The New Deal

When Roosevelt took the presidential oath, the banking and credit system of the nation was in a state of paralysis. The new government adopted a policy of moderate currency inflation, brought generous credit facilities to industry and agriculture, imposed severe regulations on the sum of securities on the stock exchange.

The next problem to solve was unemployment. Congress enacted a program of CCC (the Civilian Conservation Corps) to bring relief to young men between 18 and 25. The CCC enrolled jobless young men in work camps to plant trees to combat soil erosion, eliminate stream pollution, create fish, game and bird sanctuaries and so on.

In 1933 Congress passed the AAA (Agricultural Adjustment Act) to provide economic relief to farmers. Between 1932 and 1935, farm income increased by more than 50% (partly because of federal programs).

During the New Deal organized labor made greater gains than at any previous time in American history. In 1935 Congress passed the National Labor Relations Act, which defined unfair labor practices, gave workers the right to bargain through unions of their own choice and prohibited employers from interfering with union activities.

But all these means did not bring an end to the Depression. And as the sense of immediate crisis eased, new demands emerged. So, President Roosevelt backed a new set of economic and social measures.

The New Deal’s cornerstone, according to Roosevelt, was the Social Security Act of 1935. It created a system of insurance for the aged, unemployed and disabled based on employer and employee contributions. Social Security was funded in large part by taxes on the earnings of current workers, with a single fixed rate for all regardless of income. Today Social Security is one of the largest domestic programs administered by the US government.

In 1936, Roosevelt won presidential election for the second time. He took 60% of the population and carried all states except Maine and Vermont. In this election, a new coalition of the Democratic Party (supported by labor, most farmers, immigrants and urban ethnic groups from East and Southern Europe, African Americans and the South) and the Republican Party (supported by business and middle-class members of small towns and suburbs) made the political alliance that remained intact for several decades.

The New Deal established the foundation of the modern welfare state in the USA. It was the response for the wants of the citizens that government should take greater responsibility for the welfare of the nation.

Before the end of Roosevelt’s second term a new danger was arising, noticed by few average Americans: the expansionist designs of totalitarian regimes in Japan, Italy and Germany.

American public clearly favored the victims of Hitler’s aggression (Austria, Czechoslovakia, Poland) but the government announced neutrality legislation and prohibited trade with or credit to any of the warring nations. The objective was to prevent the involvement of the country in a non-American war.

The fall of France and the air war against Britain in 1940 resulted in a clash between the isolationists and those who favored aiding the democracies. The USA joined Canada in a Mutual Board of Defense, and aligned with the Latin American republics in extending collective protection to the nations in the Western Hemisphere.

In early 1941 Congress approved the Lend-Lease Program, which enabled President Roosevelt to transfer arms and equipment to any nations (notably Great Britain, the Soviet Union and China) deemed vital to the defense of the U.S. Total Lend-Lease aid by war’s end amounted to more than $50,000 million.

The 1940 presidential election campaign became a unique one: for the first time in US history, a president was elected to a third term (he took 449 electoral college votes).