Key Terms You Must Know

📖 Key Terms You Must Know

Roosevelt Recession (1937-38)

The sharp economic downturn caused when FDR cut New Deal spending in 1937, trying to balance the federal budget. Unemployment jumped from 14% back to 19% within months. This proved both that the New Deal spending had been keeping the economy afloat, and that FDR had not understood how dependent the recovery was on continued government action. It was the most serious self-inflicted setback of the New Deal era.

Glass-Steagall Act (1933)

Banking reform law that separated commercial banking (taking deposits) from investment banking (buying shares). Prevented banks from gambling with customers' savings. Also created the Federal Deposit Insurance Corporation (FDIC), which guaranteed bank deposits up to $2,500 — restoring public confidence in banks. This reform prevented another banking collapse and survived until 1999. One of the most lasting New Deal achievements.

Sharecropper

A tenant farmer who works someone else's land in exchange for a share of the crop. Most sharecroppers in the South were Black Americans working in extreme poverty. The AAA's policy of paying landowners to reduce crop production hit sharecroppers hardest — landlords took the subsidy payments and evicted tenants they no longer needed, pushing hundreds of thousands into destitution. The New Deal's failure to protect sharecroppers is one of its most significant moral failures.

Second New Deal (1935-37)

The more radical second phase of FDR's programme, launched after Supreme Court rulings struck down NRA and AAA. Key measures: WPA (8 million employed), Social Security Act (pensions and unemployment insurance), Wagner Act (workers' union rights), Rural Electrification Administration (electricity to farms). The Second New Deal was more concerned with long-term reform and workers' rights than the emergency relief of the First New Deal.

Social Security Act (1935)

Created the framework of the American welfare state. Provided old-age pensions for workers over 65, unemployment insurance for workers who lost their jobs, and grants to states to support dependent children and disabled people. Funded by payroll taxes on workers and employers. Deliberately excluded domestic servants and agricultural workers — disproportionately Black Americans — due to Southern Democratic pressure. Modified and expanded many times since, it remains in force today as the core of US social provision.

Wagner Act (1935)

The National Labour Relations Act, named after its Senate sponsor Robert Wagner. Guaranteed workers the legal right to organise trade unions and bargain collectively with employers. Employers were prohibited from interfering with union activities or firing workers for union membership. Led to a tripling of union membership (from 3 million to 9 million) between 1933 and 1939. Represented a major shift in the balance of power between workers and employers — previously, companies could simply fire anyone who tried to organise a union.