In 1928, Herbert Hoover ran for office at the height of American prosperity. He promised “a chicken in every pot,” and there was every indication he could deliver. A short four years later, the nation had plummeted to the depths of its worst depression, and the electorate was angry. In spite of scorching criticism, Hoover wanted to see his recovery programs given more time to work, so he sought a second term as president. Indeed, no other Republican was enthusiastic about being drafted into the seemingly hopeless 1932 presidential race.
Hoover found himself pitted against Democratic nominee Franklin Delano Roosevelt (FDR), governor of New York State. Besides being a Democrat, which in this election was a benefit, Roosevelt was blessed with charm, wit, intelligence, and self-assurance. He was also a mesmerizing speaker, which in this era of the radio was crucially important. Roosevelt had a resonant voice and a gift for employing phrases that struck a strong chord with his listeners. In a campaign speech, he used the term “forgotten man,” and in his nomination acceptance speech he pledged “a new deal for the American people.” These simple descriptors were exactly right for the time and place and contributed greatly to his success.
Although no spendthrift in normal times, Roosevelt’s liberal use of government resources to deal with the depression as governor of New York was in his favor. Roosevelt felt the needs of people took precedence over a strict budget in times of hardship. As governor, he had opened the state’s coffers in relief of those hardest hit by unemployment and bank closings. After his nomination, Roosevelt went on the stump with speeches and “whistlestop tours” to vigorously campaign for the presidency.
Following a nearly fatal bout with polio in 1921, Franklin Roosevelt had been confined to a wheelchair. He spent years trying to recuperate from the illness and its terrible effects. Though fortunate to be able to afford the intensive and prolonged physical therapy that was successful in restoring a small portion of mobility to his affected muscles, the lingering paralysis in Roosevelt’s legs would not allow him to stand on his own or even to walk with metal braces.
Understanding the importance of projecting a strong and vital appearance in the frightening times of the depression, Roosevelt and his staff were careful that voters only see him, whether in person or in a photograph, either sitting in an ordinary chair or standing with unobtrusive support, such as an aide or a podium. A sympathetic press abstained from dwelling on his infirmity, and his political opponents wisely refrained from making an issue of his misfortune. As a testament to his resilience and strength of character, Roosevelt was never prevented from fulfilling the duties of the office of president due to his disability. According to long-time friends and acquaintances, meeting the challenge of polio conferred on him a remarkable degree of tenacity, sympathy, and tolerance—traits that were desperately needed in the depression years and perhaps even more in the war years to follow.
Roosevelt’s wife, Eleanor, aided him immeasurably throughout his political career from the time he served in the New York legislature, through his years as assistant secretary of the Navy, and during his governorship of New York. Unstinting in her campaign efforts on his behalf during the presidential election, she later influenced her husband in shaping the programs of the New Deal. Even more than her husband, Eleanor Roosevelt championed the poor, the oppressed, and the dispossessed. Her genuine and heartfelt concern for the plight of unemployed and hungry Americans during the depression endeared her to the American people, while her intelligence and tireless advocacy impressed even her husband’s enemies.
The presidential campaign of 1932 was a study in contrasts. Roosevelt was bold, energetic, optimistic, and campaigned vigorously. He promised a new deal, but was vague about the specifics. He assured voters that he would balance the budget, though not how that could be accomplished. Many of his speeches were written for him by the “Brain Trust,” a group of young college professors with innovative ideas about the economy and government. Though the path ahead was not clear, even perhaps in Roosevelt’s mind, the country was restless for change, and Roosevelt and the Democrats could give it to them.
By comparison, Hoover and the Republicans were overwhelmed by the enormity and intractability of the depression. Until the last several weeks of the campaign, Hoover put in long hours in his office attempting to hold back a complete economic collapse. At last he was persuaded to take time off to campaign, but by then he was exhausted and discouraged. Crowds were either hostile or apathetic toward the measures Hoover had taken and the dangers he perceived in Roosevelt’s aggressive approach to spending and relief. Hoover’s philosophy of “rugged individualism” seemed to be just empty advice in those times when people needed opportunities to work and help just to survive.
To no one’s surprise, Roosevelt won easily, taking even a large portion of the black vote, which had traditionally gone to Republicans in loyalty to Abraham Lincoln. During the lame duck period between election day in November and the presidential inauguration in March, Hoover’s hands were tied, preventing him from taking any action as the depression steadily deepened with ever more unemployed workers and closed banks. By the time Roosevelt took office, 25 percent of the workforce was idle—50 percent in many cities—and eight out of ten banks had closed their doors.
Roosevelt began his presidency March 4, 1933, with a ringing speech from the inauguration platform in which he pledged a New Deal for the American people and cautioned them against giving in to fear. Immediately thereafter he began instituting a series of bold, nearly revolutionary reforms. On March 6, 1933, he closed the banks and announced a bank holiday. This gave banks relief from the threat of ruinous runs, but sent anxiety through the country as people wondered how safe their money was and what powers the government might give itself in the name of emergency.
On March 9, Roosevelt called a special session of Congress to deal with the banking crisis. Congress immediately passed the Emergency Banking Relief Act that allowed the president to regulate banking transactions and foreign exchange and to reopen those banks that were still solvent. Several months later, Congress passed the Glass-Steagall Banking Reform Act that created the Federal Deposit Insurance Corporation, which initially insured deposits up to $5,000.
In the first of his half-hour “fireside chats” via radio, Roosevelt reassured the American people that their money was now safer in a bank vault than under their mattress or in other less-than-safe places in their home. With these kinds of assurances and legislative guarantees to back them up, people’s faith in the banking system was largely restored. Banks could now reopen their doors without fear of a run, and individuals and companies began depositing their money in banks again. Even so, many Americans who lived through those times harbored a deep distrust of banks and were slow to resume using a bank as a safe repository for their money.
Next, Roosevelt moved to separate the nation’s currency from the stranglehold of being tied to a single commodity—gold. Both the value and the availability of gold fluctuated too much to support a modern economy. During the depression, people hoarded gold as a hedge against the possible failure of the dollar and banks. As gold became scarce, the value of the dollar rose causing deflation, which left debtors to repay loans in more valuable dollars. In addition, goods that had cost a fixed amount to produce now brought in fewer dollars on the marketplace.
Roosevelt’s solution was to order all gold to be exchanged at the Treasury for paper currency. In addition, all contracts that contained a payment-in-gold clause were required to cancel that provision. To get more currency into the economy, the Treasury paid a premium price for gold on a sliding scale from $21 an ounce in 1933 to $35 an ounce in 1934. At this high price, people were eager to cash in their gold coins, though conservative economists criticized the president for manipulating the value of money by “running the printing presses” and creating inflation. Roosevelt’s aim, however, was reform of banking and the money supply with the goal of a managed currency that would remain relatively stable and dependable regardless of the fluctuations of the precious metals market.
In 1934, the U.S. returned to a gold standard on a very limited basis with regard to international trade. Because foreign sellers sometimes required gold rather than dollars, they could request payment in gold at the rate of $35 per ounce. But within the United States, paper currency became the only legal method of payment for all debts. As the Greenback Party had wanted 50 years before, America was off the gold standard.
Following the Emergency Banking Relief Act, Roosevelt and his advisors crafted a deluge of legislation, which Congress passed with few alterations. Roosevelt retained the “Brain Trust” of his election days as his advisors and cabinet members in departure from the usual president’s cabinet that was made up of politicians and businessmen. Notable cabinet members and members of Roosevelt’s “inner circle” included Secretary of State Cordell Hull, Secretary of Interior Harold Idkes, Secretary of Labor and first woman cabinet member Frances Perkins, Roosevelt’s friend Harry Hopkins, and his wife, Eleanor.
Relief, recovery, and reform were the goals of the New Deal legislation that was passed from 1933 through 1935. Because of the immediacy of need, relief and recovery were the priorities for the first 100 days of the new Congress from March 9 to June16, 1933. Roosevelt did not have a developed plan when he took office, however. His aim was to seek practical solutions to real-world problems, and he did it on a broad scale in departure from the previous practice of legislating either general guideline laws or very specific laws to address closely defined problems. Along with programs of the New Deal, Congress approved legislation that gave the president powers unprecedented in American history.
The creation of multitudes of programs was a wholly new phenomenon in America. To communicate with the American people and reassure them about the blizzard of changes, Roosevelt regularly addressed the nation via radio in his informal fireside chats. This in itself was a novelty, but in these distressed times people took great comfort from hearing the genial FDR tell them that things were on the way to being better.
Due to the haste of their creation, the track record of these first programs was uneven, and some were notably more successful than others. Many of the programs overlapped in their areas of concern, some contradicted one another, and a few produced negative results. From a psychological perspective, however, this flurry of activity was what the country needed. Something was being done, and with new optimism people pulled themselves out of lethargy and things began to happen.
Economists debate whether Roosevelt’s programs or the natural progress of the economic cycle played a greater role in getting the country on the road to recovery. But the lasting legacy of the New Deal was to reinstate a Progressive stamp on national politics and to temper traditional American laissez-faire with enough regulation to moderate the boom-and-bust cycles characteristic of capitalism.
Throughout World War I and the booming twenties, Progressives had been forced to keep a low profile on social reform. With the election of a Democratic Congress and president, the Progressives and their liberal heirs were quick to link the economic disaster of the depression with what they saw as social ills. Part of their agenda, including unemployment insurance, a minimum wage, and child labor laws, clearly had both social and economic aspects. In other areas, such as conservation, old-age insurance (social security), and direct relief to individuals (welfare), the benefit was less clearly tied to the overall economic well-being of the nation and more to the social agenda of the movement.
Eager to promote programs that would get more currency into circulation, Roosevelt welcomed the often-expensive Progressive agenda. Critics warned that once these programs were in place and part of the landscape of American life, they would become entrenched. Indeed this has been the case as most Americans now expect unemployment benefits if they are laid off, social security benefits at retirement age, and a safety net of welfare and social services in the event that they should need them. The majority of Americans agree that these measures have generally been for the better, though debate is far from over concerning their ultimate effects. For better or worse, the New Deal irrevocably altered the culture as well as the business of the United States.
New Deal Programs
With unemployment the highest it had ever been in the nation’s history, the most pressing problem facing Roosevelt when he took office was to get people back to work. His first request to Congress was for the Unemployment Relief Act, which created the Civilian Conservation Corps (CCC). Over the course of its existence, the CCC employed some three million young men on conservation projects such as flood control, draining swamps, and planting trees. The CCC did more than just provide jobs—it kept many young men off the streets and gave them hope and dignity. CCC employees were not only able to earn money for themselves, but part of their pay was sent to their parents, so the benefit was spread to their families and ultimately to the economy. CCC workers were given uniforms, housed in barracks, and fed regular meals. Critics complained about the militarization of America’s youth, but many CCC workers would have gone without the basic necessities of food, shelter, and clothing without this program.
To assist families and adult unemployed workers, Congress passed the Federal Emergency Relief Act (FERA), which gave $3 billion to states to be used as welfare and to supplement work projects. Harry L. Hopkins, a New York social worker, was put in charge of the agency. Roosevelt also ordered the Civil Works Administration (CWA) as a sub-agency of FERA. The CWA provided strictly temporary jobs, many of them inconsequential in nature, in order to help people through the winter of 1933 to 1934. While the CCC and FERA had both relief and recovery aims, the CWA was designed solely for relief.
Farmers and homeowners were also in desperate need of assistance. The Agricultural Adjustment Act (AAA) and the Home Owners’ Loan Corporation (HOLC) provided millions of dollars in mortgage assistance so families could keep their homes and farms. Secondarily, mortgage-holding banks were saved from huge losses and in some cases even collapse with mortgage holders once again being able to make their payments. As with the CCC and FERA, these mortgage assistance agencies were for both immediate relief and longer-term recovery.
In addition, the Agricultural Adjustment Administration was created to maintain farm income. The agency’s strategy was to reduce the supply in the market by paying farmers to decrease their acreage under production. The government also bought surpluses and destroyed them, to the chagrin of people who could not afford food. The scheme was to be paid for by taxes on food processors such as grain mills and slaughterhouses, who would pass on the increases to the public.
In Butler v. U.S. in 1935, the Supreme Court ruled the government’s method of taxation unconstitutional and the AAA program was scrapped. In its place, the government created the Soil Conservation and Domestic Allotment Act of 1936 where the government paid farmers to allow some of their land to lie fallow or to plant part of their acreage in soil-conserving crops such as beans or buckwheat. In 1938, it followed up with the Second Agricultural Adjustment Act with the goal to support farm prices and restore farm income to be on a par with the incomes of other segments of society.
As if nature had joined in a conspiracy against the American economy, the 1930s witnessed a devastating drought in the region drained by the Mississippi River. Conditions were so dry that the especially hard-hit areas of eastern Colorado and western Texas, Oklahoma, Kansas, and Nebraska were called the Dust Bowl. Farming there became virtually impossible as the land turned to desert. Most of the region’s farming population headed west in the great migration memorialized by John Steinbeck in his 1939 classic, Grapes of Wrath.
The Roosevelt administration endeavored to deal with in the problems caused by the Dust Bowl by sending to Congress the Frazier-Lemke Farm Bankruptcy Act of 1934, which mandated a suspension of mortgage foreclosures for five years. The Supreme Court struck down the Frazier-Lemke Act, but Congress passed an amended act that forestalled foreclosures for three years. In 1935, the government created the Resettlement Administration to assist Dust Bowl farmers with relocating to better land. Meanwhile, CCC workers planted 200 million seedling trees in the Dust Bowl region as windbreaks. The rains began to fall again by the 1940s, but after the 50-year experiment in farming this fragile area, much of it was returned to grazing because the tough prairie grasses hold the soil during the cyclical droughts that plague the region.
Along with banking and unemployment, the Roosevelt administration was committed to repealing prohibition. In practical terms, prohibiting alcohol had simply not been successful. Those who wanted a drink were seldom prevented from getting one. In fact, alcohol consumption had increased in the 1920s. From a sociological standpoint, prohibition was a disaster because the illicit market for alcohol was so lucrative that it fostered the growth of criminal organizations such as that of Al Capone in Chicago. When alcohol became legal, these organizations did not disappear but turned to making a profit in other criminal arenas, notably drugs and prostitution.
On March 22, 1933, just 18 days after Roosevelt took office, Congress legalized light (3.2% alcohol) beer and wine. This did more than end prohibition; it spurred employment in a domestic industry that had been suppressed for a decade. Even more important, perhaps, a tax of $5 was levied on each barrel of wine and beer, which provided needed revenue to the Treasury. Later in 1933, prohibition was abolished altogether with the Twenty-first Amendment.
Another institution in desperate need of reform was the stock market. Small margin requirements and insider trading had allowed swindlers to manipulate the market and make fortunes at the expense of investors. During the first hundred days of the emergency session, Congress passed the Truth in Securities Act that called for complete disclosure concerning a stock before it was sold. In 1934, Congress solidified its fair trading policy by creating the Securities and Exchange Commission (SEC). This agency set rules and regulations concerning trading that put all investors on a level playing field.
In 1935, Congress passed the Public Utility Holding Company Act to address the huge utility conglomerates that had swallowed up hundreds of local utility companies under the umbrella of a holding company that was held by a parent holding company, and so on. As an example of the dangers of this pyramiding, Samuel Insull’s utility behemoth had failed in 1932 sending shocks throughout the business world and creating distress for the company’s tens of thousands of customers. The Insull failure had an immediate response from the first emergency Congress. Roosevelt’s New Deal cabinet and Congress wanted to counter the monopolistic utility companies, especially the electric power companies, with a model government program that could be used as a gauge for fair prices and practices. Senator George W. Norris of Nebraska was a particular champion of this idea.
The Tennessee River valley, which was badly eroded from incessant flooding and whose population had been especially hard hit by the depression, was the ideal location for a pilot project of impressive proportions. The president promoted and Congress passed the Tennessee Valley Authority (TVA) legislation that mandated the project. More than 20 dams on the river and its tributaries were constructed to prevent flooding and provide power to generate electricity for the entire region. Building this flood control and power generating system employed thousands of workers, which helped bring needed dollars to the local populace. Erosion was all but eliminated, and CCC workers restored much of the land to forest.
The TVA was a notable success, in spite of efforts by privately owned utility companies to discredit the achievement. Initiating similar large-scale projects on other river systems met with resistance, however, as conservatives and even moderate Democrats became concerned over the dangers of slipping into a socialistic, managed economy. But smaller projects and individual dams built to provide both water and power in the driest areas of the West proved great boons to those areas in the years to come.
Housing was another critical area addressed by the New Deal. In 1934, Roosevelt inaugurated the Federal Housing Administration (FHA) to make small loans to homeowners for home improvements or completing construction on a home. The project was extremely well received, and in 1937 Roosevelt supplemented it with the United States Housing Authority (USHA) aimed at sponsoring new home construction. Housing funds were allocated for over a half million low income families, but the initiative was obstructed by entrenched interests in real estate and construction who felt that government-sponsored, low-income housing would interfere with their livelihood. Enough housing was built to get many families out of the worst of the urban slums, however, and housing assistance through the FHA continues to this day.
A far-reaching program called the National Recovery Administration (NRA) attempted in 1933 to coordinate business and labor and to address unemployment both for the short and long term. The NRA called for self-restraint on the parts of both business and labor. Businesses were to abide by codes of fair competition. Minimum wages and maximum work hours were established for workers in order to employ a greater number of people. Labor was encouraged to use collective bargaining.
The National Recovery Administration program was expensive for industries, and workers who already had a job found their net pay reduced because they were restricted in the number of hours they could work. In addition, labor felt its bargaining impact blunted in not being able to threaten a strike. After a warm reception, the plan began to founder as each group felt it was being asked to sacrifice too much. The NRA’s semi-voluntary nature made it easy for individuals to cheat on the rules when they felt unfairly burdened. Finally, in the Schechter case, the Supreme Court ruled that not only had Congress overstepped its bounds by delegating its legislative authority to the executive branch, but also that the federal government did not have jurisdiction for regulating local businesses that were not engaged in interstate activity.
A companion to the ill-fated NRA was the Public Works Administration (PWA) that was also aimed at unemployment relief and economic recovery. Headed by Secretary of the Interior Harold L. Ickes, the PWA pursued tens of thousands of public works projects, including the Grand Coulee Dam on the Columbia River, which provided water for irrigation and hydroelectric power for the region. The success of the PWA and later the Works Progress Administration (WPA) lay in the fact that government was much more successful as a contractor for work than as a mediator between business and labor, as it tried to be with the NRA.
The reforms of the New Deal placed a value on heritage as well as progress. Concerned that Indians under the Dawes Act, which had called for assimilation, were losing their native identity, the Roosevelt administration sponsored the Indian Reorganization Act of 1934, which provided for tribal self-government and the means to preserve native traditions. Of nearly 300 tribes, 200 participated in the reorganization. The remainder balked due to concerns that reviving Indian culture could lead to further marginalization of Native Americans in the predominantly white American culture.
In spite of pump priming, jobs programs, and outright welfare, unemployment was still high in 1935, and many people had exhausted every resource. The mood of the country was desperate. Roosevelt decided that all of the previous programs had not gone far enough to keep people employed, and he began another round of reforms sometimes called the Second New Deal. At his request, Congress created the Works Progress Administration (WPA) as a large-scale remedy. Harry Hopkins headed the WPA, which over time spent approximately $11 billion on public works projects, education, and the arts.
WPA workers constructed bridges, paved roads, and built public buildings. Many of the brick roads laid down by WPA workers are still in use today. Workers also assisted all levels of education as graders and teaching assistants. They wrote histories and produced art for government buildings. Wages were $.25 to $.35 an hour, but people who had been earning nothing were thrilled to get any sort of pay, and WPA jobs helped people keep their self-respect.
In an effort to help organized labor after the demise of the NRA, in 1935 Congress wrote the National Labor Relations Act, sometimes known as the Wagner Act, which created the National Labor Relations Board. This agency fostered the organization of unions and protected their right to bargain collectively.
Perhaps the most revolutionary New Deal reform for America was the Social Security Act of 1935. This law provided government-sponsored insurance for the unemployed, dependent children, retirees, and the handicapped. The plan was funded by mandated contributions from both workers and employers. Social Security payments were from $10 to $85 a month, but have regularly increased to keep pace with inflation. Originally the plan did not cover self-employed persons, though that provision soon changed.
Conservatives bitterly opposed Social Security as pernicious socialism that celebrated leisure and denigrated work. They also charged that the plan was a “ponzi scheme,” an illegal form of investment where the incoming funds of people investing in the scheme are used to pay off those collecting their returns, but no principal is actually generating a dividend income. Mathematically, ponzi schemes always fail because at some point those who are receiving exceed in number those who are paying in.
Liberal theorists have maintained that if there should be shortfalls in the Social Security System, the federal government is large enough to absorb them. With the Baby Boom bulge in the population now approaching retirement, politicians and economists are scrambling to plan ways to keep Social Security afloat while shielding the working generation from a crushing tax burden. Time will tell how the story of Social Security plays out, but for the 70-some years of its existence it has provided necessary and humane retirement support for millions of Americans at a reasonable cost to those in the workforce.
Critics and Challenges
During the Great Depression, America was searching for solutions. Because of this, people with radical opinions, who in better times would have been ignored, were able to capture the attention of the nation. Some made valuable contributions by presenting new ideas for debate. Others seemed to be merely obstructionist complainers or even rabble rousers just trying to make trouble. The majority, however, seemed to fall in an intermediate category of outspoken people who had many valid objections, a few good ideas, and a love for getting on a soapbox.
At this time, Hitler and Stalin were undertaking massive propaganda campaigns describing how they were lifting their countries out of poverty and how democracy and capitalism were not the universal answer to the problems of a society. The propaganda lured many to consider the benefits of a “benign dictatorship” such as Hitler’s regime purported to be, or the blessings that might be had from the communal ownership of the means of production and equal shares in the generated wealth as Stalin claimed was blossoming in Russia. These ideas were especially appealing to workers struggling to organize and collectively negotiate for humane working conditions and a living wage. While the fascist and communist tyrannies were marred with flaws that even aggressive propaganda could not conceal, with such troubled times at home many Americans could not help but consider that their faith in capitalism may have been misplaced and that some other economic formula might better answer their needs.
Father Charles Coughlin was a Catholic priest from Michigan who began broadcasting his views on the radio in 1930. Initially a New Deal supporter, he later bitterly criticized Roosevelt and his policies believing that the NRA and AAA benefited only industry and well-off farmers. His favorite phrase was “social justice,” and he called Roosevelt a liar for not nationalizing the banks, as Coughlin had believed was Roosevelt’s intention from speeches prior to taking office. Father Coughlin had the largest radio audience in U.S. history—40 million listeners. Eventually he resorted to anti-Semitism and fascist rhetoric, which caused his show to be canceled in 1942 when the Catholic Church insisted he give up radio broadcasting.
Senator Huey P. (“Kingfish”) Long was an ultra-progressive senator from Louisiana who promoted an agenda of wealth redistribution that shocked even the Liberal Democrats. Long’s “Share Our Wealth” program promised to make “Every Man a King” by supplying each family with $5,000 at the expense of the prosperous. As governor in Louisiana he had been very popular with a majority of the electorate due to his raising taxes on the higher income earners to gain funds for schools, hospitals, road improvement, and bridge construction. Among other income-generating programs, Long instituted high inheritance taxes on large estates. His iron-fisted methods antagonized the wealthy, however, who felt he had pandered to the worst impulses of greed and envy among the poor in order to gain a voter mandate. Had Long not been assassinated in 1935, he might have posed a challenge to Roosevelt in 1936.
A retired doctor who had been reduced to poverty by the troubles of the depression, Dr. Francis Townsend organized over five million supporters for his Old Age Revolving Pension Plan. He advocated giving $200 per month (about twice the average worker’s salary) to each senior citizen over the age of 60. This money had to be spent within the month, however, in order to keep it circulating and prevent hoarding, which had been a stumbling block during the depression. Townsend’s scheme was to be funded by a national sales tax, but simple calculations proved that it would cost the Treasury about half the national income.
Taking the radically opposite view from Coughlin, Long, and Townsend, a group of wealthy Republicans and conservative Democrats, including Al Smith and John W. Davis, formed the American Liberty League in 1934 to fight what they considered the socialism of the New Deal. Their goal was to defend the interests of business and to promote open shop laws. This group supported Alfred M. Landon, governor of Kansas, for the Republican nomination in the 1936 presidential election. Former President Hoover backed Landon in vigorously opposing the New Deal programs, which the League characterized as wasteful, radical, and hopelessly muddled.
The rhetoric surrounding the presidential election of 1936 resurfaced an on-going political debate concerning the role of government in society, a debate that is no less intense today than it was in 1936. Americans continuously seek to refine and redefine the optimum balance between the benefits arising from individuals being able to amass capitol that creates jobs and industries but also makes them wealthier and the benefits derived from the redistribution of wealth via taxes and social programs back to the general population. A century has not blunted the immediacy of the debate, which attests to the monumental challenge posed to the candidates in 1936 to define the problems facing the nation and to articulate possible solutions.
In the desperate political climate of the depression, Republican Alfred Landon lost by a landslide as Roosevelt marshaled a coalition of city dwellers, minorities, and the poor. In an election that divided the nation along class and income lines, those benefiting from New Deal programs simply outnumbered those who felt they were paying for them. Roosevelt was sworn in for a second term January 20, 1937, rather than March 4, which was the old inauguration date. The Twentieth Amendment, ratified in 1933, moved the date up by six weeks and thus shortened the “lame duck” period.
Perhaps taking his easy victory too much to heart, Roosevelt began casting a resentful eye at the conservative Supreme Court, which had cashiered seven of his New Deal Programs. Six of the justices were over the age of 70, which, in one of his few errors in judgment, Roosevelt thought could give him an excuse to appoint new judges. Shortly after he was inaugurated for his second term, Roosevelt asked Congress to allow him to add a justice of his choosing to the Supreme Court for every justice over 70. He set a maximum number of judges at 15. He claimed that the Supreme Court was behind in its work and needed younger justices to carry the load. His assertion that the Supreme Court was backlogged proved to be incorrect, which invalidated his argument and cast a pall of suspicion over his motives. At the very least he was criticized for attempting to upset the system of checks and balances provided for by the Constitution. Some went so far as to accuse Roosevelt of preparing the way to take over as dictator. This was absurd, but the episode threw a chill over his proposals for additional New Deal programs.
On the other hand, this court-packing challenge must have sounded something of a wake-up call to the justices, who began to view Roosevelt’s programs in a more sympathetic light. In subsequent cases the Court upheld the Wagner Act (the National Labor Relations Act), Social Security, and minimum wage for women. Ironically, during his four terms as president, Roosevelt would be called on to name nine judges to the Supreme Court on account of retirements and deaths. Time provided him with the court he wanted. Had he been patient, he could have avoided a damaging fight.
Feeling that the worst of the depression was over and the economy was strong enough to be weaned from “pump-priming,” in early 1937 Roosevelt backed off from federal employment programs in an attempt to reduce deficit spending and fulfill his campaign promise of a balanced budget. But the economy was not as robust as Roosevelt had hoped, and it was beginning to feel the pinch of the new Social Security payroll taxes.
In 1938, the country slipped into a deep recession wiping out most of the gains that had been made since 1933. In the face of this setback, Roosevelt began to employ the economic theory of John Maynard Keynes, who argued that in a recession government should use deficit spending and expect to make up the losses in good times through increased tax revenues. Programs such as the WPA that gave direct aid through work were resumed, and the economy began to improve later in 1938. These programs were intended to provide temporary relief for people in need, and be disbanded when the economy improved, but Roosevelt realized in the wake of the recession that they could not be too hastily discontinued without disruptions.
Congress passed the Wages and Hours Bill, or Fair Labor Standards Act, in 1938. This bill required all industries involved in interstate commerce to establish maximum hours per week and minimum wage standards. The goal was a 40-hour week and $.40 an hour wage. Business complained that these were impossible standards to meet. Even so, farm workers (such as migrant workers), service employees (such as waiters), and domestic workers (such as housekeepers) were excluded from the bill, which meant that its protections were not extended to the many women and minorities engaged in these occupations. In that year also, the Committee for Industrial Organization changed its name to the Congress of Industrial Organization, and it continued its sometimes detrimental feuding with the American Federation of Labor.
In the Congressional elections of 1938, Democrats lost 80 seats in the House and all but gave up control of the legislature. A “Conservative Coalition” in Congress could now successfully block Roosevelt’s legislation, and no more New Deal programs were passed after 1939. With the programs already in place, the economy continued to mend, albeit slowly, but not until the wartime manufacturing boom of the early 1940s would America again see full employment.