Hoover’s Failure

• The first phase of the federal response to the Great Depression included President Hoover’s attempts at increasing public works and exhorting unions, businesses, and farmers to cooperate to revive economic growth. His belief in voluntary self-reliance prevented him from using federal intervention to relieve human suffering and contributed to his underestimation of the financial collapse. Such programs as the Reconstruction Finance Corporation were too few and too late. By March 1933, the economy was shattered. Millions of Americans were without jobs, the basic necessities, and hope.

The First New Deal

• In 1933, newly inaugurated President Franklin Delano Roosevelt and his “brain trust” set out to restore the economy and public confidence. During his early months in office, Congress and Roosevelt enacted the First New Deal, which propped up the banking industry with the Federal Deposit Insurance Corporation, provided short-term emergency work relief in the form of jobs for the unemployed, promoted industrial recovery with the National Recovery Administration, and passed the Agricultural Adjustment Act intended to raise agricultural prices by encouraging farmers to cut production. Most of the early New Deal programs eased hardships but did not restore prosperity; they helped to end the economy’s downward spiral but still left millions unemployed and mired in poverty.

New Deal Under Fire

• The Supreme Court ruled that many of the First New Deal programs were unconstitutional violations of private property and states’ rights. Many conservatives criticized the New Deal for expanding the scope and reach of the federal government so much that it was steering the nation toward socialism. The “radio priest,” Father Charles E. Coughlin, charged that the New Deal was a Jewish-atheist-Communist conspiracy. Other critics did not think the New Deal reforms went far enough. Senator Huey Long of Louisiana and Dr. Francis Townsend of California proposed radical plans to reshape the distribution of wealth from the rich to the poor. African Americans criticized the widespread racial discrimination in New Deal policies and agencies.

The Second New Deal and the New Deal’s Legacy

• Roosevelt responded to the criticism and the continuing economic hardship with a Second New Deal, which sought to reshape the nation’s social structure by expanding the role of the federal government. Many of the programs making up the Second New Deal, such as the Works Progress Administration, Social Security, and the Wagner Act, aimed to achieve greater social justice by establishing new regulatory agencies and laying the foundation of a federal social welfare system. Frustrated by the Supreme Court’s opposition to the First New Deal, Roosevelt proposed his “Court-packing” scheme, but it was rejected by the Senate. Support for the New Deal began to lose steam amid the lingering effects of the Great Depression. However, the New Deal established the idea that the federal government should provide at least a minimal quality of life for all Americans, and it provided people with some security against a future crisis, reaffirming for millions a faith in American capitalism.