Challenges from Critics on All Sides

While many people supported Roosevelt, especially in the first few years of his presidency, the New Deal did receive significant criticism, both from conservatives who felt that it was a radical agenda to ruin the country’s model of free enterprise and from liberals who thought that it did not provide enough help to those who needed it most.

Figure 1. Roosevelt used previously unheard–of levels of government power to push the country out of the Great Depression, as artist Joseph Parrish depicts here in this 1937 Chicago Tribune cartoon. While critics on the left felt that he had not done enough, critics on the right felt that his use of power was frighteningly close to fascism and socialism.

Industrialists and wealthy Americans led the conservative criticism against the president. Whether attacking his character or stating that he was moving away from American values toward fascism and socialism, they sought to undermine his power and popularity. Most notably, the American Liberty League—mainly comprised of conservative Democrats who lamented the excesses of several of Roosevelt’s New Deal programs—labeled the AAA as fascist and proclaimed later New Deal programs to be critical threats to the very nature of democracy. Additional criticism came from the National Association of Manufacturers, which urged business people to ignore outright portions of the NRA that promoted collective bargaining and subsequent labor protection legislation. In 1935, the U.S. Supreme Court dealt the most crushing blow to Roosevelt’s vision, striking down several key pieces of the New Deal as unconstitutional. They found that both the AAA and the NIRA overreached federal authority. The negation of some of his most ambitious economic recovery efforts frustrated Roosevelt greatly, but he was powerless to stop it at this point.

Meanwhile, others felt that Roosevelt had not done enough. Dr. Francis E. Townsend of California felt that Roosevelt had failed to address the country’s tremendous problems adequately. Townsend, a retired dentist, proposed an expansive pension plan for the elderly. As it was known, the Townsend Plan gained great popularity: It recommended paying every citizen over sixty who retired from work the sum of $200 per month, provided they spent it in thirty days. Another figure who gained national attention was Father Charles Coughlin. Although he initially supported the New Deal, he was a “radio priest” from Michigan. He subsequently argued that Roosevelt stopped far too short in his defense of labor, monetary reform, and the nationalization of key industries. The president’s plan, he proclaimed, was inadequate. He created the National Union for Social Justice and used his weekly radio show to gain followers.

Upton Sinclair’s “End Poverty in California” Program

A more direct political threat to Roosevelt came from muckraker Upton Sinclair, who pursued the California governorship in 1934 through a campaign based upon criticism of the New Deal’s shortcomings. In his “End Poverty in California” program, Sinclair called for a progressive income tax, a pension program for the elderly, and state seizure of factories and farms where property taxes remained unpaid. The state would then offer jobs to the unemployed to work those farms and factories cooperatively. Although Sinclair lost the election to his Republican opponent, he did draw local and national attention to several of his ideas.

Figure 2. Huey P. Long was a charismatic populist and governor of Louisiana from 1928 to 1932. In 1932, he became a member of the U.S. Senate and would have been a fierce rival to Roosevelt in the 1936 presidential election if his life had not been cut short by an assassin’s bullet.

Huey Long’s “Share Our Wealth”

However, the biggest threat to the president came from corrupt but beloved Louisiana senator Huey “Kingfish” Long. His disapproval of Roosevelt came partly from his ambitions for higher office; Long stated that the president was not doing enough to help people and proposed his own Share Our Wealth program. Under this plan, Long recommended the liquidation of all large personal fortunes to fund direct payments to less fortunate Americans.

“How many men ever went to a barbecue and would let one man take off the table what’s intended for nine-tenths of the people to eat?” he asked. Over twenty-seven thousand Share the Wealth clubs sprang up across the nation as Long traveled the country explaining his program to crowds of impoverished and unemployed Americans.

He foresaw giving $5,000 to every family, $2,500 to every worker, and a series of elderly pensions and education funds. Despite his questionable math, which numerous economists quickly pointed out rendered his program unworkable, by 1935, Long had a significant following of over four million people. If a local political rival’s son-in-law had not assassinated him, he might have been a contender against Roosevelt for the 1936 presidential nomination. Even in death, Long convinced Roosevelt to attack the Depression and American inequality more stridently.

If many Americans urged Roosevelt to go further in addressing the economic crisis, the president faced even more significant opposition from conservative politicians and business leaders. By late 1934, complaints increased from business-friendly Republicans about Roosevelt’s willingness to regulate industry and use federal spending for public works and employment programs. In the South, Democrats who had initially supported the president grew more hostile toward programs that challenged the region’s political, economic, and social status quo. Yet tremendous opposition came from the Supreme Court, filled with conservative appointments made during the long years of Republican presidents.

By early 1935 the Court was reviewing programs of the New Deal. On May 27, a day Roosevelt’s supporters called Black Monday; the justices struck down one of the president’s signature reforms: in a case revolving around poultry processing, the Court unanimously declared the NRA unconstitutional. In early 1936, the AAA fell.

Answering the Challenge

Figure 3. Painted by artists funded by the Federal One Project, this section of Ohio, a mural in the Bellevue, Ohio post office, illustrates a busy industrial scene. Artists painted the communities where they lived, thus creating visions of farms, factories, urban life, harvest celebrations, and more that still reflect the life and work of that era. (credit: Works Progress Administration)

Roosevelt recognized that some of the criticisms of the New Deal were valid. Although he was still reeling from the Supreme Court’s invalidation of crucial statutes, he decided to face his re-election bid in 1936 by unveiling another wave of legislation that he dubbed the Second New Deal. In the first week of June 1935, Roosevelt called congressional leaders into the White House and gave them a list of “must-pass” legislation that he wanted before they adjourned for the summer. Whereas the policies of the first hundred days may have shored up public confidence and stopped the most drastic of the problems, the second hundred days changed the face of America for the next sixty years.

The Banking Act of 1935 was the most far-reaching revision of banking laws since the creation of the Federal Reserve System in 1914. Previously, regional reserve banks, notably the New York Reserve Bank—controlled by the powerful Morgan and Rockefeller families—had dominated policy-making at the Federal Reserve. Under the new system, a seven-member board of governors would oversee regional banks. They would control reserve requirements, discount rates, board member selection, and more. Not surprisingly, this new board kept initial interest rates quite low, allowing the federal government to borrow billions of additional cash to fund significant relief and recovery programs.

In 1935, Congress also passed the Emergency Relief Appropriation Act, which authorized the most significant expenditure in the country’s history: $4.8 billion. Almost one-third of those funds were invested in a new relief agency, the Works Progress Administration (WPA). Harry Hopkins, formerly head of the CWA, took on the WPA and ran it until 1943. During that time, the program provided employment relief to over eight million Americans or approximately 20 percent of the country’s workforce. The WPA funded the construction of more than 2,500 hospitals, 5,900 schools, 570,000 miles of road, and more. The WPA also created the Federal One Project, which employed approximately forty thousand artists in theater, art, music, and writing. They produced state murals, guidebooks, concerts, and drama performances all around the country. Additionally, the project funded the collection of oral histories, including formerly enslaved people, which provided a valuable addition to the nation’s understanding of slave life. Finally, the WPA also included the National Youth Administration (NYA), which offered work-study jobs to over 500,000 college students and four million high school students.

The Social Security Act

With the implementation of the Second New Deal, Roosevelt also created the country’s present-day social safety net. The Social Security Act provided for old-age pensions, unemployment insurance, and economic aid, based on means, to assist both the elderly and dependent children. The president was careful to mitigate some of the criticism from what was, in the American context, a revolutionary concept at the time. He specifically insisted that social security be financed from payroll, not the federal government; “No dole,” Roosevelt said repeatedly, “mustn’t have a dole.” ^[1] He thereby helped separate social security from the stigma of being an excessive “welfare” entitlement. While such a strategy saved the program from suspicions, social security became the centerpiece of the modern American social welfare state. It was the culmination of a long progressive push for government-sponsored social welfare, an answer to the calls of Roosevelt’s opponents on the Left for reform, a response to the intractable poverty among America’s neediest groups, and a recognition that the government would now assume some responsibility for the economic well-being of its citizens.

Nevertheless, the act excluded large swaths of the American population. Its pension program excluded domestic and farm workers, a policy that disproportionately affected African Americans. Roosevelt recognized that social security programs would need expansion and improvement. “This law,” he said, “represents a cornerstone in a structure which is being built but is by no means complete.” ^[2]

Related to the Social Security Act, Congress also passed a law on unemployment insurance to be funded by a tax on employers and programs for unwed mothers and those who were blind, deaf, or disabled. It is worth noting that some elements of these reforms were pulled from Roosevelt’s detractors, Coughlin and Townsend; the popularity of their movements gave the president more leverage to push forward this type of legislation.

The Wagner Act

To the benefit of industrial workers, Roosevelt signed into law the Wagner Act, also known as the National Labor Relations Act. The protections previously afforded to workers under the NIRA were inadvertently lost when the Supreme Court struck down the original law due to more significant regulatory concerns, leaving workers vulnerable. Roosevelt sought to salvage this vital piece of labor legislation with the Wagner Act. The act created the National Labor Relations Board (NLRB) to protect American workers’ right to unionize and bargain collectively and provide a federal vehicle for labor grievances to be heard.

Although roundly criticized by the Republican Party and factory owners, the Wagner Act withstood several challenges and eventually received constitutional sanction by the U.S. Supreme Court in 1937. The law received the strong support of John L. Lewis and the Congress of Industrial Organizations who had long sought government protection of industrial unionism, from the time they split from the American Federation of Labor in 1935 over disputes on whether to organize workers along craft or industrial lines. Following the law’s passage, Lewis began a widespread publicity campaign urging industrial workers to join “the president’s union.” The relationship was mutually beneficial to Roosevelt, who subsequently received the endorsement of Lewis’s United Mine Workers union in the 1936 presidential election, along with a sizeable $500,000 campaign contribution. The Wagner Act permanently established government-secured workers’ rights and protections from their employers and marked the beginning of labor’s political support for the Democratic Party.

Critical Programs from the Second New Deal

The various programs that made up the Second New Deal are listed in the table below. Note that many of these programs are still in use today.

The Final Pieces

The “Supreme Court Packing Plan”

Roosevelt entered the 1936 presidential election on a wave of popularity, and he beat Republican opponent Alf Landon by a nearly unanimous Electoral College vote of 523 to 8. Believing it to be his moment of most robust public support, Roosevelt chose to exact a measure of revenge against the U.S. Supreme Court for challenging his programs and to pressure them against challenging his more recent Second New Deal provisions. Roosevelt argued that the measure would speed up the Court’s ability to handle a growing backlog of cases; however, his “court-packing scheme,” as opponents termed it, was designed to allow the president to appoint up to six friendly, pro-New Deal justices to drown the influence of old-time conservatives on the Court. To this end, Roosevelt created the informally named “Supreme Court Packing Plan” and tried to pack the court in his favor by expanding the number of justices and adding new ones who supported his views. He planned to add one justice for every current justice over the age of seventy who refused to step down. This would have allowed him to add six more judges, expanding the bench from nine to fifteen.

Opposition was quick and thorough from both the Supreme Court and Congress, as well as from his own party. The subsequent retirement of Justice Van Devanter from the court and the sudden death of Senator Joe T. Robinson, who championed Roosevelt’s plan before the Senate, all signaled Roosevelt’s defeat. However, although he never received the support to make these changes, Roosevelt appeared to succeed in politically intimidating the current justices into supporting his newer programs, and they upheld both the Wagner Act and the Social Security Act. During his presidency, the Supreme Court would never strike down any significant elements of his New Deal. Still, the court-packing scheme damaged the Roosevelt administration and emboldened New Deal opponents.

The National Deficit

Roosevelt was not as successful in addressing the nation’s growing deficit. When he entered the presidency in 1933, Roosevelt did so with traditionally held fiscal beliefs, including the importance of a balanced budget to maintain public confidence in federal government operations. However, the severe economic conditions of the depression quickly convinced the president of the importance of government spending to create jobs and relief for the American people. As he commented to a crowd in Pittsburgh in 1936, “To balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people. To do so . . . we should have had to set our face against human suffering with callous indifference. When Americans suffered, we refused to pass by on the other side. Humanity came first.” However, after his successful re-election, Roosevelt anticipated that the economy would recover enough by late 1936 that he could curtail spending by 1937. This reduction in spending, he hoped, would curb the deficit.

As the early months of 1937 unfolded, Roosevelt’s hopes seemed supported by the most recent economic snapshot of the country. Production, wages, and profits had all returned to pre-1929 levels, while unemployment was at its lowest rate in the decade, down from 25 percent to 14 percent. But no sooner did Roosevelt cut spending when a recession hit. Two million Americans were newly out of work as unemployment quickly rose by 5 percent and industrial production declined by a third. Breadlines began to build again while banks prepared to close.

Historians continue to debate the causes of this recession within a depression. Some believe the fear of increased taxes forced factory owners to curtail planned expansion; others blame the Federal Reserve for tightening the nation’s money supply. Roosevelt, however, blamed the downturn on his decision to significantly curtail federal government spending in job relief programs such as the WPA. Several of his closest advisors, including Harry Hopkins, Henry Wallace, and others, urged him to adopt the new economic theory espoused by British economic John Maynard Keynes, who argued that deficit spending was necessary for advanced capitalist economies to maintain employment and stimulate consumer spending. Convinced of the necessity of such an approach, Roosevelt asked Congress in the spring of 1938 for additional emergency relief spending. Congress immediately authorized $33 billion for PWA and WPA work projects. Although World War II would provide the final impetus for lasting economic recovery, Roosevelt’s willingness to adapt in 1938 avoided another disaster.

The Fair Labor Standards Act

Roosevelt signed the last substantial piece of New Deal legislation in the summer of 1938. The Fair Labor Standards Act established a federal minimum wage—at the time, forty cents per hour—a maximum workweek of forty hours (with an opportunity for four additional hours of work at overtime wages) and prohibited child labor for those under age sixteen. Roosevelt was unaware that the war would soon dominate his legacy, but this proved to be his last major piece of economic legislation in a presidency that forever changed the country’s fabric.