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The New Deal: National Power Over Business

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The Civil War did not settle the question of the proper balance of power between national government and business interests. In the years following the war, the courts struck down both state and national laws regulating business. In 1895 Pollock v. Farmer’s Loan and Trust Co. held that the federal income tax was unconstitutional (until it was legalized by the Sixteenth Amendment to the Constitution in 1913).16 Lochner v. New York (1905) said that states could not regulate working hours for bakers.17 This ruling was used as the basis for rejecting state and national regulation of business until the middle of the New Deal in the 1930s. Hammer v. Dagenhart (1918) said that national laws prohibiting child labor were outside Congress’ power to regulate commerce and therefore were unconstitutional.18

Description

Redefining American Government This highly partisan contemporary cartoon shows President Franklin Roosevelt cheerfully steering the American ship of state toward economic recovery, despite detractors in big business. New Deal policies redefined the scope of both national and state powers.

Granger, NYC — All rights reserved.

Throughout the early years of Franklin Roosevelt’s New Deal, designed amid the devastation of the Great Depression of the 1930s to recapture economic stability through economic regulations, the Supreme Court maintained its antiregulation stance. But the president berated the Court for striking down his programs, and public opinion backed the New Deal and Roosevelt himself against the interests of big business. Eventually the Court had a change of heart. Once established as constitutional, New Deal policies redefined the purpose of American government and thus the scope of national and state powers. The relationship between nation and state became more cooperative as the government became employer, provider, and insurer of millions of Americans in times of hardship. Our Social Security system was born during the New Deal, as were many other national programs designed to get America back to work and back on its feet. A sharper contrast to the laissez-faire policies of the early 1900s can hardly be imagined.

Keeping the Republic

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