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At the end of 20-ies – beginning of 30-ies of the 20th century the American economy was in the profound crisis. The lowest point of recession and economic development was registered in 1933, when GDP decreased in almost 2 times in comparison with 1929. There were 17 million unemployed in the USA. More than 5 thousand banks closed. The stocks depreciated by $40 billion; the inflation and price increased; the industrial production decreased by 2 times, car production fell by 5 times. And more than 5 million U.S. farmers have lost their lands for debt.
According to some indirect estimates, natural population growth in the United States fell sharply during the Great Depression (Schlesinger 2003).
The financial crisis plunged into panic financial and industrial magnates of the United States. Walter Lippmann wrote: “In the past five years, the industrial and financial leaders of America were thrown from the highest positions of influence and power in the deep abyss” (Fitzgerald 2006). And none of the representatives of monopoly capital could offer any way out of the crisis.
In 1932, the Democratic Party, headed by FD Roosevelt (1882-1945) won the president elections, offering the country a series of reforms known as “The New Deal”. The theoretical basis of The New Deal was based on the views of the English economist JM Keynes, who saw the need of state regulation of the capitalist economy in conjunction with the development of market relations (Braeman 1975).
The economic situation in the country dictated the need to initiate reforms in the solving of credit and financial problems. On Roosevelt’s initiative, the Congress was proposed the “Emergency Banking Act”. The Federal Reserve provided loans to banks; finance minister got the right to prevent massive withdrawals of deposits. The law mandated that banks could be opened only when their condition was deemed “healthy”. The export of gold was prohibited (Edwards 1970).
The second most important banking law was the Banking Act, passed on June 16, 1933, which separated the functions of deposit and investment banks, and according which the Federal Deposit Insurance Corporation was established (Smith 2006).
A special place in the reform system “The New Deal” was taken by establishment of Civilian corps of conserve resources. On Roosevelt’s suggestion, the Congress passed a law on the direction of the unemployed urban youth to work in forest areas (Doenecke 2003).
An important law that promoted the recovery of the economic crisis was the Restoration Industry Law. According to it, the entrepreneurs in every industry were offered to unite together and create the “codes of fair competition”, which, firstly, would establish the size of production, secondly, would determine the level of wages and hours, and thirdly, would distribute the sales markets between individual competitors.
Restoration Industry Act affected the labor relations also. It gave the workers the right to participate in collective bargaining and unions. The Act identified three basic conditions: a) the minimum wage of $ 12-15 per week, b) the maximum working shift – 8 hours, c) the prohibition of child labor.
“The New Deal” touched the sphere of agrarian relations also. In order to restore the purchasing power of farmers and support the price for agricultural products, the government offered farmers to reduce crop area and livestock, but guaranteed the payment of interest to farm debt in an amount not more than 2 billion dollars.
In the agrarian policy “The New Deal” was implemented as the law in 1938, which introduced the concept of “always normal granary” (Stein 2006). As the result of application the measures aimed at reviving the agricultural sector, the process has slowed down the destruction of farms, mortgage debt has decreased, cash income of farmers, including state bonus payments, increased by almost a half.
In 1935, with the active support of Evelyn Burns the Social Security Act was adopted. It was the first general federal regulatory act of this kind in U.S. history. It was the beginning of whole new social policy, that intended to change for better life of ordinary workers, disabled and elderly people. For that Office of Social Insurance was created. Starting from that date the old age pension had be paid to U.S. citizens, who met certain residency requirements and had reached the age of 65, in case “…if his total earnings for the period from December 31, 1936 until he reached the age of 65 years did not exceed $ 3000. Then his monthly pension would be equal to 1/2 the amount of his earnings…” For the formation of the pension fund, in addition to other taxes, a new annual tax on personal income of employees in the amount of 1% with a subsequent increase in tax 0,5% every three years was established. For employers, in addition to the previously existing taxes, tax of 1% of the total wages paid to them was adopted. Every three years tax rose by 0,5%. In 1938 a law on equitable hiring labor, fixing maximum working hours for some groups of workers and minimum wages was passed (Edwards, 1970).
Even though the federal law on social insurance was limited, it was fundamental because it was the first to turn the federal government to the guarantor of important social rights of workers. This was a major breakthrough in the theory and practice of classical bourgeois social policy.
Another such breakthrough was the federal Workplace Relations Act approved in the same year, which guaranteed workers the right of forming trade unions, management and collective bargaining with employers and the right to strike (with advance notice by the trade unions and arbitration by the state). In 1938 the National Congress passed a law imposing a maximum working week for those industries that fall under federal jurisdiction (Edsforth, 2000).
Reforms of the New Deal laid the foundation of modern government regulation of working conditions and relationships of organized workers and employers. The norms of Social Security have constantly been changing since the 1930s, because they have to respond to economic worries and concerns over changing gender roles and minorities’ position. Much more has been done to protect women, than minority groups (Achenbaum, 1986). Social Security slowly moved toward more universal coverage of citizens. Before 1950 most of the debates were about the occupational groups of people that should be covered by Social Security. But in the 1950ies they moved to the issue of providing of more adequate coverage. Changes in Social Security policy have influenced a balance between promoting equality between different social groups and efforts to provide adequate protection for everyone.
For example, in 1940, benefits paid to Americans totaled $35 million. Already in 1950 this sum was $961 million, in 1960 – $11.2 billion, in 1970 – $31.9 billion, in 1980 – $120.5 billion, and in 1990 – $247.8 billion. In 2004, 47.5 million beneficiaries received $492 billion of benefits. And in 2009, $650 billion of Social Security benefits will be paid to nearly 51 million US citizens (Stein, 2006).
Holding the “New Deal” was not easy. Adherents of the old methods of anti-labor legislation – representatives of conservative segments of financial monopolies were against the “New Deal”. Morgan, Dupont, Rockefeller, Mellon were against Roosevelt. In May 1935 the court decided that the law on NIRA was unconstitutional because it violated states rights and limited Interstate commerce. The Act was repealed in January 1936, the Supreme Court declared the AAA unconstitutional, because Congress, by adopting overstepped its authority.
During the period of 1933-1936 the Supreme Court rejected 12 decisions of Congress and government. Roosevelt started “war” with the court. He tried to weaken it, offering to complement it with 6 new members. It was an unbelievable attempt to change the Constitution, and even many supporters of FDR did not approve such a proposal. Congress rejected it. Talks about the “dictatorship” of President became more widespread in mass media. Roosevelt retreated. However, by 1945 he was able to replace 7 out of 9 judges. Their average age fell to 57 years. The opposition to the “New Deal” increased with the weakening of the economic crisis, which led to the repeal of the NRA, AAA, as well as violation of the Wagner law. Established American Freedom League demanded the rejection of government regulation, lower taxes on big business and the transition to a hard line against the workers (Braeman, 1975).
With the New Deal, centralization and bureaucracy became an integral part of American government. Although Roosevelt’s presidential power started out as an emergent extension of the Progressive presidents authority, it stayed the same even when the crisis was already over. Such programs as the NRA passed the responsibility for things that had previously been a part of the state or local government’s business (for example, economic regulation and welfare) to the federal government. Legislative branch lost almost all its power and responsibility; they were taken by President Administration. Even though Roosevelt’s power was checked when his court-packing scheme failed, he reorganized the executive branch to increase its power. Even today we can still see the results of these actions (Singleton, 1990).
Methodologies, strategies and tactics of reform within The New Deal demonstrated the special role of government regulation in the capitalist economy, and showed that a flexible and moderate regulation of the economy, social and political spheres, especially in difficult times of the country’s development, are vital.

Work cited
Achenbaum, Andrew. (1986). Social Security Visions and Revisions. p. 124
Badger, Anthony J. (1989). The New Deal: the depression years, 1933-1940. pp. 280-281.
Braeman, John., Bremner, Robert Hamlett., Brody, David. (1975). The New Deal: The state and local levels. pp. 314-315.
Doenecke, Justus D. (2003). The New Deal. pp. 136-139.
Edsforth, Ronald. (2000). The New Deal: America’s response to the Great Depression. Pp. 201-202.
Edwards, Cheryl. (1970). The New Deal: Hope for the Nation. Pp. 47-48.
Fitzgerald, Stephanie. (2006). The New Deal: Rebuilding America. pp. 23-24.
Folsom, Burton W. (2008). New Deal Or Raw Deal?: How FDR’s Economic Legacy Has Damaged America. pp.174-175.
Schlesinger, Arthur Meier. (2003). The coming of the New Deal, 1933-1935. pp. 478-481.
Singleton, Laurel R. (1990). The New Deal: government and the economy. Pp. 32-33.
Smith, Jason Scott. (2006). Building New Deal liberalism: the political economy of public works, 1933-1956. pp. 112-113.
Stein, R. Conrad. (2006). The New Deal: Pulling America Out of the Great Depression. Pp. 45-47.