How FDR's New Deal Created Security

What the New Deal Did
Author(s): DAVID M. KENNEDY

Source: Political Science Quarterly, Vol. 124, No. 2 (Summer 2009), pp. 251-268
Published by: The Academy of Political Science
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What theNew Deal Did
DAVID
The
United
now
States
a cascading
economic
crisis.
industries teeter on the brink
confronts
houses
Venerable
M. KENNEDY
collapse, once-mighty
banking
mounts. The air thickens with recollections
of
of oblivion, and unemployment
of the 1930s, and with comparisons
between Barack
the Great Depression
and Franklin D. Roosevelt.
Obama
So what was theGreat Depression, and what did FDR do about it?The
short answer
Roosevelt
was
Depression
of it, to the nation's
is that the Great
made
the most
a rare political opportunity, and

lasting benefit. A longer answer
was a catastrophic
economic
Depression
to resolve, at least not until World War
II came
some
answer
he
after
assumed
office.
A
still
would
along,
eight years
longer
the connection
between FDR's
short-term economic
recognize
policy failure
would
crisis
and
acknowledge
that Roosevelt
that the Great

failed
the New
Deal's
long-term
these matters.
surrounds
political
"At the heart of theNew Deal,"

Hofstadter
As a writer
success.
Much
misunderstanding
the distinguished historian Richard
once
"there was not a philosophy

but a temperament."
wrote,
in The New York Times put it not long ago, "F.D.R.
threw a bunch
ones
the
and
the
that
stuck
became
the
New Deal."1
wall,
against
of policies
a kind of unprincipled, harum-scarum
That view pf the New Deal?as
frenzy
incoherent policies
of random,
that failed to slay the Depression
demon?
in our national folklore. It is badly mistaken.
has become deeply embedded
If
we are to understand
to our own time, it is
the Great Depression's
relevance
to understand
imperative
the relationship
between
the economic
1930s and thatdecade's signaturepolitical legacy,theNew Deal.
Into the years of the New Deal was

change than in virtually any comparable
1
Richard
Hofstadter,
The American
Political
crowded
compass
Tradition
and
more
social
and
crisis of the
institutional
of time in the nation's
past.
theMen
York:
Who
Made
Alfred A. Knopf, 1948),XXX; The New York Times, 16 January2001, Sec. A, p. 23.
DAVID
M.
KENNEDY
of the Bill Lane

Prize winning
Center
Freedom
Political Science Quarterly
is the Donald
Professor
of History Emeritus
and Co-Director
at Stanford University. He
is the author of the Pulitzer
The American
in Depression
and War, 1929-1945.
People
for the American

from Fear:
It (New
J.McLachlan
West
Volume 124 Number 2
2009
251
| POLITICAL SCIENCE QUARTERLY
252
on the scale
is always controversial.
Change
Change
has proved
controversial.
Debate
about
interminably
the New
Deal
the New
Deal's
wrought
histori
cal significance,its ideological identity,and itspolitical, social, and economic
re
has ground on for three quarters of a century. Roosevelt's
consequences
a perpetual
of American
forms have become
touchstone
political argument,
re
a talisman invoked by all parties to legitimate or condemn as the occasion
an
of
toward
emblem
and
barometer
American
attitudes
government
quires,
itself.So justwhat, exactly,did theNew Deal do?

Itmight be well to begin by recognizingwhat theNew Deal did not do. It
fell pathetically
full economic
short of achieving
Roosevelt's
recovery.
pro
grams made a substantial dent in the 25 percent unemployment rate of

1933, but unemployment averaged 17 percent throughoutthe 1930s and never
went below 14 percent untilWorld War II occasioned massive federal spending
and effectively wrote
finis to the Depression
Decade.
the reasons
Among
that
theNew Deal failed to overcome theDepression andWorld War II did was the
simple fact that thewar made intellectuallyconceivable and politicallypossible
deficit spending on a level thatwas neither dreamed nor attempted before the
war came. The biggestNew Deal deficitwas some $4.2 billion in 1936, largely
"Bonus
of the veterans'
because
Bill,"
Roosevelt's veto. No New Deal

the federal
by contrast,
deficit was
which
not
passed,
deficit reached 6 percent of GNR

$53 billion, more
over
incidentally,
than an order
In 1943,
of magni
tude larger than in 1936, and as a share of GNP nearly six times the largest
New
Deal
What
New
Deal
deficit, at 28 percent.
ismore, much mythology and heated rhetoricnotwithstanding,the

did not
redistribute
substantially
income. America's
the national
income profile in 1940 closely resembled that of 1930, and for thatmatter
1920. The falling economic tide of theDepression lowered all boats, but
by and large theyheld their relative positions. What little income levelling
there was
rather
resulted more
returns to investments,
from Depression-diminished
"wealth
tax policies.
the so-called
than redistributive
tax," or
True,
"soak-the-rich"
tax, that Roosevelt
pushed
the war-time
Revenue
through Congress
in 1935
imposed
a 79 percent marginal tax rate on incomes over $5 million; but that rate ap
plied to but a single taxpayer in all theUnited States JohnD. Rockefeller.
The basic rate remained 4 percent, and even thatapplied to a decided minority
of Americans.
Until
fewer
than one American
collections,
tax at all. A Depression-era
Acts
household
hugely expanded
in twenty paid
couple with an income of $4,000 would
federal
tax
income
any
have
been
in the top tenthof all income receivers; if theyhad two children, theywould
have paid a federal income taxof $16 in 1936.A similarfamily
making $12,000
placing them in the richest1 percent of households?would have paid $600.
Nor, with
essentially
minor
exceptions
like the Tennessee
ity's (TVA) electric-power business, did theNew Deal
mental
contrast
tenet of capitalism,
with the pattern
Valley
Author
challenge the funda
of the means
private ownership
in virtually all other industrial
In
of production.
whether
societies,
WHAT THE NEW DEAL DID
communist, socialist, or capitalist, no significant state-owned

inNew Deal America.2
It is also frequentlysaid that theNew Deal
enterprises
| 253
emerged
conformed to no pre-existing
a spokesman,
not even Franklin
that it never produced
ideological
agenda,
was
out
to
the
New
who
able
Deal's
social and
Roosevelt,
lay
systematically
so
in
and
critics
have
Then
that
economic
later,
many
charged
philosophy.
tent
the
of
Roosevelt's
New
that
Deal
under
consistent
impulses contended
to seek for system and coherence was to pursue a fool's errand. That accu
sation has echoed
in assessments
repeatedly
that stress the New
mon
Deal's
grel intellectualpedigree, its improbablyplural constituentbase, itspolitical
its abundant promiscuities,

inconsistencies,
pragmatism,
stancies, and failures. What
unity of plan or purpose,
incon
contradictions,
one might ask, was to
be found in an administration that at various times tinkeredwith inflation

with deficit spending and budget-balancing,
carteliza
of consumption
the promotion
and the intimidation of
reduction and land reclamation,
farm-acreage
public employment
and with price-controls,

tion and trust-busting,
investment,
projects and
forced
torian concludes
removals
with
some
the grand manner."4
one his
from the labor pool?3 "Economically,"
"the
New
Deal
had
been
in
justice,
opportunistic
And yet, illumined by the stern-lanternof history, theNew Deal
seen
can be
that constituted
left in place a set of institutional arrangements
a more coherent pattern than is dreamt of inmany philosophies.
That pattern
can be summarized
in a single word: security.
to have
It is fitting that the New
Deal's
most
durable
and
reform
consequential
bears that veryword in its title: the Social SecurityAct of 1935. A measure
of Americans?farmers
of security was the New Deal's
and
gift to millions
as
as
and
children
and
the
well
workers,
blue-bloods,
elderly,
immigrants
countless
and home
industrialists,
bankers, merchants,
mortgage-lenders,
enormous
tracts of forest, prairie, and mountain.
buyers, not to mention
Forget
about
the colorful creations
of the decidedly
frenzied and much
of Symbolic
The New
bal
lyhooedHundred Days, like theCivilian Conservation Corps and theNational

2
See,
for example,
Mark
H.
Leff, The Limits
Reform:
and
Deal
Taxation,
1933-1939 (Cambridge: Cambridge University Press, 1984); U.S. Bureau of theCensus, Income
Distribution in theUnited States (Washington,
DC: GPO, 1966); SimonKuznets, "Long Term Changes
in the National
Income
of the United
States
of America
since
1870,"
in Kuznets,
ed., Income
and
Wealth Series II (Cambridge:Bowes and Bowes, 1952); Jeffrey

G. Williamson and PeterH. Lindert,
American
Lampman,
A Macroeconomics
Press,
Inequality:
History
(New York: Academic
1980), and Robert
inNational
The Share of Top Wealth-Holders
Wealth
(Princeton, NJ: Princeton University
Press, 1962).
3
The
classic
study of the New
Deal's
tangled
intellectual
genealogy
in the realm
(New York:
Harcourt,
of economic
policy isEllis W. Hawley, The New Deal and theProblem ofMonopoly (Princeton,NJ: Princeton
Press, 1966).
University
4
James MacGregor
Burns,
1956), 322.
Roosevelt:
The Lion
and
the Fox
Brace
and Co.,
254
Industrial
Recovery
But
consequential.
of them were
Act. Most
all of the New
Deal
short-lived
reforms
in
and ultimately
The Federal
that endured
Insurance
the Securities
and Exchange
Commission,
Deposit
Corporation,
the Federal
the National
Labor Relations
Administration,
Board,
Housing
theFair Labor Standards Act, and above all the Social SecurityAct?had
common
not
cardinal
to end
the immediate
crisis
of the
purpose:
simply
to make
to temper for
life less risky and more predictable,
thereafter what FDR
and vicissi
called the "hazards
repeatedly
but
Depression,
generations
tudes" of life.
The New Deal provided more assurance to bank depositors (FDIC), more
reliable informationto investors (SEC), more safety to lenders (FHA), more
stability to relations between capital and labor (NLRB), more predictable
wages to themost vulnerable workers (FLSA), and a safetynet forboth the
unemployed and the elderly (Social Security). Those innovations transformed
theAmerican economic and social landscape. They profoundly shaped the
fates of Americans
born
long after
the Depression
crisis had
passed.
With
the exception of FDIC, none of them dates from 1933.Had economic health
been miraculously
restored in the fabled Hundred
Days, a swift return to busi
ness as usual might well have meant politics as usual as well, and none of those
landmark reforms would have come to pass. Indeed, there would have been no
New
Deal
as we
it.
know
To be sure, Roosevelt
to enlarge
sought
the national
state as the principal
instrumentof the securityand stabilitythathe hoped to impart toAmerican

life.But legend to the contrary,much of the security that theNew Deal
into the fabric of American
threaded
society was
often stitched with a remark
ably delicate hand, not simply imposed by the fistof the imperious state.And
with
was
the notable
not usually
was
Nowhere
exceptions
purchased
of agricultural
subsidies and old-age
with the taxpayers' dollars.
the artful design
of the New
Deal's
security
it
pensions,
program
more
evident than in the financial sector.At the tip ofManhattan Island, south of
Dutch settlersbuilt theirwall to
the street laid out along the linewhere the first
defend
against marauding
ism.Deep
Exchange,
Indians,
beats
the very heart
of American
capital
in theurban canyons of the old Dutch city sits theNew York Stock
whence
had come
the first herald
of the Depression's
onset. As
the
great crash of 1929 reverberated throughthe financial system,annihilatingbil
and forcing bank closures, it raised a mighty cry

Street," a site that early and late has been beleaguered
in asset values
lions of dollars
for the reform of "Wall
by threateninghordes incensed at its supposedly inordinatepower. The New
Deal
heeded
ican financial
that cry. Among

sector, including
its first initiatives was

the banks
and
the reform of the Amer
the securities markets.
What
it accomplish?
did
| 255
Faced with effectivelycomplete collapse of the banking system in 1933,
confronted a choice. On the one hand, it could try to nationalize

create a new government
bank that would
the system, or perhaps
threaten
to drive all private banks out of business. On
the other hand, it
eventually
to the long-standing
the
of
banks
could accede
requests
major money-center
the New Deal
relax restrictions on
around Wall
those headquartered
Street?to
and thereby
interstate banking, allow mergers and consolidations,
?especially
branch and
facilitate the emergence of a highly concentrated private banking industry,
institutions to carry on the nation's banking

just a few dozen powerful
business. That, in fact, was the pattern inmost other industrialized
countries.
with
But theNew Deal

American
localized
structural change
did neither. Instead, it left the astonishingly plural and

one
system in place, while

banking
inducing
and introducing one key new institution.
important
The structuralchange, mandated by theGlass-Steagall Banking Act of
1933, was
to separate
poses. The
same Act
investment
banks
from commercial
thus securing
banks,
depositors' savings against the risks of being used forhighly speculative pur
a new entity, the Federal
created
Insurance
Bank Deposit
Corporation (FBDIC, later simplyFDIC). Guaranteeing individual bank de

posits up to $5,000 (later raised), and funded by minimal subscriptions from
Federal
Reserve
member
forever liberated banks and
institutions, the FDIC
or panics. These
from
the
fearful
of
bank
two
"runs,"
depositors
psychology
measures
an
new
not
did
elaborate
simple
impose
oppressively
regulatory
costs on either
apparatus on American
banking, nor did they levy appreciable
banks. But they did inject unprecedented

taxpayers or member
stability into
the American
Bank
which
at the rate
had
occurred
failures,
system.
banking
of hundreds per year even before the Depression's
numbered
fewer
descent,
than 10 per year in the several decades after 1933.

If speculation
and
lack of depositor
confidence
had
been
the major
problems of the banking system, the cardinal afflictionof the closely related
securities
industry had
been
ignorance.
Pervasive,
systemic
blan
ignorance
ketedWall Street like a perpetual North Atlantic fog before theNew Deal,
badly impeding the efficientoperation of the securitiesmarkets and leaving
them vulnerable
to all kinds
of abuses.
Wall
Street
the 1930s was
before
environment. Many
firms whose
securities were
strikingly information-starved
no
or
traded
whose
data were so
publicly
published
regular reports,
reports
as
worse
to
and
selected
be
audited
than
It
useless.
arbitrarily
capriciously
was this circumstance
awesome
on
a
that had conferred such
handful
power
of investment
monopoly
impossible
Chernow,
like J.P. Morgan,
in the secondary
for the average
Especially
5
For
bankers
of the information
a vivid
because
necessary
markets where
investor
of the workings
description
The House
of Morgan
(New York:
to come
reliable
information
by, opportunities
of the pre-New
Atlantic
they commanded
sound financial
to making
Monthly
Deal
financial
Press,
a virtual
decisions.5
was all but
abounded
marketplace,
1990).
for
see Ron
256
and wildcat
insider manipulation
this market,"
the canny speculator
"It's
speculation.
P.
Joseph
Kennedy
in
easy to make money
a
to
had confided
part
ner in thepalmy days of the 1920s. "We'd better get inbefore theypass a law
it."6
against
The New Deal did pass a law against it,and assigned Joseph P. Kennedy to
implement that law, a choice often compared to putting the fox in the hen
house, or settinga thief to catch a thief. In 1934 Kennedy became the first
chairman
of the new
Securities
one
Commission,
Exchange
of just four new
regulatory bodies established by the supposedly regulation-madNew Deal.7

The SEC's powers derived from statutes so patently needed but so intricately
technical thatTexas Congressman Sam Rayburn admitted he did not know
so readily because
itwas so damned
good or
some
years later, Rayburn
acknowledged
incomprehensible."
that the SEC,
thanks in part to the start it got from Kennedy, was "the stron
over
in the government." A study of the federal bureaucracy
gest Commission
whether
so damned
the legislation
"passed
seen by Herbert Hoover

commission
independent
Yet
"an outstanding example of the
called the SEC
at its best."8
For all the complexity of its enabling legislation, the power of the SEC
resided principally in just two provisions, both of them ingeniously simple.
disclosure
of detailed
information, such as balance
sheets,
names
of
and
loss
and
the
and
statements,
corporate offi
profit
compensation
were
firms
securities
traded.
The
about
second
whose
cers,
required
publicly
The
firstmandated
verification of that informationby independent auditors using standardized

of
At a stroke, those measures
ended
the monopoly
procedures.
accounting
Street was now
the Morgans
and their like on investment information. Wall
saturated with data
and
that were
The
transactions.
on businesses.
requirements
relevant,
SEC's
and comparable
accessible,
across
firms
new
regulations
unarguably
imposed
reporting
also gave a huge boost to the status of the
They
accounting profession. But they hardly constituted

theory or practice of free-market capitalism. All
the economic
dramatically
improved
regulations
a wholesale
assault
on
the
to the contrary, the SEC's

efficiency of the financial
markets by making buy and sell decisions well-informed decisions, provided

that the contractingparties consulted thedata now so copiously available. This
was less the reformthan itwas the rationalization of capitalism, along the lines
own claims
of capitalism's
6
Kennedy
quoted
York: W.W. Norton,
7
The others were
Federal
notably
in Michael
1980), 60.
the National
Communications
the Federal
and
Commission,
8
Congressman
about
R.
Beschloss,
Labor
Power
Commission,
the Federal
Reserve
and
free markets
Kennedy
Relations
Some
Commission.
Sam Rayburn
how
and Roosevelt:
Board,
existing
the Federal
were
An
Uneasy
the Civil Aeronautics
agencies were also

Trade Commission,
to work. To
supposed
Alliance
Authority,
(New
and
the
considerably
strengthened,
the Interstate Commerce
Board.
the Hoover
Commission
Report
quoted
in Thomas
K. McCraw,
Prophets ofRegulation (Cambridge,MA: The Belknap Press ofHarvard UniversityPress, 1984),175,

153-54.
be sure, a later generation's
financial prestidigitation
the SEC's
eluded
| 257
capac
ity responsibly and effectively to exercise its regulatory functions; but that
sorrydevelopment supported an argument for updating and upgrading the
Commission,
not for challenging
its essential
rationale.
housing policies provide perhaps the best example of its
The New Deal's
sector by introducing new

for stabilizing a major
economic
techniques
ments of information and reliability ?
and offer another lesson in what
ele
can
happen when government agencies fail to keep pace with changes in the
for housing was then

private sector. By its very nature, the potential demand
and later large, widespread,
and capable of generating significant employment
in countless
localities. John Maynard
that
Keynes was not alone in recognizing
housing was a sector with enormous promise for invigorating the Depression
era economy. Well
to put his eggs in the
before Keynes
urged Roosevelt
Herbert
Hoover
had
the
Better
Homes
for Amer
housing basket,
patronized
in the 1920s. In 1931, as new home construction
ica Movement
by
plunged
a national presidential
95 percent from its pre-1929
levels, he had convened
conference
on Home
the latter phrase,
and Home Ownership.

Its very title, especially
Building
to the housing issue.9
advertised Hoover's
preferred approach
As in thebanking sector, theNew Deal faced a choice in thehousing field.
It could
take Keynes's
advice and get behind proposals
for large-scale, European-style
liberals like Robert Wagner
Hoover's
Or
it
could
follow
lead and seek measures
grams.
home building and individual home ownership. Despite
with government-built
model
communities
like the so-called
from congressional
public housing pro

to stimulate private
its experimentation
Greenbelt
Towns
(ofwhich only threewere built), and itsoccasional obeisance to public housing

programs (as in themodestly fundedWagner-Steagall National Housing Act
of 1937), theNew Deal essentially adopted?and
significantlyadvanced?
Hoover's
program,
Two
approach.
the Home
Administration,
ciation
(Fannie
gram after World
new
Owners'
the New Deal's

agencies
implemented
Loan Corporation
and the Federal
later supplemented
by the Federal National
in
the
Veterans'
Administration's
1938,
Mae)
War
II, and
the Federal
Home
Loan
housing
Housing
Asso
Mortgage
Mortgage
housing
pro
Corporation
(FreddieMac) in 1970.10
The HOLC began in 1933 as an emergency agencywith two objectives: to
and to improve lending

protect defaulting homeowners
against foreclosure
institutions' balance
sheets by re-financing shaky mortgages. With much pub
licity,theHOLC
9
For
stopped the avalanche of defaults in 1933. But its lasting
a study of Hoover's
policies,
see Karen
Dunn-Haley,
The House
that Uncle
Sam
built:
the
Political CultureofFederalHousing Policy, 1919-1932, (Ph.D. Dissertation, StanfordUniversity,1995).

10
The
to Kenneth
discussion
of housing
is much
here
indebted
T. Jackson's
work,
pioneering
Frontier: The Suburbanization
Crabgrass
Press,
of the United States (New York: Oxford University
Act of 1934, and the Frazier
programs,
1985). Parallel
legislated by the Farm Mortgage
Refinancing
Lemke
Farm Bankruptcy
Federal
Acts of 1934 and 1935, gave similar relief to farm owners.
258
legacy was
a quieter affair. Just as the SEC

introduced standardized
accounting
to facilitate its nation-wide
into
the
the
securities
HOLC,
practices
industry,
uniform national appraisal methods
lending operations,
encouraged
through
out the real estate industry. Its successor,
the FHA,
created in 1934 to insure
inmuch
that the FDIC
the manner
insured bank depos
long-term mortgages
next
the
standards
of home construc
took
and
defined
national
its,
logical step
tion. The creation of Fannie Mae
New
Deal's
the
housing program
completed
Fannie Mae
apparatus.
furnished
lending
institutions with a mechanism
for re
selling theirmortgages, thus increasing the lenders' liquidityand making more
for subsequent
rounds of construction. Taken
together, the
of appraisal methods
and construction
criteria, along with
insurance and re-sale facilities the New Deal
put in place, re
of the risk from home-lending.
available
money
standardization
the mortgage
moved much
FHA
The
Nor
and Fannie
Mae
did
themselves
neither
to stimulate
much
built houses
they manage
they arranged an institutional
landscape
of private capital could flow into the home
money.
1930s. But
amounts
the post-World
War
II years. The New
Deal's
new
nor
construction
loaned
in the
in which
unprecedented
construction
industry in
housing policies, cleverly com
mingling public and private institutions,demonstrated thatpolitical economy

not be a zero-sum
of state power automat

game, inwhich the expansion
the war was over, this
Once
ically spelled the shrinkage of private prerogatives.
or intimidated
so
New Deal
"reform" proved not to have checked
capital
much as to have liberated it.And eventually
it revolutionized
the way Amer
need
icans
lived.
Before
homes.
in ten lived in their own

the New Deal,
only about four Americans
in the 1920s typically paid full cash or very large down
for their houses, usually not less than 30 percent. The standard mort
Homeowners
payments
with a highly limited service area, had

gage was offeredby a local institution
only a five to ten year maturity, bore interest as high as 8 percent, and required
a large "balloon"
payment, or refinancing, at its termination. Not surprisingly,
were renters.
a majority of Americans
under such conditions
The New Deal changed all that.Uniform appraisal procedures made

lendersmuch more confident in the underlying value of mortgaged proper
them less nervous about loans going sour. Con

insurance made
to
lenders
accept down payments of ten percent, and to offer
began
sequently,
Interest
with level monthly payments.
amortized
mortgages,
thirty-year fully
as
came
risk
rates on mortgages
the
diminished.
element
of
also
down
Finally,
ties. F.H.A.
nationally standardized
appraisal
Mae's
(and, later, Freddie Mac's)
and construction
national market
standards, along with Fannie

formortgage
paper, allowed
funds to flow out of regions of historic capital surplus to regions of historic
capital deficit?that
South and West.
is, from city to suburbs
and
from the Northeast
in short, put in place an apparatus

of financial security that
to
and
the Sunbelt. Private
suburbia
build
post-war
private money
The New Deal,

allowed
to the
| 259
Four decades
after the New Deal,
nearly two
houses. By the opening of the
in owner-occupied
?
a signal social
were homeowners
twenty-first century, nearly 70 percent
new owners
too
the
last
increment
of
achievement,
among
many
though
one
to service
the
their mortgages.
unable
percent,
Only
usually
proved
built private
money
thirds of Americans
homes.
lived
poorest of the poor, lived in public housing. By contrast, in JohnMaynard

Keynes' England, nearly half the population lived in public housing in the
years,
early post-war
as did more
than a third of the population
of France.11
**
In the financial
and housing
sectors,
the New
Deal
built structures of stability
by the inventivelysimple devices of standardizing and promulgating relevant
schemes
self-insurance
that
information, and by introducing
industry-wide
to
calmed jittery markets
and offered dependable
safeguards
capital. In many
was
less
itwas, sim
somewhat
other sectors, the New Deal's
artful;
technique
or
to
at
to
But
its
least
modulate
destructive
effects.
suppress competition,
ply,
the objective was the same: to create a uniquely American
system
everywhere
of risk-reduced, or risk-managed,
capitalism.
The New Deal
its crudest version of the anti-competitive
applied
approach
sector. There
to the chronically volatile agricultural
it contained
destabilizing
competitionwith the ham-handed device of simplypaying producers not to
surpluses off the market

altogether. Some
produce, keeping price-depressing
of the same logic of mandatory
and even subsidized
reduction of competition
was also apparent
treatment of labor markets.
in the New Deal's
Franklin
Roosevelt
declaimed
about
and the Fair Labor
rityAct
But those Acts
also
shaped
for the Social Secu

justice in his campaigns
he
and
achieved
much justice, too.
Standards Act,
a manpower
to do
policy that had nearly as much
social
with stability,plain and simple, as it did with social justice. Prohibitions on

child labor,combinedwith virtuallyobligatory retirementby age 65, statutorily
shrank
Retirees
the size of the labor pool and therefore reduced wage-competition.

in effect, paid not to work, just as farmers were paid not
were,
to
produce (though all but the firstgeneration of Social Security pensioners
were
ostensibly
unapologetically
paid from their own

drew their subsidies
forced-savings
from general
accounts,
Treasury
while
farmers
revenues).
The
Fair Labor Standards Act, as well as the industry-widebargaining power of

the new CIO
unions,
also built broad
floors under wages
and
thereby
further
reduced the abilityof employers and employees alike to compete by lowering

labor costs.
11
Jackson,
also demonstrates
that both the private and public
Frontier, 224. Jackson
and even exacerbated
racial
encouraged
by the New Deal
frequently reinforced
Britain
It
that
the
had
abandoned
in
is
also
worth
1990s,
noting
by
substantially
segregation
housing.
the public housing model,
and a majority
of Britons had become
homeowners.
housing
Crabgrass
programs
260
In some
sectors,
new
regulatory
commissions
orderly
provided
forums
where the rules of competition could be agreed on and the clash of interests
accommodated
in a peaceful
manner.
The
National
Labor
Relations
Board
constituted a compelling example of that technique. Elsewhere, as in large

infrastructural
industries
like transportation,
as
and energy,
communications,
well as in thewholesale distribution and retailmarketing sectors, theNew

Deal sought stabilityby directly curtailingprice and cost competition, often
created
in 1938, per
Board,
by limiting new entrants. The Civil Aeronautics
formed those functions for the infant airline industry; the Interstate Commerce
for the older railroad industry, and, after the passage of theMotor
of 1935, for truckers as well. The Federal Communications
Com
born in 1934, did the same for telephones,
radio, and, later, television;
Commission
Carrier Act
mission,
theFederal Power Commission, thoughwith more difficulty,for oil and gas

production. The Federal Trade Commission, newly empowered by twoNew
Deal "fair trade" laws,was chargedwith limitingprice competition in the retail
and wholesale trades. (The Robinson-Patman Act of 1936 prohibited chain
stores
from discounting
corner
"mom-and-pop"
below
certain
stores against
stipulated
aggressive
levels,
a way
price pressure
of insulating
from the high
volume giants. The Miller-Tydings Act of 1937 legalized price-maintenance
between wholesalers
and their distributors, a way of stabilizing the
marketed
name-brand
of
nationally
prices
goods.)
and regulatory instruments
The creation of this array of anti-competitive
as an inappropriate
to the Great De
has often been criticized
response
contracts
for example, writes that "the

historian Peter Temin,
pression. The economic
an
to
with
solve
macroeconomic
New Deal
attempt
represented
problems
tools." Recent writers, including conspicuously
microeconomic
Amity Shlaes,
have levelled similar charges.12But that kind of judgement about theNew
not only ignores the substantial,

if incomplete,
economic
recovery that
that solving
It also rests on the assumption
Roosevelt's
policies did achieve.
of
demand
and
the macroeconomic
insufficient
high unemployment
problem
Deal
recovery was the New Deal's

highest priority. Certainly
by inducing economic
that such was his goal. But if actions
Roosevelt
said on countless occasions
speak louder thanwords, then itmay be fair to conclude that perhaps not
in stated purpose,
but
surely
in actual
practice,
the New
Deal's
premier
ob
jective, at least until 1938, and inRoosevelt's mind probably for a long time
thereafter, was not economic
long run. In the last analysis,
recovery
tout court but structural
reform, not simply recovery, was
reform for the
the New
Deal's
highest ambition and its lasting legacy.

Roosevelt signalled as much in his Second InauguralAddress on 20 Jan
uary
1937. On
that occasion
he uttered
one
of his most-quoted
and most
12
in an Atmosphere
Temin's
remark is in Gary M. Walton,
ed., Regulatory
Change
of Crisis: Cur
The
rent Implications
Years
Press,
Shlaes,
1979), 58; Amity
of the Roosevelt
(New York: Academic
Man:
A
New
York:
the
Great
History
Depression
2007).
forgotten
of
(New
HarperCollins,
"I
lines:
see one-third
| 261
of a nation
ill
ill-housed,
ill-clad,
in
that
nourished."
He
about
the
passage
emphatically
speaking
victims of the Great Depression.
Just moments
about
earlier he had boasted
of prosperity
since he had assumed
the return of at least a measure
the
misunderstood
was
not
in 1933. But then, in one of the most extraordinary

and revealing
presidency
canon
remarks in the entire
of presidential
addresses, he said: "Such symptoms
of prosperity may become
portents of disaster!" Here was an unmistakeable
of Roosevelt's
indication
crisis and political
sensitivity
opportunity. Like
to the relationship
between
economic
a later president, Barack Obama,
who
told an interviewerinFebruary 2009 thathard times are "when the political

starts to move
system
created
a rare moment
knew that the Depression

effectively," Roosevelt
of political
and institutional malleability
when
had
the
tectonicplates ofAmerican political lifecould be consequentially shifted.13

The pattern of economic restructuringthat theNew Deal put in place
arose
out of the concrete historical

of the Depression,
circumstance
but it
even mainly determined
not wholly or perhaps
that
It
circumstance.
by
also had a more coherent intellectual underpinning
than is customarily recog
nized. Its cardinal aim was not to destroy capitalism, but to de-volatilize
it, and
was
at the same
its benefits more
time to distribute
initiatives were
from decades
evenly. New Deal

regulatory
of anxiety about overcapacity
and
that had so disrupted
the first great
precipitated
the very issues
competition,
national
the
in the nineteenth
railroads,
century, and led to the cre
industry,
ation of the country's first regulatory commission,
the Interstate Commerce
cut-throat
in 1887. Against
that background,
to
the Depression
Commission,
appeared
mark the final, inevitable collapse of an economy
that had been beset for at
least fifty years by overproduction
and an excess of competition. The regula
toryregime that theNew Deal put in place seemed, therefore,but a logical
extension
of the kind competition-controlling

remedies
that the ICC had first
a
a
half
and
applied
century earlier,
fitting climax to five de
cades of sometimes wild economic
turbulence.
to the railroads
Those
views found theirmost
systematic formulation inFranklin Roosevelt's

1932 campaign
address at San Francisco's
Commonwealth
Club. As much as
can, that speech served as a charter for the New Deal's
any single document
economic
program.
"The history of the last half century," said Roosevelt
in San Francisco,
a history of a group of financial Titans....
"in large measure
is
long as we had free land; as long as population was growing by leaps and
bounds; as long as our industrial plants were insufficient to supply our own needs,
society chose to give the ambitious man free play and unlimited reward provided
only that he produced the economic plant so much desired. During this period of
As
13
FDR's
Lehrer,
accessed
inaugural,
27 February
2009.
at http://bartelby.com/124/pres50.html;
Obama
interview
with
Jim
262
expansion, there was equal opportunity for all and the business of government
was not to interfere but to assist in the development of industry."
now
But now, said Roosevelt, "our industrialplant is built; the problem just
under existing conditions

it is not overbuilt. Our
last frontier
more
no
and
been
there
free
land.... We
since
is
reached,
long
practically
are now providing a drab living for our own people....
is whether
has
Clearly, all this calls for a re-appraisal of values. A mere

plants, a creator ofmore railroad systems, an organizer
likely to be a danger as a help. The day of the great
Titan, to whom we granted everything ifonly he would
builder ofmore industrial

ofmore corporations, is as
promoter or the financial
build, or develop, is over.
task now is not discovery, or exploitation of natural resources, or necessarily

producing more goods. It is the soberer, less dramatic business of administering
resources and plants already in hand, of seeking to reestablish foreign markets for
our surplus production, of meeting the problem of underconsumption, of adjust
ing production to consumption, of distributing wealth and products more equita
Our
bly, of adapting existing economic organizations to the service of the people. The
day of enlightened administration has come.... As I see it, the task of government
in its relation to business is to assist the development of ... an economic constitu
tional order."14
The
stabilize
of course,
National
Administration,
Recovery
limit
and
price and wage
production
its measures
with
competition,
was
the classic
to
in
stitutionalexpression of thatphilosophy. But even after theNRA's demise in

New Deal effortsto
1935, the thinkingthathad shaped itcontinued to inform
erect a new
That
"economic
thinking
implicit. The
usually
inRoosevelt's
constitutional
order."
on three premises,
rested
first was
Commonwealth
two of them explicit, the other

evident
the notion, so vividly and repeatedly
that the era of economic
Club Address,
growth
to the closing of the frontier, Roosevelt,

echo
celebrated
thesis about the 1890s, suggested
Jackson Turner's
ing Frederick
instead the
did not mark a transient crisis but heralded
that the Depression
had ended. With
death
his references
of an era and the birth of a new historical
ers, from Rexford
Tugwell
epoch. Many other New Deal

in
to the young Keynesians
who rose to prominence
the second Roosevelt administration,shared thisview. It deeply colored their

thoughtrightdown to the end of theDepression decade. "The economic crisis
Currie wrote
is not a temporary one," the economist Lauchlin
facing America
to his boss, Marriner Eccles,
in 1939. "The violence of the depression
following
for some time the fact that a profound
"obscured
continued,
1929," Currie
change of a chronic or secular nature had occurred."15 That change, Currie

was the emergence
of a "mature"
concluded,
economy, one whose
capacity
for growth was largely exhausted. The best that could be hoped for, therefore,
I, 742-756.
UPPA, Vol.
15
inAlan
Currie quoted
Brinkley,
The End
(New York: Alfred A. Knopf, 1995), 122.
of Reform:
New
Deal
Liberalism
in Recession
and War
| 263
the gross levels of production

of the late 1920s, and to effect a
of
distribution
consuming power so as to sustain those levels
equitable
himself said consistently
that his "goal" was to raise
indefinitely. Roosevelt
was
to restore
more
to "ninety or one hundred"

billion dollars. "When, the Lord
as
as October
to
he
late
remarked
1937, "but that is a
reporters
only knows,"
a
sound
Measured
income
of nearly 87
national
against
perfectly
goal...."16
national
income
billion dollars in 1929, itwas also a perfectlymodest goal, a goal inspiredby

of economic
visions
restoration,
not economic
expansion.
The second premise that informedNew Deal policy was closely related to
the first, and was also evident in Roosevelt's

Commonwealth
Club address. It
was the idea that the private sector, left to its own devices, would never again
to sustain even
be capable of generating sufficient investment and employment
a 1920s-level
economy. That premise was the starting-point forHarry Hopkins'

Both he and Roosevelt
thatWPA
Progress Administration.
presumed
would be a permanently
necessary
program.
government
employment
("The
can absorb all able-bodied
time...when
said
workers,"
industry and business
Works
in 1936, "seems to grow more distant with improvements

inmanage
Hopkins
ment and technology.")17 The same assumption
about the long-term structural
of the private sector in "mature" economies
formed much of the
inadequacies
intellectual core of Keynesian
Even
before
gave the idea full
analysis.
Keynes
articulation, thismotif ran like a bright thread through thewritings of the
of the dismal science

in the 1930s. Alvin Hansen,
professional
practitioners
a Harvard
to become America's
economist destined
gave
leading Keynesian,
forcefulexpression to thisnotion in 1938 inFull Employment or Stagnation?, a
to popularize
that helped
the concept of "secular stagnation" while also
that
to make up for the per
government
arguing
spending was indispensable
manent
of private capital.18
deficiencies
book
New
The thirdpremise thatmoulded the economic thinkingand policies of the

Deal
was
the assumption,
less consciously
held
determinative
that
the
United
nonetheless,
powerfully
ically self-sufficient nation. That concept of economic
lain Roosevelt's
international
only
than the other

States was
two, but
an econom
isolationism
had under
frank declaration
... are
in his first inaugural

address
that "our
in point of time and necessity
secondary
of a sound national
It had formed the
economy."
trade relations
to the establishment
basis of his inflationaryschemes of 1933 and 1934. It formed the filamenton

a series of New
which
and price-fixing
16
PPA,
1937 Vol.,
1938 Vol.,
PPA,
Deal
legislation,
476;
see
from crop-supports
measures,
was strung. When
Roosevelt
also Roosevelt's
Annual
Message
to Congress
to minimum-wage
spoke
of "balance"
of January
3, 1938,
in
3.
17
to Save
Harry Hopkins,
Spending
(New York: W.W. Norton,
1936), 180-181.
18
or Stagnation?
Alvin H. Hansen,
Full Employment
(New York: W.W. Norton,
1938). Witnessing
the economic
later revised his views on secular stagnation.
"All of us
II, Hansen
impact ofWorld War
had
our
Nation,
sights too low," he wrote

21 October
1944, 492.
in 1944.
See Alvin
H. Hansen,
"Planning
Full Employment,"
The
264
between
industry and agriculture,
American
or when
he posited
the require
ment "that the income of our working population actually expands sufficiently
to absorb
to create markets
sioning
an America
petitors,
he was
production,"
not
to
mention
foreign markets,
that increased
for which
did not exist.19
envi
clearly
com
foreign
***
From those intellectual building blocks, composed of a theory of history, a

of the nature
conception
of modern
economies,
and an appraisal
of America's
unique position in theworld, theNew Deal erected an institutionalscaffolding

designed to provide unprecedented stabilityand predictabilityfor theAmeri
post-war
serve as the latticework

In time, that edifice would
like
the
"mile-a-minute
vine"
kudzu,
economy
grew
financial
reliability,
on which
can economy.
the
that carpets
much of the South. The unparalleled economic vitalityof the post-1940 de

cades owed tomany factors,not least the gusher of deficit spending triggered
byWorld War II, as well as the long exemption fromforeigncompetition that
the results of thewar conferred on theUnited States. But the elements of
in commodity,
competition
transportation,
well-ordered
relations
between
communication,
retail, and labor markets,
at
of
minimal
levels
and
least
and
labor,
management
government
support
that owed much to the New Deal?must
of aggregate demand?developments
modulated
surely figure largely in any comprehensive explanation of the performance of
in the post-war quarter-century.

economy
economic growth as a later generation would know it formed little part
of
of the New Deal's
timid, attenuated
ambition, even after FDR's
acceptance
to
end
of
the
the
in
remained
reluctant
deficits
1938.
Roosevelt
Keynesian
the American
Yet
to engage
in the scale of compensatory
to pre-Depression
the economy
levels, let alone
his attacks on business
sufficiently to encourage
1930s
of the stabilizing
elements
his own government
spending
expand
to restore
adequate
it.Nor would he relax
capital to take full advantage

was putting in place. Ironically,
he succeeded in building structuresof stabilitywhile maintaining throughout

the 1930s,
so far as businessmen
and
investors were
concerned,
an atmosphere
of uncertainty.Capital can livewith restrictions,but it is terrorizedby insecu
is now hesitant about making

long term plans," the head of the
rity. "Business
to Marriner
in 1937, "partly
Eccles
Board wrote
New York Federal Reserve
are
it feels it does not know what the rules of the game
because
going to be."20
That
sentiment was widely
shared
in the business
much the regulations that theNew Deal

in the 1930s;
itwas
the fear of what
It was
community.
so
not
imposed that intimidatedbusinessmen
new and unknown
Roosevelt
provocations
14, and 1937 Vol., 496.

l9PPA, 1933 Vol.,
20
"The Decline
of the New Deal,
in Richard
Quoted
1937-1940,"
Polenberg,
The Ohio
State University
The National
et al, eds., The New Deal:
Level
(Columbus:
in John Braeman,
Press,
1975),
255.
| 265
at last Roosevelt
reform
the New Deal's
declared
yet unleash. When
the war compelled
government
spending on an
phase at an end, and when
to a
and the economy
scale, capital was unshackled,
energized,
unexampled
might
could scarcely have imagined in the
degree that he and other New Dealers

decade.
Depression
ever after, Americans
And
assumed
that the federal
gov
ernment had not merely a role, but a major responsibility, in ensuring the
health of the economy and thewelfare of citizens.That simple butmomentous
shift in perception was the newest thing in all theNew Deal, and themost
too.
consequential,
****
of course,
Humankind,
not
does
live by bread
assessment
alone. Any
of what
theNew Deal did would be incomplete if it restedwith an appraisal of New
Deal
the remarkable
and failed to acknowledge
policies
innovations nourished
temperament.
by Roosevelt's
expansive
economic
social
array of
The world isnot a finishedplace, thephilosopherWilliam James once said,

nor ever will be. Neither was theNew Deal a finished thing,though in later
years some scholars lamented
and its supposedly
premature
its incompleteness,
demise.21 But what
its alleged political

timidity,
needs emphasis,
in the final
accounting, isnotwhat theNew Deal failed to do, but how itmanaged to do so

much in the uniquely plastic moment of themid-1930s. That brief span of
in Amer
years, it is now clear, constituted one of only a handful of episodes
and lasting social change has occurred?when
ican history when substantial
the country was, in measurable
sys
degree, remade. The American
political
tem, after all, was purpose-built

from the national
manipulation
in the eighteenth century to prevent its easy

to bind governments
down from
capital,
as
the
of
chains
the Constitution,
Jefferson said, by
mischief,
especially
by
the notoriously constraining system of checks and balances.
It is hardly surpris
stasis defines the "normal" American
condition.
ing, therefore, that political
are not its limita
that backdrop, what stands out about the New Deal
Against
of its vision and the consequent
tions and its temerity, but the boldness
sweep
of its ultimate achievement.
all his alleged
social vision was
inscrutability, Franklin Roosevelt's
a
are
once
to
"We
make
he
said to Secretary
enough.
going
country,"
of Labor Frances Perkins, "in which no one is left out."22 In that unadorned
For
clear
sentence
21
Works
"The
Roosevelt
spoke
that generally
share
Achievements
volumes
about
a critical posture
Conservative
of Liberal
toward
Reform,"
the New
the New
Deal's
Deal
in Bernstein,
lasting historical
include Barton
ed., Towards
J. Bernstein,
a New
Past
(New
York: Pantheon, 1968);Howard Zinn,New Deal Thought (Indianapolis, IN: The Bobbs-MerrillCom
pany, 1966); Paul Conkin, TheNew Deal (ArlingtonHeights, IL: Harlan Davidson, 3d edition, 1992);
Alan Brinkley,The End ofReform (NewYork: AlfredA. Knopf, 1995), andMichael Sandel,Democ
MA:
racy's Discontent
(Cambridge,
22
Frances Perkins, The Roosevelt
The
Press of Harvard
Belknap
University
I Knew
(New York: Viking,
1946), 113.
Press,
1996).
266
and unpretentious
old home on
Like his rambling, comfortable,
meaning.
was
a welcoming
the Hudson
the bluff above
Roosevelt's
New
Deal
River,
of many rooms, a place where millions
mansion
of his fellow citizens could
find at last a measure of the security that the patrician Roosevelts enjoyed
as theirbirthright.
the New
Perhaps
Deal's
greatest
achievement
was
its accommodation
of
thematuring immigrantcommunities thathad milled uneasily on themargins
and more before the 1930s. In bringing

society for a generation
of national
them into the Democratic
life,
Party and closer to the mainstream
even without fully intending to do so, also made
room for an
the New Deal,
almost wholly new institution, the industrial union. To tens of millions of rural
of American
Americans,
and roads,
the New
Deal
offered
the modern
as unaccustomed
as a well
comforts of electricity, schools,

stability. To the elderly and
financial
the unemployed itextended thepromise of income security,and the salvaged

dignity thatwent with it.
To black Americans theNew Deal offered jobs with theCCC, WPA, and
as importantly, the compliment

of respect from at least
and, perhaps
PWA,
some federal officials. The time had not come for direct federal action to chal
lenge JimCrow and put rightat last the crimes of slaveryand segregation,but
than a few New
more
Dealers
clear where
made
their sympathies
lay, and
the Pres
Roosevelt,
in small but unprece
for a better future. Urged on by Eleanor

quietly prepared
into the government
ident brought African-Americans
dented numbers. By themid-1930s theygathered periodically as an informal

"black
cabinet,"
guided
also appointed
Roosevelt
New
Deal
Bethune.
often by the redoubtable
Mary McLeod
Several
the first black federal judge, William Hastie.
Interior
Ickes'
and agencies,
including especially
Departments
Youth Administration,
National
and Aubrey Williams'
placed
Department
advisers for "Negro affairs" on their staffs.
scores of social experi
New Deal,
of Roosevelt's
In the yeasty atmosphere
to
ments flourished. Not all of them were successful, not all of them destined
of building a country from whose
last, but all shared the common purpose
Admin
basic benefits and privileges no one was excluded. The Resettlement
istration
laid out model
communities
for displaced
farmers and refugees
from
the shattered industrial cities, though only a handful of those social experi
ments
survived,
they soon
and
lost their distinctive,
Utopian
character.
The
Farm SecurityAdministrationmaintained migrant labor camps that sheltered

thousands of families like John Steinbeck's Joads. The Tennessee Valley Au
thoritybrought electricity,and with it, industry,to the chronically depressed
Upper South. The Bonneville Power Authoritymade a starton doing the same
for the Columbia
Deal
also
River
extended
Reorganization
Act
century-old policy
new law encouraged
Basin
the hand
The New
in the long-isolated Pacific Northwest.
to
The
Indian
Native
Americans.
of recognition
of 1934?the
of forced
so-called
assimilation
tribes to establish
Indian New
and
alienation
their own
the half
Deal?ended
of tribal
self-governing
lands. The
bodies
and
| 267
some Indians denounced

this
to preserve
their ancestral
traditions. Though
museum
measure
a
to
as
that
make
"back-to-the-blanket"
sought
pieces
policy
consis
the Act accurately
reflected the New Deal's
out of Native Americans,
tently inclusionary
ethos.
The New Deal also succored the indigentand patronized the arts. It built
roads and bridges and hospitals. It even sought a kind of securityfor the land
itself,adding some 12millions acres of national parklands, includingOlympic
National Park inWashington State, Isle Royal inLake Superior, theEver
glades inFlorida, and King's Canyon inCalifornia. It planted trees and fought
on
and Bonneville
Coulee
It erected mammoth
dams?Grand
Fort Peck on the Missouri?that
the Columbia,
Shasta on the Sacramento,
were river-tamers and nature-busters,
to be sure, but job-makers
and region
builders, too.
erosion.
Above
had much
all, the New

of it a sense
Deal
who
gave to countless Americans
of security, and with it a sense of having
had
never
a stake
in
theircountry.And itdid it all without shredding theAmerican Constitution
or sundering
and alienation
the American
people. At a time when despair
were prostrating
that was no
other peoples
under the heel of dictatorship,
small accomplishment.
The
columnist
Dorothy
Thompson
at the end of the Depression
achievements
summed
decade,
up Franklin
in 1940:
Roosevelt's
We have behind us eight terrible years of a crisis we have shared with all coun
tries.Here we are, and our basic institutions are still intact, our people relatively
prosperous, and most important of all, our society relatively affectionate. No rift
has made an unbridgeable schism between us. The working classes are not clam
oring for [Communist Party boss] Mr. Browder and the industrialists are not
demanding a Man on Horseback. No country in the world is so well off.23
In the last analysis,
Roosevelt
his duties, in
faithfully discharged
as
trustee
of
"the
for
those
in
1933,
every coun
Keynes's
who
in
social
and
in
He
believed
did
mend
the evils of
peace
democracy.
try"
the Depression
reasoned
within
the
framework
of
the
by
experiment
existing
John Maynard
Franklin
words
social system. He did prevent a naked confrontation

between
and
orthodoxy
as
as
revolution. The priceless
value of that achievement,
much
the
surely
columns of ciphers that recorded national
income and production, must be
reckoned in any final accounting of what theNew Deal did.

The New Deal powerfully revitalizedAmerican life in the second half of
for sustained
economic
century. It built a platform
growth,
secure than
the benefits of prosperity widely, made more people more
the twentieth
spread
theyhad ever been, and helped set the stage for the civil rightsmovement that
at least a measure
brought
23
New
York Herald
of American
Presidential
Tribune,
Elections
of long-delayed
9 October
social justice forAfrican-Americans.
in Arthur M. Schlesinger,
Jr., The History
reprinted
McGraw
Hill,
IV, 2981-93.
1971), Vol.
1940,
(New York:
268
as the century waned

came
and a new generation
toward risk, security, and the role of government
Yet
attitudes
tially. "Government
clared.
"Government
is not
the solution
is the problem."
to power, national
shifted consequen
to our problem," Ronald

de
Reagan
The policies
that flowed from that
political theologydid not fullydismantle theNew Deal, but theybadly compro

mised the capacity of government to adapt to the rapidlychanging character of
the global post-industrial
economy. As a new generation of political leaders peer
into the maw of another monstrous
economic
calamity, they would do well to
of the New Deal:
that government
has not
remember
the enduring relevance
only a right,but an obligation, tomake a country inwhich no one is leftout,

and inwhich all can live in safetyand security.*
This
People
article
from David M. Kennedy,

Freedom
is adapted
and updated
York:
Oxford
and War, 1929-1945
University
(New
in Depression
From
Press,
Fear:
The American
1999).

How FDR's New Deal Created Security

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How FDR's New Deal Created Security

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What the New Deal Did

Author(s): DAVID M. KENNEDY

What theNew Deal Did

is that the Great

a rare political opportunity, and

that the Great

"At the heart of theNew Deal,"

the distinguished historian Richard

"there was not a philosophy

1930s and thatdecade's signaturepolitical legacy,theNew Deal.

Into the years of the New Deal was

of time in the nation's

of the Bill Lane

Political Science Quarterly

for the American

Volume 124 Number 2

| POLITICAL SCIENCE QUARTERLY

cal significance,its ideological identity,and itspolitical, social, and economic

itself.So justwhat, exactly,did theNew Deal do?

grams made a substantial dent in the 25 percent unemployment rate of

finis to the Depression

Roosevelt's veto. No New Deal

deficit reached 6 percent of GNR

ismore, much mythology and heated rhetoricnotwithstanding,the

tax, that Roosevelt

than one American

couple with an income of $4,000 would

like the Tennessee

ity's (TVA) electric-power business, did theNew Deal

challenge the funda

WHAT THE NEW DEAL DID

communist, socialist, or capitalist, no significant state-owned

It is also frequentlysaid that theNew Deal

that stress the New

grel intellectualpedigree, its improbablyplural constituentbase, itspolitical

its abundant promiscuities,

be found in an administration that at various times tinkeredwith inflation

and with price-controls,

the grand manner."4

And yet, illumined by the stern-lanternof history, theNew Deal

It is fitting that the New

the colorful creations

frenzied and much

lyhooedHundred Days, like theCivilian Conservation Corps and theNational

Leff, The Limits

Wealth Series II (Cambridge:Bowes and Bowes, 1952); Jeffrey

study of the New

| POLITICAL SCIENCE QUARTERLY

all of the New

state as the principal

instrumentof the securityand stabilitythathe hoped to impart toAmerican

often stitched with a remark

the artful design

the very heart

the first herald

great crash of 1929 reverberated throughthe financial system,annihilatingbil

and forcing bank closures, it raised a mighty cry

for the reform of "Wall

by threateninghordes incensed at its supposedly inordinatepower. The New

that cry. Among

its first initiatives was

the reform of the Amer