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 Court’s 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 FDR’s supporters opposed “court packing” • Similar to a bill drafted by William McReynolds (the leader of the conservative justices) when he was Wilson’s 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. • April—Wagner Act was upheld in NLRB v. Jones & Laughlin • May—Unemployment provisions of Social Security were upheld in Steward Machine Co. v. Davis • June—Willis 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 community—through the vehicle of the federal government—had 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 FDR’s 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 Long’s “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 Long’s 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 doesn’t 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 • 1936—Townsend 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?