A wealthy patrician, Roosevelt was an unlikely figure to inspire millions of ordinary Americans. But his close rapport with the American people was critical to his political success. More than 450,000 letters poured into the White House in the week after his inauguration. The president’s masterful use of the new medium of radio, especially his evening radio addresses to the American public known as fireside chats, made him an intimate presence in people’s lives. Thousands of citizens felt a personal relationship with FDR, saying, “He gave me a job” or “He saved my home” (American Voices).

Citing the national economic emergency, Roosevelt further expanded the presidential powers that Theodore Roosevelt and Woodrow Wilson had increased previously. To draft legislation and policy, he relied heavily on financier Bernard Baruch and a “Brains Trust” of professors from Columbia, Harvard, and other leading universities. Roosevelt also turned to his talented cabinet, which included Harold L. Ickes, secretary of the interior; Frances Perkins at the Labor Department; Henry A. Wallace at Agriculture; and Henry Morgenthau Jr., secretary of the treasury. These intellectuals and administrators attracted hundreds of highly qualified recruits to Washington. Inspired by New Deal idealism, many of them would devote their lives to public service and the principles of social-welfare liberalism.

Roosevelt could have done little, however, without a sympathetic Congress. The 1932 election had swept Democratic majorities into both the House and Senate, giving the new president the lawmaking allies he needed. The first months of FDR’s administration produced a whirlwind of activity on Capitol Hill. In a legendary session, known as the Hundred Days, Congress enacted fifteen major bills that focused primarily on four problems: banking failures, agricultural overproduction, the business slump, and soaring unemployment. Derided by some as an “alphabet soup” because of their many abbreviations (CCC, WPA, AAA, etc.), the new policies and agencies were more than bureaucracies: they represented the emergence of a new American state.

Banking Reform The weak banking system hobbled the entire economy, curtailing consumer spending and business investment. Widespread bank failures had reduced the savings of nearly nine million families, and panicked account holders raced to withdraw their funds. On March 5, 1933, the day after his inauguration, FDR declared a national “bank holiday” — closing all the banks — and called Congress into special session. Four days later, Congress passed the Emergency Banking Act, which permitted banks to reopen if a Treasury Department inspection showed that they had sufficient cash reserves.

In his first Sunday night fireside chat, to a radio audience of sixty million, the president reassured citizens that their money was safe. When the banks reopened on March 13, calm prevailed and deposits exceeded withdrawals, restoring stability to the nation’s basic financial institutions. “Capitalism was saved in eight days,” quipped Roosevelt’s advisor Raymond Moley. Four thousand banks had collapsed in the months prior to Roosevelt’s inauguration; only sixty-one closed their doors in all of 1934 (Table 23.1). A second banking law, the Glass-Steagall Act, further restored public confidence by creating the Federal Deposit Insurance Corporation (FDIC), which insured deposits up to $2,500 (and now insures them up to $250,000). The act also prohibited banks from making risky, unsecured investments with the deposits of ordinary people. And in a profoundly important economic and symbolic gesture, Roosevelt removed the U.S. Treasury from the gold standard in June 1933, which allowed the Federal Reserve to lower interest rates; since 1931, it had been raising rates, which had only deepened the downturn. Saving the banks and leaving the gold standard led to a mild and, it would turn out, brief recovery.

Agriculture and Manufacturing Roosevelt and the New Deal Congress next turned to agriculture and manufacturing. In those sectors, a seeming paradox was evident: the depression led to overproduction in agriculture and underproduction in manufacturing. Reversing both problematic trends was critical. The Agricultural Adjustment Act (AAA) began direct governmental regulation of the farm economy for the first time. To solve the problem of overproduction, which lowered prices, the AAA provided cash subsidies to farmers who cut production of seven major commodities: wheat, cotton, corn, hogs, rice, tobacco, and dairy products. Policymakers hoped that farm prices would rise as production fell.

By dumping cash in farmers’ hands, the AAA briefly stabilized the farm economy. But the act’s benefits were not evenly distributed. Subsidies went primarily to the owners of large and medium-sized farms, who often cut production by reducing the amount of land they rented to tenants and sharecroppers. In Mississippi, one plantation owner received $26,000 from the federal government, while thousands of black sharecroppers living in the same county received only a few dollars in relief payments.

In manufacturing, the New Deal attacked declining production with the National Industrial Recovery Act. A new government agency, the National Recovery Administration (NRA), set up separate self-governing private associations in six hundred industries. Each industry — ranging from large corporations producing coal, cotton textiles, and steel to small businesses making pet food and costume jewelry — regulated itself by agreeing on prices and production quotas. Because large companies usually ran these associations, the NRA solidified their power at the expense of smaller enterprises and consumer interests.

The AAA and the NRA were designed to rescue the nation’s productive industries and stabilize the economy. The measures had positive effects in some regions, but most historians agree that, overall, they did little to end the depression.

Unemployment Relief The Roosevelt administration next addressed the massive unemployment problem. By 1933, local governments and private charities had exhausted their resources and were looking to Washington for assistance. Although Roosevelt wanted to avoid a budget deficit, he asked Congress to provide relief for millions of unemployed Americans. In May, Congress established the Federal Emergency Relief Administration (FERA). Directed by Harry Hopkins, a hard-driving social worker from New York, the FERA provided federal funds for state relief programs.

Roosevelt and Hopkins had strong reservations about the “dole,” the nickname for government welfare payments. As Hopkins put it, “I don’t think anybody can go year after year, month after month, accepting relief without affecting his character.” To support the traditional values of individualism, the New Deal put people to work. Early in 1933, Congress established the Public Works Administration (PWA), a construction program, and several months later, Roosevelt created the Civil Works Administration (CWA) and named Hopkins its head. Within thirty days, Hopkins had put 2.6 million men and women to work; at its peak in 1934, the CWA provided jobs for 4 million Americans repairing bridges, building highways, and constructing public buildings. A stopgap measure to get the country through the winter of 1933–1934, the CWA lapsed in the spring, when Republican opposition compelled New Dealers to abandon it. A longer-term program, the Civilian Conservation Corps (CCC), mobilized 250,000 young men to do reforestation and conservation work. Over the course of the 1930s, the “CCC boys” built thousands of bridges, roads, trails, and other structures in state and national parks, bolstering the national infrastructure (Map 23.2).

Housing Crisis Millions of Americans also faced the devastating prospect of losing their homes. The economic expansion of the 1920s had produced the largest inflationary housing bubble in American history to that point, a scenario in which home prices rose wildly, fueled by excessive borrowing. In the early 1930s, as home prices collapsed and banks closed, home owners were dragged down with them. More than half a million Americans lost their homes between 1930 and 1932, and in cities such as Cleveland and Indianapolis, half of all home mortgage holders faced possible foreclosure. In response, Congress created the Home Owners Loan Corporation (HOLC) to refinance home mortgages. In just two years, the HOLC helped more than a million Americans retain their homes. The Federal Housing Act of 1934 would extend this program under a new agency, the Federal Housing Administration (FHA). Together, the HOLC, the FHA, and the subsequent Housing Act of 1937 permanently changed the mortgage system and set the foundation for the broad expansion of home ownership in the post–World War II decades.

When an exhausted Congress recessed in June 1933, at the end of the Hundred Days, it had enacted Roosevelt’s agenda: banking reform, recovery programs for agriculture and industry, public works, and unemployment relief. Few presidents had won the passage of so many measures in so short a time. The new federal agencies were far from perfect and had their critics on both the radical left and the conservative right. But the vigorous actions taken by Roosevelt and Congress had halted the downward economic spiral of the Hoover years, stabilized the financial sector, and sent a message of hope from the nation’s political leaders. For all that, however, the New Deal did not break the grip of the depression.