The New Deal

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What were the three main goals of the New Deal?

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When U.S. President Franklin D. Roosevelt took office in 1933, he immediately developed a plan known as the New Deal to combat the Great Depression, an economic crisis that began in the late 1920s. The three main goals of the New Deal were:

  • Relief for the millions of victims of the economic crisis
  • Recovery from the economic crisis
  • Reform of the U.S. economic system

To address the goal of relief, Roosevelt, created the Civilian Conservation Corps (CCC), and the Civil Works Administration (CWA), two agencies that provided people with emergency aid in the form of cash payments and temporary jobs. He also created the Federal Emergency Relief Administration (FERA), which provided state and local governments with grants to help the needy population.

To address the goal of recovery, Roosevelt created the Works Progress Administration (WPA) to reduce unemployment. He also created the Agricultural Adjustment Administration (AAA) to revitalize the agricultural industry, the National Recovery Administration to improve market stability, and the Tennessee Valley Authority (TVA) to manage environmental issues (like flooding) and supply affordable electricity to seven southern U.S. states.

To address the goal of reform, Roosevelt used legislation to regulate the banking industry and stock exchanges. Some examples include the Banking Act of 1933, Social Security Act of 1935, which created pensions for older Americans and benefits for the unemployed.

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The three main goals of the New Deal are usually described as the "three Rs": relief, recovery, and reform. To achieve these goals, the administration of Franklin Roosevelt passed an array of programs and created a number of federal agencies to administer them. I will elaborate on these goals, including some of the programs and agencies that were created, below.

  • Relief: By the time Roosevelt was inaugurated in 1933, the nation's economy was mired in the very worst period of the Great Depression. Nearly 1/3 of the nation's workforce was unemployed, and a far greater percentage were underemployed. Banks were closing and businesses were shutting their doors. This led to a desperate need for direct relief, something the federal government had been reluctant to do under FDR's predecessor Herbert Hoover. One major relief program was the Federal Emergency Relief Administration, which attempted to provide work, as well as relief payments, to those stricken by the Depression. Like the FERA, the Civilian Conservation Corps, or CCC, put people to work, namely young people who worked to combat soil erosion and on other conservation projects. 
  • Recovery: A major goal of the programs of the first "Hundred Days", the flurry of programs implemented in 1933, was to bring about economic recovery by stabilizing prices and by putting more money into the economy. The National Recovery Administration (NRA) attempted to regulate wages as well as prices in industry, while the Agricultural Adjustment Act (AAA) tried to do the same for farmers. These were the programs that met with the most resistance from conservatives--the Supreme Court struck down both on the grounds that they involved excessive government intervention in the economy. 
  • Reform: Another, and perhaps the most important, goal of the New Deal was to enact structural reforms that would make another economic disaster less likely, removing a degree of uncertainty from American capitalism and from the lives of the American people. One example was the FDIC, or Federal Deposit Insurance Corporation. This program insured bank deposits, making people less likely to panic and remove their funds from banks as they had done in the  bank panics of the early 1930s. Congress also passed the Glass-Steagall Act, which limited the investments that banks could make. Finally, the Social Security Act created a pension for the elderly financed by a payroll tax. 

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