The New Deal Reconsidered

Author(s): Bradford A. Lee

Reviewed work(s):
Source: The Wilson Quarterly (1976-), Vol. 6, No. 2 (Spring, 1982), pp. 62-76
Published by: Wilson Quarterly
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THE NEW DEAL

THE NEW DEAL RECONSIDERED

by BradfordA. Lee

"This nation asks for action, and action now," Franklin D.

Roosevelt declared at his March 1933 inauguration. Eight
months earlier, at the Democratic National Convention in
Chicago, he had confidently promised the American people a
"New Deal" to fight the Great Depression, and his "Brains
Trust" advisers had been hard at work on a program ever since.
In the famous First Hundred Days of FDR's Presidency, he
sent 15 major legislative proposals to Congress: the Agricultural
Adjustment Act, which awarded subsidies to farmers who lim-
ited their crops; the National Industrial Recovery Act, which
permitted industries to form cartels to limit output and fix
prices; and 13 other major laws- some of them passed after only
token debate.
Over the next five years, these would be followed by several
major relief measures (including the $5 billion Emergency Re-
lief Appropriation Act of 1935, the most expensive peacetime
government program anywhere up to then), the establishment
of the Social Security system in 1935, the Securities Exchange
Act, and a host of other bills. The new government agencies
created by Roosevelt strained the resources of the alphabet-
AAA,CAB,CCC,CWA,FCA,FCC,FDIC,FERA,FHA,FSA, HOLC,
NLRB, NRA, NYA, PWA,REA, SEC, TVA,WPA.
The results may have been mixed, but the impact was un-
mistakable. Even a cursory inspection of the New Deal shows
that it reshaped American institutions and gave material suste-
nance to millions of people who had been thrown out of jobs and
into various states of misery by the Depression. The greatest lift
probably came from FDR himself. Of his predecessor in the
White House, one observer remarked, "If you put a rose in
Hoover's hand, it would wilt." Roosevelt, by contrast, radiated
confidence. "Never was there such a change in the transfer of a
government," New York Times columnist Arthur Krock
exclaimed a week after the inauguration. "The President is the
boss, the dynamo, the works."
Did any conscious grand design for American society under-
lie Roosevelt's policies? Pretty clearly, the answer is "No."

The Wilson Quarterly /Spring 1982

62
 THE NEW DEAL

Civilian
Conservation
Corpsworkersin
the field. The
CCCwas the
inspiration for
the Job Corpsin
President
Johnson's War
on Poverty.

'
Helen West Heller, for Ihe WPA

Roosevelt's advisers were perpetually at odds among them-

selves. Raymond Moley hoped to revive industry by allowing
companies, in effect, to form cartels; his Columbia University
colleague, Rexford G. Tugwell, advocated centralized govern-
ment planning; and Felix Frankfurter, like Supreme Court Jus-
tice Louis Brandeis, wanted to break up big corporations and
restore a bygone economy of small businesses. FDR flirted with
all of these ideas, often at the same time.
Yet, for a historian simply to paint a picture of blooming,
buzzing confusion would be to obscure three broad aims that
Roosevelt and his advisers did share.
Apart from keeping their countrymen alive, their first goal
was to bring the economy out of the Depression. Their second
objective was to make the distribution of wealth and especially
income more equal- or, as they were wont to say, more "bal-
anced." The major cause of the Depression, in Roosevelt's view,
was the relatively small amount of purchasing power in the
hands of farmers and workers; the cure was redistribution of
income. Finally, the New Dealers hoped to realign the groupings
in American politics to keep the Democratic Party in power.
To what extent did Roosevelt succeed in his principal aim,

The Wilson Quarterly /Spring 1982

63
THE NEW DEAL

the restorationof prosperity?The conventionalwisdom has it

that only mobilizationfor war at the end of the 1930spulled the
Americaneconomyout of the Depression.And,in fact, the Gross
NationalProductdid not surpassits 1929 level until 1941.But
therewere some remarkableups and downsalong the way.
While almost all the major industrial countries (except
France)enjoyeda fairly steady recoveryafter mid-1932, inter-
ruptedonly by a mild setbackin 1937-38, the Americanecon-
omy (measured by GNP) took a wild roller coaster ride. It
plungedbetween the 1932 election and the 1933 inauguration
and recoveredbriefly.It fell again in the autumnof 1933.Then,
fromlate 1934to mid-1937,the Americaneconomygrew by an
averageof about 15 percentannually(in currentprices)- a rate
neverequalledin peacetimebeforeor since. Soon, however,the
countrywas wrackedby an industrialdeclineeven steeperthan
that in the initial post-1929crash.BetweenLaborDay 1937and
New Year'sDay 1938,two millionpeoplewere abruptlythrown
out of work. The economybegan to recoveronce more a year
later,as a surgeof defensespendingrolledthe countrytowarda
wartimeboom.

Coincidence and Calamity

"Roosevelt'sdepression"of 1937,as the Republicanscalled
it, was the result of two mistakes.Nevercomfortablewith defi-
cit spending- he had attackedHerbertHooverfor heading"the
greatest spending administration in peace times in all our
history"- FDRcut backWashington'soutlayson reliefand pub-
lic worksin a great show of budget balancingin 1936,an elec-
tion year.Theother mistakewas committedby the independent
FederalReserveBoard, which took it upon itself in 1936 and
1937to shrinkthe volumeof credit outstandingin the banking
system. The two decisions,though arrivedat separately,coin-
cided to producecalamitouseffects.
And, unfortunatelyfor Roosevelt's reputation as an eco-
nomicpolicymaker,he cannottake muchcredit for the boom of
the mid-1950s. The major economic stimulus seems to have
been an extraordinaryannualincreaseof more than 13 percent

BradfordA. Lee,33, a formerWilson CenterFellow, is assistant professor

of historyat HarvardUniversity.Born in Charlottesville,Va., he was grad-
uatedfrom Yale University(1970) and receivedhis Ph.D. from Cambridge
University(1974).He is the authorof Britain and the Sino-Japanese War,
1937-1939 (1973) and is currentlyworkingon a comparativestudy of the
crisis of the modernstate during the 1930s.

The Wilson Quarterly/Spring 1982

64
 THE NEW DEAL

(on average)in the money supply between 1934 and 1936, due
not to any calculatedpolicy but to an influxof gold frompoliti-
cally unstableEurope.*
Federalfiscal policy did little to spur the economicexpan-
sion of the mid-1930s.Roosevelt'sdeficits were unprecedented
in peacetime,reaching$3.6 billion duringhis first full year in
office. But raw deficit figures are not a good indicatorof how
much the economy is being stimulated. Economists today
measurethe effectof a fiscal policyby calculatingthe size of the
hypotheticalsurplusthat it would produceif the economywere
at its full-employment level. The higher the hypothetical
surplus, the lower the stimulus. By this standard,Roosevelt's
budgetsthroughoutthe '30sprovidedlittle stimulusin any year
except 1936- and then only because Congresspassed a $2 bil-
lion bonuspaymentfor war veteransover his veto. Indeed,Her-
bert Hoover'sfiscal policy in 1930and 1931had about the same
effectas any two consecutiveNew Deal budgets.
It was not until 1938 that Roosevelt finally accepted the
principles of Keynesian fiscal policy. Up until then, he had
vieweddeficitsas a necessaryevil, tolerableonly becauseWash-
ington had to finance programsto keep people workingor, in
some cases, eating. When John MaynardKeynes himself had
tried to tutor FDR in his theories in 1934, the Presidentwas
unimpressed.Keynes,he remarked,"left a whole rigamaroleof
figures. He must be a mathematicianrather than a political
economist."
Only Four Stripteases
From the start, Rooseveltput his faith instead in "struc-
tural"measuresthat would directlyraise prices and wages. If
farmersgot more money for their crops and workersgot more
for their labor, they would buy more goods; if there were in-
creased demand and higher prices, businessmen would earn
greaterprofits.This was the rationalebehind the two main ele-
mentsof the New Dealeconomicprogram- the AgriculturalAd-
justmentAct,administeredby the AAA,and the NationalIndus-
trial RecoveryAct, run by the NRA. "The aim of this whole
effort," Roosevelt declared, "is to restore our rich domestic
marketby raisingits vast consumingcapacity."
Underthe NRA,765 codes were drawn up to regulateout-
put, fix prices, reduce working hours, and increase wages in
various industries.The NRA'sfamous blue eagle symbol was
*The dollar was then a gold-backedcurrency.The FederalReserve Board passively allowed
the increase in gold reserves to be translated into an expansion of credit in the economy.

The WilsonQuarterly
/Spring1982
65
THE NEW DEAL

seen everywhereas the most obscureindustrieswere urged to

adopt special codes. New York'sburlesquehouses even agreed
in a code to allow no more than four stripteasesper show. The
eagles disappearedabruptlyafter the SupremeCourtdeclared
the act unconstitutionalin 1935 on the ground that Congress
had delegatedtoo muchof its authorityto the agency.TheAAA
was just as far-reaching.In 1933alone, cottonfarmerscollected
$100 million for taking 10 million acresout of production.
TheAAAand NRAdid indeedimprovethe lot of manyfarm-
ers, workers,and businessmen.But, especiallyin the case of the
NRA,the effecton the economyas a whole was not so positive.

Soaking the Rich?

Any economic stimulus will work itself out in a certain
combinationof increasesin prices and increasesin output, or
quantities of goods and servicesproduced(national income =
prices x quantities).The NRA,AAA,and othergovernmentpro-
grams, such as those encouragingcollective bargainingagree-
ments, ensuredthat the economicstimulus providedby an ex-
panding money supply would express itself more in terms of
higher prices and less in terms of increased output. Thus,
wholesaleprices rose by 45 percentbetween 1933and 1937- a
perversedevelopmentat a time when millions of people were
out of work and so many factorieswere operatingat reduced
capacity.
Higher output would have produced more jobs. In 1936,
after two years of recovery,one out of six workers(about 17
percentof the labor force)remainedunemployed.By diverting
so muchof the economy'supwardthrustinto higherprices,New
Deal policymakersinadvertentlyprolonged the agony of job-
lessnessfor millions.
This brings us to the second question:How much did the
distributionof incomeand wealthchangeduringthe New Deal?
Between the onset of the Depressionin 1929 and the out-
break of the Korean War in 1950, there was a shift toward
greaterequalityof incomes in Americafor the first time in well
over a century.The share of total national income receivedby
families in the bottom two-fifths of the scale rose from 12.5
percentto 15.7percent;the shareof incomefor the top fifth fell
13 points to 41.6 percent. There was a trend toward greater
equalityof wealth as well: Theshareof the nationalwealth held
by the richestone percentof adults fell from38 percentin 1929
to 22 percentin 1949.The two key questionsare:To what extent
did these changestakeplace in 1933-38, the heydayof the New

The Wilson Quarterly ISpring 1982

66
 THE NEW DEAL

THE MAJORNEW DEALAGENCIES

To cope with the Depressionand implementNew Deal programs.Con-

gress set up scores of new federalentities. Notable among them:
Agricultural Adjustment Administration (1933-42) Raised farm
pricesby subsidizingreducedcropproduction.
CivilWorksAdministration(1933-34) Hiredjoblessworkers,from
carpentersto artists, to practicetheir crafts.Peakenrollment:four
million.
CivilianConservationCorps(1933-42) Employeda total of three
millionreliefrecipientsto reforestpubliclandandimprovenational
parksunderArmysupervision.
Farm Security Administration (1937-46) Granted low-interest
loans for farm improvementsand for land purchasesby tenant
farmers.Set up modelcampsformigrantlaborers.Spendingtotaled
$1 billionby 1941.
Federal Emergency Relief Administration (1933-37) Financed
state-runemploymentprojects.Grantstotaled$3 billion.
Home OwnersLoanCorporation(1933-51) Refinancedmortgages
for homeownersin distress.Tookover morethanone millionloans
by 1936.
National Recovery Administration (1933-35) Directed govern-
ment-businesscooperationin cuttingproductionand raisingprices
and wages.
Public WorksAdministration(1933-39) Providedjobs on major
projects(highwaysand publicbuildings)for the unemployed.Spent
some $6 billion.
WorksProgressAdministration(1935-43) Spent $11 billion to em-
ploy the joblesson small projects,fromdiggingditchesto painting
muralsin governmentbuildings.
SurvivingNew Deal agenciesinclude:the CivilAeronauticsBoard
(formerly Authority); Commodity Credit Corporation;Export-
Import Bank; Farm CreditAdministration;Federal Communica-
tions Commission;FederalDepositInsuranceCorporation;Federal
HousingAdministration;FederalSavingsand LoanInsuranceCor-
poration;National Labor Relations Board; Rural Electrification
Administration; Securitiesand ExchangeCommission;Social Secu-
rity Administration(formerlyBoard);TennesseeValleyAuthority.

The Wilson Quarterly ISpring 1982

67
THE NEW DEAL

FEDERAL SPENDING DURING THE DEPRESSION

Federal deficits were relativelysmall during the 1930s and did little to
stimulate the economy. Yet by some measures America's 130 million
peoplewerebetteroff by 1940, despitenaggingpovertyand unemployment.

SOCIAL INDICATORS i928 1930 1932 1934 1936 1938 1940 1980

1 98 I " I I 10.31 10.7I 10.3I .2.! I .0.9

(p^Toropop.)
Birth rate
(per 1,000 pop.) 22.2 21.3 19.5 19.0 18.4 19.2 19.4 16.2

687 64"6 57"6 60A 571 5L0 47 12?

(peM^iivc'birthlo
13-S 156 174 149 143 153 144 127
(per 1W
Homicide rate
(per 100,000 pop.) 8-6 8.8 9.0 9.5 8.0 6.8 6.3 11.3

(% of householdf wUh) 27-S 45.8 60.6 65.2 70.5 79.2 81.1 99.9

40.8 40.9 33.5 31.4 33.1 34.6 36.9 96.3

(% oltuhouseholds
te; u\^ with^lcpho.nc!!
service)
Annual meat consumption
(lbs. per capita) 1243 '2' 7 124-2 '34.1 120.9 118.6 134.1 157.2

College degrees 55 57 63 61 63 72 81 238

(per 1,000 persons 23 yrs. old) | | | | | | [ |

Source: AmericanTelephone & TelegraphCo.;Merchandising(Mar. 1980);U.S. Departmentof

Agriculture;U.S. Departmentof Commerce,Bureauof the Census;U.S. Departmentof Education;
U.S. Departmentof Health and Human Services.

TheWilsonQuarterly/Spring1982
68
 THE NEW DEAL

Deal, and to what extent were shifts within that period due to
New Deal policies?
In the case of wealth,the answersare simple:TheNew Deal
had no effect.Spurredon by the growingpopularityof the flam-
boyantLouisiana"Kingfish,"SenatorHueyLong,and his Share
the Wealth movement,Rooseveltpushed stiffer taxes on gifts
and estates through Congress in 1935. (William Randolph
Hearst, the newspaper mogul, ordered his editors to call
Roosevelt'spoliciesthe "RawDeal"fromthenon.) Yet the share
of wealth held by the richest one percent of the population
actuallyrose from30 to 33 percentbetween 1933and 1939.
The answers are more complicatedin the case of income,
but one point is quite clear:Abouttwo-thirdsof the shift toward
more equality came in just three years, 1941-44. As in other
countriesduringthe 20th century,war was the greatequalizer.
Therest of the shift tookplace sometimebetween 1929and
1941. Since there are adequate income statistics for only one
interveningpoint- 1935- it is difficultto pin downwhen much
of this more modest change occurred.One can make an edu-
cated guessthat the steep economicdeclinein 1929-32hit those
at the upperand lower ends of the income laddermuch harder
than those in the middle and that the net overall effect was a
small increasein inequalityof earnings.If so, we can infer that
there must have been a significant,thoughhardly spectacular,
increase in income equality after that. But we cannot assume
that New Deal policies were responsiblefor the shift. Otherfac-
tors, such as the recoveryitself and normalchangeswithin the
economy,also contributed.
Benefitsfor Big Business
What, then, can we say about the role of federal policy?
Highertaxes after 1935did takea bite out of largeincomes.But
it is easy to overstate what can be achieved by "soakingthe
rich." Wesleyan University economist Stanley Lebergotthas
pointed out that if Washingtonhad taxed away all personal
income over $20,000in 1970 and distributedit to those below
the povertyline, each familywouldhave receivedjust $350.And
Rooseveltnever contemplatedso confiscatorya tax (thoughhe
once remarkedduring World War II that no one needed an
after-taxincomeover $25,000).In fact, the overalltax structure
did not become much moreprogressiveduringthe 1930s.
Roosevelt was rather more adventurouswhen it came to
spending.But the sums expendedon public works and relief
were never enough (even allowing for a generous"multiplier"

The Wilson Quarterly ISpring 1982

69
THE NEW DEAL

"A)id if Roosevelt
is not reelec ted,
perhaps e\}en a
villa i)i Newport,
my dearest
sweet" was the
caption of this
1936 car tooii.

Drawing h\ (.alhtmlh. < /^V /s>M

Ihc \t-\\ Yurkci \1axu;i>ic. hit

effect) to support more than a fraction of the vast numbers of

jobless and destitute at anything but a minimum level. Harry
Hopkins's Works Progress Administration, established in 1935
with a budget of $1 .4 billion, provided work for only three mil-
lion of the estimated 10 million unemployed - at wages as low as
$19 per month. This was by far the most ambitious New Deal
relief effort. Such programs did not, therefore, have much effect
on income distribution.
Indeed, it is not at all clear that the government's money
went to those whose absolute need was greatest. The states in
the richest region of the country, the West, got 75 percent more
federal relief and public works money per capita than those of
the poorest region, the South. Anyone with a modicum of cyni-
cism will (rightly) sense politics at work: The "Solid South"
fared badly because the Democrats were sure of its electoral
support. The Western states did well because their political
loyalties were up for grabs.
Still, for all their limitations, the taxing and spending
policies of the New Deal did at least slightly narrow the gap
between those at the very top and those at the very bottom.
Other policies, however, pushed the people in between further
apart. The AAA'scrop-restriction and subsidy program, for in-

The Wilson Quarterly/Spring 1982

70
 THE NEW DEAL

stance, helped big farmers more than smaller ones. On large

farms, with hired labor and large amounts of machinery,fuel,
and fertilizer,costs could be cut in many ways when the pay-
ments for curtailing acreage began. But smaller farmerswho
relied on the laborof their familieshad few extraneouscosts to
cut. The subsidieswere worthcomparativelyless to them.*
Large-scaleoperationsand influentialproducersin indus-
try also enjoyed an advantage under the shortlived National
RecoveryAdministration.Big business was generally able to
control the formulationand administrationof the NRA codes
that fixed prices and output;they showed no great concernfor
the interestsof the "little guy."
Contradictions
Even among workers,there was a tendency for the most
vulnerableto be left behind.The NRApushedemployersto pay
higher wages, and unskilled workersgained even more than
theirskilledcounterparts.Thus,the mostdramaticdividingline
was not between the skilled and the unskilled, but between
those with jobs and those without them.
After the Supreme Courtput the NRA out of business in
1935, labor got a new boost from Washington.The landmark
National Labor RelationsAct of 1935 gave labor unions even
morehelp in their effortsto organizeworkers(by guaranteeing
secret ballots in representationelections, for instance)and al-
lowed them to press wage demandsmore successfullythan be-
fore. But, again, higher wages, like higher prices, meant fewer
jobs would be createdfor the unemployed.
Theunavoidableconclusionabout New Deal economicpol-
icy is that, so far as both recoveryand redistributionare con-
cerned, FDR's"structural"measuresoffset much of whatever
uplift effect his fiscal policy may have had. There was some
progressduringthe New Deal,but government'scontributionto
it was scant.
All this, of course,is much clearerin hindsightthan it was
back then. Whenone looks over at the political side of the pic-
ture, it appearsthat a distinct majorityof the Americanpeople
at the time seemed quite satisfied with the New Deal- and
wantedto play on. Ordid they?
Roosevelt'svictory in the 1932election with more than 57
*There was another
problem in the South, where there were many sharecroppers who
customarily received from the landlord only a share of the crop they grew on his land. The
sharecropperswere entitled to a correspondingportion of the AAApayments. But the pro-
gram was implemented at the local level by farmer committees dominated by landlords,
and, especially in cotton-growingareas, the sharecroppersdid not get their due.

The WilsonQuarterlyISpring1982
71
THE NEW DEAL

THE U.S. ECONOMY,1925-45, includingthe NEW DEALPERIOD

percent of the vote, and his even more spectacular triumph four
years later with more than 60 percent, were the critical points in
a massive electoral realignment. He put together a political
coalition that has dominated American politics ever since, al-
though the 1980 elections may have changed that. The realign-
ment in the 1930s was the product of two phenomena. One was a
switch-over among some Republicans to Roosevelt; the other
was a surge of new participants into the electorate.
Prominent among the converts were blacks, who had been
attached to the GOP, the party of Lincoln, since the Civil War. (A
1938 Fortune survey showed that 84.7 percent of the blacks
polled supported Roosevelt.) But large numbers of white

The Wilson Quarterly /Spring 1982

72
 THE NEW DEAL

middle-class progressives and farmers switched as well. (Later,

they tended to gravitate back toward the Republican fold.) The
new voters included most of the young and many women; they
came above all from enclaves of Poles, Italians, and other recent
immigrants in the big Northern cities. The upshot was an incon-
gruous coalition whose staunchest elements were "minorities"
of all sorts and white Southerners with racist and nativist views.
It is easier to identify who voted for Roosevelt than to be
sure precisely why they did so. The farmers and middle-class
"swing" voters were probably spurning the Republican Party
for its mishandling of the Depression - they nad a kind of
Hoover hangover. Southerners no doubt continued to vote for

The Wilson Quarterly/Spring 1982

73
THE NEW DEAL

the DemocraticPartylargelybecauseit was part of their tradi-

tion. The ethnic groups were mobilizing to preservethe relief
and public-worksjobs that they gainedunderthe New Deal.
Yet the bond between New Dealprogramsand the general
public was never as strong and far-reachingas many people
have since assumed. It was during the 1930s that "scientific"
public opinion surveysmade their debut. The first Galluppoll,
takenin September1935,revealedthat 60 percentof a national
cross-sectionthought governmentexpendituresfor relief and
recoverywere "too great"while only nine percentdeemedthem
"too little." In December1935,59 percentopposedthe AAA;in
September1936,56 percentwere againstrevivingthe NRA.
The messagewas clear. Rooseveltwas much more popular
than were his programs.By the end of the 1930s,even his per-
sonal popularitywas in doubt.In 1938,a bitter HughJohnson,
whom Roosevelt had fired from his job as head of the NRA,
wrote,"Theold Rooseveltmagichas lost its kick.. . . His Falstaf-
fian armycan no longerbe kept togetherand led by a melodious
whinny and a winning smile." The Gallup polls suggest that
only the war made it possible for FDR to run and win in 1940
and,again,in 1944(garnering54.7and 53.4percentof the popu-
lar vote, respectively).

Sheepskins from Harvard

Thelackof widespreadideologicalsupportfor the New Deal
was soon reflected- indeed magnified- in Congress.In 1937,
Roosevelt'scongressionalcoalitioncrumbled,and a bloc of con-
servative Democrats- mostly from the South- joined with the
Republicansto oppose almost all furtherNew Deal legislation.
This happeneddespite the fact that Roosevelthimself had car-
ried everystate but two in the 1936election.(Hisadvisersjoked,
"As Maine goes, so goes Vermont.")It would be more than a
quarterof a centurybeforeanotherreform-mindedDemocratic
President,LyndonB. Johnson,could overcomethat stalemate
on CapitolHill.
The basic animus of these conservativeDemocratswas di-
rectedagainstthe rapidgrowthof the federalgovernmentunder
Roosevelt.Theywere also repelledby the growingpowerof the
new bureaucraticbreed who were intellectualsfirst and party
operatorssecond. One Congressmancomplained in mid-1937
that "unlessan applicantcan murderthe broad'a' and presenta
Harvardsheepskinhe is definitelyout."
Another development that stymied FDR during the late
1930swas the growthin the powerof interestgroups.Since the

/Spring1982
TheWilsonQuarterly
74
 THE NEW DEAL

late 19thcentury,they had made theirvoices heardin Washing-

ton on moreand moreissues.Theyhad won many"porkbarrel"
concessions,but seldom triumphedon mattersof principle.Big
Business, for instance, had failed to get from the Republican
administrationsof the 1920s what it most wanted- a drastic
relaxationof the antitrustlaws.
A New Power Structure
Roosevelthimself promotedthe growth of interest groups
after 1933,partly in hopes of defusingcriticism of the increas-
ingly powerfulbureaucracyhe presidedover and partly to line
up support for the New Deal. The Roosevelt administration
worked with the AmericanFarm Bureau Federation,for in-
stance,in designingand runningthe AAA.The result:The Farm
Bureau'smembershipincreasedby 150 percent between 1933
and 1937.Union membershipsoaredunder the NRA,and even
moreunderthe NationalLaborRelationsAct.TheNRAnot only
allowed Big Business most of what it had wanted but also en-
couragedthe growthof morepowerfultradeassociations.*
But the strategybackfired.Business,disillusionedwith the
NRA and outraged by New Deal fiscal policy, soon turned
against Roosevelt,as the FarmBureaudid later on. Part of the
labor movement,led by the fieryJohn L. Lewisof the new Con-
gress of IndustrialOrganizations(CIO),brokewith FDR in the
late 1930s.Thus,while the creationof a new powerstructurein
Washingtonwas probably Roosevelt's most lasting achieve-
ment,he himselfendedup being immobilizedby it- one reason
why he put so few major New Deal measuresbefore Congress
after 1935.Futureoccupantsof the WhiteHousewould face the
same arrayof powerfulinterestsin and out of Congress.
To a historian born after Roosevelt's death and writing
almosthalf a centuryafterhis first term in office,the New Deal
lacks the epic quality that it has for many who lived throughit.
But my purposeis not to rewrite the New Deal as a tragedyof
missedopportunities.In countrieswith pluralisticpolitical sys-
tems and marketeconomies- and not just in thosecountries- it
is difficultfor any governmentto bringaboutsuddenbut endur-
*The New Deal fostered the explosive growth of farm, labor, and business groups by provid-
ing an easy solution to what Universityof Marylandeconomist MancurOlson has described
as the "free rider problem": No individual has a great incentive to join such a group if he
can reap the benefits it wins without paying the costs of membership.A farmer,for instance,
could benefit from crop subsidies whether he belonged to an organization that helped win
them or not. By bringing such groups directly into the policymaking process, however, the
Roosevelt administration helped promote the impression that they were at the center of the
action and winning battles- a sense of "collective efficacy"- that won the groups new
members.

The Wilson QuarterlyISpring 1982

75
THE NEW DEAL

ing transformations in the structure of society.

The independent movements, decisions, and mentalities of
millions of people are, in other words, more than a match for the
flow of paper from the top. Even to begin to alter the existing
distribution of income, the democratic state must reach deep
into the pockets of taxpayers far down the middle tax
brackets- and, for its efforts, it is likely to get its hand bitten. To
revitalize an economy from above is no easy matter either. The
U.S. government's share of GNP in the 1930s was still so small
that even relatively large increases in spending would not have
had decisive results. It may be possible to concentrate political
power early in a President's term, but in a political system
whose constitutional underpinnings encourage fragmentation, a
reaction is inevitable. No President of the United States has
been able to get his own way for long.
This is not to endorse the new conventional wisdom that
governments can do nothing constructive. It is simply to say
that in complex, advanced societies such as the United States,
governments are most effective when they pursue sharply de-
fined ends through consistent, carefully designed means. FDR
could have achieved far more with more thought and less action.
So, no doubt, could have his heirs of the Johnson years. And
those who would repudiate the spirit of the New Deal today are
prone to the same incoherence of means, the same inattention to
unintended consequences, and the same unrealistic inflation of
hopes. As any historian knows, however, it is much easier to see
this in retrospect than from the eye of the storm.

The Wilson Quarterly ISpring 1982

76