Destructive Creation. Mark R. Wilson
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the Republican candidate, Alf Landon. Even in industries that seemed to be benefiting most from the New Deal, such as construction, many business leaders worked hard to roll back state enterprise and regulation. As one White House staffer concluded in 1936, it was safe to say that “85% of business and industrial men today are against the Boss.”88
The Boss, calculating that he could win reelection without much business support and concerned about containing potential challenges from his political left, launched a vigorous public-relations effort of his own. In June 1934, Roosevelt used a radio address to dismiss the “selfish minority” of men who opposed him. Their cries against “regimentation” (which had been voiced by Hoover, among others) amounted to a wild mischaracterization of the New Deal, Roosevelt complained.89 Over the following months, as business opposition deepened, the president’s rhetoric became even more heated. In his State of the Union address in January 1936, Roosevelt boasted that “we have earned the hatred of entrenched greed.” During the 1936 campaign, the president regularly portrayed his detractors as “economic autocrats” and “economic royalists.” Because he was focused on improving the welfare of the vast majority of Americans, Roosevelt explained, he didn’t mind so much if a few of the country’s most fortunate citizens opposed him. On the contrary, he said, “I welcome their hatred.”90
Such was the general state of national-level government-business relations on the eve of the 1936 elections, which Roosevelt would win in a landslide. The business community was concerned not only about the growth of regulation and government in general under the New Deal; many executives were also worried about the specific evil of government competition, which was starting to occur on a scale that had not been seen since the Great War (see Figure 1). One legacy of that conflict, the Muscle Shoals complex, was actually being used by the New Dealers as the basis for a major new public corporation. But this was not the only important connection between the mobilization of 1917–18 and the development of businessgovernment relations in the 1930s. In the military-industrial sphere, too, the 1930s saw a new push for heightened regulation and public control.
A New Deal for the Defense Sector
In early March 1936, the infant public-opinion polling firm led by George H. Gallup surveyed more than a hundred thousand Americans to ascertain their opinions about the arms trade. Gallup asked, “Should the manufacture and sale of war munitions for private profit be prohibited?” In response, 82 percent of those interviewed—one of the largest majorities Gallup had yet recorded—replied yes. Gallup found no subgroup opposed to the proposition. The idea appealed to 79 percent of Republicans and 85 percent of Democrats, compared with 91 percent of Socialists. (The group least enthusiastic were residents of Delaware, home to the Du Pont company, where only 63 percent approved of the idea.) As some of the widespread press coverage of the poll results pointed out, Americans seemed to be slightly less committed to eliminating private armaments companies than their British counterparts, 93 percent of whom had called for it in a comparable survey the previous year.91 Still, the result was remarkable. It suggested that an overwhelming majority of the American public favored the nationalization of the defense sector.
Figure 1. “Government Competition,” September 1939 cover of Nation’s Business magazine, a publication of the Chamber of Commerce of the United States. This cover suggests the business community’s concerns about the threat of direct competition from government enterprises on the eve of World War II. Courtesy of U.S. Chamber of Commerce and Hagley Museum and Library.
The results of the 1936 Gallup poll suggest the political significance of national (and international) debates over the interwar arms industry, which culminated in the well-publicized Nye Committee hearings in the Senate. Too often, these debates are remembered as little more than the product of a naïve isolationist approach to foreign policy, which would be discredited by the lessons of World War II.92 But this view is seriously deficient. First, it fails to recognize that American critics of the munitions business were participating in a transnational, popular political effort to come to confront systemic problems that might cause another terrible war. In the mid-1930s, Senator Gerald P. Nye (R-ND) and his allies were in many ways less “isolationist” than they were cosmopolitan and internationalist.93
Second, the munitions debate of the 1930s should be understood as a central chapter in the history of economic policy during the New Deal years. Revolving around issues of the relative merits of government and private ownership in an industry that was, in fact, already seminationalized, it was closely related to the TVA fight and other interwar battles over public enterprise. As such, it was taken very seriously by the American business community. Indeed, the struggle over munitions was intertwined with the broader political offensive, launched by conservative business leaders in the mid-1930s, which was designed to combat President Roosevelt and the New Deal.
During and immediately after the Great War, hundreds of thousands of people all over the world voiced their concerns about the intermixture of capitalism and modern warfare. To many people, including soldiers, veterans, and their families, the sorts of profits that had been earned by companies like Du Pont and Bethlehem Steel seemed objectionable, if not obscene. Beyond this, some critics worried that the profitability of munitions manufacture created dangerous economic incentives. The admixture of capitalism and warfare appeared to give companies and individuals a vested interest in promoting military conflict. After the armistice, there was a global movement to solve these problems. In 1921, the new League of Nations resolved that “the manufacture by private enterprise of munitions and implements of war is open to grave objections.”94
In the United States, which had not joined the league, there was a political consensus that in the event of a future conflict, the sacrifice must be shared more broadly. As President Harding put it, the next time around, there should be “no swollen fortunes.” The two leading veterans’ organizations, the American Legion and the Veterans of Foreign Wars (VFW), both called for increased control of profits in wartime, possibly via a coercive “draft” of capital that would match the conscription of soldiers. In 1924, the Republican and Democratic party platforms both promised that in the event of a future conflict, there would be something closer to a “universal mobilization.” All this sober activity did not prevent readers from chuckling at Harold Gray’s “Little Orphan Annie” comic, which in 1924 introduced a sympathetic character named Daddy Warbucks.95 But to a large number of Americans, the record of the radically inegalitarian distribution of war bucks in the late 1910s was really no laughing matter.
After 1929, as the nation slid into the Great Depression, Congress and the White House began to consider more concrete proposals for profit control in a future war. During the tenure of the Hoover administration, the most important work in this field was done by a presidentially appointed War Policies Commission, which held hearings in 1931. In its final report, which was influenced by the continuing lobbying efforts of the American Legion, the commission recommended that profit control in a future war go well beyond what had been achieved during the Great War. It called for broad price controls, as well as a new EPT that would capture 95 percent of any profits above prewar averages. Although Congress did not act immediately to institute these recommendations, it was clear that there was a broad consensus that in the event of a future war, the nation should use stricter controls than the ones applied in 1917–18.96
As the Depression worsened, there was an upsurge all around the world in calls for stricter regulation of the munitions business. The economic crisis, which naturally led to more questioning of the beneficence of largescale capitalist enterprises of all kinds, seems to have further heightened interest in the sins of arms suppliers, in particular.97 In 1933–34, books and articles about the “merchants of death” abounded in Europe and the United States. The public attention led to new action by governments. In Britain, where the Labour Party was calling for more nationalization of arms production, a Royal Commission was appointed to investigate the issue. Its report, issued in 1936, came out against full nationalization, but it did call for more regulation of production and profits. In France,