The Second New Deal (AQA A-Level History): Revision Notes

The Second New Deal

Historical context and significance

Many historians argue that Roosevelt's New Deal adopted a more radical character after 1935. During this period, Roosevelt appeared more willing to support measures that favoured poorer Americans, even when this meant challenging wealthier interests. The measures introduced between April and August 1935 — collectively known as the Second New Deal — demonstrated this shift, particularly through the introduction of social security and the legalisation of labour unions.

Reasons for the Second New Deal

Roosevelt had several motivations for launching the Second New Deal in 1935.

Congressional pressure for action

The newly elected Congress in 1935 had a strong appetite for legislative action. Roosevelt recognised this momentum and wished to maintain his position as the driving force behind New Deal policy-making. By taking the initiative in preparing legislation, he could shape the reform agenda rather than responding to Congressional proposals.

Supreme Court opposition

Roosevelt grew increasingly frustrated with the Supreme Court, which had begun striking down elements of New Deal legislation. The Court's opposition led Roosevelt to believe it was working against him personally. This judicial resistance pushed him towards adopting a more radical outlook, as he sought alternative approaches to achieving reform that might survive legal challenge.

Business hostility

Roosevelt faced mounting opposition from wealthy Americans and large corporations, who increasingly resisted his policies. His frustration intensified in May 1935 when the US Chamber of Commerce publicly attacked his measures. Roosevelt had believed his election mandate was to rescue American business from the Depression, and he felt betrayed by the continued lack of support from the business community for his efforts.

Works Progress Administration (April 1935)

Employment and wages

The Works Progress Administration recruited workers for public works projects across the nation. At its height, the WPA employed approximately 2 million people simultaneously. By 1941, one-fifth of the American workforce had found employment through the scheme. Workers received wages of approximately $52 per month — a rate that exceeded any relief payment but remained below typical industrial wages.

Scope and limitations

The WPA operated under certain restrictions. It could not compete with private firms for contracts or construct private housing. Nevertheless, the administration undertook substantial infrastructure development, building 1,000 airport landing fields, 8,000 schools and hospitals, and 12,000 playgrounds.

Major projects

Despite its official limitations on large-scale construction, the WPA became responsible for several major engineering achievements. These included cutting the Lincoln Tunnel, which connected Manhattan Island to New Jersey, and constructing Fort Knox in Kentucky.

Wagner-Connery National Labor Relations Act (July 1935)

Roosevelt's reluctance

Roosevelt approached labour relations legislation with considerable caution. Several factors explained his hesitation. Labour unions faced widespread mistrust in the USA, particularly among conservative politicians such as the Southern Democrats, whose Congressional support Roosevelt needed. Additionally, Roosevelt had no desire to position himself as a champion of organised labour, fearing this would further antagonise big business, which already viewed unions with hostility.

Provisions of the Act

The Wagner Act granted workers the right to collective bargaining through unions of their choosing. Workers could select their union through a secret ballot. A new three-member National Labor Relations Board was established to ensure fair treatment. The Act prohibited employers from resorting to unfair practices, specifically outlawing discrimination against union members.

Historical significance

The Wagner Act represented the first legislation to effectively grant unions legal rights. It marked a long-term commitment by the federal government to play an active role in labour relations. However, Roosevelt remained uncomfortable with this development and preferred to adopt a passive stance regarding labour matters going forward.

Social Security Act (August 1935)

Background and context

State provision for social security before 1935 had been wholly inadequate. For example, only Wisconsin offered any unemployment benefit, which former employers paid as a disincentive to dismissing workers. Roosevelt had long supported a federal social security system, though his eventual proposal proved both conservative and limited in scope. The proposal disappointed critics like Townsend, whose popularity concerned Roosevelt and many in Congress.

Structure and funding

The Social Security Act established the first federal measure providing direct assistance as a worker's right, building a foundation for future expansion. The Act created old-age pensions funded through contributions from both employers and employees. Unemployment insurance would be financed through payroll taxes levied on employers and employees. Whilst the federal government ran the pension programme, individual states retained control over unemployment insurance administration.

Benefits and limitations

The Act provided inadequate support for those in poverty. Pensions ranged from a minimum of $10 to a maximum of $85 per month, calculated according to how much recipients had previously contributed to the scheme. Crucially, pension payments would not begin until 1940, meaning everyone receiving them would have paid something into the system. Unemployment benefit reached a maximum of $18 per week for only sixteen weeks.

Assessment

Although the Social Security Act contained serious flaws, it represented a major departure from American governmental tradition. Never before had a direct national benefits system existed. However, it is important to recognise that Roosevelt refused to allow general taxes to subsidise the system. The scheme had to be self-financing. Recipients had to pay into the system. Pensions were not paid at a flat rate but calculated according to prior worker contributions. Unemployment benefits remained low and available for only a limited period.

The Banking Act (August 1935)

The Banking Act aimed to place banking under federal government control. Marriner Eccles, Governor of the Federal Reserve Board, believed that Wall Street exercised too much power over national finance and sought to repeal the 1913 Federal Reserve Act, which governed the American banking system. The Act transferred control of banking from private banks to central government, shifting the centre of financial management from New York to Washington.

Expansion of government role

The Second New Deal brought substantial expansion of federal, state and local government responsibilities. Several new developments emerged:

• The banking system underwent centralisation under federal control
• Labour unions received legal recognition and protection for the first time
• The Social Security Act created the first national benefits system, though states operated different components with varying approaches
• Existing policies, particularly the WPA, received further development to support both relief and economic recovery