State and Federal Legislative Response to the Great Depression

The states fashioned their own New Deal programs. Legislators enacted relief and regulatory measures, including price regulations, social welfare programs, minimum- wage legislation, and moratoriums on foreclosure of mortgages. The federal courts subjected these laws to serious scrutiny on substantive due-process grounds of state interference with freedom to contract and private property rights. The magnitude of the Depression made state efforts wholly inadequate in dealing with the profound disruptions that beset the highly interdependent industrial economy. Solving the chaos of the Depression was indubitably a federal problem. For example, on the eve of Roosevelt's inauguration, thirty-eight states had closed their banks; moreover, banks in the rest of the country operated on a restricted basis. Yet only the federal government could gain national control of the banking crisis, and two days after his inauguration, Roosevelt declared a bank holiday, shutting the doors on every bank. Congress then rapidly passed new banking legislation at Roosevelt's direction, and confidence was subsequently restored in the banking system.

The banking bill was one of fifteen measures passed in the first one-hundred days of the New Deal. In one of the most creative and active periods in the history of the Congress, the national government dramatically broadened its involvement in American life. Congress created the Home Owners Loan Corporation to refinance home mortgages, the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits up to $2500, the Civilian Conservation Corps to put unemployed youth to work in conservation and reforestation projects, and the Tennessee Valley Authority (TVA) to combine regional development with rural electrification in the South. The TVA and the

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New Deal generally exemplified the way in which the expanded role of the federal government served over time to consolidate society, with electricity, highways, and educational aid chipping away at the historical localism and agrarianism of the South. Much the same occurred in the West, where federal irrigation and dam projects undertaken during the New Deal contributed to that region's rapid development after World War II.

Experimentation was the hallmark of Franklin Roosevelt's New Deal. "I have no expectation of making a hit every time I come to bat," the president disarmingly told critics. "What I seek is the highest possible batting average." ¹⁴ The pragmatic and flexible approach of the Roosevelt administration was reflected in the changing course of the New Deal itself. The so-called first New Deal lasted from about 1933 to 1935, ending amid Roosevelt's concern that his measures had not gone far enough to satisfy the public and that, at the same time, the justices of the Supreme Court believed that he had stretched constitutional authority too far. The second New Deal, which began in 1935, stressed commission regulation and the importance of administrative lawmaking to reorder the economy and economic relations between labor and business.

Roosevelt built upon the cooperative methods that lawyers and businessmen had experimented with in the 1920s, such as trade associations and cooperation among government, labor, and business. The first New Deal relied on business-government cooperation and executive-bureaucratic administration in restoring business and agricultural profits, in strengthening labor's position to bargain and consume, and in providing for the unemployed. Each of these goals found expression in major early New Deal legislation: the Agricultural Adjustment Act, the National Industrial Recovery Act (which created the National Recovery Administration), and the Public Works Administration.

Date: 2015-01-29; view: 686