10000 years of economy : industrial revolutions : 1933

In order to tackle the social and economic consequences of the 1929 stock market crash and subsequent crisis, the newly elected President Franklin Roosevelt introduced a series of measures, known as the New Deal, in 1933. These included:

financial sector reforms: closure and merger of a large number of banks, introduction of a guarantee on customer deposits, securities regulation, separation of retail banking and securities activities;

the payment of compensation to farmers who reduced their output, in order to raise prices, and a rescheduling of their debt;

funding of public works to create jobs, such as reforestation projects (jobs for young people), and infrastructure projects (roads, dams);

introduction of unemployment benefits and retirement pensions;

suspension of the gold standard and devaluation of the dollar;

policies to limit excessive competition between manufacturers: introduction of floors on prices, quantities and wages;

extension of workers’ freedom of association and encouragement of the signature of collective agreements.

These measures are often described as Keynesian. In fact there was no clearly defined underlying doctrine - they were merely a pragmatic response to an explosive social situation and the perceived threat of deflation.

The measures brought about a lasting transformation in the economy and in American society as a whole (they notably strengthened the role of the Federal Government). Unemployment, which had risen to 25% of the workforce in 1933, fell to 14% in 1937, although it subsequently rose again to 19% in 1939, just before the outbreak of World War II.


Por­trait of Florence Owens Thompson with some of her children, an image that became known as Migrant Mother (1936). It was one of a series of pho­to­graphs ordered by the Farm Security Admin­is­tration to con­vince the American public of the need for the New Deal fol­lowing the Great Depression in 1929
Credit : Dorothea Lange / Library of Congress, Prints and Photographs Division

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Published on 07 October 2016. Updated on 12 September 2019