The President and the Economy during the Great Depression

The President and the Economy during the Great Depression

When the stock market crashed in October 1929, President Herbert Hoover encouraged business leaders to take an interventionist approach to combat the impending economic emergency because “it is action that counts.”1 Over the next three years, however, Hoover worked unsuccessfully to mitigate the economic crisis of the Great Depression. Corporate welfare promises failed. State relief efforts dissipated. Not only was the federal government too small to handle the crisis, individuals and businesses across the political spectrum opposed federal intervention. Even then-governor of New York, Franklin Roosevelt, wrote privately, “I am very much opposed to the extension of Federal action in most economy social problems.”2

But when running as the Democratic presidential candidate, Roosevelt offered a different message—he promised that the federal government would reshuffle the deck to give individuals a “New Deal.” Once elected, Roosevelt’s New Deal programs expanded the role of the federal government and the executive branch in the economic, social, cultural, and political lives of Americans. The shift in power from the courts and political parties of the nineteenth century to the administrative state and from Congress to the executive branch, which had begun during the Progressive Era, intensified. Franklin Roosevelt worked to establish what historians have called the New Deal Order—the 40-year period from the early 1930s through the early 1970s when labor, capitalists, and government shared a Keynesian belief in using the federal government to stimulate economic growth through monetary policies and the promotion of a “consumer citizenship” for all.3

This section investigates both the ways in which the relationship between the people and the president changed during the 1930s and the debates about the role of the president in initiating and narrating solutions to economic crises. As Lizabeth Cohen notes, Roosevelt “personalized federal power,” transforming the president into a cultural, as well as a political, icon.4 By focusing on the New Deal’s programs and ideology, this section provides insight into twentieth-century debates about the role of the federal government in the economy, the collective state versus individual rights, the place of interest groups in policymaking, and the growing importance of media messaging to political leadership.

Though historians like Arthur Schlesinger Jr. have previously pointed to FDR’s powerful personality as driving this reform, recent scholarship in political history shows Roosevelt responding to grassroots campaigns from consumer activists groups, pressures from Southern congressmen, and demands from interest groups—from the American Federation of Labor to farmers. Ordinary Americans penned the president letters asking for relief, and like his predecessors, Franklin Roosevelt used new media technology to connect to individual voters on a personal and emotional basis. As Margaret O’Mara notes, “Roosevelt was not a revolutionary, but an experimenter.”5 His presidency offers an opportunity to examine the ways in which Americans pushed for economic rights and opportunities.  The New Deal generated political debates over collective security and individual rights that shaped the contours of modern liberalism and conservatism over the rest of the twentieth century.

Creating a New Deal Order:

According to historian Meg Jacobs, “The Great Depression solidified the link between middle and working class interests by seemingly exposing ‘underconsumption’ as the country’s major problem.”6 The New Deal found ways to promote consumption through regulation that lifted wages and set prices, legislation that provided jobs and security, and Keynesian monetary policies to fight deflation. Rather than merely focusing the New Deal around FDR’s personality, this section draws on new studies in political economy to show the influence of interest groups and intellectuals in shaping Roosevelt’s agenda during both the Great Depression and WWII.

Moreover, historians have recently emphasized how World War II became an opportunity to extend the New Deal state and further embed it into the lives of Americans.7  During WWII, promises of consumer rights, or “freedom from want,” intensified as the nation assumed its global place as the “arsenal of democracy.” This section shows how presidents became leaders in economic policymaking and examines the new collaborative relationship that developed over time between corporations and government. It encourages students to think about the ways this economic role of the presidency reshaped Americans’ relationship to and expectations of the state during depression and war. These primary and secondary sources illuminate how FDR responded to activism on the ground from citizens and labor groups, as well as the newly popular economic theories voiced by the British economist John Maynard Keynes. 

Recommended Reading on Monetary Policy


  • On combating deflation with monetary policy, see Eric Rauchway, “Reflation and Recovery in the 1930s and Their Implications for the 2000s,” in Making the American Century: Essays on the Political Culture of Modern America,ed. Bruce Schulman,  (New York: Oxford University Press, 2014), 215–27.



  • How is Franklin Roosevelt influenced by the ideas of John Maynard Keynes?
  • How does FDR use monetary policies to promote economic solutions that also promote “the strength of a nation’s institutions and the soundness of its values”?
  • How do economic issues become moral issues that the president has authority over?

Recommended Reading on Consumer Rights


  • On the mobilization of consumer interest groups, see Meg Jacobs, “Pocketbook Politics: Democracy and the Market in Twentieth-Century America,” in The Democratic Experiment: New Directions in American Political History, eds. Meg Jacobs, William J. Novak, and Julian E. Zelizer, (Princeton and Oxford: Princeton University Press, 2003), 250-275.



  • As Meg Jacobs argues, “Labor unions sold themselves and won public support as agents of recovery and prosperity by boosting the nation’s purchasing power through higher wages.”8
  • How do Franklin Roosevelt’s rhetoric and policies toward labor and his effort to secure purchasing power and economic rights for all Americans change over the course of the New Deal and WWII?
  • How does FDR cultivate relationships with labor union leaders to secure the support of workers in his Labor Day address?
  • What do these speeches tell us about the historical trajectory of the “economic rights” promise?  How does it change from the Great Depression through World War II?  


Investigating the New Deal

Have students research a piece of legislation from the New Deal and prepare a presentation of the program for the class. Students should use these two New Deal websites:    

After selecting a piece of New Deal legislation, have students present the program and policy to the class, answering the following questions. 

  • What was the purpose of the New Deal program?
  • What did the program achieve?
  • How did FDR sell the program to the American public?
  • How have historians debated the effectiveness of the program?
  • What new expectations of government and the president arise from these piece of legislation? 
  • Does the legislation still exist?


According to Alice O’Connor, the presidents have navigated economic crises by assuming a position of “narrator-in-chief.” By controlling economic narratives, successful presidents like Franklin Roosevelt and Ronald Reagan each offered the nation an explanation of “economic problems and prospects, a statement of national objectives and policy, and a vision of national identity and purpose that could rally support for his own embattled program of economic recovery and reform.”9 O’Connor argues that FDR and Reagan used this narrative to gain publicity and support for their economic programs and push through “executive-centered reform.”   

By examining the following speeches, evaluate what makes a successful or an unsuccessful “narrator-in-chief.” What narratives did these presidents establish during times of economic crises? How does each president frame the origins of the economic crisis and his solutions?

How successful were those narratives at promoting their broader economic agendas?

Franklin Roosevelt set out his economic agenda at his first inaugural address on March 4, 1933.

Jimmy Carter grappled with the oil crisis and stagflation during the Great Inflation of the 1970s in his televised address on July 15, 1979.

Ronald Reagan outlined his economic recovery agenda on July 27, 1981, which resulted in the passage of the Economic Recovery Tax Act of 1981 on August 13, 1981.

Barack Obama delivered a speech at Osawatomie, Kansas on December 6, 2011, to discuss his economic agenda that had been stalled by a Republican-dominated Congress.

  1. ↑ Quoted in: Margaret O’Mara, Pivotal Tuesdays: Four Elections that Shaped the Twentieth Century, (Philadelphia: University of Pennsylvania Press, 2015), 61.
  2. ↑ O’Mara, 60.
  3. ↑ The Rise and Fall of the New Deal Order, 1930–1980. Eds. Steve Fraser and Gary Gerstle, (Princeton: Princeton University Press, 1989).
  4. ↑ Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago, 1919–1939 (New York and Cambridge: Cambridge University Press, 1990)284.
  5. ↑ O’Mara, 101.
  6. ↑ Meg Jacobs, “Pocketbook Politics: Democracy and the Market in Twentieth-Century America, in The Democratic Experiment: New Directions in American Political History, eds. Meg Jacobs, William J. Novak, and Julian E. Zelizer, (Princeton and Oxford: Princeton University Press, 2003), 258.
  7. ↑ James Sparrow, Warfare State: World War II Americans and the Age of Big Government, (New York: Oxford University Press, 2011), 4.
  8. ↑ Jacobs, “Pocketbook Politics,” 260.
  9. ↑ Alice O’Connor, “Narrator-in-Chief: Presidents and the Politics of Economic Crisis from FDR to Obama,” in eds. Brian Balogh and Bruce Schulman, Recapturing the Oval Office: New Historical Approaches to the American Presidency, (Ithaca: Cornell University Press,) 53.