Third New Deal

When Franklin Delano Roosevelt (FDR) was sworn into the office of President in the 1930s, the United States was in the midst of the Great Depression, a decade-long economic downturn that began in the United States itself. Faced with this crisis, FDR changed the face of American economics and instated the New Deal, which would then be expanded into the Second and Third New Deals.

The Great Depression was the worst economic downturn that Americans had ever faced. The stock market had crashed in 1929, and banks closed to prevent their customers from withdrawing their money. Many banks never reopened. In the United States, standards of living decreased. Around a quarter of the labor force struggled to find work. Those who had jobs saw wages decline dramatically. The American people were ready for new leadership. This was the landscape of America when FDR took his oath.

Fig. 1 - Franklin Delano Roosevelt

Though the initiatives from the Hundred Days had provided some recovery, President Roosevelt knew there was more work to do. In 1935, he wanted Congress to pass legislation to provide more employment opportunities (by building roads and bridges), create a “social safety net” (commonly known as Social Security), and to protect workers’ rights. This is often called the Second New Deal.

By the time FDR began his second term in 1937, the economy was showing signs of recovery, leading many to believe the economic turmoil was over. As such, there was a push in Congress to scale back the New Deal. Acknowledging their wishes and hoping to avoid deficit spending, Roosevelt cut spending on various relief programs that had been keeping Americans afloat--at the same time they were having to pay a new Social Security tax. The result was another recession, characterized by decreased industrial production and increased unemployment.

Social reformers looked to the president to save them once again, but despite this push for a Third New Deal (a term created by historians), FDR struggled to accomplish much of what he set out to do.

Roosevelt and the Third New Deal

Facing a Supreme Court that seemed intent to strike down his attempts at a Third New Deal, Roosevelt introduced a court-packing scheme that would add a new Supreme Court Justice for every member of the Supreme Court over 70. This greatly angered many conservatives who believed he was trying to expand his influence unjustly. A coalition formed, made up of conservative Republicans who feared another increase in spending and programs, but also Southern Democrats who believed the relief given to Black Americans was undermining their system of oppression. Together, they worked to undermine Roosevelt's proposed programs and legislation.

The Third New Deal: Legislation

Let's go over some key legislation that did make it past this conservative coalition:

• United States Housing Act/Wagner-Steagall Act (1937): funded public housing projects run by individual states

• Farm Tenancy Act/Bankhead-Jones Farm Tenant Act (1937): created the Farmers' Home Corporation to loan money to tenant farmers so that they could buy their own farms

• Fair Labor Standards Act (1938): set a national minimum wage as well as guidelines for overtime pay, record-keeping, and the employment of minors

• Executive Reorganization Bill (1939): gave the president the power to create and appoint his cabinet advisors