The First New Deal and Alphabet Agencies

Roosevelt’s response: relief, recovery and reform

When Franklin D. Roosevelt became president in March 1933, the Great Depression had left millions unemployed and undermined confidence in banks. His First New Deal made the federal government much more directly responsible for helping Americans and managing the economy.

Its purposes are often summarised as the three Rs. Relief meant immediate help for people who needed food, money or work. Recovery meant restarting economic activity so that businesses and farms could earn more and employ workers. Reform meant changing rules and institutions to make the economy more secure in future. These purposes overlapped: a government-funded job could relieve a family’s hardship while its wages helped shops and businesses recover.

Roosevelt did not begin with a complete, fixed solution. He drew on advisers known as the Brain Trust and tried different measures. The resulting Alphabet Agencies were named after their initials, but each addressed a particular problem.

The Hundred Days: restoring confidence in banks

During the Hundred Days in spring 1933, Roosevelt pushed legislation rapidly through a sympathetic, Democrat-controlled Congress. Speed mattered because people needed immediate help and reassurance that the government could act.

Banking was an urgent priority. Banks lent money to businesses, but frightened depositors were withdrawing their savings in bank runs. Roosevelt declared a national bank holiday, temporarily closing banks. The Emergency Banking Act, passed on 9 March 1933, enabled federal intervention and the examination and reorganisation of troubled banks. Banks judged financially sound could reopen; by 15 March, about 70% had been allowed to do so.

Roosevelt reinforced this action with his first fireside chat on 12 March 1933. Speaking by radio in reassuring, understandable language, he explained the banking measures and encouraged Americans to trust reopened banks. Within weeks, nearly US$1 billion in cash and gold had been redeposited. This mattered because confidence reduced panic withdrawals and helped banks function again.

The Glass–Steagall Banking Act of June 1933 added longer-term reform. It separated commercial banking from investment banking, restricting the use of depositors’ money for stock-market speculation. It also created the Federal Deposit Insurance Corporation (FDIC) to insure personal deposits up to US$2,500. Emergency action tackled the immediate panic; regulation and insurance aimed to make banking safer afterwards.

FERA and the CCC: helping people who could not wait for recovery

The Federal Emergency Relief Administration (FERA) channelled federal money through states to help people in immediate need. An initial US$500 million in grants supported relief agencies and assistance for the unemployed. Its importance was that help did not depend on waiting for private businesses to recover and start hiring again. However, emergency assistance alone could not create a permanently healthy economy.

The Civilian Conservation Corps (CCC) provided temporary conservation work for young unemployed men. Jobs included planting trees, fighting forest fires and improving parks. Workers received food, accommodation and clothing, as well as wages of US$30 a month. Within its first two months, the CCC employed 250,000 men; by 1938, more than two million had served.

The CCC therefore combined immediate support with useful work. It gave men an income and experience while improving the environment and public facilities. Its limits were also clear: placements were temporary, and its focus on young men meant it was not a general employment solution for women or all unemployed adults.

The AAA: raising farm prices, but not helping all farmers

Many farmers faced overproduction: so much produce reached the market that prices were too low to provide a decent income. The Agricultural Adjustment Administration (AAA), established in 1933, paid farmers to reduce production. Less produce available for sale was intended to raise prices and restore farm profitability.

The policy had measurable successes. Cotton prices rose from six to twelve cents per pound. Nevertheless, reducing production involved ploughing under crops and slaughtering pigs. Destroying food while Americans were hungry attracted strong criticism. Higher food prices could also benefit producers while making life harder for poor consumers.

Benefits were uneven within farming itself. Large commercial farms received the biggest payments. Some landowners reduced production by dismissing sharecroppers or evicting tenant farmers, who rented their land. These people could lose their livelihood rather than gain from higher prices. The AAA was therefore more successful at helping some farm owners than at relieving rural poverty generally.

The NRA: coordinating industry and improving working conditions

The National Recovery Administration (NRA) sought to help both employers and workers. Industries agreed to codes of fair practice covering prices, wages and production. These were intended to stabilise business while establishing minimum wages, improving working conditions and banning child labour and sweatshops.

Participating businesses could display the Blue Eagle symbol. Consumers were encouraged to buy their products, giving firms a reason to join the scheme. By 1933, more than two million employers were participating, with about 22 million workers covered.

This represented a major expansion of federal involvement in industry. However, participation figures demonstrate the scheme’s reach, not that every promise was fulfilled or that industrial recovery was complete. Its ambitions must be distinguished from its results.

The TVA: rebuilding a region

The Tennessee Valley Authority (TVA) tackled connected problems across the Tennessee Valley, a region spanning seven states. Flooding damaged farms and contributed to soil erosion, while electricity supplies were limited.

The TVA built dams to control flooding and generate hydroelectricity—electricity produced using moving water. Construction created jobs; flood control protected farmland; and cheap electricity made the region more attractive to industry. Car makers, paper mills and steel makers established factories there. By 1944, the TVA had built sixteen hydroelectric dams: a later achievement of an agency founded during the First New Deal, not a result completed in the Hundred Days.

The TVA shows how regional planning could connect relief with long-term recovery. Yet its benefits were not equally accessible: African Americans were excluded from owning its model farms.

How successful was the First New Deal?

The First New Deal’s strongest immediate achievements were restoring banking confidence and providing direct assistance and employment. Its agencies also addressed particular weaknesses: agricultural overproduction, poor working conditions and the Tennessee Valley’s lack of infrastructure.

However, targeted programmes left gaps. CCC work was temporary, the AAA harmed some tenant farmers and sharecroppers, and the TVA did not provide equal opportunities. The measures did not bring complete recovery from the Depression.

A balanced judgement is that the First New Deal was an important emergency response and a major change in the relationship between Americans and the state, rather than a complete economic solution. Federal intervention now extended beyond reassurance to relief payments, employment, regulation and regional development.