The ‘Second New Deal’
If Roosevelt's First New Deal (1933-1935)
concentrated on economic relief, dealing with the
immediate issue of getting unemployed Americans
back to work, then the Second New Deal (19351937) focused on recovery and long-term reform
issues.
This Second New Deal came about, in part, because
of the social concerns of the President and his First
Lady, Eleanor Roosevelt,
but also because of mounting criticism--from the
political left and the political right--of the policies of
the First New Deal.
Beginning in 1935, Roosevelt began sending to
Congress a host of new legislative initiatives: “The
Second New Deal.” The programs that came out of
the Second New Deal included:
• WPA, which stood for Works Progress (later
"Projects") Administration. The WPA promoted
both economic relief and reform. Required to
choose projects that would not compete with
private business, the WPA paved streets and
highways; built bridges, airfields, and post
offices; restored forests, and extended electrical
power to rural areas. Over its seven-year history,
the WPA employed about 8.5 million
Americans.
• The Wagner Act, known officially as the
National Labor Relations Act, preserved and
strengthened Section 7A of the NIRA. It
guaranteed workers the right to unionize and the
right to bargain collectively with management.
For the first time, the federal government
recognized and protected labor unions.
• The Social Security Act created a cooperative
federal-state system to provide unemployment
compensation, old-age insurance and aid to
families with dependent children. Workers who
paid Social Security taxes out of their wages
would receive benefits upon retirement at age 65.
Employee and employer contributions would
cover the costs of these benefits.
• On the one hand, Social Security seemed a fairly
radical piece of reform legislation, since the
government committed itself to provide help for
the elderly. In reality, however, it was a fairly
conservative program, since workers and their
employers, and not the government, were footing
the bill. Still, the act was a milestone in
American history because it acknowledged the
responsibility of society at large to take care of
the less fortunate.
• The Wealth Tax Act increased taxes on the
wealthy and created new and larger taxes on
excess business profits, inheritances, large gifts,
and profits from the sale of property. The act
also put new restrictions on trusts and holding
companies.
Business leaders were highly critical of this Second
New Deal and many viewed Roosevelt as a traitor to
his class and a socialist who was out to strip them of
their wealth. Although many members of Congress
were far to the left of FDR, he seemed to personify
the new anti-business position in America.
Nonetheless, FDR's relief and reform efforts actually
preserved capitalism. The AAA, the NIRA, new
banking legislation, and regulations of securities on
Wall Street ultimately helped big business.
The Roosevelt Recession
• Having won the 1936 presidential election by
the biggest margin up to that time, it seemed
that everything was going well for Roosevelt
and the New Deal.
• In 1937, the president, in fact, believed that the
nation had recovered its economic health and he
tried to balance the federal budget by cutting
back on New Deal programs.
• Such policies, however, proved disastrous for
the American economy. As a result of such cuts,
unemployment rose by 1.5 million by July 1937.
With farm subsidies cut, farm prices also fell,
and by August an additional 4 million
Americans were out of work. The economy
would not recover fully from the Roosevelt
Recession until the United States entered World
War II.
Lasting Impacts of the New Deal: From Main
Street to Pennsylvania Avenue
• The New Deal was not a revolution; it did not
bring about radical change. Nor did it end the
Great Depression. It did, however, transform
American society and alter the relationship
between government and business.
• For one thing, the New Deal redirected the eyes
of the American public from Main Street, city
council chambers, and state capitol buildings
towards Washington, D. C. For the first time,
many Americans expected the federal
government to play a vital role in the nation's
social welfare.
• In another significant development, the Wagner
Act made organized labor much more powerful.
Public policy became a struggle between big
business and organized labor for control
of/influence on “big government.” This
relationship continues to have a major impact on
public policy today.