Documents: Great Depression / New Deal

Following his election as President of the U. S. in November,1932, Franklin D. Roosevelt, in his First Inaugural Address in 1933, famously urged his fellow Americans, millions of whom were out of work at the height of the Great Depression, to demonstrate courage. He proclaimed: “The only thing we have to fear is fear itself.”

He explained that because of the nation’s financial crisis, “the normal balance of power” in American government needed to be altered. He said that he would “ask the Congress for…broad executive power to wage a war against the emergency as great as the power that would be given to me if we were in fact invaded by a foreign foe.”

In his so-called New Deal, Roosevelt thus argued for a shift in the balance of power between the national government and the states in our federal system of government. A substantial growth in the role and power of the national government resulted as a consequence of several major New Deal laws which FDR persuaded Congress to adopt.

In the early 20th century the United States was the only developed nation in the Western world which did not have a national social insurance system aimed at assisting those in need. When difficult economic times occurred, workers and the elderly were largely on their own. Government at this point in history had little involvement with caring for the unemployed or the elderly. This was particularly true of the national government. Except for veterans’ benefits, the national government did not provide pensions, social insurance, or other forms of assistance. Any relief provided to people was from the private sector or from state or local governments. Only one state, Wisconsin, had adopted an unemployment compensation program and only did so in 1932. Besides helping the unemployed, the other major concern was protection for the growing number of elderly Americans. By 1930, the number of elderly more than doubled. Many elderly lived on the edge of survival and feared that injury, sickness, or economic downturn would ruin them. Following the stock market crash of 1929, the nation and the world experienced what is called the Great Depression during which workers and the elderly found themselves in desperate situations.

One of Franklin D. Roosevelt’s first appointments after he was elected President in 1932 was that of Frances Perkins as U. S. Secretary of Labor. She played a key role in what eventually became the Social Security Act of 1935. In 1931 she had gone to England to study that nation’s old age pension and unemployment programs. On her return, she urged President Roosevelt to persuade Congress to adopt similar programs for the U. S. Both chambers of Congress adopted the Social Security Act by overwhelming margins, and FDR signed it into law in 1935. The law had four major components: (1) a federal-state unemployment insurance program administered by the states; (2) federal grants to states for welfare payments for needy children, the blind, and the elderly; (3) federal grants to the states for vocational rehabilitation, infant and maternal health, aid to crippled children, and public health programs; and (4) old-age insurance paid directly by the national government to individuals when they retired at age 65, financed by employer and employee taxes while employed. The law has been amended and added to several times since 1937.

In 1937 when the law was challenged as to its constitutionality, the U. S. Supreme Court ruled that Congress had the constitutional power to pass the law.