By then the New Deal, as an era of far-reaching social reform, had already begun to recede. One reason was that more and more southern Democrats were finding themselves at odds with Roosevelt’s policies. In 1938, the administration released a “Report on Economic Conditions in the South,” along with a letter by the president referring to the region as “the nation’s No. 1 economic problem.” The document revealed that the South lagged far behind other parts of the country in industrialization and investment in education and public health. Its per capita income stood at half that of the rest of the nation. Also in 1938, a new generation of homegrown radicals—southern New Dealers, black activists, labor leaders, communists, even a few elected officials—founded the Southern Conference for Human Welfare to work for unionization, unemployment relief, and racial justice.
Until the late 1930s, prominent southern Democrats had been strong supporters of the New Deal, while at the same time working to shape legislation to allow for the local administration of relief and the exclusion of most black workers. Now, southern business and political leaders feared that continuing federal intervention in their region would encourage unionization and upset race relations. Roosevelt concluded that the enactment of future New Deal measures required a liberalization of the southern Democratic Party. In 1938, he tried to persuade the region’s voters to replace conservative congressmen with ones who would support his policies. The South’s small electorate dealt him a stinging rebuke. In the North, where the economic downturn, the “Court-packing” plan, and the upsurge of CIO militancy alarmed many middle-class voters, Republicans increased their congressional representation.
A period of political stalemate followed the congressional election of 1938. For many years, a conservative coalition of southern Democrats and northern Republicans dominated Congress. Further reform initiatives became almost impossible, and Congress moved to abolish existing ones, beginning with the Federal Theater Project, which had alarmed conservatives because of the presence of radicals and homosexuals on its payroll. Congress repealed an earlier tax on corporate profits and rejected a proposed program of national medical insurance. The administration, moreover, increasingly focused its attention on the storm gathering in Europe. Even before December 1941, when the United States entered World War II, “Dr. Win the War,” as Roosevelt put it, had replaced “Dr. New Deal.”