THE NEW DEAL OVERVIEW

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1 THE NEW DEAL OVERVIEW The Tennessee Valley Authority (TVA), a creation of the New Deal, raised a series of nine massive dams along the Tennessee River and its tributaries between 1933 and Building dams, flood control works, navigation canals, and hydroelectric power stations provided work to the inhabitants of Tennessee, northern Alabama, western Kentucky, and parts of Virginia, North Carolina, and Georgia. The people of these regions were among the poorest Americans, making a precarious living on stony farmland. Now they had the chance to work for the federal government a dependable employer first in construction, and later in the power plants, chemical and aluminum factories, and fertilizer works that the project powered. These people also enjoyed electric power and light in their homes for the first time, at cheap government prices. A Republican senator, George Norris, had first come up with the idea for the TVA in the 1920s. But the plan went nowhere until Franklin Roosevelt became president in 1933; Roosevelt enthusiastically supported the TVA, both for regional development and to help cure high unemployment. The scheme was always controversial because it placed the federal government, which retained ownership of all the dams and plants, in direct competition with private power companies, forcing them to cut their profits in order to compete. The business community said the TVA was the entering wedge of socialism, comparable to the work of the Communist government in the Soviet Union at the same time. The TVA survived, however, and its effects on the people of the region made it a fitting symbol for the way in which the New Deal brought the federal government into ordinary citizens everyday lives. STUDY QUESTIONS 1. How did President Roosevelt justify the expansion of the federal government after he took office in March 1933? 2. What role did the Supreme Court play in the history of the New Deal? 3. Why did Republicans dislike Roosevelt? 4. How did the New Deal affect the fortunes of trade unions? 5. How did Roosevelt justify running for a third term as president? 6. What was innovative about the Tennessee Valley Authority? 7. How did European affairs influence American policy in the late 1930s? THOUGHT QUESTIONS 1. How was the New Deal vulnerable to criticism from the political left? 2. Why did so many ordinary citizens welcome the New Deal? 3. How did the New Deal confront American agricultural problems? 4. How did Roosevelt s plans for industrial recovery compare with those undertaken in Europe during the 1930s? 5. Why did political demagogues and visionaries thrive in the 1930s?

2 CHRONOLOGY 1932 Franklin Roosevelt defeats Herbert Hoover in general election 1933 Roosevelt, at his March fifth inauguration, promises a New Deal for the American people 1933 The first hundred days (March through June), in which Congress passes legislation creating the Agricultural Adjustment Administration, the Tennessee Valley Authority, the National Recovery Administration, as well as other financial and economic reforms 1934 Democrats increase their majorities in both houses at mid-term election 1935 Supreme Court, in the Schechter case, finds the National Recovery Administration unconstitutional 1935 Severe dust storms whip through Great Plains states 1936 Sit-down strike takes place in Flint, Michigan 1936 Roosevelt wins reelection over Alf Landon (Republican), William Lemke (Union), and Earl Browder (Communist) 1937 Roosevelt attempts to restructure the Supreme Court to win approval for New Deal programs 1938 Democratic losses in mid-term elections 1939 Hitler s invasion of Poland sets off World War II 1940 Roosevelt wins a third term in office, defeating Wendell Willkie (Repub.) OUTLINE I. Building the New Deal: The First Hundred Days A. The Call to Action B. Reform of the Banking and Financial System C. Relief for the Unemployed D. Repeal of Prohibition E. Regulating the Economy II. The New Deal and the American People A. The New Deal and the Forgotten American B. Critics from the Right C. Challenges from the Left III. The Second New Deal A. Public Works Projects B. Labor Support C. The Social Safety Net D. Attacks on the Wealthy and Large Corporations E. The New Deal s Peak: IV. Decline and Consolidation A. Setbacks: Court-packing and the Roosevelt Recession B. Effects of the New Deal V. The New Deal in Context A. The International Context B. The Domestic Context

3 INTRODUCTION Immediately after he entered office in March 1933, President Franklin D. Roosevelt proposed a series of laws and programs intended to end the Great Depression. Collectively called the "New Deal," these measures were designed to regulate the economy, provide for national recovery, and create a social safety net for all Americans. Once enacted, the New Deal expanded the role of the federal government in the lives of ordinary Americans to an unprecedented degree except for the emergency conditions during World War I. But not all Americans welcomed the New Deal: the right portrayed it as irresponsible and dangerous, while the left attacked it for being too cautious. Still, Roosevelt himself enjoyed immense popularity with the American public and succeeded in creating a national majority for the Democratic Party that lasted well into the 1940s. Even after the New Deal lost political support in the late 1930s, the changes it had wrought continued to affect American society and its cultural and political institutions. And although historians now generally agree that it was World War II and not Roosevelt's actions that actually ended the depression, the New Deal nevertheless had a profound and enduring impact on American society. BUILDING THE NEW DEAL: THE FIRST HUNDRED DAYS Over the course of his first hundred days in office, Roosevelt dramatically boosted the nation's mood. With the help of his administration and "Brain Trust" - a group of leading intellectuals charged with formulating policy - Roosevelt proposed a series of dramatic measures meant to reorganize the country's financial system and raise the living standards of all Americans, especially working Americans. With the passage of these and other New Deal measures, the federal government took on a much larger role in the nation's economic affairs than had ever been attempted in peacetime. Roosevelt's decisiveness made ordinary people feel that the federal government cared about the "forgotten man." Interestingly, many of the New Deal's programs were not all that innovative; they built on Progressive ideas of social welfare that had been tried in various states and by private institutions and corporations since the early 1900s. Moreover, President Herbert Hoover, Roosevelt's predecessor, had already tried, albeit reluctantly, to use what would become Roosevelt's main tactic: expanding government spending while projecting an aura of confidence in the future. Roosevelt succeeded where Hoover had failed, however, through his willingness to boldly experiment with government powers - even when his programs' goals contradicted one another. The Call to Action Roosevelt came to power during a time of growing national crisis. Throughout the campaign he had promised to provide a "new deal for the American people," but had offered few specifics, and had even attacked Hoover for spending too much money fighting the depression. Yet between Roosevelt's election in November 1932 and his inauguration on March 4, 1933, the depression significantly worsened. Industrial output slowed to 56% of its 1929 level, and many Americans, fearing for the safety of their deposits, withdrew their money from banks across the country; a series of bank failures followed. By March most American banks were either permanently closed or had their operations curtailed by state regulators. These emergency conditions prompted Roosevelt to take immediate action. In his inaugural speech, in which he famously declared that "the only thing we have to fear is fear itself," Roosevelt tried to reassure the country about its future. Should the crisis continue, he said, he would ask for power "to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe." The next day, March 5, Roosevelt declared a four-day national bank holiday and summoned Congress into special session to deal with the situation.

4 Reform of the Banking and Financial System Congress's first act was to address the banking crisis. Many Americans, afraid that banks would collapse, refused to place their money in banks and hoarded gold currency. The Emergency Banking Relief Act, passed on March 9, established federal control over banks and, if necessary, rescued them from disaster with government loans. In April Roosevelt took the United States off the gold standard, meaning that the government would no longer redeem paper money in gold. With the end of the gold standard, the price of silver, stocks, and commodities rose, encouraging investment in these areas and putting money back into the economy. These emergency measures were followed by structural changes to America's financial and banking systems. In May Congress passed the Federal Securities Act, which regulated the stock market and prosecuted individuals who took advantage of "insider" knowledge to enrich themselves through stocks and bonds. [1] (A separate Security and Exchange Commission to regulate markets was set up in 1934.) In June Congress passed the Glass-Steagall Banking Act, which regulated the size of banks and created the Federal Deposit Insurance Corporation (FDIC), a program that guaranteed individual deposits of up to $5,000. These steps reassured millions of Americans that it was safe to put their money in banks and that financial markets would be free of the reckless misconduct that had contributed to the boom and bust economy of the late 1920s. Relief for the Unemployed Roosevelt next turned to providing government help for Americans suffering from the effects of the depression. Congress vastly increased the federal contribution to city and state relief agencies by creating the Federal Emergency Relief Administration (FERA), with funding of $500 million. FERA's chief administrator, Harry Hopkins, preferred public-works wages to direct relief payments ("the dole"), believing that the former were less hurtful to recipients' pride. One of FERA's most successful programs was the Civilian Conservation Corps (CCC), created in March The CCC enlisted unemployed young men aged in building and repairing highways, forest service sites, flood control projects, and national park buildings. By 1941, 2.5 million young men had worked in military-style CCC camps; enlistees received $30 a month, part of which they had to send to dependents at home. Other works projects created in 1933 included the Public Works Administration (PWA), which built roads and buildings, and the Civil Works Administration (CWA), instituted in the winter of to provide seasonal employment and wages. Also headed by Hopkins, the CWA distributed over $900 million through some four million "make-work" federal jobs. Repeal of Prohibition In addition to financial relief, Roosevelt supported a proposal that he felt would bring psychological relief to millions of Americans: the end of Prohibition. In February 1933 the Democratic majority in Congress submitted a constitutional amendment repealing Prohibition to the states, and in December it was ratified as the 21st Amendment. Yet even before repeal, in March 1933, Roosevelt successfully urged Congress to pass the Beer-Wine Revenue Act, legalizing - and taxing - low-alcohol beverages. [2] Regulating the Economy In May 1933 Roosevelt and Congress finally turned to the major recovery measures that they hoped would bring the American economy out of the Great Depression. Legislation passed during this period included the Agricultural Adjustment Act, the Tennessee Valley Authority, and the National Industrial Recovery Act. The key to these parts of the New Deal was a novel use of federal power to encourage general economic cooperation. In both industry and farming, New Deal measures were intended to bring together competing interests and use government mediation to ensure that economic competition benefited the American public.

5 Agricultural Adjustment Administration On May 12 Roosevelt signed the administration's main farm reform proposal, the Agricultural Adjustment Act (AAA). The AAA attempted to address the great problem of American agriculture - excess supply - that had devastated American farmers since the 1920s. [3] The Agricultural Adjustment Administration attempted to address this problem by offering farmers cash subsidies to not grow crops; with the drop in supply, the theory went, the cost of farm products would rise. On the same day that Congress created the AAA it also passed the Emergency Farm Mortgage Act, which helped to refinance farm loans at lower interest rates. Unfortunately, the accumulated surplus of previous years made it difficult for the AAA or other government policies to raise farm prices until late in Even then, the rise in prices had less to do with the AAA than with the horrific "Dust Bowl" drought that settled over the southern states of the Great Plains between 1932 and The drought forced millions of farmers off their land; many migrated west to California in search of work. In some respects the AAA actually hurt small farmers. Its policy of taking marginal land out of production (again, to decrease supply and raise prices) encouraged some large landowners to evict tenant farmers altogether. Other groups also failed to benefit from the AAA, most notably sharecroppers, who did not own their farms, and African Americans in the South, who - even when they owned their own land - were kept off the local committees in charge of distributing AAA aid. Tennessee Valley Authority The emphasis on cooperative planning that animated the AAA found its broadest expression in an attempt to improve regional living conditions in the Southeast. The Tennessee Valley Authority (TVA), created by Congress in May 1933, gave the federal government the power to build a series of dams in the Tennessee River watershed. The TVA began by converting for power usage an unused, pre-world War I dam and nitrates plant at Muscle Shoals, Alabama; by 1944 nine major dams, and a number of smaller ones, had been completed on the Tennessee and its tributaries. Although its larger goal of regional planning included improving river navigation and undertaking soil reclamation and flood control projects, the TVA is best remembered for its success at bringing electricity to the rural southeast. The TVA provided power services to farms and villages that private companies had bypassed, deeming them too costly to serve; all in all, the TVA brought electricity to poor and isolated populations in seven states. The success of these ideas of regional planning led Roosevelt to create a Rural Electrification Administration (1935), dedicated to subsidizing similar experiments around the country. The National Industrial Recovery Act On June 16 Congress passed the hundred days' last, and most important, piece of legislation - the National Industrial Recovery Act (NIRA). Under the stewardship of Secretary of Labor Frances Perkins, the first-ever female cabinet member, the NIRA instituted programs to regulate industry and oversee efforts to establish labor rights and better working conditions. Section 7a of the NIRA, for example, guaranteed the right of labor unions to organize. As a result, labor representatives sat down with business and government officials in committees to set working standards and wage levels. The codes drawn up by these committees in every American industry established a forty-hour workweek, banned child labor, and created a minimum weekly wage. The National Recovery Administration The NIRA's most important creation was the National Recovery Administration (NRA). Led by General Hugh Johnson, who had headed the government's supervision of American industry during World War I, the NRA focused on the issue of "cut-throat" competition. In the early years of the depression, competing companies had fought for survival by repeatedly slashing prices, thus destroying profit margins, lowering workers' wages, and preventing national economic recovery. The NRA responded to this problem by enforcing fair-trade rules set by industry associations during the 1920s and by encouraging companies and workers in a given industry to

6 meet and agree on prices and wages. Additionally, the NRA launched a public relations campaign in mid 1933, encouraging participants to stamp their products or show in their windows a flag with a blue eagle and the NRA's slogan, "We do our part." With the passage of the NIRA, Congress adjourned on June 16, Although Congress enacted a number of laws and programs in the subsequent year and a half, few would have the dramatic impact of those from the first hundred days. Still, these New Deal programs were not without their critics. Contemporaries noted that the goals of many New Deal programs were at odds with one another. For example, the AAA's policy of destroying livestock and crops to inflate prices went against the NRA's emphasis on workers' living standards; critics said it was immoral to decrease supply at a time when millions of unemployed people needed basic food supplies. Nevertheless, behind the confusion lay a belief in the expanded role of the federal government, which would be tested over the next few years. THE NEW DEAL AND THE AMERICAN PEOPLE Roosevelt's willingness to experiment boldly with government legislation was immediately appreciated by the American public. As effective as any specific laws or programs, however, was Roosevelt's ability to radiate a sense of supreme self-confidence throughout the crisis. He mastered the art of communicating his ideas and sensibility to the public, most notably through regular radio broadcasts, called "fireside chats." The result was widespread public adulation for Roosevelt and a nationwide political realignment in favor of the Democratic Party. Yet even Roosevelt was not immune to public criticism, and complaints about the direction of the New Deal began to mount by The New Deal and the "Forgotten American" Much of Roosevelt's popularity was due to the tremendous impact of many New Deal programs on average working families. The following scenario illustrates how several of the new agencies could have benefited an ordinary citizen. In late 1933 an industrial worker goes to work in a factory participating in the NRA and featuring the NRA's blue eagle logo on its products. The worker's membership in a trade union is protected by the NIRA's section 7a, and his employer is breathing a little easier because, thanks to the NRA, the company is no longer involved in destructive cost-cutting competition with rivals. Walking home after his shift, the worker feels secure as he passes the bank where his small savings is kept, knowing that the FDIC now insures his deposit against loss. Arriving home, the worker reflects with a sense of relief that he would have lost his house had it not been for the timely passage of the Home Owners' Loan Act in 1933, a government scheme that permitted him to refinance his loan with lower monthly payments. As for the worker's family, his 19-year-old son, too old for school but unable to find a factory job, now works in a CCC camp, as part of the project to build the new Appalachian Trail, and sends part of his paycheck home every month. The worker's destitute brother (supported by the family for the last few months of the Hoover administration) now gets direct relief funds from FERA. The worker's brother-in-law, still farming in rural Ohio, is now being paid by the AAA not to plant a third of his farm's acreage this year. In their first few years, New Deal programs helped to create a small but significant economic stabilization. The NRA, for example, succeeded in controlling price levels to some extent in 1933 and Initially, national unemployment remained stubbornly high, but it gradually declined from 21.7% in 1934 to 14.3% in 1937; also during these years, the gross domestic product rose from $65 billion to $91 billion. The American public responded by giving tremendous public support to Roosevelt and the Democrats; in 1934, against historic trends for midterm elections, the Democrats actually gained ground in both houses of Congress.

7 Critics from the Right Despite his enormous popularity, Roosevelt was never short of critics, many of whom looked on the New Deal with horror and dismay. Orthodox Republican opinion argued that periodic downturns were an integral and inevitable part of the capitalist business cycle. In their view the best cure for the depression was to let market forces take their course, knowing that in time there would be a new era of growth and recovery. Republicans thus feared that political intervention, by impeding the "invisible hand" of the market, might inadvertently prevent economic recovery. Equally dismayed were conservative Democrats, who deplored Roosevelt's tampering with the gold standard and feared that his programs were increasing the power of the federal government at the states' expense. In 1934 Al Smith, the unsuccessful Democratic presidential candidate of 1928, and John W. Davis, the unsuccessful Democratic presidential candidate of 1924, joined a group of conservative politicians and business leaders in the Liberty League, an anti-new Deal organization. The League argued that many of Roosevelt's new measures were harmful to the American way of life, and even immoral. Citizens' lives, they believed, ought not to be in the hands of - and therefore at the mercy of - the federal government. Challenges from the Left If Davis and Smith saw the New Deal as an unconscionable extension of federal power, voices on the Left saw it as a set of timid reforms that merely reinforced the American status quo. America's small Socialist Party, under the leadership of Norman Thomas, believed that the depression was evidence that capitalism was a failure and that a fully socialized economy - one that banned private ownership of factories, railroads, mines, and other industries - should take its place. The New Deal, in the Socialists' view, had made the mistake of shoring up capitalism rather than seizing the opportunity to get rid of it once and for all. America's small but vigorous Communist Party (CP), headed by Earl Browder, enjoyed a brief vogue among intellectuals, artists, and many workers in the 1930s. Like Socialists, Communists favored the abolition of capitalism, but went further by using the Soviet Union - then being rapidly and brutally industrialized by Josef Stalin - as an example of an economic system that (in theory) had no unemployment at all. The CP also attracted support from African-American sharecroppers in the South, mainly because of its opposition to racial segregation and white supremacy. Nevertheless, at its peak in 1938, CP membership numbered only 75,000 nationwide. Critics with less radical goals abounded as well. Francis Townsend, a doctor living in Long Beach, California, was shocked to see old ladies rummaging in garbage cans for food. He proposed an Old Age Revolving Pension Plan, in which the federal government would give all citizens over age 60 a monthly pension of $200 (raised through a purchase tax); the only condition Townsend proposed on this payment was that recipients spend it right away, so as to help stimulate the economy. The idea became so popular that tens of thousands of elderly Americans joined Townsend Clubs, which sought to popularize the plan and see it through to its adoption by the federal government. Ultimately, the proposal was introduced in Congress, but the scheme's cost was prohibitive and it never came up for a vote. A similar plan to redistribute wealth was proposed by aging novelist and Progressive crusader Upton Sinclair in his 1934 bid for governor of California. A former socialist, Sinclair championed the End Poverty in California (EPIC) program, which aimed to turn over idle factories and farms to workers' cooperatives and tax property valued at over $100,000. A powerful coalition of conservative business interests banded together to defeat Sinclair in the November election. In 1935 Senator Huey Long of Louisiana announced the Share-the-Wealth plan. A former governor and a clever, ruthless organizer, Long proposed punitive taxation of the rich and a guaranteed yearly payment of $5,000 to every American family. He wanted to go even further

8 than the New Deal in making the national government every citizen's guardian. Long's national stature was rising until a political enemy assassinated him in September Another popular rival of the New Deal was Charles Coughlin, a Catholic priest from Detroit. Coughlin was a spellbinding speaker, as talented a public performer as Roosevelt, and his weekly radio show had a largely Catholic audience of over 30 million. Coughlin went from being an early supporter of the New Deal to one of its harshest critics, accusing Roosevelt of being in league with Communists and Jewish bankers. In 1934 Coughlin founded the Union for Social Justice, which argued for radical redistribution of incomes and a nation free of bankers. Coughlin's conspiratorial anti-semitism later prompted his censure by the Catholic Church. Amid these growing voices of dissent, Roosevelt faced a new challenge in the Supreme Court. In its May 1935 decision in Schechter Poultry Corp. v. U.S., the Court invalidated the NIRA on the grounds that it gave unconstitutionally broad powers to the federal government and the president. The logic of the Court's decision, written by conservative Chief Justice Charles Evans Hughes, suggested that the other parts of the New Deal's legislation would be overturned when they came up for review. Despite the Supreme Court's challenge, Roosevelt believed that without a national plan for economic reform the country would succumb to demagogues and slide back into despair. Emboldened by the Democratic victories in the 1934 elections, Roosevelt laid out a new set of reform proposals in January 1935 designed to expand and strengthen the programs begun in Ultimately enacted by Congress in July and August of 1935, these new reform measures are known collectively as the "Second New Deal." THE SECOND NEW DEAL The Second New Deal was prompted by Roosevelt's decision to gain further support for the New Deal from the working and lower-middle classes. Even if it cost him the support of the wealthy, whom he called "economic royalists," Roosevelt decided to co-opt the ideas of his critics by pressing for greater work relief and public welfare programs, and by championing the cause of organized labor. Public Works Projects In April Congress approved the Emergency Relief Appropriation Act (ERAA), which authorized massive new efforts to help America's poor through relief measures and works projects. The most notable new program was the Works Progress Administration (WPA), which employed over 8.5 million Americans before its demise in WPA workers built roads, dams, schools, subways, housing projects, and other federal projects. The WPA also sponsored cultural programs for unemployed artists and writers, who worked on original plays and artworks, compiled historical records, wrote a series of guidebooks for tourists, and gave classes and performances to the general public. Under the auspices of the ERAA, Roosevelt established other agencies designed to help Americans cope with the continuing depression. In May the administration created the Resettlement Administration (RA), which provided assistance in relocating farmers and workers away from economically weak areas and funded flood control and reforestation projects. (The Farm Security Administration replaced the RA in 1937.) The National Youth Administration (NYA), founded in June 1935, provided work relief programs, job training, and part-time work for men and women aged 16-25, including high school and college students. Labor Support In July Congress strengthened the legal position of trade unions with the National Labor Relations Act (NLRA), also known as the Wagner-Connery Act, or simply, "the Wagner Act." Even with the guarantees established under the NRA, unions had often been vulnerable to court injunctions to prevent strikes, and management had not always been obliged to negotiate with them. The Wagner Act established a National Labor Relations Board to oversee industrial compliance and

9 resolve employee grievances against management. In subsequent years union membership grew dramatically, despite the unemployment rate, even among unskilled workers in mining and the steel and automobile industries. The Social Safety Net The most far-reaching element of the Second New Deal, and possibly of all 1930s legislation, was the Social Security Act, passed in August Social Security was intended to provide a "safety net" for citizens who could not financially support themselves. Different elements of the Social Security plan served different social needs: The centerpiece of Social Security was its provision for an old-age and survivor pension. Making use of the public enthusiasm aroused by the Townsend scheme, Social Security provided pensions to Americans aged 65 and over - though the highest monthly rate was $85 rather than Townsend's proposed $200, and the average was a humble $22. The pension plan was financed by a trust fund that employers and workers paid into on the basis of a payroll tax; unlike the income tax, Social Security payments were taken at a flat rate, making them regressive. Other groups who were considered unable to work received Social Security aid through a variety of sources: the unemployed received assistance through a fund created by a payroll tax; federal grants provided help for the disabled. A final group covered under the Social Security act was children of unwed mothers. Aid to Dependent Children (ADC), or "welfare," was seen as a minor part of the overall Social Security package, primarily helping families whose father/husband had died. In the 1930s divorce rates were low and few women had births out of wedlock. Welfare was primarily seen as a continuation of earlier government policies that had helped veterans' widows. A federal program for national health insurance would have widened the social safety net, but Congress shelved the idea after complaints from the medical profession. As a plan for social welfare, Social Security was cautious and limited in comparison to models already in place in other Western nations. Germany, for example, had been putting many social safety-net programs in place since the 1880s. Aside from the regressive effects of its payroll tax, Social Security initially excluded many involved in farm labor, domestic servant work, and other jobs that disproportionately employed women and minorities. Yet Social Security, particularly its old-age pension elements, proved to be the most popular and enduring of New Deal measures; its basic plan remains in place today. By putting federal authority squarely behind efforts to guarantee citizens' well being, Social Security created a modern welfare state in America. Attacks on the Wealthy and Large Corporations Roosevelt observed the popularity of Long's denunciations of big business and the rich. Hence his "soak the rich" tax reform plan, passed by Congress in August as the Revenue Act of 1935, imposed steeper income taxes on wealthy Americans and large corporations. The Public Utility Holding Company Act, also passed in August, placed rigorous political controls over utility companies and warned that if they did not offer good service at low cost to customers, they would be broken up. The New Deal's Peak: Congress passed a number of other New Deal measures in 1935 and 1936, regulating specific industries, providing for further rural electrification, and carrying out additional farm reforms. This burst of political activity consolidated Roosevelt's reputation as a friend of the workingman and an opponent of special privilege; in his speeches, Roosevelt decried the rich minority as "malefactors of great wealth." By mid 1936 Roosevelt's political successes had given him tremendous popularity with the public, even though the American economy had yet to substantially revive and some 80% of American

10 newspapers - generally owned by Republicans - went on record as opposed to his reelection. For that fall's presidential campaign, the Republicans nominated an old "Bull Moose" progressive, Alfred Landon of Kansas, who was considerably more liberal than his party. Coughlin attempted to get his followers, along with Long's and Townsend's, to coalesce behind the new Union Party and its nominee, William Lemke. Roosevelt won the election by 11 million votes, carrying every state except Maine and Vermont. Lemke won less than a million votes, while Socialist candidate Thomas and Communist candidate Browder attracted barely a quarter of a million votes between them. Grateful farmers, workers pleased with relief acts and union protection, and middle-class homeowners bailed out by the mortgage protection laws all supported Roosevelt. The Democratic Party had over three-quarters of the seats in both houses of Congress, and the New Deal appeared invincible. DECLINE AND CONSOLIDATION At the beginning of 1937 the New Deal appeared to be at its height. But Roosevelt soon made a series of poor political and economic decisions that scuttled the most far-reaching elements of the New Deal, creating powerful opposition to his plans in Congress. Yet rather than disappearing, the New Deal entered a period of consolidation, when its changes in culture, labor relations, and politics firmly took root in American life. Setbacks: Court-packing and the "Roosevelt Recession" The Democratic landslide of the 1936 elections energized Roosevelt. In his second inaugural speech, he declared an attack on standards of living that left "one-third of a nation... ill-housed, ill-clad, [and] ill-nourished." Yet his plans faltered as a result of poor political and economic decisions, and conservatives stymied many New Deal measures in the years that followed. In February 1937 Roosevelt made what was for him an unusual blunder. Vexed by the Supreme Court's decision against the NRA in the Schechter case, its overturning of the AAA in 1936, and its unfavorable decision in five of seven other cases testing New Deal laws, he resolved to change the Court's ideological makeup. Without such changes, Roosevelt feared that the Court would also reject the NLRA and Social Security. The Constitution does not specify how many justices can sit on the Court, but by long-standing convention the number had been set at nine. Roosevelt now proposed laws that would allow him to appoint up to six new justices and would force judges to retire at age 70. [4] Given the fact that the Court's opinions reflected the Republican attitudes of the 1920s - attitudes that the electorate had defeated so decisively in the recent elections - Roosevelt felt that the Court's actions threatened American democracy. Nevertheless, his plan flouted the traditional belief that the Court was above partisan politics, and thus shocked even some of Roosevelt's staunchest congressional supporters. Congressional Democrats, arguing that Roosevelt had overreached, delayed considering this plan to "pack the court." Yet the need for the legislation seemed to diminish after March and April of 1937, when Justice Owen Roberts changed his previous position and unexpectedly began voting to uphold New Deal laws, creating a 5-4 pro-new Deal majority on the Court. Some observers speculated that Roberts had changed his mind to protect the principle of a nine-judge court. In any case, over the next four years Roosevelt had the chance to appoint seven new justices, allowing him to change the political tilt of the Court. Among these new justices was Felix Frankfurter, an old Roosevelt friend and advisor. The court-packing episode cost Roosevelt a considerable amount of popular support and good will, and new economic problems compounded the damage. In early 1937, satisfied that the nation was well on its way to recovery, Roosevelt slashed enrollment in the WPA, and the Federal Reserve Bank raised interest rates to fight inflation. As a result of these actions, production soon slowed, unemployment shot up, and critics declared a "Roosevelt recession." That fall, when Roosevelt called Congress into special session to pass emergency relief legislation, it failed to act

11 on his proposals. The party suffered losses in the 1938 election, and congressional conservatives of both parties joined to block future New Deal measures. Effects of the New Deal Although the major political accomplishments of the New Deal had ended by the late 1930s, those programs that had already become law continued to dramatically influence American politics, society, and culture. The New Deal thus effected permanent changes in the American landscape more far-reaching than any particular piece of legislation. Culture The New Deal included a number of programs that examined social realities that Hollywood and other cultural outlets often ignored. Problems such as poverty, crime, prostitution, and suicide had always existed in America, of course, but New Deal cultural programs focused on their effects and placed them in the center of American social consciousness. The Resettlement Administration hired photographers such as Dorothea Lange and Ben Shahn to record the lives of ordinary Americans struggling through the depression. By documenting the breadlines, migrant camps, and withered farms of the era, these photographers made a powerful indictment of economic inequality. The WPA and other works projects hired artists to create murals, sculptures, and other artworks in new post offices, airports, schools, and office buildings. The best-known works of this genre depicted the history of local communities as well as average American farmers and workers, creating an image of America that celebrated the accomplishments of the working class. The Federal Theater Project mounted experimental "Living Newspapers" - plays meant to impartially dramatize recent news events. These plays had a stripped-down, didactic style that sought to emulate the "documentary" style of social realism in New Deal photography and murals. Yet most living newspapers clearly tried to arouse their audience's conscience, leading to charges that the productions were propaganda for the New Deal. Other writers and artists contributed to and emulated the aesthetic of these government cultural programs. Magazines ran stories about depression refugees: Fortune sent James Agee to the rural Deep South to write on poverty there. He wrote not just an article but a book that has become a classic - Let Us Now Praise Famous Men - made all the better by the stark photographs of FSA photographer Walker Evans. Rural poverty became a way to symbolize the experience of the depression as a whole, as in John Steinbeck's The Grapes of Wrath, which showed a newly caring federal government sheltering migrants in a work camp and providing the poorest of Americans with decent living conditions. Labor The New Deal was especially beneficial to the American labor movement. Previous economic downturns had usually made union members vulnerable to layoffs and replacement by strikebreakers. But now the NLRA guaranteed unions the right to organize and negotiate with their employers. During the mid 1930s a new, broadly based trade union, the Congress of Industrial Organizations, began recruiting unskilled men and women on a large scale, particularly in the mining and clothing industries. A new militancy in labor was demonstrated in several sectors of the economy. On December 31, 1936, for example, General Motors (GM) auto workers, led by Walter Reuther, went on strikes at plants at Flint, Michigan, for better pay and working conditions and recognition of their new union, the United Auto Workers. Rather than leave the factory, as previous generations of strikers had done, GM workers staged a "sit-down strike," locking themselves in so that strikebreakers could not take their places. They were careful to do no damage to the factory, and their wives, girlfriends, and mothers brought food to keep them going. Although Roosevelt was openly critical of the strike, he nonetheless refused management pleas for federal troops to stop the strike.

12 Roosevelt did this because he believed industrial peace for the future could only be achieved by integrating unions into the economy. Ultimately, GM gave in and agreed to negotiate with the union. Similar strikes often ended with violent attempts by management to reopen their plants. For example, on Memorial Day, 1937, strikebreaking police fired on a picket line in front of the Republic Steel plant in Chicago, killing 10 workers. Yet Roosevelt's moral authority contributed to the steel factory and mine owners' eventual agreement to come to terms with unions. Such successes led to a rapid rise in American unionization. By the 1950s over 20% of all American workers belonged to unions, which had become accepted facets of industrial life. Politics Finally, the New Deal permanently altered the political landscape. Many workers revered Roosevelt, and his photograph was a ubiquitous fixture in urban households and small businesses. Although Roosevelt had an aristocratic bearing and background, the warmth and emotion of his "fireside chats" made many Americans feel they had a personal connection with the man, and they identified with his struggles against big business. The result was a fundamental realignment of American politics. "New immigrant" Catholic and Jewish voters, many of whom had been alienated from the Democratic Party's tilt toward southern conservatives in the early 1920s, now flocked to the party. Traditionally Democratic southern whites joined them, as did a large majority of African Americans, whose benefit from many relief programs led them to abandon their age-old support for the Republican Party, the party of Lincoln. The Democrats thus made a national majority by fashioning that elusive alliance of "producing" or working classes - farmers and laborers - dreamed of since the Populist movement of the 1890s. Yet these very successes of the New Deal coalition set in motion fundamental changes in the Democratic Party itself. The support of African Americans reflected the fact that some New Deal programs seemed to combat racist discrimination in American society. The CCC, for example, briefly housed both black and white workers together, in defiance of local segregation measures. In addition, a number of black officials appointed to government posts by Roosevelt created an informal "Black Cabinet" to discuss African-American issues. But opposition to ending desegregation came from many quarters: labor unions, for example, often excluded African Americans from their ranks and prevented the inclusion of nondiscrimination clauses in the Wagner Act. Roosevelt's administration often gave in to segregationist pressure in the 1930s, but southern Democrats nevertheless saw the New Deal moving the party leftward. Roosevelt was the first to popularize the term "liberal" in referring to pro-reform forces, and he led this wing in internal fights to shift the balance of power in the party away from southern conservatives. [5] Even as the Democrats dominated national politics over the next 30 years, intraparty conflicts between liberals and conservatives, particularly over southern segregation, continued to widen with time. THE NEW DEAL IN CONTEXT Although the New Deal changed American society in fundamental ways, it did not end the Great Depression: throughout the 1930s, nearly 10 million men remained unemployed or underemployed. Roosevelt's measures undoubtedly seemed radical to many Americans at the time, but most historians today agree that only truly massive government intervention - of the sort undertaken in Nazi Germany or the Soviet Union during these years - could have dramatically affected the American economy. The relative caution of Roosevelt's approach fits in with the New Deal's distinctive ideology, which stressed the continuity and conservatism of American institutions and values.

13 The International Context The 1929 stock market collapse ended American investment in Europe and thus caused economic slowdowns there and in other industrialized countries. European countries faced industrial decline, high unemployment, widespread homelessness, and social dislocation. These problems increased political tensions; in many nations, such as France and Spain, fighting broke out between communists and nationalists. The U.S. stock market crash had a particularly devastating effect on Germany, whose reparations payments for World War I had largely been financed by American lenders. The crash forced American businesses to withdraw their investments in German industry, causing production to fall there by half between 1929 and Also in 1933, Adolf Hitler's Nazi Party took power in Germany, ruthlessly consolidated its control of the state, and began persecuting the nation's Jews. Hitler then began a massive armament campaign that put millions of Germans to work on public works projects and in factories; the depression there was over by At the same time, Stalin was similarly forcing state-led industrialization in the Soviet Union. The regimes of both Hitler and Stalin demonstrated the extent to which centralized command economies could alter the effects of economic depression. All nations confronting the depression thus faced new questions about the role of the state in economic affairs. Only slowly did international economists reject the conventional wisdom, expressed by Roosevelt during the 1932 campaign, that governments needed to cut expenses in order to keep their budgets balanced. By 1934, however, British economist John Meynard Keynes was advising world leaders, including Roosevelt, to take the opposite tack. Keynes argued that government budgets alone, with their ability to borrow unlimited amounts, could stimulate an economy by engaging in large-scale deficit spending. Nevertheless Roosevelt rejected Keynes's ideas as being too radical; the total expenditures of New Deal works programs were much smaller than those advocated by Keynes. Germany's recovery proved Keynes right, however, and also provided the real cause of America's own industrial recovery. From 1937 to 1941, German, Italian, and Japanese military aggression provoked the re-arming of Britain, France, China, and the Soviet Union. The outbreak of war in Europe and Asia provided an immense boost to the American economy, as arms manufacturers sold arms to war-torn Britain and China. At the same time, America began to rebuild its own defenses: Roosevelt asked for, and received, congressional authorization to build 50,000 warplanes per year. The continued expansion in industrial production finally brought employment back to pre-1929 levels by The world crisis, rather than the New Deal, had finally brought the depression to an end. The Domestic Context American critics of the New Deal, watching events abroad, denounced Roosevelt as an American version of overseas demagogic dictators. Yet from another perspective, what is striking about Roosevelt is his conservative impulse to defend American political and economic traditions. His programs did overturn the time-honored American tradition of letting citizens take care of themselves and their families with a minimum of outside intervention. But the New Deal was fundamentally dedicated to preserving the capitalist system and free enterprise. Indeed, in the 1936 elections, Roosevelt described himself as a "true conservative" who sought "to protect the system of private property and free enterprise by correcting such injustices and inequalities as arise from it." To be sure, business owners no longer enjoyed all liberty from federal scrutiny. But the overwhelming majority of economic activity was still dependent on corporate decisions and individual entrepreneurial initiatives. The New Deal was also conservative in the sense that it consciously sought to strengthen American traditions of pluralism and democracy, at a time when these values seemed threatened by dictators throughout the world. Its cultural products, such as the American Guide tourbooks and post office murals, portray an American people of strong local traditions and diversity that

14 can nevertheless stand together as a powerful and unique nation. This ideological sense that America, alone among the countries of the world, had found a way to strengthen its democracy in a time of stress, would prove to be of critical importance in the crises of the 1940s: World War II and the Cold War. CONCLUSION Between 1933 and 1940 the New Deal dramatically changed American society. A host of regulatory, relief, and social safety net programs had brought the federal government closer to the lives of ordinary citizens than ever before. The New Deal had also created public works, cultural projects, labor regulations, and political accomplishments that embodied Roosevelt's commitment to "the forgotten American." Although he did not end the depression or completely fulfill the hopes of many liberals, Roosevelt did reshape national politics and government more profoundly than any previous American president. Emboldened by these successes, Roosevelt decided to run for a third term as president in Just as he had been willing to override tradition in his Supreme Court "packing" plan, so now he overrode the tradition, established by George Washington, of holding the office of president for no more than two terms. Running against Republican nominee Wendell Willkie, he urged voters not to "switch horses in mid-stream," stressing his long political experience in view of the looming world crisis. Americans met Roosevelt's unprecedented request with enthusiasm and overwhelmingly voted him to a third term. With the 1940 election, the nation left the problems of the 1930s behind, to meet the new challenges posed by a world at war. FOOTNOTES [1] During the 1920s insider trading was a frequent problem in American stock and commodity markets. Investors who were privy to impending deals or reports sold or bought stocks on the basis of their knowledge, triggering speculative frenzies on Wall Street. After 1934 the Security and Exchange Commission (SEC) strictly regulated such practices, in part by ensuring that publicly traded companies fully disclose their operations and expenses in regular reports. [2] Although the 18th Amendment had outlawed the sale of intoxicating beverages, it provided Congress with the power to define what legally counted as such a beverage. The Volsted Act, passed in 1919, had outlawed beverages with an alcohol content of.5%; 1933 s Beer-Wine Revenue Act amended the Volsted Act by legalizing wine and beer with an alcohol content of 3.2% by weight, or 4% by volume. [3] The tremendous growth in farm equipment and productivity, as well as the reintroduction of competition from Europe after World War I, had expanded the supply of crops and driven down their prices. [4] Several of the Court s members had each served for over 20 years, including Justice Willis Van Devanter (appointed 1911), Justice Jas. C. McReynolds (appointed 1914), and Justice Louis Brandeis (appointed 1916). All of the Court s other members had been appointed during the Harding, Coolidge, and Hoover administrations, and Roosevelt suspected them of Republican leanings. [5] During these years, for example, the Democratic National Convention allowed equal participation between black delegates and black reporters and their white counterparts. Roosevelt s wing of the party also led a successful fight to end the requirement that two-thirds of the delegates to the convention needed to nominate a presidential candidate, a rule that had given the South veto power over prospective nominees.