The Second New Deal

Section 22.2

Though progress had been made toward easing the problems of the Great Depression, Roosevelt knew that much work still needed to be done.

In 1935, FDR launched a new campaign to help meet the goals of relief, recovery, and reform.

The second New Deal

As FDR planned a new round of spending, critics charged that New Deal programs, and their high price tags, were wasteful.

• The government was spending money it did not have.

• The federal deficit had soared to $4.4 billion.

• adopted Keynsian economics by John Maynard Keynes, a British economist who believed the government should be more proactive in the economy; rejected Adam Smith’s ideas of laissez faire

1. tax cuts2. increase government spending which

would create a deficit3. he would have the government intervene

on a massive scale by creating jobs even though the government would go in debt

4. the idea was a trade off where priorities would be that the government would have to give up something to get something and that was to create demand

5. jobs would be made through the CCC, CWA, PWA, TVA where the unemployed would now be hired by the government and get a check from Uncle Sam

6. now with money these individuals can purchase products

7. with an increase in demand, private industry would then have to produce more so they would hire workers

8. these jobs could be taken from the CCC, CWA, etc and now these individuals would have jobs and pay taxes which in turn would help pay off the debt since they now can be taxed

The Works Progress Administration (WPA) created millions of jobs on public-works projects.

• Workers built highways and public buildings, dredged rivers and harbors, and promoted soil and water conservation.

• Artists were hired to enhance public spaces.

• In 1935 it would be the WPA – greatest non war time agency where over 8,000,000 would get public jobs in construction, the arts, etc

The Social Security Act created a pension system for retirees.

It also provided:

• unemployment insurance

• insurance for victims of work-related accidents

• aid for poverty-stricken mothers and children, the blind, and the disabled

The government continued to give aid to farmers.

The government provided price supports for agriculture.

The Rural Electrification Administration helped bring power to isolated rural areas.

The government also funded irrigation systems, dams, and other water projects in the West.

Helping Labor• National Labor

Relations Act - set up National Labor Relations Board to supervise labor- management relations; in the 1930s, it strongly favored labor unions

• Fair Labor Standards Act or the Wagner Act established a maximum normal work week of 40 hours and a minimum wage of 40 cents/hour and outlawed most forms of child labor; still exists

As union activity rose, a split emerged in the American Federation of Labor.

The AFL represented skilled workers who joined craft or trade unions.

The union made little effort to organize workers in the major industries.

John L. Lewis formed the Congress of Industrial Organizations (CIO) to unionize industrial workers.

Labor Unions Find a New Energy

In 1936, the CIO’s United Auto Workers Union staged a sit-down strike at General Motors.

This success led to others, and union membership soared.

After 44 days, GM recognized the new union.

• Roosevelt wins the 1936 Presidential Election in a landslide and will win altogether an unprecedented four terms as president

• despite his popularity, his New Deal programs came under fire

FDR Fights Back• after his inauguration on

1937, FDR made a bold proposal; he wanted to add six more justices to the US Supreme Court making the number go from nine to fifteen ( Judicial Reorganization Bill)

• he cited that the justices were too old and this would alleviate the work load on the court

• his real reason was he was being outvoted 7 – 2 on New Deal programs

• a bipartisan effort was mounted by Congress to stop this and this became a major defeat for the New Deal

• by 1937, the economy snapped and FDR’s critics called it the Roosevelt Recession

• WWII would start and the country’s attention would be diverted from the Great Depression to war

The combination caused the economy to sink again, and unemployment soared.

After the economy had begun to improve in 1935 and 1936, FDR cut back on government spending to reduce the deficit. At the same time, interest rates rose.

With his support wavering, FDR did not try to push further reforms through Congress.