The Second New Deal

THE FINAL PIECES

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 strongest 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. 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. His plan was 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 justices, 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, as well as the sudden death of Senator Joe T. Robinson, who championed Roosevelt’s plan before the Senate, all but 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. Never again during his presidency would the Supreme Court strike down any significant elements of his New Deal.

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 in order 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 in advanced capitalist economies in order 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.

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 changed the fabric of the country forever.