Franklin D. Roosevelt's program was known as the New Deal. Under it, the federal government took far more responsibility for the economic welfare of the people than it had in any previous administration. One amendment to the Constitution was passed—the 21st (1933), which repealed the 18th (Prohibition) Amendment.
The nation's economic system was almost at a standstill when Roosevelt became President on March 4, 1933. Nearly every state government had declared a banking holiday, or moratorium, to prevent depositors from withdrawing all their funds and ruining the banks. Roosevelt declared a four-day national banking holiday. He then obtained, in one day, legislation from Congress that permitted reopening of most banks under certification by the federal government that they were sound. Later banking reforms included insuring of deposits through the Federal Deposit Insurance Corporation.
The New Deal provided large sums of federal money for direct payments to needy citizens through grants (rather than loans) to the states. It also established various new agencies to provide government-sponsored work for the unemployed. Through the Works Progress Administration (WPA) special projects were devised to provide employment for skilled and unskilled labor and for such persons as writers, artists, actors, and musicians. A vast program of public works—the construction of public buildings, highways, dams, and similar projects—was begun under the Public Works Administration (PWA). Young men were employed by the Civilian Conservation Corps (CCC) to work on conservation projects.
A basic goal of the New Deal was to raise both wages and prices, which had dropped lower and lower as the depression continued. The National Industrial Recovery Act called for the cooperation of labor and management in setting prices, minimum wages, and working hours within various industries. The act also gave workers the right to join unions without interference from employers.
To increase the income of farmers, the Agricultural Adjustment Act was passed. It included provisions for paying farmers to reduce the acreage of certain crops and to limit livestock holdings. These measures were intended to reduce surpluses, which caused low prices.
Both the National Industrial Recovery Act and the Agricultural Adjustment Act later were declared unconstitutional by the Supreme Court. However, the right of workers to organize was reinforced by the National Labor Relations Act (1935), the constitutionality of which was upheld by the court. Later legislation restored other gains for labor that originally had been part of the Recovery Act. A revised Agricultural Adjustment Act, passed in 1938, retained the basic provisions of the farm relief program and was later sustained by the Supreme Court.
Along with its relief program, the New Deal enacted various measures for the reform of business practices, many of which resulted in increasing the scope of government activity. The Tennessee Valley Authority was created in 1933. The Securities and Exchange Commission was established to regulate the stock market. The Social Security Act of 1935 provided for unemployment insurance and old-age pensions.
In 1936 Roosevelt was reelected, carrying every state except Maine and Vermont against the Republican candidate, Alfred M. Landon. During Roosevelt's second term, the United States Housing Authority was established to advance funds to cities for replacing slums with low-rental housing projects for low-income families.
In 1937, in order to get a Supreme Court more receptive to his policies, Roosevelt asked Congress to enact legislation increasing the number of justices. He was accused of trying to "pack" the court and the plan was defeated. However, the court eventually became more sympathetic toward the New Deal.
In 1940 Roosevelt sought election to an unprecedented third term—no President had ever served more than two terms. He went on to defeat Republican candidate Wendell Willkie.By 1940, the New Deal crusade for economic reform had all but ended. War in Europe and Japanese aggression in Asia caused the Roosevelt administration to shift its main attention to foreign policy and national defense. In September Congress authorized the first peacetime military draft in the nation's history. In October, 16,300,000 men registered and the draft began soon afterwards.