VI. THE REST OF THE NEW DEAL: A ROUNDUP

The National Industrial Recovery Act (NIRA), in Roosevelt’s mind, was a twin of the Agricultural Adjustment Act, since each was intended to exercise active oversight of prices, markets, and modes of competition. Its preamble stated its objectives, which were something new under the American sun:

to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production… [and so on and on].⁵¹

That is a classic statement of the aspirations of 1920s-vintage progressive reformers, with its roots in the “scientism” of turn-of-the-century philosophers and social scientists, like Henry Demarest Lloyd and Charles Horton Cooley.^† John Dewey predicted that when the methods of physical science were “progressively applied to history and all the social sciences, we can anticipate no other outcome than increasing control in the ethical sphere.”⁵² The twenty-five-year-old Walter Lippmann, in his Drift and Mastery (1914) cheered the advent of “the new science of administration,” by which “experiments conducted by experts” would resolve age-old business problems. Lippmann’s discussion of “mastery” anticipates the NIRA almost point for point:

Technical improvement must be for the whole industry, the labor market must be organized and made stable, output must be adjusted to a common plan. The appearance of federal organization seems to suggest a possible compromise in which the administrative need for decentralization is combined with the social demand for a unified industrial policy.⁵³

It was a pleasant fantasy, but in its real-life incarnation, the NIRA was a hopeless mess. Hiram Johnson, a California politician, in the process of losing a struggle against alcoholism, was the wrong choice for the job. Big businesses dominated the process of setting industry “codes” on pricing and competition, gleefully organizing trusts with impunity. Small businesses complained that the bigger players were systematically eviscerating their markets. Unions had been badly weakened in the 1920s, and were simply ignored until they took advantage of the NIRA’s union-protective clauses to mount waves of strikes. The Supreme Court’s 1935 decision against the NIRA’s constitutionality was greeted almost with relief.^* New specific legislation—the National Labor Relations Act and the Fair Labor Standards Act, were enacted in due course, while the Federal Trade Commission once more returned to its trust-busting mission. The one stimulative accomplishment of the NIRA was the pay codes; real wages improved substantially after 1934.⁵⁴

Price Fishback and John Wallis have constructed a table of average annual New Deal spending per capita on the base 1930 population in 1930 dollars (see Figure 5.4). The per capita/per year protocol in constant dollars also allows a convenient apples-to-apples comparison with the Hoover administration.⁵⁵

The New Deal relief grants, which included both work relief and welfare grants, constituted about 41 percent of the average total annual per capita spending. The next highest figure for both Roosevelt and Hoover was aid to veterans. The New Deal total includes the veterans’ bonus, which was passed by the Congress over the president’s veto. Actual outlays were about half again higher than shown in Figure 5.4, because the program was also credited with repayments of veterans’ previous loans against their bonuses. The Hoover veterans’ amount mostly comprised such loans. The “miscellaneous” category in the Hoover column was dominated by RFC lending, primarily to banks and railroads, while about half the Roosevelt total consisted of mortgage lending by the new Home Owners’ Loan Corporation (HOLC), which refinanced home mortgages, usually on extended terms with low interest rates. HOLC financed more than a million homes, with a life-of-program cash loss of $53 million, or about 2.7 percent of the $3 billion of lending. Its books were closed in 1951, and it is usually considered one of the more successful New Deal programs. Agricultural grants and loans and public works grants and loans, in that order, rounded out the major spending programs.⁵⁶