With Roosevelt’s support, Congress passed two laws that changed the lives of American workers. The first law granted labor unions more rights, and the second established a federal retirement system for employees.

In 1935, Congress passed the National Labor Relations Act, creating a new nationwide labor organization to help workers negotiate with employers.

Congress also passed the Social Security Act, establishing the American social security system. The law required each worker and employer to pay a small amount to the federal government each month. When a worker retired or became unemployed, they could receive money from the federal government. This social insurance law created a social security system, ensuring economic protection for Americans. Roosevelt’s “Second New Deal” provided economic security for the public.

New Deal Ends Depression but Recession Returns, 1937

Roosevelt expanded government spending, running budget deficits and adopting deficit spending policies.

For a long time, most Americans had conservative, free-market economic beliefs. Since the Great Depression, some had started to show interest in Marxist and socialist economic theories. Roosevelt advocated a middle path. He supported a free-market economy while expanding government powers and responsibilities.

In 1937, the U.S. economy fell into recession again, entering another period of depression. In August, the stock market sharply declined. Over seven months, General Motors stock fell from $60 to $25, and U.S. Steel stock dropped from $121 to $38. As a result, the stock market value built up since Roosevelt took office was reduced by two-thirds in just nine months. Goods could not be sold, merchants panicked, and production was cut. Within a few months, 2 million people lost their jobs and purchasing power. The dollar depreciated, accelerating a dangerous economic cycle.

The New Deal, which had previously helped solve the Great Depression and won American support, now seemed to be failing.

Economic and political problems remained unresolved, while international war crises were escalating, making other issues seem minor. Hitler and the Nazi Party were preparing to launch war in Europe, and Japan was preparing for conflict in the Pacific. With global crises mounting, Americans could no longer focus solely on domestic issues.