There was a recession in 1937-38. The usual explanation for it is that the Roosevelt administration prematurely cut back on relief and recovery measures.

In 1936, Roosevelt’s Treasury Secretary, Henry Morgenthau Jr., helped persuade the president it would be politically savvy to reduce relief spending. That way they could deflect any Republican criticism, as it was an election year. These cuts continued into 1937. As John Maynard Keynes write Roosevelt in 1938, this was too soon; the recovery had not yet taken hold.

In addition, the Treasury undertook deflationary measures for monetary policy, “sterilizing” gold imports so they would have no effect on the money supply. This too had a contractionary effect on the economy.

Finally, the Federal Reserve also undertook contractionary policies, raising reserve requirements .

So there were at least three significant policies, born of mistaken hope the Depression no longer required major government intervention.

In response the Roosevelt administration crafted its first explicitly Keynesian budget in 1938, which Morgenthau justified to Congress in Keynesian language. They also stopped the sterilization program. Recovery resumed.