The New Deal Comes Under Attack

TVA and its Impact

I. Road BlocksA. What were some of the reasons the New Deal

was challenged? 1. Created a very powerful president that led

Congress, (violation of checks & balances) 2. Radical departure from Laissez Faire ideals.

Created "big gov’t" - bureaucracy. 3. Some acts appeared

interfering/unconstitutional. 4. Heavy debt burden - the US was engaged in

deficit spending & this was unhealthy for the economy in the long run.

II. How to Pay For these Programs

Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and so-called "excess profits" taxes all went up

TAXES!!!• excise taxes levied on alcoholic beverages

(prohibition ended), cigarettes, matches, candy, chewing gum, margarine, fruit juice, soft drinks, cars, tires (including tires on wheelchairs), telephone calls, movie tickets, playing cards, electricity, radios

III. Deficit Spending John Maynard Keynes-

Keynesian Economics British Economist Deficit spendingDeficit spending- A situation when the gov’t

spends more $ than it receives in revenue

Promotes deficit spending Gov’t should spend its way

out of a depression by putting $ into the hands of consumers

IV. Trouble for the New DealRadical Reactions to the New Deal

Conservative Reactions to the New Deal

• Believed the New Deal did not go far enough in reforming the economy

• Wanted a complete overhaul of capitalism

• Huey P. Long, Father Charles Coughlin, Dr. Francis Townsend

• Interfered with the free-market economy

• Acts like AAA & the NIRA which gave the fed’l gov’t too much power

• American Liberty League-believed ND violated individuals and property

V. Leading Critics of the New Deal

Demagogues- leaders who manipulate ppl w/ half truths, deceptive promises & scare tactics

1. Charles Coughlin Roman Catholic Priest Broadcast radio sermons of

economic, political, religious ideas

Favored guaranteed annual income & nationalization of banks

Lost support because of anti-Semitic views

2. Dr. Francis Townsend (on right)

Didn’t think FDR was doing enough for the poor & elderly

Devised pension plan to provide monthly pensions to the elderly

Too expensive to work

3. Huey Long (Kingfish) Louisiana Senator Most serious challenge Share Our Wealth

program• High tax on the

wealthy & corps.• Redistribution of

their income to the poor

Promised something for everyone (King)

VI. FDR battles the Supreme Court

Critics of the New Deal feared that it gave the president too much power over other branches of gov’t.

Schechter Poultry vs. US (1935) “Sick Chicken Case” Background: Suit claimed that the Schechter Co.

• 1. Sold sick chickens• 2. Failed to pay workers min. wage• 3. Didn’t adhere to the maximum work hours rules

All violated the Live Poultry Code of the NIRA Ruling: SC declares NIRA unconstitutional

• Fed can regulate interstate commerce, but couldn’t set rules for business operating within a state

• The power to make such rules belongs to Congress• Exe. Branch cannot be given powers of the

legislative branch

United States v. Butler (1936)

AAA unconstitutional on the grounds that agriculture is a local matter & should be regulated by the states

How did FDR respond to the Courts attack on the New Deal? SO what is FDR to do?? Well…. Constitution did not specify # of Judges FDR asked for Congress to pass a bill that

would allow him to appoint 6 new judges Violation of ???? Separation of Powers This represented an attempt to subvert the

process & alter the system of checks & balances.

VII. Minorities & the New Deal A. Women in office: Frances Perkins-Sec. of labor Mary McLeod Bethune-Nat’l Youth Adms.-

Negro Affairs advised FDR on programs, that aide African Americans

Eleanor Roosevelt- eyes & ears for FDR, toured country getting support for New Deal

“My Day” writings used to promote equality

B. African Americans Benefit less from the New Deal 50 African Americans appt to New Deal

posts Discrimination w/ in the New Deal…but

40% did receive help thru the New Deal Helps win FDR a 2nd term

VIII. The New Deal’s ImpactA. Did it end the Depression? Not exactly 1937 Recession: Congress scales back on ND programs which leads

to another economic down turn Instead of trying to pass more legislation, FDR tried

to cut gov’t spending When that failed, FDR finally created new public

works projects Unemployment had already soared from 6 to 10

million when FDR was still cutting costs.

Problems still around by 1939: • Unemployment• Farm crisis• Under consumption

B. What did it do? Increased gov’t regulation Creation of welfare state Role & responsibility of the gov’t changes to encompass

more involvement in the nation’s economic & social life Preserve the free-enterprise system Helped citizens cope w/ the sense of loss &

hopelessness of the Depression