Critical Interpretations of the New Deal

Challenges to the New Deal

The New Deal faced growing opposition from conservatives in both political parties and attracted criticism among business leaders.

Opposition to the New Deal

When Franklin Delano Roosevelt took office in 1933, the economic situation in the United States was so disastrous that initially, the New Deal agenda provoked limited political opposition and enjoyed vast public support. Unlike his predecessor, Roosevelt proposed sweeping reform, recovery, and relief programs at a time when hope and optimism were scarce. Although many First New Deal (1933–1934/5) policies were controversial and triggered criticism among representatives of business, politics, labor, and experts, they demonstrated that the new administration took immediate action, which most agreed was necessary. However, the Second Deal (1934/5–1938) provoked much more fervent criticism, particularly in conservative circles. Both Republicans and conservative Democrats grew concerned with the expansion of the regulative role of the federal government and the unprecedented impact that the president had on legislation. Business leaders also joined the ranks of New Deal critics as the legislation continued to expand workers' rights as well as regulate production and trade practices.

The American Liberty League

The American Liberty League was a nonpartisan organization formed in 1934 in opposition to the New Deal. The League gathered Republicans, Democrats, and business leaders who opposed the New Deal's premise that the government not only could but should intervene in the economy. The organization's stated goal was "to defend the Constitution and defend the rights and liberties guaranteed by that Constitution." Its members believed that the New Deal's regulative nature threatened Constitution-given individual liberties and expanded the executive power beyond what the Constitution intended (some decisions of the Supreme Court that declared certain New Deal policies unconstitutional suggest that this criticism was not unfounded). The League engaged in campaigns in which it aimed to educate the public about the legislative process.

While the American Liberty League's members were divided over the National Recovery Administration, they fervently criticized the Agricultural Adjustment Administration (calling it "a trend toward fascist control of agriculture") and Social Security (which they saw marking "the end of democracy"). The League's lawyers also challenged the 1936 National Labor Relations Act, but the Supreme Court upheld its constitutionality. After Roosevelt's 1936 victory, the League slowly dissolved, disappearing entirely in 1940. Historians argue that its relatively small impact was a result of misjudging the reality of the extreme economic crisis, in which references to individual liberties were less appealing than concrete, even if controversial, reform projects.

The Court Packing

In the aftermath of the 1936 election, Roosevelt proposed the Judicial Procedures Reform Bill of 1937 that would be commonly known as the " court-packing plan." Its aim was to add up to six more justices to the U.S. Supreme Court, one for each member of the court over the age of 70 years and 6 months. The goal was to change the political balance of the court and ensure the court's support for the New Deal legislation. The proposal provoked vast opposition, even among some liberals. It also united conservatives in both parties. While Burton Wheeler, a progressive Democrat from Montana, played the role of the public voice of the alliance that formed in opposition to the court-packing plan, conservative Democratic senators—Carter Glass, Harry Flood Byrd, and Josiah Bailey—were critical to collecting enough opposing votes in Congress. Roosevelt realized that the bill had no chance of being passed and a compromise that did not alter the existing balance in the court was negotiated.

Conservative Coalition

The court-packing plan strengthened conservative opposition to the New Deal. By 1937, an informal yet strong group of congressmen and representatives opposing the New Deal formed in Congress. Known as the Conservative Coalition (at the time, the term "conservative" referred to the opponents of the New Deal and did not imply any specific party affiliation), it initiated a conservative alliance that, with modifications, shaped Congress until the 1960s. In 1937, Bailey released a "Conservative Manifesto" that presented conservative philosophical tenets, including the line, "Give enterprise a chance, and I will give you the guarantees of a happy and prosperous America." The manifesto called for reduced government spending, a balanced budget, and lower taxes. It also emphasized the importance of private enterprise and suggested that the position of unions was too powerful. Over 100,000 copies were distributed and the document marked a turning point in terms of congressional support for the New Deal legislation. The coalition's members did not form a solid anti-New Deal legislation voting bloc. Instead, they responded to each proposed law depending on how much, in their opinion, it violated the conservative principles that they supported.

The results of the 1938 midterm election demonstrated that the dissatisfaction with New Deal policies grew. In the Democratic primaries, Roosevelt endorsed the challengers of his conservative opponents but the anti-New Deal incumbents won. In the national election, more conservative candidates won seats in Congress with Republicans recording substantial gain in both the House and Senate.

The Business Plot

The Business Plot (known as the White House Coup) was a 1933 political conspiracy against Roosevelt. Smedley Butler, a retired Marine Corps Major General, testified before the Special Committee on Un-American Activities that wealthy businessmen were plotting to create a fascist veterans' organization to overthrow the president. No one was prosecuted. While historians have questioned whether a coup was actually close to execution, most agree that some sort of "wild scheme" was contemplated and discussed. Contemporary media dismissed the plot, with a New York Times editorial characterizing it as a "gigantic hoax."

Resistance to Business Reform

Many business leaders and conservative politicians expressed strong opposition to the New Deal's programs and reforms aimed at industrial recovery.

Opposition to the New Deal

The New Deal agenda was based on the presumption that free market forces and common business practices had greatly contributed to the failure of the economy. However, neither Roosevelt nor his New Deal experts and advisers attempted to overthrow or even radically reform capitalism. Instead, they believed that capitalism could be fixed or its outcomes could be improved through the intervention of the government. The New Deal was thus rooted in the idea (proposed already in the 19th century) that the government not only could but simply should regulate and reform the economy. Poverty, unemployment, dangerous labor conditions, and the struggling agricultural sector were now to be addressed through government reforms and relief programs. Not surprisingly, the idea did not gain much popularity among those who promoted limited government intervention, laissez-faire, and individualism. Among them, business leaders, Republicans, and conservative Democrats constituted the most powerful group of the New Deal's opponents.

The so-called Roosevelt Recession that began in 1937 provided fresh fuel for business and political opponents of the New Deal. Extreme stock market decline coupled with growing unemployment and decreasing GDP served as apparent evidence that the New Deal regulations and reforms, in fact, hurt the economy.

National Industrial Recovery Act

The National Industrial Recovery Act (NIRA), signed into law in June 1933, proposed comprehensive reforms to boost industrial recovery. It outlined guidelines for the creation of the so-called "codes of fair competition" (rules according to which industries were supposed to operate), guaranteed trade union rights, and permitted the regulation of working standards. It also established the Public Works Administration, an agency responsible for creating jobs through public works projects. The National Recovery Administration (NRA) was founded to implement NIRA.

Both NIRA and NRA attracted widespread criticism. Critics argued that the NIRA endorsed monopolies and cartels, which in turn contributed to higher prices. While higher prices were one of NIRA's explicit goals (in response to severe deflation), evidence for whether they contributed to economic recovery remained ambiguous. Even the National Recovery Review Board, established by Roosevelt in March 1934, in response to the growing criticism to review the performance of the NRA, concluded that the codes of fair competition gave disproportional power to each industry's biggest and most powerful actors. As the codes regulated such matters as wages, working hours, production quotas, and prices, many businesses, particularly those smaller and newer ones, refused to endorse NIRA. The Blue Eagle logo became the symbol of businesses that signed up for NRA and, in the aftermath of an effective public campaign, businesses that did not display the logo were often boycotted. Consequently, some business owners argued that the NRA membership was not really voluntary but necessary for survival. Business leaders and conservative politicians were also critical of the power that NIRA invested in organized labor and workers generally. NIRA's labor protection provisions soon turned out to be incredibly difficult to implement which provoked labor unrest and increased tensions between employers and workers. As NIRA included no provisions on how to dissolve labor disputes, the National Labor Board was established under the auspices of the NRA to handle conflicts between labor and employers.

On May 27, 1935, in Schechter Poultry Corp. v. United States, the Supreme Court declared Title I (devoted to industrial recovery) of the NIRA unconstitutional. The court ruled that the act delegated legislative powers to the executive  and regulated commerce that was not interstate in character. It also criticized the fact that instead of providing "rules of conduct," NIRA authorized the creation of codes (containing "rules of conduct") without outlining any specific standards. As NRA was a product of the same section of NIRA that the court deemed unconstitutional, the agency's role was redefined by an executive order. It now promoted industrial cooperation and produced economic studies.

National Labor Relations Act

In the aftermath of NIRA's failure, the 1935 National Labor Relations Act (NLRA; known also as the Wagner Act) was passed. It offered many of the labor protection provisions that were earlier included in NIRA. NLRA provided basic rights of private sector employees to organize into trade unions, engage in collective bargaining for better terms and conditions at work, and take collective action, including strike. Unlike NIRA, which tied the same rights to industrial codes, NLRA guaranteed labor rights through the federal government. The act also created the National Labor Relations Board (not to be confused with the National Labor Board created under NRA), which was to guarantee the rights included in NLRA (as opposed to merely negotiating labor disputes) and organized labor unions representation elections.

Business leaders overwhelmingly criticized NLRA. The increasing power of labor unions and the rights of all workers, both unionized and non-unionized, to negotiate their terms of employment caused rather expected anxiety among employers. Some voiced the opinion that NLRA would significantly contribute to the higher costs of production (most notably through increasing wages) and thus trigger higher prices and limited profits. Politicians affiliated with the business also opposed NLRA, most notably members of the American Liberty League, a non-partisan organization that gathered Republicans, Democrats, and business leaders opposing the New Deal. The League's lawyers challenged NLRA, but the Supreme Court upheld its constitutionality in National Labor Relations Board v. Jones & Laughlin Steel Corporation (1937). While organized labor largely lauded NLRA, the American Federation of Labor accused the NLRB of favoring practices employed by the Congress of Industrial Organizations ( CIO ). CIO, created in 1935 as the Committee of Industrial Organizations by unions belonging to AFL, gathered industrial workers and it eventually broke away from AFL in 1938.

Political Critiques of the New Deal

Roosevelt's New Deal attracted criticism from all sides of the political scene and was challenged by a number of popular movements that gained substantial support.

Overview

Criticism of the Roosevelt administration ranged from arguments that its policies would harm business and economic recovery to charges that it was subverting democracy. Some labeled the New Deal as fascism, although it is important to remember that at the time, fascism did not connote the tragedy of World War II but rather an ideology of authoritarian nationalism and planned economy, associated most often with Benito Mussolini's Italy. Others saw the New Deal as a manifestation of socialism or communism. The left accused Roosevelt of empowering big business while the right opposed the policies that regulated business and expanded workers' rights. FDR and his vision attracted critics from all sides of the political spectrum who often labeled the New Deal using the same terms but meaning very different things.

The American Liberty League

The American Liberty League was a nonpartisan organization formed in 1934 in opposition to the New Deal. The League gathered Republicans, Democrats, and influential business leaders who opposed the New Deal's premise that the government not only could but should intervene in the economy. The organization's stated goal was "to defend the Constitution and defend the rights and liberties guaranteed by that Constitution." Its members believed that the New Deal's regulative nature threatened Constitution-given individual liberties and expanded the executive power beyond what the Constitution intended. The League engaged in campaigns aimed to educate the public about the legislative process. Its strong links with business elites and the pro-business agenda discouraged popular support, but the League remained one of the most vocal conservative voices opposing the New Deal in the mid-1930s.

Conservative Coalition

After Roosevelt's failed attempt to appoint additional pro-New Deal judges in the Supreme Court (the so-called "court packing plan"), conservative opposition strengthened and unified. By 1937, an informal group of congressmen and representatives opposing the New Deal formed in Congress. Known as the Conservative Coalition (at the time, the term "conservative" referred to the opponents of the New Deal and did not imply any specific party affiliation), it initiated a conservative alliance that, with modifications, shaped Congress until the 1960s. In 1937, Josiah Bailey, a Democratic senator and one of the staunchest critics of the New Deal, released a "Conservative Manifesto" that presented conservative philosophical tenets, including the line, "Give enterprise a chance, and I will give you the guarantees of a happy and prosperous America." The Manifesto called for reduced government spending, a balanced budget, and lower taxes. It also emphasized the importance of private enterprise and suggested that the position of unions was too powerful. Over 100,000 copies were distributed and the document marked a turning point in terms of congressional support for the New Deal legislation.

Huey P. Long

Although Republicans formed natural opposition to the policies of the Democratic administration, it was a Democratic senator from Louisiana, Huey Long, who became Roosevelt's most fervent opponent. In 1934, Long established the Share Our Wealth movement built upon populist slogans of the redistribution of wealth (e.g., capping personal fortunes, taxation of the rich, guaranteed income, etc.). He popularized his ideas through radio and Share Our Wealth clubs began to mushroom across the country. While some labeled Long a socialist, Roosevelt called him "one of the two most dangerous men in America" and accused him of spreading fascism. Long gained massive support. Share Our Wealth clubs had millions of members and tens of millions of Americans listened to Long on the radio every week. He was assassinated in 1935, shortly after he announced that he would run for president.

Opposition on the Left

Roosevelt attracted as much criticism from the left as he did from the right. When Norman Thomas ran as the presidential candidate of the Socialist Party of America in the 1932 election, his platform reminded people more of the later New Deal agenda than the New Deal plan announced at the time by presidential candidate Roosevelt. Thomas promised support for the unemployed and the elderly, federal relief and jobs programs, repeal of Prohibition, and national medical insurance, but he gained very limited support. Although Roosevelt's New Deal introduced programs corresponding with the 1932 socialist proposals, Thomas and his colleagues criticized Roosevelt's attempts as fixing or reforming capitalism rather than radically changing the existing economic order. Roosevelt's ambiguous relationship with business, which conservatives perceived as too restrictive and focused on pro-labor initiatives while leftists thought he was leaving too much power in the hands of business leaders, has also provoked much criticism on the left.

While not really an opponent of Roosevelt, a socialist writer, Upton Sinclair (known for his immensely influential 1906 novel The Jungle), popularized a program known as End Poverty in California ( EPIC ) that Roosevelt eventually considered to be too radical. EPIC called for public works projects, tax reform, and guaranteed pensions. It also proposed that unused farmland should be given to the unemployed who could establish cooperative farms. Many farmers and unemployed workers supported EPIC, although Sinclair lost the governorship of California in 1934. Though Roosevelt did not endorse Sinclair, the program influenced later New Deal policies.

Other Opposition

Two other important figures became prominent critics of Roosevelt although neither of them was a mainstream politician. Charles Coughlin, a Catholic priest and an extremely popular radio show host, initially supported Roosevelt. However, by 1934, he became one of the harshest critics of the New Deal. He blamed communists and Jews for the Great Depression and his radio show was increasingly anti-Semitic and sympathetic towards Hitler and Mussolini. Coughlin founded the National Union for Social Justice in 1934 and in 1935, he helped found the Union Party. The organizations aimed to challenge Roosevelt's agenda and bid for reelection. Coughlin was incredibly popular, attracting tens of millions of listeners to his weekly broadcast. His activism attracted widespread accusations of promoting fascism and criticism of both Americans bishops and the Vatican.

Another popular challenger of the New Deal was Francis Townsend, a physician from California. In 1934, he proposed the so-called Townsend Plan, which called for a monthly pension for the elderly (all Americans 60 years old or older). Townsend popularized his plan through a letter sent to a local newspaper and the idea quickly gained substantial support. Although its critics noted that the plan's execution would be too expensive, what started as a challenge to the New Deal pushed Roosevelt to offer his own old age pension plan which was part of his Social Security program.

Roosevelt's Response to Critics

In 1934, Roosevelt defended himself against his critics and attacked them in his "fireside chat" radio broadcast:

"Some people will try to give you new and strange names for what we are doing. Sometimes they will call it 'Fascism,' sometimes 'Communism,' sometimes 'Regimentation,' sometimes 'Socialism.' But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical... Plausible self-seekers and theoretical die-hards will tell you of the loss of individual liberty. Answer this question out of the facts of your own life. Have you lost any of your rights or liberty or constitutional freedom of action and choice?"