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Current R., Williams T. H., Freidel F., Brinkley A. American History: a survey. 7th edition; New York, 1987.
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Chapter 26. The New Deal
Franklin Roosevelt not only served longer president than any man in American history. He became during his years in office more central to the life of the nation than any chief executive before him. More important, perhaps, his administration constructed a series of programs that permanently altered the role and structure of the federal government. The accomplishments of the New Deal, and ttheir impact on all subsequent discussions of the role of government in American society, have helped to shape the nation's political life ever since.
And yet the Roosevelt administration itself was never firmly committed to any particular philosophy of government. Pragmatic, experimental, unwedded to any single set of social or economic beliefs, the New Deal defied easy classification or neat description. Roosevelt himself gave perhaps the clearest statement of the New Deal's political philosophy. "Try something," he once exhorted the nation. "If it works, keep doing it. If it doesn't, try something else."
By the end of the 1930s, when the outbreak of war in Europe finally brought thexrusade for domestic reform temporarily to a close, the Roosevelt administration had created many of the broad outlines of the political world we know today. It had constructed the beginnings of a modern welfare system. It had extended federal regulation over new areas of the economy. It had presided over the birth of the modern labor movement. It had made the government a major force in the agricultural economy. It had created a powerful coalition within the Democratic party that would dominate American politics for most of the next thirty years. And it had produced the beginnings of a new liberal ideology that would govern reform efforts for several decades after the war.
One thing the New Deal had not done, however, was end the Great Depression. It had, to be sure, helped stabilize the economy in the desperate early months of 1933 and had kept things from getting worse. And there had been a limited, if erratic, recovery in many areas of economic life. But by the end of 1939, many of the basic problems of the Depression remained unsolved. An estimated 15 percent of the work force remained unemployed. And the gross national product was no larger than it had been ten years before.
Inevitably, these Lone vears of economic stagna-tion took their toll on the nation s political and social life. And the Roosevelt administration faced repeated challenges throughout the 1930s from groups impatient with its programs. The political fortunes of the New Deal ebbed and flowed throughout the 1930s, and at times a major political upheaval seemed to be at hand. But in the end, Franklin Roosevelt managed, despite the challenges, to retain a firm grip on the loyalties of a majority of the public.
Launching the New Deal
Roosevelt's first task, he knew, was to alleviate the crisis that was threatening in early 1933 to bring the financial system and the economy as a whole to its knees. In particular, he had to stop the panic that was rapidly gripping the nation. He did so remarkably quickly—in part by sheer force of personality and in part by constructing, in a few months, an ambitious and diverse program of legislation. This "First New Deal," as many historians have called it, embraced many different approaches to reform (as well as some intensely conservative measures).
Much of Roosevelt's success was a result of his ebullient personality. Beginning with his inaugural address—in which he assured the American people that "the only thing we have to fear is fear itself"—he projected an infectious optimism that helped dispel the growing despair. He was the first president to make regular use of the radio, and his friendly "fireside chats," during which he explained his programs and plans to the people, helped to build public confidence in the administration. Roosevelt was also a master at handling his relations with the press. He held frequent informal press conferences, and he won both the respect and the friendship of most reporters. Their regard for him was such that by unwritten agreement, no newsman ever photographed the president getting into or out of his car or being wheeled in his wheelchair. Much of the American public remained unaware throughout the Roosevelt years that their president's legs remained completely paralyzed. Image alone, however, could not solve the serious economic problems of March 1933; and within twenty-four hours of his inauguration, Roosevelt was moving forcefully to construct a positive program that would restore at least momentary stability to the nation. With the banking crisis at a fever pitch and with Congress apparently in a mood to do virtually anything the new president suggested, Roosevelt might well have taken drastic steps, such as nationalizing the banking system. Instead, he worked to shore up existing financial institutions and to revive business faith in the economy. On March 6, two days after taking office, he issued a proclamation closing all American banks for four days until Congress could meet in special session. Under other circumstances, shutting down the nation's banks would have created wide alarm. But since many states had already closed their banks before Roosevelt's proclamation, the "bank holiday," as the president euphemistically described it, created a general sense of relief. Finally, the federal government was stepping in to stop the alarming pattern of bank failures.
Three days later, Roosevelt sent to Congress the Emergency Banking Act, a generally conservative bill (much of it drafted by holdovers from the Hoover administration) designed primarily to protect the larger banks from being dragged down by the weakness of smaller ones. The bill provided for Treasury Department inspection of all banks before they would be allowed to reopen, for federal assistance to some troubled institutions, and for a thorough reorganization of those in the greatest difficulty. A confused and fnghtened Congress passed the bill within four hours of its introduction. "I can assure you," Roosevelt told the public on March 12, in his first fireside chat, "that it is safer to keep your money in a reopened bank than under the mattress." The public apparently believed him. Three-quarters of the banks in the Federal Reserve system reopened within the next three days, and $1 billion in hoarded currency and gold flowed back into them within a month. The immediate banking crisis was over.
On the morning after passage of the Emergency Banking Act, Roosevelt sent to Congress another measure—the Economy Act—designed to convince the public (and especially the business community) that the federal government was in safe, responsible hands. The act proposed to balance the federal budget by cutting the salaries of government employees and reducing pensions to veterans by as much as 15 percent. Otherwise, the president warned, the nation faced a $1 billion deficit. The bill revealed clearly what Roosevelt had always maintained: that he was at heart as much a fiscal conservative as his predecessor. And like the banking bill, it passed through Congress almost instantly—despite heated protests from some congressional progressives.
Roosevelt also moved in his first days in office to put to rest one of the divisive issues of the 1920s. He supported and then signed a bill to legalize the manufacture and sale of beer with a 3.2 percent alcohol content—an interim, measure pending the repeal of prohibition, for which a constitutional amendment (the Twenty-first) was already in process. The amendment was ratified later in 1933.
Roosevelt realized that these initial actions were nothing but stopgaps, that more comprehensive government programs would be necessary. The first such program was on behalf of the troubled agricultural economy, and it established an important and long-lasting federal role in the planning of the entire agricultural sector of the economy.
The Agricultural Adjustment Act, which Congress passed in May 1933, reflected the desires of leaders of various farm organizations and the ideas of Roosevelt's secretary of agriculture, Henry A. Wallace. It included scraps and reworkings of many long-cherished agricultural schemes, but its most important feature was its provision for crop reductions.
Under the "domestic allotment" system of the act, producers of seven basic commodities (wheat, cotton, corn, hogsi rice, tobacco, and dairy products) would decide on production limits for their crops. The government would then, through the Agricultural Adjustment Administration (AAA), tell individual farmers how much they should plant and would pay them subsidies for leaving some of their land idle. A tax on food processing (for example, the milling of wheat) would provide the funds for the new payments. Farm prices were to be subsidized up to the point of parity.
Because the 1933 agricultural season was already under way by the time the AAA began operations, the agency oversaw a large-scale destruction of existing crops and livestock to reduce surpluses. Six million pigs and 220,000 sows were slaughtered. Cotton farmers plpwed under a quarter of their crop. In a society plagued by want, in which many families were suffering from malnutrition and starvation, it was difficult for the government to explain the need for destroying surpluses, and the crop and livestock destruction remained controversial for many years. Beginning in 1934, however, crop and livestock limitations were accomplished in less provocative ways.
The results of the AAA efforts were in many ways heartening. Prices for farm commodities did indeed rise in the years after 1933, and gross farm income increased by half in the first three years of the New Deal. The relative position of farmers in the nation, therefore, improved significantly for the first time in twenty years; and the agricultural economy as a whole emerged from the 1930s much more stable and prosperous than it had been in the past. The AAA did, however, tend to favor larger farmers over smaller ones, particularly since local administration of its programs often fell into the hands of the most powerful producers in a community. At times, even if unintentionally, the New Deal farm program actually dispossessed some struggling farmers. In the cotton belt, for example, planters who were reducing their acreage evicted their tenants and sharecroppers and fired many field hands.
tnjanuary 1936, the Supreme Court struck down the crucial provisions of the Agricultural Adjustment Act, arguing that the government had no constitutional authority to require farmers to limit production. But the essence of the AAA programs survived, because within a few weeks the administration had secured passage of new legislation (the Soil Conservation and Domestic Allotment Act), which permitted the government to pay farmers to reduce production so as allegedly to "conserve soil," prevent erosion, and accomplish other secondary goals. The new law apparently met the Court's objections.
It also attempted to correct one of the most glaring injustices of the original act: its failure to protect sharecroppers and tenant farmers. Now landlords were required to share the payments they received for cutting back production with those who worked their land. (The new requirements were, however, largely evaded.) The administration launched other efforts to assist poor farmers as well. The Resettlement Administration, established in 1935, and its successor, the Farm Security Administration, created in 1937, attempted through short- and long-term loans to help farmers cultivating submarginal soil to relocate on better lands. But the programs never moved more than a few thousand farmers. Of more importance was the Rural Electrification Administration, created in 1935, which worked to make electric power available to farmers through utility cooperatives.
The industrial economy in 1933 was, as it had been for nearly three years, suffering from a vicious cycle of deflationv Ever since 1931, leaders of the U.S. Chamber of Commerce and many others had been urging the government to adopt an antideflation scheme that would permit trade associations to cooperate in stabilizing prices within their industries. Existing antitrust laws clearly forbade such practices, but businesspeople argued that the economic emergency justified a suspension of the restrictions.
Herbert Hoover had long been a supporter of the trade association movement, but he had refused to lend his assistance to the scheme.
The Roosevelt administration was far more receptive to the idea of cooperation among producers, and even to the demands of some businesspeople that the government enforce trade association agreements on pricing and production. But New Dealers insisted on additional provisions that would deal with other economic problems as well. Businesspeople would have to make important concessions to labor to ensure that the incomes of workers would rise alone with prices. And lest consumer buying power lag behind and defeat the scheme, the administration added another ingredient: a major program of public works spending designed to pump needed funds into the economy. The result of these many impulses was the National Industrial Recovery Act, which Congress passed in June 1933. Roosevelt, signing the bill, called it "the most important and far-reaching legislation ever enacted by the American Congress." Businesspeople hailed it as the beginning of a new era of cooperation between government and industry. Labor leaders praised it as a "Magna Carta" for trade unions. There was, it seemed, something in the bill for everyone.
At first, moreover, the new program appeared to work miracles. At its center was a new federal agency, the National Recovery Administration (NRA); and to head it, Roosevelt chose the flamboyant and energetic Hugh S. Johnson, a retired general and successful businessman. Johnson envisioned himself as a kind of evangelist, whose major mission was to generate public enthusiasm for the NRA. He did so in two ways. First, he called on every business establishment in the nation to accept a temporary "blanket code": a minimum wage of between 30 and 40 cents an hour, a maximum workweek of 35 to 40 hours, and the abolition of child labor. The result, he claimed, would be to raise consumer purchasing power, increase employment, and eliminate the infamous sweatshop. To generate enthusiasm for the blanket code, Johnson devised a symbol—the famous NRA Blue Eagle— which employers who accepted the provisions could display in their windows. Soon Blue Eagle flags, posters, and stickers, carrying the NRA slogan "We Do Our Part," were decorating commercial establishments in every part of the country.
At the same time, Johnson was busy negotiating another, more specific set of codes with leaders of the nation's major industries. These industrial codes set floors below which no company would lower prices or wages in its search for a competitive advantage, and they included agreements on maintaining employment and production. The extraordinary public support Johnson had managed to generate for the blanket code gave him substantial bargaining strength; in a remarkably short time, he won agreements from almost every major industry in the country. A nation eager For positive action was giving the NRA its fervent support.
From the beginning, however, the New Deal's bold experiment in economic cooperation encountered serious difficulties, and the entire effort ultimately .dissolved in failure. The codes themselves were hastily and often poorly written. Administration of them proved to be a bureaucratic nightmare, far beyond the capacities of federal officials with no prior experience in administering so vast a program. Large producers consistently dominated the code-writing process and ensured that the new regulations would work to their advantage and to the disadvantage of smaller firms. And the codes often did more than simply set floors under prices; they actively and artificially raised them—at times to levels higher than was necessary to ensure a profit and far higher than market forces would normally have dictated.
A closely related problem was that attempts to increase consumer purchasing power did not progress as quickly as the efforts to raise prices. Section 7(a) of the National Industrial Recovery Act—the NRA's charter—gave legal protection to the right of workers to form unions and engage in collective bargaining. Partly as a result, many new workers joined unions in the ensuing months; but actual recognition of unions by employers (and thus the significant wage increases the unions were committed to winning) did not follow. The Public Works Administration (PWA) established by the bill to administer spending programs was placed in the hands of Interior Secretary Harold Ickes, a self-described "curmudgeon" who only gradually allowed the $3.3 billion in public works funds to trickle out; Not until 1938 was the PWA budget pumping an appreciable amount of money into the economy.
For a while, most Americans enthusiastically supported the NRA experiment, expecting a major industrial revival to result: But the revival did not come. Indeed, industrial production actually declined in the months after the establishment of the NRA—from an index of 101 in July 1933 to 71 in November—despite the rise in prices that the codes had helped to create. By the spring of 1934, therefore, the NRA was besieged by criticism. Businesses were beginning once again to cut wages and prices or to violate agreements on levels of production—claiming as they did so that the wage requirements of the codes were making it impossible to earn adequate profits. They were also openly flaunting the provisions requiring them to bargain with unions, which attracted increasing labor hostility to the NRA. Economists were charging that the price fixing encouraged by the codes was undermining efforts to raise purchasing power. Reformers were complaining that the NRA was encouraging economic concentration and monopoly. A national Recovery Review Board, chaired by the famous criminal lawyer Clarence Darrow, reported in the spring of 1934 that the NRA was excessively dominated by big business and unduly encouraging monopoly; and Hughjohnson's vituperative response served only to undermine the agency's prestige even further.
Finally, in the fall of 1934, Roosevelt pressured Johnson to resign and established a new board of directors to oversee the NRA. Then in 1935, the Supreme Court intervened to bring an end to the troubled, experiment, The constitutional basis for the NRA had been Congress's power to regulate commerce among the states, a power the administration had interpreted very broadly. The case before the Court involved alleged code violations by the Schechter brothers, who operated a wholesale poultry business confined to one locality: Brooklyn, New York. The Court ruled unanimously that the Schecht-ers were not engaged in interstate commerce and, further, that Congress had unconstitutionally delegated legislative power to the president to draft the NRA codes. The legislation establishing the agency, therefore, was declared void; the NRA was forced to cease its operations.
Roosevelt expressed outrage at what became known as the "sick chicken" decision__and denounced the justices for their "horse-and-buggy" interpretation of the interstate commerce clause. He was rightly concerned, for the reasoning in the Schechter case threatened many other New Deal programs as well. But the destruction of the NRA itself was probably more of a blessing than a catastrophe for the New Deal, providing it with a face-saving way to abolish the failed experiment.
The AAA and the NRA largely reflected the beliefs of New Dealers who favored economic planning but wanted private interests (farmers or business leaders) to dominate the planning process. In some areas, however, other reformers—those who believed that the government itself should be the chief planning agent in the economy—managed to establish dominance. Their most conspicuous success, and one of the most celebrated accomplishments of the New Deal as a whole, was an unprecedented experiment in regional planning: the Tennessee Valley Authority (TVA).
The TVA had its roots in a political controversy that had surfaced repeatedly in the 1920s. Throughout that decade, one of the cherished goals of progressive reformers had been public development of the nation's water resources as a source of cheap electric power. In particular, they had urged completion of a great dam at Muscle Shoals on the Tennessee River in Alabama—a dam begun during World War I but left unfinished when the hostilities concluded. The nation's utility companies, predictably opposed to the concept of public power in any form, had fought desperately and successfully against completion of the project.
In 1932, however, one of the great utility empires—that of the electricity magnate Samuel Insull— had collapsed spectacularly, amid widely publicized exposes of corruption. That and other scandals had combined by 1933 to create indignation against the private power interests so intense that they were no longer able to block the public power movement. The result was legislation supported by the president and enacted by Congress in May 1933 creating the Tennessee Valley Authority, a public corporation whose mandate was "national planning for a com-plete river watershed." The TVA was intended not only to complete the dam at Muscle Shoals and build others in the region, and not only to generate and sell electricity from them to the public at reasonable rates. It was also to be the agent for a comprehensive redevelopment of the entire region: for stopping the disastrous flooding that had plagued the Tennessee Valley for centuries, for encouraging the development of local industries, for supervising a substantial program of reforestation, and for helping farmers to improve productivity.
On the whole, it succeeded quite well. Although opposition by conservatives within the administration ultimately blocked some of the most ambitious social planning projects proposed by David Lilienthal and other TVA administrators, the project did revitalize the region in numerous ways. It improved five existing dams, built twenty new ones, and constructed an extensive (and heavily trafficked) system of inland waterways. It managed as a result virtually to eliminate flooding in the region and to provide electricity to thousands who had never before had it. Indeed, the TVA soon became the greatest producer of electric power in the United States, as well as one of the cheapest suppliers. Throughout the country, largely because of the yardstick provided by the TVA, private power rates soon declined as well. The TVA also produced inexpensive phosphate fertilizers, helped fafimers to prevent soil erosion, and generally raised agricultural productivity—and through it the standard of living—for the entire region. But the Authority worked no miracles. The Tennessee Valley remained a generally impoverished region despite its efforts. And like many other New Deal programs, it made no serious effort to challenge local customs and prejudices.
For more than half a century, many Americans concerned about the health of their economy had believed that the nation's monetary system—its currency—was the key to solving most economic problems. In the early days of the New Deal, this preoccupation with the currency continued to affect policy and helped produce a number of important initiatives. In particular, the administration made a controversial decision: to take the country off the gold standard.
Roosevelt was not an inflationist at heart, but he soon came to recognize the gold standard as a major obstacle to the restoration of adequate prices. "I have always favored sound money," he told one critical congressman, "and do now, but it is 'too darned sound' when it takes so much of farm products to buy a dollar." The Emergency Banking Act of March 1933 had been the first step toward taking the country off the gold standard; it had included provisions forbidding the exporting of gold. Then on April 18, 1933, the president made the shift official with an executive order (over the warnings of his budget director, Lew Douglas, who had predicted the action would lead to "the end of Western civilization"). A few weeks later, Congress passed legislation confirming his decision. By itself, the repudiation of the gold standard meant relatively little. But both before and after the April decision, the administration experimented in various ways with manipulating the value of the dollar—by making substantial purchases of gold and silver and later by establishing a new, fixed standard for the dollar (reducing its gold content substantially from the 1932 amount). The resort to government-managed currency—that is, to a dollar whose value could be raised or lowered by government policy according to economic circumstances— created an important precedent for future federal policies and permanently altered the relationship between the public and private sectors. It did not, however, have any immediate impact on the depressed American economy.
Through other legislation, the early New Deal increased federal authority over previously unregulated or weakly regulated areas of the economy. The Glass-Steagall Act of June 1933 gave the government authority to curb irresponsible speculation by banks. More important, in the public mind at least, it established the Federal Deposit Insurance Corporation, which guaranteed all bank deposits up to $2,500. In other words, even should a bank fail, small depositors would be able to recover their money. Roosevelt opposed the FDIC during congressional debate over the bill, but once in operation it proved so successful that he later approved a gradual raising of the limit on guaranteed deposits, which by the end of the decade had reached $15,000. (It is now $100,000.)
It was a more difficult task to work out a comprehensive overhaul of the Federal Reserve system so as to remedy the serious financial defects that had appeared during the Depression. Finally, in 1935, Congress passed a major banking act that transferred much of the authority once wielded by the regional Federal Reserve banks to the Federal Reserve Board in Washington, whose seven members now exercised direct control over interest rates. By lowering the rates, the board could make it easier to borrow money from banks and thus, in most cases, encourage prices to rise.
To protect investors in the once popular and now mistrusted stock market, Congress passed the so-called Truth in Securities Act of 1933, requiring corporations issuing new securities to register them with the Federal Trade Commission and provide full and accurate information about them to the public. In June 1934, Congress went further and established the Securities and Exchange Commission (SEC) to police the stock market. Among other things, the establishment of the SEC was an indication of how far the financial establishment had fallen in the estimation of the public. In earlier years, J. P. Morgan and other important financiers could have wielded enough influence to stop such government interference in the financial world. Now Morgan could not even get a respectful hearing on Capitol Hill. The criminal trials of a number of once respected Wall Street figures for grand larceny and fraud (including the conviction and imprisonment of Richard Whitney, one-time head of the New York Stock Exchange and a close Morgan associate) eroded the public stature of the financial community still further.
The most important purpose of the New Deal, Franklin Roosevelt and his colleagues believed, was to reform and revive the economy—to restore stability and enhance productivity so that prosperity would return. In the meantime, however, millions of Americans were in desperate need of assistance, and the administration quickly recognized the necessity of providing them with relief.
Like his predecessor, Roosevelt believed that aid to the indigent was primarily a local responsibility and should remain so. But he also recognized that under the circumstances of the Depression, localities were unable to fulfill that responsibility. Among his first acts as president, therefore, was the establishment of the Federal Emergency Relief Administration (FERA), which provided cash grants to states (rather than loans, as the Hoover administration had favored) to prop up bankrupt relief agencies. To administer the program, he chose the director of the New York State relief agency, Harry Hopkins, who was ultimately to become one of the most important members of his administration. Hopkins, unlike Harold Ickes, realized the importance of speed in distributing government funds, and he disbursed the FERA grants widely and rapidly. Even he, however, shared Roosevelt's basic misgivings about establishing a government dole. It is probably going to un-dermine the independence of hundreds of thousands of families," he once lamented.
Both Roosevelt and Hopkins felt somewhat more comfortable with another form of government assistance: work relief. Unlike the dole, Hopkins believed, work relief "preserves a man's morale. It saves his skill. It gives him a chance to do something socially useful." Thus when it became clear that the FERA grants would not be sufficient to pull the country through the winter, the administration established a second program: the Civil Works Administration. Between November and April, it put more than 4 million people to work on temporary projects: some of them of real value, such as the construction of roads, schools, and parks; others little more than make-work, such as raking leaves or supervising playgrounds. The important thing, however, was that the 400,000 CWA projects (with a budget of $1 billion) were pumping money into an economy badly in need of it and were providing assistance to people with nowhere else to turn. This use of government spending to stimulate the economy—later to be known as "pump priming" and an important element of Keynesian economics (see below, p. 746)— was one of the New Deal's most important contributions to public policy. But in 1933, at least, members of the administration were only vaguely aware of the broad effects of this spending on the economy as a whole; most thought of it more as a way to help particular people than as a way to stimulate a broader recovery.
Evidence of this limited view of the value of government spending was that most of these early relief programs had short lives. Like the FERA, the CWA was intended to be only a temporary expedient. As the winter continued, not only congressional critics but Roosevelt himself became increasingly uncomfortable with the program. In the spring of 1934, the president dismantle the agency, and he ultimately disbanded it altogether. Most economists now agree that massive and sustained government spending would have been the most effective way to end the Depression. Few policymakers in the 1930s shared that belief.
Of all the New Deal relief projects, the one closest to Roosevelt's own heart, and the one he had the least difficulty reconciling with his conservative beliefs, was the Civilian Conservation Corps. Established in the first weeks of the new administration, the CCC was designed to provide employment to the millions of urban youths who could find no jobs in the cities and who, in many cases, were moving restlessly from one region of the country to another in search of work. At the same time, it was intended to advance the work of conservation and reforestation—goals Roosevelt had long cherished. The CCC created a series of camps in national parks and forests and in other rural and wilderness settings. There young men worked in a semimilitary environment on such projects as planting trees, building reservoirs, developing parks, and improving agricultural irriga-tion. As with the CWA, many of the CCC projects were of only marginal value. But the president took great pride in the success of the corps in providing jobs to over 500,000 young men, offering them not only incomes but an opportunity to work in a "healthy and wholesome" atmosphere.
Mortgage relief was a pressing need of millions of farm owners and homeowners. Roosevelt had provided some assistance to farmers in danger of losing their land, through the AAA and particularly through the Farm Credit Administration, which within two years refinanced one-fifth of all farm mortgages in the United States. The Frazier-Lemke Farm Bankruptcy Act of 1933 went further, enabling some farmers to regain their land even after the foreclosure of their mortgages. Despite such efforts, however, small farmers continued to lose their property in many regions; by 1934, 25 percent of all American farm owners had lost their land.
Homeowners were similarly troubled, and in June 1933 the administration established the Home Owners' Loan Corporation, which in a three-year period loaned out more than $3 billion to refinance the mortgages of more than 1 million householders. Altogether, it carried about one-sixth of the nation's urban mortgage burden. A year later, Congress established the Federal Housing Administration to insure mortgages for new construction and home repairs—a measure that combined an effort to provide relief with a program to stimulate lasting recovery of the construction industry.
The Reconstruction Finance Corporation continued under the New Deal to provide loans to troubled businesses. Democrats in Congress, unhappy with the RFC's tendency during the Hoover administration to make most of its loans to large banks and corporations, broadened the agency's authority so as to allow it to lend funds to smaller enterprises. The effort was only partially successful. Some small businesses did benefit from the reforms; but under the conservative management of Jesse Jones (originally appointed by Hoover but retained by Roosevelt), the RFC continued to make loans only to those enterprises it believed likely to repay them. In the eyes of the agency, that meant for the most part large organizations.
The relief efforts of the first two years of the New Deal were intended to be limited and temporary, so few of these early programs survived as a permanent part of the federal government. But they helped stimulate interest in other forms of social protection. Ultimately, the creation of a permanent welfare system would be one of the New Deal's most important and lasting accomplishments.
The New Deal in Transition
Seldom has an American president enjoyed such remarkable popularity as Franklin Roosevelt during his first two years in office. By early 1935, however, the New Deal was faced with serious problems. The Depression continued—softened, perhaps, by government programs, but generally unabated. And as a result, the New Deal was beginning to find itself the target of fierce public criticism. For a time, the president's political future seemed in doubt. Roosevelt himself, however, appeared unperturbed-by the problems; and in the spring of 1935, he launched a forceful campaign of new legislation designed to preempt his critics and move the government more forcefully into the fight against the Depression.
In the first, heady days of 1933, critics of the New Deal (of whom there were, even then, considerable numbers) had difficulty finding any substantial public support for their position. But by the time two years had passed and the economy still had not revived, the situation had changed. Attacks on the New Deal were now generating a large response.
Some of the most strident attacks came from critics on the right. Roosevelt had for a time tried to conciliate conservatives and had allowed corporate leaders to play a major role in shaping some of his early policy initiatives—most notably by allowing business executives themselves to control most aspects of the NRA. By the end of 1934, however, it was clear that the American right in general, and much of the corporate world in particular, had become irreconcilably hostile to the New Deal. Indeed, so intense was conservative animosity toward the New Deal's "reckless spending," "economic cracky pots," and "socialist" reforms that some of Roosevelt's critics could not even bear to say the president's name. They called him, simply and bitterly, "that man in the White House."
In August 1934, a group of the most fervent'(and wealthiest) Roosevelt opponents formed the American Liberty League, designed specifically to arouse public opposition to the New Deal's "dictatorial" policies and its supposed attacks on free enterprise. The new organization generated wide publicity and caused some concern within the administration. In fact, however, it was never able to expand its constituency much beyond the Northern industrialists (most of them Republicans) who had founded it. At its peak, membership in the organization numbered only about 125,000.
The real impact of the Liberty League and other conservative attacks on Roosevelt was not to undermine the president's political strength. It was, rather, to convince Roosevelt that his efforts to conciliate the business community had failed. By 1936, he no longer harbored any illusions about cooperation with conservatives. The forces of "organized money/' he said near the end of his campaign for reelection, "are unanimous in their hate for me—and I welcome their hatred."
Roosevelt's critics on the far left also managed to produce alarm among some supporters of the administration; but like the conservatives, they proved to have only limited strength. The Communist party, the Socialist party, and other radical and semiradical organizations were at times harshly critical of the New Deal. But not only did they fail ever to attract gen-uinely widespread support; they proved at times uncertain about how best to combine their commitment to radical change with their fervent opposition to the growth of fascism elsewhere in the world. The Communist party, in particular, spent much of the 1930s tacitly; and at times explicitly supporting the Roosevelt programs.
More fnenacing to the New Deal than either the far right or the far left was a group of dissident political movements that defied easy ideological classification. Some were marginal "crackpot" organizations with little popular following, but others gained substantial public support within particular states and regions. And three men, in particular, succeeded in mobilizing genuinely national followings.
Dr. Francis E. Townsend, an elderly California physician, rose from obscurity to lead a movement of more than 5 million members with his plan for federal pensions for the elderly. According to the Townsend plan, all Americans over the age of sixty would receive monthly government pensions of $200, providing they retired from their current employment (thus freeing jobs for younger, unemployed Americans)-arrd spent the money in full each month (which would pump needed funds into the economy). The movement expanded quickly from its founding in 1933, and within two years it had attracted the support of a formidable block of voters, most of them older men and women. The Townsend plan made little progress in Congress when it was introduced by sympathetic representatives. But the public sentiment behind the plan helped build support for the Social Security system, which Congress did approve in 1935.
Father Charles E. Coughlin, a Catholic priest in the small Detroit suburb of Royal Oak, Michigan, achieved even greater renown by means of his weekly sermons broadcast nationally over the radio. Drawing on Populism and other earlier political movements, as well as on what he claimed were the teachings of his church, he proposed a series of monetary reforms—remonetization of silver, issuing of greenbacks, and nationalization of the banking system—that he insisted would restore prosperity and provide economic justice. At first a warm supporter of Franklin Roosevelt, he had by 1934 become disheartened by what he claimed was the president's failure to deal harshly enough with the "money powers." In the spring of 1935, he established his own political organization, the National Union for Social Justice, which many people believed was the first step toward the formation of a third party. He was also displaying an apparently remarkable influence in Congress. (An avalanche of telegrams inspired by a Coughlin radio sermon was generally believed to have been responsible for the defeat in the Senate of a treaty admitting the United States to the World Court.) And he was attracting public support throughout much of the nation—primarily from Catholics, but from others as well. He was widely believed to have one of the largest regular radio audiences of anyone in America.
Most alarming of all to the administration was the growing national popularity of Senator Huey P. Long of Louisiana. Long had risen to power in his home state through his strident attacks on the banks, oil companies, and utilities, and on the conservative political oligarchy allied with them that had for decades dominated the Louisiana government. Elected governor in 1928, he launched an assault on his opposition so thorough and forceful that they were soon left with virtually no political power whatever. Long dominated the legislature, the courts, and the executive departments; and he brooked no interference. When opponents accused him of violating the Louisiana constitution, he brazenly replied, "I'm the Constitution here now." Many claimed that he had, in effect, become a dictator.
If so, he was a dictator who maintained the overwhelming support of the Louisiana electorate, in part because of his flamboyant personality and in part because of his record of accomplishment: building roads, schools, and hospitals; revising the tax codes; distributing free textbooks; lowering utility rates; and more. Barred by law from succeeding himself as governor, he ran in 1930 for a seat in the U.S. Senate, won easily, and left the state government in the hands of loyal, docile allies.
Once in Washington, Long, like Coughlin, soon became harshly critical of Herbert Hoover's ineffectual policies for dealing with the Depression. And also like Coughlin, he supported Franklin Roosevelt for president in 1932. Far more rapidly than the priest, however, Long broke with the New Deal—a break that was all but complete within six months of the inauguration. As an alternative, he advocated a drastic program of wealth redistribution, a program he ultimately named the Share-Our-Wealth Plan. According to Long, the government could end the Depression easily and quickly simply by confiscating through taxation the surplus riches of the wealthiest men and women in America, whose fortunes were, he claimed, so bloated that not enough wealth remained to satisfy the needs of the great mass of citizens. By limiting incomes to $1 million annually and by limiting capital accumulation and inheritances to $5 million, the government would soon acquire enough assets to guarantee every family a minimum "homestead" of $5,000 and an annual wage of $2,500. Long made little effort to disguise his interest in running for president. In 1934, he established his own national organization: the Share-Our-Wealth Society, which soon attracted a large following—not only in Long's native South but in New York, Pennsylvania, parts of the Midwest, and above all California. There were no accurate figures to indicate the movement's precise size, but even Long's critics admitted it might have as many as 4 million members. A poll by the Democratic National Committee in the spring of 1935 disclosed that Long might attract more than 10 percent of the electorate running as a third-party candidate, enough to tip a close election to the Republicans.
Observers in the 1930s hotly debated the significance of these dissident movements. Some believed they represented the rise of fascism in America; others claimed they were dangerously close to socialism or communism. In fact, they were neither. They represented, rather, two competing popular sentiments: the urgent desire of many Americans for government assistance in this time of need, and their equally strong desire to protect their ability to control their own lives from the encroachments of large and powerful organizations. Long, Coughlin, Townsend, and others spoke harshly of the "plutocrats," ''international bankers," and other remote financial powers who were, they claimed, not only impoverishing the nation but exercising tyrannical power over individuals and communities. They spoke equally harshly, however, of the dangers of excessive government bureaucracy, attacking the New Deal for establishing a menacing, "dictatorial" state. They envisioned a society in which government would, through a series of simple economic reforms, guarantee prosperity to every American without exercising intrusive control over private and community activities.
However much their critics may have disagreed about the merits of these programs, most agreed on one thing: the specter of dissident politics seemed in 1935 to have become a genuine threat to the established political parties. An increasing number of advisers were warning the president that he would have to do something dramatic to counter their strength.
In response both to the growing political pressures and to the continuing economic crisis, Roosevelt embarked in 1935 on a set of new initiatives that together became known as the "Second New Deal." In some respects, the new proposals were simply an attempt to steal the thunder of the administration's critics. But they also represented, if not a new direction at least a change in the emphasis of New Deal policy. "We have not weeded out the overprivileged," the president told Congress in January 1935, "and we have not effectively lifted up the underprivileged." His new programs, he claimed, were designed to do both.
Perhaps the most conspicuous change in New Deal policy in 1935 was its new attitude toward big business. Rhetorically at least, the president was now openly attacking the great corporate interests. In March, for example, he proposed to Congress an act to combat the concentration of power in the great utility holding companies. In 1935, thirteen such companies controlled three-quarters of the nation's electric power; and Roosevelt spoke harshly of the injustices inherent in their monopolistic position. The companies fought desperately against the "death-sentence" bill; one of them spent $700,000 to lobby against the measure. In the end, neither side emerged entirely victorious. Congress did indeed pass the Holding Company Act of 1935, but the bill contained amendments favored by the companies that sharply limited its effects.
Equally alarming to affluent Americans was a series of tax reforms proposed by the president in 1935, a program conservatives quickly labeled a "soak the rich" scheme. Apparently designed to undercut the appeal of Huey Long's Share-Our-Wealth Plan, the Roosevelt proposals called for establishing the highest and most progressive peacetime tax rates in history. Rates in the upper brackets reached 75 percent on income, 70 percent on inheritances, and 15 percent on corporate incomes. In fact, the actual impact of these taxes was far less radical than the president liked to claim (as Huey Long quickly pointed out). Like the Holding Company Act, the New Deal's tax legislation served progressive political purposes; but in terms of its actual impact on the economy, it had only modest results.
The Supreme Court decision in 1935 to invalidate the National Industrial Recovery Act solved some problems for the administration, but it also created others. The now defunct act had contained, among other things, the important clause—Section 7(a)— guaranteeing to workers the right to organize and bargain collectively. Supporters of labor, both in the administration and in Congress, advocated quick action to restore that protection. With the president himself slow to respond, the initiative fell to a group of progressives in Congress led by Senator Robert F. Wagner of New York, who in 1935 introduced what was to become the National Labor Relations Act. The new bill, ultimately known as the Wagner Act, provided workers with far more federal protection than Section 7(a) of the National Industrial Recovery Act had offered. It specifically outlawed a group of "unfair practices" by which employers had been fighting unionization. And it created a National Labor Relations Board (NLRB) to police employers, with power to compel them to recognize and bargain with legitimate unions. The president was not happy with the bill as it moved through Congress. But when the measure reached his desk, he signed it. That was in large part because American workers themselves had by 1935 become so important and vigorous a force that Roosevelt realized his own political future would depend in part on responding to their demands.
The emergence of a powerful American trade union movement in the 1930s was perhaps the most important social development of the decade, and one of the most significant political developments as well. It occurred in part in response to government efforts to enhance the power of unions; but it was primarily a result of the increased militancy of American workers and their leaders.
During the 1920s, workers had displayed little militancy in challenging employers or demanding recognition of their unions. They had faced a powerful and highly popular business establishment. They were often coopted by the system of welfare capitalism, which provided them with increased wages and benefits. And they had been saddled with conservative labor organizations, unwilling to risk the modest gains already won.
In the 1930s, these inhibiting factors began to vanish. Business leaders and industrialists lost (if only temporarily) the high public standing they had enjoyed in the New Era; and on matters of labor policy at least, they lost the support of the government. Both Section 7(a) of the National Industrial Recovery Act of 1933 and the Wagner Act of 1935 were passed over the strong objections of corporate leaders. The "welfare capitalism" of the 1920s had vanished almost overnight; with the economy in sharp decline, employers had quickly rescinded most of the gains offered to labor in the preceding years. Those workers who kept their jobs often did so only by accepting reduced wages and fewer benefits. Finally, as the decade progressed, new labor organizations emerged to challenge the established, conservative unions. The result was, among other things, an important change in the outlook of many workers: a growing resentment of conditions as they were, and an increasing commitment to the idea of organizing to rectify them.
The new militancy first became obvious in 1934, when newly organized workers (many of them inspired by the collective bargaining provisions of the National Industrial Recovery Act) staged a series of strikes to demand recognition of their unions. In Minneapolis, Toledo, and San Francisco, in particular, striking workers demonstrated a militancy and radicalism seldom seen in recent years and became involved at times in violent confrontations with employers and local authorities. Both the strength and the failure of these labor uprisings were important in promoting passage of the Wagner Act of 1935. Industrial workers were, it was clear, becoming too militant to ignore any longer. But it was equally clear that without stronger legal protection, their organizing drives would end in frustration. Once the Wagner Act became law, the search for more effective forms of organization rapidly gained strength in labor ranks.
Even though the American Federation,of Labor, under the leadership now of William Green, increased its activities in response to the Depression, it proved in most cases painfully inadequate to the task at hand. The AFL remained committed to the idea of the craft union: the idea of organizing workers on the basis of their skills. As a result, the Federation offered little hope to unskilled laborers, even though it was the unskilled who now constituted the bulk of the industrial work force.
During the 1930s, therefore, another concept of labor organization emerged to challenge the traditional craft union ideal: industrial unionism. Advocates of this approach argued that all the workers in a particular industry should be organized in a single union, regardless of what functions the workers performed. All auto workers should be in a single automobile union; all steel workers should be in a single steel union. Workers divided into many small unions would lack the strength to deal successfully with the great corporations. United into a single great union, however, they would wield considerable power.
Leaders of the AFL craft unions for the most part opposed the new concept. But industrial unionism found a number of important advocates, most prominent among them John L, Lewis. Lewis was the talented, flamboyant, and eloquent leader of the United Mine Workers—the oldest major union in the country organized along industrial rather than craft lines. He was also a charismatic public figure, whose personal magnetism alone helped win thousands of recruits to his cause.
At first, Lewis and his allies attempted to work within the AFL, but friction between the new industrial organizations and the older craft unions grew rapidly as a result. At the 1935 AFL convention, Lewis became embroiled in a series of angry confrontations (and one celebrated fistfight) with craft union leaders before finally walking out. A few weeks later, he created the Committee on Industrial Organization— a body officially within the AFL but unsanctioned by its leadership. After a series of bitter jurisdictional conflicts, the AFL finally expelled the new committee from its ranks, and along with it all the industrial unions it represented. In response, Lewis renamed the committee the Congress of Industrial Organizations (CIO), established it in 1936 as an organization directly rivaling the AFL, and became its first president. The schism clearly weakened the labor movement as a whole in many ways. But by freeing the advocates of industrial unionism from the restrictive rules of the Federation, it gave important impetus to the creation of powerful new organizations.
Those new organizations had been struggling for recognition even before the schism of 1936. Major battles were under way, in particular, in the automobile and steel industries. Out of a myriad of competing auto unions, the United Auto Workers (UAW) was, during the early and mid-1930s, gradually emerging preeminent. But through 1936, although steadily gaining recruits, it was making little progress in winning recognition from the corporations.
In December 1936, however, auto workers employed a controversial and dramatically effective technique for challenging corporate opposition: the sit-down strike. Employees in several General Motors plants in Detroit simply sat down inside the plants, refusing either to work or to leave, thus preventing the company from making use of strikebreakers. The tactic quickly spread to other locations, so that by February 1937 strikers had occupied seventeen GM plants. The strikers ignored court orders to vacate the buildings, and they successfully resisted sporadic efforts by local police to remove them. When Michigan's governor, Frank Murphy, a liberal Democrat, refused to call out the National Guard to clear out the strikers, and when the federal government refused as well to intervene on behalf of employers, the company had little choice but to, relent) General Motors became in February 1937 the first major manufacturer to recognize the UAW; other automobile companies soon did the same. The sit-down strike proved effective for rubber workers (who, in fact, were the first to use the technique in 1936) and workers in other industries as well; but it survived only briefly as a labor technique. Its apparent illegality aroused widespread public outrage and alarm; so labor leaders ultimately abandoned it.
In the steel industry, the battle for unionization was less easily won. In 1936, the CIO had appropriated $500,000 to support the Steel Workers' Organizing Committee (later United Steelworkers of America) in a major campaign. Over the next few months, the onslaught began, with the SWOC quickly recruiting tens of thousands of workers and staging a series of prolonged and often bitter strikes. In March 1937, to the amazement of almost everyone, U.S. Steel, the giant of the industry, relented. Rather than risk a costly strike at a time when it sensed itself on the verge of recovery from the Depression, the company signed a contract with the SWOC, the new organization's first important victory.
The lesser companies (known collectively as "Little Steel") were, however, far less ready to surrender. On Memorial Day 1937, a group of striking workers from Republic Steel gathered with their families for a picnic and demonstration in South Chicago; and when they attempted to march peacefully (and legally) toward the steel plant, police opened fire on them. Ten demonstrators were killed; another ninety were wounded. Despite a public outcry against the "Memorial Day Massacre," the harsh tactics of "Little Steel" ultimately proved successful. The 1937 strike failed.
But the victory of Little Steel was the exception rather than the rule; it was, in fact, one of the last gasps of the kind of brutal, naked strikebreaking that had proved so effective in the past. In the course of 1937, one of the most turbulent years in the history of American labor, there were 4,720 strikes—over 80 percent of them settled in favor of the unions. By the end of the year, more than 8 million workers were members of unions recognized as official bargaining units by employers (as compared with 3 million in 1932). By 1941, that number had expanded to 10 million and included the workers of Little Steel, which had finally relented. Workers were slower to win major new wage increases and benefits than they were to achieve union recognition. But the organizing battles of the 1930s had established the labor movement as a powerful force in the American economy.
From the first moments of the New Deal, important members of the administration, most notably Secretary of Labor Frances Perkins, had been lobbying patiently for a system of federally sponsored social insurance for the elderly and the unemployed. The popularity of the Townsend movement added strength to their cause, and in 1935, finally, Roosevelt gave public support to what became the Social Secu- rity Act. It established a variety of programs. For the elderly, there were two types of assistance. Those who were presently destitute could receive up to $15 a month in federal assistance (depending on what matching sums the state might provide). More important for the future, Americans presently working were incorporated into a pension system, to which they and their employers would contribute by paying a payroll tax and which would provide them with an income on retirement. There were severe limits on the program. Pension payments would not begin until 1942 and even then would provide only $10 to $85 a month to recipients. And wide categories of workers (including domestic servants and agricultural laborers, many of whom were black) were excluded from the program. But it was a crucial first step in creating the nation's most important social program for the elderly.
In addition, the Social Security Act expanded the government's activities on behalf of the unemployed and dispossessed. It provided for a system of unemployment insurance, to which employers alone would contribute and which made it possible for workers laid off from their jobs to receive government assistance for a limited period of time. It also established a system of federal aid to disabled people and to dependent children.
New Dealers did not like to think of Social Security as a "welfare" system; even the strongest supporters of the new program continued to oppose the idea of a "dole." They insisted, rather, that Social Security was an "insurance" system, most of whose recipients would earn their benefits. Those assumptions were reflected in the structure of the programs the act created. The pensions to the elderly were to be based not on need but on contributions to the system. Even the wealthiest retired Americans would be entitled to their Social Security payments. Unemployment insurance, similarly, was not to be "welfare," with benefits based on economic need. Any unemployed person would be eligible to receive assistance, no matter what his or her financial situation. Where the Social Security Act did provide direct assistance based on need—to the elderly poor, to the disabled, to dependent children—it was servicing groups widely perceived to be small and genuinely unable to support themselves.
In the years to come, however, Social Security was to evolve in ways its planners neither foresaw nor desired. The old-age pension program would ultimately become far more expensive (and far more generous) than the founders of the system had expected. Aid to Dependent Children, envisioned as a relatively modest program to aid a small number of needy people, would in the 1950s expand to become one of the cornerstones of the modern welfare sys-tem. However one evaluates the long-range effects of Social Security, however, it is clear that the 1935 act was the most important single piece of social welfare legislation in American history.
Social Security was designed primarily to fulfill long-range goals. Of more immediate concern were the millions of Americans who remained unemployed and who had not yet found relief through existing government programs. To meet their needs (and not incidentally to replace such early New Deal programs of direct relief as the FERA, with which the president had always felt uncomfortable), the administration established in 1935 the Works Progress Administration (WPA). Like the Civil Works Administration and other earlier efforts, the WPA established a sys-tem of work relief for the unemployed. It far surpassed all earlier agencies, however, both in the size of its budget ($5 billion at first) and in the energy and imagination of its operations.
Under the direction of Harry Hopkins, who had by now emerged as the New Deal's "minister of relief," the WPA employed an average of 2.1 million workers at any given moment between 1935 and 1941. The agency was responsible ultimately for the erection or renovation of 110,000 public buildings (schools, post offices, office buildings) and for the construction of almost 600 airports, more than 500,000 miles of roads, and over 100,000 bridges. More important, however, the WPA provided incomes to those it employed and helped stimulate the economy in general by increasing the flow of money into it.
The WPA also displayed remarkable flexibility and imagination in offering assistance to those whose occupations did not fit into any traditional category of relief. The Federal Writers Project of the WPA, for example, offered unemployed writers support to pursue their own creative endeavors and to work on projects initiated by the agency itself. The Federal Artjroject, similarly, provided aid to painters, sculptors, and others to continue their careers. The Federal Music Project and the Federal Theater Project oversaw the production of concerts and of plays, skits, and even a controversial review of public affairs known as the "Living Newspaper," thus creating work for unemployed musicians, actors, directors, and others.
Other relief agencies emerged alongside the WPA. The National Youth Administration provided assistance to those between the ages of sixteen and twenty-five, largely in the form of scholarship assistance to high-school and college students. The Emergency Housing Division of the Public Works Administration (the agency that had been established in 1933 along with the NRA, but whose benefits were slow to be felt) began federal sponsorship of public housing. It cleared some of the nation's most notorious slums and built instead some fifty new housing developments, containing nearly 22,000 units—but most of them priced too high for those who had been displaced by slum clearance. Not until 1937, when Congress approved Senator Wagner's bill creating the United States Housing Authority, did the government begin to provide a substantial amount of housing for low-income families.
The presidential election of 1936, it was clear from the start, was to be a national referendum on Franklin Roosevelt and the New Deal. And whereas in 1935 there had been reason to question the president's political prospects, by the middle of 1936 there could be little doubt that he would win a second term.
The conservative opposition to Roosevelt had always been intense but never large. In 1936, it was not even strong enough to win control of the Republican party. Ignoring the anguished pleas of Herbert Hoover and others who detested all aspects of the New Deal, the party nominated the moderate governor of Kansas, Alf M. Landon, who had supported Theodore Roosevelt's 1912 crusade (see pp. 631—633) and who had never abandoned his progressive commitments. The Republican platform promised, in effect, to continue the programs of the New Deal—but constitutionally, and without running a deficit.
As for the dissidents, their strength seemed to .evaporate as quickly as it had emerged. One reason was the violent death of their most effective leader, Huey Long, who was assassinated in a corridor of the Louisiana state capitol in September 1935 by a young Baton Rouge doctor. (No one ever had a chance to discover the motives of the assailant; he was gunned down on the spot by Long's bodyguards.) Another reason was the ill-fated alliance among several of the remaining dissident leaders in 1936. Father Coughlin, Dr. Townsend, and Gerald L. K. Smith (a sycophantic henchman of Huey Long trying unsuccessfully to establish himself as Long's political heir) joined forces that summer to establish a new political movement— the Union party. But the incessant squabbling among them combined with the colorlessness of their presidential candidate—a mediocre North Dakota congressman, William Lemke—made the new party a sorry spectacle. It polled only 890,000 votes. The most important reason for the dissidents' collapse, however, was their failure ever to turn their supporters fully against Franklin Roosevelt, who had skillfully undercut the appeal of his critics by espousing many of their ideas.
The campaign was a lopsided contest. Roosevelt drew huge crowds and evoked widespread enthusiasm with his impassioned attacks on the "economic royalists." Landon's pallid rhetoric and moderate platform could not effectively compete. The result was the greatest landslide in American history to that point. Roosevelt polled just under 61 percent of the vote to Landon's 36 percent. The Republican candidate carried only Maine and Vermont. The Democrats increased their already large majorities in both houses of Congress.
In addition to ensuring Roosevelt a second term, the election displayed the fundamental party realign-ment that the New Deal had managed to effect. The Democrats now controlled a broad coalition of Western and Southern farmers, the urban working classes, the poor and unemployed, and the black communities of the Northern cities, as well as traditional progressives and committed new liberals—a coalition that constituted a substantial majority of the electorate. It would be many years before the Republican party could again muster anything approaching a true majority coalition of its own.
The New Deal in Disarray
Roosevelt emerged from the 1936 election at the zenith of his popularity. Within months, however the New Deal was mired in serious new difficulties—a result of continuing opposition, of the president's own political errors, and of serious economic setbacks. His administration would never fully recoVer. Throughout Roosevelt's second term, recovery from the Depression remained elusive; and the New Deal, stumbling from one policy to another, appeared unable to regain the initiative it had once held.
The Court Fight and the "Purge"
If the 1936 election had been a mandate for anything, Franklin Roosevelt believed, it was a mandate to do something about the Supreme Court. No program of reform, he had become convinced, could long survive the ravages of the obstructionist justices, who had already struck down the NRA and the AAA and threatened to invalidate even more legislation. Foes of such New Deal measures as the National Labor Relations Act, the Social Security Act, and the Holding Company Act were openly flouting the new laws, confident that the Supreme Court would soon disallow them. Through its narrow interpretation of the federal power over interstate commerce and taxation, and through its broad interpretation of freedom of contract, the Court seemed to have created an economic no man's land within which neither the federal government nor the state governments could act. Early in 1937,. Roosevelt proposed a solution: expanding the Supreme Court through the addition of new justices—justices he would appoint and whose liberal views would presumably counterbalance the conservatism of the existing justices.
It was a bold measure, but it was not as radical as many of its critics charged. The Constitution called for no specific number of Supreme Court justices, and Congress had from time to time changed the size of the Court in the past (although not since the early nineteenth century). Nevertheless, the plan aroused a great public furor, largely because Roosevelt displayed what was, for him at least, an astounding political ineptitude in proposing and promoting it. Without informing congressional leaders in advance, he sent a surprise message to Capitol Hill in February proposing a general overhaul of the federal court system and including, among many provisions, one to add up to six new justices to the Supreme Court. The courts were "overworked/' he claimed, and needed additional manpower and younger blood to enable them to cope with their increasing burdens. The explanation fooled almost no one.
Conservatives throughout the country expressed outrage at the "court-packing plan," warning that such constitutional shortcuts were the common route by which dictators seized power. And while in the past few Americans had been disposed to heed such warnings, now, as a result of Roosevelt's heavyhanded tactics, much of the public seemed to agree. Still the president had considerable political flout at his disposal; and he might well have forced Congress to approve at least a compromise measure had not the Supreme Court itself intervened in the controversy. Even before the court-packing fight began, the ideological balance of the Court had been a precarious one. Four conservative justices could be relied on to oppose the New Deal on almost all occasions; three were generally inclined to support it. The remaining two tended to waver, with Chief Justice Hughes often siding with the progressives and Associate Justice Owen J. Roberts more often voting with the conservatives. Were Hughes and Roberts both to side with the liberals, there would be a 5-to-4 majority in support of the New Deal without the appointment of additional justices. That is precisely what happened. On March 29, 1937, Roberts, Hughes, and the three progressive justices voted together to uphold a state minimum wage law—in the case of West Coast Hotel v. Parrish—thus reversing a 5-to-4 decision of the previous year invalidating a similar law. Two weeks later, again by a 5- to 4-margin, the Court upheld the Wagner Act; and in May, it validated the Social Security Act. The necessity for Roosevelt's judicial reform bill had vanished. The Supreme Court had prudently moderated its position in order to avert what it considered a disastrous precedent. "You may have saved the country," Hughes jubilantly told Owen Roberts after the first decision favorable to the New Deal in March.
On one level, the affair was a significant victory for Franklin Roosevelt. No longer would the Court serve as an obstruction to New Deal reforms, particularly after a group of older justices began retiring in the following months, to be replaced by Roosevelt appointees. On another level, however, the court-packing episode was a serious defeat for the president, and one that did lasting damage to his administration. By generating public suspicion of his motives, he had reinvigorated the conservative opposition, which only months before had been in disarray. By-giving members of his own party an excuse to oppose him,'he had helped destroy his congressional coalition. From 1937 on, Southern Democrats and other conservatives voted against his measures with alarming consistency; never again would the president enjoy the freedom of legislative action he had had during his first years in office. Roosevelt was not even spared the embarrassment of having his Court plan publicly voted down by Congress.
A year later, the president's political situation deteriorated further. Determined to regain the initiative in his legislative battles, Roosevelt launched an ill-considered effort to "purge" Congress of some of its most conservative members. In Democratic primaries that spring, he openly campaigned against members of his own party who had opposed his programs. The effort was a humiliating failure. Not only was Roosevelt unable to unseat any of the five Democratic senators against whom he campaigned, but his "purge" efforts drove an even deeper wedge between the administration and its conservative opponents, ensuring that Roosevelt would suffer more legislative frustrations in the future.
Hard on the heels of the court-packing fiasco came another economic crisis: a severe recession that began in the fall of 1937, continued for more than nine months, and plunged the nation into its worst suffering since 1932. It was a bitter pill for a society that was just beginning to believe that true recovery was under way; and it was a particularly bitter pill for Franklin Roosevelt, whose policies seemed to have contributed to the new collapse.
By the summer of 1937, it no longer seemed fanciful to believe that prosperity was about to return. The national income, which had dropped from $82 billion in 1929 to $40 billion in 1932, had risen to nearly $72 billion. Other economic indices showed similar improvements. To the president, the time seemed ripe for a retrenchment in government spending, for allowing the business community, as Roosevelt put it, to stand once again on its own two feet. Not incidentally, it also seemed to be a good time to balance the federal budget, whose mounting deficits had never ceased to trouble the president. And there were even arguments that the real danger now was no longer depression but inflation.
As a result, the administration moved on several fronts to cut back its recovery programs. Roosevelt persuaded the Federal Reserve Board to tighten credit by raising interest rates. At the same time, he reduced government spending by slashing the budget for one relief program after another. Between January and August 1937, for example, he cut the WPA in half, sending 1.5 million relief workers on unpaid "vacations." A few weeks later, the fragile boom collapsed. The index of industrial production dropped from 117 in August 1937 to 76 in May 1938. Four million additional workers lost their jobs.
The recession of 1937 was a result of many factors. But to many observers at the time (including, apparently, Franklin Roosevelt), it seemed to be a direct result of the administration's unwise decision to reduce spending. And so the new crisis forced yet another reevaluation of policies by the president and his advisers and produced yet another shift of emphasis within the New Deal. The advocates of government spending as an antidote to the Depression had always had to struggle for the president's favor against those who believed in more conservative fiscal policies. Now, it seemed, they stood vindicated; and the notion of using government deficits to stimulate the economy—an idea associated with the great British economist John Maynard Keynes—had established its first, timid foothold in American public policy. In April 1938, the president asked Congress for an emergency appropriation of $5 billion for public works and relief programs, and government funds soon began pouring into the economy once again. Within a few months, another tentative recovery seemed to be under way, and the advocates of spending pointed to it as proof of the validity of their approach.
At the same time, advocates of another approach to the economic crisis began to win Franklin Roosevelt's ear: a group of younger liberals who saw the recession as the result of excessively concentrated corporate power and who wanted the government to move forcefully to curb that power and restore competition. It was time, they said, to launch a genuine assault on monopoly. There had been antimonopoly advocates in New Deal circles from the beginning, but until now their position had been weak. By 1937, however, the president was sufficiently disillusioned with the American business community (a disillusionment only strengthened by the 1937 recession, which he too tried to blame on "selfish interests") that he was willing to experiment with their approach. In April 1938, Roosevelt sent a stinging message to Congress, vehemently denouncing what he called an unjustifiable concentration of economic power and asking for the creation of a commission to examine that concentration with an eye to major reforms in the antitrust laws. In response, Congress established the Temporary National Economic Committee (TNEC), including representatives of both houses of Congress and of several executive agencies. At about the same time, Roosevelt appointed a new head of the antitrust division of the Justice Department: Thurman Arnold, a Yale Law School professor who soon proved to be the most vigorous director ever to serve in that office. Making new and sophisticated use of the Sherman and Clayton acts, Arnold filed (and won) more antitrust cases in the next three years than the Justice Department had filed in its entire previous history.
Despite the apparent triumph of antimonopoly advocates, the policies of the late New Deal did not really represent a frontal assault on economic concentration. For one thing, neither the TNEC nor, in the end, Thurman Arnold's crusades had very much lasting impact. The TNEC investigation ran on for nearly three years and produced volumes of testimony, but in the end it made no important recommendations for action. And Arnold's vigorous, tenure in the Justice Department came to an end when wartime pressures convinced the president and others that the time for antitrust activity was over. But even at its peak, these antimonopoly efforts were not in any real sense attempts to restore a small-scale, decentralized economy. Arnold himself admitted that such efforts would be nostalgic nonsense and explained that he was using the antitrust laws not to break up combinations but to regulate their behavior. That, in fact, was the principal ideological commitment of many New Dealers in the late 1930s: not destroying monopoly, but increasing the regulatory functions of the federal government. Roosevelt's much vaunted (and only partially successful) effort to reorganize the executive branch of the federal government was motivated in part by the idea that a streamlined state would be able to exert its influence more effectively in the economy.
By the end of 1938, however, it was becoming clear that these ambitious new goals faced an uncertain future. For the New Deal had by then essentially come to an end. Congressional opposition now made it difficult for the president to enact any major new programs. But more important, perhaps, the threat of world crisis hung heavy in the political atmosphere, and Roosevelt was gradually growing more concerned with persuading a reluctant nation to prepare for war than with pursuing new avenues of reform.
The New Deal: Limits and Legacies
To some of Roosevelt's embittered conservative contemporaries, the New Deal was a dangerous, radical break with the past, a time in which constitutional safeguards were abandoned, in which the president sought to establish a dictatorship, in which the American economy fell under the control of a med-dlesome and intrusive federal bureaucracy. To critics on the left, both in the 1930s and since, the New Deal was little more than a painfully timid defense of traditional capitalism, a bulwark of conservatism against demands for more fundamental change. (See "Where Historians Disagree," pp. 748-749.) There are elements of truth in both those views, although neither captures the essence of the New Deal experiment in reform. Any evaluation of this crucial episode in the history of American government must take into consideration both the extent and the limits of its legacy.
The Idea of the "Broker State"
In 1933, many New Dealers dreamed of using their new popularity and authority somehow to remake American capitalism—to produce new forms of cooperation and control that would create a genuinely harmonious, ordered economic world. By 1939, it was clear that what they had created was in fact something quite different. But rather than bemoan the gap between their original intentions and their ultimate achievements, New Deal liberals, both in 1939 and in later years, chose to accept what they had produced and to celebrate it—to use it as a model for future reform efforts.
What they had created was something that in later years would become known as the "broker state." Instead of forging all elements of society into a single, harmonious unit, as some reformers had once hoped to do, the effect of the New Deal was to elevate and strengthen new interest groups so as to allow them to compete more effectively in the national marketplace. And it was to make the federal government a mediator in that constant competition—a force that could intercede when necessary to help some groups and limit the power of others.
In 1933, there had been only one great interest group with genuine power in the national economy (albeit a varied and divided one): the corporate world. By the end of the 1930s, American business found itself competing for influence with an increasingly powerful labor movement, with an organized agricultural economy, and with aroused consumers. In later years, the "broker state" idea would expand to embrace other groups as well: racial and ethnic minorities, women, and many others. One of the enduring legacies of the New Deal, in other words, was to make the federal government a protector of interest groups and a supervisor of the competition among them, rather than an instrument attempting to create a universal harmony of interests.
What determines which interest groups receive government assistance in a "broker state"? The experience of the New Deal suggests that such assistance goes largely to those groups able to exercise enough political or economic power to demand it. Thus in the 1930s, farmers—after decades of organization and agitation—and workers—as the result of militant action and mass mobilization—won from the government new and important protections. Other groups, less well organized perhaps but politically important because so numerous and visible, won more limited assistance as well: imperiled homeowners, the unemployed, the elderly.
By the same token, the interest-group democracy that the New Deal came to represent offered much less to those groups either too weak to demand assistance or not visible enough to arouse widespread public support. And yet those same groups were often the ones most in need of help from their government. One of the important limits of the New Deal, therefore, was its very modest record on behalf of several important social groups.
Black America and the New Deal
One such group was black Americans, whose economic problems were accompanied by widespread political disfranchisement and who were subjected throughout the nation to forms of discrimination that prevented them from making any significant advances. The New Deal did relatively little to improve their lot.
It was not that the administration was hostile to blacks. On the contrary, the New Deal was probably more sympathetic to the cause of racial justice than any previous government of the twentieth century. Indeed, the cause of racial equality had one of its greatest champions in the White House itself. It was not the president, however, but the first lady. Eleanor Roosevelt spoke throughout the 1930s on behalf of racial justice. She put continuing pressure on her husband and others in the federal government to ease discrimination against blacks. She was also in part responsible for what was, symbolically at least, one of the most important events of the decade for American blacks. When the black opera singer Marian Anderson was refused permission in the spring of 1939 to give a concert in the auditorium of the Daughters of the American Revolution (Washington's only concert hall), Eleanor Roosevelt resigned from the organization and then (along with Interior Secretary Harold Ickes, another champion of racial equality) helped secure government permission for her to sing on the steps of the Lincoln Memorial. Anderson's Easter Sunday concert attracted 75,000 people and became, in effect, the first modern civil-rights demonstration.
The president himself made some important gestures to blacks as well. Unlike his Democratic predecessor, Woodrow Wilson, he did not move to increase government discrimination against blacks; oh the contrary, he worked to repeal certain particularly glaring racial restrictions within the federal government. He appointed a number of blacks to significant second-level positions in his administration, creating a network of officeholders that became knqwn as the "Black Cabinet." Roosevelt appointees such as Robert Weaver, William Hastie, and Mary McLeod Bethune consulted with one another frequently and served as an active lobby for the interests of their race. Blacks also benefited in significant though limited ways from New Deal relief programs. Eleanor Roosevelt, Harold Ickes, and Harry Hopkins all made efforts to ensure that such programs did not exclude blacks. By 1935, an estimated 30 percent of all blacks were receiving some form of government assistance. One result of all this was a historic change in black electoral behavior. As late as 1932, the great majority of American blacks were voting Republican, as they had since the Civil War. By 1936, more than 90 percent of them were voting Democratic— the beginnings of a political alliance that would en-dure for many decades.
Blacks supported Franklin Roosevelt because they knew he was not their enemy. And they supported him because the New Deal created relief agencies and other programs of public assistance that were of great economic importance to this particularly impoverished group. But they had few illusions that the New Deal represented a millennium in American race relations. The president was generally sympathetic to the plight of blacks, but he believed that other problems were far more pressing; he was never willing, therefore, to risk losing the support of Southern Democrats by becoming too much identified with the issue of race. Typical of his equivocal attitude was his harsh denunciation of lynching combined with his refusal to support legislation making lynching a federal crime. He declined as well to support efforts to enact legislation banning the poll tax, one of the most potent tools by which white Southerners kept blacks from voting.
Similarly, Roosevelt refused to use the relief agencies he was creating to challenge local patterns of discrimination. On the contrary, he permitted them to reinforce such patterns. The Civilian Conservation Corps established separate black camps. The NRA codes tolerated the widespread practice of paying blacks less than whites doing the same jobs. The FERA, the CWA, and other relief agencies permitted discriminatory practices in hiring and paying their workers. Blacks were largely excluded from employment in the TVA. The Federal Housing Administration refused to provide mortgages to blacks moving into white neighborhoods, and the first public housing projects financed by the federal government were racially segregated. The AAA and its successor agencies were almost entirely ineffectual in protecting the interests of black sharecroppers and tenant farmers, thousands of whom were evicted from their land. The New Deal was not often actively hostile to black Americans, and it did much—both directly and indirectly—to help them advance. But the Roosevelt years did not see American blacks emerge as a poterit interest group capable of seriously challenging the discriminatory forces arrayed against them. That emergence would await the development of a powerful movement among blacks themselves during and after World War II.
Nor were the 1930s years in which American women emerged as an interest group powerful enough to challenge the obstacles to female advancement. This was not because the New Deal was hostile to feminist aspirations; it was because those aspirations did not yet attract widespread enough support to make jt politically necessary for the administration to back them.
There were, to be sure, important symbolic gestures on behalf of women. Roosevelt appointed the first female member of the cabinet in the nation's history: Secretary of Labor Frances Perkins. He also named more than 100 other women to positions at lower levels of the federal bureaucracy; they created an active female network within the government and cooperated with one another in advancing causes of interest to women. Such appointments were in part a response to pressure from Eleanor Roosevelt, who was a committed advocate of women's rights and a champion of humanitarian causes. Mary Dewson, head of the Women's Division of the Democratic National Committee, was also influential in securing federal appointments for women as well as in increasing their role within the Democratic party. Several women received appointments to the federal judiciary. And one, Hattie Caraway of Arkansas, became the first woman ever elected to a full term in the U.S. Senate. (She was running to succeed her husband, who had died in office.)
But New Deal support for women operated within strict limits, partly because New Deal women themselves often had limited views of what was appropriate for their sex. Frances Perkins and many others in the administration emerged out of the old feminist tradition of the progressive era, which emphasized not so much sexual equality as special protections for women. Perkins herself had been instrumental in fighting for passage of various state laws safeguarding 'female workers. She opposed the National Woman's party and its goal of securing the Equal Rights Amendment because she feared the amendment would threaten the protective mechanisms she had helped secure.
The New Deal also supported the prevailing belief that in hard times women should withdraw from the workplace to open up more jobs for men. Frances Perkins herself spoke out against what she called the "pin-money worker"—the married woman working to earn extra money for the household. Such women, the secretary of labor said, were a "menace to society." New Deal relief agencies offered relatively little employment for women. The NRA sanctioned sexually discriminatory wage practices. The Social Security program excluded domestic servants, waitresses, and other predominantly female occupations.
As with blacks, so also with women: The New Deal was not actively hostile; in many ways, it was unprecedentedly supportive. It did, however, accept prevailing cultural norms. There was not yet sufficient political pressure from women themselves to persuade the administration to do otherwise.
The "broker state" approach to reform, therefore, provided important opportunities for some groups to advance their interests. But for other, less powerful but at least equally imperiled interests—not only blacks and women, but Hispanics, Native Americans, small farmers, small entrepreneurs, and many others—the New Deal offered relatively little. It did, however, help establish a pattern in American politics—individual interest groups mobilizing themselves to demand assistance from the government— that would govern the nation's public life for many decades.
The most frequent criticisms of the New Deal involve its failure genuinely to revive or reform the American economy. New Dealers never fully recognized the value of government spending as a vehicle for recovery, and their efforts along other lines never succeeded in ending the Depression. Unemployment remained high throughout the New Deal years; consumption, investment, and economic growth remained low. It was World War II, not the New Deal, that finally ended the crisis. Nor did the New Deal substantially alter the distribution of power within American capitalism; and it had only a small impact on the distribution of wealth among the American people. Large economic organizations continued to dominate the .American economy at the end of the New Deal; in many respects, in fact, their power was greater than it had been a decade before.
Nevertheless, the New Deal did have a number of important and lasting effects on both the behavior and the structure of the American economy. It may not have ended the Depression, but it created a large array of protections for various groups of citizens who suffered from the crisis, and it helped prevent the economy from decaying further. It may not have altered the face of capitalism, but it helped elevate new groups—workers, farmers, and others—to positions from which they could on occasion effectively challenge the power of the corporations. It increased the regulatory functions of the federal government in ways that helped stabilize previously troubled areas of the economy: the stock market, the banking system, among others. And although the New Dealers themselves did not fully realize it at the time, the administration helped establish the basis for new forms of federal fiscal policy, which would in the postwar years give the government a series of important tools for promoting and regulating economic growth.
The New Deal also created, the rudiments of the American welfare state, through its many relief programs and above all through the Social Security system. The conservative inhibitions New Dealers brought to this task ensured that the welfare system that ultimately emerged would be limited in its impact (at least in comparison with those of other industrial nations) and expensive and cumbersome to administer. But for all its limits, the new system marked a historic break with the nation's traditional reluctance to offer any public assistance whatever to indigent citizens.
The New Deal and American Politics
Perhaps the most dramatic effect of the New Deal was on the structure and behavior of American government arid politics. Franklin Roosevelt helped enhance the power of the federal government as a whole. By the end of the 1930s, state and local governments were clearly of secondary importance to the government in Washington; in the past, that had not always been clear. Roosevelt also established the presidency as the preeminent center of authority within the federal government. Never again would Congress be able to wield as much independent power as it had in the years before the New Deal. And never again would it have the same control over presidential authority. The expansion of presidential authority would lead, in later eras, to several major political crises as well as to important social and diplomatic accomplishments.
Finally, the New Deal had a profound impact on how the American people defined themselves politically. It took a weak, divided Democratic party, which had been a minority force in American politics for many decades, and turned it into a mighty coalition that would dominate national party competition for more than forty years. It turned the attention of many voters away from the cultural issues that had preoccupied them in the 1920s and awakened in them an interest in economic matters of direct importance to their lives. And it created among the American people at large greatly increased expectations of government—expectations that the New Deal itself did not always fulfill but that survived to become the basis of new liberal crusades in the postwar era.
WHERE HISTORIANS DISAGREE
The New Deal
For many years, the debate among historians over the nature of the New Deal seemed to mirror the debate among Americans in the 1930s over the achievements of the Roosevelt administration. Historians tended to debate the question of whether the New Deal was a good thing or a bad thing. Did it go too far in expanding the size and power of the government? Did it go far enough in helping the dispossessed and reforming capitalism? Was it a valuable progressive moment in the development of modern government or an example of squandered opportunities and conservative retrenchment?
The conservative critique of the New Deal has received relatively little scholarly expression. Edgar Robinson, in The Roosevelt Leadership (1955), and John T, Flynn, in The Roosevelt Myth (1956), attacked Roosevelt as both a radical and a despot; but few historians have ever taken such charges seriously. By far the dominant view of the New Deal among scholars has been an approving, liberal interpretation—one that has appeared in various forms but rests on certain basic common assumptions. First, liberals maintain, the New Deal was not a radical, socialistic, or communistic program. It was firmly within the mainstream of the American political tradition. Second, they argue, the New Deal represented a powerful response by the government to glaring social needs that had long gone unmet. And third, it marked a decisive repudiation of old orthodoxies about the proper role of government, business, labor, and other groups in society.
The leading voice in the liberal chorus has long been Arthur M. Schlesinger, Jr., who argued in the three volumes of The Age of Roosevelt (1957-1960)—a work still to be completed—that the New Deal marked a continuation of the long struggle between public power and private interests but that Roosevelt had moved that struggle to a new level. The unrestrained power of the business community was finally confronted with an effective challenge, and what emerged was a system of reformed capitalism, with far more protection for workers, farmers, consumers, and others than in the past.
Other liberals have gone further. Carl Degler, in Out of Our Past (1959), called the Roosevelt years a "Third American Revolution" (the first two being the Revolution of 1776 and the Civil War). It marked, he claimed, "the crossing of a divide from which, it would seem, there could be no turning back." Eric Goldman, in Rendezvous with Destiny (1952) and later works, called the New Deal the culmination of a "half-century of revolution." Although Roosevelt drew heavily on the traditions of the progressive past, "there was something more to New Deal liberalism" because it included unprecedented new departures such as Social Security.
Richard Hofstadter offered a more skeptical assessment of the New Deal in the 1950s but one that fell largely within the liberal framework. In The Age of Reform (1955), he emphasized the New Deal's discontinuities with the past. It was, he said, a "drastic new departure . . . different from anything that had yet happened in the United States"— a program that even many old progressives found alarming and opposed. The crucial change, Hofstadter argued, was in the New Deal's conception of the purpose of liberal reform. The New Deal had largely abandoned the old progressive concern about reshaping the corporate world— what Hofstadter called "entrepreneurial" reform. Instead, New Deal liberalism took on a "social-democratic tinge that had never before been present in American reform movements" and raised a new set of issues to prominence: "social security, unemployment insurance, wages and hours, and housing."
Hofstadter not only echoed the view of other liberals that the New Deal marked an important break with the past; he also gave early expression to some of the criticisms that historians in the 1960s would begin to offer. In The American Political Tradition (1948), and again in The Age of Reform, he complained that the New Deal's fragmented, "pragmatic" approach had lacked a central, guiding philosophy. James MacGregor Burns, in Roosevelt: The Lion and the Fox (1956), raised other objections: that Roosevelt's wily political methods had often led him away from the proper goals of reform; that he had failed to make full use of his potential as a leader and had accommodated himself unnecessarily to existing patterns of political power. The first systematic "revisionist" interpretation of the New Deal came in 1963, in William Leuchtenburg's Franklin D. Roosevelt and the New Deal. Leuchtenburg was a generally sympathetic critic, arguing that most of the limitations of the New Deal were a result of the restrictions imposed on Roosevelt by the political and ideological realities of his time—that the New Deal probably could not have done much more than it did. Nevertheless, Leuchtenburg openly challenged earlier views of the New Deal as a revolution in social policy. He was able to muster only enough enthusiasm to call it a "halfway revolution," one that enhanced the positions of some previously disadvantaged groups (notably farmers and workers) but did little or nothing for many others (including blacks, sharecroppers, and the urban poor). Ellis Hawley augmented these moderate criticisms of the Roosevelt record in The New Deal and the Problem of Monopoly (1966). In examining 1930s economic policies, Hawley challenged liberal assumptions that the New Deal acted as the foe of private business interests. On the contrary, he argued, New Deal efforts were in many cases designed to enhance the position of private entrepreneurs—even, at times, at the expense of some of the liberal, reform goals that administration officials espoused.
Other historians in the 1960s, writing from the perspective of the New Left, expressed much harsher criticisms of the New Deal. Barton Bernstein, in a 1968 essay, compiled a dreary chronicle of missed opportunities, inadequate responses to problems, and damaging New Deal initiatives. The Roosevelt administration may have saved capitalism, Bernstein charged, but it failed to help—and in many ways actually harmed— those groups most in need of assistance. Paul Conkin, in The New Deal (1967), similarly chastised the government of the 1930s for its policies toward marginal farmers, its failure to institute meaningful tax reform, and its excessive generosity toward certain business interests. Even the most important progressive measures of the New Deal—the Social Security Act, for example—were marked by inadequate and regressive funding. And Howard Zinn, in an essay in 1966, harshly criticized the New Deal for working actively to preserve the worst evils of capitalism.
The New Left attack on the New Deal never developed very far beyond these preliminary statements. Instead, by the 1970s and 1980s, scholars seemed largely to have accepted the revised liberal view: that the New Deal was a significant (and most agree valuable) chapter in the history of reform but one that worked within rigid, occasionally crippling limits. Much of the recent work on the New Deal, therefore, has been less interested in the question of whether it was a "conservative" of "revolutionary" phenomenon than in the question of the constraints within which it was operating. The sociologist Theda Skocpol, in an important series of articles, has emphasized the issue of "state capacity" as an important New Deal constraint; ambitious reform ideas often foundered, she argued because of the absence of a government bureaucracy with sufficient strength and expertise to administer them. James T. Patterson, Barry Karl, and others have emphasized the political constraints the New Deal encountered. Both in Congress and among the public at large, conservative inhibitions about government remained strong; and the New Deal was as much a product of the pressures of its conservative opponents as of its liberal supporters. Frank Freidel, Ellis Hawley, Herbert Stein, and many others point as well to the ideological constraints affecting Franklin Roosevelt and his supporters. Even the most advanced New Dealers harbored great suspicions about excessive federal power, expansive welfare systems, and large-scale government spending.
The phrase "New Deal liberalism" has come, in the postwar era to seem synonymous with modern ideas of aggressive federal management of the economy, elaborate welfare systems, a powerful bureaucracy, and large-scale government spending. The "Reagan revolution" of the 1980s often portrayed itself as a reaction to the "legacy of the New Deal." Many historians of the New Deal, however, would argue that the modern idea of "New Deal liberalism" bears only a limited relationship to the ideas that New Dealers themselves embraced. The liberal accomplishments of the 1930s can be understood only in the context of their own time; later liberal efforts drew from that legacy but also altered it to fit the needs and the assumptions of a very different era.
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