New Deal in North Carolina | Levine Museum of the New South

Ben Runkel, Jay M. Robinson Middle School

Compelling Question

Was the New Deal a good deal for North Carolina?

Background Information

In the United States, the Great Depression and New Deal era began in the late 1920s and lasted through the 1930s. Historians debate the factors that led to the Great Depression. But most agree that the deflation of the American dollar and local bank failures caused many people to lose their jobs and their savings.

As the effects of the Great Depression spread across the United States economy, millions of people lost their jobs. By 1930 with a possible total workforce of about 51 million people, there were 4.3 million unemployed. By early 1933, almost 13 million were out of work and the unemployment rate was an astonishing 25 percent. Additionally, more than a third of the nation’s banks failed in the three years following 1929. Long lines of desperate people waited outside banks hoping to retrieve their savings. Many lost their life savings when banks failed.

North Carolina was not spared from the effects of the Great Depression. The manufacturing, farming, and banking industries were hit hard, generating far less profit than they had in the 1920s. By 1933, unemployment had reached astonishing levels. 27 out of 100 people received direct aid from the government.

At first, United States President Herbert Hoover responded to the economic failings by doing little. He believed that minimal government interference in the economy would be the best approach for economic improvement. He was concerned that people would become dependent on government help. The effects of his inaction were visible. Poorly and quickly constructed homes—insultingly labeled “Hoovervilles”—sprang up for people who were out of work and unable to pay their rent or mortgages.

In his 1932 run for the presidency, Franklin D. Roosevelt asserted that he would help in ways that Hoover did not. After becoming president, he championed the series of laws and policies known as the New Deal. The New Deal created a broad range of national government programs that offered economic relief to the suffering, regulated private businesses and industries, and grew the economy. The New Deal is often summed up by the “Three Rs”:

relief (for the unemployed)
recovery (of the economy through federal spending and job creation)
reform (of the economy by creating economic limits for banks and businesses and new social welfare programs to help people in need)

The New Deal changed the way businesses operated to help make sure they paid employees more fairly. The government paid for and ran all the New Deal programs. This meant that the government’s debt grew a great deal. United States debt was $22 billion in 1933 and grew by 50 percent in the three years that followed, reaching $33 billion. In the short term, New Deal programs helped improve the lives of people suffering from the events of the Depression. In the long run, New Deal programs set a standard for the federal government to play a key role in the economic and social affairs of the nation.