the new deal essay introduction

The New Deal — A Guide to FDR’s Plan for Relief, Recovery, and Reform

The New Deal was a series of programs and policies implemented in the 1930s by President Franklin Delano Roosevelt in response to severe economic and social issues in the United States.

President Franklin D. Roosevelt in 1944. Image Source: FDR Presidential Library & Museum on Flickr .

New Deal Summary

The New Deal was a series of programs and policies implemented in the 1930s by President Franklin Delano Roosevelt — commonly referred to as FDR — in response to severe economic and social issues in the United States. Each New Deal program and policy fell into one or more of three areas, known as the “Three Rs” — Relief, Recovery, and Reform.

At the end of the Roaring Twenties, the 1929 Stock Market Crash triggered the Great Depression started when the stock market crashed in 1929. Starting in 1931, the southwestern Great Plains suffered from a severe drought, which led to massive dust storms. The area was called “The Dust Bowl” and thousands of people were forced to abandon their homes and move west. In the wake of these events, Roosevelt ran for President in 1932, promising a “New Deal” for Americans, and defeated incumbent Herbert Hoover.

Roosevelt was inaugurated on March 4, 1933. In his First Inaugural Address, he delivered the famous line, “The only thing we have to fear is fear itself.” FDR moved quickly to ease the effects of the Depression on Americans by passing New Deal legislation during “The First Hundred Days” of his Presidency.

FDR started by restoring faith in banks, which had suffered due to the stock market crash of 1929. A Bank Holiday was declared and Congress followed by passing the Emergency Banking Relief Act, which allowed the government to inspect the financial health of banks before allowing them to reopen.

The New Deal aimed to tackle unemployment by creating programs that provided job opportunities. The Civil Works Administration (CWA) and the Civilian Conservation Corps (CCC) employed millions of Americans to work on infrastructure projects, such as building roads, bridges, and schools. Other programs, like the Tennessee Valley Authority (TVA), developed hydroelectric power plants to bring electricity to communities where none existed.

The New Deal also addressed labor relations by passing the National Labor Relations Act — also known as the (Wagner Act). It protected the rights of workers, allowing them to join unions and engage in collective bargaining. The act also established the Fair Labor Standards Act, which set a minimum wage for workers.

The New Deal programs and policies created a significant expansion of the Federal government. They also redefined the government’s role in dealing with economic and social issues. The New Deal was controversial when it was implemented, and its legacy continues to be debated by historians, economists, and others. However, the significance of the New Deal and its impact on the United States during the era leading up to World War II cannot be denied.

What did the New Deal do?

This video from the Daily Bellringer provides an overview of the New Deal and its programs. It also touches on the controversy caused by the New Deal which was caused by the expansion of the Federal Government.

New Deal Facts

• The name “New Deal” came from Franklin D. Roosevelt’s 1932 acceptance speech for the Democratic Party’s presidential nomination. In the speech, he said, “I pledge you, I pledge myself, to a new deal for the American people.”
• The New Deal was designed to deal with the economic and social issues created by the 1929 Stock Market Crash, the Great Depression, and the Dust Bow.
• On March 4, 1933, Franklin D. Roosevelt was elected President. He gave a speech on Capitol Plaza in Washington DC to 100,000 people. He said the “only thing we should be afraid of is fear itself.”
• He took action right away by calling Congress into a special session known as “The Hundred Days,” during which legislation was passed to deal with the Depression and provide economic aid to struggling Americans.
• In an effort to restore the public’s confidence in banks, FDR declared a Bank Holiday and Congress passed the Emergency Banking Relief Act.
• The New Deal dealt with unemployment by creating programs like the Civil Works Administration (CWA) and the Civilian Conservation Corps (CCC), providing jobs for millions of Americans and improving the nation’s infrastructure.
• The New Deal was followed by the Second New Deal, which included the National Labor Relations Act, the  Works Progress Administration, and the Social Security Act.
• The New Deal also included labor-related legislation, such as the National Labor Relations Act (Wagner Act) and the Fair Labor Standards Act, which gave workers the right to join unions, negotiate collectively, and established a minimum wage.
• The New Deal paved the way for the repeal of the 18th Amendment, which established Prohibition. The Beer-Wine Revenue Act of 1933 amended the Volstead Act by raising the amount of alcohol allowed to 3.2 percent and also levied a tax.
• Social programs established by the New Deal are still in effect today, including Social Security and the “Food Stamp Plan.”

New Deal AP US History (APUSH) Terms, Definitions, and FAQs

This section provides terms, definitions, and Frequently Asked Questions about the New Deal and the Second New Deal, including people, events, and programs. Also, be sure to look at our Guide to the AP US History Exam .

The New Deal was a series of policies and programs implemented by President Franklin D. Roosevelt during the 1930s in response to the Great Depression. The New Deal aimed to provide relief to the unemployed and poor, promote economic recovery, and reform the financial system. The New Deal included programs such as the Civilian Conservation Corps (CCC), the Federal Emergency Relief Administration (FERA), and the National Recovery Administration (NRA). It also created numerous agencies and programs such as the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and the Social Security Administration.

The second phase of the New Deal, which was enacted in 1935. The Second New Deal focused on providing economic security to Americans through the creation of Social Security and other welfare programs. It also included measures to stimulate the economy, such as the Works Progress Administration (WPA) and the National Labor Relations Act (NLRA). The Second New Deal was instrumental in helping to alleviate poverty and providing employment opportunities during the Great Depression.

FDR’s Alphabet Soup refers to the numerous programs and agencies created during Franklin D. Roosevelt’s presidency as part of the New Deal. These initiatives, often known by their acronyms, aimed to provide relief, recovery, and reform during the Great Depression. Examples include the CCC (Civilian Conservation Corps), the TVA (Tennessee Valley Authority), and the WPA (Works Progress Administration).

The New Deal was a series of economic programs and reforms enacted by President Franklin D. Roosevelt during the Great Depression. The New Deal sought to provide relief, recovery, and reform to the American economy. It included programs such as Social Security, the National Labor Relations Act (NLRA), and the Fair Labor Standards Act (FLSA). These programs were instrumental in helping to protect workers’ rights and providing employment opportunities during the Great Depression. However, the New Deal was controversial, with some arguing it was a “raw deal” for workers and others arguing that it helped to alleviate the suffering of millions of Americans.

The three Rs of the New Deal were 1) Relief for the needy, 2) Recovery of the economy, and 3) Reform of the financial system. Each of the New Deal Programs generally fell into one of these areas. The goal of the three Rs was to keep the United States from falling into another Economic Depression.

New Deal People and Groups

Herbert Hoover — Herbert Hoover served as the 31st President of the United States from 1929 to 1933. He faced the immense challenges of the Great Depression and was criticized for his belief in limited government intervention. Despite his efforts to address the crisis, Hoover’s presidency is often associated with economic hardships and the initial response to the Depression.

John L. Lewis — An American labor leader who was instrumental in the formation of the Congress of Industrial Organizations (CIO) in 1935. He was a key figure in the Second New Deal and helped to pass the National Labor Relations Act (NLRA). He was also responsible for leading several major strikes during the Great Depression, including the United Mine Workers strike of 1934. Lewis worked to protect workers’ rights and provide employment opportunities during the Great Depression.

Franklin D. Roosevelt — Franklin D. Roosevelt was the 32nd President of the United States, serving from 1933 to 1945. He was elected to the presidency during the Great Depression, and his presidency is closely associated with the New Deal, a series of policies and programs aimed at addressing the economic crisis and promoting economic recovery. He was re-elected for an unprecedented four terms and his leadership during the Great Depression and World War II solidified the role of the Federal government in the American economy and society.

Eleanor Roosevelt — The wife of Franklin D. Roosevelt and one of the most influential First Ladies in American history. She was an advocate for civil rights and women’s rights, and she used her position to promote social reform.

FDR’s Brain Trust — A group of advisors to President Franklin D. Roosevelt who helped him develop the New Deal. They included prominent academics and intellectuals such as Raymond Moley, Rexford Tugwell, and Adolf Berle.

New Deal Democrats —  New Deal Democrats were a faction within the Democratic Party during the 1930s and 1940s that supported Franklin D. Roosevelt’s New Deal policies. These Democrats supported increasing government intervention in the economy and expanding social welfare programs.

United Mine Workers — A labor union that was formed in 1890. The union was instrumental in the formation of the Congress of Industrial Organizations (CIO) in 1935 and led several major strikes during the Great Depression, including the United Mine Workers strike of 1934.

Hundred Days Congress — The Hundred Days Congress was a special session of the United States Congress that ran from March 9 to June 16, 1933. It was called in response to the economic crisis of the Great Depression and was used to pass a number of laws known as the New Deal. During this period, President Franklin D. Roosevelt proposed a series of sweeping reforms designed to provide relief for those affected by the depression, as well as to stimulate the economy. The Hundred Days Congress passed a number of laws, including the Emergency Banking Relief Act, the Glass-Steagall Act, and the National Industrial Recovery Act.

New Deal Events

1932 Presidential Election — The 1932 Presidential Election marked a pivotal moment in American history as the nation grappled with the Great Depression. It was primarily a contest between Republican incumbent Herbert Hoover and Democratic candidate Franklin D. Roosevelt (FDR). FDR emerged victorious, promising a “New Deal” to combat the Depression and implementing a series of reforms that fundamentally reshaped the role of the federal government.

Bank Holiday — A bank holiday is a period of time during which banks are closed, usually by government order. In 1933, President Franklin D. Roosevelt declared a national bank holiday in order to address the banking crisis caused by the Great Depression. During the holiday, which lasted four days, the government examined the books of all banks and only those that were found to be sound were allowed to reopen. This action helped stabilize the banking system and restore public confidence in banks.

Fireside Chats — The Fireside Chats were a series of radio addresses given by President Franklin D. Roosevelt during his presidency. The chats were designed to provide the American people with information about the government’s policies and actions and to explain the reasoning behind them in plain language. The chats were informal and conversational in tone, and they were delivered from the White House, often in the evening, giving the impression that Roosevelt was speaking directly to the American people from the warmth and comfort of their own homes. The Fireside Chats were a powerful tool for Roosevelt to communicate with the American people, build public support for his policies and maintain public confidence during a time of economic crisis.

Great Depression — The Great Depression refers to the severe economic downturn that occurred in the United States and other countries during the 1930s. It was characterized by widespread unemployment, poverty, and a sharp decline in industrial production and trade—ultimately leading to a fundamental restructuring of the American economy and significant social and political changes.

Roosevelt Recession — A period of economic contraction that occurred during the Great Depression, starting in 1937 and lasting until 1938. It was caused by a combination of factors, including President Franklin D. Roosevelt’s decision to reduce government spending, an increase in taxes, and the Federal Reserve’s decision to raise interest rates. This resulted in a decrease in consumer spending and investment, leading to a decrease in economic activity. The Roosevelt Recession was a major setback for the New Deal and led to increased unemployment and poverty.

United Mine Workers Strike of 1934 — A major strike led by the United Mine Workers Union during the Great Depression. The strike was in response to wage cuts and other grievances. It lasted for several months and resulted in a victory for the miners, who were able to secure higher wages and better working conditions.

New Deal Programs

Agricultural Adjustment Act (1933) — A law passed by Congress in 1933 as part of the New Deal. The AAA was designed to help farmers by providing subsidies for reducing crop production and encouraging soil conservation. It also established the Agricultural Adjustment Administration (AAA), which was responsible for implementing the provisions of the act. The AAA was instrumental in helping to stabilize agricultural prices and providing economic relief to farmers during the Great Depression.

Civilian Conservation Corps (CCC) — The CCC provided employment for young men between the ages of 18 and 25, who were paid to work on conservation projects such as planting trees, building roads, and constructing dams. The CCC also provided educational opportunities for its workers, including classes in literacy, math, and vocational skills. The CCC was instrumental in helping to restore the environment and providing employment opportunities during the Great Depression.

Civil Works Administration (CWA) — An agency created by the Federal Emergency Relief Act of 1933 as part of the New Deal. The CWA was responsible for providing jobs to millions of Americans during the Great Depression. It provided employment in construction, repair, and maintenance projects such as building roads, bridges, and public buildings. The CWA was instrumental in helping to alleviate poverty and providing employment opportunities during the Great Depression.

Emergency Banking Relief Act (1933) — A law passed by Congress in 1933 which allowed the federal government to provide emergency loans to banks in order to stabilize the banking system. The act was part of President Franklin D. Roosevelt’s New Deal and was designed to restore public confidence in the banking system. It provided for the reopening of solvent banks, the reorganization of insolvent banks, and the establishment of a Federal Deposit Insurance Corporation (FDIC) to insure deposits up to $2,500. The act was instrumental in helping to stabilize the banking system during the Great Depression and restoring public confidence in banks.

Federal Deposit Insurance Corporation (FDIC) — An independent agency of the United States government created in 1933 as part of the New Deal. The FDIC provides insurance for deposits up to a certain amount in member banks, protecting depositors from losses due to bank failures. The FDIC also regulates and supervises financial institutions to ensure that they are operating safely and soundly. It is one of the most important financial regulatory agencies in the United States and has helped to restore public confidence in the banking system.

Federal Emergency Relief Act (1933) — A law passed by Congress in 1933 as part of the New Deal. The FERA provided federal funds to states and local governments to create relief programs for the unemployed. It also established the Civil Works Administration (CWA), which was responsible for providing jobs to millions of Americans during the Great Depression. The FERA was instrumental in helping to alleviate poverty and providing employment opportunities during the Great Depression.

Federal Housing Administration (FHA) — An agency created by the National Housing Act of 1934 as part of the New Deal. The FHA was responsible for providing mortgage insurance to lenders, which allowed them to make home loans with lower down payments and easier credit requirements. This helped to increase homeownership and provided jobs to thousands of Americans during the Great Depression. The FHA helped stabilize the housing market and provide employment opportunities during the Great Depression.

Glass-Steagall Act (1933) — The Glass-Steagall Act was a law passed by Congress in 1933 as part of the New Deal. It was designed to separate commercial and investment banking, and it prohibited banks from engaging in certain types of speculative investments. The act also established the Federal Deposit Insurance Corporation (FDIC), which provided insurance for bank deposits up to a certain amount. The Glass-Steagall Act helped restore public confidence in the banking system and prevent another financial crisis.

National Industrial Recovery Act (1933) —  The National Industrial Recovery Act (NIRA) was a law passed by Congress in 1933 as part of the New Deal. It was designed to stimulate economic growth by providing government assistance to businesses, setting minimum wages and maximum hours for workers, and establishing codes of fair competition. The NIRA also established the National Recovery Administration (NRA), which was responsible for enforcing the provisions of the act. The NIRA was eventually declared unconstitutional by the Supreme Court in 1935.

The Public Works Administration (PWA) — An agency created by the National Recovery Administration of 1933 as part of the New Deal. The PWA was responsible for providing jobs to millions of Americans during the Great Depression. It provided employment in construction, repair, and maintenance projects such as building roads, bridges, and public buildings. The PWA played an important role in helping to alleviate poverty and providing employment opportunities during the Great Depression.

The Tennessee Valley Authority (TVA) — An agency created by the Tennessee Valley Authority Act of 1933 as part of the New Deal. The TVA was responsible for developing the infrastructure and resources of the Tennessee Valley region, including hydroelectric power, flood control, navigation, reforestation, and soil conservation. It also provided jobs to thousands of Americans during the Great Depression. The TVA played an important role in helping modernize the region and providing employment opportunities during the Great Depression.

Second New Deal Programs

Committee for Industrial Organizations (CIO) — An organization formed in 1935 as part of the Second New Deal. The CIO was responsible for organizing workers into unions and bargaining collectively with employers.

Fair Labor Standards Act (1938) — An act passed in 1938 as part of the Second New Deal. The Fair Labor Standards Act was responsible for establishing a minimum wage, overtime pay, and other labor standards.

National Labor Relations Act (1935) — An act passed in 1935 as part of the Second New Deal. The NLRA was responsible for protecting the rights of workers to organize and bargain collectively with their employers. It also established the National Labor Relations Board (NLRB), which was responsible for enforcing the provisions of the act.

Social Security Act (1935) — An act passed as part of the Second New Deal. The Social Security Act was responsible for providing economic security to Americans through the establishment of a federal retirement program and other welfare programs. It also provided unemployment insurance and disability benefits.

Wagner Act — Also known as the National Labor Relations Act (NLRA), it was passed in 1935 as part of the Second New Deal. The Wagner Act was responsible for protecting the rights of workers to organize and bargain collectively with their employers. It also established the National Labor Relations Board (NLRB), which was responsible for enforcing the provisions of the act.

Works Progress Administration (WPA) — An agency created by the Emergency Relief Appropriation Act of 1935 as part of the Second New Deal. The WPA was responsible for providing jobs to millions of Americans during the Great Depression. It funded a variety of projects, including construction, infrastructure development, and arts and culture programs. The WPA was instrumental in helping to stimulate the economy and providing employment opportunities during the Great Depression.

More New Deal Terms and Definitions

21st Amendment — The amendment to the U.S. Constitution that repealed the 18th Amendment and ended Prohibition. The 21st Amendment was ratified in 1933 as part of the New Deal and allowed states to regulate the sale and consumption of alcohol within their borders. It also gave states the power to collect taxes on alcohol sales, which provided a much-needed source of revenue during the Great Depression.

Boondoggling — A term coined by President Franklin D. Roosevelt to describe wasteful government spending on public works projects. The term was used to criticize the New Deal programs, which were seen as a form of government waste and corruption. Boondoggling became a popular term during the Great Depression and is still used today to refer to any wasteful or unnecessary government spending.

Tennessee River Valley — The Tennessee River Valley refers to the region in the southeastern United States encompassing parts of Tennessee, Alabama, and Kentucky. It gained prominence during the New Deal era due to the establishment of the Tennessee Valley Authority (TVA), a federal agency tasked with developing the area’s water resources, controlling flooding, and promoting economic development through hydroelectric power generation and irrigation projects.

National Parks — National Parks are protected areas designated by the federal government to preserve and showcase the country’s natural, historical, and cultural heritage. These areas, managed by the National Park Service, offer opportunities for recreation, conservation, and education. Notable examples include Yellowstone, Yosemite, and the Grand Canyon. National Parks serve as significant landmarks and contribute to the nation’s tourism industry and environmental conservation efforts.

Why is the New Deal important?

The New Deal is important to United States history for several reasons:

1. Response to the Great Depression: The New Deal was a direct response to the economic crisis of the Great Depression, which was one of the most challenging periods in American history. It represented a major shift in the role of the federal government in addressing economic issues and providing relief to citizens.

2. Economic Recovery and Relief: The New Deal implemented a range of programs and policies aimed at stabilizing the economy, creating jobs, and providing relief to those affected by the Great Depression. It helped alleviate immediate suffering and provided assistance to millions of Americans through employment, financial aid, and social welfare programs.

3. Expansion of Federal Government Power: The New Deal marked a significant expansion of the federal government’s role in regulating the economy and addressing social issues. It introduced new agencies and programs, such as the Works Progress Administration (WPA) and Social Security, that had long-lasting impacts on American society and established a precedent for increased government intervention in the economy.

4. Transformation of American Society: The New Deal’s programs had a transformative effect on American society. It brought about improvements in infrastructure, public works, and conservation projects, enhancing the nation’s physical landscape. It also introduced labor reforms, such as the right to unionize and the establishment of minimum wage standards, which aimed to improve working conditions and workers’ rights.

5. Legacy and Long-Term Impacts: Many of the programs and policies initiated during the New Deal era had lasting impacts on American society. Social Security, for example, continues to provide financial security to elderly and disabled Americans. The New Deal also shaped the political landscape, as the Democratic Party under FDR gained support from various social groups and established a coalition that would dominate American politics for decades.

• Written by Randal Rust

The New Deal

The election of Franklin D. Roosevelt in 1932 resulted in the New Deal he proposed, a fundamental shift in the American political economy and a new conception of the relationship between the government and the governed.

Though less overtly critical of the Constitution than the early progressives, FDR largely ignored it, saying only that it was “so simple and practical that it is possible always to meet extraordinary needs by change in emphasis and arrangement without loss of essential form” (Franklin D. Roosevelt, “First Inaugural Address, March 4, 1932).

The New Deal redefined the purpose of government. No longer was it enough for the government to protect the rights of individuals. The Founders’ regime of limited government, Roosevelt believed, had created a new class of industrial titans, “malefactors of great wealth,” who had acquired tyrannical power over farmers, small businessmen, consumers, and workers. It was now necessary for the government to redress this imbalance of power, to redistribute income and wealth, and to provide economic security for the victims of the old system. In the 1932 campaign he called for “an economic declaration of rights,” a new Bill of Rights that would provide citizens with such goods as jobs, housing, education, recreation, and health care.

In the 1932 campaign Franklin D. Roosevelt called for “an economic declaration of rights,” a new Bill of Rights that would provide citizens with such goods as jobs, housing, education, recreation, and health care.

Roosevelt’s initial strategy was to promote a system of industrial and agricultural cartels created by government.

The Agricultural Adjustment Act would enable farmers to limit crop production in order to increase the prices they got, with government subsidies if those prices were not reached, paid for by taxes on processors of farm commodities. The National Industrial Recovery Act invited industries to devise “codes of fair competition”—to limit production, raise prices, and agree to bargain with labor unions. The New Dealers hoped that these schemes would produce reliable profits for businessmen and farmers, who would then increase their own spending and hiring, and thus facilitate economic recovery. They had, however, clearly failed by the time the Supreme Court declared them unconstitutional in 1935 and 1936.

The administration did not abandon its initial strategy. A “second New Deal” followed further Democratic victories in 1934 and adjusted to the Court’s constitutional objections—for example, by providing benefits to farmers from general revenue and promoting crop reduction as “soil conservation.” It enacted more specific price- and production-fixing measures for particular industries like coal, oil, and motor transportation. It promoted labor unions with the National Labor Relations (Wagner) Act, which compelled employers to bargain exclusively with whatever organization a majority of its workers chose to represent them. It regulated capital markets by the Securities and Exchange Commission and passed legislation strengthening the power of the Federal Reserve Board. It also embarked on massive public works spending and government employment programs, adopting and gradually applying the economic philosophy of John Maynard Keynes that government spending was the cure for depression and unemployment. Congress also provided long-term policies for old-age pensions, unemployment insurance, and insurance for widows and orphans in the Social Security Act of 1935. This was said to be insurance paid for by one’s earnings, rather than a welfare payment.

Large Democratic majorities in Congress accepted the proposals of the president, but the Supreme Court remained an obstacle. Roosevelt said nothing about the Court when he ran for re-election in 1936, winning a landslide victory that increased Democratic congressional majorities still further. A month after his second inauguration, he asked Congress to increase the size of the Supreme Court so that he could appoint six new justices. This “Court-packing plan” shocked the country, split the Democratic party, and went down to defeat. Except for the Fair Labor Standards Act of 1938, which established a national minimum wage and abolished child labor, Congress did not enact any further New Deal legislation. But the Court responded to the threat by abandoning its objections to New Deal programs, so Roosevelt was able to claim that he had “lost the battle but won the war.”

Upholding the Wagner Act and Social Security Act, as well as state economic regulations, the Court no longer used the due process clause of the Fourteenth and Fifth Amendments or the dual federalism of the Tenth Amendment, to protect property rights.

Charles Evans Hughes was Chief Justice of the Supreme Court from 1930-1941

After 1937, the Court stepped aside when it came to economic regulations. The states were free to exercise their police powers to legislate for the safety, health, welfare and morals of the people, unrestrained by the Fourteenth Amendment, the due process clause of which had been held to protect fundamental economic freedoms such as the “liberty of contract.” Congress could do [virtually anything] under the interstate commerce power and its power to tax and spend. The Court declared in the 1938 case of  U.S. v. Carolene Products  that it would apply a stricter standard of constitutional protection to non-economic rights and the rights of minority groups especially.

The Second World War had many of the same effects as the First, establishing a wartime economy in which the government controlled prices and rationed scarce goods in the Office of Price Administration, one of many new agencies. Government control of the wartime economy included extraordinarily high rates of taxation, inflation, the promotion of labor unions, wage and price controls, and outright rationing. The Second World War, like the First, produced a public reaction against these economic controls after the war ended. But the most important New Deal programs survived the postwar readjustment and many of them, like Social Security, expanded. Liberals were disappointed that they were unable to bring the New Deal to completion, as President Harry Truman proposed in his “Fair Deal” campaign. Conservatives were disappointed that the Republican Eisenhower administration did not roll back the New Deal. Labor unions continued to grow, but their powers were limited by the Taft-Hartley Act of 1947, whose most important provision permitted states to prohibit agreements that compelled workers to join unions. Over time, more capital would be invested and economic growth would occur in these “right to work” states of the South and West.

The New Deal and the war had produced a myriad of administrative agencies that combining legislative, executive and judicial functions.

These powers were largely confirmed in the Administrative Procedure Act of 1946, which attempt to guarantee due process to persons and companies who were accused to violating administrative regulations. As the Cold War settled in, especially with the outbreak of the Korean War in 1950, many elements of the wartime economy in both world wars, such as conscription, continued after World War II. President Dwight D. Eisenhower warned about an excessively militarized economy—what he called the “military-industrial complex”—in his 1961 farewell address (Dwight D. Eisenhower, “Farewell Address,” January 17, 1961). At the height of the Cold War the U.S. spent 10 percent of its gross domestic product on defense.

The twenty years following World War II were prosperous. Economic growth was slow but widely shared; this period saw less income inequality (measured by the share of national income going to the top and bottom quintiles of the population) than any before or since.

American producers were temporarily ahead of foreign competition, and American workers similarly benefited from laws that severely limited immigration until 1965. These were the years of the “big-unit economy,” in which a small number of firms dominated their markets, and the country valued stability and equality above entrepreneurial risk-taking. Policymakers believed that modern, Keynesian economics, by which government fiscal powers could prevent depressions and inflation, now enabled the government to ensure growth and full employment without excessive inflation. In the generation after the Second World War, the American people had great confidence in the government. This fed another great expansion of progressivism, now called liberalism, in the “Great Society” of the 1960s.

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By: History.com Editors

Updated: March 28, 2023 | Original: October 29, 2009

The New Deal was a series of programs and projects instituted during the Great Depression by President Franklin D. Roosevelt that aimed to restore prosperity to Americans. When Roosevelt took office in 1933, he acted swiftly to stabilize the economy and provide jobs and relief to those who were suffering. Over the next eight years, the government instituted a series of experimental New Deal projects and programs, such as the CCC , the WPA , the TVA, the SEC and others. Roosevelt’s New Deal fundamentally and permanently changed the U.S. federal government by expanding its size and scope—especially its role in the economy.

New Deal for the American People

On March 4, 1933, during the bleakest days of the Great Depression , newly elected President Franklin D. Roosevelt delivered his first inaugural address before 100,000 people on Washington’s Capitol Plaza.

“First of all,” he said, “let me assert my firm belief that the only thing we have to fear is fear itself.”

He promised that he would act swiftly to face the “dark realities of the moment” and assured Americans that he would “wage a war against the emergency” just as though “we were in fact invaded by a foreign foe.” His speech gave many people confidence that they’d elected a man who was not afraid to take bold steps to solve the nation’s problems.

Did you know? Unemployment levels in some cities reached staggering levels during the Great Depression: By 1933, Toledo, Ohio's had reached 80 percent, and nearly 90 percent of Lowell, Massachusetts, was unemployed.

The next day, Roosevelt declared a four-day bank holiday to stop people from withdrawing their money from shaky banks. On March 9, Congress passed Roosevelt’s Emergency Banking Act, which reorganized the banks and closed the ones that were insolvent.

In his first “ fireside chat ” three days later, the president urged Americans to put their savings back in the banks, and by the end of the month almost three quarters of them had reopened.

The First Hundred Days

Roosevelt’s quest to end the Great Depression was just beginning, and would ramp up in what came to be known as “ The First 100 Days .” Roosevelt kicked things off by asking Congress to take the first step toward ending Prohibition —one of the more divisive issues of the 1920s—by making it legal once again for Americans to buy beer. (At the end of the year, Congress ratified the 21st Amendment and ended Prohibition for good.)

In May, he signed the Tennessee Valley Authority Act into law, creating the TVA and enabling the federal government to build dams along the Tennessee River that controlled flooding and generated inexpensive hydroelectric power for the people in the region.

That same month, Congress passed a bill that paid commodity farmers (farmers who produced things like wheat, dairy products, tobacco and corn) to leave their fields fallow in order to end agricultural surpluses and boost prices.

June’s National Industrial Recovery Act guaranteed that workers would have the right to unionize and bargain collectively for higher wages and better working conditions; it also suspended some antitrust laws and established a federally funded Public Works Administration.

In addition to the Agricultural Adjustment Act, the Tennessee Valley Authority Act and the National Industrial Recovery Act, Roosevelt had won passage of 12 other major laws, including the Glass-Steagall Act (an important banking bill) and the Home Owners’ Loan Act, in his first 100 days in office.

Almost every American found something to be pleased about and something to complain about in this motley collection of bills, but it was clear to all that FDR was taking the “direct, vigorous” action that he’d promised in his inaugural address.

Second New Deal

Despite the best efforts of President Roosevelt and his cabinet, however, the Great Depression continued. Unemployment persisted, the economy remained unstable, farmers continued to struggle in the Dust Bowl and people grew angrier and more desperate.

So, in the spring of 1935, Roosevelt launched a second, more aggressive series of federal programs, sometimes called the Second New Deal.

In April, he created the Works Progress Administration (WPA) to provide jobs for unemployed people. WPA projects weren’t allowed to compete with private industry, so they focused on building things like post offices, bridges, schools, highways and parks. The WPA also gave work to artists, writers, theater directors and musicians.

In July 1935, the National Labor Relations Act , also known as the Wagner Act, created the National Labor Relations Board to supervise union elections and prevent businesses from treating their workers unfairly. In August, FDR signed the Social Security Act of 1935, which guaranteed pensions to millions of Americans, set up a system of unemployment insurance and stipulated that the federal government would help care for dependent children and the disabled.

In 1936, while campaigning for a second term, FDR told a roaring crowd at Madison Square Garden that “The forces of ‘organized money’ are unanimous in their hate for me—and I welcome their hatred.”

He went on: “I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match, [and] I should like to have it said of my second Administration that in it these forces have met their master.”

This FDR had come a long way from his earlier repudiation of class-based politics and was promising a much more aggressive fight against the people who were profiting from the Depression-era troubles of ordinary Americans. He won the election by a landslide.

Still, the Great Depression dragged on. Workers grew more militant: In December 1936, for example, the United Auto Workers strike at a GM plant in Flint, Michigan lasted for 44 days and spread to some 150,000 autoworkers in 35 cities.

By 1937, to the dismay of most corporate leaders, some 8 million workers had joined unions and were loudly demanding their rights.

The End of the New Deal?

Meanwhile, the New Deal itself confronted one political setback after another. Arguing that they represented an unconstitutional extension of federal authority, the conservative majority on the Supreme Court had already invalidated reform initiatives like the National Recovery Administration and the Agricultural Adjustment Administration.

In order to protect his programs from further meddling, in 1937 President Roosevelt announced a plan to add enough liberal justices to the Court to neutralize the “obstructionist” conservatives.

This “ Court-packing ” turned out to be unnecessary—soon after they caught wind of the plan, the conservative justices started voting to uphold New Deal projects—but the episode did a good deal of public-relations damage to the administration and gave ammunition to many of the president’s Congressional opponents.

That same year, the economy slipped back into a recession when the government reduced its stimulus spending. Despite this seeming vindication of New Deal policies, increasing anti-Roosevelt sentiment made it difficult for him to enact any new programs.

On December 7, 1941, the Japanese bombed Pearl Harbor and the United States entered World War II . The war effort stimulated American industry and, as a result, effectively ended the Great Depression .

The New Deal and American Politics

From 1933 until 1941, President Roosevelt’s New Deal programs and policies did more than just adjust interest rates, tinker with farm subsidies and create short-term make-work programs.

They created a brand-new, if tenuous, political coalition that included white working people, African Americans and left-wing intellectuals. More women entered the workforce as Roosevelt expanded the number of secretarial roles in government. These groups rarely shared the same interests—at least, they rarely thought they did— but they did share a powerful belief that an interventionist government was good for their families, the economy and the nation.

Their coalition has splintered over time, but many of the New Deal programs that bound them together—Social Security, unemployment insurance and federal agricultural subsidies, for instance—are still with us today.

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Chapter 26: Franklin Roosevelt and the New Deal 1932-1941

The First New Deal

Learning objectives.

By the end of this section, you should be able to:

• Identify the key pieces of legislation included in Roosevelt’s “First New Deal”
• Assess the strengths, weaknesses, and general effectiveness of the First New Deal
• Explain Roosevelt’s overall vision for addressing the structural problems in the U.S. economy

Much like a surgeon assessing the condition of an emergency room patient, Roosevelt began his administration with a broad, if not specific, strategy in mind: a combination of relief and recovery programs designed to first save the patient (in this case, the American people), and then to find a long-term cure (reform through federal regulation of the economy). What later became known as the “First New Deal” ushered in a wave of legislative activity seldom before seen in the history of the country. By the close of 1933, in an effort to stem the crisis, Congress had passed over fifteen significant pieces of legislation–many of the circulated bills allegedly still wet with ink from the printing presses as members voted upon them. Most bills could be grouped around issues of relief, recovery, and reform. At the outset of the First New Deal, specific goals included 1) bank reform; 2) job creation; 3) economic regulation; and 4) regional planning.

REFORM: THE BANKING CRISIS

When Roosevelt took office, he faced one of the worst moments in the country’s banking-history. States were in disarray. New York and Illinois had ordered the closure of their banks in the hopes of avoiding further “bank runs,” which occurred when hundreds (if not thousands) of individuals ran to their banks to withdraw all of their savings. In all, over five thousand banks had been shuttered. Within forty-eight hours of his inauguration, Roosevelt proclaimed an official bank holiday and called Congress into a special session to address the crisis. The resulting Emergency Banking Act of 1933 was signed into law on March 9, 1933, a scant eight hours after Congress first saw it. The law officially took the country off the gold standard, a restrictive practice that, although conservative and traditionally viewed as safe, severely limited the circulation of paper money. Those who held gold were told to sell it to the U.S. Treasury for a discounted rate of a little over twenty dollars per ounce. Furthermore, dollar bills were no longer redeemable in gold. The law also gave the comptroller of currency the power to reorganize all national banks faced with insolvency, a level of federal oversight seldom seen prior to the Great Depression. Between March 11 and March 14, auditors from the Reconstruction Finance Corporation, the Treasury Department, and other federal agencies swept through the country, examining each bank. By March 15, 70 percent of the banks were declared solvent and allowed to reopen.

On March 12, the day before the banks were set to reopen, Roosevelt held his first “fireside chat” (Figure 26.5). In this initial radio address to the American people, he explained what the bank examiners had been doing over the previous week. He assured people that any bank open the next day had the federal government’s stamp of approval. The combination of his reassuring manner and the promise that the government was addressing the problems worked wonders in changing the popular mindset. Just as the culture of panic had contributed to the country’s downward spiral after the crash, so did this confidence-inducing move help to build it back up. Consumer confidence returned, and within weeks, close to $1 billion in cash and gold had been brought out from under mattresses and hidden bookshelves, and re-deposited in the nation’s banks. The immediate crisis had been quelled, and the public was ready to believe in their new president.

The Power of Hearth and Home

Fireside chats–Roosevelt’s weekly radio addresses–underscored Roosevelt’s savvy in understanding how best to reach people. Using simple terms and a reassuring tone, he invoked a family patriarch sitting by the fire, explaining to those who trusted him how he was working to help them. It is worth noting how he explained complex financial concepts quite simply, but at the same time, complimented the American people on their “intelligent support.” One of his fireside chats is provided below:

I recognize that the many proclamations from State capitols and from Washington, the legislation, the Treasury regulations, etc., couched for the most part in banking and legal terms, should be explained for the benefit of the average citizen. I owe this in particular because of the fortitude and good temper with which everybody has accepted the inconvenience and hardships of the banking holiday. I know that when you understand what we in Washington have been about I shall continue to have your cooperation as fully as I have had your sympathy and help during the past week….

The success of our whole great national program depends, of course, upon the cooperation of the public–on its intelligent support and use of a reliable system…. After all, there is an element in the readjustment of our financial system more important than currency, more important than gold, and that is the confidence of the people. Confidence and courage are the essentials of success in carrying out our plan. You people must have faith; you must not be stampeded by rumors or guesses. Let us unite in banishing fear. We have provided the machinery to restore our financial system; it is up to you to support and make it work. It is your problem no less than it is mine. Together we cannot fail. –Franklin D. Roosevelt, March 12, 1933

A huge part of Roosevelt’s success in turning around the country can be seen in his addresses like these: He built support and galvanized the public. Ironically, Roosevelt, the man who famously said we have nothing to fear but fear itself, had a significant fear: fire. Being paralyzed with polio, he was very afraid of being left near a fireplace. But he knew the power of the hearth and home, and drew on this mental image to help the public view him the way that he hoped to be seen.

Click and Explore

Visit the American Presidency Project to listen to one of Roosevelt’s fireside chats. What kind of feeling does his language and demeanor evoke?

In June 1933, Roosevelt replaced the Emergency Banking Act with the more permanent Glass-Steagall Banking Act. This law prohibited commercial banks from engaging in investment banking, therefore stopping the practice of banks speculating in the stock market with deposits. This law also created the Federal Deposit Insurance Corporation, or FDIC, which insured personal bank deposits up to $2,500. Other measures designed to boost confidence in the overall economy beyond the banking system included passage of the Economy Act, which fulfilled Roosevelt’s campaign pledge to reduce government spending by reducing salaries, including his own and those of the Congress. He also signed into law the Securities Act, which required full disclosure to the federal government from all corporations and investment banks that wanted to market stocks and bonds. Roosevelt also sought new revenue through the Beer Tax. As the Twenty-First Amendment, which would repeal the Eighteenth Amendment establishing Prohibition, moved towards ratification, this law authorized the manufacture of 3.2 percent beer and levied a tax on it.

THE FIRST HUNDRED DAYS

In his first hundred days in office, the new president pushed forward an unprecedented number of new bills, all geared towards stabilizing the economy, providing relief to individuals, creating jobs, and helping businesses. A sympathetic Democrat-controlled Congress helped propel his agenda forward.

Relief: Employment for the Masses

Even as he worked to rebuild the economy, Roosevelt recognized that the unemployed millions required jobs more quickly than the economy could provide. In a push to create new jobs, Roosevelt signed the Wagner-Peyser Act, creating the United States Employment Service, which promised states matching funds if they created local employment opportunities. He also authorized $500 million in direct grants through the Federal Emergency Relief Act (FERA). This money went directly to states to infuse relief agencies with the much-needed resources to help the nearly fifteen million unemployed. These two bills illustrate Roosevelt’s dual purposes of providing short-term emergency help and building employment opportunities that would strengthen the economy in the long term.

Roosevelt was aware of the need for immediate help, but he mostly wanted to create more jobs. FERA overseer Harry Hopkins, who later was in charge of the Civil Works Administration (CWA), shared this sentiment. With Hopkins at its helm, the CWA, founded in early 1933, went on to put millions of men and women to work. At its peak, there were some four million Americans repairing bridges, building roads and airports, and undertaking other public projects. Another work program was the Civilian Conservation Corps Relief Act (CCC). The CCC provided government jobs for young men aged fourteen to twenty-four who came from relief families. They would earn thirty dollars per month planting trees, fighting forest fires, and refurbishing historic sites and parks, building an infrastructure that families would continue to enjoy for generations to come. Within the first two months, the CCC employed its first 250,000 men and eventually established about twenty-five hundred camps (Figure 26.6).

The various programs that made up the First New Deal are listed in the table below (Table 26.1).

The final element of Roosevelt’s efforts to provide relief to those in desperate straits was the Home Owners’ Refinancing Act. Created by the Home Owners’ Loan Corporation (HOLC), the program rescued homeowners from foreclosure by refinancing their mortgages. Not only did this save the homes of countless homeowners, but it also saved many of the small banks who owned the original mortgages by relieving them of that responsibility. Later New Deal legislation created the Federal Housing Authority, which eventually standardized the thirty-year mortgage and promoted the housing boom of the post-World War II era. A similar program, created through the Emergency Farm Mortgage Act and Farm Credit Act, provided the same service for farm mortgages.

Rescuing Farms and Factories

While much of the legislation of the first hundred days focused on immediate relief and job creation through federal programs, Roosevelt was committed to addressing the underlying problems inherent in the American economy. In his efforts to do so, he created two of the most significant pieces of New Deal legislation: the Agricultural Adjustment Act (AAA) and the National Industry Recovery Act (NIRA).

Farms around the country were suffering, but from different causes. In the Great Plains, drought conditions meant that little was growing at all, while in the South, bumper crops and low prices meant that farmers could not sell their goods at prices that could sustain them. The AAA offered some direct relief: Farmers received $4.5 million through relief payments. But the larger part of the program paid southern farmers to reduce their production: Wheat, cotton, corn, hogs, tobacco, rice, and milk farmers were all eligible. Passed into law on May 12, 1933, it was designed to boost prices to a level that would alleviate rural poverty and restore profitability to American agriculture. These price increases would be achieved by encouraging farmers to limit production in order to increase demand while receiving cash payments in return. Corn producers would receive thirty cents per bushel for corn they did not grow. Hog farmers would get five dollars per head for hogs not raised. The program would be financed by a tax on processing plants, passed on to consumers in the form of higher prices.

This was a bold attempt to help farmers address the systemic problems of overproduction and lower commodity prices. Despite previous efforts to regulate farming through subsidies, never before had the federal government intervened on this scale; the notion of paying farmers not to produce crops was unheard of. One significant problem, however, was that, in some cases, there was already an excess of crops, in particular, cotton and hogs, which clogged the marketplace. A bumper crop in 1933, combined with the slow implementation of the AAA, led the government to order the plowing under of ten million acres of cotton, and the butchering of six million baby pigs and 200,000 sows. Although it worked to some degree–the price of cotton increased from six to twelve cents per pound–this move was deeply problematic. Critics saw it as the ultimate example of corrupt capitalism: a government destroying food, while its citizens were starving, in order to drive up prices.

Another problem plaguing this relief effort was the disparity between large commercial farms, which received the largest payments and set the quotas, and the small family farms that felt no relief. Large farms often cut production by laying off sharecroppers or evicting tenant farmers, making the program even worse for them than for small farm owners. Their frustration led to the creation of the Southern Tenant Farmers Union (STFU), an interracial organization that sought to gain government relief for these most disenfranchised of farmers. The STFU organized, protested, and won its members some wage increases through the mid-1930s, but the overall plight of these workers remained dismal. As a result, many of them followed the thousands of Dust Bowl refugees to California (Figure 26.7).

Labor Songs and the Southern Tenant Farmers Union

And if the growers get in the way, we’re gonna roll right over them We’re gonna roll right over them, we’re gonna roll right over them And if the growers get in the way, we’re gonna roll right over them We’re gonna roll this union on –John Handcox, “Roll the Union On”

“Mean Things Happening in This Land,” “Roll the Union On,” and “Strike in Arkansas” are just a few of the folk songs written by John Handcox. A union organizer and STFU member, Handcox became the voice of the worker’s struggle, writing dozens of songs that have continued to be sung by labor activists and folk singers over the years. Handcox joined the STFU in 1935, and used his songs to rally others, stating, “I found out singing was more inspiring than talking … to get the attention of the people.”

Racially integrated and with active women members, the STFU was ahead of its time. Although criticized by other union leaders for its relationship with the Communist Party in creating the “Popular Front” for labor activism in 1934, the STFU succeeded in organizing strikes and bringing national attention to the issues that tenant farmers faced. While the programs Roosevelt put in place did not do enough to help these farmers, the STFU–and Handcox’s music–remains a relevant part of the country’s labor movement.

The AAA did succeed on some fronts. By the spring of 1934, farmers had formed over four thousand local committees, with more than three million farmers agreeing to participate. They signed individual contracts agreeing to take land out of production in return for government payments, and checks began to arrive by the end of 1934. For some farmers, especially those with large farms, the program spelled relief.

While Roosevelt hoped the AAA would help farms and farmers, he also sought aid for the beleaguered manufacturing sector. The Emergency Railroad Transportation Act created a national railroad office to encourage cooperation among different railroad companies, hoping to shore up an industry essential to the stability of the manufacturing sector, but one that had been devastated by mismanagement. More importantly, the NIRA suspended antitrust laws and allowed businesses and industries to work together in order to establish codes of fair competition, including issues of price setting and minimum wages. New Deal officials believed that allowing these collaborations would help industries stabilize prices and production levels in the face of competitive overproduction and declining profits; however, at the same time, many felt it important to protect workers from potentially unfair agreements.

A new government agency, the National Recovery Administration (NRA), was central to this plan, and mandated that businesses accept a code that included minimum wages and maximum work hours. In order to protect workers from potentially unfair agreements among factory owners, every industry had its own “code of fair practice” that included workers’ rights to organize and use collective bargaining to ensure that wages rose with prices (Figure 26.8). Headed by General Hugh S. Johnson, the NRA worked to create over five hundred different codes for different industries. The administration of such a complex plan naturally created its own problems. While codes for key industries such as automotive and steel made sense, Johnson pushed to create similar codes for dog food manufacturers, those who made shoulder pads for women’s clothing, and even burlesque shows (regulating the number of strippers in any one show).

The NIRA also created the Public Works Administration (PWA). The PWA set aside $3.3 billion to build public projects such as highways, federal buildings, and military bases. Although this program suffered from political squabbles over appropriations for projects in various congressional districts, as well as significant underfunding of public housing projects, it ultimately offered some of the most lasting benefits of the NIRA. Secretary of the Interior Harold Ickes ran the program, which completed over thirty-four thousand projects, including the Golden Gate Bridge in San Francisco and the Queens-Midtown Tunnel in New York. Between 1933 and 1939, the PWA accounted for the construction of over one-third of all new hospitals and 70 percent of all new public schools in the country.

Figure 26.8 Consumers were encouraged to buy from companies displaying the Blue Eagle (a), the logo signifying compliance with the new NRA regulations. With talons gripping a gear, representing industry, and lightning bolts, representing power, the eagle (b) was intended to be a symbol of economic recovery.] Another challenge faced by the NRA was that the provision granting workers the right to organize appeared to others as a mandate to do so. In previously unorganized industries, such as oil and gas, rubber, and service occupations, workers now sought groups that would assist in their organization, bolstered by the encouragement they now felt from the government. The Communist Party took advantage of the opportunity to assist in the hope of creating widespread protests against the American industrial structure. The number of strikes nationwide doubled between 1932 and 1934, with over 1.5 million workers going on strike in 1934 alone, often in protests that culminated in bloodshed. A strike at the Auto-Lite plant in Toledo, Ohio, that summer resulted in ten thousand workers from other factories joining in sympathy with their fellow workers to attack potential strike-breakers with stones and bricks. Simultaneously in Minneapolis, a teamsters strike resulted in frequent, bloody confrontations between workers and police, leading the governor to contemplate declaring martial law before the companies agreed to negotiate better wages and conditions for the workers. Finally, a San Francisco strike among 14,000 longshoremen closed the city’s waterfront and eventually led to a city-wide general strike of over 130,000 workers, essentially paralyzing the city. Clashes between workers, and police and National Guardsmen left many strikers bloodied, and at least two dead.

Although Roosevelt’s relief efforts provided jobs to many and benefitted communities with the construction of several essential building projects, the violence that erupted amid clashes between organized labor and factories backed by police and the authorities exposed a fundamental flaw in the president’s approach. Immediate relief did not address long-existing, inherent class inequities that left workers exposed to poor working conditions, low wages, long hours, and little protection. For many workers, life on the job was not much better than life as an unemployed American. Employment programs may have put men back to work and provided much needed relief, but the fundamental flaws in the system required additional attention–attention that Roosevelt was unable to pay in the early days of the New Deal. Critics were plentiful, and the president would be forced to address them in the years ahead.

Regional Planning

Regionally, Roosevelt’s work was most famously seen in the Tennessee Valley Authority (TVA) (Figure 26.9), a federal agency tasked with the job of planning and developing the area through flood control, reforestation, and hydroelectric power. Employing several thousand Americans on a project that Roosevelt envisioned as a template for future regional redevelopment, the TVA revitalized a river valley that landowners had badly over-farmed, leaving behind eroded soil that lacked essential nutrients for future farming. Under the direction of David Lilienthal, beginning in 1933, the TVA workers erected a series of dams to harness the Tennessee River in the creation of much-needed hydroelectric power. The arrival of both electric lighting and machinery to the region eased the lives of the people who lived there, as well as encouraged industrial growth. The TVA also included an educational component, teaching farmers important lessons about crop rotation, soil replenishment, fertilizing, and reforestation.

The TVA was not without its critics, however, most notably among the fifteen thousand families who were displaced due to the massive construction projects. Although eventually the project benefited farmers with the introduction of new farming and fertilizing techniques, as well as the added benefit of electric power, many local citizens were initially mistrustful of the TVA and the federal government’s agenda. Likewise, as with several other New Deal programs, women did not directly benefit from these employment opportunities, as they were explicitly excluded for the benefit of men who most Americans still considered the family’s primary breadwinner. However, with the arrival of electricity came new industrial ventures, including several textile mills up and down the valley, several of which offered employment to women. Throughout his presidency, Roosevelt frequently pointed to the TVA as one of the glowing accomplishments of the New Deal and its ability to bring together the machinery of the federal government along with private interests to revitalize a regional economy. Just months before his death in 1945, he continued to speak of the possibility of creating other regional authorities throughout the country.

ASSESSING THE FIRST NEW DEAL

While many were pleased with the president’s bold plans, there were numerous critics of the New Deal, discussed in the following section. The New Deal was far from perfect, but Roosevelt’s quickly implemented policies reversed the economy’s long slide. It put new capital into ailing banks. It rescued homeowners and farmers from foreclosure and helped people keep their homes. It offered some direct relief to the unemployed poor. It gave new incentives to farmers and industry alike, and put people back to work in an effort to both create jobs and boost consumer spending. The total number of working Americans rose from twenty-four to twenty-seven million between 1933 and 1935, in contrast to the seven-million-worker decline during the Hoover administration. Perhaps most importantly, the First New Deal changed the pervasive pessimism that had held the country in its grip since the end of 1929. For the first time in years, people had hope.

It was the hard work of Roosevelt’s advisors–the “Brains Trust” of scholars and thinkers from leading universities–as well as Congress and the American public who helped the New Deal succeed as well as it did. Ironically, it was the American people’s volunteer spirit, so extolled by Hoover, that Roosevelt was able to harness. The first hundred days of his administration was not a master plan that Roosevelt dreamed up and executed on his own. In fact, it was not a master plan at all, but rather a series of, at times, disjointed efforts made from different assumptions. But after taking office and analyzing the crisis, Roosevelt and his advisors did feel that they had a larger sense of what had caused the Great Depression and thus attempted a variety of solutions to fix it. They believed that it was caused by abuses on the part of a small group of bankers and businessmen, aided by Republican policies that built wealth for a few at the expense of many. The answer, they felt, was to root out these abuses through banking reform, as well as adjust production and consumption of both farm and industrial goods. This adjustment would come about by increasing the purchasing power of everyday people, as well as through regulatory policies like the NRA and AAA. While it may seem counterintuitive to raise crop prices and set prices on industrial goods, Roosevelt’s advisors sought to halt the deflationary spiral and economic uncertainty that had prevented businesses from committing to investments and consumers from parting with their money.

U.S. History Copyright © 2014 by OpenStax is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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Module 9: The New Deal (1932-1941)

Introduction to the first new deal, what you’ll learn to do: summarize roosevelt’s first new deal.

Figure 1. A radio broadcast by President Roosevelt.

After assuming the presidency, Roosevelt took bold steps to fight back against the poverty and unemployment plaguing the country. He immediately created a bank holiday and used the time to bring legislation known as the Emergency Banking Act before Congress, which allowed federal agencies to examine all banks before they reopened, thus restoring consumer confidence. In his historic first hundred days, he then went on to sign numerous other significant pieces of legislation geared towards creating jobs, shoring up industry and agriculture, and providing relief to individuals through refinancing options and direct handouts. It’s important to note that not all of his programs were effective, and many generated significant criticism. However, these programs helped stabilize the economy, restore confidence, and change the pessimistic mindset that had overrun the country.

• US History. Provided by : OpenStax. Located at : http://openstaxcollege.org/textbooks/us-history . License : CC BY: Attribution . License Terms : Access for free at https://openstax.org/books/us-history/pages/1-introduction
• FDR Radio Broadcast. Authored by : Harris & Ewing. Located at : https://picryl.com/media/fdr-franklin-delano-roosevelt-radio-broadcast . License : Public Domain: No Known Copyright

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Lesson Plan: The New Deal

Franklin Roosevelts 1933 Inauguration

Curator Herman Eberhardt gave a tour of the Franklin D. Roosevelt Presidential Library and Museum and discussed the significance of FDR's 1933 inauguration address.

Description

In 1932 the United States was in the depths of the Great Depression with the government struggling on the best way to intervene when Franklin Roosevelt won a landslide victory in the presidential election, promising a "new deal" for Americans. The New Deal was a series of government programs and financial reforms meant to put many Americans back to work, stabilize the economy, and give people hope that the depression would end. In this lesson, students will learn about the creation of the New Deal, its impact on the Great Depression and the economy, as well as its legacy on the role of the government in the lives of the American people.

INTRODUCTION

Have students either complete the Great Depression Lesson or research the causes and impact of the Great Depression prior to the election of Franklin Roosevelt.

Then, as a class watch the following video and have the students answer the questions below:

VIDEO CLIP: Franklin Roosevelts 1933 Inauguration (2:15)

Describe the significance of FDR's line of "there is nothing to fear, but fear itself" in his inauguration speech.

What line changed in the last minute of FDR's inauguration address?

• Do you think FDR's inaugural address would be effective in helping give the nation confidence during the Great Depression? Explain.

Break students into groups and have each group view the following video clips. Students should take notes using the handout provided or answer the individual Bell Ringer questions, and then share their findings with the rest of the class.

HANDOUT: New Deal Handout (Google Doc)

Video Clip: Franklin Roosevelt's First 100 Days (0:52)

Herman Eberhardt discussed the legislation that Franklin Roosevelt passed in his first 100 days as president.

Video Clip: FDR and the New Deal (9:01)

Author and History Professor Eric Rauchway discusses the Great Depression, President Franklin Delano Roosevelt, and the New Deal.

Video Clip: The Great Depression and Public Policy (6:58)

Author Amity Shlaes talks about the various public policy attempts to stimulate the economy during the Great Depression.

Video Clip: New Deal and Economic Recovery (7:35)

University of California, Davis history professor Eric Rauchway talks about the state of the U.S. and global economy after the Wall Street crash of 1929, as well as the President Franklin Delano Roosevelt's New Deal programs that helped to foster economic recovery.

Video Clip: The Legacy of the New Deal (1:48)

Documentary filmmaker Ken Burns discussed the impact and legacy of FDR's New Deal.

After watching the videos and reporting out to the class, have students participate in a "Take a Stand" activity with the following question.

"FDR's New Deal programs were responsible for stabilizing the economy and ending the Great Depression"

Have students line up on a continuum based on their opinion from “Strongly Agree” to “Strongly Disagree.” Ask several students from different points on the line to share their reasoning and defend their position.

After completing the "Take a Stand" activity, have students write an essay (or similar culminating activity) that includes the following information. Students should cite specific examples from the videos and class discussion.

The goal of Franklin Roosevelt's first 100 days as president

Different examples of New Deal programs, their goals, and their impact

The different events that led to the end of the Great Depression

• The lasting impact of the New Deal on the United States today

Additional Resource

In this lesson, students will learn about the causes and impact of the Great Depression as well as the significance of governmental policies on the crisis.

• Bank Holiday
• Federal Deposit Insurance Corporation
• First 100 Days
• Franklin Roosevelt
• Great Depression
• Gross Domestic Product
• Herbert Hoover
• Social Security Administration

• Society and Politics
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History Grade 11 - Topic 2 Essay Questions

Essay Question:

To what extent did Roosevelt’s New Deal succeed in mitigating the negative effects of the Great Depression in USA in the 1930’s?  Present an argument in support of your answer using relevant historical evidence. [1]

Introduction:

On 29 October 1929 (also known as “Black Tuesday”), the United States (US) stock market crashed which initiated the Great Depression. [2]   After winning the US elections and taking office in 1933, President Franklin D. Roosevelt sought to bring economic relief to the US during the 1930’s by implementing a series of reforms and restructures in what he called the ‘New Deal’. [3]   Although the ‘New Deal’ succeeded somewhat in relieving economic situations on a macro-level, the “New Deal”, in the long run, is considered a failure as it did not ultimately succeed in what it was set out to do, which was to recover the economy from its “depressed state”. [4]   This statement will be discussed by analyzing the two phases of the “New Deal”, as well as discussing the effects of some of the relief, recovery and reform programs implemented.

The First Hundred Days

When analyzing the legacy of the “New Deal”, it is important to understand that there were two phases of the deal, namely the “First New Deal” and the “Second New Deal”.  The First New Deal consisted mainly of the first three months of Roosevelt’s presidency and is referred to as the “hundred days”. [5]   Within the first hundred days, various relief programs such as the “Federal Emergency Relief Administration” (FRA), the “Civilian Conservation Corps” and the “Agricultural Adjustment Act” were implemented in order to create employment opportunities for Americans as well as providing some extent of economic relief for struggling citizens. [6]

Another significant program that was implemented during the hundred days, was the “National Industrial Recovery Act” (NIRA).  This recovery act allowed working Americans to unionize and in a sense bargain for better working conditions, as well as wages. [7]   Roosevelt felt that a significant part of the recovery process will come from decreasing competition through using set prices, wages and commodities. [8]   Mixed reviews came from the implementation of these recovery acts, as many felt that corporate heads were being disadvantaged by the state, and in some instance some corporations felt as though their competition became the US government itself. [9]   However, on the larger part, many felt that the hundred days and the “First New Deal” was relatively successful as it was marked by a decrease in unemployment and the stabilization of US banks.

The Second New Deal

In 1935, Roosevelt decided that the New Deal should take a more aggressive approach in the attempt to diminish the Great Depression. [10]   This phase is known as the Second New Deal.  One of the more prominent acts implemented was the “Social Security” Act which provided the elderly and widowed people with some financial support, allowed some unemployment and disability compensation and set a framework or minimum wages and maximum work hours. [11]   Furthermore, the “Works Progress Administration” (WPA) was implemented to provide the unemployed with opportunities in the public sector.  These opportunities included building bridges, schools and roads. [12]   To some extent, the Great Deal built a platform for more financial security and opportunity for the American citizens during the onslaught of the Great Depression with its housing, employment and financial interventions. [13]

Criticism of the New Deal

When analyzing some of the programs and acts implemented by the Great Deal, one also has to mention points of criticism.  One of the more popular points of criticism stems from the “interventionalist” and anti-competitive nature of the New Deal. [14]   Larger companies and the Supreme Court also felt that some of the reform initiatives were unconstitutional and did not go through the right channels to implement reform acts. [15]   However, with this criticism in mind, the main reason why the New Deal was deemed unsuccessful, is simply because it did not achieve what it set out to do.  The American economy and employment rates did not recover enough for the New Deal to have remedied the effects of the Great Depression.  Rather, American entrance into the Second World War stimulated more economic growth than the New Deal. [16]

Therefore, one could say that the New Deal mitigated the effects of the Great Depression to an extent where it improved the employment rate from 25% of 1933 to 17% in 1939. [17]   One could also say that some of the relief and reform acts were deemed successful as some of them, such as the Social Security Act, still remains today. [18]   The New Deal also led to a, albeit short-lived, coalition between “white working people, African Americans and left-wing intellectuals”. [19]   Many also argue that the New Deal built a surface for the future economy of America post-World War Two. [20]   However, with regards to the mitigation of the Great Depression itself, the New Deal ultimately did not succeed in ending the Great Depression and its effects.

This content was originally produced for the SAHO classroom by Sebastian Moronell, Ayabulela Ntwakumba, Simone van der Colff & Thandile Xesi.

[1] National Senior Certificate.: “Grade 11 November 2017 History Paper 1 Exam,” National Senior Certificate, November 2017.

[2] M, Johnston.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[3] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[4] Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[5] Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online].  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).

[6] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[7] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[8] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[9] J. Green.: “The New Deal:  crash Course US History #34,” Crash Course [YouTube Online].  Accessed on 23 March 2021 ( https://www.youtube.com/watch?v=6bMq9Ek6jnA&t=380s ).

[10] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[11] Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online].  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).

[12] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[13] D.M. Kennedy.: “What the New Deal Did,” Political Science Quarterly, (124), (2), 2009, pp. 265-267.

[14] M, Johnston.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[15] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[16] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[17] Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[18] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[19] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[20] D.M. Kennedy.: “What the New Deal Did,” Political Science Quarterly, (124), (2), 2009, p. 267.

• Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online], January 2021.  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).
• Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ). 
• Green, J.: “The New Deal:  Crash Course US History #34,” Crash Course [online].  Accessed on 24 March 2021 ( https://www.youtube.com/watch?v=6bMq9Ek6jnA&t=391s ).
• History.  Editors of History.: “New Deal,” History [online], November 2021.  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).
• Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online], January 2021.  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).
• Kennedy, D.M.: “What the New Deal Did,” Political Science Quarterly, (124),(2), 2009, pp. 251-268.

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The election of President Franklin Delano Roosevelt signaled both immediate relief for the American public as well as a permanent shift in the role of the federal government in guiding the economy and providing direct assistance to the people, albeit through expensive programs that made extensive budget deficits commonplace. For many, the immediate relief was, at a minimum, psychological: Herbert Hoover was gone, and the situation could not grow worse under Roosevelt. But as his New Deal unfolded, Americans learned more about the fundamental changes their new president brought with him to the Oval Office. In the span of little more than one hundred days, the country witnessed a wave of legislation never seen before or since.

Roosevelt understood the need to “save the patient,” to borrow a medical phrase he often employed, as well as to “cure the ill.” This meant both creating jobs, through such programs as the Works Progress Administration , which provided employment to over eight million Americans ( Figure ), as well as reconfiguring the structure of the American economy. In pursuit of these two goals, Americans re-elected Roosevelt for three additional terms in the White House and became full partners in the reshaping of their country.

Home — Essay Samples — History — The New Deal — The New Deal Relief Programs

The New Deal Relief Programs

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Words: 660 |

Published: Jan 30, 2024

Words: 660 | Page: 1 | 4 min read

Table of contents

Relief programs, recovery initiatives, reform measures, evaluation of the new deal's successes, criticisms and limitations of the new deal.

• "New Deal," The Eleanor Roosevelt Papers Project, accessed November 10, 2021, https://www2.gwu.edu/~erpapers/teachinger/glossary/new-deal.cfm.
• "Emergency Banking Relief Act: Definition and Facts," Encyclopedia Britannica, accessed November 10, 2021, https://www.britannica.com/event/Emergency-Banking-Relief-Act.
• "Tennessee Valley Authority," History.com, accessed November 10, 2021, https://www.history.com/topics/great-depression/tennessee-valley-authority.

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FDR and the New Deal Essay

Aims/objectives, thesis statement, introduction, literature review, research methods.

Aim of the paper is to explore the events of Great Depression and its impact on U.S economy. The paper strives to focus on the ‘New Deal’ offered by the President to address the issues related to Great Depression. The impact of New Deal on economy is also presented in the paper.

On the basis of explorative research made for this paper it is hypothesized that the FDR’s actions were effective to shorten the Depression and has perpetual impacts on U.S economy.

Franklin D. Roosevelt (FDR) was nominated as the President of United States in the summer of 1932. Roosevelt, in his acceptance speech, addressed different problems faced by the American people due to the Great Depression. He pledged to offer a new deal to resolve the grave scenario. Roosevelt won by a huge margin. (Powell, 2004) FDR’s New Deal in fact, served as a catalyst for the economy and different programs set the economy to recover from the disastrous effects of the Great Depression.

Literature review will encompass theoretical books, articles in magazines and internet as well as the research studies on the topic under analysis. It will focus on the condition of Economy during Great Depression. The economy, in fact, was facing a total collapse when FDR assumed power as the President. Unemployment hit thirty percent; inflation was at its peak, while GDP was critically down by fifty percent. This phenomenon is called ‘Great Depression’ which hit the highest level in the early part of 1933. (Powell, 2004) The period of FDR in the office, in the decade of 1930, can be classified as; the First New Deal during 1933 to 1935, characterized by different relief programs related to the problems of unemployment. The Second New Deal, during the years 1935 to 1037 was featured by different reforms related to economic and social problems.

According to some scholars, the New Deal ineffectively played with the theme of establishing close relations between government and business. However, some of these endeavors did not survive after World War II. The other group of scholars highlights the phenomenon that the initiatives taken by the New Deal pointed to almost new power-sharing among three primary economic players- the bankers, brokers and the businessmen. (Barnanke, 2004).

Different programs were initiated which included; the Federal Deposit Insurance Corporation- focusing on providing guarantee on deposits in banks; Securities and Exchange Commission- with the primary task of regulating and controlling the stock market; and the Social Security System- responsible for providing pensions on the basis of contributions made by elderly during their jobs. (Smilely, 2003).

The research will primarily focus on analyzing the secondary data available in theoretical books, magazines and internet. On the basis of the exploration made, a deep analysis and an in-depth opinion will be presented supported by authentic resources.

The New Deal promised by Roosevelt to the Americans was aimed at pulling the country out of depression. In the early days of his presidency, administration of Roosevelt initiated a passage of different laws related to banking reforms, relief programs for lifting emergency along with different other agricultural and work relief programs. (Mcelvaine, 1993)By the year 1939, FDR’s New Deal had practically supported in improving the general standards of lives suffered from the disastrous effects of Great Depression. Moreover, in the long-run, the programs of New Deal served as a precedent particularly for the federal government to assume a primary role in the social and economic affairs of the nation. (Sowell, 2007) It could be concluded, on the basis of arguments presented in the paper, that the FDR’s New Deal was successful in pulling the economy from Great Depression and has perpetual impact on the economy of United States.

Barnanke, B (2004) Essays on the Great Depression. Princeton University Press.

Powell, J (2004) FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression . Three Rivers Press.

Mcelvaine, R (1993) The Great Depression: American 1929-1941. Three Rivers Press.

Sowell, Thomas.(2007) Economic Facts and Fallacies. Basic Books.

Smilely, G (2003) Rethinking the Great Depression. Ivan R. Dee, Publisher.

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IvyPanda. (2021, October 2). FDR and the New Deal. https://ivypanda.com/essays/fdr-and-the-new-deal/

"FDR and the New Deal." IvyPanda , 2 Oct. 2021, ivypanda.com/essays/fdr-and-the-new-deal/.

IvyPanda . (2021) 'FDR and the New Deal'. 2 October.

IvyPanda . 2021. "FDR and the New Deal." October 2, 2021. https://ivypanda.com/essays/fdr-and-the-new-deal/.

1. IvyPanda . "FDR and the New Deal." October 2, 2021. https://ivypanda.com/essays/fdr-and-the-new-deal/.

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IvyPanda . "FDR and the New Deal." October 2, 2021. https://ivypanda.com/essays/fdr-and-the-new-deal/.

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The New Deal: Meaning, Overview, History

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

What Was the New Deal?

The New Deal was a comprehensive and broad set of government-directed projects introduced by President Franklin Delano Roosevelt in an attempt to help the United States economy emerge from the Great Depression . It launched in the early 1930s and was designed to bolster the United States economy, reduce unemployment, provide a social safety net, and instill confidence in the government’s ability to protect its citizens.

Key Takeaways

• The New Deal was a series of domestic programs introduced by President Franklin D. Roosevelt in an attempt to end the economic ravages of the Great Depression.
• The New Deal also attempted to curb the excesses of untrammeled capitalism through such policies as setting minimum wages, regulating working conditions, promoting labor unions, and bolstering retirement security.
• The New Deal made the government’s role in steering the economy more important.

Understanding the New Deal

The stock market crash of 1929 began on October 24—a day known as Black Thursday . It brought a period of roaring growth to a sudden halt.   Companies and banks across the United States started failing, and the unemployment rate skyrocketed to the point that nearly a quarter of the workforce was unemployed.

President Franklin Roosevelt launched the New Deal after taking office in 1933.   It consisted of a variety of government-funded programs aimed at getting people back to work, as well as legislation and executive orders that propped up farmers and stimulated business activity.

The New Deal engendered controversy by introducing a number of radical reforms and increasing the government’s role in guiding the economy. Several of its programs were ultimately declared unconstitutional by the U.S. Supreme Court, including two major pillars: the National Recovery Administration (NRA)—which set working conditions, minimum wages, and maximum hours, while guaranteeing the right of labor to bargain collectively —and the Agricultural Adjustment Administration (AAA), which intended to stabilize farm prices.    

Public opinion was for the New Deal, though, and, as a result, in February of 1937 Roosevelt tried to increase the number of Supreme Court justices in order to prevent future programs from being shuttered.   Though he failed in this court-packing attempt, he succeeded in his objective. In May 1937, the Supreme Court declared the Social Security Act to be constitutional by a five-to-four vote after one of its justices changed his anti–New Deal stance. No other New Deal program was ever again judicially invalidated by the court.  

The New Deal was enacted in two parts: the first in 1933 and the second in 1935.  

History of the New Deal

The New Deal is often broken into two segments. The “first” New Deal was launched in 1933 during the initial two years of the Roosevelt presidency. In addition to the NRA and AAA, it consisted of measures to stabilize the banking system ( Emergency Banking Act ), ensure bank deposit security (Banking Act of 1933, known as the Glass-Steagall Act ), and increase confidence in the stock market ( Securities Act of 1933 ).

The “second” New Deal, in 1935, introduced perhaps the program’s greatest and most enduring legacy : government-sponsored retirement plans in the form of Social Security. It also increased government employment ( Works Progress Administration ) and minimum wages ( Fair Labor Standards Act ).

Was the New Deal a Success?

Historians credit the New Deal with some success in reviving the country’s fortunes . The economy did slowly recover during the 1930s, confidence was restored to the banking system through federal deposit insurance, working conditions were improved, and labor unions strengthened the hand of workers.

It was World War II, however, that ultimately provided the impetus to get America fully back to work. The unprecedented spending worldwide on ships, arms, and planes propelled the country into full employment —a feat that the New Deal programs, despite their best efforts, were unable to achieve on their own.

Economic History Association. " The 1929 Stock Market Crash ." Accessed Feb. 11, 2021.

Library of Congress. " President Franklin Delano Roosevelt and the New Deal ." Accessed Feb. 11, 2021.

National Archives Catalog. " Department of Agriculture. Agricultural Adjustment Administration. (1933 - 2/23/1942) Organization Authority Record ." Accessed Feb. 11, 2021.

Library of Congress. " National Recovery Administration (NRA) and the New Deal: A Resource Guide ." Accessed Feb. 11, 2021.

Federal Judicial Center. " FDR's "Court-Packing" Plan ." Accessed Feb 11, 2021.

Social Security Administration. " Constitutionality of Social Security Act ." Accessed Feb 11, 2021.

Library of Congress. " New Deal Programs: Selected Library of Congress Resources ." Accessed Dec. 27, 2020.

• Depression in the Economy: Definition and Example 1 of 14
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• Were There Any Periods of Major Deflation in U.S. History? 7 of 14
• The Greatest Generation: Definition and Characteristics 8 of 14
• A History of U.S. Government Financial Bailouts 9 of 14
• Understanding Austerity, Types of Austerity Measures, and Examples 10 of 14
• The New Deal: Meaning, Overview, History 11 of 14
• The Economic Effects of the New Deal 12 of 14
• Gold Reserve Act of 1934: Meaning, History 13 of 14
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• The world in debt
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• Managing farm and factory
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• The end of the beginning.

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(page 1) p. 1 Introduction

• Published: April 2008
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The Great Depression caused a profound crisis in the US. The world that broke down in 1929 broke down for reasons that had been predicted before. The Introduction gives a brief analysis of why the Great Depression occurred. The failure to prepare the damage of the initial crisis in 1929 owed to errors of judgement and action, and the misery that followed could have been lessened. Roosevelt and the Democratic Congress of the New Deal era succeeded by correcting these errors (they also added errors of their own). This heralded an era of pragmatic experimentation, which became the basis for a generation's faith in the new American way, in both the United States and beyond.

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Opinion | NPR suspends an editor for his essay blasting … NPR

The firestorm caused by uri berliner’s critical essay in the free press continues to rage.

When a senior editor at NPR recently wrote a 3,500-word essay for another outlet, blasting where he works and saying that NPR had “lost America’s trust,” my first thought, quite frankly, was, “ … and he still works there?”

Well, it was learned on Tuesday that the editor in question, Uri Berliner, is currently serving a five-day suspension without pay. NPR media writer David Folkenflik reported the suspension began last week. Folkenflik wrote, “In presenting Berliner’s suspension Thursday afternoon, the organization told the editor he had failed to secure its approval for outside work for other news outlets, as is required of NPR journalists. It called the letter a ‘final warning,’ saying Berliner would be fired if he violated NPR’s policy again. Berliner is a dues-paying member of NPR’s newsroom union but says he is not appealing the punishment.”

Berliner, who has been at NPR for 25 years, wrote his scathing essay for the online news site The Free Press, a publication on Substack. Folkenflik described The Free Press as a “site that has become a haven for journalists who believe that mainstream media outlets have become too liberal.”

The suspension does not mean the firestorm created by Berliner’s essay has been suppressed. Folkenflik wrote, “Yet the public radio network is grappling in other ways with the fallout from Berliner’s essay for the online news site The Free Press. It angered many of his colleagues, led NPR leaders to announce monthly internal reviews of the network’s coverage, and gave fresh ammunition to conservative and partisan Republican critics of NPR, including former President Donald Trump.”

The New York Times’ Benjamin Mullin wrote , “After Mr. Berliner’s essay was published, NPR’s new chief executive, Katherine Maher, came under renewed scrutiny as conservative activists resurfaced a series of years-old social media posts criticizing former President Donald J. Trump and embracing progressive causes. One of the activists, Christopher Rufo, has pressured media organizations into covering controversies involving influential figures, such as the plagiarism allegations against Claudine Gay, the former Harvard president.”

Maher was not at NPR at the time of her posts and, furthermore, the CEO has no involvement in editorial decisions at the network.

But Berliner told Folkenflik in an interview on Monday, “We’re looking for a leader right now who’s going to be unifying and bring more people into the tent and have a broader perspective on, sort of, what America is all about. And this seems to be the opposite of that.”

In a statement earlier this week, Maher said, “In America everyone is entitled to free speech as a private citizen. What matters is NPR’s work and my commitment as its CEO: public service, editorial independence, and the mission to serve all of the American public. NPR is independent, beholden to no party, and without commercial interests.”

As far as Berliner’s essay, many, particularly inside NPR, are pushing back against his various assertions, including that NPR has a liberal bias.

Mullin wrote for the Times, “Several NPR employees have urged the network’s leaders to more forcefully renounce Mr. Berliner’s claims in his essay. Edith Chapin, NPR’s top editor, said in a statement last week that managers ‘strongly disagree with Uri’s assessment of the quality of our journalism,’ adding that the network was ‘proud to stand behind’ its work.”

Tony Cavin, NPR’s managing editor for standards and practices, pushed back against specific claims made by Berliner and told the Times, “To somehow think that we were driven by politics is both wrong and unfair.”

NPR TV critic Eric Deggans tweeted , “Many things wrong w/terrible Berliner column on NPR, including not observing basic fairness. Didn’t seek comment from NPR before publishing. Didn’t mention many things which could detract from his conclusions. Set up staffers of color as scapegoats.”

So what happens now? Will Berliner be in further trouble for criticizing the CEO in an interview with Folkenflik, his NPR colleague?

Berliner told Folkenflik, “Talking to an NPR journalist and being fired for that would be extraordinary, I think.”

I urge you to check out Folkenflik’s piece for all the details. And, by the way, kudos to Folkenflik for his strong reporting on his own newsroom.

CNN’s response

In Tuesday’s newsletter , I wrote how “King Charles” — the limited series featuring Gayle King and Charles Barkley — has ended after 14 shows. I wrote that the network had “pulled the plug” on the show.

CNN said that description was inaccurate and that I was wrong in framing it the way I did.

While I did say that CNN announced from the beginning that the show was a limited series, I also wrote that the show reached its ending “a little ahead of time.” The network, however, said it was clear all along that the show was scheduled to end in the spring, that it is spring right now, and the show was not canceled early.

A CNN spokesperson told me, “‘King Charles’ has come to the end of its limited run, as we announced when it launched last fall that it would run through spring. The show was a great addition to CNN’s lineup, with the youngest, most affluent, and most diverse P2+ audience in its cable news time period and brought new audiences to CNN. It’s inaccurate to report that the show was canceled as it went through its full run and duration of the limited series. We hope to work with both of these incredible talents in the future as they balance their very busy schedules.”

With the NBA playoffs about to begin, Barkley is about to head into extra duty at his main job as studio analyst for TNT’s “Inside the NBA.”

The show’s average viewership was under a half million and lagged behind competitors Fox News and MSNBC, but CNN said it was pleased that the King-Barkley broadcast brought new audiences to CNN. It pointed to this statistic from Nielsen via Npower that said 43% of the “King Charles” audience was nonwhite, compared to 7% for Fox News and 27% for MSNBC during that Wednesday at 10 p.m. Eastern hour.

Smartmatic and OAN settle suit

Smartmatic, the voting technology company, and One America News, the far-right TV network, have settled their lawsuit. Smartmatic was suing OAN, claiming the network lied that the company rigged the 2020 election in favor of Joe Biden and against Donald Trump.

Neither side disclosed the terms of the settlement.

Smartmatic still has pending lawsuits against Fox News and Newsmax. And OAN is still facing a defamation lawsuit from Dominion Voting Systems. That’s the company that Fox News settled with out of court a year ago by agreeing to pay Dominion a whopping $787.5 million.

Missing at the Masters

According to Sports TV Ratings , Sunday’s final round of The Masters golf tournament on CBS averaged 9.58 million viewers, which was down 20% from last year’s final round, which averaged 12.05 million. This shouldn’t be a surprise. This year’s final round lacked drama, with winner Scottie Scheffler pretty much in control throughout the day.

Sports Media Watch’s Jon Lewis noted that in the past three decades, only COVID-era Masters in 2020 (5.64 million) and 2021 (9.54 million) had fewer viewers. Those were the least-viewed Masters since 1993.

But Lewis also points out, “As one would expect, the final round of the Masters still ranks as the most-watched golf telecast and one of the most-watched sporting events of the past year — placing ahead of four of five World Series games and every Daytona 500 since 2017. It also goes without saying that the Masters dominated all other weekend sporting events.”

Just for fun, however, I will mention that the 9.58 million was nowhere near the number of viewers (18.7 million) that watched the NCAA women’s college basketball final between South Carolina and Iowa (and star Caitlin Clark) one week earlier on a Sunday afternoon.

Other media notes, tidbits and interesting links …

• Speaking of Clark, Tom Kludt writes for Vanity Fair: “Behind the Scenes With Caitlin Clark on WNBA Draft Day: ‘I Definitely Know There’s Eyeballs on Me.’”
• Axios’ Sara Fischer with “Dozens of Alden newspapers run coordinated editorials slamming Google.”
• For the Los Angeles Times, Greg Braxton and Carolyn Cole with “What ‘Civil War’ gets right and wrong about photojournalism, according to a Pulitzer Prize winner.”
• For The Washington Post, Dave Barry, Angela Garbes, Melissa Fay Greene, John Grogan and Charles Yu with “How does the election feel around the country? 5 writers capture the vibe.” Barry, as always looking at things a bit differently, writes, “Greetings from the Sunshine State! The mood down here, as we anticipate the 2024 presidential election, is one of hopefulness. Specifically, we’re hoping that a large, previously undetected meteor will strike the planet before November.”
• For NPR and “Morning Edition,” Elizabeth Blair with “50 years ago, ‘Come and Get Your Love’ put Native culture on the bandstand.”

More resources for journalists

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Have feedback or a tip? Email Poynter senior media writer Tom Jones at [email protected] .

The Poynter Report is our daily media newsletter. To have it delivered to your inbox Monday-Friday, sign up here .

Opinion | A conversation with White House Correspondents’ Association president Kelly O’Donnell

Advocating for her press corps colleagues has become a second full-time job for NBC News' senior White House correspondent.

Opinion | The case for funding environmental journalism right now

Philanthropy has an important role to play in supporting reporters, but funding must be transparent and clear to maintain credibility

How Poynter transformed a hands-on workshop into an email course

Lessons learned from an experiment in building a new journalism project

Opinion | Journalists at Columbia are leading the coverage of their campus

The Columbia Daily Spectator has expertly documented tense protests over the Israel-Hamas war inside and outside the campus.

Q&A: Mina Kimes on her run from acclaimed sportswriter to Emmy-nominated NFL Analyst

The ESPN star explains how she got over her fears (and the trolls) to get better at discussing the sport she loves

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Guest Essay

My Country Knows What Happens When You Do a Deal With Russia

By Paula Erizanu

Ms. Erizanu is a Moldovan journalist who focuses on politics and the arts in Eastern Europe. She wrote from Chisinau, Moldova.

More and more people, including Pope Francis , are asking Ukraine to drop its defense and sit at the negotiation table with Russia. Citing the stalemate on the battlefield and Russia’s superior resources, they urge Ukraine’s leadership to consider a deal. What exactly that would involve is largely left unsaid. But it would clearly involve freezing the conflict, resigning Ukraine’s occupied territory to Russia in exchange for an end to the fighting.

My country, Moldova, knows all about that kind of bargain. A small western neighbor of Ukraine, Moldova experienced Russia’s first post-Soviet war of aggression, which ended with a cease-fire agreement in 1992. Thirty-two years later, 1,500 Russian troops are still stationed on internationally recognized Moldovan territory, despite the Kremlin’s formal agreement to withdraw them in 1994 and then once again in 1999 . The case shows that Russia simply cannot be trusted.

But there’s a bigger problem for Ukraine than Russian untrustworthiness. It’s that freezing a conflict, without a full peace deal, simply does not work. For three decades, it has fractured Moldova, hindered national development and given Russia continued opportunities to meddle with Moldovan life. A frozen conflict, we should remember, is still a conflict. Anyone calling for Ukraine to settle for one should heed Moldova’s cautionary tale.

The ground for the Russian-Moldovan war was Transnistria , a strip of land in eastern Moldova with about 370,000 people. With support from Moscow — but no formal recognition — the territory declared independence from Moldova in 1990, setting off violence that escalated into conflict. Russian-backed separatists clashed with government security forces, and troops from both sides fought each other. Hundreds of people died. Russia stopped providing Moldova with gas, leaving people in cities to freeze in their apartments and cook their food outside on bonfires.

After four intense months of fighting, a cease-fire deal was signed in the summer of 1992 by President Boris Yeltsin of Russia and his Moldovan counterpart, Mircea Snegur. It established a security zone to be patrolled by so-called peacekeeping forces, effectively locking Moldova out of Transnistria. For 30 years, Transnistria has maintained a separate government, set of laws, flag and currency — all under Russian protection. Moldova has never recognized Transnistria’s independence, nor has any other member of the United Nations.

The self-proclaimed republic hasn’t fared well. It has become known for its arms and drug smuggling and a poor human rights record . Dissenters are persecuted and independent journalists are detained ; last summer an opposition leader was found shot dead at home. Most of the region’s economy is dominated by a single company, Sheriff, founded by a former K.G.B. agent.

Transnistria cleaves Moldova in two. On the right bank of the Dniester River, in democratic Moldova, there is a free press in Romanian, the official language of the country, along with Russian and other minority tongues. On the left bank, in autocratic Transnistria, the media is controlled by the authorities, who use it to transmit Russian propaganda.

Perhaps the starkest division is in education. Above Transnistrian schools, the Russian and Transnistrian — but not Moldovan — flags are mounted. There, as well as in the press, Romanian is written in Cyrillic rather than Latin script, just as it was in the Soviet Union. In history classes, pupils learn that ethnic Romanians on the right bank of the Dniester are fascists who want to kill them. With limited education and meager work opportunities, most young people leave the region after they graduate.

Some of them go to Chisinau, Moldova’s capital. But being in Russia’s sphere of influence has forestalled Moldova’s economic development. While Moldova used to export wines, fruits and vegetables to Russia, following the Soviet trade model, Moscow traded mainly gas and oil.

The Kremlin has always weaponized these commercial relations. In 2006 , Moscow placed an embargo on Moldovan produce after Moldova refused to accept a Russian-devised federalization plan. The Kremlin came up with new bans on imports in the run-up to Moldova signing an association agreement with the European Union in 2014 and again after Moldova became an E.U. candidate country in 2022 .

Similarly, Moscow has exploited Moldova’s reliance on it for energy. By signing contracts only at the last minute, reducing gas supplies ahead of winter and threatening to stop deliveries, Moscow exerts considerable control over the country. While Europe invests in good governance and infrastructure in Moldova, Russia has invested only in propaganda and agents of influence, fueling corruption, division and instability.

Russia has played on fears of renewed conflict since the 1990s. Since the invasion of Ukraine, those efforts have gone into overdrive . Rumors about Transnistria requesting Russian annexation and false reports of attacks in the region are common. Kremlin officials repeatedly threaten Moldova and claim it is a second Ukraine , adding to the anxiety people already feel living next door to a full-blown war.

This is a particularly bad year for Moldova to be under such pressure. In October, Moldovans will vote for their next president, as well as in a referendum on joining the European Union. With accession negotiations set to open this year, Moldova is looking to move closer to Europe. But Russia won’t let it go lightly.

For Moldovans, the war in Transnistria is a wound, constantly picked at in books and films. “Carbon,” released in 2022, is a good example. Set during the war in 1992, the film centers on a veteran of the Soviet war in Afghanistan and his younger neighbor who wants to enroll in the Moldovan volunteer troops. On the way, they discover a carbonized body, which could be from either side of the conflict. They try, often comically, to find out its identity and provide it with a dignified burial.

Based on a true story and made by a crew with personal connections to Transnistria, the film broke national box office records. Mariana Starciuc, the scriptwriter, summed up the subtext. “Transnistria,” she said , “is the root for all of our problems for the past 30 years.”

Today her words ring truer than ever. It is because of the frozen conflict that Moldova is still under Russian influence, with its constant threats and endless jeopardy. Yet Moldovans fear escalation not because we haven’t sat down at negotiation tables with Russians but because we have, and the result was deeply damaging. Ukraine must not make the same mistake.

Paula Erizanu ( @paulaerizanu ) is a freelance journalist who has written for CNN, The Guardian and The London Review of Books.

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An earlier version of this article misstated the locations of Transnistria and the rest of Moldova. Transnistria is on the left bank of the Dniester River, not the right bank. The rest of the country is on the right bank, not the left bank.

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Oracle Introduces New AI Capabilities to Help Organizations Boost Sales

New AI capabilities in Oracle Cloud CX help marketers, sellers, and service agents, improve customer satisfaction, increase productivity, and accelerate deal cycles

Oracle today announced new artificial intelligence (AI) capabilities within Oracle Fusion Cloud Customer Experience (CX) to help marketers, sellers, and service agents accelerate deal cycles. The new AI capabilities will help organizations generate more sales faster by automating time-consuming tasks and enabling front office professionals to more precisely target, engage, and serve buyers.

“AI is continuously proving its ability to enhance user experiences and we are only beginning to see what this technology can do for customer service, sales, and marketing,” said Katrina Gosek, vice president of product strategy, Oracle Cloud CX. “The new AI capabilities embedded within Oracle Cloud CX will enable organizations to enhance customer satisfaction and drive more sales by automating processes that enable marketing, sales, and service professionals to spend their quality time on more meaningful tasks while the technology is helping to engage and serve buyers in a more precise manner.”

Built on Oracle Cloud Infrastructure (OCI) and leveraging its leading AI services, Oracle supports over 50 generative AI use cases that are embedded within Oracle Fusion Cloud Applications Suite and designed to respect customers’ enterprise data, privacy, and security. With OCI Generative AI Service, no customer data is shared with large language model (LLM) providers or seen by other customers. In addition, an individual customer is the only entity allowed to use custom models trained on its data. To further protect sensitive information, role-based security is embedded directly into Oracle Fusion Applications workflows that only recommends content that end users are entitled to view.

The new AI capabilities in Oracle Cloud CX further expand the AI capabilities within Oracle Fusion Applications, which helps organizations be more competitive, boost productivity, and reduce the cost of doing business. New AI capabilities in Oracle Cloud CX include:

• Gen AI Assisted Answer Generation: Helps service agents reduce their workloads by automatically crafting contextually aware responses to customer questions. This new generative AI capability in Oracle Service will improve customer response times and free up service agents to focus on more complex scenarios by leveraging Oracle Digital Assistant to manage and answer customer inquiries.
• Assisted Scheduling for Field Service: Helps field service technicians optimize their schedules by automatically recommending relevant jobs by considering key identifiers such as availability, location, skills, billing status, and more. This new capability in Oracle Service leverages AI to improve service productivity and overall customer satisfaction by automatically recommending jobs based on the estimated job duration and travel time.
• Opportunity Identification: Helps marketers and sellers generate more B2B deals and grow account-based revenue by helping to identify the right contacts at target accounts in order to improve effective cross-sell and upsell motions. The new AI models within Oracle Unity CDP provide look-alike modeling for contacts, job title normalization, and topic interest mapping, which help predictively identify and label the right members of a buying group to drive activation and more relevant sales engagement.
• Gen AI Assisted Authoring for Marketing and Sales: Helps marketers and sellers quickly create compelling content to better engage buyers and accelerate deal cycles. The new generative AI capabilities in Oracle Marketing and Oracle Sales help increase buyer engagement by producing targeted content for marketing and sales collateral, such as recommended copy for emails and landing pages.
• Seller Engagement Recommendations: Helps sellers increase buyer engagement and accelerate purchase decisions. The new AI capabilities within Oracle Sales enable sellers to generate more deals by delivering highly targeted recommendations on specific products to offer, insights on the buyers’ role and engagement level, and additional contacts for key opportunities.

“Service resources are finite so it is critical that organizations can predict, plan, and proactively activate the parts of service that can be automated. This would also free up time to be spent on more complex and business-critical tasks that only a human can complete,” said Aly Pinder, research vice president, IDC. “The latest updates to Oracle Service are good examples of how AI and machine learning models can improve customer experiences and create the efficiencies needed for service workers to be more productive.”

Part of Oracle Fusion Applications, Oracle Cloud CX helps organizations connect data and workflows across marketing, sales, and service to make every customer interaction matter. To learn how Oracle Cloud CX can help your organization improve the customer experience and build brand loyalty, please visit: oracle.com/cx

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HMRC releases new Transfer Pricing operational guidance on risk allocation

On January 26, 2024, HMRC published new chapters within its International Manual: “ INTM485023 Transfer Pricing operational guidance: Accurate delineation of the actual transaction: Risk allocation” and “ INTM485025 Transfer Pricing operational guidance: Accurate delineation of the actual transaction: Risk”.

This guidance addresses HMRC's view on the application of the six-step process within Chapter I of the Transfer Pricing Guidelines (TPG) and its impact on Transfer Pricing outcomes. Whilst guidance is welcome since the UK includes the TPG in domestic legislation, HMRC’s public interpretation may create more uncertainty than it solves when determining transfer prices and preparing tax returns. Note – HMRC guidance is HMRC’s interpretation of the law, not law itself and therefore should be viewed in that context.

For many Transfer Pricing and Tax Controversy professionals who regularly deal with HMRC Transfer Pricing and Diverted Profits Tax enquiries, the guidance formalises much of what is seen on the frontlines. Set out below is a summary of the guidance, how it is impacting clients and what clients are doing to manage the challenges this guidance presents.

Introduction to HMRC's new guidance

HMRC has released guidance focusing on the role of senior decision-makers in risk management for Transfer Pricing. This guidance is instrumental for businesses in preparing Transfer Pricing documentation and for navigating potential audits. It highlights the importance of the forensic examination of decision-making processes related to risk assumption and management.

Overview of the six-step process for risk analysis

The guidance elaborates on HMRC’s view on the six-step process, as per the OECD guidelines, for analysing risks in Transfer Pricing arrangements. This includes identifying economically significant risks, understanding the contractual allocation of risks, conducting a functional analysis to determine who controls the risks, and ensuring that the contractual terms are consistent with the conduct of the parties involved; and that the party has the capability and capacity to control the risk.

Implications for Transfer Pricing arrangements

The guidance has implications for transactions that involve the provision of decision makers. It challenges the routine return approach for tested parties, advocating for a more nuanced examination of risk control contributions which may lead to considering the profit split method more frequently in situations where decision-making significantly impacts risk management.

• Divergent interpretations of risk control and inconsistency across jurisdictions: Tax authorities globally interpret and apply the TPG on risk control differently. HMRC's detailed guidance on the role of senior decision-makers and the process of risk management does not align with the practical interpretations of other countries, leading to potential disputes in cross-jurisdictional transactions.
• Documentation and evidence requirements (note that this is in addition to the UK TP Documentation requirements that have come into force here ): The guidance places a significant burden on taxpayers to provide detailed documentation and evidence of decision-making processes and control over risks. This requirement could pose challenges when the business models or operational realities do not easily align with the evidentiary expectations of tax authorities in other jurisdictions, leading to increased compliance costs and complexities.
• Discrepancies in functional and risk analysis: The emphasis on functional analysis to determine who controls the risks and contributes to risk management may lead to discrepancies in how different tax authorities view the allocation of functions, assets, and risks within multinational enterprises (MNEs). Such discrepancies could result in double taxation if authorities arrive at divergent conclusions regarding the entity that should bear the risks (and rewards).
• Valuation of risk control functions: Quantifying the value of risk management and decision-making contributions poses a technical challenge. The subjective nature of such valuations often leads to conflicts between businesses and HMRC, and similarly, between HMRC and other tax authorities, over the appropriate Transfer Pricing methods and outcomes.
• Application of the profit split method: The guidance's implication that the profit split method may be more appropriate in certain scenarios heightens the technical complexity of Transfer Pricing analyses. This method's application requires a level of granularity in operational data and a consensus on profit allocation that may be difficult to achieve across jurisdictions. In practice we often see that HMRC prefer headcount related profit splits, which inherently is more difficult for clients to operationally implement given the constant change of employee numbers, location, grading, etc. adding to the ever-growing compliance burden for taxpayers.
• Double taxation: The potential for double taxation arises when HMRC and other tax authorities do not agree on the interpretation of risk control functions and their impact on Transfer Pricing arrangements. Resolving these disputes may require lengthy and complex mutual agreement procedures (MAPs) or arbitration under tax treaties.
• Dispute resolution mechanisms: The reliance on dispute resolution mechanisms, such as MAPs, increases in the context of these technical issues. However, these processes can be time and resource consuming and do not always guarantee a resolution that avoids double taxation; all of which adds to the uncertainty.

How are we helping clients?

• Review of Transfer Pricing policies: We are helping review clients’ existing Transfer Pricing arrangements to ensure they align with the guidance's detailed expectations for documenting risk control and decision-making processes.
• Functional analysis: Conducting an accurate and timely functional analysis is crucial. This analysis should accurately delineate transactions, identifying and documenting economically significant risks, and assessing the actual conduct of the parties involved. Doing this on a regular basis under legal professional privilege ensures that contemporaneous evidence is documented and protected.
• Decision-making process evaluation: It's important to scrutinise and document the roles of senior decision-makers in risk management processes. This includes helping clients document via a risk control framework, how decisions impacting risk are made, who makes these decisions, and how these processes contribute to the enterprise's overall risk control.
• Pricing method re-evaluation: Given the emphasis on decision-making and risk control, in delineating intra-group transactions clients may need to reassess their pricing method and in cases where decision-making has a significant impact on risk management consider the use of the profit split method.
• Preparation for HMRC enquiries: The guidance suggests HMRC will adopt a forensic approach in audits, focusing on decision-making processes. We are helping clients prepare comprehensive and contemporaneous documentation that form part of defence files which can withstand detailed enquiries.
• Achieve certainty: Leveraging the use of our former tax authority network we are helping clients assess the use of Advance Pricing Agreements (APAs), to secure upfront agreement from tax authorities on Transfer Pricing arrangements. This is particularly valuable for complex and material transactions.
• Uncertain Tax Treatment (UTT): Under the UTT regime there is an obligation to notify HMRC of uncertain tax treatments that differ from HMRC's known position. HMRC’s guidance is HMRC’s known position. Therefore, if your filed company tax return is at odds with HMRC’s risk control guidance, you may have a notification obligation and failure to do so may result in penalties.

HMRC's guidance on risk control in Transfer Pricing marks a significant shift towards a more detailed and forensic analysis of how businesses manage and document risk in their intercompany transactions. To ensure compliance, clients must take a proactive approach in reviewing and updating their Transfer Pricing policies and documentation. This includes a thorough functional and risk analysis, re-evaluation of pricing methods, and preparation for detailed scrutiny by HMRC on decision-making processes related to risk control.

By adopting these measures under legal professional privilege clients can better defend their Transfer Pricing arrangements and mitigate the risks of non-compliance, whilst maintaining control over the evidence produced.

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