The Second New Deal

1
The Second New Deal

• 1935-1938

2
First New Deal

• Enacted during the first Hundred Days
• Goals
• Achieve economic recovery through national
  planning and controls
• AAA and NRA
• Provide relief assistance to the unemployed and
  impoverished
• FERA
• Other important programs included CCC and TVA

3
Battling the Supreme Court
4
The Court

• Nine man court was divided
• 4 conservatives
• 3 liberals
• 2 floaters
• Conservatives usually won 5-4
• Decisions in the 1920s reflected the pro-business
  ethos of the era.

5
Attack on the New Deal

• Schecter decision, May 1935 unanimously outlawed
  Title I of NIRA
• on the grounds that it delegated legislative
  power to the president and exceeded the authority
  of the federal government to regulate intrastate
  commerce
• Butler decision, January 1936 struck down AAA by
  a vote of 6-3.
• Dissenting judges argued that the court was
  subverting the role of Congress and not
  reflecting the will of the people.

6
Court Packing

• FDR feared that the Supreme Courts decisions in
  1935 and 1936 meant that they would strike down
  second New Deal reform legislation.
• FDR sought the means to make the Court more
  amenable to social reform legislation.

7
Supreme Court Reform Bill

• January 1937, FDR sent the Supreme Court Reform
  Bill to Congress.
• Agued that the Court action was hindered by
  advanced age of justices. (5 were over 70 and
  youngest was 66.)
• Proposed that justices should retire at 70.
• For every justice that remained past 70, the
  President could appoint an additional justice up
  to 6.
• Court would vary in size from 9-15.

8
Court Packing

• Even FDRs supporters opposed court packing
• Similar to a bill drafted by William McReynolds
  (the leader of the conservative justices) when he
  was Wilsons Attorney General in 1914.
• FDR was portrayed by Republicans (and even
  Southern Democrats) as power hungry.

9
Changing Court

• Court decisions began to change in 1937.
• AprilWagner Act was upheld in NLRB v. Jones
  Laughlin
• MayUnemployment provisions of Social Security
  were upheld in Steward Machine Co. v. Davis
• JuneWillis VanDevanter suddenly resigned and was
  replaced by Hugo Black.

10

• Court reform bill failed, but FDR was still able
  to reshape the court through resignations.
• By 1940, he had appointed
• Hugo Black (author of 30 hour legislation)
• Frank Murphy (friend of UAW)
• Felix Frankfurter (Keynesian)
• William O. Douglas
• James Byrnes

11
The Second New Deal1935-1938
12
Continuity and Change

• Second New Deal Continuity
• Continued relief efforts
• Emergency Relief Appropriations Act
• April 1935
• Works Progress Administration
• National Youth Administration

13

• Increasing support in the cabinet and Congress
  for the continued use of deficit spending
• Relief
• Public works
• Domestic allotment plan
• Refinancing farm mortgages

14
National Youth Administration

• Organized in June 1935
• Provided education and training for young men and
  women aged 16-25.

15
NYA Girls Camp
16
Eleanor Roosevelt at NYA Camp
17
Black NYA Workers
18
The Black Cabinet

• Approximately 40 African-Americans who headed
  Negro Divisions or projects within the Roosevelt
  administration
• Led by Mary McLeod Bethune
• Director of the Negro Division of the NYA

19
Change

• Concerned with societal reform
• Sought more permanent political solutions to
  economic problems through
• Redistribution of wealth
• Managed capitalism
• Second Hundred Days (late spring and summer 1935)
• Social Security Act
• National Labor Relations Act (Wagner Act)
• Revenue Act (Wealth Tax)
• Banking Act

20

• Liberals pushed the New Deal in the direction of
  European social democracy.
• Moderates worked in the mode of American
  progressivism.
• Conservatives wanted to end government
  involvement in economic and social planning.

21
Seeking Permanent Solutions

• Reforming the Economy and Society

22
Social Security Act

• The establishment of a social safety net
• Take care of basic human needs and provide enough
  spending power to prevent a future depression.
• First payments in 1940

Ida Mae Fuller, 1940
23

• Provisions
• Old Age Assistance (OAA) for low-income elderly
• Old Age Insurance (OAI) for retirees
• Unemployment Insurance (UI)
• Aid to Dependent Children (ADC) for single
  mothers
• Critics were suspicious of its European roots,
  vaguely socialist undertones, and un-American
  collectivism.
• Europeans began with health insurance (Germany in
  1880s) and then moved to include unemployment and
  retirement.

24

• Financed by a payroll tax paid by employer and
  employee.
• Tax fell most heavily on lowest paid workers
• Actual payments were small 5-60 per month
• Excluded domestic workers, agricultural labor,
  temporary workers, and the self-employed
• Thus denied coverage for much of the female,
  non-white, and lower-class workforce.
• In 1935, approximately 7.5 million Americans were
  65 or older. (6 pop.)
• Vast majority were unemployed.

25

• Social Security was a real break with the past.
  Established the basic principle that the
  communitythrough the vehicle of the federal
  governmenthad some responsibility for mass
  welfare.
• However, never developed into the comprehensive
  European model which includes
• national system of unemployment compensation
• health insurance
• low cost housing
• child allowances (which European nations view as
  the single most important factor in ending
  poverty.)

26
National Labor Relations Act

• Wagner Act after sponsor Sen. Robert Wagner of
  NY
• Provided government protection of workers right
  to organize through the National Labor Relations
  Board
• Outlawed unfair labor practices which
  interfered with the right to organize

27
NLRA

• Began as an effort to ensure the rights of labor
  under the NIRA.
• Replaced the NIRA when Title I was declared
  unconstitutional by the Supreme Court on May
  1935.
• on the grounds that it delegated legislative
  power to the president and exceeded the authority
  of the federal government to regulate intrastate
  commerce
• NRLA signed into law in July 1935.
• Upheld by the Supreme Court in 1937.

28
Wealth Tax of 1935

• Idea was to heavily tax the wealthy in order to
  redistribute wealth
• Increase taxes on inheritance, gift taxes,
  graduated income tax, graduated corporate taxes
• Wealthy mounted a campaign against the tax bill
• FDR did not offer serious defense
• Final bill did little to tax the wealthy.

29

• Most of FDRs tax program remained regressive
• Encouraged local sales taxes
• Share of the wealth held by the top 1 actually
  increased during the 1930s.
• New Deal did not fundamentally alter the
  mal-distribution of wealth.

30
1935 Banking Act

• Radical reform of the central bank
• Gave the Federal Reserve much more control over
  policy, currency, credit, and reserve
  requirements
• Fiercely resisted by conservatives and bankers
• Final bill was weaker than desired by liberals
  but far more than bankers wanted

31
Alternatives to the New Deal
32
Huey Longs Share the Wealth

• Governor of Louisiana from 1928 to 1932
• US Senator from 1932 until his assassination in
  1935
• Every man a King

33

• In 1918 Long wrote an article saying that with
  65 of the wealth controlled by the top 2 of the
  population there is not the opportunity for
  Christian uplift and education and cannot be
  until there is more economic reform.

34
Share the Wealth

• Plan to correct the mal-distribution of wealth
• Limit the size of fortunes to whatever degree
  necessary to provide 5000 to each family in
  America.
• 30 hour work week and one month vacation
• Old age pension
• Free college tuition
• Government purchase of agricultural surplus

35

• 1934-5 there were 27,000 Share the Wealth Clubs
  nationally
• At least 4.7 million members
• After Longs death, the leadership fell to a
  right-wing radical minister, Gerald Smith.
• Advocated a national movement to seize the
  government of the U.S.
• The democratic method is a lot of baloney. It
  doesnt mean a thing.

36
Dr. Francis Townsend

• Assistant director of city health in Long Beach,
  California
• Devised his old-age pension plan in 1933 after
  watching three old women dig through garbage for
  food.
• Townsend Plan
• 200 per month for every person over 60
• Financed by 2 tax on all wholesale and retail
  transactions
• 1936Townsend Clubs had 3.5 million members and
  had 20 million signatures on a petition to
  Congress to implement the plan.

37
Upton Sinclair

• Novelist and socialist
• EPIC End Poverty in California
• August 1933
• Start idle factories to benefit unemployed
• Make untilled land available to farmers
• Distribute goods and services through a system of
  statewide cooperatives
• 50 per month to those over 60
• Financed by high taxes on wealth

38

• How was the shape of the New Deal affected by the
  conservative opposition from Congress and
  business and the more radical opposition from
  people like Huey Long, Upton Sinclair, and
  Francis Townsend?