Roosevelt and Reform;
Roosevelt and Reform
How did the New Deal reform American life?
In 1935, the focus of the New Deal shifted from relief and recovery to reform. During his fi rst two years in office, FDR had concentrated on fighting the Great
Depression by shoring up the sagging American economy. Only a few new agencies, notably TVA, sought to make permanent changes in national life. Roosevelt was
developing a “broker-state” concept of government, responding to pressures from organized elements such as corporations, labor unions, and farm groups while ignoring
the needs and wants of the dispossessed who had no clear political voice. The early New Deal tried to assist bankers and industrialists, large farmers, and members of
the labor unions, but it did little to help unskilled workers and sharecroppers. The continuing depression and high unemployment began to build pressure for more
sweeping changes. Roosevelt faced the choice of either providing more radical programs, ones designed to end historical inequities in American life, or deferring to
others who put forth solutions to the nation’s ills. Bolstered by an impressive Democratic victory in the 1934 congressional elections, Roosevelt responded by
embracing a reform program that marked the climax of the New Deal.
Challenges to FDR
The signs of discontent were visible everywhere by 1935. In the upper Midwest, progressives and agrarian radicals, led by Minnesota governor Floyd Olson, were calling
for government action to raise farm and labor income. “I am a radical in the sense that I want a definite change in the system,” Olson declared. “I am not satisfied
with patching.” Upton Sinclair, the muckraking novelist, nearly won the governorship of California in 1934 running on the slogan “End poverty in California,” while in
the East a violent strike in the textile industry shut down plants in twenty states. The most serious challenge to Roosevelt’s leadership, however, came from three
demagogues who captured national attention in the mid-1930s. The first was Father Charles Coughlin, a Roman Catholic priest from Detroit, who had originally supported
FDR. Speaking to a rapt nationwide radio audience in his rich, melodious voice, Coughlin appealed to the discontented with a strange mixture of crank monetary schemes
and anti-Semitism. He broke with the New Deal in late 1934, denouncing it as the “Pagan Deal,” and founded his own National Union for Social Justice. Increasingly
vitriolic, he called for monetary inflation and the nationalization of the banking system in his weekly radio sermons to an audience of more than thirty million. A
more benign but equally threatening figure appeared in California. Francis Townsend, a 67-year-old physician, came forward in 1934 with a scheme to assist the elderly,
who were sufferring greatly during the depression. The Townsend Plan proposed giving everyone over the age of 60 a monthly pension of $200 with the proviso that it
must be spent within thirty days. Although designed less as an old-age pension plan than as a way to stimulate the economy, the proposal understandably had its
greatest appeal among the elderly. They embraced it as a holy cause, joining Townsend Clubs across the country. Despite the criticism from economists that the plan
would transfer more than half the national income to less than 10 percent of the population, more than ten million people signed petitions endorsing the Townsend Plan,
and few politicians dared oppose it. The third new voice of protest was that of Huey Long, the flamboyant senator from Louisiana. Like Coughlin, an original supporter
of the New Deal, Long turned against FDR and by 1935 had become a major political threat to the president. A shrewd, ruthless, yet witty man, Long had a remarkable
ability to mock those in power. The King fish (a nickname he borrowed from Amos ’n Andy) announced a nationwide “Share the Wealth” movement in 1934. He spoke grandly
of taking from the rich to make “every man a king,” guaranteeing each American a home worth $5,000 and an annual income of $2,500. To finance the plan, Long advocated
seizing all fortunes of more than $5 million and levying a tax of 100 percent on incomes greater than $1 million. By 1935, Long claimed to have founded twenty-seven
thousand Share the Wealth clubs and had a mailing list of more than seven million people, including workers, farmers, college professors, and even bank presidents.
Threatening to run as a third party candidate in 1936, Long generated fear among Democratic leaders that he might attract three to four million votes, possibly enough
to swing the election to the Republicans. Although an assassin killed Huey Long in Louisiana in late 1935, his popularity showed the need for the New Deal to do more
to help those still in distress.
When the new Congress met in January 1935, Roosevelt was ready to support a series of reform measures designed to take the edge off national dissent. The recent
elections had increased Democratic congressional strength significantly, with the Republicans losing thirteen seats in the House and retaining less than one-third of
the Senate. Many of the Democrats were to the left of Roosevelt, favoring increased spending and more sweeping federal programs. “Boys—this is our hour,” exulted Harry
Hopkins. “We got to get everything we want . . . now or never.” Congress quickly appropriated $4.8 billion for the WPA and was prepared to enact virtually any proposal
that Roosevelt offered. The most significant reform enacted in 1935 was the Social Security Act. The Townsend movement had reminded Americans that the United States,
alone among modern industrial nations, had never developed a welfare system to aid the aged, the disabled, and the unemployed. A cabinet committee began studying the
problem in 1934, and President Roosevelt sent its recommendations to Congress the following January. The proposed legislation had three major parts. First, it provided
for old-age pensions financed equally by a tax on employers and workers, without government contributions. In addition, it gave states federal matching funds to
provide modest pensions for the destitute elderly. Second, it set up a system of unemployment compensation on a federal-state basis, with employers paying a payroll
tax and with each state setting benefit levels and administering the program locally. Finally, it provided for direct federal grants to the states, on a matching
basis, for welfare payments to the blind, handicapped, needy elderly, and dependent children. Although there was criticism from conservatives who mourned the passing
of traditional American reliance on self-help and individualism, the chief objections came from those who argued that the administration’s measure did not go far
enough. Democratic leaders, however, defeated efforts to incorporate Townsend’s proposal for $200 monthly pensions and increases in unemployment benefits. Congress
then passed the Social Security Act by overwhelming margins. Critics began to point out its shortcomings, as they have ever since. The old-age pensions were paltry.
Designed to begin in 1942, they ranged from $10 to $85 a month. Not everyone was covered; many of those who most needed protection in their old age, such as farmers
and domestic servants, were not included. And all participants, regardless of income or economic status, paid in at the same rate, with no supplement from the general
revenue. The trust fund also took out of circulation money that was desperately needed to stimulate the economy in the 1930s. Other portions of the act were equally
open to question. The cumbersome unemployment system offered no aid to those currently out of work, only to people who would lose their jobs in the future, and the
benefits (depending on the state) ranged from barely adequate to substandard. The outright grants to the handicapped and dependent children were minute in terms of the
need; in New York City, for example, a blind person received only $5 a week in 1937. The conservative nature of the legislation reflected Roosevelt’s own fiscal
orthodoxy, but even more it was a product of his political realism. Despite the severity of the depression, he realized that establishing a system of federal welfare
went against deeply rooted American convictions. He insisted on a tax on participants to give those involved in the pension plan a vested interest in Social Security.
He wanted them to feel they had earned their pensions and that in the future no one would dare take them away. “With those taxes in there,” he explained privately, “no
damned politician can ever scrap my social security program.” Above all, FDR had succeeded in establishing the principle of government responsibility for the aged, the
handicapped, and the unemployed. Whatever the defects of the legislation, Social Security stood as a landmark of the New Deal, creating a system to provide for the
welfare of individuals in a complex industrial society.
The other major reform achievement in 1935 was passage of the National Labor Relations Act, or the Wagner Act, as it became known. Senator Robert Wagner of New York
introduced legislation in 1934 to outlaw company unions and other unfair labor practices in order to ensure collective bargaining for unions. FDR, who had little
knowledge of labor-management relations and apparently little interest in them, opposed the bill. In 1935, however, Wagner began to gather broad support for his
measure, which passed the Senate in May with only twelve opposing votes, and the president, seeing passage as likely, gave it his approval. The bill moved quickly
through the House, and Roosevelt signed it into law in July.
The Wagner Act created a National Labor Relations Board to preside over labor-management relations and enable unions to engage in collective bargaining with federal
support. The act outlawed a variety of union-busting tactics and in its key provision decreed that whenever the majority of a company’s workers voted for a union to
represent them, management would be compelled to negotiate with the union on all matters of wages, hours, and working conditions. With this unprecedented government
sanction, labor unions could now recruit the large number of unorganized workers throughout the country. The Wagner Act, the most far-reaching of all New Deal
measures, led to the revitalization of the American labor movement and a permanent change in labor-management relations. Three years later, Congress passed a second
law that had a lasting impact on American workers—the Fair Labor Standards Act. A long-sought goal of the New Deal, this measure aimed to establish both minimum wages
and maximum hours of work per week. Since labor unions usually were able to negotiate adequate levels of pay and work for their members, the act was aimed at
unorganized workers and met with only grudging support from unions. Southern conservatives opposed it strongly, both on ideological grounds (it meant still greater
government involvement in private enterprise) and because it threatened the low southern wages that had attracted northern industry since Reconstruction. Roosevelt
finally succeeded in winning passage of the Fair Labor Standards Act in 1938, but only at the cost of exempting many key industries from its coverage. The act provided
for a minimum wage of 40 cents an hour by 1940 and a standard workweek of forty hours, with time and a half for overtime. Despite its loopholes, the legislation did
lead to pay raises for the twelve million workers earning less than 40 cents an hour. More important, like Social Security it set up a system—however inadequate—that
Congress could build on in the future to reach more generous and humane levels. Other New Deal reform measures met with a mixed reception in Congress. Proposals to
break up the huge public utility holding companies created by promoters in the 1920s and to levy a “soak the rich” tax on the wealthy stirred up bitter debate, and
these bills were passed only in greatly weakened form. Roosevelt was more successful in passing a banking act that made important reforms in the Federal Reserve
System. He also gained congressional approval of the Rural Electrification Administration (REA), which helped bring electricity to the 90 percent of American farms
that still did not have it in the 1930s. All in all, Roosevelt’s record in reform was similar to that in relief and recovery—modest success but no sweeping victory. A
cautious and pragmatic leader, FDR moved far enough to the left to overcome the challenges of Coughlin, Townsend, and Long without venturing too far from the
mainstream. His reforms improved the quality of life in America significantly, but he made no effort to correct all the nation’s social and economic wrongs.
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