Departing from the failed economic planning between the federal government and the private sector in the First New Deal, Arthur Schlesinger Jr. and other historians have claimed that the New Deal moved to a distinct second phase. There was the call to restore a competitive economy with social responsibilities by Judge Louis Brandeis and his followers, coupled with the influence of the economic school of John Maynard Keynes- that government deficit spending could prime the pump.
Emergency Relief Appropriation Act
Believing that the private sector could not provide jobs to every able-bodied individual for the indeterminate future, Franklin Roosevelt and the designers of the Emergency Relief Appropriation Act thought that government should step in and supply more employment. Roosevelt wanted the projects in this act to be permanently useful, labor intensive, pay a "security wage" that was larger than the dole but less than private jobs, and not compete with the private sector.
The agencies created from this act (signed into law April 18, 1935) were:
- Rural Electrification Administration (REA)- brought electricity to rural areas.
- National Youth Administration (NYA)- gave part-time jobs to needy high school and college students.
- Resettlement Administration- applied urban planning in depressed areas.
- Works Progress Administration (WPA)- conducted public work projects from highways to the arts.
The projects overseen by these agencies were meant to give short-term security to workers until the private sector could provide enough jobs.
Social Security
Long-term security would be addressed by the Social Security Act, passed in August of 1935. The idea of old-age insurance was nothing new, dating back to the Progressive Era. But it came to the fore in 1933 thanks to Dr. Francis E. Townsend. His plan called for monthly payments of $200 to all persons over the age of sixty who agreed to retire and spend the money in the month it was received. It would be paid for by a 2% value-added tax on products. The radical plan became a popular movement, sprouting "Townsend Clubs" across the country.
The Roosevelt administration doused the movement with a more conservative and workable plan. The Social Security Act established a system of old-age insurance funded by a tax on workers' wages and a tax on employers. The act also taxed employers for unemployment benefits, and it contributed to states' funds in aiding dependent mothers and children, and the disabled. Over time, Social Security would expand its coverage, becoming the largest federal expenditure by the 1990's.
Wagner National Labor Relations Act
Long-term security was also extended to labor through the National Labor Relations Act of 1935. According to historian David Kennedy, the act only provided a skeletal legal framework guaranteeing workers' right to organize. It charged the National Labor Relations Board to supervise union elections. It prohibited employers from: discriminating against union members, refusing to bargain, and sponsoring company unions. However, these rights all depended on the workers' inititive to organize themselves.
Despite its weaknesses, the Wagner Act had a great impact. It was a factor in what Kennedy described as the "historic organizing drive that rearranged the balance of power between American capital and labor." Union membership grew from 3 million in 1933, to 8 million by 1940, about 23% of the non-agricultural workforce. The NLRB's power to peacefully settle disputes reduced union violence. Wages increased for the worker in organized industries.
Although the Second New Deal had other legislation- the Banking Act, Public Utilities Holding Companies Act, Wealth Tax Act- the Emergency Relief Appropriation, Social Security, and Wagner Acts had the biggest influence. Providing a measure of economic security to sufferers of the Great Depression, the Second New Deal also set the groundwork for the economic safety net for the following decades.
Sources
Bailyn, Bernard et al eds, The Great Republic, D.C. Heath: Lexington, MA, 1985.
Kennedy, David, Freedom From Fear, Oxford: New York, 1999.
Schlesinger, Arthur Jr., The Politics of Upheaval, Mariner: New York, 2003.
