In dramatic contrast to the first term, very little major legislation was passed in the second term. There was a United States Housing Authority (1937), a second Agricultural Adjustment Act and the Fair Labor Standards Act (FLSA) of 1938, which created the minimum wage. When the economy began to deteriorate again in late 1937, Roosevelt responded with an aggressive program of stimulation, asking Congress for $5 billion for WPA relief and public works. This managed to eventually create a peak of 3.3 million WPA jobs by 1938.
The Supreme Court was the main obstacle to Roosevelt's programs during his first term. In 1935, the Court ruled that the National Recovery Act was an unconstitutional delegation of legislative power to the President. It also ruled that some other pieces of New Deal legislation were unconstitutional. In addition, the Court reversed the President’s dismissal of William E. Humphrey from the Federal Trade Commission. The decision on Humphrey "is said to have nettled the President more than any other, but when he held a lengthy press conference and denounced the Supreme Court for taking the country back to a "horse-and-buggy" concept of interstate commerce it was the NRA decision that he had in mind." Roosevelt proposed a "persistent infusion of new blood" by enlarging the Court so that he could appoint more sympathetic judges. This "court packing" plan ran into intense political opposition from his own party, since it seemed to upset the separation of powers which is one of the cornerstones of the American constitutional structure. Roosevelt was forced to abandon the plan, but the Court also drew back from confrontation with the administration by finding the Labor Relations Act and the Social Security Act to be constitutional. Deaths and retirements on the Supreme Court soon allowed Roosevelt to make his own appointments to the bench. Between 1937 and 1941, he appointed eight justices to the court.
Determined to overcome the opposition of conservative Democrats in Congress (mostly from the South), Roosevelt involved himself in the 1938 Democratic primaries, actively campaigning for challengers who were more supportive of New Deal reform. His targets denounced Roosevelt for trying to take over the Democratic Party and used the argument that they were independent to win reelection. Roosevelt only defeated one target: a conservative Democrat from New York City. The Southern Congressmen forged a Conservative coalition with congressional Republicans, virtually ending Roosevelt's ability to get his domestic proposals enacted into law. The minimum wage law of 1938 was the last substantial New Deal reform act passed by Congress.
The rise to power of Adolf Hitler in Germany aroused fears of a new world war. In 1935, at the time of Italy's invasion of Abyssinia, Congress passed the Neutrality Act, applying a mandatory ban on the shipment of arms from the U.S. to any combatant nation. Roosevelt opposed the act on the grounds that it penalized the victims of aggression such as Abyssinia, and that it restricted his right as President to assist friendly countries, but public support was overwhelming so he signed it. In 1937, Congress passed an even more stringent act, but when the Sino-Japanese War broke out in 1937, public opinion favored China, and Roosevelt found various ways to assist China.
In October 1937, he gave the Quarantine Speech aiming to contain aggressor nations. He proposed that warmongering states be treated as a public health menace and be "quarantined." Meanwhile he secretly stepped up a program to build long range submarines that could blockade Japan. When World War II broke out in 1939, Roosevelt rejected the Wilsonian neutrality stance and sought ways to assist Britain and France militarily. He began a regular secret correspondence with Winston Churchill discussing ways of supporting Britain.
Roosevelt turned to Harry Hopkins for foreign policy advice, who became his chief wartime advisor. They sought innovative ways to help Britain, whose financial resources were exhausted by the end of 1940. Congress, where isolationist sentiment was in retreat, passed the Lend-Lease Act in March 1941, allowing America to "lend" huge amounts of military equipment in return for "leases" on British naval bases in the Western Hemisphere. In sharp contrast to the loans of World War I, there would be no repayment after the war. Roosevelt was a lifelong free trader and anti-imperialist, and ending European colonialism was one of his objectives. Roosevelt forged a close personal relationship with Churchill, who became British Prime Minister in May 1940.
In May 1940, a stunning German blitzkrieg overran Denmark, Norway, the Low countries and France, leaving Britain vulnerable to invasion. Roosevelt, who was determined to defend Britain, took advantage of the rapid shifts of public opinion. A consensus was clear that military spending had to be dramatically expanded. There was no consensus on how much the U.S. should risk war in helping Britain. FDR appointed two interventionist Republican leaders, Henry L. Stimson and Frank Knox, as Secretaries of War and the Navy respectively. The fall of Paris shocked American opinion, and isolationist sentiment declined. Both parties gave support to his plans to rapidly build up the American military, but the isolationists warned that Roosevelt would get the nation into an unnecessary war with Germany. He successfully urged Congress to enact the first peacetime draft in United States history in 1940 (it was renewed in 1941 by one vote in Congress). Roosevelt was supported by the Committee to Defend America by Aiding the Allies, and opposed by the America First Committee.
Roosevelt used his personal charisma to build support for intervention. America should be the "Arsenal of Democracy," he told his fireside audience. In August, Roosevelt openly defied the Neutrality Acts with the Destroyers for Bases Agreement, which gave 50 American destroyers to Britain in exchange for base rights in the British Caribbean islands. This was a precursor of the March 1941 Lend-Lease agreement which began to direct massive military and economic aid to Britain, China and Russia.