Comparing the First New Deal and the Second New Deal
First New Deal
Second New Deal
Dates
Goals
1933 – 1935
1935 – 1939
▪ Direct relief for unemployed; recovery from
the Depression
▪ Cooperated with business community to
restore pre-1929 prosperity
▪ Helped organized labor to improve position
in society
▪ Provided assistance to agriculture
▪ Revived progressive tradition of trust
regulation
▪ strengthened organized labor
▪ Sought to meet needs of workers, elderly,
disabled, farmers, unemployed
▪ Narrowed class differences by taxing the
wealthy
▪ Supported industrial workers and small
farmers
Position on
Business
▪ Partnership
▪ Cooperation
▪ Suspended Anti-trust actions
▪ Confrontational toward corporate interests
▪ Strong regulation of public utilities
Actions
▪ National Industrial Recovery Act
▪ Agricultural Adjustment Act
▪ Federal Emergency Relief Admin
▪ Emergency Banking Act
▪ Civilian Conservation Corp
▪ Tennessee Valley Authority Act
▪ Public Utility Holding Company Act
▪ Wealth Tax Act (Revenue Act)
▪ National Labor Relations Act (Wagner Act,
i.e. the Magna Carta of labor)
▪ Works Progress Administration
▪ Social Security Act
▪ Fair Labor Standards Act
Comments
▪ Brief honeymoon between business
community and the Roosevelt administration
▪ First New Deal told business what is must
do
▪ Business found New Deal regulations
increasingly confining and intrusive
▪ Supreme Court sided with business
interests as it struck down several major New
Deal acts
▪ Stronger controls and higher taxes on the
wealthy and large businesses
▪ Responded to attacks by Liberty League
and Supreme Court’s judicial review
▪ Second New Deal told business what it must
not do
New Deal Programs
United States bank holiday, 1933: closed all banks until they became certified by federal
reviewers
Abandonment of gold standard, 1933: allowed more money to be put in circulation to create a
mild inflation
Civilian Conservation Corps (CCC), 1933: employed young adults to perform unskilled work for
the federal government
Tennessee Valley Authority (TVA), 1933: a government program that ran a series of dams built
on the Tennessee River
Federal Emergency Relief Administration (FERA), 1933: provided breadlines and other aid to
the unemployed
Agricultural Adjustment Act (AAA), 1933: paid farmers to not grow crops
National Recovery Act (NRA), 1933: created fair standards in favor of labor unions
Civil Works Administration (CWA), 1933: provided temporary jobs to millions of unemployed
Public Works Administration (PWA), 1933: employed middle-aged skilled workers to work on
public projects, cost $4 billion
Federal Deposit Insurance Corporation (FDIC) / Glass-Steagall Act, 1933: insures deposits in
banks in order to restore public confidence in banks
Securities Act of 1933, created the SEC, 1933: codified standards for sale and purchase of stock,
required risk of investments to be accurately disclosed
Indian Reorganization Act, 1934: measure enacted by the U.S. Congress to decrease federal
control of American Indians and to increase tribal self-government to strengthen tribal structure by
encouraging written constitutions and to undo the damage caused by the Dawes Act
Social Security Act (SSA), 1935: provided financial assistance to: elderly, handicapped, delinquent,
unemployed; paid for by employee and employer payroll contributions
Works Progress Administration (WPA), 1935: a reiteration of the PWA, created useful work for
skilled workers
National Labor Relations Act (NLRA) / Wagner Act, 1935: granted right of labor unions to exist
Judicial Reorganization Bill, 1937: FDR requested power to appoint a new Supreme Court judge
for every judge 70 years or older; failed to pass
Fair Labor Standards Act (FLSA), 1938: established a maximum normal work week of 40 hours,
and a minimum pay of 40 cents/hour
The New Deal and Keynesian economics
In the early 1930s, before John Maynard Keynes wrote The General Theory of Employment,
Interest, and Money, he advocated public works programs and deficits as a way to recover the
British economy from the Depression. Although he never mentioned fiscal policy in The General
Theory, and instead advocated the need to socialize investments, Keynes ushered in a theory-driven
rather than a policy-driven revolution. In order to keep people fully employed, governments would
need to run deficits when the economy was slowing because the private sector would not invest
enough, according to Keynes.
Keynes's visit to the White House in 1934 to urge Roosevelt to do more deficit spending was a
debacle. A dazed, overwhelmed Roosevelt complained to Labor Secretary Frances Perkins, "He
left a whole rigmarole of figures ... he must be a mathematician rather than a political economist."
Keynes, equally frustrated with the encounter, later told Secretary Perkins that he had "supposed the
President was more literate, economically speaking."
As the Depression wore on, Roosevelt tried public works, farm subsidies and other devices to restart
the economy, but he never completely gave up trying to balance the budget. Unemployment
remained high throughout the New Deal years, possibly as a result of this approach.
The recession of 1937 and recovery
The Roosevelt administration came under new assault during his second term, which played host to
a new dip in the Great Depression, starting in May of 1937 and continuing through June of 1938,
causing unemployment, at 14.3% for 1937, to rise to 19.0% for 1938 (in the United States,
monthly jobless figures were not compiled prior to 1948). The administration reacted by launching
a rhetorical campaign against monopoly power, which was cast as the cause of the new dip. The
president appointed an aggressive new direction of the antitrust division of the Justice Department,
which some economists blame for depressing economic activity further. This effort lost its
effectiveness once World War II, a far more pressing concern, began.