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Did New Deal Programs Help End the Great Depression?

While the New Deal did have a lasting impact on the U.S. economy, other significant factors contributed toward ending the Great Depression by June 1938.
The New Deal

A New Deal WPA mural created in 1942 for the former Social Security Board Building in Washington, D.C.

Since the late 1930s, conventional wisdom has held that President Franklin D. Roosevelt’s “New Deal” helped bring about the end of the Great Depression. The series of social and government spending programs did get millions of Americans back to work on hundreds of public projects across the country.

But in the 80 years since the Great Depression was formally declared over in June of 1938, historians and economists have continued to debate the true merits of the New Deal and whether, in fact, the radical government spending programs brought about the end of the biggest economic downturn in history.

Many New Deal programs established critical economic safeguards.

“The reforms put in place by New Deal, including encouraging the beginning of the labor movement, which fostered wage growth and sustained the purchasing power of millions of Americans, the establishment of Social Security and the federal regulations imposed on the financial industry, as imperfect as they were, essentially ensured there wouldn’t be another Great Depression after the 1930s,” says Nelson Lichtenstein, professor of history and director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara.

“And there hasn’t been. We’ve had a few close calls, but nothing like the Great Depression,” he says.

But, just because the United States hasn’t repeated the economic catastrophe of the Great Depression doesn’t mean the programs of the New Deal can take all the credit. Other factors were also at play—including the onset of a major world war. “It really could be argued World War II, which ultimately lowered unemployment and increased GNP through weapons production really played a much bigger role,” Lichtenstein says.

Still, as Dr. Lichtenstein notes, several programs created through the New Deal did have a lasting positive impact on the U.S. economy which was flagging throughout the 1930s, among them the Social Security Act, which provided income for the elderly, disabled and children of poor families. The Glass-Steagall Act of 1933 established the Federal Deposit Insurance Corporation, which effectively insured the savings of Americans in the event of a bank failure, which was all too common at the time.

The modern labor movement was born out of New Deal initiatives.

In addition, Lichtenstein notes, the National Industrial Recovery Act of 1933 was enacted to foster “fair competition” through the fixing of prices and wages and the establishment of production quotas, among other measures.

The subsequent National Labor Relations Act of 1935 allowed for collective bargaining and essentially led to the development of the labor movement in the United States, which protected workers’ rights and wages.

But New Deal programs alone weren’t enough to end the Great Depression.

According to Linda Gordon, professor of history at New York University, the Works Progress Administration, created in 1935, also had a positive impact by employing more than 8 million Americans in building projects ranging from bridges and airports to parks and schools.

Such programs certainly helped end the Great Depression, “but were insufficient [because] the amount of government funds for stimulus wasn’t large enough,” she notes. “Only World War II, with its demands for massive war production, which created lots of jobs, ended the Depression.”

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