The second New Deal and the Supreme Court

In reaction to pressures from the left and hostility from the right, the New Deal shifted more toward reform in 1935–36. Popular leaders, promising more than Roosevelt, threatened to pull sufficient votes from him in the 1936 election to bring Republican victory. Senator Huey P. Long of Louisiana was building a national following with a “Share the Wealth” program. The poor in Northern cities were attracted to the Roman Catholic priest Charles E. Coughlin, who later switched from a program of nationalization and currency inflation to an antidemocratic, anti-Semitic emphasis. Many older people supported Francis E. Townsend’s plan to provide $200 per month for everyone over age 60. At the same time, conservatives, including such groups as the American Liberty League, founded in 1934, attacked the New Deal as a threat to states’ rights, free enterprise, and the open shop.

Roosevelt’s response in 1935 was to propose greater aid to the underprivileged and extensive reforms. Congress created the Works Progress Administration, which replaced direct relief with work relief; between 1935 and 1941 the WPA employed an annual average of 2,100,000 workers, including artists and writers, who built or improved schools, hospitals, airports, and other facilities by the tens of thousands. The National Youth Administration created part-time jobs for millions of college students, high-school students, and other youngsters. Of long-range significance was the Social Security Act of 1935, which provided federal aid for the aged, retirement annuities, unemployment insurance, aid for persons who were blind or crippled, and aid to dependent children; the original act suffered from various inadequacies, but it was the beginning of a permanent, expanding national program. A tax reform law fell heavily upon corporations and well-to-do people. The National Labor Relations Act, or Wagner Act, gave organized labour federal protection in collective bargaining; it prohibited a number of “unfair practices” on the part of employers and created the strong National Labor Relations Board to enforce the law.

In the 1936 elections, Roosevelt, aided by his reform program, formed a coalition that included liberals, urban ethnics, farmers, trade unionists, and the elderly. He easily defeated the Republican nominee for president, Gov. Alfred (“Alf”) Landon of Kansas, receiving more than 60 percent of the popular vote and the electoral votes of every state except Maine and Vermont. The Democratic majorities in the House and Senate were also strengthened. Viewing his decisive victory as an electoral mandate for continued reform, Roosevelt sought to neutralize the Supreme Court, which in 1935 had invalidated several early New Deal reform measures and now seemed about to strike down the Wagner Act and the Social Security Act. In February 1937 Roosevelt created a furor by proposing a reorganization of the court system that would have included giving him the power to appoint up to six new justices, thus giving the court a liberal majority. Some Democrats and a few liberal Republicans in Congress supported the proposal, but a strong coalition of Republicans and conservative Democrats, backed by much public support, fought the so-called court-packing plan.

Meanwhile the court itself in a new series of decisions began upholding as constitutional measures involving both state and federal economic regulation. These decisions, which began an extensive revision of constitutional law concerning governmental regulation, made the reorganization plan unnecessary; the Senate defeated it in July 1937 by a vote of 70 to 22. Roosevelt had suffered a stinging political defeat, even though he no longer had to fear the court. Turnover on the court was rapid as older members retired or died; by 1942 all but two of the justices were Roosevelt appointees.

The culmination of the New Deal

Roosevelt lost further prestige in the summer of 1937, when the nation plunged into a sharp recession. Economists had feared an inflationary boom as industrial production moved up to within 7.5 percent of 1929. Other indices were high except for a lag in capital investment and continued heavy unemployment. Roosevelt, fearing a boom and eager to balance the budget, cut government spending, which most economists felt had brought the recovery. The new Social Security taxes removed an additional $2,000,000,000 from circulation. Between August 1937 and May 1938 the index of production fell from 117 to 76 (on a 1929 base of 100), and unemployment increased by perhaps 4,000,000 persons. Congress voted an emergency appropriation of $5,000,000,000 for work relief and public works, and by June 1938 recovery once more was under way, although unemployment remained higher than before the recession.

Roosevelt’s loss of power became evident in 1938, when his attempts to defeat conservative congressional Democrats in the primaries failed. In the fall Republicans gained 80 seats in the House and seven in the Senate. The Democratic Party retained nominal control of Congress, but conservative Democrats and Republicans voting together defeated many of Roosevelt’s proposals. A few last bills slipped through. The U.S. Housing Authority was created in 1937 to provide low-cost public housing. In 1938 the Fair Labor Standards Act established a minimum wage and a maximum work week. Otherwise, the president seldom got what he asked for.

Apart from the New Deal itself, no development in the 1930s was more important than the rise of organized labour. This too had negative, or at least mixed, effects upon Roosevelt’s political power. When the depression struck, only 5 percent of the work force was unionized, compared to 12 percent in 1920. The great change began in 1935 when the American Federation of Labor’s Committee for Industrial Organization broke away from its timid parent and, as the Congress of Industrial Organizations (after 1938), began unionizing the mass production industries. The CIO had a unique tool, the sit-down strike. Instead of picketing a plant, CIO strikers closed it down from inside, taking the factory hostage and preventing management from operating with nonunion workers. This, together with the new reluctance of authorities, many of them Roosevelt Democrats, to act against labour, made sit-down strikes highly successful. On February 11, 1937, after a long sit-down strike, General Motors, the country’s mightiest corporation, recognized the United Auto Workers. The United States Steel Corporation caved in less than a month later, and by 1941 some 10,500,000 workers were unionized, three times as many as a decade before. The CIO became a mainstay of the New Deal coalition, yet it also aroused great resentment among middle-class Americans, who opposed strikes in general but the CIO’s tactics especially. This further narrowed Roosevelt’s political base.

An assessment of the New Deal

The New Deal established federal responsibility for the welfare of the economy and the American people. At the time, conservative critics charged it was bringing statism or even socialism. Left-wing critics of a later generation charged just the reverse—that it bolstered the old order and prevented significant reform. Others suggested that the New Deal was no more than the extension and culmination of progressivism. In its early stages, the New Deal did perhaps begin where progressivism left off and built upon the Hoover program for fighting the depression. But Roosevelt soon took the New Deal well beyond Hoover and progressivism, establishing a precedent for large-scale social programs and for government participation in economic activities. Despite the importance of this growth of federal responsibility, the New Deal’s greatest achievement was to restore faith in American democracy at a time when many people believed that the only choice left was between communism and fascism. Its greatest failure was its inability to bring about complete economic recovery. Some economists, notably John Maynard Keynes of Great Britain, were calling for massive deficit spending to promote recovery; and by 1937 the New Deal’s own experience proved that pump priming worked, whereas spending cutbacks only hurt the economy. Roosevelt remained unpersuaded, however, and the depression lingered on until U.S. entry into World War II brought full employment.