practice of federal regulation of wages and working conditions, another radical departure from pre-Depression policies. The year 1937 also witnessed a sharp downturn of the economy. With economic conditions improving in 1936, Roosevelt had reduced federal funding for farm subsidies and WPA work relief. The result was disastrous. As government spending fell, so did business investment, industrial produc- tion, and the stock market. Unemployment, still 14 percent at the beginning of 1937, rose to nearly 20 percent by year’s end. In 1936, in The General Theory of Employment, Interest, and Money , John Maynard Keynes had challenged economists’ traditional belief in the sanctity of balanced budgets. Large-scale government spending, he insisted, was neces- sary to sustain purchasing power and stimulate economic activity during downturns. Such spending should be enacted even at the cost of a budget deficit(asituationinwhichthegovernmentspendsmoremoneythanittakes in). By 1938, Roosevelt was ready to follow this prescription, which would later be known as Keynesian economics. In April, he asked Congress for bil- lions more for work relief and farm aid. By the end of the year, the immediate crisis had passed. But the events of 1937–1938 marked a major shift in New Deal philosophy. Rather than economic planning, as in 1933–1934, or eco- nomic redistribution, as in 1935–1936, public spending would now be the government’s major tool for combating unemployment and stimulating economic growth. The Second New Deal had come to an end. T H E L I M I T S O F C H A N G E Roosevelt conceived of the Second New Deal, and especially Social Security, as expanding the meaning of freedom by extending assistance to broad groups of needy Americans—the unemployed, elderly, and dependent—as a right of citizenship, not charity or special privilege. But political realities, especially the power of inherited ideas about gender and black disenfran- chisement in the South, powerfully affected the drafting of legislation. Different groups of Americans experienced the New Deal in radically dif- ferent ways. 8 8 4 Ch. 21 The New Deal, 1932–1940 T H E L I M I T S O F C H A N G E Percentage of civilian labor force unemployed 30 25 20 1945 1942 1939 1936 1933 Year 1930 1927 1925 15 10 5 0 Figure 21.2 UNEMPLOYMENT, 1925–1945 The New Deal did not really solve the problem of unemployment, which fell below 10 percent only in 1941, as the United States prepared to enter World War II.
T H E N E W D E A L A N D A M E R I C A N W O M E N The New Deal brought more women into government than ever before in American history. A number of talented women, including Secretary of Labor Frances Perkins, advised the president and shaped public policy. Most prominent of all was Eleanor Roosevelt, FDR’s distant cousin whom he had married in 1905. She transformed the role of First Lady, turning a position with no formal responsibilities into a base for political action. She traveled widely, spoke out on public issues, wrote a regular newspaper col- umn that sometimes disagreed openly with her husband’s policies, and
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