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Introduction
Proponents hailed the New Deal as a way to salvage the American economy and outlook after the Great Depression. This comprised a series of financial reforms, public work projects, programs, and miscellaneous regulations that were enacted at the behest of President Franklin D. Roosevelt. They primarily addressed supposed 3Rs, which were Relief for the unemployed and the poor, Recovery of the economy, and Reform for financial reforms (Patel 18). Inadvertently, however, the New Deal is accredited with a significant political upheaval and realignment, despite the efficacy of the New Deal itself being retrospectively disputed by historians and economists (Patel 20). This study will seek to identify and review two essential New Deal programs, outlining their significance and repercussions as well. It will also include an assessment of why the Supreme Court revoked some of the programs and Roosevelts attempted intervention with court procedure.
For the most part, the New Deal led to a redefinition of the roles of the federal government, at least where most Americans were concerned. However, perhaps more impactfully in the short-term, it led to the re-situation of the members of the New Deal Coalition or the Democratic Party. However, regardless of any controversy regarding the aims of the New Deal, it remains an integral part of US history. According to Franklin Roosevelt, the government had the obligation to ensure that every man had the means to provide for themselves comfortably. This became the primary rallying call for his bid for the Presidency, and the impetus for the New Deal. Therefore, despite the controversy surrounding various facets of the New Deal, the general focus shifted from whether the government would help citizens during economic duress, to how the government would help.
The New Deal was, essentially, a set of government programs designed to end the Great Depression and prevent the re-occurrence of future economic depressions. Historians and economists conceptualize the New Deal in two primary outlines. First is categorizing the New Deal by their functions, hence the development of the 3R moniker to represent Reform, Recovery, and Relief. The second categorization defines the New Deal in more chronological phases, thus the First and Second New Deals.
Both conceptualizations, however, introduce much ambiguity in their definitions. For instance, in the functional categorization, some programs such as Social Security do not fit wholly into any single category. Furthermore, there are blurred definitions between reform and recovery, such as difficulty in categorizing the 1933 Bank Holiday. This executive order, enacted by Franklin Roosevelt to close banks temporarily, led to the inception of the Federal Deposit Insurance Corporation, which insures personal deposits against future banking disasters that persist to this day. The conundrum, therefore, presents itself as to whether the Bank Holiday was a recovery due to helping bank stability in the short-term, or reform due to the federal deposit insurance preventing future bank crashes.
The second chronological categorization suggests a cause-and-effect scenario within the New Deal, and hence the logic behind the existence of the second New Deal. The first New Deal comprises Rooseveltian programs passed before 1935, most of which were passed during his first 100 days in office (Patel 17). Spurred by the crisis of the economic depression, Congress passed significant legislation establishing The Civilian Conservation Corp, which employed and paid young Americans to build national parks, the Agricultural Adjustment Act, the Glass-Steagall Act, which barred banks from trading in stocks, and the National Industrial Recovery Act to establish the National Recovery Administration (NRA) (Patel 32). These laws would have a profound impact, and controversy, in the countrys societal and economic development.
Controversy Surrounding New Deal Programs
The National Recovery Administration comprised business magnates and government planners, working in tandem to systematize the industry standards regarding pricing, production, and labor conditions. However, this did not translate to any immediate relief for the vast unemployed populations, and resultantly, an additional legislature was passed, The Federal Emergency Relief Administration, which was aimed at providing welfare benefits to the desperate.
However, Roosevelts administration was worried about its population being dependent on relief handouts. Instead, programs that created temporary jobs were favored. Consequently, a section of the NRA created the Public Works Administration, which appropriated funds into projects such as the Triborough Bridge, airports and schools, ultimately employing over 4 million people (Olson 43). Government intervention, however, reached an uncomfortable point with the Tennessee Valley Authority, which was a program to build dams in the Tennessee River Valley. While the intentions were noble, with the dams meant to provide affordable rural electrification to towns in the region, curb deforestation, and control flooding, the program was overall extremely controversial as it introduced direct competition between the government and private companies.
The Agricultural Adjustment Act (AAA) was also very controversial. Essentially, the AAA afforded the government the tenure to try and raise farm and agricultural prices by creating more demand for agricultural produce. This was accomplished by nudging farmers to produce lesser output, of which they were paid, and allocating production quotas that should not be exceeded. The AAA was very contentious to the hungry populations and represented a period of excessive wastefulness. Property-owning farmers did see the benefit of the AAA. However, farm tenants and sharecroppers, who were at the time disproportionately African-American, were suffering. The suffering was especially acute in the states of Texas, Oklahoma, Kansas, and Colorado, where drought eventually created the Dust Bowl (Olson 38). Public discontent, coupled with judicial pressures, resulted in the Supreme Court intervening and deciding several flagship cases.
Intervention of the Supreme Court
The Supreme Court sought to regulate much of the contentious government intervention into the economy through the interpretation and decision of several flagship cases. For instance, in 1936, the court ruled on United States v. Butler, 1936 which effectively disbanded the Agricultural Adjustment Act. The court ruled that the Act was unconstitutional for levying Processing tax or processors, only to relay the tax back to farmers. Regulation of agriculture was defined as within the jurisdiction of the state. Therefore, the federal government did not have the tenure to force states to adopt and implement the AAA due to their lack of jurisdiction.
Conversely, the National Industrial Recovery Acts constitutionality was being challenged in court. The Supreme Court finally decided the definitive outcome in Schechter Poultry Corp v. United States, 1935 whereby three inherent problems were identified with the NIRA: (1) if issue of contention was under the regulation of Congress, (2) if employed intervention had contradicted the Fifth Amendment of the US constitution, and (3) if Congress had instead entrusted its responsibility to the Executive. The decision provided that the Act was unconstitutional on two grounds: (1) that the critical term fair competition was very ambiguous, and therefore, rendered the law void on the grounds that it was vague, and (2) that the Act had awarded the Executive authority in a manner that was overboard in constitutional logic (Patel 27). The Supreme Court, therefore, effectively invalidated NIRA due to the fact that the Act had effectively given the president legislative powers.
Franklin Roosevelts Response and Attempt to bridle the Supreme Court
With the Supreme Courts invalidation of two very significant Acts, the New Deal was in disarray and in danger of unraveling. Franklin Roosevelt, however, retaliated and proposed a law that would allow him, the sitting president, to appoint new Supreme Court Justices if the sitting Justices reached the age of 70 but failed to retire (Patel 28). While this was completely constitutional, it was perceived by the general public and legislators as a blatant power grab, and therefore elicited extensive backlash.
Significant New Deal Programs
A new period of Supreme Court legal philosophy was, however, underway. The court began upholding laws under the New Deal, which marked the advent of the Second New Deals under the chronological categorization scheme. This upholding of the New Deal laws rested on the tenet that the governments regulation of the economy was allowed under an extensive reading of the commerce clause (Patel 33). The second New Deal, therefore, was characterized by a shifting focus from recovery, and more towards long-term economic security. Two laws are critical for their far-reaching and sustained effects; The National Labor Relations Act, or the Wagner Act, and the Social Security Act.
The National Labor Relations Act or Wagner Act of 1935
The National Labor Relations Act (NLRA), also called the Wagner Act, guaranteed workers the right to unionize, and it created a National Labor Relations Board to hear disputes arising from unfair labor practices (Fishback 20-21). This Act was precedented by a period of employment turmoil surrounding the effects of the Great Depression. For instance, in 1934 alone, there were more than 2000 strikes, including one that involved 400,000 textile workers (Fishback 21). The NLRA, therefore, primarily sought to correct the inequality of bargaining power by promoting collective bargaining for employees in the form of trade unions and employers.
The NLRA has led to the tremendous growth and popularity of labor unions. It is called the Wagner Act as it was drafted by Senator Robert F. Wagner, passed by the 74th United States Congress, and signed by Franklin D. Roosevelt. Also central to the Act was a ban on Company unions. The most vital union during the enactment of the Act in the 1930s was the Congress of Industrial Organizations (CIO), which sought to unionize employees within entire industries like automobile workers, and steel manufacturing (Fishback 23). One of the more significant forms of collective action that underlined the importance of labor unions was when United Auto Workers organized a sit-down strike in 1936. This tactic had the workers in the Fisher Body Plant in Michigan simply set down their tools, sit, and occupy the plant. Eventually, the employer, General Motors, agreed to negotiate with the workers. Union membership shortly rose to 9 million people, with the CIO receiving widespread acclaim (Fishback 67). The labor unions were seen as an essential factor as they provided their members a sense of freedom, dignity, and belonging while working to intervene within an otherwise chaotic employment domain.
Trade unions played a critical role in influencing the doctrine that pervaded the Second New Deal. This is because they insisted that the economic downturn had been caused by underconsumption and that the most effective way to combat the great depression was to raise workers wages to allow them to have better purchasing power (Olson 73). The logic behind this ideology was that people would be more inclined to spend more money, if they were exposed to lesser economic insecurity overall. There were, as a result, increased lobbying for universal health programs, and public housing projects, which culminated in the development of the Social Security Act in 1935. This Act is anecdotally considered the greatest and farthest-reaching achievement stemming from the New Deal.
The Social Security Act of 1935
The Social Security Act is essential to the contemporary job marketplace as well. Social security included the allocation of aid to low-income families, unemployment insurance, disability assistance, and centrally, retirement benefits. Since its inception, Social Security has been funded by payroll taxes. However, local governments and the state governments retained a lot of autonomy and discretion over how benefits were accrued and distributed (Olson 59). Despite this, social security represented a significant shift in the relationship that the American citizen had with the federal government.
The Social Security Acts inception was quite fundamental. In 1934, the Committee on Economic Security (CES) was created by Roosevelt, who commissioned members with developing an economic security bill. The overarching goal was to provide financial security for the working American throughout their lives, and to this end, the CES developed the Social Security Act. The Act was signed and passed into law (Patel 58). However, there was an inclusion criterion to the Social Security program. Self-employed individuals, field hands, and domestic workers were excluded from registration (Olson 31). Eligibility was attained by applying at the local post office for an identity card bearing a unique nine-digit identifying number. This Social Security Act placed the burden of an American citizens economic future squarely on the hands of the federal government.
Social Security created a federal safety net for the elderly, the unemployed, and the disadvantaged. However, the primary provision of the Social Security Act was to provide financial aid to the retired citizens of over 65 years of age based on an accrued contribution of payroll tax. The Act also established the Social Security Board, which would later be named the Social Security Administration, to structure the Social Security Act, and outline the logistics behind its implementation (Patel 62). Since its inception, tens of millions of American citizens have benefited, in the form of financial assistance, from the Act.
Conclusion
Preceding the New Deal, a majority of Americans did not expect direct government intervention and aid during economic distress. However, after the New Deal, the question became how the government should intervene, rather than how. This change in ideology was especially cemented with the inception of the Social Security Act. For the most part, the United States federal government under President Franklin Roosevelt embraced Keynesian Economics, which is based on the idea that the government should spend money, even if it means going into deficit, propping up demand (Olson 31). As a result, became more omnipresent and involved in the populations lives.
Equally transformative was the change to American Politics attributed albeit indirectly to the New Deal. The popularity of President Roosevelt and his policies brought together progressives from all walks of life, and varying levels of social standing. The president also enjoyed immense support from middle-class homeowners, and he significantly influenced the inclusion of African Americans into the Democratic Party (Braik 23). While it is debatable that the New Deal ended the Great Depression, it is inarguable that it represented a significant shift in American economics and history, with the repercussions of its implementation being felt to this day.
Works Cited
Braik, Fethia. New Deal for Minorities During the Great Depression. Journal of Political Science and International Relations, vol. 2 no. 1, 2018, pp. 20-24.
Fishback, Price V. New Deal. Banking Crises. Palgrave Macmillan, London, 2016.
Olson, James Stuart. Saving Capitalism: The Reconstruction Finance Corporation and the New Deal, 1933-1940. Princeton University Press, 2017.
Patel, K. K. The New Deal: a global history (Vol. 21). Princeton University Press, 2018.
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