chapter  7
The New Deal
Pages 17

Growing urgency for government action swamped the nation’s governments during the catastrophic Great Depression. Democratic President Franklin Roosevelt’s “New Deal” triggered an energetic and far-reaching Federal response to the crisis. But the Roosevelt administration inherited a system of federalism in

which states had become more active in balancing market-driven economic growth and mitigating its consequences. The New Deal also inherited the decentralized Democratic Party, Southern segregation, and the business enterprises that dominated American capitalism. These legacies forced the New Deal to fight for national activism on two battlegrounds at once: first, to expand the scope of government, and second, to extend the scope of the national government relative to the states. The Roosevelt administration’s strategy depended on enlisting all the states in helping to mitigate the nation’s economic problems. Drawing on the model of durable Progressive Era grants programs, the New Deal designed most of its enduring national initiatives around grants and financial incentives for the states, layering new responsibilities on top of established ones. This politically expedient strategy allowed a few Northern states to pursue more active agendas for mitigating the economic crisis, while at the same time allowing the South to maintain low wages and legal segregation. The New Deal changed federalism by elevating the Federal government

to leadership in mitigating the problems of American industrial society. But while the New Deal energized the national government, it also energized and strengthened the states and intergovernmental networks of policy experts. Roosevelt’s administration left a legacy of decentralized governance organized around crop production, highway construction, welfare administration, and other specialized programs. In agriculture, efforts to revitalize farm incomes came to depend heavily on the state agricultural extension services and the American Farm Bureau Federation. National relief and public works programs gave way to Federal grants-in-aid to the states, most notably for highway building. The Social Security Act of 1935 created a fully nationalized program only for old age insurance, and delegated con-

and helping the elderly, children, and the blind. Labor union rights were fully nationalized, but evolved in a way that permitted some of the fastest growing states to discourage union organizing. The New Deal, then, left a flourishing system of intergovernmental policy.