The partial economic recovery brought about by the first New Deal provoked criticism from the right for doing too much, and from the left for doing too little. Conservatives and businessmen criticized the deficit financing, which accounted for about half of the federal budget, federal spending for relief, and government regulation of business. They frequently charged that the New Deal was socialist or communist in form, and some conservative writers labeled the wealthy Roosevelt “a traitor to his class.” People on the lower end of the economic scale thought that the New Deal, especially the NRA, was too favorable to big business. Small business people and union members complained that the NRA codes gave control of industry to the big firms, while farmers complained that the NRA set prices too high. The elderly thought that nothing had been done to help them. Several million people who were or had been tenant farmers or sharecroppers were badly hurt. When the AAA paid farmers to take land out of production, the landowners took the money while the tenants and sharecroppers lost their livelihood. Several opposition organizations and persons were particularly active in opposing Roosevelt’s policies:
With millions of Democratic voters under the sway of Townsend, Long, and Coughlin, with the destruction of the NRA by the Supreme Court imminent, and with the election of 1936 approaching the next year, Roosevelt began to push through a series of new programs in the spring of 1935. Much of the legislation was passed during the summer of 1935, a period sometimes called the Second Hundred Days.
The Works Progress Administration (WPA) was started in May 1935 following the passage of the Emergency Relief Appropriations Act of April 1935. Headed by Harry Hopkins, the WPA employed people from the relief rolls for thirty hours of work a week at pay double the relief payment but less than private employment. There was not enough money to hire all of the unemployed, and the numbers varied from time to time, but an average of 2.1 million people per month were employed. By the end of the program in 1941, 8.5 million people had worked at some time for the WPA at a total cost of $11.4 billion. Most of the projects undertaken were in construction. The WPA built hundreds of thousands of miles of streets and roads, and thousands of schools, hospitals, parks, airports, playgrounds, and other facilities. Hand work was emphasized so that the money would go for pay rather than equipment, provoking much criticism for inefficiency. Unemployed artists painted murals in public buildings; actors, musicians, and dancers performed in poor neighborhoods; and writers compiled guide books and local histories.
The National Youth Administration (NYA) was established as part of the WPA in June 1935 to provide part-time jobs for high school and college students to enable them to stay in school, and to help young adults not in school to find jobs.
The Rural Electrification Administration (REA) was created in May 1935 to provide loans and WPA labor to electric cooperatives to build lines into rural areas not served by private companies.
The Resettlement Administration (RA) was created in the Agriculture Department in May 1935 under Rexford Tugwell. It relocated destitute families from seemingly hopeless situations to new rural homestead communities or to suburban greenbelt towns.
The National Labor Relations or Wagner Act was passed in May 1935 to replace the provisions of Section 7a of the NIRA. It reaffirmed labor’s right to unionize, prohibited unfair labor practices, and created the National Labor Relations Board (NLRB) to oversee and insure fairness in labor-management relations.
The Social Security Act was passed in August 1935. It established a retirement plan for persons over age sixty-five funded by a tax on wages paid equally by employee and employer. The first benefits, ranging from $10 to $85 per month, were paid in 1942. Another provision of the act had the effect of forcing the states to initiate unemployment insurance programs. It imposed a payroll tax on employers which went to the state if it had an insurance program, and to the federal government if it did not. The act also provided matching funds to the states for aid to the blind, handicapped, and dependent children, and for public health services. The American Social Security system was limited compared with those of other industrialized nations, and millions of workers were not covered by it. Nonetheless, it marked a major change in American policy.
The Banking Act of 1935 created a strong central Board of Governors of the Federal Reserve System with broad powers over the operations of the regional banks.
The Public Utility Holding Company or Wheeler-Rayburn Act of 1935 empowered the Securities and Exchange Commission to restrict public utility holding companies to one natural region and to eliminate duplicate holding companies. The Federal Power Commission was created to regulate interstate electrical power rates and activities, and the Federal Trade Commission received the same kind of power over the natural gas companies.
The Revenue Act of 1935 increased income taxes on higher incomes, and also inheritance, large gift, and capital gains taxes.
The Motor Carrier Act of 1935 extended the regulatory authority of the Interstate Commerce Commission to cover interstate trucking lines.
At the convention in Philadelphia in June, Roosevelt and Garner were renominated by acclamation on the first ballot. The convention also ended the requirement for a two-thirds vote for nomination. The platform promised an expanded farm program, labor legislation, more rural electrification and public housing, and enforcement of the antitrust laws. In his acceptance speech Roosevelt declared that “this generation of Americans has a rendezvous with destiny.” He further proclaimed that he and the American people were fighting for democracy and capitalism against the “economic royalists,” business people he charged with seeking only their own power and wealth, and opposing the New Deal.
Governor Alfred M. Landon of Kansas, a former progressive supporter of Theodore Roosevelt, was nominated on the first ballot at the convention in Cleveland in June. Frank Knox, a Chicago newspaper publisher, was chosen as his running mate. The platform criticized the New Deal for operating under unconstitutional laws, and called for a balanced budget, higher tariffs, and lower corporate taxes. It did not call for the repeal of all New Deal legislation, and promised better and less expensive relief, farm, and labor programs. In effect, Landon and the Republicans were saying that they would do about the same thing, but do it better.
Dr. Francis Townsend, Father Charles Coughlin, and the Reverend Gerald L.K. Smith, Long’s successor in the Share Our Wealth Society, organized the Union Party to oppose Roosevelt. The nominee was Congressman William Lemke of North Dakota, an advocate of radical farm legislation but a bland campaigner. Vicious attacks by Smith and Coughlin on Roosevelt brought a backlash against them, and American Catholic leaders denounced Coughlin.
Roosevelt carried all of the states except Maine and Vermont with 27,757,333 votes, or 60.8 percent of the total, and 523 electoral votes. Landon received 16,684,231 votes and 8 electoral votes. Lemke had 891,858 votes for 1.9 percent of the total. Norman Thomas, the Socialist candidate, received 187,000 votes, only 21 percent of the 881,951 votes he received in 1932.
Roosevelt had put together a coalition of followers who made the Democratic party the majority party in the nation for the first time since the Civil War. While retaining the Democratic base in the Solid South and among white ethnics in the big cities, Roosevelt also received strong support from midwestern farmers. Two groups which made a dramatic shift into the Democratic ranks were union workers and blacks. Unions took an active political role for the first time since 1924, providing both campaign funds and votes. Blacks had traditionally been Republican since emancipation, but by 1936 about three-fourths of the black voters, who lived mainly in the northern cities, had shifted into the Democratic party.
Frustrated by a conservative Supreme Court which had overturned much of his New Deal legislation, Roosevelt, after receiving his overwhelming mandate in the election of 1936, decided to curb the power of the court. In doing so, he overestimated his own political power and underestimated the force of tradition. In February 1937 he proposed to Congress the Judicial Reorganization Bill which would allow the president to name a new federal judge for each judge who did not retire by the age of 70 1/2. The appointments would be limited to a maximum of fifty, with no more than six added to the Supreme Court. At the time, six justices were over the proposed age limit. Roosevelt cited a slowing of the judicial process due to the infirmity of the incumbents, and the need for a modern outlook. The president was astonished by the wave of opposition from Democrats and Republicans alike, and uncharacteristically refused to compromise. In doing so, he not only lost the bill but he lost control of the Democratic Congress which he had dominated since 1933. Nonetheless, the Court changed its position as Chief Justice Charles Evans Hughes and Justice Owen Roberts began to vote with the more liberal members. The National Labor Relations Act was upheld in March 1937, and the Social Security Act in April. In June a conservative justice retired, and Roosevelt had the opportunity to make an appointment.
Most economic indicators rose sharply between 1935 and 1937. The gross national product had recovered to the 1930 level, and unemployment, if WPA workers were considered employed, had fallen to 9.2 percent. Average yearly earnings of the employed had risen from $1,195 in 1935 to $1,341 in 1937, and average hourly manufacturing earnings from 55 cents to 62 cents. During the same period there were huge federal deficits. In fiscal 1936, for example, there was a deficit of $4.4 billion in a budget of $8.5 billion. Roosevelt decided that the recovery was sufficient to warrant a reduction in relief programs and a move toward a balanced budget. The budget for fiscal 1938, from July 1937 to June 1938, was reduced to $6.8 billion, with the WPA experiencing the largest cut. During the winter of 1937-1938 the economy slipped rapidly and unemployment rose to 12.5 percent. In April 1938 Roosevelt requested and received from Congress an emergency appropriation of about $3 billion for the WPA, as well as increases for public works and other programs. In July 1938 the economy began to recover, and it regained the 1937 levels in 1939.
With the threat of adverse Supreme Court rulings removed, Roosevelt rounded out his program during the late thirties: