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The New Deal, The Second New Deal

Alf Landon, Agricultural Adjustment Act, New Deal coalition, UMWA, Wagner Act

In 1935 the New Deal veered left with further efforts to promote social welfare and exert federal control over business enterprise. The Securities and Exchange Commission Act of 1934 enforced honesty in issuing corporate securities. The Wagner Act of 1935 recognized employees’ bargaining rights and established a National Labor Relations Board to oversee relations between employers and employees. Finally, the Work Projects Administration put unemployed people to work on short-term public projects.

New Dealers also enacted a series of measures to regulate utilities, to increase taxes on corporations and citizens with high incomes, and to empower the Federal Reserve Board to regulate the economy. Finally, the administration proposed the Social Security Act of 1935, which established a system of unemployment insurance, old-age pensions, and federal grants to the states to aid the aged, the handicapped, and families with dependent children. Largely an insurance program, Social Security was the keystone of welfare policy for decades to come.

In the election of 1936, Roosevelt defeated his Republican opponent, Alf Landon, in a landslide and carried every state but Maine and Vermont. The election confirmed that many Americans accepted and supported the New Deal. It also showed that the constituency of the Democratic Party had changed. The vast Democratic majority reflected an amalgam of groups called the New Deal coalition, which included organized labor, farmers, new immigrants, city dwellers, African Americans (who switched their allegiance from the party of Lincoln), and, finally, white Southern Democrats.

At the start of Roosevelt’s second term in 1937, some progress had been made against the depression; the gross output of goods and services reached their 1929 level. But there were difficulties in store for the New Deal. Republicans resented the administration’s efforts to control the economy. Unemployment was still high, and per capita income was less than in 1929. The economy plunged again in the so-called Roosevelt recession of 1937, caused by reduced government spending and the new social security taxes. To battle the recession and to stimulate the economy, Roosevelt initiated a spending program. In 1938 New Dealers passed a Second Agricultural Adjustment Act to replace the first one that the Supreme Court had overturned and the Wagner Housing Act, which funded construction of low-cost housing.

Meanwhile, the president battled the Supreme Court, which had upset several New Deal measures and was ready to dismantle more. Roosevelt attacked indirectly; he asked Congress for power to appoint an additional justice for each sitting justice over the age of 70. The proposal threatened the Court’s conservative majority. In a blow to Roosevelt, Congress rejected the so-called court-packing bill. But the Supreme Court changed its stance and began to approve some New Deal measures, such as the minimum wage in 1937.

During Roosevelt’s second term, the labor movement made gains. Industrial unionism (unions that welcomed all the workers in an industry) now challenged the older brand of craft unionism (skilled workers in a particular trade), represented by the American Federation of Labor (AFL). In 1936 John L. Lewis, head of the United Mine Workers of America (UMWA), left the AFL to organize a labor federation based on industrial unionism. He founded the Committee for Industrial Organizations, later known as the Congress of Industrial Organizations (CIO). Industrial unionism spurred a major sit-down strike in the auto industry in 1937. Next, violence erupted at a steelworkers’ strike in Chicago, where police killed ten strikers. The auto and steel industries, however, agreed to bargain collectively with workers, and these labor victories led to a surge in union membership.

Finally, in 1938 Congress passed another landmark law, the Fair Labor Standards Act (FLSA). It established federal standards for maximum hours and minimum wages for workers in industries involved in interstate commerce. At first the law affected only a minority of workers, but gradually Congress extended it so that by 1970 it covered most employees. In the 1930s, however, many New Deal measures, such as labor laws, had a limited impact. African Americans, for instance, failed to benefit from FLSA because they were engaged mainly in nonindustrial jobs, such as agricultural or domestic work, which were not covered by the law. New Deal relief programs also sometimes discriminated by race.

The New Deal never ended the Great Depression, which continued until the United States’ entry into World War II revived the economy. As late as 1940, 15 percent of the labor force was unemployed. Nor did the New Deal redistribute wealth or challenge capitalism. But in the short run, the New Deal averted disaster and alleviated misery, and its long-term effects were profound.

One long-term effect was an activist state that extended the powers of government in unprecedented ways, particularly in the economy. The state now moderated wild swings of the business cycle, stood between the citizen and sudden destitution, and recognized a level of subsistence beneath which citizens should not fall.

The New Deal also realigned political loyalties. A major legacy was the Democratic coalition, the diverse groups of voters, including African Americans, union members, farmers, and immigrants, who backed Roosevelt and continued to vote Democratic.

The New Deal’s most important legacy was a new political philosophy, liberalism, to which many Americans remained attached for decades to come. By the end of the 1930s, World War II had broken out in Europe, and the country began to shift its focus from domestic reform to foreign policy and defense.



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