" projects that added little to American society. In fact, Americans in the twenty-first century continue to enjoy the picnic tables, the cabins, and the forest roads built by FDR's "tree army."

Agricultural and Rural America

In the hope of spurring the recovery of American agriculture, Roosevelt asked Congress to pass the Agricultural Adjustment Act (AAA), which it did in May 1933. FDR and his advisers believed that overproduction had caused gluts in the farm market, dropping prices, and, in turn, sending farmers' incomes plummeting. The AAA aimed to inflate farmers' incomes by offering cash incentives to farmers who agreed cut production. The AAA originally covered wheat, corn, cotton, hogs, milk, rice, and tobacco, but Congress added new commodities to the program in the ensuing years.

More than three million farmers joined the AAA program in its first year, and farm income did increase by more than fifty percent between 1932 and 1935. Despite these impressive gains, the benefits of the AAA too often accrued to large farm-owners rather than the millions of poor white and African American tenant farmers and sharecroppers who lived in abject poverty. Moreover, AAA policies stressed the lowering of production—which in a few cases in 1933 meant that crops were plowed under and livestock killed. With many Americans hungry and ill-clothed, critics labeled such policies "utterly idiotic."Roosevelt also believed it imperative to reduce poverty in rural areas. The Farm Credit Association, another offshoot of the RFC, lent more than a billion dollars to families to save their farms from foreclosure. The Federal Emergency Relief Administration and the Resettlement Administration sponsored experimental rural communities and greenbelt towns. The Farm Security Administration (FSA) enabled tenant farmers to buy farms and built modern labor camps for migrants like John Steinbeck's fictional Joads. Perhaps nothing did more to rescue the farm family from isolation than the Rural Electrification Administration (REA) which brought electricity for the first time to millions of rural homes and with it such conveniences as radios and washing machines.

The REA is only one example of FDR's interest in public power, which he had sponsored as governor of New York. Huge dams—Grand Coulee and Bonneville—transformed the economy of the Pacific Northwest. Still more important was the Tennessee Valley Authority (TVA). The Tennessee Valley stretched some 40,000 square miles from Virginia to Mississippi and was the poorest region in the nation. The TVA aimed to marshal the area's natural resources into an engine of economic uplift by building dams and power plants that would bring jobs, electricity, and flood control to the Valley. A number of Tennessee Valley natives criticized the TVA for displacing thousands of people—usually poor farmers—to make way for power plants and dams. But by the end of the 1930s, the TVA had brought millions of southern Americans electric power, roads, and jobs in regions that previously had no phones, electric lights, or stable employment. In later years, the TVA's dams and power plants wreaked havoc on the environment by spewing pollution. The TVA however, also did a great deal to restore badly eroded hillsides, and another New Deal agency, the Soil Conservation Service, trained farmers in the proper methods of cultivation. As Theodore Roosevelt is the father of forest conservation, Franklin Roosevelt is the father of soil conservation.

Resuscitating American Industry

Finally, in some of the most controversial legislation of his administration, Roosevelt set out to help American industry get back onto its feet. The centerpiece of his industrial recovery program was the National Industrial Recovery Act (NIRA) that Congress passed in June 1933. Drawing its inspiration from the federal government's efforts at economic planning during World War I and the voluntary trade associations of the 1920s, the NIRA provided for national economic planning as opposed to individualistic and competitive, laissez-faire capitalism.

The NIRA created two new agencies, the Public Works Administration (PWA) and the National Recovery Administration (NRA). The PWA, run by Secretary of the Interior Harold Ickes, had a budget of over $3 billion. Overseeing the construction of large-scale public works (including such landmarks San Francisco's Golden Gate Bridge and New York City's Triborough Bridge), it hoped to stimulate the economy by creating jobs and, more important, by generating orders for materials that American industry produced. To some degree, the PWA accomplished this mission, although Ickes was such a scrupulous administrator—sometimes scrutinizing contracts line by line—that he failed to spend all the money available to him.

The NRA, however, was the cornerstone of FDR's plan for industry. It proposed a business-government partnership in which business leaders, under the watchful eye of the NRA, would draft fair codes of competition regulating prices and wages. The codes would also outlaw cutthroat practices, such as below-cost sales and child labor. Unhealthy competition between businesses would thus become a thing of the past, spurring job creation and economic growth. Additionally, section 7a of the NIRA guaranteed labor the right to organize and bargain collectively. As an enticement to business, the NIRA suspended antitrust laws that had been reviled by business leaders since the beginning of the twentieth century.

Under the leadership of General Hugh Johnson, the NRA attempted to rally public support to its program, hoping that public pressure, rather than federal government power, would compel American industry to support the NRA. Johnson held rallies and parades and urged businesses which had agreed to the codes to put the NRA's symbol, the Blue Eagle, in their store fronts. In sum, the NRA signified FDR's belief that business, with a little push from government, could regulate itself.

This strategy proved inadequate, and perhaps naive. Businesses heeded the codes when they saw fit, and ignored them when it served their purposes. Small business owners complained, with good reason, that big businesses dominated the code-drafting process and looked to drive their smaller competitors out of the market. Labor unions enjoyed a new-found legitimacy—symbolized by the millions of workers who joined—but found that businesses ignored provisions that guaranteed worker's wages and hours. By the end of 1933, it was clear that the NRA was anything but a success.

New Deal Critics

FDR promised an energetic attack on the Great Depression with his New Deal. He kept his word, urging Congress to pass laws which established dozens of New Deal programs. But the New Deal accumulated a record of notable failures as well as successes. Mixed results were not the only enemy of the early New Deal, however. A host of critics arose on the Political Left and Right to attack Roosevelt and his policies. In 1934, conservative businessmen—and dissident Democrats like 1928 presidential candidate Al Smith—formed the American Liberty League, which tarred the New Deal as a radical and un-American assault upon the basic principles of capitalism and free enterprise.

Others criticized FDR for not doing enough for those hardest hit by the Depression: the poor, the elderly, and the working class. Democratic Senator Huey Long of Louisiana was an early supporter of the New Deal, but soon accused FDR of falling captive to American business interests. Long insisted that his "share our wealth" plan of income redistribution would "make every man a king." Another early supporter of the New Deal, Detroit's Father Charles Coughlin, took to the radio airwaves in 1934 to tell his estimated 40 million listeners that the key to ending the depression was "free silver"—the populist solution of the 1890s. Finally, Dr. Francis Townsend, a California physician, attacked FDR for not doing enough to help elderly Americans.

Another powerful opponent of FDR's New Deal initiatives came from within the government: the United States Supreme Court. In a series of landmark cases, the Court struck down some of the most important pieces of New Deal legislation. In the May 1935 Schechter decision, the Court invalidated the NIRA on the grounds that Congress had improperly delegated its powers to the Executive and that it unconstitutionally interfered with intra-state commerce. In 1936, the Court's Butler decision shut down the AAA because of its tax provisions. FDR legitimately worried that the Court might reject most of the New Deal's legislation as unconstitutional. Moreover, growing criticism of the New Deal—from the Left, from the Right, and from within the government—revealed that FDR's popular support might be ebbing as the 1936 presidential election came into view.

The Second New Deal

Roosevelt, as a result, began to change direction, inaugurating what scholars have come to call the "Second New Deal." In the summer of 1935, during what became known as the "Second Hundred Days" (June to August, 1935) FDR won passage of a slew of progressive legislation that almost single-handedly dedicated the United States government to providing a minimum level of social and economic protection for all Americans. Three major initiatives represented the administration's turn to the political left: the Works Progress Administration (WPA); the Wagner-Connery National Labor Relations Act (or the Wagner Act, for short); and the Social Security Act.

In April—prior to the beginning of the Second Hundred Days—Congress approved the Emergency Relief Appropriation Act, creating the WPA .

Under the leadership of Harry Hopkins, the WPA aimed to give unemployed Americans jobs rather than signing them up for the dole. By 1937, three million Americans were receiving WPA checks for building schools, hospitals, and airports. and for pursuing cultural projects in theater, music, literature, and history. Together with the PWA, the WPA transformed the face of the land—from La Guardia Airport and the Triborough Bridge in New York to the Orange Bowl in Miami to the Oregon Coastal Highway. The National Youth Administration (NYA), an agency of the WPA, trained and employed hundreds of thousands of teenagers and made it possible for many more young people, including the future playwright Arthur Miller, to work their way through college.

FDR also belatedly threw his support behind the Wagner-Connery National Labor Relations Act, which had been languishing in Congress. This legislation guaranteed labor unions the right to organize and bargain collectively—and established the National Labor Relations Board to enforce these rights. It also curbed employer use of "unfair labor practices," like blacklisting union organizers or unionized workers. Because of the legitimacy conferred on unions by the Wagner Act, the legislation came to be known as the "Magna Carta" for American labor unions. With this new political power, union membership swelled to more than 13 million Americans during World War II.

Finally, in August, FDR signed the Social Security Act of 1935. Long a goal of liberals, this bill, like the Wagner Act, had been stalled in Congress until FDR declared it vital legislation. With its passage came programs like Old Age Assistance (Title I), Old Age Insurance (Title II), Unemployment Insurance (Title III), Aid to Dependent Children (Title IV) and Aid to the Blind (Title V). Taken together, these programs represented a significant commitment to developing a welfare state in the United States.

This phase of the New Deal did not constitute an uninterrupted revolution of progressive legislation. Roosevelt proposed a tax scheme in 1935 that would have greatly increased the tax bills of wealthy Americans and corporations. Conservatives in Congress, however, watered down the proposal considerably. Likewise, FDR's attempt to break up large public utilities holding companies with the Public Utilities Holding Company Act ignited a political firestorm on Capitol Hill that resulted in a weakened bill—and one that eventually benefited the utilities.

The reforms wrought by FDR's "Second New Deal" also had several weaknesses. The WPA, for all its efforts, failed to lift the country out of its economic doldrums. The Social Security Act financed its programs through deductions from workers' paychecks, which actually stunted economic growth by muting consumer purchasing power. Moreover, the programs and benefits of the Social Security Act were not distributed evenly among all Americans. Agricultural workers (who were likely to be African Americans or Mexican Americans of both sexes) and domestic servants (often African American women) were not eligible for old-age insurance (what is now commonly referred to as "social security"); farm laborers also were ineligible for unemployment insurance. Likewise, since many of these social security programs were administered by state governments, the size of benefits varied widely, especially between the North and the South.

Reorganizing the Government

FDR's policies were wildly popular with large segments of the American population, as his overwhelming victory in 1936 made clear. At his inauguration in 1937, FDR vowed to continue fighting for the nation's underprivileged, the "one-third of nation ill-housed, ill-clad, ill-nourished." FDR understood, though, that despite his victory in the 1936 election, his New Deal program was by no means safe. The Supreme Court and a phalanx of Republicans and conservative Democrats had at various times proven hostile to FDR's New Deal. FDR set out in his second term to remove these roadblocks. All too often, however, he encountered stiff resistance.

The Supreme Court topped FDR's list of concerns. If the Court had ruled the centerpiece of the early New Deal unconstitutional, FDR reasoned, it was likely to do the same to subsequent programs, such as the Social Security Act, when they appeared on the Court's docket. Roosevelt's best hope was for the composition of the Court to change. But older, conservative justices opposed to FDR's program refused to retire—and some of the most ardent New Deal supporters surmised that these jurists simply refused to die—so FDR sought a more systematic way to shield his policies from court action.

In early February, 1937, he proposed legislation that would expand the membership of the Court, adding a new justice for every sitting justice over the age of seventy-five. This maneuver would have put six new Roosevelt-appointed justices on the Court, giving FDR a comfortable majority that could be expected to validate the New Deal. Though most of the press erupted in fury, denouncing FDR as a would-be dictator, he had so large a majority in both houses of Congress (5-1 in the Senate, 4-1 in the House) that political commentators expected the bill to pass. But in late-March the Court began to uphold state and federal social legislation in what has been called "the switch in time that saved nine." When the bill finally reached the Senate floor in July, Roosevelt no longer had the votes he needed. He claimed, though, with good reason, that though he had lost the battle he had won the war, for never again did the Court strike down a New Deal law. Scholars differ on why the Court changed, but they almost all agree that what happened in 1937 was nothing less than a "Constitutional Revolution." From that day to this, the Court has not invalidated a single piece of major New Deal legislation regulating business or expanding social rights.

In addition to revamping the Supreme Court, FDR believed that he needed to reform and strengthen the Presidency, and specifically the administrative units and bureaucracy charged with implementing the chief executive's policies. During his first term, FDR quickly found that the federal bureaucracy, specifically at the Treasury and State Departments, moved too slowly for his tastes. FDR often chose to bypass these established channels, creating emergency agencies in their stead. "Why not establish a new agency to take over the new duty rather than saddle it on an old institution?" asked the President. "If it is not permanent," he continued, "we don't get bad precedents."FDR would look at other ways to increase his administrative and bureaucratic power. His 1937 plan for executive reorganization called for the President to receive six full-time executive assistants, for a single administrator to replace the three-member Civil Service Commission, for the President and his staff to assume more responsibility in budget planning, and for every executive agency to come under the control of one of the cabinet departments. The President's conservative critics pounced on the plan, seeing it as an example of FDR's imperious and power-hungry nature; Congress successfully bottled up the bill. But in 1939, Congress did pass a reorganization bill that created the Executive Office of the President (EOP) and allowed FDR to shift a number of executive agencies (including the Bureau of the Budget) to its watch. While FDR did not get the far-reaching result he sought in 1937, the 1939 legislation strengthened the Presidency immeasurably.

Some of the more liberal measures of the New Deal encountered stiff resistance in Congress, often from conservative Southerners within the President's own party. As a result, FDR attempted in 1938 to purge conservative congressional Democrats by supporting their more liberal opponents in the party's primaries. He went after Senators Millard Tydings (MD), "Cotton Ed" Smith (SC), and Walter George (GA), as well as seven other conservative Democrats. FDR's plan failed miserably; of the ten Democrats he targeted for ouster, only one lost. The others returned to Washington even more antagonistic toward the President. In addition, many other Democrats resented the President's meddling in local affairs.

Economic Collapse and a Slow Recovery

These controversies, largely political in scope, occurred against the backdrop of a collapsing economy. Beginning in the fall of 1937, industrial production fell by 33 percent, national income dropped by 12 percent, and industrial stock prices plummeted by 50 percent. Nearly 4 million people lost their jobs, and the total number of unemployed increased to 11.5 million. The "Roosevelt recession" occurred largely because the President, along with some of his advisers (led by Secretary of the Treasury Henry Morgenthau) were determined to balance the federal budget and had, as a result, reduced government spending. In 1936, the government contributed $4.1 billion to consumer purchasing power, versus less than $1 billion in 1937.

The recession hit hard and, at first, Roosevelt chose to maintain his fiscally conservative course. In April 1938, worried that a continuing recession and the appearance of White House inactivity would doom Democrats in the 1938 congressional midterm elections, FDR jettisoned Morgenthau's advice. Instead, he listened to Harry Hopkins and other advisers who believed that government spending on relief and public works would revive the economy—even if such spending produced ever larger deficits. Their rationale for this approach was that the depression was the product of under-consumption and that putting money in the hands of consumers—"priming the pump"—would stimulate consumer spending and perk up the economy. Accordingly, FDR asked Congress for a $5 billion relief program, which passed in the spring and summer of 1938.

Despite this infusion of federal money into the economy, the nation still suffered from under-consumption and lay mired in depression. In 1939, over 19 percent of the nation's work force remained unemployed. Stock prices had yet to recover from the crash of the late 1920s. Despite the New Deal, the U.S. economy in 1940, though considerably improved, had not yet regained its former vigor.

In hindsight, many economists and historians claim that FDR's strategy of "deficit-spending" and "pump-priming" was sound, but that $5 billion was too small to jump-start the nation's economy. Nonetheless, as the historian Alan Brinkley has argued, a generation of economic policymakers adopted the view that the manipulation of government fiscal policies was the key to maintaining a healthy economy. As a result, this approach colored federal efforts to regulate the economy for the next thirty years.

The War Years

World War II, not the New Deal, brought an end to the Great Depression. The war sparked the kind of job creation and massive public and private spending that finally lifted the United States out of its economic doldrums. It was a mammoth effort in which the vast majority of America's industrial and human resources were brought to bear. Great ships were built in weeks, then in days. American-made vehicles all but put the entire Russian Army on wheels. Airplanes emerged from factories in days. American industry churned out guns, munitions, and clothing. Women and African Americans benefited greatly from this war-time economy, as the former joined the workforce in unprecedented numbers while the latter left the rural and poor South to find industrial employment, as well as voting rights and a less oppressive legal and social system, in the North.

Sacrifice was the word of the day. The nation's two main labor union federations, the AFL and the CIO, agreed not to strike. Americans, sometimes begrudgingly, submitted to the federal government's rationing of everything from gasoline to shoes to food. New automobiles, radios, and other big-ticket items were virtually unavailable for purchase. In addition to rationing, the government coordinated the use of raw materials and the production of staple goods. Indeed, during the war the federal government played an even larger role in the functioning of the American economy than it did during the New Deal. In the process, the Roosevelt administration ran up massive deficits.

This extraordinary economic mobilization came with great costs. African Americans still lived as second-class citizens, helping fight a war against racist and oppressive nations while enduring racism and oppression at home. The new jobs they moved into often paid poorly and offered little chance for advancement. World War II, though, was also a time of advance for African Americans. The NAACP multiplied its membership, and the Supreme Court struck down the white primary. Women, while joining the workplace at great rates, still suffered from sex discrimination once on the job. They earned less than men for doing the same work and received few opportunities for promotion. Yet, as with African Americans, women made permanent gains during the war. Some historians have even seen in World War II the origins of the women's liberation movement of the 1960s.

Finally, in the wake of the hysteria following the Japanese attack on Pearl Harbor, the Roosevelt administration relocated Americans of Japanese descent, more than 110,000 persons, to prison camps. Many of them stayed there until the war's conclusion, even as their sons died in Europe fighting Nazi Germany. It was one of the most disgraceful acts in American history, one sanctioned by FDR and validated by the Supreme Court. Only in the 1980s did the American government admit its flagrant violation of the constitutional rights of these American citizens.