Road to Plenty, The
ROAD TO PLENTY, THE
The Road to Plenty by William Trufant Foster and Waddill Catchings was a widely read book that challenged the assumption of classical economics that production and consumption were inherently in balance. It anticipated the ideas of John Maynard Keynes and the strategy of counter-cyclical government spending. Neither Foster nor Catchings were professional economists. Foster had been president of Reed College in Portland, Oregon, and Catchings was a manufacturer who became a partner in Goldman Sachs, an investment banking firm.
In The Road to Plenty, their fourth and most influential book, Foster and Catchings popularized and developed the ideas of the English economist John A. Hobson. They argued that consumption regulated production and that underconsumption could occur due to savings ("wasteful thrift"), artificially high prices, low wages, and other conditions that constrained purchasing power. The authors believed that the key to full employment and improved standards of living was public spending. The book became especially relevant after the onset of the Depression because it argued that the way to deal with unemployment was to stimulate consumption rather than production. Couched in terms of an instructional conversation, The Road to Plenty proposed the creation of a federal board that would gather data on economic conditions and make recommendations for public works to stimulate consumption during economic downturns. Foster and Catchings contended that reliance on fiscal policy would restrict the need for state intervention and would present no threat to American values and existing institutions. The book informed the congressional debate about public works expenditures during the early phase of the Depression, and it influenced Marriner S. Eccles, who became chairman of the Federal Reserve Board in 1934. However, it was not until the recession of 1937 to 1938 that the ideas of Foster and Catchings elicited significant support from New Dealers.
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Dorfman, Joseph. The Economic Mind in American Civilization, Vols. 4–5: 1918–1933. 1946–1959.
Gleason, Alan H. "Foster and Catchings: A Reappraisal." Journal of Political Economy 67 (1959): 156–172.