The Second New Deal

In its early years, the New Deal sponsored a remarkable series of legislative initiatives and achieved significant increases in production and prices -- but it did not bring an end to the Depression. As the sense of immediate crisis eased, new demands emerged. Businessmen mourned the end of "laissez-faire" and chafed under the regulations of the NIRA. Vocal attacks also mounted from the political left and right as dreamers, schemers, and politicians alike emerged with economic panaceas that drew wide audiences. Dr. Francis E. Townsend advocated generous old-age pensions. Father Charles Coughlin, the "radio priest," called for inflationary policies and blamed international bankers in speeches increasingly peppered with anti-Semitic imagery. Most formidably, Senator Huey P. Long of Louisiana, an eloquent and ruthless spokesman for the displaced, advocated a radical redistribution of wealth. (If he had not been assassinated in September 1935, Long very likely would have launched a presidential challenge to Franklin Roosevelt in 1936.)

In the face of these pressures, President Roosevelt backed a new set of economic and social measures. Prominent among them were measures to fight poverty, create more work for the unemployed, and provide a social safety net.

The Works Progress Administration (WPA), the principal relief agency of the so-called second New Deal, was the biggest public works agency yet. It pursued small-scale projects throughout the country, constructing buildings, roads, airports, and schools. Actors, painters, musicians, and writers were employed through the Federal Theater Project, the Federal Art Project, and the Federal Writers Project. The National Youth Administration gave part-time employment to students, established training programs, and provided aid to unemployed youth. The WPA only included about three million jobless at a time; when it was abandoned in 1943, it had helped a total of nine million people.

President Franklin D. Roosevelt signs perhaps the most far-reaching legislation of the New Deal: the Social Security Act of 1935. Today, Social Security, one of the largest government programs in the United States, provides retirement and disability income to millions of Americans.

The New Deal's cornerstone, according to Roosevelt, was the Social Security Act of 1935. Social Security created a system of state-administered welfare payments for the poor, unemployed, and disabled based on matching state and federal contributions. It also established a national system of retirement benefits drawing on a "trust fund" created by employer and employee contributions. Many other industrialized nations had already enacted such programs, but calls for such an initiative in the United States had gone unheeded. Social Security today is the largest domestic program administered by the U.S. government.

To these, Roosevelt added the National Labor Relations Act, the "Wealth Tax Act" that increased taxes on the wealthy, the Public Utility Holding Company Act to break up large electrical utility conglomerates, and a Banking Act that greatly expanded the power of the Federal Reserve Board over the large private banks. Also notable was the establishment of the Rural Electrification Administration, which extended electricity into farming areas throughout the country.