United States

Roosevelt’s response in 1935 was to propose greater aid to the underprivileged and extensive reforms. Congress created the Works Progress Administration, which replaced direct relief with work relief; between 1935 and 1941 the WPA employed an annual average of 2,100,000 workers, including artists and writers, who built or improved schools, hospitals, airports, and other facilities by the tens of thousands. The National Youth Administration created part-time jobs for millions of college students, high-school students, and other youngsters. Of long-range significance was the Social Security Act of 1935, which provided federal aid for the aged, retirement annuities, unemployment insurance, aid for persons who were blind or crippled, and aid to dependent children; the original act suffered from various inadequacies, but it was the beginning of a permanent, expanding national program. A tax reform law fell heavily upon corporations and well-to-do people. The National Labor Relations Act, or Wagner Act, gave organized labour federal protection in collective bargaining; it prohibited a number of “unfair practices” on the part of employers and created the strong National Labor Relations Board to enforce the law.

A poster by Vera Bock for the Works Progress Administration, c. 1936–41. Work Projects Administration Poster Collection/Library of Congress, Washington, D.C. (Digital file no. cph 3b48737)

In the 1936 elections Roosevelt, aided by his reform program, formed a coalition that included liberals, urban ethnics, farmers, trade unionists, and the elderly. He easily defeated the Republican nominee for president, Gov. Alfred (“Alf”) M. Landon of Kansas, receiving more than 60 percent of the popular vote and the electoral votes of every state except Maine and Vermont. The Democratic majorities in the House and Senate were also strengthened. Viewing his decisive victory as an electoral mandate for continued reform, Roosevelt sought to neutralize the Supreme Court, which in 1935 had invalidated several early New Deal reform measures and now seemed about to strike down the Wagner Act and the Social Security Act. In February 1937 Roosevelt created a furor by proposing a reorganization of the court system that would have included giving him the power to appoint up to six new justices, thus giving the court a liberal majority. Some Democrats and a few liberal Republicans in Congress supported the proposal, but a strong coalition of Republicans and conservative Democrats, backed by much public support, fought the so-called court-packing plan.

Landon, Alfred M.Alf Landon.Courtesy of the Kansas State Historical Society

Meanwhile the court itself in a new series of decisions began upholding as constitutional measures involving both state and federal economic regulation. These decisions, which began an extensive revision of constitutional law concerning governmental regulation, made the reorganization plan unnecessary; the Senate defeated it in July 1937 by a vote of 70 to 22. Roosevelt had suffered a stinging political defeat, even though he no longer had to fear the court. Turnover on the court was rapid as older members retired or died; by 1942 all but two of the justices were Roosevelt appointees.

The culmination of the New Deal

Roosevelt lost further prestige in the summer of 1937, when the nation plunged into a sharp recession. Economists had feared an inflationary boom as industrial production moved up to within 7.5 percent of 1929. Other indices were high except for a lag in capital investment and continued heavy unemployment. Roosevelt, fearing a boom and eager to balance the budget, cut government spending, which most economists felt had brought the recovery. The new Social Security taxes removed an additional $2,000,000,000 from circulation. Between August 1937 and May 1938 the index of production fell from 117 to 76 (on a 1929 base of 100), and unemployment increased by perhaps 4,000,000 persons. Congress voted an emergency appropriation of $5,000,000,000 for work relief and public works, and by June 1938 recovery once more was under way, although unemployment remained higher than before the recession.