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The Great Depression (1920–1940)

History SparkNotes

The Demise of the New Deal: 1935–1939

The Second New Deal: 1935–1938

Study Questions & Essay Topics

1936 Butler v. United States ruling
1937 Roosevelt initiates court-packing scheme Roosevelt Recession begins
1939 Congress passes the Hatch Act
Key People
Franklin Delano Roosevelt -  32nd U.S. president; attempted to fill Supreme Court with like-minded justices to ensure longevity of New Deal policies; brought on brief economic recession

A Weakened New Deal

By 1935, New Deal critics were becoming more numerous and vocal. Congressmen, including even some Democrats, had overcome the initial panic and were becoming more fiscally conservative as Franklin Delano Roosevelt’s deficit spending soared. More important, aging, conservative appointees dominated the Supreme Court and had begun to strike down several key laws of the First New Deal.

In the 1935 Schechter v. United States ruling, for example, a majority of justices declared that the National Recovery Act was unconstitutional. They argued that the act gave too much power to the president and was an attempt to control intrastate commerce. The following year, justices also struck down the Agricultural Adjustment Administration in Butler v. United States on the grounds that it was unconstitutional and tried to exert federal control of agricultural production.

Roosevelt’s Court-Packing Scheme

Roosevelt believed that the National Recovery Act and the Agricultural Adjustment Administration were crucial to reviving the American economy and feared that any more conservative Supreme Court rulings would cripple or even kill New Deal policy entirely. In 1937, to prevent this from happening, the president petitioned Congress to alter the makeup of the Supreme Court on the pretense that the justices, old age was affecting their ability to work and concentrate. Roosevelt asked for the power to appoint as many as six new justices, bringing the total to fifteen, and to replace justices over the age of seventy. The true aim of the request was obvious: it would enable Roosevelt to effectively stack the deck to ensure that only pro–New Dealers would sit on the Court.

The court-packing scheme backfired. Rather than win over Democrats and New Dealers in Congress, Roosevelt shocked supporters with his attempt at misusing his executive powers. The president’s blatant disregard for the cherished separation of powers stunned even the American people. Roosevelt repeatedly denied charges that he was trying to bend the entire federal government to his will and defended his belief that aging justices were often incapable of performing their duties. The court-packing debate dragged on for several months before Congress and Roosevelt reached a compromise. Congress made minor reforms in the lower courts but left the Supreme Court untouched.

Consequences of the Court-Packing Scheme

The court-packing scheme took a severe toll on Roosevelt’s popularity and marked the beginning of the end of the New Deal. Politicians and regular Americans alike were keenly aware that the federal government under the tight control of a single individual would be nothing more than a dictatorship, no matter how benevolent or well intentioned the leader happened to be. Roosevelt’s clumsy attempts to disguise his intentions had the effect only of making him look guilty. As the public grew suspicious of “dictator” Roosevelt, fellow Democrats in Congress began to vote more conservatively, and the chances of any more significant New Deal legislation being passed became slim.

Ironically, the court-packing scheme may have helped Roosevelt in one way. Supreme Court Justice Owen Roberts, who had notoriously struck down New Deal laws in the past, mysteriously began to vote in favor of the Wagner Act and the Social Security Act after Roosevelt announced his plan to replace six justices. Historians are still uncertain as to why Roberts suddenly looked favorably upon the New Deal, but few believe it was mere coincidence.

The Roosevelt Recession

In 1937, Roosevelt began to scale back deficit spending, because he believed that the worst of the Great Depression had passed and because he was receiving pressure from conservatives in Congress (and even from ardent New Dealers in his own cabinet). The size of the Works Progress Administration, for example, was severely reduced, as were agricultural subsidies.

This decision to cut back spending turned out to be premature, however, as the economy buckled again, resulting in what became known as the Roosevelt Recession. The stock market crashed for a second time in 1937, and the price of consumer goods dropped significantly. Contrary to conservative beliefs, the economy simply had not pulled far enough out of the depression to survive on its own. The embattled Roosevelt only made himself look worse by trying to place the blame on spendthrift business leaders. The American people were not convinced, and as a result, Democrats lost a significant number of seats in the House and Senate in the 1938 congressional elections. This return of Republican power effectively killed the New Deal.

The Hatch Act

Republicans in Congress further weakened Roosevelt’s executive powers with the Hatch Act of 1939. The act forbade most civil servants from participating in political campaigns and public office holders (i.e., Roosevelt and New Dealers) from using federal dollars to fund their reelection campaigns. The bill also made it illegal for Americans who received federal assistance to donate money to politicians. Conservatives hoped that these measures would divorce the functions of government from the campaign frenzy and ultimately dislodge entrenched New Dealers who preyed on a desperate public for votes.

No End to the Depression

Despite the numerous positive effects that the New Deal had, it failed to end the Great Depression. Millions of Americans were still hungry, homeless, and without jobs as late as December 1941, when the United States entered World War II. Many historians and economists have suggested that the New Deal would have been more successful if Roosevelt had put a greater amount of money into the economy, but this conclusion is debatable. Only after the surge in demand for war-related goods such as munitions, ships, tanks, and airplanes did the economy finally right itself and begin to grow.

The Legacy of the New Deal

The New Deal was a crucial turning point in the history of the U.S. government. Politics had never before been so involved in—or exerted more control over—the daily lives of regular Americans as it was during Roosevelt’s terms in office in the 1930s. Critics lamented that the United States had transformed itself into a welfare state. Indeed, the budget deficit increased dramatically every year, and the national debt more than doubled in just ten years.

However, the New Deal did in fact help millions of Americans survive the Great Depression. Unlike his predecessor, Herbert Hoover, Roosevelt tried to directly help as many people as the conservatives in Congress and the Supreme Court would allow him to. His New Deal legislation helped create new jobs, build houses and shelters for the homeless, and distribute food to the hungry. New Deal policy also raised agricultural commodity prices, put banks back on solid footing, and greatly improved the national infrastructure. Moreover, the New Deal created a number of long-standing government institutions, such as Social Security, that we still have today.

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