Roosevelt and Reform;

Roosevelt and Reform;

Roosevelt and Reform
How did the New Deal reform American life?
In 1935, the focus of the New Deal shifted from relief and recovery to reform. During his fi rst two years in office, FDR had concentrated on fighting the Great

Depression by shoring up the sagging American economy. Only a few new agencies, notably TVA, sought to make permanent changes in national life. Roosevelt was

developing a “broker-state” concept of government, responding to pressures from organized elements such as corporations, labor unions, and farm groups while ignoring

the needs and wants of the dispossessed who had no clear political voice. The early New Deal tried to assist bankers and industrialists, large farmers, and members of

the labor unions, but it did little to help unskilled workers and sharecroppers. The continuing depression and high unemployment began to build pressure for more

sweeping changes. Roosevelt faced the choice of either providing more radical programs, ones designed to end historical inequities in American life, or deferring to

others who put forth solutions to the nation’s ills. Bolstered by an impressive Democratic victory in the 1934 congressional elections, Roosevelt responded by

embracing a reform program that marked the climax of the New Deal.

Challenges to FDR
The signs of discontent were visible everywhere by 1935. In the upper Midwest, progressives and agrarian radicals, led by Minnesota governor Floyd Olson, were calling

for government action to raise farm and labor income. “I am a radical in the sense that I want a definite change in the system,” Olson declared. “I am not satisfied

with patching.” Upton Sinclair, the muckraking novelist, nearly won the governorship of California in 1934 running on the slogan “End poverty in California,” while in

the East a violent strike in the textile industry shut down plants in twenty states. The most serious challenge to Roosevelt’s leadership, however, came from three

demagogues who captured national attention in the mid-1930s. The first was Father Charles Coughlin, a Roman Catholic priest from Detroit, who had originally supported

FDR. Speaking to a rapt nationwide radio audience in his rich, melodious voice, Coughlin appealed to the discontented with a strange mixture of crank monetary schemes

and anti-Semitism. He broke with the New Deal in late 1934, denouncing it as the “Pagan Deal,” and founded his own National Union for Social Justice. Increasingly

vitriolic, he called for monetary inflation and the nationalization of the banking system in his weekly radio sermons to an audience of more than thirty million. A

more benign but equally threatening figure appeared in California. Francis Townsend, a 67-year-old physician, came forward in 1934 with a scheme to assist the elderly,

who were sufferring greatly during the depression. The Townsend Plan proposed giving everyone over the age of 60 a monthly pension of $200 with the proviso that it

must be spent within thirty days. Although designed less as an old-age pension plan than as a way to stimulate the economy, the proposal understandably had its

greatest appeal among the elderly. They embraced it as a holy cause, joining Townsend Clubs across the country. Despite the criticism from economists that the plan

would transfer more than half the national income to less than 10 percent of the population, more than ten million people signed petitions endorsing the Townsend Plan,

and few politicians dared oppose it. The third new voice of protest was that of Huey Long, the flamboyant senator from Louisiana. Like Coughlin, an original supporter

of the New Deal, Long turned against FDR and by 1935 had become a major political threat to the president. A shrewd, ruthless, yet witty man, Long had a remarkable

ability to mock those in power. The King fish (a nickname he borrowed from Amos ’n Andy) announced a nationwide “Share the Wealth” movement in 1934. He spoke grandly

of taking from the rich to make “every man a king,” guaranteeing each American a home worth $5,000 and an annual income of $2,500. To finance the plan, Long advocated

seizing all fortunes of more than $5 million and levying a tax of 100 percent on incomes greater than $1 million. By 1935, Long claimed to have founded twenty-seven

thousand Share the Wealth clubs and had a mailing list of more than seven million people, including workers, farmers, college professors, and even bank presidents.

Threatening to run as a third party candidate in 1936, Long generated fear among Democratic leaders that he might attract three to four million votes, possibly enough

to swing the election to the Republicans. Although an assassin killed Huey Long in Louisiana in late 1935, his popularity showed the need for the New Deal to do more

to help those still in distress.

Social Security
When the new Congress met in January 1935, Roosevelt was ready to support a series of reform measures designed to take the edge off national dissent. The recent

elections had increased Democratic congressional strength significantly, with the Republicans losing thirteen seats in the House and retaining less than one-third of

the Senate. Many of the Democrats were to the left of Roosevelt, favoring increased spending and more sweeping federal programs. “Boys—this is our hour,” exulted Harry

Hopkins. “We got to get everything we want . . . now or never.” Congress quickly appropriated $4.8 billion for the WPA and was prepared to enact virtually any proposal

that Roosevelt offered. The most significant reform enacted in 1935 was the Social Security Act. The Townsend movement had reminded Americans that the United States,

alone among modern industrial nations, had never developed a welfare system to aid the aged, the disabled, and the unemployed. A cabinet committee began studying the

problem in 1934, and President Roosevelt sent its recommendations to Congress the following January. The proposed legislation had three major parts. First, it provided

for old-age pensions financed equally by a tax on employers and workers, without government contributions. In addition, it gave states federal matching funds to

provide modest pensions for the destitute elderly. Second, it set up a system of unemployment compensation on a federal-state basis, with employers paying a payroll

tax and with each state setting benefit levels and administering the program locally. Finally, it provided for direct federal grants to the states, on a matching

basis, for welfare payments to the blind, handicapped, needy elderly, and dependent children. Although there was criticism from conservatives who mourned the passing

of traditional American reliance on self-help and individualism, the chief objections came from those who argued that the administration’s measure did not go far

enough. Democratic leaders, however, defeated efforts to incorporate Townsend’s proposal for $200 monthly pensions and increases in unemployment benefits. Congress

then passed the Social Security Act by overwhelming margins. Critics began to point out its shortcomings, as they have ever since. The old-age pensions were paltry.

Designed to begin in 1942, they ranged from $10 to $85 a month. Not everyone was covered; many of those who most needed protection in their old age, such as farmers

and domestic servants, were not included. And all participants, regardless of income or economic status, paid in at the same rate, with no supplement from the general

revenue. The trust fund also took out of circulation money that was desperately needed to stimulate the economy in the 1930s. Other portions of the act were equally

open to question. The cumbersome unemployment system offered no aid to those currently out of work, only to people who would lose their jobs in the future, and the

benefits (depending on the state) ranged from barely adequate to substandard. The outright grants to the handicapped and dependent children were minute in terms of the

need; in New York City, for example, a blind person received only $5 a week in 1937. The conservative nature of the legislation reflected Roosevelt’s own fiscal

orthodoxy, but even more it was a product of his political realism. Despite the severity of the depression, he realized that establishing a system of federal welfare

went against deeply rooted American convictions. He insisted on a tax on participants to give those involved in the pension plan a vested interest in Social Security.

He wanted them to feel they had earned their pensions and that in the future no one would dare take them away. “With those taxes in there,” he explained privately, “no

damned politician can ever scrap my social security program.” Above all, FDR had succeeded in establishing the principle of government responsibility for the aged, the

handicapped, and the unemployed. Whatever the defects of the legislation, Social Security stood as a landmark of the New Deal, creating a system to provide for the

welfare of individuals in a complex industrial society.

Labor Legislation
The other major reform achievement in 1935 was passage of the National Labor Relations Act, or the Wagner Act, as it became known. Senator Robert Wagner of New York

introduced legislation in 1934 to outlaw company unions and other unfair labor practices in order to ensure collective bargaining for unions. FDR, who had little

knowledge of labor-management relations and apparently little interest in them, opposed the bill. In 1935, however, Wagner began to gather broad support for his

measure, which passed the Senate in May with only twelve opposing votes, and the president, seeing passage as likely, gave it his approval. The bill moved quickly

through the House, and Roosevelt signed it into law in July.
The Wagner Act created a National Labor Relations Board to preside over labor-management relations and enable unions to engage in collective bargaining with federal

support. The act outlawed a variety of union-busting tactics and in its key provision decreed that whenever the majority of a company’s workers voted for a union to

represent them, management would be compelled to negotiate with the union on all matters of wages, hours, and working conditions. With this unprecedented government

sanction, labor unions could now recruit the large number of unorganized workers throughout the country. The Wagner Act, the most far-reaching of all New Deal

measures, led to the revitalization of the American labor movement and a permanent change in labor-management relations. Three years later, Congress passed a second

law that had a lasting impact on American workers—the Fair Labor Standards Act. A long-sought goal of the New Deal, this measure aimed to establish both minimum wages

and maximum hours of work per week. Since labor unions usually were able to negotiate adequate levels of pay and work for their members, the act was aimed at

unorganized workers and met with only grudging support from unions. Southern conservatives opposed it strongly, both on ideological grounds (it meant still greater

government involvement in private enterprise) and because it threatened the low southern wages that had attracted northern industry since Reconstruction. Roosevelt

finally succeeded in winning passage of the Fair Labor Standards Act in 1938, but only at the cost of exempting many key industries from its coverage. The act provided

for a minimum wage of 40 cents an hour by 1940 and a standard workweek of forty hours, with time and a half for overtime. Despite its loopholes, the legislation did

lead to pay raises for the twelve million workers earning less than 40 cents an hour. More important, like Social Security it set up a system—however inadequate—that

Congress could build on in the future to reach more generous and humane levels. Other New Deal reform measures met with a mixed reception in Congress. Proposals to

break up the huge public utility holding companies created by promoters in the 1920s and to levy a “soak the rich” tax on the wealthy stirred up bitter debate, and

these bills were passed only in greatly weakened form. Roosevelt was more successful in passing a banking act that made important reforms in the Federal Reserve

System. He also gained congressional approval of the Rural Electrification Administration (REA), which helped bring electricity to the 90 percent of American farms

that still did not have it in the 1930s. All in all, Roosevelt’s record in reform was similar to that in relief and recovery—modest success but no sweeping victory. A

cautious and pragmatic leader, FDR moved far enough to the left to overcome the challenges of Coughlin, Townsend, and Long without venturing too far from the

mainstream. His reforms improved the quality of life in America significantly, but he made no effort to correct all the nation’s social and economic wrongs.


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