Topic 2.4 - The Second New Deal, 1935-38

Question 1

What have historians argued about the New Deal in the years after 1935 and why was this?

What evidence is there to support this viewpoint?

Answer 1

New deal seemed more radical!

• Roosevelt genuinely tried to favour the poorer classes at the expense of the rich.

E.g. Introduction of social security and the legislation of labour unions.

Question 2

Some historians believe the Second New Deal saw the reintroduction of competition but with regulations about fair pay.

What are some examples of some acts which achieved this?

Answer 2

• National Labour Relations Act- Fair representation for all sides in industry.
• Public Utility Holding Company Act- broke up holding companies.
• Social Security Act- A national system of benefits for those groups who could not participate in the system.

Question 3

The motivation behind the new deal

What is an example for how Roosevelt needed to respond to the radical forces?

Answer 3

He needed to take the initiative from individuals such as Huey Long, Francis Townsed & Charles Coughlin- to avoid millions of voters supporting politicians with extreme views.

Question 4

The motivation behind the new deal

The climate in New Congress was for action- Roosevelt wanted to prevent this.

What didn’t he want to do and give examples?

Answer 4

• Didn’t want to surrender the initiative in preparing New Deal legislation.
• The Farmer- Labor Party, could rely on as many as 50 supporters in both houses.
• It was preparing its own programme & would have introduced radical changes.

E.g. minimal hours of work, greater investment in public works, higher taxes for wealthy & social security.

Question 5

The motivation behind the new deal

Why was Roosevelt increasingly frustrated by the Supreme Court?

Answer 5

• Beginning to overturn New Deal legislation.
• Believed it was opposing him.
• Made him more radical in outlook.
• He needed to introduce new measures to replace those such as the NIRA which the Supreme Court had declared as unconstitutional.

Question 6

The motivation behind the new deal

Roosevelt was becoming increasingly frustrated with the wealthy & the forces of big businesses, why was this?

Answer 6

• They were opposing him more & more!
• Angry when the US Chamber of Commerce attacked policies in May 1935.
• Believed he had been elected to save American business & felt let down by its lack of continued support.

Question 7

The motivation behind the new deal

What businesses had benefitted little from the measures adopted so far?

What were officials in Washington becoming aware of?

What were measures in the second new deal designed to do, examples?

Answer 7

Small businesses!

Aware that small firms had a crucial role in economic recovery!

Many measures taken in the second new deal were designed with them in mind, e.g. the Public Utility Holding Company Act.

Question 8

The motivation behind the new deal

What had some historians argued that politics was becoming?

Who was Roosevelt seeking support from?

Answer 8

More divided & extreme!

Political left.

Question 9

When was the Emergency Relief Appropriation Act set up?

Answer 9

April 1935

Question 10

Emergency Relief Appropriation Act

What did this measure see the authorisation of?

What did it set up?

How much was allocated to it?

Answer 10

• The largest appropriation for relief at that time in the nations history! It set up the Works Progress Administration (WPA).
• Set up new agencies to provide employment through federal works.
• $45.5 billion (equivalent of over $20 billion at 1930 values & over $400 billion today!)

Question 11

The Works Progress Administration (WPA)

• What did it recruit people for?
• At any one time, how many employees did it have?
• By 1941, how much of the nation’s workforce had found employment within it?

Answer 11

• Public works projetcs.
• 2 million employees!
• 20%

Question 12

The Works Progress Administration (WPA)

What were wages like?

What was the WPA not allowed to do?

What did it actually build?

Answer 12

• Wages- $52 per month, greater than any relief but less than the going rate in industry!
• Not allowed to compete for contracts with private firms or build private houses.
• Built 1000 airport landing fields, 8000 schools & hospitals and 12,000 playgrounds.

Question 13

The Resettlement Administration

When was it set up?

Answer 13

May 1935

Question 14

The Works Progress Administration (WPA)

What ambitious plans were there?

What was necessary for the agency to do to achieve this?

Answer 14

• To move 500,000 families from overworked land and resettle them in more promising surroundings elsewhere!
• Buying good land, encouraging farmers to move to it & teaching them how to farm it effectively using modern machinery & efficient techniques.

Question 15

The Resettlement Administration, May 1935

Why could the agency be judged as not being a success?

What were the reasons for its apparent failure?

Answer 15

• It only ever resettled just over 4, 400 families.
• Costs involved & reluctance of people to move!

Question 16

The Revenue (Wealth Tax) Act

When was the Act introduced?

Answer 16

June 1935

Question 17

The Revenue (Wealth Tax) Act, June 1935

What was it implemented to do?

How was it perceived by those affected by it?

What did the government sought to do?

Answer 17

• Implememted to pay for New Deal reforms.
• Percieved- to be an attack on the fundamental right of Americans to become rich.
• Sought to raise more revenue through taxation and it seemed logical to do this by targeting those who could most afford it.

Question 18

The Revenue (Wealth Tax) Act, June 1935

What tax was imposed?

What was the maximum tax on incomes over $50,000 increased from and to?

How much did the new taxes impose and why was this?

Answer 18

• Graduated tax on corporate income & an excessive profits tax on corporations.
• Increased from 59% to 79%.

New taxes- raised little, about $250 million.

Only 1% of the population earned more than $10,000 - so the increased income taxes didn’t raise large amounts of revenue.

Question 19

The Wagner-Connery National Labour Relations Act (the ‘Wagner Act’), July 1935

What were the 2 major reasons as to why Roosevelt didn’t want to become involved in labour relations legislation?

Answer 19

• There was a mistrust of labour unions in the USA. This was particularly the case among conservative politicians such as the Southern Democrats, whose support was needed.
• He had no more wish to become the champion of unions than to than to upset big businesses further- and big businesses generally loathed unions.

Question 20

The Wagner-Connery National Labour Relations Act (the ‘Wagner Act’), July 1935

What did the Act guarantee?

How could they choose their union?

What ensured fair play?

What were employees forbidden to do?

Answer 20

• Guaranteed workers the rights to collective bargaining through unions of their own choice.
• Choose their union through a secret ballot (voting secretly).
• New three-man National Labor Relations Board (NLRB) set up- ensure fair play.
• Employees- forbidden to resort to unfair practises such as discrimination against unionists.

Question 21

The Wagner-Connery National Labour Relations Act (the ‘Wagner Act’), July 1935

What was it effectively the first Act to do?

What did Roosevelt prefer to do?

Answer 21

• Gave unions rights in law and in long term committed federal government to an important labor relations role.
• Roosevelt- preferred to continue to take a back seat in labour relations.

Question 22

The Public Utility Holding Company Act, August 1935

Why had there been many problems resulting from the existence of giant holding-company structures?

Answer 22

• They were often powerful enough to bribe legislators either to stop legislation & threaten them or promote beneficial laws.
• Rates paid to investors were often excessive.

Question 23

The Public Utility Holding Company Act, August 1935

What did it order to happen?

What did it destroy?

How did it do this?

Answer 23

• Breaking up of all companies more than twice removed from the operating company.
• Destroyed the pyramid structure.
• Making all holding companies register with the Securities Exchange Commission (SEC) which could decide their fate.

Question 24

The Public Utility Holding Company Act, August 1935

What would happen to any company that could not justify its existence on the ground of co-ordination of utilities or economic efficiency?

Answer 24

Was to be eliminated by 1 January 1940.

Question 25

The Social Security Act, August 1935

The Act was the first federal measure of what?

What did the Act provide?

While the pension scheme was a federal programme, what was it anticipated that the states would do?

Answer 25

• First federal measure of direct help as a worker’s right and would be built upon in the future.
• Provided for old age pensions to be funded by employer and employee contributions, & unemployment insurance to be paid for by payroll taxes levied on both employers and employees.
• States- control unemployment insurance.

Question 26

Limitations- The Social Security Act, August 1935

What were the limitations of the Act?

When were they not to be paid until?

What was unemployment benefit a maximum of and for how many weeks?

Answer 26

• Inadequate to meet the needs of the poor.
• Pensions- paid at minimim of $10 & max of $85 per month, according to the contributions that recipients had paid into the scheme.
• Until 1940- so everyone recieving had paid something in.
• Max of $18 per week for 16 weeks only!

Question 27

Limitations - The Social Security Act, August 1935

• What assistance programmes were set up by the Act?
• Although states recieved the same amount per child from the federal government- how did the amounts vary widely? Give an example?

Answer 27

• Assistance programmes for the blind, disabled and families with dependent children.
• In 1939, Massachusetts paid poor children $61 per month while Mississipi paid $8 per month.

Question 28

Limitations, The Social Security Act, August 1935

Who were excluded from the Act?

Why was this?

Answer 28

• Those needing the most help, e.g. agricultural workers, domestic servants and those working for small-scale employers.
• It felt employers couldn’t afford to pay the contributions & it would in any event cost the Treasury too much to collect them. It was hoped that theses workers would be included in the schemes later, once the Act had time to embed itself.

Question 29

What was the importance of the Social Security Act?

Was it relief, how did people get it?

How were pensions paid?

Unemployment benefits?

Answer 29

• Never before had there been a direct system of national benefits.
• It was not relief- it had to be self-financing and recipients had to pay into the system.
• Pensions- not paid at flat rate but according to how much the worker had contributed previously.
• Unemployment benefits- low and paid for a very limited period.

Question 30

The importance of the social security act

What did many conservatives argue about the act?

Answer 30

• It was too much & would destroy individual initiative.
• Would make people dependent on the state.
• It took powers away from individual states & concentrated them in Washington.

Question 31

The importance of the social security act

How did many states compensate for unemployment benefits?

What else did they do?

Answer 31

• Cut back on other schemes of relief.
• Increased residence qualifications and made means-tested benefits more rigorous.

Question 32

The importance of the social security act

What did the Act signify?

Answer 32

• Signified a massive break with the traditional role of the federal government.
• Sent out loud message- it cared about people.
• It said Roosevelt took more satisfaction in this measure than anything else he had achieved on the domestic front.

Question 33

The Banking Act- August 1935

• The Act intended to do what?
• What did the governor of the Federal Reserve Board- Eccles feel about the Wall Street?
• What happened to the control of banking?

Answer 33

• Give the federal government control of the banking system in the USA.
• Eccles- felt Wall Street exercised too much power in national finance & sought to repeal - 1913 Federal Reserve Act- which governed the American banking system.
• Control- removed from private banks to central government & the centre of financial management shifted from NY to Washington.

Question 34

Assessing the Second New Deal

The SND saw an important expansion of the role of the federal, state and local government.

What are some examples of what was new?

Answer 34

• Banking system = centralised.
• Some of worst excesses of capitalism- power of holding companies were addressed & attack on unfair competition helped small businesses.
• Labour Unions- given a legal voice.
• Social Security Act- created the first national system of benefits- although individual states operated the parts they had control over very differently.
• Further development of existing policies, as with creation of the WPA to aid relief & recovery.
• REA- helped process of modernising the rural areas of the USA.

Question 35

What have some historians argued about the Second New Deal compared to the first?

Answer 35

• First- primarily about relief and recovery from the Depression.
• The second was about the creation of permanent reforms.

Question 36

What was set up in April 1935?

Answer 36

Emergency Relief Appropriation Act

Question 37

Give one main reason why Roosevelt saw the Supreme Court was in need of reform

Answer 37

• As the first term came to an end they found his laws more unconstitutional
• Previous 140 years only 60 federal laws found to be unconstitutional
• In 18 months they found 11 to be so.
• on ‘Black Monday’ the supreme court attacked the New Deal as they found the Farm Mortage Act unconstitutional as well as the NIRA through the sick chicken case

Question 38

Explain the sick chicken case

Answer 38

• Schechter Brother Butchers in NYC who sold chickens unfit for consumption
• It was prosecuted by the NIRA for breaking codes of practice
• The company appealed to Supreme Court as they believed it should be prosecuted by city not federal courts
• poultry code declared illegal as federal gov no right to interfere in internal state issues.
• Found NIRA unconstitutional as developed by federal gov but effect individual firms in individual states

Question 39

What was the Judiciary Reform Bill?

Answer 39

• Feb 1936
• issue of unelected officials stifling work of democratically elected gov.
• Idea - president appoint a new justice whenever existing reacted 70 years old and failed to retire within 6 months.
• He would also be able to appoint 6 new justices increasing possible total to 15
• Backfired as eldest Congressman - 79 justice Brandeis was most liberal
• shown more Justices = more difficult and time-consuming
• Roosevelt seen as a dictator - he had underestimated the support and respect for the court.

Question 40

What is one key reason for opposition to Roosevelt from big businesses?

Answer 40

• Revenue Act - raising taxes and more government interference

Question 41

Why did Republicans and Conservative Democrats oppose Roosevelt?

Answer 41

• Feared New Deal had gone to far
• In 1937 - special congressional session Roosevelt failed to pass never laws like the antilynching bill
• Opponents issued conservative manifesto - called for lower taxes and antistrike legislation - warning of social security in creating a dependency culture.

Question 42

What caused the Roosevelt Recession?

Answer 42

• federal expenditure cut in June 1937 hoped to meet balanced budget
• Roosevelt had hoped there had been sufficient time to have recovered and fill the gap caused by Govt. cutbacks.

Question 43

What was the effects of the 1937-8 Roosevelt Recession?

Answer 43

• Unemployment rose - 7,000,000 to 10,390,000
• Social security payments swallowed $2 billion
• Manufacturing employment fell 23%
• Production eg. motor cars fell 50%
• National income fell 13%
• 66% New Deal gains lost
• Index fell from 117 points in 1937 to 76 in 1938 (Faster than original depression)

Question 44

What happened in the 1936 presidential election?

Answer 44

• Roosevelt won 60.8% of the popular vote & carried all but two states, Vermont and Maine.
• Democrats appeared to control both houses of Congress.
• Roosevelt had offered little in the way of concrete promises in his election speeches but people expected much of him.