Great Depression: People and Perspectives. Editor: Hamilton Cravens. Santa Barbara, CA: ABC-CLIO, 2009.
Redefining the Group
Two notable features of the New Deal (1933-1939) have been its reputation for “planning” and for “experimentation.” The first suggests a purposeful drive toward a predetermined objective; the second suggests a searching, by trail and error, that in the longer run might redefine objectives. This chapter seeks to find a place for both characteristics in the New Deal’s approach to dealing with groups. It concludes that the New Deal sought specific objectives but that those objectives had their own indeterminate ends. Thus, between 1933 and 1939, the New Deal changed its approach to planning. At first its goal was to produce a kind of institutional commonwealth in which social groups consciously interacted with one another for the common good. But there was no way to guarantee that outcome. In the end, New Deal thinking focused on a kind of rights-based pluralist democracy that combined economic security with capitalist opportunity, facilitated by “flexible,” “interactive” government administration.
The inspiration for New Deal planning was the Great Depression, the most widespread and devastating economic collapse in American history. Its motive force was a sense of urgency created by the collapse of major economic institutions, widespread unemployment and rural misery, and fear of social conflict. The means for planning came from the professional scholars that president-elect Franklin D. Roosevelt recruited to analyze the Depression’s causes and to propose remedies. Those remedies were based on assumptions about the nature and function of social groups.
Since the late nineteenth century, social scientists (primarily sociologists) had turned away from the individualism that had characterized earlier social thinking and had begun to stress the “interdependence” of society’s parts. At first scholars, business leaders, and public officials generally agreed that this insight justified centralized, hierarchical management (considered essential for “efficiency”), but by the late 1910s, the consensus was turning away from hierarchy and toward the idea that society’s parts interacted in complex, ever-changing ways that were difficult to predict and thus difficult to manage centrally. Groups had different characteristics. Their parts might be similar or identical (as a “race” or an isolated community); or they might be dissimilar but interdependent so that in one or more respects they would have unity. All these groups would have a “center” that made up their “identity.” All groups constantly faced new challenges; each action to solve a problem produced results that posed new problems.
Redefining the group meant redefining how it functioned. The idea of group leadership, for example, changed from the need for a strong, authoritative individual to the idea that a leader merely played a role in a group, and because the nature of groups was always changing and because these groups were facing different problems, many people could be leaders. The best leadership “facilitated” the course of group action instead of determining it. It inspired group members to common action or provided useful advice that the members could apply in ways most practical to their own circumstances. Thus, the group had a center, but its parts were separate, differentiated, decentralized. The essential function of a society that operated in this way was to achieve a “balance” among its parts so that its interdependence would benefit the largest number. The processes of a “good” society, then, were inclusive, integrating the largest number into a cooperative whole. Because of the complexity of social interactions, the resulting “whole” always would be different or greater than the sum of its parts.
Many current scholars of the New Deal take a cue from Roosevelt’s address during the campaign of 1932 to the Commonwealth Club of San Francisco. In this address, Roosevelt announced what others would label the idea of a “mature economy.” The traditional means of economic opportunity, Roosevelt declared, no longer existed. The nation’s industrial plant had been built, and 600 corporations controlled two-thirds of it. The frontier of “free land” had been used up and the farm population was declining. The United States was no longer able to provide for immigrants. Indeed, “we are now providing a drab living for our own people.”
In such conditions, Roosevelt declared the need for government and business to create “an economic declaration of rights, an economic constitutional order” (Rosenman 1938, vol. 1, 742-56).
Every man has a right to life; and this means that he has a right to make a comfortable living. He may by sloth or crime decline to exercise that right, but it may not be denied him. We have no actual famine or dearth; our industrial and agricultural mechanism can produce enough and to spare. Our government formal and informal, political and economic, owes to every one an avenue to possess himself of a portion of that plenty sufficient for his needs, through his own work.
Every man has a right to his own property, which means a right to be assured, to the fullest extent attainable, in the safety of his savings. By no other means can men carry the burdens of those parts of life which, in the nature of things, afford no chance of labor; childhood, sickness, old age. In all thought of property, this right is paramount; all other property rights must yield to it. If, in accord with this principle, we must restrict the operations of the speculator, the manipulator, even the financier, I believe we must accept the restriction as needful, not to hamper individualism but to protect it.
Roosevelt concluded that it was now necessary for economic groups to realize these rights by pursuing the public interest. “The responsible heads of finance and industry instead of acting each for himself, must work together to achieve the common end” (Roosevelt 1932).
Given what followed Roosevelt’s election—the “Hundred Days” that inaugurated the legislative program of the New Deal—it is easy to interpret Roosevelt’s remarks as a blueprint for the national government’s planning a cooperative economic system based on individual rights. Many years ago, scholars referred to this approach as “Jeffersonian” ends (individual rights) secured by “Hamiltonian” means (national power). But the actual approach, in theory and practice, cannot be characterized so neatly. The ideas of Rexford Tugwell, one of the New Deal’s early architects and a member of Roosevelt’s “Brains Trust” that planned the early program of the New Deal before and following his election in 1932, illustrate this point.
In the spring of 1933, Tugwell published The Industrial Discipline and the Governmental Arts, a coherent statement of his ideas. Tugwell did not subscribe to the classical economic model of the rational individual. At the same time, however, he held that the individual was the proper base of social action. Groups were only the embodiment of individual desires. Groups came into existence because people identified their self-interest with them. They achieved their identity through action and through enforcing an internal discipline. Society was composed of groups that pursued their objectives in relative isolation, sometimes competing, sometimes cooperating. And because individual interests changed from time to time, groups were changeable, impermanent, and, Tugwell concluded, poor material for social analysis.
But Tugwell’s purpose was not to dismiss group analysis; it was to place it in its proper context. Once he had established that groups were changeable, he had established a basis for reforming society. Reformers worked with the elements necessary for industrial advancement: research and invention, standardization of materials and production processes, and the clerical tasks of accounting and recordkeeping. They then fitted these elements into a rational plan to improve the economy; one that would save about a third of the costs currently incurred because of old habits and lack of competition. Tugwell called this process “series-unit” concentration, or closely linking together the various stages of production and distribution in a “continuous process.” New techniques, devised by “experts” or “technicians,” were developing to place persons in the jobs most suited to them. This served “democracy” by employing persons in jobs that engaged their minds as well as their bodies. Workers thus placed would see how their welfare benefited from greater efficiency and would become partners in the planning process. Although efficiency would in theory require leadership by one dominant group, the fact that each would use its dominant position to further its own interests led him to conclude that the best leadership would come from a combination of expertise, ownership, and labor—this, in turn, would be furthered by the growing associational character of economic and social life. Thus, efficiency would become a self-fulfilling process. By creating greater wealth and higher standards of living it would encourage all to cooperate to maintain it.
To attain this goal, Tugwell recommended “planning.” The federal government should establish an agency to gather data that would be used to develop a plan for the efficient production and distribution of goods and should enable this plan by substituting federal incorporation law for state incorporation law and by using the taxing power to force surplus capital into the market for more efficient investments. A series of “associations,” subordinate to a central “board,” would study and make recommendations for various economic sectors. The central board would reconcile these recommendations with a plan submitted by the government for the allocation of capital and the regulation of prices. The goal would be to replace competition with cooperation and the overall integration of economic endeavor. The object was to create groups that disciplined individual self-interest to efficient effort for the common good.
Tugwell did not believe that the process would be rapid. Instead he called for a willingness to “experiment” in a long-term search for the best outcome.
This experimentation began in March 1933, during a special session of Congress called by President Roosevelt to deal with the banking crisis, but it stretched to 100 days to produce the most productive congressional session in American history and the legislative outline of the New Deal. The following discussion describes the New Deal’s efforts to correct what it saw as certain structural weaknesses in the American economy by forming groups and conferring on them “rights” to create a “balance” among them. In an operational sense, this was New Deal “planning.”
Corporate Enterprise: Group Formation by Interest Group Consensus
Corporate enterprise was born with the nation, but it assumed its modern form after the Civil War. Corporations made it possible for a large business to operate by putting its functions in the hands of “managers,” who supervised its specific operations. Corporations operated in the market, but they tried to protect themselves from market pressure, notably by merging into larger units and consolidating management authority through “holding companies” that held shares in previously competing companies and operated them under the laws of especially tolerant states. By the mid-1920s, large concentrations of corporate enterprise dominated major economic sectors. These units sought further to protect themselves by forming trade associations that shared information and ideas about business practices. Still, most association members hesitated to give up power to larger units that might be either too weak to enforce its policies on all members or might be strong enough to impose policies that would favor some members over others. In many ways, then, corporations continued to act as individual enterprisers in a competitive market instead of large organizations of economic production and distribution.
Such competitive behavior was intensified by the economic crisis of the Great Depression, which produced downward spirals of prices, production, and employment. By the time Franklin D. Roosevelt assumed office, many corporate executives and trade association leaders were calling for the federal government to protect them by enforcing rules of association.
The administration’s response, crafted during the Hundred Days of the special session, was the product of various interests: financiers, trade association leaders, labor leaders, professional economists, and officials of the Department of Commerce. In May 1933, Congress produced a draft that a month later became the National Industrial Recovery Act (NIRA). The act permitted business associations to draft “codes” of practice that would govern their industry. The act offered something for everyone. Business received authority over production and prices, labor received the right to organize trade unions, professional economists and “planners” received the power to approve the codes, and the president, through a National Recovery Administration (NRA) received the power to enforce their terms.
The purpose of the NRA was, as one trade association executive observed, to “recognize the necessity of becoming ‘group-minded’ and accept some limitations of individual rights for the sake of promised enlarged practical advantage” (Hanke 1933). “Individual manufacturers cannot by independent action protect themselves from the affects of destructive competition brought about by causes beyond their control,” declared the National Lumber Manufacturers Association. “Cooperative action with enforceable performance offers the only practicable solution” (Outline of Code 1933). Working under pressure to produce results rapidly, the administration allowed industrial groups to identify themselves as representing their entire industries. The result was that about between four and ten entities drew up each code. (The administration invited comment from outside groups, an offer that produced no results.)
The success of the NRA, then, depended on the New Deal’s ability to create a group out of existing groups. Its original plan was to organize the ten major industrial groups that controlled the bulk of the nation’s industrial employment. No one in the Roosevelt administration questioned the structure of corporate enterprise. They wanted to organize that structure into larger wholes in partnership with the federal government. When he signed the act on June 16, 1933, Roosevelt called on all interested parties to do their part.
In the same statement Roosevelt declared that the NRA’s purpose was “to put people back to work—to let them buy more of the products of farms manufactories and start our business at a living rate again” (Roosevelt, statement, June 1933). The NRA was to improve the conditions of labor by establishing maximum hours, minimum wages, and a shorter work week to encourage more employment through job-sharing. These measures, the New Dealers hoped, would increase the national standard of living. Roosevelt made this clear in a conversation with representatives of the coal industry and the United Mine Workers union. The object of the meeting was to work out the details of the labor provisions of the coal industry code. After getting the owners to agree to rewrite the contract in language the miners would be able to understand, Roosevelt turned to the issue of the miners’ compensation. He declared that Harry Hopkins, head of federal relief had
given me many examples of a miner, because he’s in debt to the company, not receiving any pay for his work—not a red cent. Legally, this may be one thing, but from a human point of view, it’s quite another. If the country were told the facts tomorrow, there’d be an awful explosion. We have examples everywhere. I know of a case where a man has worked for two months and received nothing in cash. You can’t explain that kind of thing away. (Elmhirst, notes on meeting, September 1933)
Raising living standards also meant holding down prices. News that many industries intended to use the codes to raise prices to increase profits lent urgency to this need. But the industries and their associations, dispirited by Depression-induced price drops, were determined to “stabilize” prices. By 1935 the overwhelming majority of industrial codes included some provision for price-fixing. Business also resisted unionization and the nation was plagued by protests and strikes.
In the end, New Deal industrial policy failed because the administration could find no way to enforce business to comply with its wishes. Roosevelt might want consensus and cooperation, but he could not have it on his own terms. Business was willing to cooperate but only on what made sense to it. In its industrial policy, the New Deal was better able to recognize groups than to create them. It could not create a group that represented the “larger” or “public” interest of business; it could only create larger business groups.
Amid complaints of price increases and price-fixing, the New Deal scrambled for a response. Some argued that higher prices were necessary for higher wages and more employment. Roosevelt himself had considered deflation a major ill of the Depression. Others declared that the government should step in and control prices. But NRA lawyers and Roosevelt’s attorney general advised that the government had no constitutional way to enforce the codes. In the end, it was decided to create a group that would check the price spiral. This meant that the New Deal would create a category of consumers.
The Consumer and Federal Relief: Group Formation by Identifying Individual Need
In 1933, the idea of the consumer as an economic group was largely a figment of economists’ imagination. One theory of the Depression, advanced by Tugwell and others, was “underconsumption,” that the purchasers of industrial products, largely workers and farmers, had received too little income to buy the products that industry turned out. The New Deal attempted to correct this imbalance through the NRA codes and a program to increase farm income. But neither advocates for agriculture nor for labor articulated the cause of the consumer as effectively as the administrators of federal relief for the unemployed.
To provide emergency assistance to the destitute while its programs for industry and agriculture took effect, the New Deal created a Federal Emergency Relief Administration (FERA), which was empowered to make matching grants or emergency direct grants to the states to aid people who qualified, according to state and local standards, for “relief.” When the industrial and agricultural programs failed to produce general prosperity and the nation faced an unemployment crisis for the winter of 1933-1934, Roosevelt created a Civil Works Administration (CWA) to employ people directly on federally funded projects. When the Depression continued through 1934, Roosevelt agreed to create a Works Progress Administration (WPA) to expand work relief. This program would continue through the rest of the New Deal.
WPA operated like the NRA in that it took the groups in American society as they existed. It worked through state and local governments, which recommended projects that the WPA then funded and operated under federal guidelines. Relief director Harry Hopkins soon learned that, for work relief to achieve broad coverage, it would be necessary to categorize relief clients by group. Most of its project were in construction and employed men: roads, bridges, parks, and public buildings. For women, it set up projects for sewing, clerical work, and childcare. It also employed writers, musicians, actors, and artists. Because Congress severely limited its appropriation so that it could never care for more than a third of the unemployed, it was always acutely aware of the cost of living and how higher prices limited its mission. By the middle of 1934, FERA officials were noting that relief stipends had increased 12 percent while prices had increased 20 percent. Out of this concern, they developed a theory of prosperity through increased consumption.
Their theory was simply stated. Work relief enhanced both production and consumption. Because relief funds came from government appropriations, they showed how government could contribute to recovery by stimulating consumption. Thus, government would not need to control or regulate industry; it simply could stimulate a demand for the products of industry. The argument was elaborated in An Economic Program for American Democracy. Published in 1938, the book was jointly written by a number of economists who had worked in various New Deal agencies but who were coming to be associated with Harry Hopkins. The program called for government to spend for public works and aid to the elderly, ill, and unemployed. Financing would come from borrowing and from taxes collected from those best able to pay.
Overlying this program was developing the conception of what we can call “social citizenship.” When he spoke on behalf of relief for the unemployed, Harry Hopkins referred to the needy as “citizens,” and, as such, as people who deserved to be helped in hard times. Touring WPA projects, he asked his listeners to consider the projects and those who worked on them from their own experience, and to decide whether the projects were a value to the community and whether those who worked on them—often their friends, neighbors, or relatives—deserved to be helped.
By using the conception of citizenship, Hopkins formed the unemployed, who under work relief followed various work regimes, into an overall group that in many ways was larger than the sum of its parts. Franklin Roosevelt employed the same kind of large conception by speaking of work relief as part of the fight for democracy. In an address on federal relief, he declared: “More and more people, because of clearer thinking and a better understanding, are considering the whole rather than a mere part relating to one section or to one crop, or to one industry, or to an individual private occupation. That is a tremendous gain for the principles of democracy” (Hopkins, Radio Address, 1935; Rosenman 1938, vol. 4, 133).
Social Security: Group Formation by Social and Cultural Definition
At the same time Roosevelt was establishing the WPA for people on relief, he was formulating a program of “social insurance” for the elderly and unemployed. In 1935 Congress passed the Social Security Act. The act had three principal features: old-age assistance to retired persons, unemployment insurance, and aid to dependent children. Although the act had broad implications, some of its features and implementation caused it to conform to existing ideas about groups in society. Old-age assistance was potentially the most general, providing pensions to people age 65 and over. But old-age assistance contained restrictive provisions that targeted its benefits primarily to white males. It based assistance on a person’s work history, granting larger pensions for longer times worked and amount of money earned. This approach benefited males, who ranked highest in these categories. By excluding agricultural laborers, it cut out the majority of African American males, who were still employed primarily on southern farms and plantations. The act also excluded people working in domestic service, thus cutting out almost all African American females. The act further restricted benefits to women by omitting coverage for workers in religious and nonprofit organizations, cutting out teachers, nurses, and social workers.
Unemployment insurance took on a similar character. The program relied on the states to set standards for eligibility but encouraged them to meet federal guidelines by promising to pay up to 90 percent of the program costs if the states complied. Still, the states were allowed to determine eligibility in ways that benefited white men.
Aid to dependent children was modeled on “mother’s pension” laws that many states had adopted a generation earlier. The law was directly aimed to benefit women, but it permitted standards of “eligibility” that restricted support to women of “good character.”
Roosevelt took a dynamic view of the act, portraying social security as a means to advance democracy.
We in America know that our own democratic institutions can be preserved and made to work. But in order to preserve them we need to act together, to meet the problems of the Nation boldly, and to prove that the practical operation of democratic government is equal to the task of protecting the security of the people … Not only our future economic soundness but the very soundness of our democratic institutions depends on the determination of our Government to give employment to idle men. The people of America are in agreement in defending their liberties at any cost, and the first line of that defense lies in the protection of economic security. Your Government, seeking to protect democracy, must prove that Government is stronger than the forces of business depression. (Roosevelt, Message to Congress, 1938; Rosenman 1938, vol. 7, 221-33)
Labor and Agriculture: Group Formation by Majority Vote
The National Industrial Relations Act had sought to stabilize labor conditions by having the industrial codes include provisions for wages, hours, working conditions, and the right to form labor unions. The codes included these provisions but succumbed to management hostility to unions and to its customary desire to consider wages and hours as costs of doing business to be managed rather than as rights to be recognized. Hoping that management would voluntarily use the codes as an opportunity to treat labor fairly, Roosevelt refused to throw his support behind an independent labor movement. The result was that between 1933 and 1935 the New Deal struggled and dithered over its labor policy while industrial disputes and major strikes shook the nation.
The turning point came in the spring of 1935, when the Supreme Court declared the National Industrial Recover Act unconstitutional. It so happened that, at this moment, Congress was considering a bill sponsored by Senator Robert Wagner of New York to protect workers and labor unions. With the labor provisions of the NIRA no longer enforceable, Roosevelt gave Wagner’s bill his full support. In July 1935, the Wagner Act became law.
The Wagner Act’s major feature was its encouragement of labor union organization. It declared the right of workers to form unions that were independent from management by a majority vote and listed “unfair” practices that management was not permitted to do to inhibit them. It established a National Labor Relations Board (NLRB) to supervise and enforce its terms.
More important, the Wagner Act breathed life into a labor movement weakened and demoralized by unemployment and employer hostility. Because the act’s provisions were not self-starting and because management often refused to cooperate with it pending challenges in court, workers and union officials had to take the initiative to make organization a reality. This they accomplished in a number of ways: protests and threats, shop-floor slowdowns, and strikes. In Akron, Ohio, tire and rubber workers engaged in the first “sit-down” strike, during which they stopped work and refused to leave the factories, in effect taking control of the property. However they chose to act, the motive behind it was their belief that the national government was on their side.
Indeed, as Professor Lizabeth Cohen has shown in her book about industrial workers in Chicago, Making a New Deal (1990), the New Deal’s programs for work relief, banking reform, and home mortgage credit had encouraged the workers not only to believe that the government was on their side but also to expect that it would be on their side. The New Deal had inspired them to believe they had the rights of social citizenship.
That citizenship they would confirm by voting to form unions that would be independent of management and would be empowered by law to bargain with management. During the first eighteen months under the Wagner Act, three-fourths of workers voted to form independent unions, approximately the proportion that had voted for them under the NIRA. But under the Wagner Act, less than half as many voted to form company unions that would be part of the management structure. In 1938, union membership made up 27 percent of all wage and salaried workers, up from 11 percent in 1933.
The Roosevelt administration intended to empower American agriculture more directly. In 1933 approximately 20 percent of American workers were in agriculture. Believing that low crop prices and farm income had been a major cause of the Depression, the administration had pushed through an Agricultural Adjustment Act. The act identified major commodity groups and promised farmers in those groups to subsidize their income if they reduced their production. Less production, the New Dealers reasoned, would lead to higher prices that in turn would reduce the need for subsidies.
To put this policy into operation, the act created an Agricultural Administration (AAA) to organize farmers to sign production and price support contracts. To act quickly, it worked through the Extension Service, which the U.S. Department of Agriculture operated in cooperation with state land grant colleges. Extension Service agents organized local committees that encouraged farmers to sign the contracts. In effect, by signing the contract, a farmer voted for the program. Initial signings covered 75 to 95 percent of crop acreage, but not always the majority of farmers.
Participation in the agriculture programs enhanced their political support. Members of Congress were not inclined to vote against a program that most of their farmer constituents favored. Representatives from the cities were inclined to go along, not wanting to lose farm state support for legislation in their interest. Realizing this, the AAA provided members with data on program participation, and Congress scheduled their own votes on the program until after the farmers had voted on participation.
Functionally, the New Deal farm programs were less “democratic” because they worked through the local committees. These were usually made up of the most “prominent” or “successful” farmers. This meant that the democratic nature of the agriculture program depended on the democratic nature of the local social structure. Here, the most conspicuous failing was in the southern states, primarily those of the former Confederacy. There, as in Civil War times, cotton and tobacco were the principal cash crops, land ownership was concentrated, and tenancy was particularly widespread. Often the landowner shared little or nothing of the benefit payment with the tenant. Over time, the AAA tried to correct this situation by requiring the owner to share the proportion of the payment that the tenant had produced. Thus, if the owner and tenant had agreed to share half the crop, the tenant should receive half of any benefit payment. The local committees usually agreed to these terms and then ran them to suit their own interests.
The Tennessee Valley Authority: Group Formation by Regional Planning
An important feature of the social science formulation of the interdependent society was “regionalism”—that is, the idea that certain geographic areas shared common economic, social, and cultural characteristics that could be brought together to achieve a better life for all. Achieving this, however, would require some kind of guidance, or “planning.”
Many, including President Roosevelt, saw a rich opportunity for the planning approach in the Tennessee River Valley. Carved by a river that rambled through seven southern states, the valley was characterized by rural poverty, aggravated by the river’s persistent flooding. The key to taming the river and advancing the region’s prosperity existed at the northern Alabama town of Muscle Shoals in the form of the Wilson Dam built to provide electric power to produce munitions for American troops in World War I. Following his election, Roosevelt visited Muscle Shoals and promised to make the valley a laboratory for social planning, “tying industry and agriculture and forestry and flood prevention … into a unified whole over a distance of a thousand miles so that we can afford better opportunities and better places for millions yet unborn to live in the days to come” (Roosevelt, speech, January 1933; Rosenman 1938, vol 1, 887). During the Hundred Days, Congress gave him the chance to realize his promise.
The act that Roosevelt signed created a Tennessee Valley Authority (TVA) and gave the president the power to appoint a board of directors. Roosevelt chose a three-person board that represented the major thrusts of the project: social planning, agricultural development, and electric power production. TVA’s first major project was constructing a dam near Knoxville. The dam would produce electricity for the area. The nearby town of Norris would become an ideal community of small, comfortable houses and residents employed in various cooperative businesses.
The community ideal represented the thinking of Arthur Morgan, whom Roosevelt chose to chair the TVA board. Morgan had a vision of a region of small towns, each with its own diversity of small industries and cooperative businesses. But his counterparts, Harcourt Morgan, an agricultural scientist and president of the University of Tennessee, and David Lilienthal, an attorney who specialized in public utility regulation and who headed TVA’s production of electric power, had difference ideas. Morgan and Lilienthal became natural allies. Morgan subscribed to the “integrated,” “interdependent” approach to reviving the valley, but he proceeded from the vantage point of agricultural reform. He began with a program of soil conservation and enrichment from diversified plantings. This approach would be supplemented by damming the river to produce electric power for phosphate fertilizers and rural electrification, converting it from a raging torrent into an avenue of commerce. The resulting farm prosperity would balance agriculture and industry by creating a market for manufactured goods, especially appliances now made affordable by cheap electricity. Soon Lilienthal was making speeches stressing how electricity would benefit farm families by enabling them to have electric lights, ranges, water heaters, and refrigerators, as well as water pumps and other labor-saving devices. Lilienthal continually emphasized that low electric rates alone would not create “an electrified America”—only large-scale distribution of electric appliances could achieve that goal.
Thus TVA’s electric power and fertilizer programs became its principal thrusts. Local businessmen ecstatically supported the prospect of new industries and jobs, as did their congressional representatives. This tended further to confirm Lilienthal’s advantage. Under Lilienthal’s guidance, TVA developed the idea of widely distributing its power and using its rates as a “yardstick” to judge the fairness of the rates charged by private power companies. To meld power development with social and economic development, TVA created the Electric Home and Farm Association, which provided inexpensive electric appliances to valley residents.
As TVA developed, many of its plans for social reconstruction faded away. Engineers cooperated to integrate flood control, navigation, and recreation. The Authority built more dams and bought others from private power interests, selling the electricity to local cooperatives. Local farmers, fertilizer manufacturers, and agricultural extension agents experimented with types of crops and farming practices. By 1947 average income in the valley had increased from 40 percent of the national average to 60 percent. Instead of becoming a community of cooperative enterprise, Norris became a bedroom suburb of Knoxville, and its residents were content to aspire to the middle-class life of the “average American.” This was the essential course of New Deal planning.
The New Deal Focuses Its Vision
In the end, the course of New Deal planning followed the course of the TVA. Increasingly, the New Deal turned to special solutions and aid to targeted groups. Unable to have industrial codes that would be fair to large and small business alike, it approved the Robinson-Patman Act that limited the ability of big retailers to undersell small retailers. The New Deal regulated securities markets, broke up utility holding companies, and threatened big business with antitrust prosecution. Unable to cover all workers under Wagner Act unionization, it sponsored the Fair Labor Standards Act that set a standard for minimum wages and maximum hours. Unable to provide for all the poor and isolated Americans through regional planning, it set up individual communities like “Arthurdale” in West Virginia and the “greenbelt communities” near Washington, D.C. For the rural poor excluded from the benefits of the AAA, it set up the Resettlement Administration and the Farm Security Administration. More broadly and effectively, it distributed electric power to rural America by selling power to cooperatives via the Rural Electrification Administration. Congress also passed legislation specifically limiting cotton and tobacco production.
The Transformation of “Planning”
By the end of the decade, the New Deal had moved away from large, essentially static solutions of the NIRA. From the “cooperative commonwealth,” it had taken up what we can call “pluralist democracy.” This was the belief that by granting “social rights” to different groups of people it would spread the American middle-class ideal. It would be “democratic” not just because persons were voting to join programs and to form institutions that would advance their social status but also because it would enlist them as partners in the further development of American society. Americans would retain their different identities, but they would have the rights of equal citizens, entitled to a secure existence and a proper claim on their country’s protection and support.
The New Deal moved from seeking to integrate different parts of society to identifying the central identity and conferring upon it benefits in line with the “rights” it wished to confer. The ultimate consequences would be worked out through historical processes to which government would have to respond but which it could not control. Still, by conferring rights on various groups, the New Deal had tried to direct that development. Because such rights are universal and because New Deal programs aimed to increase incomes and standards of living, it sought to homogenize society around a middle-class, capitalist ideal. This ideal would be the basis on which cooperation, toleration, interdependence, and “democracy” would stand.
This was a turning away from the idea of the “mature economy” toward an emphasis on economic growth, toward bringing more of the nation’s resources into production to increase the standard of living. Now government was charged not to create a cooperative commonwealth but to facilitate the prosperity of a complex, diverse, decentralized society. This meant that it needed to be “flexible” to adjust to changing conditions, that it needed to be “responsive” or “interactive” to maintain contact with the American people and advance American “democracy,” and that it needed to promote the common good by reconciling the conflicts that inevitably arose in a complex, ever-changing society.
This was the reality that New Deal planning eventually discovered. During the course of Roosevelt’s first two terms, his administration established a series of planning agencies. The National Planning Board became the National Resources Board and, in 1935, the National Resources Committee (NRC). In 1939 this organization (soon to assume its final form as the National Resources Planning Board) produced a comprehensive study, The Structure of the American Economy. The NRC had gathered its information by a decentralized method, in which its field service worked with regional, state, and local planning staffs and with consultants that advised on specific matters. It further employed specialized administrative divisions, project advisory committees, and a technical research staff.
This complex structure produced a complex analysis. The NRC study identified five different kinds of corporate organization, eight major economic concentrations, and eleven connections among these eight. The key feature in identifying these concentrations was control. Determining this required knowledge of the history of the corporation and knowledge of the persons who controlled it. Quantitative or “objective” definition was not possible. Similarly, the study identified five types of trade unions, four types of collective bargaining agreements, and ten subjects of negotiation and methods of enforcement “of too great variety to be discussed in detail” (National Resources Committee 1939). The report identified geographic areas of economic specialization, examined their historical development and potential for further expansion, and discussed their financial elements. All this it presented with the understanding that structure and operating policies were subject to constant change and interactions that might be beneficial or frictional. Invention, shifting consumer wants, new forms of business organization and management, and shifting balances in labormanagement relations all would influence the structure.
But no amount of complexity should obstruct the search for improving the nation’s economic performance. The potential existed vastly to improve living standards, but it was not being realized. Too many workers and factories were idle. Too many wants were going unmet. The report warned that nothing less than the “maintenance of democracy requires that an adequate solution be found to the problem of keeping resources fully employed.”
Finding a “democratic” solution would be neither short nor simple. It would require “many minds working through a period of years.” Nor did the report provide more than a “frame of reference” for seeking a solution. “It must be left to the reader,” the report concluded, “to combine these separate aspects in his own mind into a unified conception of the national economy as a whole” (National Resources Committee 1939).
The report summarized lessons learned. Tugwell’s prescription for long-term solutions achieved by experimentation remained, but his confidence in the leadership of experts had disappeared. Now the expert merely played a role in the larger group, while each member of the larger group was instructed to seek their own solutions. At some future time, the New Dealers seemed to hope, these solutions would restore the nation’s economic well-being by “democratic” means.
Sooner than any of the authors believed, the nation’s well-being was restored, but by war. Massive spending combined with forced saving to achieve New Deal objectives and to validate New Deal democracy. Pluralist democracy became the order of the day. It now seemed possible that everyone could aspire to the middle-class ideal and melt into a homogeneous society. Economists discovered that United States was blessed with a “mixed” economy, sociologists discovered that most Americans considered themselves “middle class,” and social critics saw the country plagued by the pervasive blandness of a middle-class consumer culture. Others found that culture to be reassuring. Dr. Benjamin Spock encouraged the worried mother-to-be to “trust yourself,” school children were encouraged to be “leaders” and to develop a variety of skills (to become “well rounded”), and African Americans acquired new energy through equal rights. Between 1946 and 1966, the present author’s mother, Harriet McJimsey, taught home economics students how to classify their physical features so each of them could be “well dressed.”
New Deal planning had formed groups and identified them as worthy members of society. In the 1946 Christmas holiday film It’s a Wonderful Life, surely the most enduring expression of New Deal pluralism, actor James Stewart portrayed George Bailey, a building and loan executive who loans money to low-income citizens so they can live in clean and comfortable surroundings. Thereby, he affirms their value and gives them security and the chance to become useful, contributing middle-class members of society. When the town banker, Sherman Potter (played by Lionel Barrymore) “the richest and the meanest man in town,” derides Bailey for loaning money to “rabble,” Bailey responds:
Doesn’t it make them better citizens? Doesn’t it make them better customers? You—you said—what’d you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they’re so old and broken down that then. Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you’re talking about . they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn’t think so. People were human beings to him. But to you, a warped, frustrated old man, they’re cattle. Well, in my book he died a much richer man than you’ll ever be.