The Great Depression (1920–1940): The Second New Deal: 1935–1938

The Social Security Act

Congress also passed the Social Security Act in 1935, creating a federal retiree pension system for many workers, funded by a double tax on every working American’s paycheck. The act also created an unemployment insurance plan to provide temporary assistance to those who were out of work, while also making funds available to the blind and physically disabled. Furthermore, Congress agreed to match federal dollars for every state dollar allocated to workers’ compensation funds.

Despite its vocal critics, the Social Security Act had an enormous impact on Great Depression–era Americans and future generations. It brought the most sweeping change of the Second New Deal legislation as it not only gave income to some of the most destitute in society but also forever changed the way Americans thought about work and retirement. The paycheck taxes were advertised as a personal retirement savings plan even though those tax dollars were actually being redistributed as soon as they were collected. Nevertheless, retirement came to be seen as something every worker could enjoy. Still, many criticized the Social Security system for not extending pensions to enough people, particularly unskilled black and women laborers.

Legislation for Farmers and Homeowners

The Second New Deal provided even more assistance to farmers. After the Supreme Court declared the Agricultural Adjustment Administration unconstitutional in 1936, Democrats immediately responded with the passage of the Soil Conservation and Domestic Allotment Act that same year. This act continued to subsidize farmers to curb overproduction and also paid them either to plant soil-enriching crops (instead of wheat) or to not grow any crops at all. In 1938, Congress also created a Second Agricultural Adjustment Administration to reduce crop acreage. Meanwhile, the United States Housing Authority(USHA), created by Congress in 1937, gave assistance to American urbanites, building new houses for over half a million Americans.

The Indian Reorganization Act

Native Americans also received federal assistance during Roosevelt’s second term. In 1934, Congress passed the Indian Reorganization Act(IRA) to promote tribal organization and give federal recognition to tribal governments. The IRA also reversed the 1887 Dawes Severalty Act, changing the relationship between various tribes and the federal government. The Dawes Act had weakened tribal affiliations because it stated that only individual Native Americans—not tribal councils—could own land.

Despite Roosevelt’s efforts to alleviate Native American suffering, however, the IRA was only partially successful. Some tribes had difficulty understanding the terms of the new treaty, while others, such as the Navajo in the Southwest, flat-out rejected it. Many tribes saw more immediate benefit from relief programs such as the Civilian Conservation Corps, Public Works Administration, and Works Progress Administration, in which nearly 100,000 young Native American men participated.

Labor Reforms

These labor reforms had a lasting effect on America. The Wagner Act paved the way for more effective collective bargaining and striking, and within a year, fledgling labor unions had I-line workers in the General Motors automobile factory, for example, used the Wagner Act to initiate a series of sit-down strikes, in which workers would sit at their stations and refuse to leave, preventing the company from hiring new, non-union “scab” workers to fill in for the strikers. By 1937, General Motors had recognized its workers’ right to organize.