History 1302 – Lecture 16 - Second New Deal

Introduction to the Second New Deal
- Franklin D. Roosevelt (FDR) won his second term in a landslide victory in 1936.
- Faced criticism from multiple fronts:
- Conservatives: Raised concerns about the expansion of government and spending.
- Liberals: Argued that his policies did not go far enough in addressing poverty and inequality.
- The Supreme Court struck down essential components of the First New Deal, which pressured Roosevelt to respond with new initiatives.

Led primarily by industrialists and wealthier Americans.
National Association of Manufacturers (NAM):
- This group urged business leaders to ignore sections of the National Industrial Recovery Act (NIRA) that promoted union activities and collective bargaining.
Supreme Court Actions:
- In 1935, the Supreme Court deemed both the Agricultural Adjustment Act (AAA) and NIRA unconstitutional, undermining key reforms FDR had implemented in his First New Deal.

Considerable pressure came from the left.
Dr. Francis E. Townsend:
- Proposed the Townsend Plan, advocating for a monthly pension of
  $200$ for citizens over 60 years old to stimulate the economy and provide security for the elderly.
Father Charles Coughlin:
- Known as the “Radio Priest” from Michigan;
- Established the National Union for Social Justice, promoting populist ideas and critiquing capitalism.
Upton Sinclair:
- Ran for the governorship of California in 1934.
- Proposed the End Poverty in California program that aimed to provide economic relief.

Louisiana senator with presidential aspirations.
Proposed the Share Our Wealth program that promised:
- $5,000$ distributed to every family.
- $2,500$ to each worker, redistributing wealth on a grand scale.
Assassinated in 1935, curtailing his movement but leaving a lasting impact on American politics.

Introduced in 1935 as a way to address valid criticisms raised from both conservatives and liberals.
Aimed to push through critical legislation that was deemed essential before the congressional summer recess.
Included major reforms related to:
- Banking.
- Relief programs.
- Social security initiatives.

Considered the most significant revision of banking laws since 1914; pivotal in stabilizing the banking system.
Established a Board with control over:
- Discount rates for loans.
- Selection of board members to ensure accountability.
Resulted in the ability to maintain lower interest rates to fund relief and recovery operations.

Authorized spending of $4.8$ billion, the largest expenditure of its time.
Created the Works Progress Administration (WPA):
- Initiated public works projects, constructing hospitals, schools, and infrastructure.
- Established Federal Project Number One, which focused on cultural projects and employed artists, writers, and musicians.

Instituted programs to assist vulnerable populations including the elderly, unemployed, disabled, and youth.
Established a pension fund for retirees over the age of 65.
- Notably excluded domestic workers and farmers, disproportionately affecting women and African Americans.

Established the National Labor Relations Board (NLRB).
Protected the rights of workers to organize into unions and engage in collective bargaining.
Initiated a new political alignment, marking the beginning of labor's support for the Democratic Party.

FDR achieved a monumental victory in the 1936 election, winning with 523 to 8 Electoral College votes.
Proposed an expansion of the Supreme Court from 9 justices to 15, aimed at overcoming opposition to his New Deal policies.
- The plan faced significant backlash and ultimately failed to pass.

The Great Depression reinforced FDR's belief in the necessity of government spending to stimulate the economy.
In 1937, a recession struck, coinciding with a cut in government spending.
- This led to a rise in unemployment from 14% to 19%.

Several contributing factors:
- Public fear regarding potential increases in taxes deterred spending and investment.
- The Federal Reserve's decision to tighten the money supply.
- Reduced federal spending on job relief programs, exacerbating economic conditions.

John Maynard Keynes: A renowned British economist who advocated for active government intervention in economies.
Proposed that deficit spending is crucial in advanced capitalist economies to stimulate growth during downturns.
FDR adopted a Keynesian approach beginning in 1938 to promote economic recovery.

Considered the last major piece of New Deal legislation.
Established a maximum workweek of 40 hours with provisions for overtime pay.
Prohibited child labor for minors under the age of 16, aiming to protect young workers.

Contributed to economic stability in the postwar period of the 1950s.
Introduced lasting social security systems and provided union contracts that enhanced job stability.
Implemented federal housing mortgage programs that expanded home ownership.

Conservative Critics:
- Viewed the New Deal as the advent of a welfare state, arguing that it undermined individual entrepreneurship and spirit.
Unemployment rates were still around 15% in 1940, illustrating ongoing economic challenges.

Historians and economists generally regard the New Deal as a significant success, despite its criticisms.
It fundamentally altered the relationship between the government and its citizens, creating lasting social programs and labor protections that shaped modern America.