What is The New Deal?

Definition: The New Deal is a government program that aimed to revitalize the U.S. economy after the Great Depression. It was a recovery plan that dealt with the severe consequences experienced by the country after the 1929’s market crash.

What Does The New Deal Mean?

The New Deal was designed by Franklin D. Roosevelt after he became President of the United States in 1933. The purpose of the plan was to pick up the country’s pieces in the aftermath of the Great Depression. He started by stabilizing the banking industry through the Emergency Banking Act and then moved on to reduce unemployment rates by creating temporary government jobs to alleviate the effects of the recent depression. Also, industrial activity was promoted and sanitized through legislation that kept malpractices such as worker’s exploitation and child labor to a minimum.

Agencies like the Securities and Exchange Commission were created to supervise the financial markets adequately and a Social Security program was also designed to provide unemployment and retirement benefits. Despite of its many detractors, the New Deal has a big legacy, since many of the institutions and laws developed back then are still functioning.


Suppose Mr. Wagner is a U.S. citizen back in 1934. He suffered the consequences of the Great Depression deeply and sometimes he had nothing to eat. Recently, the New Deal granted him an unemployment benefit that allows him to buy enough food for himself. Since the depression, he doesn’t trust banks at all. He managed to save some money recently, since he started working in a construction site near his home.

He was afraid to deposit his money in the bank, but he heard about the newly created Federal Deposit Insurance Corporation (FDIC), a institution that provides protection for all his deposited money. He decided to open an account to save because he also wishes to purchase a home one day. This is how the New Deal reconstructed the US economy.

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