694 Chapter 26 The New Deal: 1933–1941
get money but not what to do with it.) Collectively
they represented a threat to Roosevelt; their success
helped to make the president see that he must move
boldly to restore good times or face serious political
trouble in 1936.
Political imperatives had much to do with
Roosevelt’s decisions, and the influence of Justice
Brandeis and his disciples, notably Felix Frankfurter, was
great. They urged Roosevelt to abandon his probusiness
programs, especially the NRA, and stress restoring com-
petition and taxing corporations more heavily. The fact
that most businessmen were turning away from him
encouraged the president to accept this advice; so did
the Supreme Court’s decision in Schecter v. United States
(May 1935), which declared the National Industrial
Recovery Act unconstitutional. (The case involved the
provisions of the NRA Live Poultry Code; the Court
voided the act on the grounds that Congress had dele-
gated too much legislative power to the code authorities
and that the defendants, four brothers engaged in
slaughtering chickens in New York City, were not
engaged in interstate commerce.)
Coughlin,A Third Party (1936)at
http://www.myhistorylab.com
The Second New Deal
Existing laws had failed to end the Depression.
Conservatives roundly denounced Roosevelt, and
extremists were luring away some of his sup-
porters. Voters, heartened by the partial success
of early New Deal measures, were clamoring
for further reforms. But the Supreme Court
had declared many key New Deal measures
unconstitutional. For these many reasons,
Roosevelt, in June 1935, launched what histo-
rians call the Second New Deal.
There followed the “second hundred
days,” one of the most productive periods in
the history of American legislation. The
National Labor Relations Act—commonly
known as the Wagner Act—restored the labor
guarantees wiped out by the Schechterdeci-
sion. It gave workers the right to bargain col-
lectively and prohibited employers from
interfering with union organizational activities
in their factories. A National Labor Relations
Board (NLRB) was established to supervise
plant elections and designate successful unions
as official bargaining agents when a majority
of the workers approved. It was difficult to
force some big corporations to bargain “in
good faith,” as the law required, but the
NLRB could conduct investigations of
employer practices and issue cease and desist
orders when “unfair” activities came to light.
ReadtheDocumentTheSocial Security Actof August 1935 set up
a system of old-age insurance, financed partly by a
tax on wages (paid by workers) and partly by a tax
on payrolls (paid by employers). It created a state-
federal system of unemployment insurance, simi-
larly financed. Liberal critics considered this Social
Security system inadequate because it did not cover
agricultural workers, domestics, self-employed per-
sons, and some other groups particularly in need of
its benefits. Health insurance was not included, and
because the size of pensions depended on the
amount earned, the lowest-paid workers could not
count on much support after reaching sixty-five.
Yet the law was of major significance. Over the
years the pension payments were increased and the
classes of workers covered expanded.
The Rural Electrification Administration (REA),
created by executive order, also began to function
during this remarkable period. The REA lent money
at low interest rates to utility companies and to
farmer cooperatives interested in bringing electricity
to rural areas. When the REA went into operation,
only one farm in ten had electricity; by 1950 only
one in ten did not.
Another important measure was the Wealth Tax
Act of August 1935, which, while not the “soak the
rich” measure both its supporters and its opponents
claimed, raised taxes on large incomes considerably.
Estate and gift taxes were also increased. Stiffer taxesMonopoly, patented in 1935, was an instant best-seller: Players risk all their assets
in an attempt to secure a real estate monopoly—and thus great wealth.