Abstract
The success of New Deal efforts to secure industrial recovery was strictly limited. Between 1933 and 1937 the American economy grew at an annual rate of 10 per cent, but output had fallen so low after 1929 that even this growth left 14 per cent of the workforce unemployed. A recession in 1937 quickly shot the unemployment rate back up to 19 per cent. Well into 1941 unemployment remained at over 10 per cent.
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Bibliographical Essay
The starting point for any study or the New Deal and industrial recovery must remain Ellis W. Hawley’s magisterial, The New Deal and the Problem of Monopoly (Princeton University Press: Princeton, 1966). Subsequent scholarship may have supplemented his study or fleshed out additional detail but has done little to alter the basic shape to the policy struggles of the 1930s which Hawley established. He himself summarised his own findings and took notice of other work in a brilliantly concise ‘The New Deal and Business’ in
John Braeman, Robert Bremner, and David Brody (eds.), The New Deal, vol. 1 The National Level (Ohio State University Press: Columbus, 1975), pp. 50–82. There are two other helpful studies of general recovery policies: Theodore Rosenof’s schematic Dogma, Depression and the New Deal: The Debate of Political Leaders Over Economic Recovery (Kennikat Press: Port Washington, 1975) and
Albert U. Romasco’s, The Politics of Recovery: Roosevelt’s New Deal (Oxford University Press: New York, 1983). Romasco places a salutary emphasis on monetary policy: an emphasis which nevertheless I have not followed in this chapter.
The definitive account of the banking crisis is Susan Estabrook Kennedy, The Banking Crisis of 1933 (University Press of Kentucky: Lexington, 1973). For subsequent banking legislation see
Helen M. Burns, The American Banking Community and New Deal Banking Reforms, 1933–1935 (Greenwood: Westport, 1974).
The conflict between business self-regulation advocates, planners, and market restorers in the formulation and passage of the Industrial Recovery Act is laid out in Hawley, The New Deal and the Problem of Monopoly, pp. 3–52. See also Bernard Bellush, The Failure of the NRA (Norton: New York, 1975), pp. 1–29. For the particular role of trade association leaders see
Robert F. Himmelberg, The Origins of the National Recovery Administration: Business, Government and the Trade Association Issue, 1921–1933 (Fordham University Press: New York, 1976), pp. 181–218, and
Louis Galambos Competition and Cooperation: The Emergence of a National Trade Association (Johns Hopkins University Press: Baltimore, 1966), pp. 173–202.
Edward Berkowitz and Kim McQuaid overstress the positive role of welfare capitalists in launching the NRA in Creating the Welfare State: The Political Economy of Twentieth Century Reform (Praeger: New York, 1980), pp. 78–86. For the diversity of planning proposals, their ‘faddish’ quality, and the lack of any clear proposed mechanism for centralised coercive planning, see
Stuart Kidd, ‘Collectivist intellectuals and the ideal of national economic planning, 1929–33’, in Stephen W. Baskerville and Ralph Willett (eds.), Nothing Else to Fear: New Perspectives on America in the Thirties (Manchester University Press: Manchester, 1985), pp. 15–35,
Otis L. Graham, Toward a Planned Society: From Roosevelt to Nixon (Oxford University Press: New York, 1976), pp. 13–31, and
Richard H. Pells, Radical Visions and American Dreams: Culture and Social Thought in the Depression Years (Harper & Row: New York, 1973), pp. 43–81. For the recovery programme of Justice Brandeis, see
Nelson Lloyd Dawson, Louis D. Brandeis, Felix Frankfurter and the New Deal (Archon: Hamden, Conn., 1980), pp. 29–32, 173–6. For the pressure to devalue the dollar and to inflate the currency see Romasco, The Politics of Recovery, pp. 67–156. Stanley Vittoz stresses the variety of recovery initiatives and emphasises start-up and share-the-work proposals in ‘The Economic Foundations of Industrial Politics in the United States and the Emerging Structural Theory of the State in Capitalist Society: The Case of New Deal Labor Policy’, Amerikastudien 27 (1982), pp. 369–74.
There is no adequate history of the Public Works Administration. The qualities of Harold Ickes which shaped his performance as Administrator — an incurable suspiciousness, a massive self-righteousness, an inflated sense of self-importance, a limitless susceptibility to flattery, and a fierce combativeness — are best savoured in his own diaries, The Secret Diaries of Harold L. Ickes, vol. I The First Thousand Days, 1933–1936, vol. II The Inside Struggle, 1936–1939 (Simon and Schuster: New York, 1953). Graham White and John Maze show how selective the published editions of the diaries were and cast doubt on the reliability of Ickes’s version of many events in Harold Ickes of the New Deal: His Private Life and Public Career (Harvard University Press: Cambridge, Mass., 1985), but while they may illuminate Ickes’s personality, they do not add much to our understanding of the PWA. More helpful is
William D. Reeves, ‘PWA and Competitive Administration in the New Deal’, Journal of American History 60 (1973), pp. 357–72.
The ability of businessmen to dominate both the drafting and the implementation of the NRA codes is demonstrated in general by Hawley, The New Deal and the Problem of Monopoly, pp. 53–71, Bellush, The Failure of the NRA, pp. 30–54, and Peter H. Irons, The New Deal Lawyers (Princeton University Press: Princeton, 1982), pp. 26–34.
Theda Skocpol and Kenneth Feingold, ‘State Capacity and Economic Intervention in the early New Deal’, Political Science Quarterly 97 (1982), pp. 255–79, highlight the ‘virtually complete absence of autonomous capacity to administer industrial planning in the United States policy of the early 1930s’. The consequences in particular industries can be traced in three excellent cases: cotton textiles, Galambos, Competition and Cooperation, pp. 202–26, coal,
James P. Johnson, The Politics of Soft Coal: The Bituminous Industry from World War I Through the New Deal (University of Illinois Press: Urbana, 1979), pp. 150–64, cars,
Sidney Fine, The Automobile under the Blue Eagle: Labor, Management and the Automobile Manufacturing Code (University of Michigan Press: Ann Arbor, 1963), pp. 44–74. For discrimination in the codes against blacks and the reluctance of NRA officials to acknowledge there was a problem see
Raymond Wolters, Negroes and the Great Depression: The Problem of Economic Recovery (Greenwood: Westport, 1970), pp. 98–192. For discrimination against women, see
Lois Scharf, To Work and to Wed: Female Employment, Feminism, and the Great Depression (Greenwood: Westport, 1980), pp. 111–13.
Alice Kessler-Harris, Out to Work: A History of Wage-Earning Women in the United States (Oxford University Press: New York, 1982), pp. 259–71, demonstrates that nevertheless NRA codes did benefit the lowest-paid women workers who were covered and sometimes, combined with industrial rationalisation, opened up opportunities for low-paid women. The Brookings Institution study of the NRA contains a wealth of information on code provisions,
Leverett L. Lyon et al., The National Recovery Administration: An Analysis and Appraisal (Da Capo: New York, 1972 c. 1935).
The challenge to business domination, the policy stalemate that resulted, and the collapse of the NRA are covered by Hawley, The New Deal and the Problem of Monopoly, pp. 72–129, and Bellush, The Failure of the NRA, pp. 55–84, 136–75. For the reaction of women and the Consumers’ Advisory Board see Susan Ware, Beyond Suffrage: Women and the New Deal (Harvard University Press: Cambridge, Mass., 1981), pp. 87–96. For the criticism by midwestern progressives see
Ronald L. Feinman, Twilight of Progressivism: The Western Republican Senators and the New Deal (Johns Hopkins University Press: Baltimore, 1981), pp. 68–73. For business frustration and intra-industry tensions in industries which did want to see the NRA approach abandoned entirely see Galambos, Competition and Cooperation, pp. 227–79, Johnson, The Politics of Soft Coal, pp. 195–216,
Ian Jarman, ‘Harold L. Ickes and United States’ Domestic Oil Policy, 1937–1941’ (Oxford University: M.Litt. Thesis, 1986), pp. 49–90. For complete business disenchantment with the benefits of government regulation see Fine, The Automobile under the Blue Eagle, pp. 141, 410–16, and
James E. Fickle, The New South and the ‘New Competition’: Trade Association Development in the Southern Pine Industry (University of Illinois Press: Urbana, 1980), pp. 117–54. For business reaction to excessive codification and bureaucracy see
Thomas R. Winpenny, ‘Henning Webb Prentiss and the Challenge of the New Deal’, Journal of the Lancaster Historical Society 81 (1977), pp. 1–24,
F. J. Harper, ‘The Small Retailer and the New Deal’ (Paper delivered at the FDR Centennial Colloquium, David Bruce Centre for American Studies, University of Keele, 23 April 1982), and
Ernest B. Fricke, ‘The New Deal and the Modernization of Small Business: The McCreary Tire and Rubber Company, 1930–1940’, Business History Review 56 (1982), pp. 559–76.
The constant problem of enforcing compliance and the final failure to uphold the NRA in the courts is fully elaborated in Irons, The New Deal Lawyers, pp. 35–107. Hawley provides the most balanced overall appraisal of the NRA in The New Deal and the Problem of Monopoly, pp. 130–46. Hugh Johnson himself sadly sums up his principal errors in The Blue Eagle: From Egg to Earth (Doubleday: Garden City, New York, 1935), pp. 295–7.
Michael M. Weinstein, ‘Some Macroeconomic Impacts of the National Industrial Recovery Act, 1933–1935’, in Karl Brunner (ed.), The Great Depression Revisited (Martinus Nijhoff: Boston, 1981), pp. 262–81, argues that not only did the NRA not produce economic recovery but that the codes positively hindered that recovery. The price inflation the NRA induced wiped out any gains that might have resulted from the monetary expansion that began in June 1933. He also suggests however that there was some redistribution of income to labour and some spreading of employment to an increased number of individuals.
The two most important opposing statements of the idea of two New Deals are Basil Rauch, The History of the New Deal (Creative Age Press: New York, 1944), pp. 111–39, 156–90, 256–340, and
Arthur M. Schlesinger Jr, The Politics of Upheaval (Houghton Mifflin: Boston, 1960), pp. 385–423.
Otis L. Graham, ‘Historians and the New Deals, 1944–1960’, Social Studies 54 (1963), pp. 133–40 is an excellent survey of the debate.
See also William H. Wilson, ‘The Two New Deals: A Valid Concept?’, The Historian 28 (1966), pp. 268–88. Two reasoned attempts to identify what did and did not change in 1935 are
William E. Leuchtenburg, Franklin D. Roosevelt and the New Deal, 1932–1940 (Harper & Row: New York, 1963), pp. 162–5, and
Robert S. McElvaine, The Great Depression: America, 1929–41 (New York Times Books: New York, 1984), pp. 250–63.
There have recently been considerable efforts to pinpoint the exact nature of the impact of Brandeis and Frankfurter. The best of these attempts are Dawson, Louis D. Brandeis, Felix Frankfurter and the New Deal, who concluded that ‘The New Deal simply did not do what Brandeis and Frankfurter wanted it to do’, and Michael E. Parrish, Felix Frankfurter and His Times: The Reform Years (The Free Press: New York, 1982), pp. 197–298.
Bruce Allen Murphy, The Brandeis-Frankfurter Connection: The Secret Political Activities of Two Supreme Court Justices (Oxford University Press: New York, 1982), and
Leonard Baker, Brandeis and Frankfurter: A Dual Biography (Harper & Row: New York, 1984), add little to our understanding of the New Deal.
For continued interest in planning after the demise of the NRA see Hawley, The New Deal and the Problem of Monopoly, pp. 169–86, 270–80, Graham, Toward a Planned Society, pp. 45–68, and Rosenhof, Dogma, Depression and the New Deal, Ch. 5. For partial planning and efforts to revive the NRA in particular industries see Hawley, The New Deal and the Problem of Monopoly, pp. 205–69, Johnson, The Politics of Soft Coal, pp. 217–35 and Jarman, ‘Harold L. Ickes and United States’ Domestic Oil Policy’, pp. 91–103. Robert M. Collins, The Business Response to Keynes, 1929–1964 (Columbia University Press: New York, 1981), pp. 23–52, highlights negativistic business opposition to the New Deal.
The definitive history of the complex efforts to regulate the stock market and control public utility holding companies is Michael E. Parrish, Securities Regulation and the New Deal (Yale University Press: New Haven, 1970). Mark Leff unravels the political imperatives behind New Deal tax policy and lucidly demonstrates the limited real, as distinct from symbolic, effects of tax changes in The Limits of Symbolic Reform: The New Deal and Taxation, 1933–1939 (Cambridge University Press: Cambridge, 1984).
The belated New Deal anti-trust offensive is covered in Hawley, The New Deal and the Problem of Monopoly, pp. 404–71, Gene Gressley, Voltaire and the Cowboy: The Letters of Thurman Arnold (Colorado Associated University Press: Boulder, 1977), pp. 39–54, and
Wilson D. Miscumble, ‘Thurman Arnold goes to Washington: A Look at Anti-Trust Policy in the Later New Deal’, Business History Review 56 (1982), pp. 1–15. For an excellent description of big business’s favoured position during World War II, see
Richard Polenberg, War and Society: The United States, 1941–1945 (J. B. Lippincott: Philadelphia, 1972), pp. 5–36, 215–37.
The standard history of fiscal policy in the 1930s is Herbert Stein, The Fiscal Revolution in America (University of Chicago Press: Chicago, 1969), pp. 6–168.
Stephen W. Baskerville analyses the views of professional economists on spending in ‘Cutting loose from prejudice: economists and the Great Depression’, in Stephen W. Baskerville and Ralph Willet (eds.), Nothing Else to Fear: New Perspectives on America in the Thirties (Manchester University Press: Manchester, 1985), pp. 259–84.
He also examines Frankfurter’s early role in pushing Keynes’s ideas in ‘Frankfurter, Keynes, and the Fight for Public Works’, Maryland History 9 (1978), pp. 1–16. The contrasting views of the Secretary of the Treasury and the chairman of the Federal Reserve Board can be clearly traced in Marriner S. Eccles’s own words, Beckoning Frontiers: Public and Personal Recollections (Knopf: New York, 1951), pp. 91–323, and
John Morton Blum, From the Morgenthau Diaries: Years of Crisis, 1928–1938 (Houghton Mifflin: Boston, 1959), pp. 229–451.
Dean L. May, From New Deal to New Economics: An American Liberal Response to the Recession of 1937 (Garland: New York, 1981), is an excellent account of the struggle between Morgenthau and Eccles in the winter of 1937–38 and the crisis of liberal confidence which the recession provoked. For the recession see also Hawley, New Deal and the Problem of Monopoly, pp. 383–403, Romasco, The Politics of Recovery, pp. 216–40, Leff, The Limits of Symbolic Reform, pp. 209–20. Collins, The Business Response to Keynes, 1929–1964, pp. 53–112, describes the acceptance by a small but influential group of businessmen of Keynesian ideas. He also provides the best account of the final decision at Warm Springs in 1938 to resume spending.
John Kenneth Galbraith with engaging, if unconvincing, self-deprecation describes his own role in shaping the ideas of Henry Dennison and his liberal business friends as well as the triumph of Keynesianism in academic circles in ‘How Keynes Came to America’, in Economics, Peace and Laughter (Houghton Mifflin: Boston, 1971), pp. 43–59, and A Life in Our Times: Memoirs (Andre Deutsch: London, 1981), pp. 61–70.
For the inadequacy of the level of New Deal spending for ending the Depression see E. Cary Brown, ‘Fiscal Policy in the Thirties: A Reappraisal’, American Economic Review 46 (1956), pp. 857–79, and
Larry Peppers, ‘Full Employment Surplus Analysis and Structural Change: The 1930s’, Explorations in Economic History 10 (1973), pp. 197–210.
Ross McKibbin raises doubts about the likely success of more avowedly Keynesian policies both in Europe and America in ‘The Economic Policy of the Second Labour Government, 1929–1931’, Past and Present 68 (1975), pp. 95–123.
For the development of liberal confidence, during the war and after, that the means existed to create a full employment economy see Alonzo L. Hamby, Beyond the New Deal: Harry S. Truman and American Liberalism (Columbia University Press: New York, 1973), pp. 3–28, 297–303, and his Liberalism and Its Challengers: F.D.R. to Reagan (Oxford University Press: New York, 1985), pp. 28–30, 48, 60–3.
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© 1989 Anthony J. Badger
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Badger, A.J. (1989). Holidays, Eagles, and Deficits: Finance and Industry. In: The New Deal. American History in Depth. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-18848-2_3
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