The Great Depression and the government response to it marked a major turning point in American history. President Herbert Hoover (r. 1929–1933) and his administration initially reacted to the stock market crash and economic decline with limited action. When the full force of the financial crisis struck Europe in the summer of 1931 and boomeranged back to the United States, people’s worst fears became reality. Banks failed; unemployment soared. Between 1929 and 1932, industrial production fell by about 50 percent.

In these dire circumstances, Franklin Delano Roosevelt (r. 1933–1945) won a landslide presidential victory in 1932 with promises of a “New Deal for the forgotten man.” Roosevelt’s goal was to reform capitalism in order to preserve it. Though Roosevelt rejected socialism and government ownership of industry, he advocated forceful government intervention in the economy and instituted a broad range of government-supported social programs designed to stimulate the economy and provide jobs.

The most ambitious attempt to control and plan the economy was the National Recovery Administration (NRA). Intended to reduce competition among industries by setting minimum prices and wages, the NRA broke with the cherished American tradition of free competition. Though participation was voluntary, the NRA aroused conflicts among business people, consumers, and bureaucrats and never worked well. The program was abandoned when declared unconstitutional by the Supreme Court in 1935.

Roosevelt and his advisers then attacked the key problem of mass unemployment. The federal government accepted the responsibility of employing as many people as financially possible. New agencies like the Works Progress Administration (WPA), set up in 1935, were created to undertake a vast range of projects. One-fifth of the entire U.S. labor force worked for the WPA at some point in the 1930s, constructing public buildings, bridges, and highways.

In 1935, the U.S. government also established a national social security system with old-age pensions and unemployment benefits. The National Labor Relations Act of 1935 gave union organizers the green light by declaring collective bargaining to be the policy of the United States. Union membership more than doubled from 4 million in 1935 to 9 million in 1940. In general, between 1935 and 1938, government rulings and social reforms chipped away at the privileges of the wealthy and tried to help ordinary people.

Programs like the WPA were part of the New Deal’s fundamental commitment to use the federal government to provide relief welfare for all Americans. This commitment marked a profound shift from the traditional stress on family support and community responsibility. Embraced by a large majority in the 1930s, this shift in attitudes proved to be one of the New Deal’s most enduring legacies.

Despite undeniable accomplishments in social reform, the New Deal was only partly successful in responding to the Great Depression. At the height of the recovery in May 1937, 7 million workers were still unemployed. The economic situation then worsened seriously in the recession of 1937 and 1938, and unemployment had risen to a staggering 10 million when war broke out in Europe in September 1939. The New Deal never pulled the United States out of the depression; it took the Second World War to do that.