4.13 Legacy of the New Deal

In many ways, it was quite conservative. It left capitalism intact, even strengthened, and it overturned few cultural conventions. Even its reformers followed the old progressive formula of softening industrialism by strengthening the state. Yet for all its conservatism and continuities, the New Deal left a legacy of change. Under it, government assumed a broader role in the economy than progressives had ever undertaken.

To regulation was now added the complicated task of maintaining economic stability – compensating for swings in the business cycle. In its securities and banking regulations, unemployment insurance, and requirements for wages and hours, the New Deal created stabilizers to avoid future breakdowns. Bolstering the Federal Reserve System and enhancing control over credit strengthened government influence over the economy.

The power of Congress diminished, but the scope of government grew. In 1932 there were 605,000 federal employees; by 1939, there were nearly a million (and by 1945, after World War II, there were 3.5 million).

The many programs of the New Deal – home loans, farm subsidies, bank deposit insurance, relief payments and jobs, pension programs, unemployment insurance, aid to mothers with dependent children – touched the lives of ordinary Americans, made them more secure, bolstered the middle class, and formed the outlines of the new welfare state.

By the end of the 1930s, Roosevelt and his Democratic Congresses had presided over a transformation of the American government and a realignment in American party politics. Before World War I, the American national state, though powerful, had been a “government out of sight.” After the New Deal, Americans came to see the federal government as a potential ally in their daily struggles, whether finding work, securing a decent wage, getting a fair price for agricultural products, or organizing a union. Voter turnout in presidential elections jumped in 1932 and again in 1936, with most of these newly mobilized voters forming a durable piece of the Democratic Party that would remain loyal well into the 1960s. Even as affluence returned with the American intervention in World War II, memories of the Depression continued to shape the outlook of two generations of Americans.¹ Survivors of the Great Depression, one man would recall in the late 1960s, “are still riding with the ghost—the ghost of those days when things came hard.”²

Historians debate when the New Deal ended. Some identify the Fair Labor Standards Act of 1938 as the last major New Deal measure. Others see wartime measures such as price and rent control and the G.I. Bill (which afforded New Deal–style social benefits to veterans) as species of New Deal legislation. Still others conceive of a “New Deal order,” a constellation of “ideas, public policies, and political alliances,” which, though changing, guided American politics from Roosevelt’s Hundred Days forward to Lyndon Johnson’s Great Society—and perhaps even beyond. Indeed, the New Deal’s legacy still remains, and its battle lines still shape American politics.

Notes

1. Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago, 1919 – 1939 (New York: Cambridge University Press, 1990); Kristi Andersen, The Creation of a Democratic Majority, 1928–1936 (Chicago: University of Chicago Press, 1979); Caroline Bird, The Invisible Scar (New York: McKay, 1966).
2. Quoted in Studs Terkel, Hard Times: An Oral History of the Great Depression (New York: Pantheon Books, 1970), 34.