The Myth of the New Deal
Great Depression, labor unrest, massive unemployment, growing consciousness among the working classes, bitter hostility toward the multimillion-dollar corporations, failure of the reigning Republican Administration to quiet the brewing explosion—and then the New Deal. The social revolution, which many expected and others feared, failed to materialize. Why? Was it because the New Deal, in its own special way, was indeed a third American Revolution? From the perspective of the 1970s, with the stark realization that the United States had failed to deal with the race question, or to eradicate poverty, or even to begin to deal with the urban crisis, or to handle the general malaise and cultural poverty, or to adapt itself to the growing realization that revolutions abroad would have to be accepted and dealt with on their own terms, all of these events of the past ten years seemingly provided living evidence that a revolution had not occurred.
The new generation of New Left historians have asserted cogently that the New Deal instituted changes that only buttressed the corporate-capitalist order; that the vaunted Welfare State reforms hardly addressed themselves to the existing social needs of the 1930s, not to speak of working to end poverty, racism, and war. Historians Howard Zinn and Barton J. Bernstein have already written critical essays seeking to evaluate the New Deal from a radical perspective,1 and this essay shall not seek to repeat the critique advanced therein. The essence of their critical view has been best expressed by Bernstein:
The liberal reforms of the New Deal did not transform the American system; they conserved and protected American corporate capitalism, occasionally by absorbing parts of threatening programs. There was no significant redistribution of power in American society, only limited recognition of other organized groups. . . . The New Deal failed to solve the problem of depression, it failed to raise the impoverished, it failed to redistribute income, it failed to extend equality and generally countenanced racial discrimination and segregation.2
Once having presented this argument, however, the radical critic has in effect merely chastised the New Deal for what it failed to achieve. This does not work to answer the counterargument that Franklin D. Roosevelt and the New Dealers wanted more, but were stopped short because of the power of the congressional conservative bloc and other impenetrable obstacles.
It is undeniable that to
many of the over-forty generation, Franklin D. Roosevelt was and remains the
unassailable hero—the man who used all the powers at his command to ease the
plight of the dispossessed, and who introduced dramatic reforms that would soon
be accepted by the most staunch Old Guard Republican. That generation remembers
the animosity with which many in the business community greeted
The enemies of the New Deal were wrong. They should have been friends. Security was a prime concern of the insecure thirties. It cut across all classes. Businessmen, by their policies, desperately sought it in lowered corporate debts and tried to get the government to practice the same austerity. Even when ragged and ill-housed, workers opened saving accounts. The New Deal . . . underwrote a vast apparatus of security. But the meager benefits of Social Security were insignificant in comparison to the building system of security for large, established businesses. But like stingy laborers, the frightened businessmen did not use and enjoy this security and thus increase it. The New Deal tried to frame institutions to protect capitalism from major business cycles and began in an unclear sort of way to underwrite continuous economic growth and sustained profits. Although some tax bills were aimed at high profits, there was no attack on fair profits or even on large profits . . . there was no significant leveling by taxes. The proportionate distribution of wealth remained. Because of tax policies, even relief expenditures were disguised subsidies to corporations, since they were in large part paid by future taxes on individual salaries or on consumer goods. Thus, instead of higher wages creating a market, at the short-term expense of profits, the government subsidized the businessman, without taking the cost out of his hide as he expected and feared.3
was suggesting is that the anger of some businessmen was misdirected; another
example of how members of the governing
class can be so shortsighted that they will oppose their own best long-range
interests. The confusion of the businessmen had its mirror image in the high
regard in which so many members of the underclass held F.D.R. and the New Deal.
Before we can begin to deal with these questions, it may be wise to start by citing the answer presented to the New Left historians by the dean of American corporate liberalism, Arthur M. Schlesinger, Jr., author in 1948 of the theory of a crucial "vital center" in American politics. Schlesinger has carefully presented his generation's answer to the New Left, and has defended the traditional view that the New Deal was a major watershed in American history.
A young radical told him, Schlesinger wrote, that all F.D.R. did was
"abort the revolution by incremental gestures." At the
same time, he dangerously cultivated a mood for charismatic mass policies,
dangerously strengthened the Presidency, dangerously concentrated power in the
national government. In foreign affairs, he was an imperialist who went to war
led our nation through a crisis of confidence by convincing the American people that they had unsuspected reserves of decency, steadfastness and concern. He defeated the grand ideologists of his age by showing how experiment could overcome dogma, in peace and in war.4
Schlesinger's writings help us to understand how those who only mildly benefited from the New Deal praised it, defended it, and allowed their experience during the 1930s to shape their social and political attitudes for more than a decade. Undoubtedly, many Americans have the same analysis of Social Security as does Schlesinger.
No government bureau ever directly touched the lives of so many millions of Americans—the old, the jobless, the sick, the needy, the blind, the mothers, the children—with so little confusion or complaint. . . . For all the defects of the Act, it still meant a tremendous break with the inhibitions of the past. The federal government was at last charged with the obligation to provide its citizens a measure of protection from the hazards and vicissitudes of life. . . . With the Social Security Act, the constitutional dedication of federal power to the general welfare began a new phase of national history.5
The assumptions behind
Schlesinger's evaluation of Social Security are those he revealed years
earlier. Writing in his classic The Age of Jackson, Schlesinger noted that
Just as all historians used
to look at the accomplishments of the Progressive Era as antibusiness,
equating state regulation with regulation over business, and with the
assumption that corporate business opposed the new regulatory acts, so do many
historians of the New Deal view the achievements of F.D.R.'s
first two terms as a continuation of the Progressive tradition. The New Deal
thus becomes the culmination of a "progressive" process that began with the age of
This analysis was stated most strongly by Carl N. Degler, when he referred to the New Deal as the "Third American Revolution." Seeing in the various New Deal measures "a new conception of the good society," Degler claimed pathbreaking significance once the "nation at large accepted the government as a permanent influence in the economy." Is such an influence sufficient to describe the New Deal as revolutionary?
To Degler it was. Like Schlesinger, historian Degler saw the Social Security Act as revolutionary because "it brought government into the lives of people as nothing had since the draft and the income tax." Yet another proof of revolutionary effect, even more important, was the "alteration in the position and power of labor." Noting that the decline in union growth had come to an end, and that the new spurt in unionism was that of the industrial unionism of the CIO, Degler argued that it was Robert F. Wagner's National Labor Relations Act that "threw the enormous prestige and power of the government behind the drive for organizing workers." The "placing of the government ot the side of unionization," Degler wrote, "was of central importance in the success of many an organizational drive of the CIO, notably those against Ford and Little Steel."
In summation, the Wagner Act was depicted as revolutionary because, prior to the Act, no federal law prevented employers from discharging workers for exercising their rights or from refusing to bargain with a labor union, whereas after the Act was passed, workers had new rights against their employers. The result, according to Degler, was a truly pluralistic structure to American society. "Big Labor now took its place beside Big Business and Government to complete a triumvirate of economic power." The Wagner Act particularly revealed that:
the government served notice that it would actively participate in securing the unionization of the American workers; the state was no longer to be an impartial policeman merely keeping order; it now declared for the side of labor.
Although the New Deal used traditional rhetoric, Degler asserted, "in actuality it was a revolutionary response to a revolutionary situation."8
This estimate was upheld by even such a critical historian as William E. Leuchtenburg. Although he modified Degler's analysis a degree, by noting that the Wagner Act was partially motivated by a desire to "contain 'unbalanced and radical' labor groups," Leuchtenburg agreed that the New Deal was a "radically new departure." But to Leuchtenburg, the New Deal had major shortcomings. It failed to demonstrate "that it could achieve prosperity in peacetime," perhaps its greatest failure. The fact that the unemployed disappeared only with war production meant to Leuchtenburg that the New Deal was only "a halfway revolution; it swelled the ranks of the bourgeoisie but left many Americans—sharecroppers, slum dwellers, most Negroes—outside of the new equilibrium." But, argued Leuchtenburg, it was a revolution anyway. Here, we might raise the question of what type of "revolution" is it that fails to deal with the most basic problems produced by the old order, especially when an end to unemployment was the key task confronting the first New Deal, and while there were still by Leuchtenburg's count six million unemployed "as late as 1941."9
The myth of a New Deal revolution, or a new departure, or a basic watershed, call it what you will, dies hard. New Left critics have correctly emphasized the New Deal's failures to destroy some part of the myth. But their critique, valuable as it has been, has failed to take up a more essential question. How does one confront the truth that the New Deal obviously did move in new directions, in some ways quite dramatically, and still keep the old order intact? And how is it that, although the old order remained basically untouched and even preserved, Roosevelt and the New Dealers were able to win the everlasting gratitude of the dispossessed and the white working class?
Rather than discuss all of the policies of the New Deal, we can begin to cope with this question by a more thorough look at a few key areas, particularly the National Recovery Administration (NRA), the birth of the Congress of Industrial Organizations (CIO) and the origins of the Wagner or National Labor Relations Act, and the passage of the Social Security Act. These three areas have been pointed to as evidence for the pathbreaking if not revolutionary character of the New Deal. Close attention to them should therefore prove most helpful in arriving at a more historically accurate assessment of what the New Deal wrought.
Most historians have
discussed the Social Security Act in terms of what it offered American citizens
for the first time, not in terms of how and why it was passed. Fortunately,
sociologist G. William Domhoff has enabled us to take
a new look at what lay behind some of the major New Deal reforms.10 Domhoff, following the lead supplied by the New Left
revisionist historians, put his emphasis on the sponsorship of major reforms by
leading moderate big businessmen and
liberal-minded lawyers from large corporate enterprises. Working through reform
bodies such as the American Association for Labor Legislation (AALL) and the
Fraternal Order of Eagles, model bills for social insurance had been proposed
and discussed in the
These proposals had come to
naught. But when the Great Depression hit, the need for reform was clear to
all. The first unemployment bill in the
In June, 1934,
The Committee on Economic
Security got to work after F.D.R.'s speech, and met
eleven times. On
While the friends of social security were arguing out the details of the program, other Americans were regarding the whole idea with consternation, if not with horror. Organized business had long warned against such pernicious notions. "Unemployment insurance cannot be placed on a sound financial basis," said the National Industrial Conference Board; it will facilitate "ultimate socialist control of life and industry," said the National Association of Manufacturers. . . . One after another, business leaders appeared before House and Senate Committees to invest such dismal prophecies with what remained of their authority.
Republicans in the House faithfully reflected the business position.12
Of significance are Schlesinger's last words, "the business position." This telling phrase reveals the ideological mask on reality that helps to hide the manner in which the corporate state maintains its hegemony over the country. Schlesinger not only overstated big-business opposition; he did not account for the support given Social Security by moderate yet powerful representatives of the large-corporation community. Particularly important is the backing given the Act by the Business Advisory Council, which formed a committee on Social Security headed by Gerard Swope, president of General Electric, Walter Teagle of Standard Oil, Morris Leeds of the AALL and Robert Elbert. These men were major corporate leaders, or as Domhoff put it, "some of the most powerful bankers and industrialists in the country."
These business leaders not
only supported the proposed Social Security Act, they visited F.D.R. at the
White House to counter the attack on Social Security coming from the
Henry I. Harriman, retiring president of the United States Chamber of Commerce
H. P. Kendall, Massachusetts business leader
Winthrop W. Aldrich, Chase National Bank
James Rand, president, Remington Rand
W. A. Harriman, Brown Brothers, Harriman
E. T. Stannard, Kennecott Copper Corporation
F. B. Dabis, U.S. Rubber Company
Delancy Kountze, Devote and Reynolds
Charles A. Cannon, Cannon Towels Co.
R. R. Deupree, Procter & Gamble
Gano Dunn, Grace National Bank
Lew Hahn, National Retail Dry Goods
William Julian, Queen City Trust Company
Robert Lund, Lambert Pharmical Company
A. P. Greensfelder, contractor
George H. Mead, Mead Corporation
Sidney Weinberg, Goldman, Sachs
H. H. Heimann, credit association13
Despite the support given
the Act by these key corporate figures, the original bill was to be watered
down by the Congress. This was because many congressmen and senators reflected
their local constituencies, which included local antilabor
and small-town mentality
As Domhoff showed, the Social Security Act was the measured response of the moderate members of the power elite to the discontent of the thirties. These moderates took their program, based on models introduced by various corporate policy-making bodies during the previous twenty years, to the Congress. Congress, however, listened more to the NAM-type businessmen. The result was a legislative compromise between the original moderate and conservative position on the Act. Radicals among labor who wanted a comprehensive social-insurance program remained unsatisfied. It was their pressure, however, that induced the moderates to present their plan to Congress. The demands of the poor and the working class provided the steam that finally brought the modified Act to fruition.
The result, as Domhoff wrote:
from the point of view of the power elite was a re-stabilization of the system. It put a floor under consumer demand, raised people's expectations for the future and directed political energies back into conventional channels. The difference between what could be and what is remained very, very large for the poor, the sick, and the aged. The wealth distribution did not change, decision-making power remained in the hands of upper-class leaders, and the basic principles that encased the conflict were set forth by moderate members of the power elite.
Social Security may have been a symbolic measure of the new Welfare State. But, to the corporate liberals in the governing class, it served as the type of legislation that eased tension, created stability, and prevented or broke any movements for radical structural change. Hence, it served an essentially conservative purpose because it helped maintain the existing system of production and distribution.
The pattern of corporate support to New Deal programs is even more vivid when we consider the first great program initiated by the New Deal to produce recovery, the National Recovery Administration. NRA arose from a background of collectivist plans such as the one proposed in 1931 by Gerard Swope, president of General Electric. Presented to a conference of the National Electrical Manufacturers Association, the plan, as Murray N. Rothbard has described it, "amounted to a call for compulsory cartelization of American business—an imitation of fascism and an anticipation of the NRA."14
Swope argued that antitrust laws had to be suspended, so that producers in a given industry could meet and agree on a certain amount of production. All companies engaged in manufacturing and commercial enterprises could form one trade association supervised by a federal commission that would outline trade practices, as well as proper business ethics. Federal legislation had to be passed that would suspend the Sherman Antitrust Law and permit manufacturers to combine for the purpose of making agreements. Swope also revealed that he favored establishment of a "national economic council" that would enable trade associations to interact and permit coordination between different industries. Companies within one industry would join together in their own trade association to coordinate production, consumption, and unemployment benefits. Each association would then elect delegates to a national body that would meet together "and choose from amongst themselves, or from outside, a national economic council."
Trade associations were the "natural organizations to study the economic elements of each industry." Each would hold itself responsible for coordination of production and consumption to stabilize industry/They would
then be the foundation stones upon which to erect the superstructure of the national economic council. This might be created by bringing together officers, or duly elected representatives of these various associations
to choose a council that would study the needs of industry as a whole. The men would come up through industry itself and would be able to work to solve their problems. "If you do that for each of the various industries," Swope commented, "and then have a similar body from the banking group, from the transportation, labor," and other bodies, delegates from each would meet "to form this national economic council."15
Swope hoped for a national
economic council. In essence it would function through an elite group, the
leaders of the different functional economic groups. Although they would make
major decisions and all groups were to be represented, decision-making would remain
within the hands of the elite who ruled for the society at large. Swope was
seeking an end to the imbalance caused by blunt contests for power between the
various groups, each jockeying for more for itself from the state's administrators.
He wanted to substitute corporate cooperation and mold previously warring
constituencies into one corporate body. He sought, in plain language, an
American corporate state. As such, his views paralleled the developments in
During the 1930s, many liberals viewed fascist economic theory as a promising alternative to what they considered the twin evils of an unreconstructed laissez-faire capitalism and a rampant increase of socialism. To such liberals, John P. Diggins has explained, fascism
appeared to be a continuous creative effort that found its affirmation in the subordination of end to means. In its attempt to strike a balance between the dogmas of capitalism and socialism, moreover, Fascism avoided doctrinal myopia. Rejecting the fetishes of both the Left and Right, it presented an admirable alternative to an ironclad ideology on the one hand and a tenaciously shallow sentimentalism on the other.
To liberals, fascism appeared to be a system of planning that transcended classes and led to an equilibrium of contending social forces. Thus it was "essentially the theoretical appeals of corporatism that interested" the liberals.17
It is no accident that the
early New Deal was characterized by the introduction of planning techniques
that had antecedents in trade associations developed within industry during the
the draftsmen of the recovery bill turned to the experience with industrial mobilization in World War I. Swope himself had served in a war agency, and his plan was one of many . . . which drew on recollections of government coordination of the economy during the war. Since they rejected laissez-faire, yet shrank from embracing socialism, the planners drew on the experience of the War Industries Board because it offered an analogue which provided a maximum of government direction with a minimum of challenge to the institutions of a profit economy.18
William McAdoo, who had been Woodrow Wilson's Secretary of Commerce, thus wrote Bernard Baruch in 1931 to suggest a new permanent organization of a "peacetime board or national economic council" that would revise the antitrust laws. He argued that it had become apparent that government regulation "for the prevention of waste, overproduction, monopolistic oppressions" was necessary for a "stabilized economic and social order." Raphael Herman agreed that there should be a "board that *ill function the same as the War Industries Board functioned durirs the War," one that could "coordinate national industries." The WIB controlled 350 different industries, Herman wrote McAdoo, "and did it well. Why could we not do it again?"19
had, after all, been run chiefly by business executives. If they learned anything from the war, it was not the virtues of collectivism but the potentialities of trade associations, the usefulness of the state in economic warfare with the traders of other nations, and the good-housekeeping practices of eliminating duplication and waste. The immediate consequence of the war was not a New Jerusalem of the planners but the Whiggery of Herbert Hoover as Secretary of Commerce. While the war mobilization did establish meaningful precedents for New Deal reforms, it was hardly the "war socialism" some theorists thought it to be. Perhaps the outstanding characteristic of the war organization of industry was that it showed how to achieve massive government intervention without making any permanent alteration in the power of the corporations.20
This significant insight holds as well for the reforms of the New Deal. As Leuchtenburg went on to state, the New Dealers also rejected class struggle, as well as "mass action and socialist planning, and assumed a community of interest of the managers of business corporations and the directors of government agencies." They feared not discredited conservatives, but the "antiplutocratic movements," or we might put it, the forces of the radical left.21 Hence the New Deal cartelization efforts, which culminated in NRA.
One of NRA's major
architects was Donald Richberg, who had been chosen
for his position because of his prolabor background.
But again, Richberg's commitment to labor lay within
the framework of the corporate state. As a young
As a prolabor formulator of the NRA, Richberg revealed his private vision of a new corporate state, but one in which industrial unions would have to become the prerequisite for an American corporatism. "If industrial workers were adequately organized," he explained, "it would be entirely practical to create industrial councils composed of representatives of managers, investors and workers and then to create a national council composed of similar representatives of all essential industries." In this council, "all producing and consuming interests would be so represented that one group could hardly obtain sanction for a policy clearly contrary to the general welfare." Richberg was critical of craft-union leaders. He wished they had "seized" labor's great "opportunity to organize the unemployed," and simply ignore "the hampering tradition of craft unionism" by organizing men and women "denied their inherent right to work." Labor should have demanded that "their government should no longer be controlled by rulers of commerce and finance who have utterly failed to meet their obligations." If such a movement had been built, if labor had created one "mighty arm and voice" of the "unemployed millions," Congress would have listened to the dispossessed.
Richberg also forecast the conservative role that industrial unions would play. "Let me warn those who desire to preserve the existing order," he cautioned, "but intend to do nothing to reform it, that if this depression continues much longer the unemployed will be organized and action of a revolutionary character will be demanded." To avoid that, people had to be put back to work and mass purchasing power had to be increased. The solution was to mobilize the nation "through the immediate creation of a national planning council, composed of representatives of major economic interests who recognize the necessity of a planned economy."23 The need: to avoid radicalism. The means: a formal American corporate state, or the NRA.
The NRA, which became law
The program of the large
corporate community, as political scientist Eugene Golob
put it, revealed that "the basic idea of corporatism had been accepted as
part of the American scene." Defining corporatism as "the
organization of the economic functions of society into groupings of labor and
management for each industry," Golob noted
that the term was applicable to other forms than
the European fascist model. "Neither in
Despite the obvious corporate origins and function of the NRA, and despite the program's clear antecedents in the War Industries Board and trade associations of the 1920s, liberals and radicals ignored the conservative heritage because of what Arthur A. Ekirch, Jr., has called
widespread confidence in the broad nature and humanitarian goals of the New
Deal's planning. Although
In the Senate, laissez-faire liberals led by Senator William E. Borah (R., Idaho) tried to prevent passage of the NRA, arguing that suspension of the antitrust laws would only promote the concentration of wealth and economic power. Borah, Burton K. Wheeler (D., Mont.), and Hvlgo Black (D., Ala.) also contended that large interests would dominate the code-making agencies and proceed to formulate agreements regarding the price of commodities. They were challenged by the Senate corporate liberals. Robert F. Wagner (D., N.Y.) angrily replied that NRA was the "first step toward that which the liberals of the country have been preparing for years." Wagner claimed that the NRA idea was part of the Progressive Party platform in 1912. It meant essentially the "necessity of a national planned economy," without which there would not be "an orderly organized economic system." He therefore favored ending restrictions on business combinations that were placed upon industry by the antitrust laws. Competition would then be put "upon a higher plane." Sweatshops would be eliminated and efficient production would prevail.27
Even after the NRA was placed under the direction of General Hugh Johnson, an old associate of Bernard Baruch's in the WIB, the corporate liberals did not become increasingly suspicious. Johnson began the campaign to have the entire nation accept the codes of fair competition to be drawn up by each industry. Under his reign the famous Blue Eagle was developed to popularize the NRA. "In the national effort to break the force of the depression via the NRA codes," Ekirch commented, "little attention was paid to the fact that it was industry itself that had largely prepared the regulations governing prices and production," and that the NRA meant "the suspension of the antitrust laws along with the whole theory of free competition and free enterprise."28
But the corporate background of the NRA was a theme always enunciated by the NRA leaders themselves. To Donald Richberg, the need of the hour was a new form of representative government based upon "the free functioning of the representatives of all interests." The nation would then have devised a "method of industrial self-control which will last long after the present experiments in political control in other nations have disappeared."29
Richberg admitted that he had been asked to help draft the NRA because he was familiar with the operation of antitrust laws, and he understood that a consensus existed "among the managers of industry and the workers" that relief had to be gained from their existence. Agreements were needed among business to eliminate unfair practices and establish price levels, but such action was illegal under existing law. Richberg was concerned about protecting industry against the "complete uncertainty as to what could be legitimately done by a trade" association that desired stabilization of industry. Although he preferred not to compare the result of ending antitrust restrictions with European cartels, Richberg admitted that "in a general way it has that tendency," since there would be no prosecution against industries which combined to fix prices if the prices established were related to costs of production.30
The NRA reformers, unlike
our contemporary liberal historians, understood that their program was meant to
be a conservative prop to the existing order. They also realized the dire need
to include social reform as an essential component of the corporate state. They
understood that many liberals and even political radicals would overlook the
conservative origin and effect of the NRA if reform, especially public works,
was offered as part of a package deal. Hence Title I of the NRA promoted the
organization of industry to achieve cooperative action among trade
associations, and it included the codes of fair competition and exemption of
industry from prosecution under the antitrust laws. Title II set up a Public
Works Association with a federal appropriation of three billion dollars. It
should be understandable why Henry I. Harriman,
president of the United States Chamber of Commerce, argued that there was
"ample justification for a reasonable public works program" in
conjunction with a corporate plan that would free industry from antitrust
restrictions. If there was any doubt that the large corporations would support
a program that would result in wage increases along with a fair return on
dividends, Harriman assured reluctant congressmen that the "big ones will
rush to it."31 But the problem was to win the allegiance not of the big ones,
but of the "liberals." The means to this end was the technique of
public works. Of all the New Deal reforms, public works seemed to most people
to have the aura of "socialism" or at least of an attack on private
interests. To the hungry and unemployed, it symbolized a direct concern by the
government for their plight. That public works, as
The commitment to support reform if the liberals and radicals would cease criticism of the NRA was understood by Donald Richberg. In a private draft prepared for the committee that drew up the NRA legislation, Richberg suggested that "it would be at least a tactical error not to begin the bill with a public works program," with the provision for trade agreements following as further stimulation to industrial stabilization. "If this is not done," he explained, "the reaction of the host of people expecting, advocating and convinced of the value of public works will be antagonistic to the general program." If
industrial control leads off, with public works as a secondary, incidental part of the program, it will be difficult to avoid violent opposition from those now clamoring for public works who might swallow a somewhat "fascist" proposal to get their "democratic" measure of relief.32
In using the very terms that he expected opponents to denounce the NRA with in the future, Richberg added that he was being facetious. Nevertheless, he was showing awareness that the Administration knew that reformers would acquiesce in the corporate state if reform was part of its program.
Richberg and his contemporaries, including the laissez-faire opponents of the NRA, were both correct. NRA was conservative. It is true, as Leuchtenburg wrote, that NRA gave jobs to two million workers, stopped renewal of a deflationary spiral and established a national pattern of maximum hours and minimum wages, thus wiping out child labor and the hated sweatshops. But as he added, the NRA did not speed recovery,
and probably actually hindered it by its support of restriction-minded businessmen moved into a decisive position of authority. By delegating power over price and production to trade associations, the NRA created a series of private economic governments .... The large corporations which dominated the code authorities used their powers to stifle competition, cut back production, and reap profits from price-raising rather than business expansion.33
Leuchtenburg's appraisal of the NRA only confirmed the critique
offered before its beginning by Borah, Wheeler, and
Black. It also matched the criticism offered after the NRA's development by
journalist Walter Lippmann, laissez-faire critic John
T. Flynn, and the conservative AF of L labor leader, Matthew Woll. As Woll noted at the time,
under the NRA codes monopoly had grown, cartelization of the economy had been
encouraged, and "corporate control had been permitted to strengthen its
grip upon the economic life of the nation." The cartelization of American
industry taking place under the codes, he wrote, was a familiar story in the
early history of Mussolini's
Only our contemporary
liberal historians, even when they acknowledge the loopholes in the New Deal
programs, present the New Deal in a positive fashion. Perhaps it should not be
surprising that conservatives in the 1930s had a more realistic appraisal of
the New Deal and the basic function it served. Thus a conservative
I think I am still a conservative, but I believe that a new set of plans is essential to preserve the conservative order of things. The trouble is that most of our business and professional friends do not understand that the old methods will not serve. New arrangements are necessary to save the economic structure. I think it is not radical, certainly not revolutionary, to change the methods of business leadership and the relations both with employees and with customers . . . the methods you and your associates are inaugurating are necessary in order to retain the existing industrial order.35
Or, in the words of William Appleman Williams, our leading radical historian:
the New Deal saved the system. It did not change it. Later developments and characteristics of American society which suggest an opposite conclusion are no more than the full extension and maturation of much earlier ideas and policies that were brought together in what a high New Dealer called a shotgun approach to dealing with the depression.36
Unlike Brown and Williams, most of our contemporary historians do not seem to realize that institution of "a new set of plans" is conservative, not to speak of not being radical or revolutionary. But what happens when an area emerges where the "old methods" are entirely done away with? Can one rightly call such an area of innovation revolutionary? As Degler has argued, this is indeed the case with organized labor, and the passage of the Wagner or National Labor Relations Act. More than any other piece of New Deal legislation, the policy toward labor seemed to suggest a new revolutionary stance toward the worker on the part of government.
In reality, the role played by the Wagner Act was the 1 same as that of the NRA and the other conservative New Deal programs. It was the Wagner Act that allowed the Administration to obtain the final integration of organized labor into the existing political economy of corporation capitalism. Unions, which had a sudden revival under the NRA, even before the Wagner Act period, were industrial in nature—the United Mine Workers and the Amalgamated Clothing Workers showing exceptional growth. Craft unions grew only 13 percent between 1933 and 1935, as against 132 percent by the AF of L's four industrial unions and 125 percent for their semi-industrial unions. The NRA provided the original impetus to organization. Between July and August, 1933, the AF of L issued 340 new charters to affiliated local trade and federal labor unions, and Green estimated that in two months AF of L membership increased by about 1,500,000 members.37
With the NRA, the federal government took over the traditional organizing function that had previously been an exclusive union domain. The old AF of L craft unions had refused to initiate a widespread program of unionization in unorganized basic industries. But now the New Deal was seeking a labor movement that would gain working-class support and provide the necessary structural parallel to industry that would allow integration of the labor force into the new system. The New Deal, contemporary reporter Benjamin Stolberg observed, "needed organized labor to save big business." While the NRA was a "price fixing mechanism to enable big industry to regain the control of scarcity," it needed big labor to police "the 'social planning' of stabilizing prices in an economic system" that was "partly irresponsibly competitive and partly dictatorially monopolistic." Thus the NRA turned the labor movement "into a semipublic unionism whose organization was part of a government program."38
The government became
heavily involved, through the early NRA efforts, in the traditional function of
union organization. The government did not tell the workers what form of union to organize, but only the
industrial unions had any success. Moreover, it was the more politically
radical unions that led the integration of labor into the corporate structure.
the socialist unions, whose militancy had been kept alive these last few years by an inner left wing opposition, fitted very easily into the drift towards state capitalism, which characterizes the New Deal.39
Not all members of the corporate elite opposed labor's new gains. But unlike the Social Security Act, which obtained an overwhelming corporate consensus for its support, many members of the governing class were not friendly to union organization. A split developed between the moderate sophisticated corporate leaders and the old-line antilabor diehards. Labor did use its own muscle to get general support behind new prolabor legislation. But, as G. William Domhoff explained:
even after acknowledging that labor showed considerable strength in forcing the acceptance of the Wagner Act, the fact remains that the story of how labor acquired its rights is a very different one from what is generally believed. A powerful mass of organized workers did not overwhelm a united power elite position. Rather, moderate members of the power elite, faced with a very serious Depression, massive unemployment, declining wages, growing unrest, and spontaneous union organizing, and after much planning and discussion, chose a path that had been traced out gradually over a period of years by the National Civic Federation, the Commission on Industrial Relations, and other pro-union forces within the power elite. By making certain concessions and institutionalizing their conflict with labor, they avoided the possibility of serious political opposition to the structure of the corporate system.40
The leading figure among the moderates was Gerard Swope, president of General Electric. As chieftain of one of the key multimillion-dollar corporations, Swope was quite an important figure in the corporate community. Herbert Hoover had stood fast against introduction of his plan, viewing it as a stepping stone toward a business fascism. But during F.D.R.'s Administration, Swope began to get results.
As early as 1926, Swope had sought to convince AF of L president William Green to form a nationwide union of electrical workers organized on an industrial basis. He felt that having an industrial union might mean "the difference between an organization with which we could work on a businesslike basis and one that would be a source of endless difficulties."41
William Green, because he had to maintain his commitment to the craft unions comprising the AF of L, rejected Swope's pleas. Swope preferred industrial organization for one simple reason: he saw his industry "intolerably handicapped if the bulk of our employees were organized into different and often competing craft unions." They could deal easily with one bargaining agent, but not with more than one dozen. When the CIO was eventually built and the left-led United Electrical Workers began to organize General Electric, Swope rejoiced. He informed one of his vice-presidents that "if you can't get along with these fellows and settle matters, there's something wrong with you." The UEW was praised by Swope as "well led, the discipline good."42
The left-led leadership of UEW-CIO thought as highly of Swope. Julius Emspak, the leading organizer, recalled that Swope had a "sharp enough nose to sense a trend and see it developing." He praised him as an "enlightened" employer who had told him that the time had come when "industry would have to recognize that" a union representative should sit on the company's board of directors.43 Not only did Swope favor industrial organization, but he also supported Senator Hugo Black's bill for a thirty-hour week, as well as the minimum-wage amendment introduced by Secretary of Labor Frances Perkins. Whereas William Green opposed the amendment because he feared it would reduce the hourly earnings of well-paid skilled labor, Swope supported it because he knew that the AF of L did not represent unskilled labor. The bill was a necessity, Swope argued, since out of the "millions of men employed in industry, a very small proportion is in the American Federation of Labor." The legislation was on behalf of the unskilled worker "who needs protection . . . those who have no organization working for them." Congress, Swope said, had to act on the behalf of the "millions of men who are not members" of the AF of L and "for whom no one is talking."44
Because Swope recognized the necessity of integrating the working class into the existing corporate system, he helped develop the mechanism that would be written into the Wagner Act. It was Swope who proposed creation of a National Labor Relations Board to supervise labor relations, as well as the method of holding secret-ballot elections in factories to judge which group was the accurate representative of organized labor. It was this device that insured victory to the industrial unions in their factory contests with both craft and company unions. Swope argued that a majority vote had to be binding on all workers, and he opposed the intransigence of employers who believed workers should have no voice in picking their own representatives.45
Because of his position, Benjamin Stolberg reported that Gerard Swope had "become converted to authentic collective bargaining." This was because Swope did not cherish the idea of the craft federation becoming the bargaining agent within General Electric. Then the company would be forced to deal with more than fifteen different craft unions. Swope
could not see his way clear to invite all of them to organize his highly mechanized industry, and then to watch them wreck it in "jurisdictional disputes." He wanted some sort of industrial union form of organization.
Swope again asked William Green
to organize General Electric on an industry-wide basis, but the AF of L
refused. "Just what Mr. Swope thought of the intelligence of our labor
Swope understood what many contemporary historians do not. Industrial unionism was not inherently radical, and its recognition by government was not revolutionary. Rather, industrial unions functioned in the era of corporate capitalism to exert discipline on the work force so that labor productivity would be improved and cooperative relations with employers would emerge. The existence of such an industrial unionism benefited the long-range interests of the corporations. It was precisely for this reason that so many employers ignored section 7-a of the NRA, and continued to build their own company unions. They simply preferred to deal with their own unions organized industrially rather than with "legitimate" trade unions organized on a craft basis.
This preference was made clear by none other than Walter C. Teagle, president of Standard Oil of New Jersey. As a representative of industry on the NRA's Industrial Advisory Board, Teagle sought to explain why he defended company unionism—called the "employee representation plan"—as a proper form of unionism. In a report presented to Senator Robert F. Wagner, Teagle argued that "thoughtful proponents of employee representation neither predict nor desire the destruction of the union labor movement." Company unions were desirable, he argued, because an industry could avoid disputes between craft unions, "in that while it insures representation to all employees by their own associates," it also "avoidfs] jurisdictional disputes between two crafts in the same organization. Unity of action in all departments is assured." Specifically, he continued, "with many different crafts employed in the manufacture of a single line of products, it has not proved feasible to affiliate with several outside union organizations having different interests."47
Even some of the craft-union leaders, whose own bodies faced severe trouble and decline in power during the NRA era, recognized that men like Teagle were not antilabor. John P. Frey, president of the AF of L Molder's union, reflected that "men like Swope, Teagle," and others "realized how close to the precipice of industrial collapse we had gone. They clearly sensed the definite turn in the road which was necessary for industrial salvation." Although Frey doubted that they had looked with favor on an increase of craft-union organization, he was sure that they
unquestionably . . . recognized that new attitudes must replace former policies, and while they probably shiver at the thought of having trade unionism develop in their plants, they dread this less than the fatal character of the competition they have been encouraging through competitors who paid materially lower wages and worked longer hours.
Having to choose between unionism and unfair competition, these industrialists felt that "unfair competition is the more dangerous of the two."48 Frey's candid evaluation of the factors motivating the corporate leaders shows that these industrialists were not following a simple policy of hostility to organized labor.
As late as March, 1934, when the AF of L had already publicly attacked the NRA for spreading company unionism, Frey was still optimistic. He had more reason than other union leaders to complain about inadequate NRA code provisions, and about noncompliance on the part of employers who ignored the NRA regulations on labor. Yet he wrote that what the NRA had accomplished in "changing the employers point of view on industrial relations ... is an extraordinary tribute to [the NRA staff's] capacity." The National Labor Board bluntly told employers to accept unions. There were many examples, Frey noted, where "employers have suddenly become more sane, seen the facts of the situation as they really are, and without further argument in opposition, fall into line with the newer methods which are being applied for the basis of a New Deal."49
The key again is the term "newer methods." The New Dealers devised, in this case, a means to integrate big labor into the corporate state. But only unions that were industrially organized, and which paralleled in their structure the organization of industry itself, could play the appropriate role. A successful corporate state required a safe industrial-union movement to work. It also required a union leadership that shared the desire to operate the economy from the top in formal conferences with the leaders of the other functional economic groups, particularly the corporate leaders. The CIO unions, led by Sidney Hillman of the Amalgamated Clothing Workers, provided I such a union leadership.50
It was for this reason that the moderates in the governing class pushed for passage of the Wagner Act. As Domhoff noted, the anti-union diehards did have leverage for one major reason.
From the point of view of the employers, it had to be an all or nobody proposition, for any holdouts would supposedly have the competitive advantage brought about by lower wage costs. Thus, the diehards held great power over the majority, making it ultimately necessary to legislate against them. Perhaps there is something to the claim that most employers would go along with union recognition if all their compatriots would. But not every employer would go along, which set the stage for the battle over the Wagner Act, a battle which precipitated a serious split in the power elite.51
showed, the moderate members of the power elite played shrewd politics. After a
vast amount of strikes occurred, they refused to heed the many calls for
sending in troops. The result was that the diehards were forced into
negotiation and compromise.
member of the upper class and its power elite. However, he was a member of that
part of the power elite that had chosen a more moderate course in attempting to
deal with the relationship of labor and capital. . . . While he did not
encourage unionism, his record during the thirties makes very clear, he was nonetheless
unwilling to smash it in the way the
Referring back to Roosevelt's prolabor ideology formed during World War I, when he was a member of the Executive Board of the National Civic Federation, Domhoff noted that when the "time came for choosing, he and the moderate members of the power elite chose bargaining rather than repression."52
One of the major architects of the act, therefore, was a highly regarded, young upper-class lawyer, Lloyd K. Garrison. Another was Francis Biddle, former lawyer for the anti-union Pennsylvania Railroad, and also the man who replaced Garrison as head of the National Labor Relations Board created by the interim Public Resolution No. 44, which existed between the NRA epoch and the passage of the Wagner Act. Biddle noted that Frances Perkins was satisfied with his appointment, since
our firm represented solid interests, and the country would have a feeling that the appointment was that of a man who had dealt with the practical affairs of business, an experience generally believed to make him "safe," particularly in a position where the diverging conflict between labor and industry was at white heat.53
Biddle was particularly instrumental in drawing up the Wagner Act. He felt that the NRA was at its end, and that new legislation was needed to guarantee labor the right to organize and bargain collectively. Wagner, Biddle, corporate lawyer Simon Rifkind, economist Leon Keyserling, and lawyer Calvert Magruder drew up the bill that gave the NLRB the power to prohibit unfair labor practices and to enforce its decisions.
When the hearings on the
Wagner Act were held, Garrison gave an insight into the reason that some
elements of the governing class favored it. Organized labor, he told the
congressmen, was a bulwark against radical movements. Also, the purchasing
power of labor had to be increased to get industry back on its feet. Taken
together, these were two eminently conservative reasons for a major piece of
reform legislation.54 At the hearings, Wagner produced
support from the Twentieth Century Fund, a major corporate-liberal policy group.
This fund had on its board William H. Davis, a major
Even if a majority of businessmen opposed the Wagner Act, the moderate group within the elite was able to use political power to its own advantage. Once the Supreme Court voted in favor of the Act, the NLRB, an administrative body, became the final arbitrator of all labor disputes. This was, as Domhoff wrote, the "favorite solution of the moderate members of the power elite, the 'nonpolitical' administrative body or regulatory agency."55 Thus Biddle noted that
the feature of the act attacked as the most radical was in fact the least novel—the provisions authorizing the Board to request a court to enforce its order, which derived from the Federal Trade Commission Act of 1914.56
Even before the Court
decision favorable to the Act, F.D.R. had moved to conciliate diehards among
the elite. Working through Thomas Lamont,
to realize that men looked upon as the conservative branch of the Roosevelt Administration were cooperative in bringing about a new, more modern, and more reasonable attitude on the part of employers toward collective bargaining agreements.57
But the final goal for which these conservative industrialists worked was the creation of an American corporate state. This was made clear in the 1960s by Leon Keyserling, who had been legislative assistant to Robert F. Wagner during the 1930s and who helped the group that formulated the Wagner Act's principles. In i960, economist Keyserling called for a "new national agency to embody top level discussions among those who hoped that such a body would move the country away from fruitless wrangles between competing groups." He hoped that a new agency would bring the "organized powers in our enterprise system," unions and trade associations, into a "relationship of participation and concert with the efforts of government." He then noted that this was the goal fought for by Wagner during the 1930s.58
This detailed examination of the roots of the Wagner Act, as well as the NRA and the Social Security Act, should help us to assess the meaning of the New Deal. We now should be able to answer some of the questions raised earlier. First, it is clear that non-elite groups—the unemployed, workers, farmers—were the beneficiaries of many of the new social reforms. Social Security did produce benefits despite its limitations, NRA did eliminate sweatshops, and organized labor was able to strengthen its position in society. Reform, after all, would be a meaningless word if it did not have any partial effect. That is, indeed, the very meaning of reform.
But reform is not revolution. Revolution means a substantive fundamental change in the existing social structure, a massive dislocation and revamping of the existing system of production and distribution. Schlesinger's "New Left" student, if he is quoted correctly, has emphasized the wrong issue. The New Deal reforms were not mere "incremental gestures." They were solidly based, carefully worked out pieces of legislation. They were of such a character that they would be able to create a long-lasting mythology about the existence of a pluralistic American democracy, in which big labor supposedly exerts its countering influence to the domination that otherwise would be undertaken by big industry.
One cannot explain the success of the New Deal by pointing to its rhetoric. The populace responded to F.D.R.'s radical rhetoric only because it mirrored their own deeply held illusions. They could not comprehend how the reforms that changed their lives only worked to bolster the existing political economy, and they did not realize that many sponsors of the reforms came from the corporation community themselves. The integration of seemingly disparate elements into the system was successful. Labor did get its share and it did benefit from the development of a permanent war economy and the military-industrial complex. Many of those who lived through and benefited from the New Deal most likely view its accomplishments in much the same way as Schlesinger or Carl Degler. One can never be sure whether they reflect the explanations offered by the "vital center" historians, or whether these historians merely reflect the false consciousness of their own epoch.
The New Deal policies, as
That many on the political
left viewed the New Deal as "progressive" or "neosocialist" is also no clue to the meaning of New
Deal policies. Like the small businessmen, the left was a victim of its own
particular myths, and its support of F.D.R. cannot tell us anything about New
Deal policies either. It may reveal the essential liberalism of the 1930s left,
but this is another story. The failure of contemporaries properly to evaluate
the epoch in which they live is traditional. One can never, as Karl Marx warned,
evaluate an era by concentrating on the consciousness of an era's major
protagonists. The New Deal was conservative. Its special form of conservatism
was the development of reforms that modernized corporate capitalism and brought
corporate law to reflect the system's changed nature. To many, these New Deal reforms
seemingly proved that the system had changed its basic essentials. As we move
into the era of a fully matured corporate capitalism, whose contradictions are
just beginning to emerge, it has become easier to see what the New Deal
accomplished. Only in an epoch where consciousness begins to soar beyond the
capitalist marketplace can a critique of the major reform era that marketplace
had to offer emerge. This is such an epocliJUaderstanding
how the New Deal worked will enable-us to resist policies based on further
extensions of the Welfare State and to commit ourselves instead to forge a
socialist community in
1 Howard Zinn, "The Limits of the New Deal," in Howard Zinn, The Politics of History (Boston: Beacon Press, 1970), pp. 118-136; Barton J. Bernstein, "The New Deal: The Conservative Achievements of Liberal Reform," in Barton J. Bernstein, ed., Towards a New Past (New York: Pantheon, 1968), pp. 263-288.
2 Bernstein, op. cit., p. 264.
3 Paul Conkin, The New Deal (New York: T. Y. Crowell, 1967), pp. 74-75-
4 Arthur M. Schlesinger,
Jr., "Topics: F.D.R. After Twenty-Fivt
Years," The New York Times,
5 Arthur M. Schlesinger, Jr., The Coming of the New Ded (Boston: Houghton Mifflin, 1958), pp. 314-315.
6. Arthur M. Schlesinger,
Jr., The Age of
7. See especially William Appleman Williams, The Contours of American History
(Cleveland and New York: World Publishing Co., 1961), pp. 343-488; Gabriel
Kolko, The Triumph of Conservatism (New York: Free Press, 1963); James
Weinstein, The Corporate Ideal in the
8. Carl N. Degler, Out of Our Past (
9. William E. Leuchtenburg, Franklin D. Roosevelt and the New Dmi (New York: Harper & Row, 1963), pp. 336, 346-347
10. Unless otherwise noted, material pertinent to the Social Security Act and its passage is from G. William Domhoff, The Higher Circles (New York: Random House, 1970), pp. 207-218.
11 Edwin E. Witte, The Development of the Social Security Act (Madison, Wis.: University of Wisconsin Press, 1963), p. 76.
12 Schlesinger, The Coming of the New Deal, p. 311.
13 "Business Advisors
Uphold President," The New York Times,
15 U.S., Senate, Senate Committee on Manufacturers, Establishment of a National Economic Council, 72nd Cong., 1st sess., 1932, pp. 300-301, 312-315.
16 Herman Finer,
17 John P. Diggins, "Flirtation with Fascism: American Pragmatic
Liberals and Mussolini's
18 Leuchtenburg, op. cit., p. 57.
19 William McAdoo to
Bernard Baruch, June ro, 1931; McAdoo to Raphael
Herman, June 10, 1931; Herman to McAdoo, June 8, 1931, William McAdoo
21 Ibid., p.
22 Schlesinger, The Coming of the New Deal, pp. 98, 106, 162-
23 Donald Richberg, "Depression: Causes and Remedies," submitted February 23, 1933, to the Senate Committee on Finance, U.S., Senate, Committee on Finance, Investigation of Economic Problems, 72nd Cong., 2nd sess., 1933, pp. 643-652.
24 John T. Flynn, "Whose Child Is the NRA?" Harper's Magazine, CLXIX (September, 1934), pp. 385-394. Cf. Rinehart J. Swenson, "The Chamber of Commerce and the New Deal," The Annals, CLXXIX (May, 1935), pp. 136-143. Swenson similarly argued that the Chamber of Commerce program for relaxation of antitrust laws had been accomplished with the NRA, as well as that of planning through trade associations. With the exception of the collective-bargaining provision, which Swenson correctly observed "was subsequently robbed of much of its original strength," he argued with Flynn that the NRA "represented almost entirely the influence and ideal of big businessmen."
An interesting comment on the NRA was offered by A. A. Berle, Jr., "What's Behind the Recovery Laws?" Scribner's, XCIV (September, 1933), pp. 131-133. "The machinery of the industrial system has been called . . . Guild Fascism. This ignores the fact that mechanically fascism, corporate capitalism, and communism are so closely allied as to be almost indistinguishable. A committee of Communist commissars, a corporate board of directors, a syndicate of Fascists all work in about the same way."
25 Eugene O. Golob, The Isms: A History and Evaluation (New York: Harper & Bros., 1954), pp. 97-123; quoted in Bernard Sternsher, The New Deal (Boston: Allyn & Bacon, 1966), pp. 157-159-
26 Arthur A. Ekirch, Jr., The Decline of American Liberalism (New York, London, Toronto: Longmans, Green & Co., 1955), P 275
27 U.S. House, Committee on Ways and Means, National Industrial Recovery, 73rd Cong., 1st sess., 1933, PP 95-98
28 Ekirch, op. cit., p. 276.
Richberg, speech of
31 Ibid., pp. 134-153
Memorandum, n.d., 1933, Richberg
33 Leuchtenburg, Franklin D. Roosevelt and the New Deal, p. 69.
34 Matthew Woll, Labor, Industry and Government (New York: Appleton-Century, 1935), pp. 59-63, 71-72, 171-172, 124-125.
Charles LeRoy Brown to Richberg,
36 Williams, The Contours of American History, p. 439.
37 James O. Morris,
Conflict Within the
40 Domhoff, op. cit., p. 249.
41 David Loth, Swope of GE (New York: Simon & Schuster, 1958), p. 168.
42 Ibid., pp. 172, 259.
op. cit., pp. 226-228.
47 Walter C. Teagle, "Employee Representation and Collective Bargaining," Report of the Chairman of the Industrial Relations Committee, Business Advisory and Planning Council of the Department of Commerce (NA, RG 25), National Labor Board, NRA, Senator Robert F. Wagner's Correspondence, 1933-1934, box 84
P. Frey to Walter A. Draper,
to Walter A. Draper,
50 For a discussion of the corporate ideology of Hillman and the CIO leaders, see Ronald Radosh, "The Corporate Ideology of American Labor Leaders from Gompers to Hillman," in James Weinstein and David W. Eakins, eds., For a New America (New York: Random House, 1970), pp. 125-151.
51 Domhoff, op. cit., p. 235.
52 ibid., p. 242.
53 Francis Biddle, In Brief Authority (New York: Doubleday, 1962), pp. 7-8.
54 Legislative History of the National Labor Relations Act, Vol. I (Washington, D.C.: Government Printing Office, 1949), p. 1505
55 Domhoff, op. cit., p. 246.
56 Biddle, op. cit., p. 50
57 Frances Perkins, The Roosevelt I Knew (New York: Viking, 1946), pp. 324-325.