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Businessmen reached new levels of unpopularity during the 1930s. Following the prosperity of the 1920s, the stock market crash of 1929 punctuated the end of the "New Era" in dramatic fashion. By 1932, the nation's gross national product had dropped 33 percent, nearly 25 percent of workers had been thrown out of work, and the prices of most goods were cut in half. Business executives who had been seen as enlightened captains of industry, responsible for much of capitalism's advances during the years following the end of World War I, were soon perceived as responsible for capitalism's collapse. Some, such as utility magnate Samuel Insull, fled the country as their corporate empires collapsed around them. In 1933 and 1934, the Senate Banking and Currency Committee, led by chief counsel Ferdinand Pecora, questioned leading businessmen and financiers, including J. P. Morgan, Charles Mitchell, Winthrop Aldrich, and Thomas W. Lamont, about their practices. Morgan acknowledged that he had (legally) avoided paying any income tax in 1930, 1931, and 1932, while others, such as Mitchell, eventually faced criminal charges for their actions. The legitimacy of capitalism, itself, was increasingly called into question.

Businessmen reacted to this social, political, and economic crisis, and to subsequent New Deal policy measures, in different ways and in ways that changed over time. To speak of "businessmen" as an unchanging monolith does injustice to the complexity of the historical record. It is, however, possible to make some generalizations. In reacting to the Great Depression and the coming of the New Deal, businessmen drew on the intellectual currents that had been popular during the 1920s and earlier. They at first welcomed the election of President Franklin Roosevelt, and cautiously looked to the federal government to provide stability and legitimize the "associational" activities that antitrust laws had long prevented. By 1935, however, many businessmen were frustrated with the New Deal. Although there were exceptions, businessmen generally opposed New Deal measures designed to increase the bargaining power of organized labor, provide public works projects, create unemployment insurance and old-age insurance, and regulate wages and hours. Businessmen could usually be counted as reliable supporters of a balanced federal budget, and as vociferous opponents of measures designed to increase federal revenues, such as Roosevelt's call to "soak the rich" with income tax increases. Efforts to regulate the nation's banks and financial markets, such as the 1933 Glass-Steagall Banking Act and the creation of the Securities and Exchange Commission, were also greeted with disdain by most businessmen. With the coming of World War II, though, New Dealers and businessmen achieved a rapprochement of sorts.


During the 1920s, a number of businessmen and politicians, including such figures as George Perkins, Frank Munsey, and Herbert Hoover, championed the idea of business cooperation. Through voluntary organizations, such as trade associations, businesses could attempt to plan production, develop and implement codes of conduct, and avoid competing on price. These anticompetitive practices grew in part out of measures developed in World War I to regulate wartime production, but they also expanded on the popular notion of the "business commonwealth." Thanks to enlightened planning, supporters of the business commonwealth assumed, business could coordinate the economy and capitalism in such a way as to ensure prosperity and stability for all firms. Greater efficiencies would smooth out the business cycle's oscillations, minimizing unemployment and delivering a wider selection of goods to consumers.

In developing the National Industrial Recovery Act (NIRA) in 1933, New Dealers explicitly drew on associational activities in their effort to end the economic depression. Businessmen welcomed Title I of the NIRA, which suspended the nation's antitrust laws and called for business to participate in drafting codes of conduct that would govern competitive practices. Organizations such as the American Bar Association and the U.S. Chamber of Commerce supported this idea, and even the National Association of Manufacturers offered a lukewarm endorsement of the policy. Bernard Baruch and Hugh Johnson, both of whom had served on the War Industries Board during World War I, backed the NIRA, as did such leading businessmen as Gerard Swope, Henry Dennison, and Charles Abbot. Many of these individuals helped participate in the actual drafting of the legislation, and Hugh Johnson was placed in charge of the National Recovery Administration (NRA), which emerged from this work. The NRA not only reflected ideas about efficiency, planning, and competition that dated back to thinkers such as Thornstein Veblen and Frederick W. Taylor, it also found favor with such New Dealers as Rexford Tugwell. Although reluctant to trust businessmen, New Dealers saw in the NRA the possibility for the state to counter business's power by championing the interests of consumers, farmers, and labor. In practice, however, the codes of competition that were drafted under the NRA reflected the power and interests of larger businesses. In sectors as diverse as cotton textiles, steel, lumber, petroleum, and automobiles, for example, the NRA codes served to put in place government-sanctioned cartels, largely achieving big business's goals while minimizing the influence of consumers and labor. As time passed, the NRA's popularity waned. By the time the Supreme Court declared Title I of the NIRA an unconstitutional use of federal power in Schechter Poultry Corporation v. United States, the NRA had few remaining supporters.


While businessmen initially looked to the New Deal to provide economic stability, they found most of Roosevelt's political agenda unpalatable. They were particularly upset by the New Deal's commitment to organized labor. Section 7(a) of NIRA's Title I, though, which enshrined the right of organized labor to collectively bargain with employers, was initially met with guarded acceptance by the business community. Businesses located in northern, higher-wage environments generally assumed that it would improve their competitiveness relative to their southern counterparts, or simply accepted its inclusion as a price to be paid for the suspension of antitrust laws. When NIRA's Title I was struck down in Schechter, stronger protections for workers' rights to organize were incorporated into the language of the National Labor Relations Act, which became law in 1935 despite vigorous opposition from many business organizations. Business opposition to the Social Security Act of 1935, while noticeable, was somewhat less intense, in part because a number of firms characterized by welfare capitalism saw Social Security as a way to, in effect, transfer these sorts of programs to the federal government.

Measures such as the Fair Labor Standards Act of 1938 were also passed by Congress despite objections from businessmen and firms concerned about further government encroachment into what they declared was their right to manage labor relations as they saw fit. These issues were particularly salient in the steel, auto, and mining industries, where such businessmen as Myron Taylor of U.S. Steel and Alfred Sloan of General Motors confronted labor leaders like John L. Lewis and Walter Reuther. Such events as the 1936 to 1937 Flint sit-down strike and the 1937 Memorial Day massacre outside of Republic Steel in Chicago graphically demonstrated the high stakes of the conflict between labor and business, driving home to businessmen the importance of trying to shape public policy and public opinion. This effort had taken a number of forms throughout the Great Depression, but one of the most prominent organizations to emerge was the American Liberty League, founded in 1934 with financial backing from the DuPont family. Along with the U. S. Chamber of Commerce, the National Association of Manufacturers, and a number of other organizations, the American Liberty League led the public relations effort against President Roosevelt and the New Deal. It opposed deficit spending by the federal government, objected to Roosevelt's court-packing plan, and tried to influence the rewriting of the federal tax code.

Although businessmen had little success in rehabilitating their public image during the 1930s, with the coming of war they found a new chance to recapture the public's trust and respect. Many businessmen took a leave of absence from their private-sector employment in order to work for such new government bodies as the War Production Board, becoming "dollar-a-year men" (so named because, while retaining their private salaries, they took only minimal compensation from the government). While working for the government, they drew upon their expertise to advance the war effort. Investment banker Ferdinand Eberstadt, for example, developed and implemented the Controlled Materials Plan, which solved many of America's wartime production problems by controlling the allocation of copper, aluminum, and steel. After converting automobile production facilities to the building of airplanes, the United States managed to produce nearly 300,000 aircraft during the war, easily trumping the productivity of the other combatant nations. By the time the war ended, businessmen had made some strides in changing public opinion. By 1953, for example, David Lilienthal, a staunch New Dealer, published Big Business: A New Era, a glowing account of big business and its place in American society.



Gordon, Colin. New Deals: Business, Labor, and Politics inAmerica, 1920–1935. 1994.

Hawley, Ellis W. The New Deal and the Problem of Monopoly: A Study in Economic Ambivalence. 1966. Reprint, 1995.

Leff, Mark H. The Limits of Symbolic Reform: The New Deal and Taxation, 1933–1939. 1984.

McCraw, Thomas K. American Business, 1920–2000: HowIt Worked. 2000.

Jason Scott Smith