New Deal Causes and Effects

Written and fact-checked by The Editors of Encyclopaedia Britannica

Causes

The stock market crash of 1929 signaled the beginning of the Great Depression, the longest and most severe economic depression ever experienced by the western world.

Franklin D. RooseveltU.S. Pres. Franklin D. Roosevelt, 1933.
Library of Congress, Washington, D.C. (Digital File Number: cph 3c17121)

Reacting to the ineffectual response of the administration of U.S. President Herbert Hoover during the onset of the Great Depression, American voters overwhelmingly elected Franklin D. Roosevelt as the next president on his promise of creating opportunities for dispossessed and struggling Americans.

Roosevelt was opposed to the traditional American political philosophy of laissez-faire, the policy of minimum governmental interference in the economic affairs of individuals and society.

Because of the scale of the economic suffering of so many Americans, Roosevelt did not see a better solution to the immediate problem than swift executive intervention.

Roosevelt’s New Deal program generally embraced the concept of a government-regulated economy aimed at achieving a balance between conflicting economic interests.

Effects

New Deal legislation enacted early in Roosevelt’s administration established a range of new federal agencies, including the Civil Works Administration and the Civilian Conservation Corps to alleviate unemployment, the National Recovery Administration to revive industrial production, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission to regulate financial institutions, and the Tennessee Valley Authority to provide public power and flood control.

Works Progress Administration: museum aidMuseums in the United States were among the beneficiaries of Works Progress Administration (WPA) programs during the 1930s. The WPA was an agency of the New Deal.
Great Museums Television (A Britannica Publishing Partner)

Later New Deal legislation established the National Labor Relations Board, the Works Progress Administration, and the Social Security system.

Certain New Deal laws were declared unconstitutional by the U.S. Supreme Court on the grounds that neither commerce nor taxing provisions of the Constitution granted the federal government authority to regulate industry or to undertake social and economic reform. Roosevelt differed with the Court and in 1937 sought to pack the court (or expand it) to make it more amenable to his programs and federal initiatives. The ploy failed, but the Supreme Court ended up not ruling against all of Roosevelt’s reforms.

Despite resistance from business and conservative segments of the United States to the alleged “socialistic” ambitions or purposes of the New Deal, many of its reforms gradually achieved national acceptance.

Roosevelt’s domestic programs were largely followed in the Fair Deal of U.S. President Harry S. Truman (in office 1945–53), and both major political parties came to accept most New Deal reforms as a permanent part of the national life.

New Deal Key Facts

New Deal | Key Facts

New Deal Timeline

New Deal | Timeline