Large-Scale State




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Dealing with the Supreme Court


Roosevelt had to make sure that the Supreme Court would not continue to interfere in his work by declaring that his reforms were illegal. The nine judges of the Supreme Court were all old; no one was under 60. Roosevelt put forward the Judicial Reform Act, saying that the Court had too much work to do and gave Roosevelt the right to appoint six extra judges. Roosevelt would naturally appoint judges whom he knew agreed with him. When the Supreme Court heard what was in store, they immediately stopped opposing Roosevelt. They did nothing to change the Acts that were to follow. Simply by threatening to appoint new judges who agreed with him, Roosevelt succeeded in overcoming the opposition of the Supreme Court but it made him very unpopular.


Name: National Labour Relations Act


Date: July 1935

Aim: To give the right of union membership to workers and check for unfair labour practices
The National Labour Relations Act was passed only 6 weeks after the Supreme Court killed the NRA. Roosevelt only accepted it when it got through Congress and the Senate. This act gave workers the right to join and to form trade unions. It stopped employers from punishing those who did so. It set up a National Labour Relations Board to bargain on behalf of workers and to restrict management from using ‘unfair labour practices’. It also acted as a watchdog to ensure that both employers and workers obeyed the act. This greatly expanded the role of Government in industrial relations and opened the way to unprecedented growth of union membership and power.

Strikes


As a result of the National Labour Relations Act union membership rose from 2 million in 1933 to 9 million in 1938. In 1935 a new trade union, the Congress of Industrial Organisation (CIO), was set up for unskilled workers in big industries such as cars and steel. By 1937 it had over 3 million members. Bitter conflicts between labour and employers occurred. Demands for closed shops – only one union in the workplace – met ferocious resistance from employers because if industrial action was called the business could be held at random by the union. The workers went on strike. Some of these strikes were ‘sit-down’ strikes in which the workers occupied the factories to prevent any work from being done. Others were all-out strikes, involving violent clashes with all those who tried to break up their picket lines. Employers resorted to lockouts, employing strikebreakers and company spies and relied heavily on private armies – ‘goon squads’ and help from local police to deal with trouble.
The strikes succeeded. Under pressure from the Government, the managers allowed the workers to use their legal right to join the CIO. But the violence and disruption involved in the strikes added to Roosevelt’s unpopularity.


Name: Social Security Act


Date: 1935

Aim: To provide a basic level of security for the weakest members of society
The most important and lasting of all the New Deal laws was the Social Security Act. Welfare legislation in the US lagged behind Europe. In 1935 only 27 out of 48 states had old age pensions. Only one, Wisconsin, had unemployment benefit. The Social Security Act was the first attempt to provide for the welfare of society’s weaker members on a national scale.
This Act set up:

  • A national system of pensions for old people and widows. The payments fell between $10 and a maximum of $85 monthly, paid from taxes on earnings and employers’ profits.

  • Provided help for the blind and physically handicapped.

  • Mothers with dependent children were paid up to $20 a month.

  • Set up a national system of unemployment insurance so the unemployed would receive financial help from State Government instead of local charities. It was intended that individual states would provide unemployment insurance, with aid from the Federal Government in the form of payroll tax rebates.

The aid provided to the blind, handicapped and mothers with children was known as ‘categorical assistance’. It was based on the ‘matching grant’ principle that is, the Federal Government contributed as much money for this group as did each state. Better off states had far more money to distribute than others. For example, in 1939 dependent mothers and children in Arkansas received $8.10 a month, whilst in Massachusetts the rate was $61.07 a month.


The provision of social security was wholly inadequate and its scope was conservative and limited. This caused problems with the more radical elements in society.


  • Some employers could not afford to pay and it was too expensive to collect. It was envisaged that they would become involved at a later date.

  • Unemployment benefit was paid for only 16 weeks at a very low rate.

  • So many people applied for unemployment benefit that many areas tried to avoid having to pay it.

  • Many states compensated for unemployment benefit by cutting back on other relief schemes. Increased residential qualifications and more stringent forms of means testing were introduced.

  • Ex-President Hoover thought that it encouraged people to be lazy and that it took away their dignity by treating them as numbers rather than as individuals.

  • The most in need, e.g. farm labourers, casual workers and domestic servants were excluded – this amounted to millions of needy people.

  • It was believed that they wealthy should pay more towards the scheme.

  • Pensions were low and were not paid out until the 1940s.

  • Pensions were paid out according to how much the recipient had paid in whilst working.

  • The medical profession had fiercely opposed sickness benefit as the American Medical Association believed it would limit the right to set doctors to set fees. There were no health insurance clauses in the bill.

  • It took powers away from individual states and concentrated it in Washington.

Despite these drawbacks, the Social Security Act was a major departure, a foundation, on which all subsequent administrations have built. Never before had there been a direct system of national benefit. FDR refused to fund it through taxes it had to be self-financing.


The Social Security Act sent out a loud message that the Government cared about people. As a result of it, millions of people were able to face life’s problems with greater confidence. Roosevelt, according to his Secretary of Labour, regarded the Social Security Laws as the cornerstone of his administration and took greater satisfaction from it than anything else achieved on the domestic front.


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