Third New Deal

The “Third New Deal” refers to domestic policy developments in the second and third terms of President Franklin D. Roosevelt. A distinction between a First New Deal of 1933 that emphasized recovery and relief, and a Second New Deal of 1935 concerned especially with social reform, has long provided one important framework for understanding the New Deal. The period after 1935 seemed far less significant, as a more conservative Congress and then the prosperity and global priorities of World War II stymied efforts to expand the New Deal.

But a number of New Deal scholars now recognize a Third New Deal that began to take shape in Roosevelt’s second term and that was perhaps as important to postwar American government as the bursts of liberal reform in 1933 and 1935 that created the modern regulatory welfare state. As with the First and Second New Deals, scholars do not always agree on precisely what the Third New Deal entailed. Some, for example, emphasize efforts to enhance the policy planning and coordination capacity of the executive branch by such means as the Executive Reorganization Act of 1939 and the National Resources Planning Board. But a consensus has come to emphasize two related aspects of a Third New Deal: a more conservative political atmosphere in Washington and the nation that prevented significant expansion of the New Deal; and a new focus of liberalism on government spending to produce full-employment prosperity.

The key event leading to this Third New Deal was the recession of 1937-1938. Together with such other events as the court-packing plan of 1937 and labor unrest, the 1937-38 recession eroded President Roosevelt’s popularity and power, helped produce a conservative coalition of Republicans and conservative Democrats in Congress, and fueled Republican gains in the 1938 elections. Henceforth, Roosevelt would not have Congresses nearly so cooperative as those of 1933 and 1935. But the recession also persuaded a growing number of New Deal economists and policymakers that deliberate deficit spending based on Keynesianism was the way out of the Great Depression and that spending on social programs could underwrite both recovery and reform.

World War II then confirmed and reinforced patterns under way in the late 1930s. Particularly after the 1942 congressional elections, the conservative coalition became even more powerful in Washington. As war priorities became paramount, and as the massive wartime deficit spending brought full employment and rising living standards, several New Deal relief agencies were terminated, and liberals stood little chance of expanding social welfare programs or enacting new ones. Wartime mobilization efforts, though ultimately successful, showed the difficulties of federal micromanagement of the economy—and also the ability of business and the military to “capture” government agencies designed to regulate the economy. At the same time, wartime prosperity proved the resiliency of the American economy and corroborated the theory that deficit spending could produce prosperity. Moreover, fiscal policy—taxing and spending—did not entail government control of the economy, was politically more feasible than major new economic and social reform, and brought obvious gains to working - and lower-class Americans by producing full-employment prosperity. Although Roosevelt and other liberals talked about a far-reaching Economic Bill of Rights toward the end of the war, the Full Employment Bill proposed in 1945 embodied the change in liberal priorities from the more aggressive economic reform and regulation of Roosevelt’s first term. The emphasis on fiscal policy and full-employment prosperity of the Third New Deal would continue (along with a new emphasis on civil rights) to characterize liberalism in the postwar era.

Further reading: John W. Jeffries, “A ‘Third New Deal’? Liberal Policy and the American State, 1937-1945,” Journal of Policy History 8, no. 4 (1996): 387-409.

Further reading: W. A. Swanberg, Norman Thomas, The Last Idealist (New York: Scribner’s, 1976).

—Aimee Alice Pohl

Thomas, Norman (1884-1968) socialist leader, pacifist

Pacifist, civil libertarian, writer, and longtime leader of American SOCIALISTS, Norman Thomas headed the U. S. Socialist Party from 1928 until his death in 1968 and was a six-time candidate for the presidency on its ticket.

Norman Mattoon Thomas was born in 1884 in Marion, Ohio, into a family of Presbyterian ministers. He graduated from Princeton University and then from Union Theological Seminary, where he became a disciple of the Social Gospel movement. Ordained in 1911, Thomas had become a pacifist by 1916. In 1917, motivated by the poverty he had witnessed, he identified himself as a Christian Socialist. During World War I, Thomas helped found the National Civil Liberties Bureau, predecessor of the American Civil Liberties Union. He joined the Socialist Party in 1918, and in 1921 he became associate editor of the Nation, a major journal of the left. During the 1920s and early 1930s, Thomas worked for reform in New York City, running for mayor twice. He first ran for president as a Socialist Party candidate in 1928, polling less than 300,000 votes.

In the election Of 1932, Thomas won almost 900,000 votes, a disappointing total (just 2 percent of the popular vote) for the Socialists in the midst of the Great Depression. Many New Deal policies reflected important parts of Thomas’s platform, including RELIEE for the unemployed and impoverished and support for the rights of labor. When President Franklin D. Roosevelt achieved some of the goals of the Socialist platform, many of Thomas’s followers left the Socialist Party for the Democratic Party. In the election oe 1936, Thomas polled some 190,000 votes. Increasingly frustrated with both the church and marxism in the 1930s, Thomas resigned his ordination, condemned Stalinism, and tried to build up the non-marxist wing of the Socialist Party. He continued to be active in the fight to protect civiL liberties, working for the release of Communist Party leader Earl Browder and for civiL rights, supporting antilynching legislation and the Southern Tenant Farmers Union.

Although Thomas opposed U. S. entry into World War II before Pearl Harbor, he supported the U. S. war effort afterward. During the war he condemned the relocation of Japanese Americans, aided conscientious objectors, and protested racial inequality. He remained active until he died in 1968 at the age of 82, helping victims of anticommunist legislation, founding the antinuclear organization Committee for a Sane Nuclear Policy (SANE), and protesting against the Vietnam War.

Townsend, Francis E. (1867-1960) advocate for old-age pensions

Francis Everett Townsend, a retired physician in Long Beach, California, mobilized many of the elderly during the Great Depression into a mass movement demanding a retirement pension. The passage of the Social Security Act of 1935 led to the decline of Townsend’s movement. While Townsend continued to advocate his plan of a $200 per month pension for the elderly, what had seemed to be a potent challenge to President Franklin D. Roosevelt and the New Deal in the mid-1930s dwindled away as Social Security programs benefited Townsend’s constituency.

Born on January 13, 1867, Townsend had grown up in Nebraska and, until he entered medical school in 1897, had failed at several ventures, including farming and sales. Setting up his medical practice in South Dakota, Townsend spent the next several decades with a comfortable practice. But concerns about his health led him to relocate in 1919 to the more comfortable climate of Long Beach, California, where he set up a new practice and lived in relative obscurity.

Townsend claimed that the idea for his plan to help the elderly came from a vision he had when he watched three elderly women searching for scraps in garbage cans near his home in 1933. But however it came about, Townsend began to publicize his idea for a $200 per month pension for all persons over age 60. The Townsend Plan, as it came to be called, was to be funded through a 2 percent sales tax, with pension recipients to spend the entire $200 by the end of each month. Townsend promoted his plan as pumping money back into the economy, taking “surplus workers” out of the labor market, and providing economic security for the nation’s elderly. The plan was economically unsound, for, as Townsend’s critics pointed out, estimates indicated that the plan would have cost up to half of the nation’s income and possibly doubled the tax burden on younger generations. But despite the flaws in the plan, Townsend had hit upon an issue that carried tremendous appeal.

Following Townsend’s publication of his plan in the Long Beach Press-Telegraph in September 1933, the Townsend movement grew explosively. Townsend formalized his organization on January 1, 1934, when he created the Old-Age Revolving Pensions, Ltd., and launched a weekly newsletter. The organization began circulating a petition for a federal old-age pension and quickly spread beyond California. By mid-1935, perhaps as many as 25 million people had signed the petition, while about 5,000 local Townsend clubs (which claimed to have more than 2.2 million members) had sprung up around the nation. There were at least 500,000 dues paying members, and it appeared that Townsend had wide support in Congress for his pension plan.

In early 1935, a Townsend-supported congressman introduced the Townsend Plan in Congress. The plan was easily defeated, with many congressmen recognizing its impracticality and expense. (Many also did not want to be on record as voting against it, and some 200 members of the House of Representatives were absent when the vote came up.) Coming just before President Franklin D. Roosevelt sent Congress the Economic Security Bill (which became the Social Security Act), the popularity of Townsend’s plan may have helped the old-age programs of Social Security gain increased support in Congress as a more realistic method to assist the elderly.

The passage of the Social Security Act in August 1935 did not end Townsend’s quest for an across-the-board pension, for he felt the act did not do enough to support the elderly. Partly because Roosevelt had opposed the Townsend plan, the doctor became a major, though soft-spoken, opponent of the president as the election OF 1936 approached. Recognizing that many of his supporters were also drawn to Senator Huey P. Long and Father Charles E. Coughlin, Townsend made overtures to these two men about forming a loose alliance. But his distaste for them was apparent in his lukewarm support for the Union Party, formed by Father Coughlin and supported by Long’s organization to challenge Roosevelt in the 1936 election. While Townsend lent his endorsement to the Union Party in the 14 states where it was on the ballot, he preferred Republican Party candidate Alfred M. Landon. The dismal showing by the Union Party allowed Townsend to distance himself from Coughlin, and he returned to advocating his pension plan.

Townsend spent the next several decades trying to replace Social Security with his plan. But the Social Security Act had sapped much of his support and his attempts to reintroduce it in Congress never went very far. Townsend died on September 1, 1960, having failed to achieve his plan but contributing to the organization of one of the largest lobbying groups in American politics, the elderly.

Further reading: Abraham Holtzmann, The To-wnsend Movement: A Political Study (New York: Brookman Associates, 1963).

—Katherine Liapis Segrue