The New Deal Comes Under Attack

TVA and its Impact

I. Road Blocks A. What were some of the reasons the New Deal was challenged?  1. Created a very powerful president that led Congress, (violation of checks & balances)  2. Radical departure from Laissez Faire ideals. Created "big gov’t" - bureaucracy.  3. Some acts appeared interfering/unconstitutional.  4. Heavy debt burden - the US was engaged in deficit spending & this was unhealthy for the economy in the long run.

II. How to Pay For these Programs  Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and so-called "excess profits" taxes all went up  TAXES!!! excise taxes levied on alcoholic beverages (prohibition ended), cigarettes, matches, candy, chewing gum, margarine, fruit juice, soft drinks, cars, tires (including tires on wheelchairs), telephone calls, movie tickets, playing cards, electricity, radios

III. Deficit Spending  John Maynard Keynes- Keynesian Economics  British Economist  Deficit spending  Deficit spending-  A situation when the gov’t spends more $ than it receives in revenue  Promotes deficit spending  Gov’t should spend its way out of a depression by putting $ into the hands of consumers

IV. Trouble for the New Deal Radical Reactions to the New Deal Conservative Reactions to the New Deal Believed the New Deal did not go far enough in reforming the economy Wanted a complete overhaul of capitalism Huey P. Long, Father Charles Coughlin, Dr. Francis Townsend Interfered with the free-market economy Acts like AAA & the NIRA which gave the fed’l gov’t too much power American Liberty League-believed ND violated individuals and property

V. Leading Critics of the New Deal  Demagogues- leaders who manipulate ppl w/ half truths, deceptive promises & scare tactics  1. Charles Coughlin  Roman Catholic Priest  Broadcast radio sermons of economic, political, religious ideas  Favored guaranteed annual income & nationalization of banks  Lost support because of anti- Semitic views

 2. Dr. Francis Townsend (on right)  Didn’t think FDR was doing enough for the poor & elderly  Devised pension plan to provide monthly pensions to the elderly  Too expensive to work

 3. Huey Long (Kingfish)  Louisiana Senator  Most serious challenge  Share Our Wealth program High tax on the wealthy & corps. Redistribution of their income to the poor  Promised something for everyone (King)

VI. FDR battles the Supreme Court  Critics of the New Deal feared that it gave the president too much power over other branches of gov’t.

Schechter Poultry vs. US (1935)  “Sick Chicken Case”  Background: Suit claimed that the Schechter Co. 1. Sold sick chickens 2. Failed to pay workers min. wage 3. Didn’t adhere to the maximum work hours rules  All violated the Live Poultry Code of the NIRA  Ruling: SC declares NIRA unconstitutional Fed can regulate interstate commerce, but couldn’t set rules for business operating within a state The power to make such rules belongs to Congress Exe. Branch cannot be given powers of the legislative branch

 United States v. Butler (1936)  AAA unconstitutional on the grounds that agriculture is a local matter & should be regulated by the states

How did FDR respond to the Courts attack on the New Deal?  SO what is FDR to do?? Well….  Constitution did not specify # of Judges  FDR asked for Congress to pass a bill that would allow him to appoint 6 new judges  Violation of ????  Separation of Powers  This represented an attempt to subvert the process & alter the system of checks & balances.

VII. Minorities & the New Deal A. Women in office:  Frances Perkins-Sec. of labor  Mary McLeod Bethune-Nat’l Youth Adms.-Negro Affairs advised FDR on programs, that aide African Americans  Eleanor Roosevelt- eyes & ears for FDR, toured country getting support for New Deal  “My Day” writings used to promote equality

B. African Americans  Benefit less from the New Deal  50 African Americans appt to New Deal posts  Discrimination w/ in the New Deal…but 40% did receive help thru the New Deal  Helps win FDR a 2 nd term

VIII. The New Deal’s Impact A. Did it end the Depression?  Not exactly  1937 Recession:  Congress scales back on ND programs which leads to another economic down turn  Instead of trying to pass more legislation, FDR tried to cut gov’t spending  When that failed, FDR finally created new public works projects  Unemployment had already soared from 6 to 10 million when FDR was still cutting costs.

 Problems still around by 1939: Unemployment Farm crisis Under consumption B. What did it do?  Increased gov’t regulation  Creation of welfare state  Role & responsibility of the gov’t changes to encompass more involvement in the nation’s economic & social life  Preserve the free-enterprise system  Helped citizens cope w/ the sense of loss & hopelessness of the Depression