What was the response of congress, the supreme court, and presidents to the rise of big business?

Franklin D. Roosevelt

By the fall of 1934, the measures passed during The Hundred Days had produced a limited degree of recovery; more importantly, they had regenerated hope that the country would surmount the crisis. Although the New Deal had alienated conservatives, including many businessmen, most Americans supported Roosevelt’s programs. That support manifested itself in the congressional elections of 1934, in which Democrats added to their already substantial majorities in both houses.

Yet by 1935 Roosevelt knew he had to do more. Although the economy had begun to rise from its nadir during the winter of 1932–33, it was still far below its level before the stock market crash of 1929. Millions of Americans were still unemployed—many had been jobless for several years—and the destitute were beginning to listen to demagogues who criticized the New Deal for not going far enough. Roosevelt foresaw the possibility that in the 1936 presidential election he would face a significant third-party challenge from the left.

To meet this threat, Roosevelt asked Congress to pass additional New Deal legislation—sometimes called the “Second New Deal”—in 1935. The key measures of the Second New Deal were the Social Security Act, the Works Progress Administration (WPA), and the Wagner Act. The Social Security Act for the first time established an economic “safety net” for all Americans, providing unemployment and disability insurance and old-age pensions. The WPA, headed by Roosevelt’s close confidant Harry Hopkins, aimed to provide the unemployed with useful work that would help to maintain their skills and bolster their self-respect. Between 1935 and 1941 it employed a monthly average of 2.1 million workers on a variety of projects, including the construction of roads, bridges, airports, and public buildings; natural-resource conservation; and artistic and cultural programs such as painting public murals and writing local and regional histories. The Wagner Act (officially the National Labor Relations Act) reestablished labour’s right to bargain collectively (which had been eliminated when the Supreme Court had invalidated the NRA), and it created the National Labor Relations Board (NLRB) to adjudicate labour disputes. In addition to these hallmark measures, Congress also passed a major tax revision—labeled by its opponents as a “soak-the-rich” tax—that raised tax rates for persons with large incomes and for large corporations.

Declaring in his Second Inaugural Address that “I see one-third of a nation ill-housed, ill-clad, ill-nourished,” Roosevelt was determined to push forward with further New Deal reforms. With large Democratic majorities in both houses of Congress, there remained only one obstacle to his objectives: the Supreme Court. During Roosevelt’s first term, the court, which consisted entirely of pre-Roosevelt appointees, had invalidated several key New Deal measures, and cases challenging the Social Security Act and the Wagner Act were pending. To make the court more supportive of reform legislation, Roosevelt proposed a reorganization plan that would have allowed him to appoint one new justice for every sitting justice aged 70 years or older. Widely viewed as a court-packing scheme (even by Roosevelt’s supporters), the reorganization bill provoked heated debate in Congress and eventually was voted down, which handed Roosevelt his first major legislative defeat. Meanwhile, the fight over court packing seemed to alter the Supreme Court’s attitude toward the New Deal, and both the Social Security Act and the Wagner Act were upheld.

By 1937 the economy had recovered substantially, and Roosevelt, seeing an opportunity to return to a balanced budget, drastically curtailed government spending. The result was a sharp recession, during which the economy began plummeting toward 1932 levels. Chastened by the recession, Roosevelt now began to pay more attention to advisers who counseled deficit spending as the best way to counter the depression. Late in 1937 he backed another massive government spending program, and by the middle of 1938 the crisis had passed.

By 1938 the New Deal was drawing to a close. Conservative Southern Democrats openly opposed its continuation, and Roosevelt’s attempt to defeat several of them in the 1938 Democratic primaries not only proved unsuccessful but also produced charges that the president was a dictator trying to conduct a “purge.” In the congressional elections that year the Republicans gained 80 seats in the House and 7 in the Senate. Despite continued Democratic majorities in both houses, an alliance of Republicans and conservative Democrats now blocked any further reform legislation.