The New Deal

The 1932 presidential campaign of Franklin D. Roosevelt could serve as a model for the presidential campaign of “tea
party” backed candidates in 2012. While most progressives were lambasting Hoover for not going far enough, fast enough
in investing in America’s economic recovery, Franklin D. Roosevelt criticized him for spending and taxing too much,
increasing the national debt, raising tariffs, stifling trade, and placing millions on the public dole. Roosevelt attacked Hoover
for "reckless and extravagant" spending, and of thinking
"that we ought to center control of everything in Washington as
rapidly as possible."
As politicians are wont to do, once in office, Roosevelt continued most of the Hoover programs, even
expanding and strengthening them. Hoover’s
Emergency Relief and Construction Act was adopted by Roosevelt and
became a cornerstone of the
New Deal. The Reconstruction and Finance Act was also kept and expanded along with many
other Hoover policies.

The Roosevelt administration was riddled with progressives, socialists, communists, “useful idiots”, “fellow travelers”, and
“dupes”. After the 1917 Bolshevik revolution, American progressives looked to Soviet Russia for inspiration, just as they
would look to Western Europe after World War II. A visit to Russia became obligatory for intellectuals of academia and
literature. Soviet Russia soon became a major tourist attraction for America’s left, who returned with glowing tales of
communism’s newfound paradise.

Journalists like John Reed, and Leading muckrakers like Lincoln Steffens, wrote raving reviews of the new Russia.  After
returning from Petrograd, Steffens, writing in an article appearing in the Nation, declared that,

    “The revolution in Russia is to establish the Kingdom of Heaven here on earth, now; in order that Christ may come
    soon; and, coming, reign forever. Forever and ever, everywhere. Not over Russia alone. The Revolution in Russia
    is not the Russian revolution. It is ‘the Revolution’.” (Daniel Flynn; History of the American Left)

Paul Douglas, a University of Chicago Economist who served as Senator from Illinois from 1949 to 1967, visited Russia in
1927. On his return, he informed his colleagues,

    “Our visit strengthened my faith in social-ism, the material strength behind all material evidence, is that there is a
    real community of belief, a national ideal, and moral unity, which is the solid basis of the new Russia. They really
    have a new religion; the building up of a People’s society.” (History of the American Left)

Political groups during the Great Depression and the New Deal covered the entire political spectrum from conservatism to
communism. There were the communists who got their marching orders from Moscow, the Communist Party USA; The
Socialist Party of America, (of the Eugene Debs, Robert La Follette, and Norman Thomas variety); American socialists,
(progressives) in both Republican and Democratic Parties; And the Conservative Coalition, a coalition of conservatives
from both parties, primarily Democrats, who controlled congress from 1938 until 1963. The groups that affected the New
Deal most were the progressives, conservatives and communists.

The Communists

Following the Bolshevik Revolution the communist established the Communist Party USA. During the depression, they set
up a number of “front groups” under the auspices of the American League Against War and Fascism, later changed to the
American League for Peace and Democracy. This group was established in 1933. Its Chairman was Henry Ward of the
American Civil Liberties Union. Ward was a Methodist Minister as well as Chairman of the ACLU. The group targeted
religious groups as their primary source for prospective members.

The executive committee was know as the Natal Bureau and was responsible for recruiting new members. In 1935, it
established a plan targeting unions and religious organizations for special attention. According to the Reverend Hermann
Reissig, its purpose was to
“use religious forces in the defense of the masses of people”. Among the groups singled out for
special attention were the
YMCA ministerial associations, Knights of Columbus, the League of Catholic Men, the Catholic
Association for International Peace
, Zionist groups, and adherents to the Lutheran and Reformed faiths.

The communists of the Great Depression were successful in infiltrating or establishing a number of influential groups.
They were heavily involved in the
Congress of Industrial Organizations. Some of its front groups were the American
Youth Congress
, 1934; the National Negro Congress, 1936; The American Congress for Democracy and Intellectual
Freedom,
1939; Its most influential front group was the League of American Writers whose membership included Robert
Frost, Earnest Hemingway, John Steinbeck, Albert Einstein, and Upton Sinclair. Hemingway was the keynote speaker at
the 1937 convention held in Carnegie Hall. Membership in the group, by design, was limited to the literary elite and included
some of the most influential writers of the twentieth century.

Socialists and Progressives

The Socialist Party, headed by Norman Thomas, was “low key” during the depression having lost most of its membership
to the
Democratic Party and Roosevelt’s New Deal. The Depression Era saw a major shift in the progressive movement.
Since the Gilded Age, the progressives’ home had been in the
Republican Party. During the New Deal, progressivism
(American socialism) shifted from the
Republican Party to the Democratic Party. After World War II, the progressive
influence in the
Democratic Party increased even more, until today it makes up the Party’s core constituency.  According
to the
Democratic Socialist of America, it considers the 83 member Congressional Progressive Caucus as its primary
lobbying arm in Congress.

The
Congressional Progressive Caucus co-chaired by Representatives Raul M. Grijalva of Arizona and Keith Ellison of
Minnesota, lists four core principles on its internet website. They are; (1) Fighting for economic justice and security for all;
(2) Protecting and preserving our civil rights and civil liberties; (3) Promoting global peace and security; and (4) Advancing
environmental protection and energy independence.

Conservative Coalition

Conservatism has never been an organized force in American politics. During the Great Depression, conservatism was
visible mostly as fiscal conservatism; however, Constitution conservatism was also present, as evidenced by Supreme
Court decisions during the early part of the New Deal through 1936, and political opposition to the New Deal on
constitutional grounds. Roosevelt himself was considered by many to be a fiscal conservative, rejecting Keynesian
economics and insisting on a balanced budget until it became evident that he could not achieve his agenda without deficit
spending. He actively recruited and appointed fiscal conservatives, most notably Lewis Douglas as Director of Budget and
Henry Morganthau, Jr., as Secretary of the Treasury. Fiscal conservatism had strong support among businessmen, voters,
conservative republicans and many leading Democrats.

During Roosevelt’s first term a lot of opposition developed against the New Deal among conservatives. A number of his
most ambitious programs were ruled unconstitutional by the Supreme Court and voters and politicians alike began to
become disenchanted with the New Deal. In 1936, Roosevelt easily won reelection, but in the states, conservatives won
enough congressional seats to shift the power in Congress. When the new Congress convened conservative republicans
and conservative democrats formed the conservative coalition to oppose New Deal policy. The conservative coalition
would make up the majority in Congress until the election of 1962.

The New Deal Agenda

During the vaunted first “hundred days” of the Roosevelt administration many of his programs were merely continuations
of Hoover’s policies, expanded and repackaged. The more significant of the New Deal Programs were the…

Reconstruction Finance Corporation, 1933: A Hoover agency expanded to make large loans to banks. Ended in 1954.

Federal Emergency Relief Administration, 1933: Hoover program replaced by WPA in 1936.

Abandonment of Gold Standard, 1933: Still applies.

Civilian Conservation Corps, 1933: Provided work for unskilled labor, mostly in rural areas. Ended 1942.

Homeowners Loan Corporation, 1933: Bought mortgages from banks and restructured them creating payments
homeowners could afford.

Tennessee Valley Authority, 1933: Rural electrification project.

Agricultural Adjustment Act: Heavily infiltrated by Communist Party USA, later found unconstitutional by Supreme
Court and replaced by new AAA.

National Industrial Recovery Act, 1933: Cooperative effort between government and business to regulate prices and
wages. Found unconstitutional by Supreme Court and ended in 1935.

Public Works Administration, 1933: Financed large public works projects. Ended in 1938.

Federal Deposit Insurance Corporation, 1933: Still exists.

Securities Act of 1933: Created Securities and Exchange Commission.

Works Progress Administration, 1935: Works program employing up to two million people in construction, home crafts
and the arts. Ended 1943.

National Labor Relations Act, 1935: The Wagner Act set up the Nation Labor Relations Board. Later modified by the
Taft-Hartley Act of 1947. Still Exists.

Federal Crop Insurance Corporation, 1938: Transferred to Risk Management Agency in 1996. Still exists.

Fair Labor Standards Act, 1938: Set minimum wage and work hours. Still exists.

Rural Electrification Administration, 1938: Provides utility services to rural areas under private-public partnerships. Still
exists.

Resettlement Administration: Resettled tenant farmers. Replaced by Farm Security Administration in 1935.

The “Blue Eagle” Campaign

One of the most egregious and un-American programs of the New Deal was the Blue Eagle Campaign authorized by the
National Recovery Administration. To Roosevelt and his advisors, the depression was caused by too much competition
between big businesses, resulting in low wages and lower prices. To combat this perceived problem he reached back to
the Hoover administration and Hoover’s reliance on volunteerism and associationalism. An association was formed with
America’s major businesses and the federal government as participants. Under this plan, business associations would be
authorized to set working hours, wages and prices for their particular segment of the economy.

It was called the “Blue Eagle” campaign because of a decal featuring a large blue eagle to be displayed prominently at the
place of business to let customers and others know that the business was a cooperating member. Each business group was
authorized to set its own codes for members of that particular business group. Enforcement of the codes was carried out
by the government. The program was run by former General Hugh Johnson, a senior economic official in World War I.
Many businesses liked the plan because it controlled competition while guaranteeing its business operations a profit.

Every business in the nation was called on to accept a blanket code with a minimum wage of 20 to 45 cents per hour, a
maximum workweek of 35 to 45 hours and the abolition of child labor. Within these guidelines, each business association
was authorized to write its own code. The result was hundreds of associations with thousands of codes, all different and
frequently changing, enforced by hordes of government inspectors. The most important feature of the plan was the setting
of “floors” on prices and wages below which no business could go. Businesses also were expected to maintain their
current level of employment and production. The objective was to cut unemployment and curb deflation by raising prices
and eliminating “cut-throat” competition for customers.

On one occasion, an inspector charged a New York, Kosher butcher of selling diseased chickens. The butcher shop was
run by three brothers named Schechter. The brothers were furious because the accusation questioned their integrity as
Kosher butchers. They challenged the ruling and eventually appealed their case all the way up to the Supreme Court. The
case, Schechter vs. United States, sometimes called “the sick chicken case” received a unanimous ruling from the court in
favor of the Schechter brothers, finding the “Blue Eagle Campaign” unconstitutional. On the same day, May 27, 1935, the
Court also struck down the New Deal legislation known as the Frazier-Lemke Act.

In the Schechter case, the Court ruled that the law violated the separation of powers found in the Constitution. The
Executive Branch does not have the power to make law, and certainly does not have the right to delegate legislative power
to a third party. The same constitutional rule should apply to the “rule making” powers of federal bureaucracies, although
the Court has been inconsistent in those areas.   
E-mail address
jfm@illinoisconservative.com
Philosophy of
Evil
Socialism in America

"The struggle of History is not
between the bourgeoisie and the
proletariat; it is between government
and the governed."

Jerry McDaniel
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Philosophy of Evil
Socialism In America
By Jerry McDaniel
Chapter 31
The Roosevelt Years
The Illinois Conservative