The Great Depression

Although the causes of the Great Depression are subject to much academic debate, there is no question that the Depression was one of the most serious domestic crises in U.S. history. Every sector of the economy was impacted, from agriculture to manufacture. The contraction of the economy left one-quarter of the American workforce unemployed, while the standard of living dropped for those who remained employed. Shantytowns—dubbed Hoovervilles for the president upon whom many blamed the Depression—sprang up across the nation, populated by homeless families no longer able to pay for shelter.

Twentieth Amendment

Until the ratification of the Twentieth Amendment in 1933, the outgoing president spent four months in office before the inauguration of the new chief executive. The Lame Duck Amendment, as it was called, provided that the new Congress would convene on January 3 and that the president and vice president would take office on January 20.

Roosevelt Takes Charge

The Republican party was repudiated at the polls in the 1932 presidential election. Franklin Delano Roosevelt won a landslide victory by promising the nation a New Deal that would restore the American economy to prosperity. In his inaugural address, Roosevelt committed his administration to programs of unprecedented governmental intervention to pull the nation from the grips of the Depression. “This nation asks for action,” he said, “and action now. Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.”

Saving the Banks

A banking crisis swept the nation as businesses and homeowners defaulted on their debts and Americans, fearing bank closures, withdrew their deposits. By March of 1933, nearly every state had passed measures suspending or limiting ordinary banking activities. One of Roosevelt’s first actions as president was to issue a series of executive orders, subsequently enacted into law by Congress, to stabilize the banking system.

Recovery Measures

In the first three months of Roosevelt’s presidency, Congress enacted legislation providing the bare minimum of relief needed to prevent widespread social upheaval. The traditional assumptions of American life seemed to have failed, and Roosevelt sought to restore confidence to the nation. The Agricultural Adjustment Act and the National Industrial Recovery Act raised income levels in agriculture and industry. The Tennessee Valley Authority promoted economic development in some of the most depressed areas of the country, and the Civilian Conservation Corps and Public Works Administration created jobs conserving and developing the public infrastructure.

The Second New Deal

In 1935 Roosevelt implemented a second wave of New Deal programs focusing on social and economic reform. The Works Progress Administration put millions of workers on the government payroll with projects ranging from public works to cultural programs. The National Youth Administration employed people between the ages of 16 and 25. The National Labor Relations Act created a board to deal with labor grievances and settle strikes. Measures such as wage-and-hour legislation and the Social Security Act of 1935 provided direct relief to the aged and unemployed.

State Recovery Measures

In Home Building Association v. Blaisdell (1934) the Supreme Court narrowly upheld state legislation protecting debtors from foreclosure as a valid exercise of state police powers. The dissenting justices viewed such laws as clear violations of the Contract Clause of the Constitution.

Public Interest Doctrine Abandoned

Starting with Nebbia v. New York (1934), the Supreme Court abandoned the public interest doctrine limiting public regulation, thus paving the way for state regulation of virtually any business so long as the measures reasonably promoted the general welfare .

Gold Clause Cases

Some of the New Deal emergency measures involved monetary policy, specifically, the cancellation of contract clauses calling for the payment of debts in gold. In what came to be known as the Gold Clause Cases, the Supreme Court narrowly upheld the cancellation of such provisions as a valid exercise of Congress’s power over the monetary system. The cases represented a major victory for New Deal’s recovery program.

New Deal Setbacks

While the Supreme Court upheld the New Deal on monetary policy, its regulatory programs did not fare as well. Legislation creating retirement benefits for interstate railroad employees, measures protecting farmers from foreclosure, and laws regulating wages and hours were overturned as violations of the Due Process Clause of the Fifth Amendment and the Commerce Clause. In addition, the authority of the president to remove members of federal regulatory commissions was held to violate the constitutional separation of powers.

Roosevelt and the Court

Roosevelt made no attempt to conceal his frustration with the Court. In a press conference of May 31, 1935, he likened the Schechter Poultry decision to the Dred Scott case in its historical import and accused the Court of being out of touch with the needs of the nation. When the Court struck down even more recovery measures the following year, many New Dealers urged the president to take action.

Roosevelt’s Court Plan

Democratic victory in the 1936 elections prompted Roosevelt to take action against judicial opposition to the New Deal program. In February of 1937 Roosevelt presented Congress with a plan for the reorganization of the federal judiciary. The proposal included appointing additional judges at every level of the judiciary to counter the influence of older judges thought to be out of touch with the needs of the nation. The proposal backfired badly and was rejected as an attack on the independence of the judiciary. Its defeat had far-reaching consequences in shoring up congressional opposition to other New Deal proposals.