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<text> <title> (1930s) The New Deal </title> <history> TIME--The Weekly Newsmagazine--1930s Highlights </history> <link 08168> <link 00038><article> <source>Time Magazine</source> <hdr> The New Deal </hdr> <body> [The banks having been shorn up, there followed in the next three months the whirlwind of legislation that became known as the Hundred Days. Almost the very next act made a start on fulfilling Roosevelt's campaign pledge to end Prohibition, with a bill authorizing the sale of "3.2" (percent alcohol) beer. Then came an emergency relief bill that quickly disbursed $500,000,000 through the states. Other bill attempted to protect farmers and small homeowners from foreclosure on mortgages because of inability to pay. An ardent conservationist, Roosevelt had the idea of putting some of the unemployed to work in the nation's parks and forests.] (April 3, 1933) President Roosevelt had outlined the measure to Congress as follows: "I propose to create a civilian conservation corps to be used in simple work, confining itself to forestry, the prevention of soil erosion, flood control and similar projects...This type of work is of definite, practical value as a means of creating future national wealth...I estimate that 250,000 men can be given temporary employment by early summer if you give me authority to proceed within the next two weeks...This enterprise will pay dividends to the present and future generations..." Under the Roosevelt plan the Department of Labor would recruit city jobless from municipal lodging houses, breadlines and relief agencies, enlisting them in a Civilian Conservation Corps for one year. For work in the woods members of the C.C.C. would be paid not more than $1 per day, plus food, shelter, clothing and medical attention. The C.C.C. would clear brush, plant sapplings, develop fire controls, fix roads, mend wash-outs, cook their own food and pick their own subordinate leaders under supervision of Army officers. A worker would be free to ask his discharge from C.C.C. whenever he had another job awaiting him. Approximate cost of the corps for a year: $250,000,000 most of which would come out of appropriations already made for public works which have been temporarily postponed. [Still one of the most urgent problems was relief for farmers, who by 1933 were worse off than ever.] (April 10, 1933) Spring, marching swiftly north across the land last week, found teams hitched to harrows and fields being broken, plow horses streaking the countryside with new furrows, tractors barking and chattering with lusty strength. Corn was about to go into the fat black acres of Illinois and Iowa. South Carolinians had their cotton planted; their February oats already sprouting. Seed beds for tobacco were being prepared as far north as Connecticut. Spring wheat was being sowed in Kansas now that the thaw had come & gone. Sows had littered in Iowa. John Farmer was starting his 1933 crops on the same haphazard plan of the past because President Roosevelt's bill to control his production and get him better prices was not yet on the statute books. From the moment he took office President Roosevelt realized that he was in a relentless race against the sun on farm relief. His purpose was to outsprint nature to planting time. In his special farm message last month he warned Congress that "if we wait for another month or six weeks the effect on the prices of this year's crops will be wholly lost." Infected with his sporting spirit, the House passed his bill with blind speed. Into Secretary Wallace's hands the farm bill puts a three-pronged pitchfork with instructions to try to toss farm prices high up on to the wagon of better days. Prong No. 1 of the Wallace pitchfork authorizes the Secretary to reduce production by contracting with farmers to rent the land they leave idle. What that rental will be has yet to be determined but estimates have ranged around $3 per acre. In theory the farmer who last year harvested 1,000 acres of wheat will get more by raising only 700 this year and collecting Government rent on 150. Prong No. 2 is the Domestic Allotment Plan refurbished. It permits the Secretary to pay a farmer who reduces his 1933 crop what the law euphemistically calls a "benefit." How this crop is to be effected is left to the Secretary. The farmer agreeing to cut his 1933 production would get a Government certificate on which he could borrow at the bank, the loan being repaid after the harvest when the Secretary is sure that he kept his reduction agreement. Prong No. 3 was welded on to the pitchfork by South Carolina's cotton-minded Smith who devised a price-upping scheme especially for cotton planters. The Handle of the Wallace pitchfork is the Secretary's power to tax. To raise money to pay land rents and Domestic Allotment "benefits" he may levy on every bushel of wheat the miller turns to flour, on every pound of pork and beef the packer turns to ham and steak, on every quart of milk and cream that go into butter and cheese, on every pound of cotton the spinner makes into cloth. This processing tax, heart of the Roosevelt relief scheme, is a variable quantity which the Secretary of Agriculture adjusts to bring farm prices up to the desired level. Once they are at pre-War parity, the tax scales off and disappears. Nine weeks in the White House, Franklin Roosevelt last week called his farm friends around him and signed a monster farm measure. Most radical experiment so far in the New Deal, this bill not only bulged with dictatorial powers over the nation's food supply, from farmer's field to consumer's kitchen but also was packed with the dynamite of currency inflation. By its terms the Government could levy unlimited taxes, subsidize countless producers, lease untold millions of acres, put processors out of business, issue billions of greenback dollars--all in a colossal attempt to raise the prices of hogs, wheat, corn, cotton, rice, tobacco, and dairy products to the 1909-14 level. Farmers and financiers alike held their breath to see how it would work. [Good evening my friends.] (May 15, 1933) Millions of U.S. citizens edged closer to their radios last Sunday as they heard this familiar greeting from the President of the U.S. For the second time Franklin Roosevelt was "reporting" to the country from the White House. Eight weeks prior when "the country was dying by inches" his first broadcast on the banking crisis had been a historic success. His second attempt to clear and steer the public mind on issues of state produced a popular reaction no less favorable. For the baffled businessman who wondered whither he was being led, it was a look into the future. To many that future had looked like an era of State Socialism, with the Government's grip fixed hard & fast upon industry, agriculture, transportation. To others it seemed as if Congress were abdicating its Constitutional powers to the White House. The country appeared in the thick of a gigantic social and economic revolution, quiet but nonetheless real, the direction and philosophy of which the average citizen did not begin to comprehend. President Roosevelt gave no such view of the national situation. Deftly he turned aside the "dictatorship" charged by pointing out that Congress still retains its Constitutional authority and has done nothing more than designate him as its agent in carrying out its will, all in keeping with U.S. tradition. As for the Government's relations with industry, agriculture and transportation, the President explained them not as those of a Socialist state and its servants but as those of business partners, "not a partnership in profits, because the profits would still go to the citizens, but rather a partnership in planning and a partnership to see that the plans are carried out." [Hard on the heels of farm relief came help for business and industry. These two radical, somewhat makeshift plans represented the very essence of the New Deal cooked up by Roosevelt and his young, idealistic "brains trust."] (May 29, 1933) "A national emergency productive of widespread unemployment and disorganization of industry...is hereby declared to exist." So began what might easily have been mistaken for a dictator's proclamation upon first seizing national power. Actually it was a measure about to become law of the land. The striking words prefaced the National Industrial Recovery Bill which President Roosevelt sent to Congress last week for immediate enactment. After weeks of talk the 4,000-word measure represented the grand climax of President Roosevelt's domestic attack on the Depression, his Two-Year Plan "to put people to work." The legislation, for all the powers it gave the President to put Government and Business into "partnership," contained few surprises. As a price for having the Anti-Trust laws suspended, each industry was to draft and subscribe to a fair trade code to be approved by the President. Each such code was to ration production so that some plants would not work 24 hours per day while others stood idle, to reduce working hours so that more employees could find jobs, to set up a minimum wage so that sweatshop operators could not steal the market, to give labor a free hand so that it could organize and bargain collectively. On the surface and in most official explanations voluntary partnerships were called for but deep down in the new law were large penal powers which gave a determined Government the whip hand over the toughest business. Part Two of the National Recovery Act was President Roosevelt's colossal public works program. For this purpose $3,300,000,000 was to be raised by Federal bond issues which, with other "extra-ordinary" budget expenditures, would probably put the Public Debt to an all-time high. The proceeds were to be lent to states, counties and municipalities on a 30-to-70 basis. It was estimated that each billion dollars would put 1,000,000 men to work constructing bridges, laying roads, clearing slums, eliminating grade crossings, building war ships. Private industry was to get no cash from the Government, on the ground that the Treasury, unable to supply all corners, should avoid discrimination by supplying none. (July 31, 1933) Late one night last week National Recovery Administrator Hugh Samuel Johnson marched proudly out of the White House with President Roosevelt's signature to a program which they both hoped would put 6,000,000 persons to work by Labor Day. Nothing like it had ever before been seen in the U.S. in peacetime. It was a "war" measure designed to mobilize the entire nation and march it patriotically forward into the biggest and perhaps the final battle with its old enemy, the Depression. Signed by the President were orders for setting up a man-to-man partnership between himself and each of the country's 5,000,000 employers "to raise wages, create employment and thus increase purchasing power and restore business." The "partnership" between the President and every employer from the corner grocer to the biggest tycoon was to be voluntary (no law existed to force it upon all industry & business) and run until Jan. 1. Approval of regular trade codes before that date would release all "partners" in the subscribing industry. Excepting household servants and farm hands, all employees were divided into two groups: 1) those who worked with their hands in factories and shops; 2) those who worked with their heads in offices and stores. Employers of Group 1 were asked not to work their help more than eight hours a day or 35 hours a week, not to pay them less than 40 cents per hour. Employers of Group 2 were asked not to work their help more than 40 hours a week or pay them less than $15-to-$12 per week depending upon the size of the community. Out from the Government Printing Office poured millions and millions of copies of the "partnership agreement." They were loaded into freight cars and shipped to distributing points throughout the U.S. Beginning July 27 postmen were to deliver a copy to every employer of three or more persons along his route. The employer was to sign on the dotted line and mail it back to the Government. In return he would be given a bundle of signs and placards with which to advertise his compliance with the President's program. Insigne: a blue eagle over the inscription: "Member N.R.A. We Do Our Part." The blue eagle (General Johnson called it a hawk) could be painted on factory chimneys, printed on letter heads. To get 5,000,000 employers to sign up and regiment public opinion behind them, General Johnson organized the biggest and loudest propaganda campaign out of Washington since War days. The agreements were "voluntary" but the Government was ready to put the screws on balky employers. Consumers, particularly housewives, were to be asked to sign this pledge: "I will cooperate in re-employment by supporting and patronizing employers and workers who are members of N.R.A." Thus the way was open for boycott of firms that refused to fall into line. If patriotism did not work, a sharp pinch in the pocketbook might. (September 25, 1933) After a sensational three-month spurt President Roosevelt's recovery program was slowing down last week. Farm prices had sagged from July highs, leveled out flat. September business was lagging behind August, NRA had yet to produce its miracle of re-employment. Public works made more headlines than new jobs. Banks were still tight-fisted on credit. Labor troubles pocked the land. Price rises due to NRA tended to cancel out A.A.A. gains in farm purchasing power. President Roosevelt was being bombarded with redoubled demands to turn to direct currency inflation as the one quick, sure means of keeping the country on a rising economic curve. Last week President Roosevelt paused long enough to take stock of his recovery program, to weigh its achievements against its failures. He agreed with General Johnson that the nation was about 25% out of the Depression. In August 750,000 persons found new jobs, bringing the total of re-employment since march up to about 2,200,000. But the nation's jobless still exceeded 7,000,000, most of whom would have to go through another bleak winter before getting work. From Feb. 15 to Aug. 15 the index of all farm prices rose from 49 to 72, with 100 (the 1914 level) as the ultimate goal. In 1932 gross farm income was $5,143,000,000. This year it will be about $6,360,000,000. This 1914 level was over $9,000,000,000. Since the President took office, mass purchasing power has increased 16%. [No proposal would put the federal government more directly into the world of business--and more directly into competition with private industry--than the Tennessee Valley Authority Act, which updated a scheme first proposed during World War I to provide cheap electric power to poverty-ridden sections of seven Southern states.] (May 29, 1933) With six pens and a happy smile President Roosevelt last week brought into being the Tennessee Valley Authority, another administrative engine for planned economy. Modeled after the Port of New York Authority, this independent Federal agency, with its own credit and its own crew, is to undertake what the President had called "the widest experiment ever conducted by a government"--the industrial development of a 640,000-sq. mi. watershed. Its domain starts in the wooded heights of the Cumberland and Great Smoky Mountains, sweeps down past Knoxville and Chattanooga, dips into Alabama at Muscle Shoals, turns north through the rolling farm lands of Tennessee and Kentucky and comes to an end at Paducah on the Ohio. In this vast basin the U.S. Government is not only going into business on a grand scale but is inviting U.S. Industry to join it in a project which may change the whole economic character of the central South. Chairman Arthur Morgan's assigned objectives are as follows: 1) flood control works along the Tennessee River to even up its flow between a March torrent and an October trickle; 2) a 9-ft. channel for navigation from Knoxville to Paducah (650 mi.); 3) reforestation of marginal lands to prevent soil erosion and to supply the next generation with a timber crop; 4) decentralization of industry so that Tennessee Valley residents may live on farms while working in factories; 5) manufacture of fertilizer; 6) production and distribution of cheap hydroelectric power. For these purposes the Tennessee Valley Valley Authority is permitted to sell its own 3 1/2% bonds, but not underwritten by the U.S. Treasury. President Roosevelt estimated that the whole integrated project, an old social dream of his and of Nebraska's Senator Norris, would supply 200,000 new jobs and stimulate the "back-to-the-land" movement. If it succeeds, he is ready to experiment similarly with the valleys of the Missouri and the Columbia. [Another government scheme to provide low-cost power was the Rural Electrification Administration, which lent money to be used to supply electricity to farmers. By the end of the 1930s, more than 2,000,000 farmers, mostly in the South, had electric power, up from 750,000 in 1933. With the end of 1933 came the demise of one of the great failed experiments in social reform ever undertaken by an idealistic citizenry: Prohibition.] (July 31, 1933) Repeal of the 18th Amendment looked so close last week that even a good professional Dry like Prohibition Director Alfred Vernon Dalrymple was in favor of letting distilleries resume production immediately under government license to stock up for the coming deluge. "Major" Dalrymple, a hefty, red-faced A.E.F. veteran who spent years chasing 'leggers, personally opposes Repeal which would cost him his job. Yet at New Orleans he declared: "There's no use to kid ourselves and there isn't any use in delaying the start of liquor manufacture. It will mean putting hundreds of thousands of men back to work and it will mean hundreds of thousands of dollars of new business." By the end of the week the State score for Repeal stood 20-to-0. Elections this year in 16 more States were definitely in sight after Colorado's Governor moved for a vote Sept. 4. Postmaster General Farley, who had led the Administration's anti-Prohibition campaign, marched in to see President Roosevelt and report on the situation. Said he afterwards: "The country is safe. We will have the Repeal by Christmas. The President agrees with me." (December 11, 1933) Having existed for 13 years, 10 months, 19 days, national Prohibition came to an end Dec. 5 at 5:32 p.m. E.S.T. at Salt Lake City when Utah became the 36th State to ratify the 21st Amendment. [Nothing the government had so far attempted, however, was really coping with the biggest, most widespread problem: unemployment. More, faster, better relief--direct relief--was needed. Thus were born those agencies that came to epitomize the "make-work" efforts of the New Deal, which one commentator described as "setting people to rake leaves in a windstorm." They were largely the brainchild of Roosevelt's idealistic federal relief administrator Harry Hopkins. Through his Civil Works Administration Hopkins swiftly put 4,000,000 people to work at 40 cents an hour; through the Federal Emergency Relief Administration, which became the Works Progress Administration (WPA) in 1935, he distributed $10 billion and became the nation's biggest employer. Harold Ickes' Public Works Administration (PWA) also spent billions and employed millions on such super-projects as the Grand Coulee Dam and New York's Triborough Bridge. But Hopkins spent nearly 86 cents of every relief dollar in wages, and specialized in paying people to do what they did best, be it painting, acting, singing, writing or photography.] (February 19, 1934) Acts of God bear awesome names. Last week's was called Anticyclone. With His hand He described an Arctic Circle on the map of the U.S., and everywhere within that circle thermometers fell so low that only artificial warmth divided Life from Death. Such icy weather found one out of every six inhabitants of the U.S.--20 million people--with no means of obtaining fire or food, except from the public purse. Thus did the finger of God point at Harry Lloyd Hopkins. Also at him pointed the fingers of 435 Congressmen and 96 Senators. For in the midst of God's great Anticyclone, an accounting was taken of the $900,000,000 which Harry Hopkins has doled out to fulfill President Roosevelt's promise that no one in the U.S. shall go hungry or cold in the fifth winter of the Depression. And to Harry Hopkins last week was also given a sum of money even larger to carry on unemployment relief until May makes life easier. Without the latter, 4,000,000 people would have been turned off, payless, in the midst of the winter's bitterest cold. Those who want direct relief--the thing Herbert Hoover stubbornly set his face against for four hard years--have to register with local offices, are investigated to see if they are really without income, then are given orders good with grocers for food, or with landlords for rent. After starting in this way, Mr. Hopkins branched out and gave "work relief" to those who could work. A man getting $7 a week in grocery orders was asked to work on the roads or other public projects at the local rate of wages for enough hours to earn his $7. Said Mr. Hopkins: "We found that when we started work relief, many people, fine people, who would not come to us for direct relief would come for work relief because they said it was a job." Soon he had 2,000,000 people on work relief. Next step was to start the Civil Works Administration. The Public Works Administration. The Public Works Administration was not getting people employed fast enough. Industry under NRA had not, as expected, soaked up the great puddles of urban unemployment. So in November CWA was set up and PWA allotted it $4,000,000,000 with which to hire 4,000,000 men and put them to work by mid-December. Snip, snip, snip, Mr. Hopkins began to cut red tape. He and many of his relief assistants stepped over to work simultaneously for CWA. (CWA's own pay roll has 204 employees, is less than $30,000 a month.) A week after he started he held a meeting in the Mayflower Hotel attended by over 1,000 mayors, governors, state relief administrators from every state, told them his plans. They were to hire at once 2,000,000 people already on work relief. Then they were to hire 2,000,000 more through the Federal Employment Service. They were not to take them from the relief rolls because 1) Mr. Hopkins did not want all the unemployed in the U.S. asking for relief in order to get a job. 2) He wanted to give jobs to many who were too proud to ask relief. In most states state Relief Administrators were made state CWA Administrators. With PWA's $400,000,000, CWA was to use PWA's wage scale; 40 cents to 50 cents an hour for common labor, $1 to 1.20 an hour for skilled labor. Work was to be started on projects which would have social value, which could be completed in two months. (At the start CWA only had funds to last to Feb. 15.) Building feeder roads in the country (not main highways), widening and repaving streets in cities were the chief jobs. About 1,200,000 CWA employees now work on such projects. Other projects: repairing and decorating schoolhouses and public building paths, control of pests (malaria, cattle ticks, etc.), building sewers and improving sanitation ditches. Things had to be started quickly. Local officers were to suggest projects, state officials were to O.K. them, without waiting for approval from Washington. Furthermore, all projects were to be entered upon without contracts which have to be passed on by many legal authorities, and thus slow down any emergency program. No stipulation was made that local authorities had to contribute money, but CWA made many promise to pay the costs of materials. A special effort was made to find CWA projects for women and for skilled laborers. Actually about 5% of those hired were skilled. Many strange things had to be found for the white collar people to do. For example, last week in Missouri a group of professional singers headed by Miss Edna Haseltine was hired at 35 cents an hour, sent out into the Ozark hills to give grand opera--only it was not called that for fear the natives would not attend. Admissions charged in different towns were turned back to buy materials for local CWA projects. Elsewhere unemployed musicians were hired to give public symphonies, unemployed actors to give public plays. Said Mr. Hopkins: "Great art...is confined to a few people. If it is good for 20,000 people it will be good for 20,000,000. "Similarly two men with a reading knowledge of Russian were hired to study the effect of temperature and rainfall on the Russian wheat crop. Twelve others arranged the books on the shelves of the Department of Agriculture library, cleaned the volumes, oiled their leather bindings. [Practically since 1929, and certainly since investigative hearings began in 1932, Congress had been trying to pin the blame for the Depression on the stock market. Numerous irregularities in the market's operations were uncovered, as well as the deleterious effects of trading stocks with insufficiently secured margin accounts, which tended to produce a spiral effect on prices during a market downturn. In 1933-34, Congress passed two important bills to regulate the issuing of new stock, margin requirements and the overall operation of the market.] (June 12, 1933) Felix Frankfurter, Vienna-born Jew whose name shines brightest in the most famed law school of the U.S., had written a law. The President had signed it. And last week every firm of corporation lawyers in the land, including nearly all the cleverest pupils of Harvard's Professor Frankfurter, sidetracked most of their other business to find a way to finance U.S. industry without disrupting the existing financial system. They could not; their professor had out-smarted them ("with diabolical brilliance"); and some were vexed. Some were even alarmed. As far as they could see at first glance--and they had been trained to see through any law--the so-called Securities Act had made it practically impossible for any corporation to raise any new capital. President Roosevelt started out to get a law which would effectively tell the buyer of a bond or a stock what he was buying, and thereby put an end to a system which permitted fraud & folly. After several ridiculous attempts had been made to write the Securities Act it was turned over to Professor Frankfurter. The Securities Act can be considered in two main parts: 1) Issuing new stocks and bonds; 2) buying & selling stocks and bonds already issued. Will any corporation be able to raise any more money? Before any bonds or stocks can be issued a company's directors must sign and "register" with the Federal Trade Commission a complete account of the company's affairs. If any "material" fact is misstated or if any "material" fact is omitted, each director is liable for the loss incurred by a buyer of the security. Few lawyers were prepared to advise businessmen last week that they could afford to take any such chance. There must always be a risk in buying or selling a security. In the past, too much of the risk has been passed on to the buyer. The purpose of the Securities Act is obviously to place the largest part of the risk with the seller. [Many an honest seller of an honest stock worried last week and hedged himself about with every precaution. Although the registration of securities becomes compulsory only this month, securities issued since the law was passed are subject to its fraud provisions. Many an old and conservative institution has altered its whole way of doing business in an effort to put an anchor or two to windward in a sea of liability. Many a bank has refused to sell bonds except over the counter in its own office, refused to give any information about them by mail. The shadow of the law fell also upon financial advertising. Advertisements of an issue of 63,506 shares of International Mining Corp. common were typical: "This advertisement appears as a matter of record only and is under no circumstances to be construed as an offering of these shares, or as a solicitation of an offer to buy...The offering is made only by the prospectus...copies of which may be obtained from International Mining Corp.... or from its agents, Lehman Brothers."] (June 11, 1934) It took the House 20 minutes to pass the conference report on the Securities Exchange Bill of 1934 last week. The Senate followed suit almost as quickly. When President Roosevelt returned from his New York week-end, the product of a quarter century of liberal agitation and four months of bitter legislative wrangling lay on his desk for signature. Wall Street scarcely noted the bill's passage. On the New York Stock Exchange stocks were slipping to new lows for the year. Trading volume dwindled to the slowest pace in eleven years. With regulation a fact, weary brokers frankly admitted that in their fight against a Federal strait-jacket they had painted the future somewhat blacker than it was likely to be. Their business would be different under Federal rule but by no means extinct. Fresh from the hands of Ferdinand Pecora and his young legalities, the original bill was a dogmatic double decalog for brokers, bankers and businessmen. The bill finally enacted still bristled with penalties, liabilities and thou-shalt-nots, but many of its cutting edges had been removed. No longer is a banker both a broker and dealer by definition. No longer is a bank forbidden to loan on sound but unlisted local securities. The odd-lot business and arbitrage are not annihilated by loose language. Even the much disputer margin requirements (45% for a starter) may be altered by the Federal Reserve Board. Most important of all the new Federal Securities & Exchange Commission, established to administer both the Exchange Act and the Securities Act, is given broad discretionary powers to modify and exempt. Instead of welter of specific prohibitions, control becomes largely a matter of "such rules and regulations as the Commission may prescribe." The Federal Reserve Board, which has complete control over all stock-market credit, is likewise permitted to use its judgment. Almost the only sections which still stand practically unchanged are those dealing with information required from listed corporations, their officers, directors and big stockholders. [One piece of New Deal legislation that had very little direct effect in the 1930s but profoundly changed life in the next half-century for America's aged was the Social Security Act of 1935, which provided for federally funded old-age pension as well as federally aided unemployment insurance. Finding the formulas for how much to pay and how to finance it had delayed the bill's passage, but there was great pressure from the public.] (January 28, 1935) President Roosevelt sent a message to Congress: "It is overwhelmingly important to avoid any danger of permanently discrediting the sound and necessary policy of Federal legislation for economic security by attempting to apply it on too ambitious a scale before actual experience has provided guidance for the permanently safe direction of such efforts. The place of such a fundamental in our future civilization is too precious to be jeopardized now by extravagant action." Within the hour an Administration Bill embodying the Committee's proposal was in the legislative hopper. Its chief points: 1) The Federal Government will pay half the amount of State pensions to poor persons now over 65 but not more than $15 a month. 2) All persons under 65, and earning $250 a month or less, would be compulsory members of a Federal annuity system. Funds for these annuities like funds for unemployment insurance will be raised by a payroll tax: 1% for the first five years, 2% for the next five and so on up to a maximum tax of 5%. The tax will be paid by employers who will deduct half of it from the pay envelope of each employee. Thus a clerk getting $20 a week will at first get $19.90 and a stamp for a 10 cent contribution to the annuity fund. By the time the tax reaches 5% the $20 a week clerk will get $19.50 in his envelope and 50 cents in annuity stamps. No annuities would start until after the system had been in operation five years. The size of the annuities would vary with the number of weekly contributions to the annuity fund. The maximum that any one over 65 would get, after contributing to the annuity fund for 45 years, would be 40% on the first $150 of his monthly wage. Thus if a man works at a wage income of $100 a month for 45 years he will have contributed $1,050 to the annuity fund and his employers an equal amount. The total sum, $2,100 even with 3% interest added, cannot provide many $40-a-month pension payments. On the other hand a man of 20 cannot expect on the average to live beyond 66 so that the Government figures on breaking even. (April 29, 1935) Some Congressional hearts bled more profusely than others, with the result that the House was swamped with amendments to liberalize the benefits of Social Security bill. Offered, only to be thumbed down by a topheavy majority, were the Townsend Plan, with $200 per month pensions for all over 60; the Lundeen Plan, with a minimum of $10 per week payments to all jobless. Though possibly not one member out of five understood the implications of the bill or its probable consequences, the House was overwhelmingly of the opinion that Social Security was a good thing politically to vote for, a dangerous thing to vote against. Result: Passage, 371-to-33. [Most of the New Deal legislation was by then in place. It embodied controversial principles, and much of it hadn't even worked very well to aid recovery, but the Administration was stunned when two of its most basic structures, AAA and NRA, were declared by the U.S. Supreme Court to be unconstitutional.] (June 3, 1935) The Chief Justice announced that he would read the Court's decision concerning four poulterers from Brooklyn. NRA Administrator Donald Richberg visibly stiffened and grew pale. The Chief Justice had just stated flatly that the nine Justices unanimously agreed that the power of code-making was an unconstitutional delegation of legislative authority by Congress. That meant that 557 authority by Congress. That meant that 557 NRA codes were no longer the law of the land. Said Chief Justice Hughes: "The point is urged that the national crisis demanded a broad and intensive cooperative effort by those engaged in trade and industry. It does not seek merely to endow voluntary trade or industrial associations or groups with privileges or immunities. "It involves the coercive exercise of the law-making power. "...Instead of prescribing rules of conduct, it authorizes the making of codes to prescribe them. "...We think that the code-making authority thus conferred is an unconstitutional delegation of legislative power." Mr. Richberg was a very glum man as he left the Court, started for the White House. "The decision was rather sweeping," he murmured. Emerging from a solemn conference with the President. Mr. Richberg announced that codes would no longer be enforced, asked employers please to obey them anyway. (January 13, 1936) A soft Chunk, chunk sounded from the press benches as pneumatic tubes carried down to the press room below the news that the Supreme Court was about to pass on the AAAct in a test case brought by the Government against a New England textile mill regarding the cotton processing tax. In slow precise tones, seldom consulting the written opinion that lay before him, Mr. Justice Roberts proceeded to outline the law and the nature of the case. For some minutes none of the hearers in the crowded courtroom knew which way the decision would go. Gradually the general tenor of the argument became adverse. Then came the words: "The tax, the appropriation of the funds raised, the direction for their disbursement are but part of the plan. They are but means to an unconstitutional end." Chunk...chunk...chunk, chunk. The pneumatic tubes shot the news to a waiting world. AAA was dead as NRA. Once again the Supreme Court had knocked a prime prop from under the New Deal. [The care of the AAA legislation was embodied in the Soil Conservation Act of 1938 and provided the basis for the morass that is federal farm policy today. Some of the NRA were incorporated into the National Labor Relations Act (the Wagner Act) of 1935. Rather surprisingly, the Supreme Court upheld the act's constitutionality two years later, and it became "Labor's Magna Carta."] (April 8, 1935) Across West Virginia coal fields, through Ohio tire towns, around Michigan automobile factories, over Pennsylvania steel plants and past New England textile mills, the first warmish winds of early spring last week wafted vehement talk of strikes. This chorus of discontent was music to the ears of Labor's leaders, assembled in Washington. For weeks they had been using, with no great success, all their powers of peaceful persuasion to induce Congressional committees to act upon a stack of labor legislation. By last week they were resorting to threatening strike talk as a means of blasting their pet measures through to enactment. Prime goal of every strike-talking A.F. of L. leader last week was passage of Senator Robert Wagner's National Labor Relations Bill. It proposes to set up a supreme National Labor Relations Board empowered to enforce the right of any union which can poll a majority of a plant's workers to represent them all in collective bargaining. Under such a system the A.F. of L. would have to organize only 51% of an industry to take over 100% control of its labor. Well aware of this fact were the manufacturers who crowded the Senate and house Labor Committee's rooms last week to object to the Wagner bill. Goodyear Tire & Rubber Co.'s President Litchfield cried out against proposed policing of all employer-employe relations by Federal agencies. President Henry I. Harriman of Chamber of Commerce of the U.S. called majority rule in collective bargaining "un-American and unethical." (July 1, 1935) Same day that the Senate passed the Social Security Bill, the House passed the Labor Disputes Bill, sent it likewise to conference. This act will establish a new class of crimes of which employers only can be guilty: "Unfair labor practices." These will include coercing employees not to join a union, dominating or contributing money to a union (i.e. having a company union), "refusing to bargain collectively." Besides assuring Labor of its right to organize and bargain collectively--the substance of section 7a of the late Recovery Act--the measure gives new powers to the Labor Board, provides that any union wining a majority of the votes in a plant election shall represent all employees in that plant. Many a good lawyer regards this Labor bill as unconstitutional. Although the House dressed it up, it attempts to do exactly what the Supreme Court declared the Government could not do in the Schechter Case: use the interstate commerce clause of the Constitution to regulate Labor relations in intrastate business. </body> </article> </text>