Second New Deal (1935-1936) : Reform

On May 27, 1935, the NRA was found to be unconstitutional by a unanimous decision of the U.S.
Supreme Court in the case of Schechter v. United States. After the end of the NRA, quotas in the oil
industry were fixed by the Railroad Commission of Texas with Tom Connally's federal Hot Oil Act of
1935, which guaranteed that illegal "hot oil" would not be sold. [75] By the time NRA ended in May
1935, well over 2 million employers accepted the new standards laid down by the NRA, which had
introduced a minimum wage and an eight-hour workday, together with abolishing child labor.
[50]
These standards were reintroduced by the Fair Labor Standards Act of 1938.
Housing sector[edit]
The New Deal had an important impact in the housing field. The New Deal followed and increased
President Hoover's lead-and-seek measures. The New Deal sought to stimulate the private home
building industry and increase the number of individuals who owned homes. [76] The New Deal
implemented two new housing agencies; Home Owners' Loan Corporation (HOLC) and the Federal
Housing Administration (FHA). HOLC set uniform national appraisal methods and simplified the
mortgage process. The Federal Housing Administration (FHA) created national standards for home
construction.[77]
Reform[edit]
Reform was based on the assumption that the depression was caused by the inherent instability of
the market and that government intervention was necessary to rationalize and stabilize the economy
and to balance the interests of farmers, business and labor. Reforms targeted the causes of the
depression and sought to prevent a crisis like it from happening again. In other words, financially
rebuilding the U.S. while ensuring not to repeat history.
Trade liberalization[edit]
Most economic historians assert that protectionist policies, culminating in the Smoot-Hawley Act of
1930, worsened the Depression.[78] Roosevelt already spoke against the act while campaigning for
president during 1932.[79] In 1934, the Reciprocal Tariff Act was drafted by Cordell Hull. It gave the
president power to negotiate bilateral, reciprocal trade agreements with other countries. The act
enabled Roosevelt to liberalize American trade policy around the globe and it is widely credited with
ushering in the era of liberal trade policy that persists to this day.[80]
Puerto Rico[edit]
A separate set of programs operated in Puerto Rico, headed by the Puerto Rico Reconstruction
Administration. It promoted land reform and helped small farms, it set up farm cooperatives,
promoted crop diversification and helped the local industry. The Puerto Rico Reconstruction
Administration was directed by Juan Pablo Montoya Sr. from 1935 to 1937.
Second New Deal (1935–1936)[edit]

See also: Second New Deal
In the spring of 1935, responding to the setbacks in the Court, a new skepticism in Congress and the
growing popular clamor for more dramatic action, New Dealers passed important new initiatives.
Historians refer to them as the "Second New Deal" and note that it was more liberal and more
controversial than the "First New Deal" of 1933–1934.
Social Security Act[edit]

A poster publicizing Social Security benefits
Until 1935, only a dozen states had implemented old-age insurance, and these programs were
woefully underfunded. Just one state (Wisconsin) had an insurance program. The United States was
the only modern industrial country where people faced the Depression without any national system
of social security. The work programs of the "First New Deal" such as CWA and FERA were
designed for immediate relief, for a year or two.[81]
The most important program of 1935, and perhaps of the New Deal itself, was the Social Security
Act. It established a permanent system of universal retirement pensions (Social
Security), unemployment insurance and welfare benefits for the handicapped and needy children in
families without a father present.[82] It established the framework for the U.S. welfare system.
Roosevelt insisted that it should be funded by payroll taxes rather than from the general fund—he
said: "We put those payroll contributions there so as to give the contributors a legal, moral, and
political right to collect their pensions and unemployment benefits. With those taxes in there, no
damn politician can ever scrap my social security program". [83]
Labor relations[edit]
The National Labor Relations Act of 1935, also known as the Wagner Act, finally guaranteed
workers the rights to collective bargaining through unions of their own choice. The Act also
established the National Labor Relations Board (NLRB) to facilitate wage agreements and to
suppress the repeated labor disturbances. The Wagner Act did not compel employers to reach
agreement with their employees, but it opened possibilities for American labor. [84] The result was a
tremendous growth of membership in the labor unions, especially in the mass-production sector, led
by the older and larger American Federation of Labor and the new, more radical Congress of
Industrial Organizations. Labor thus became a major component of the New Deal political coalition.
However, the intense battle for members between the AFL and the CIO coalitions weakened labor's
power.[85]
The Fair Labor Standards Act of 1938 set maximum hours (44 per week) and minimum wages (25
cents per hour) for most categories of workers. Child labor of children under the age of 16 was
forbidden, children under 18 years were forbidden to work in hazardous employment. As a result, the
wages of 300,000 workers, especially in the South, were increased and the hours of 1.3 million
were reduced.[86] It was the last major New Deal legislation and it passed with support of Northern
industrialists who wanted to stop the drain of jobs to the low-wage South. [87]
Works Progress Administration[edit]
Works Progress Administration (WPA) poster promoting the LaGuardia Airport project (1937)

Roosevelt nationalized unemployment relief through the Works Progress Administration (WPA),
headed by close friend Harry Hopkins. Roosevelt had insisted that the projects had to be costly in
terms of labor, beneficial in the long term and the WPA was forbidden to compete with private
enterprises—therefore the workers had to be paid smaller wages. [88] The Works Progress
Administration (WPA) was created to return the unemployed to the workforce. [89] The WPA financed a
variety of projects such as hospitals, schools, and roads, [50] and employed more than 8.5 million
workers who built 650,000 miles of highways and roads, 125,000 public buildings as well as bridges,
reservoirs, irrigation systems, parks, playgrounds and so on. [90]
Prominent projects were the Lincoln Tunnel, the Triborough Bridge, the LaGuardia Airport,
the Overseas Highway and the San Francisco–Oakland Bay Bridge.[91] The Rural Electrification
Administration used cooperatives to bring electricity to rural areas, many of which still operate.
[92]
The National Youth Administration was another semi-autonomous WPA program for youth. Its
Texas director, Lyndon B. Johnson, later used the NYA as a model for some of his Great
Society programs in the 1960s.[93] The WPA was organized by states, but New York City had its own
branch Federal One, which created jobs for writers, musicians, artists and theater personnel. It
became a hunting ground for conservatives searching for communist employees. [94]
The Federal Writers' Project operated in every state, where it created a famous guide book—it also
catalogued local archives and hired many writers, including Margaret Walker, Zora Neale
Hurston and Anzia Yezierska, to document folklore. Other writers interviewed elderly ex-slaves and
recorded their stories. Under the Federal Theater Project, headed by charismatic Hallie Flanagan,
actresses and actors, technicians, writers and directors put on stage productions. The tickets were
inexpensive or sometimes free, making theater available to audiences unaccustomed to attending
plays.[93]
One Federal Art Project paid 162 trained woman artists on relief to paint murals or create statues for
newly built post offices and courthouses. Many of these works of art can still be seen in public
buildings around the country, along with murals sponsored by the Treasury Relief Art Project of the
Treasury Department.[95][96] During its existence, the Federal Theatre Project provided jobs for circus
people, musicians, actors, artists and playwrights, together with increasing public appreciation of the
arts.[50]

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On May 27, 1935, the NRA was found to be unconstitutional by a unanimous decision of the U.S.

Second New Deal (1935–1936)[edit]

Social Security Act[edit]

Works Progress Administration[edit]

Works Progress Administration (WPA) poster promoting the LaGuardia Airport project (1937)

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