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Corporate Influence and World War II: Resolving the New Deal Political Stalemate

Published online by Cambridge University Press:  14 October 2011

Brian Waddell
Affiliation:
University of Connecticut

Extract

Since many scholars focus on the New Deal as the foundation for modern U.S. governance, it is widely assumed that the United States is characterized by a weak state as compared to the welfare states of Western Europe. Yet, in the wake of World War II, the United States established a national security “warfare state” that rivaled the welfare states of Western Europe in scope of authority and operations and in its isolation from popular forces. The wartime redirection of U.S. state power also resolved the political stalemate stemming from the executive-congressional and business-government tensions roused during the New Deal. In fact, the course of wartime statebuilding was in many ways a response to the political tensions of the New Deal and to the expectation that the organization of wartime mobilization would indelibly define the postwar organization of U.S. state power. As this article argues, wartime mobilization resolved the New Deal political stalemate in large part by granting various segments of the corporate community the opportunity to influence the shape of U.S. national state power.

Type
Articles
Copyright
Copyright © The Pennsylvania State University, University Park, PA. 1999

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References

Notes

1. Besides the debate to be reviewed below, see, for example, Amenta, Edwin and Skocpol, Theda, “Redefining the New Deal: World War II and The Development of Social Provision in the United States,” in Weir, Margaret et al., eds., The Politics of Social Policy in the United States (Princeton, N.J., 1988)Google Scholar ; Hooks, Gregory, Forging the Military-Industrial Complex: World War ll's Battle of the Potomac (Urbana, Ill., 1991)Google Scholar ; and Sparrow, Bartholomew, From the Outside In: World War 11 and the American State (Princeton, N.J., 1996).Google Scholar Even Plotke, David, who expresses concern about the formalism or structuralism of the “new institutionalism,” nonetheless studies the 1930s and 1940s to distill the autonomous political dynamics that governed political change. Building A Democratic Political Order (New York, 1996)Google Scholar.

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29. Jessop, Bob, State Theory (University Park, Pa., 1990), 362.Google Scholar See also Swenson, Peter, “Arranged Alliance: Business Interests in the New Deal,” Politics & Society 25 (1997): 66116Google Scholar.

30. Ibid. Poulantzas, State, Power, Socialism (London, 1978).

31. A point well expressed by Piven, Frances Fox and Friedland, Roger in “Public Choice and Private Power: A Theory of Fiscal Crisis,” in Kirby, Andrew, et al., eds., Public Service Provision and Urban Development (New York, 1984), 402Google Scholar.

32. Domhoff, G. William, The Power Elite and the State (New York, 1990).Google Scholar

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34. Forging the Military-Industrial Complex, quotes in order, pp. 150, 161. For more extensive criticisms, see Waddell, Brian, “The Dimensions of the Military Ascendancy During U.S. Industrial Mobilization for World War II,” Journal of Political and Military Sociology 23 (1995): 8198Google Scholar.

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39. Corcoran, 27 July 1938 interview with Joseph Alsop, copy in Joseph Lash Papers, Box 65, Franklin D. Roosevelt Library (hereafter FDRL).

40. Leuchtenburg even entitles his chapter on the late New Deal, “Stalemate.” See FDR and the New Deal, chap. 11.

41. Forrestal, who became Under Secretary of the Navy, and Eberstadt, who headed the Army-Navy Munitions Board, were close friends who had worked together for the Wall Street firm of Dillon, Read. Forrestal and Eberstadt kept a “Good Man” list of prominent and trusted corporate associates who could be called upon in time of need. As Jeffrey Dorwart reports, “Seventy percent of those on the Good Man list went to Washington as so-called dollar-a-year men during the second world war.” ( , Dorwart, Eberstadt and Forrestal: A National Security Partnership, 1909-1949 (College Station, Tex., 1991], 8Google Scholar .) Patterson, who would become Under Secretary of the Army, was on the list, and before and after his federal judgeship (1930-40) was a partner in a prominent New York law firm. See Burch, Philip, Elites in American History: The New Deal to the Carter Administration (New York, 1980), 7475Google Scholar.

42. The Truman Committee (Senate Select Committee Investigating the National Defense Program) directly charged the corporate dollar-a-year advisers who dominated the Office of Production Management (predecessor to the War Production Board) with responsibility for the weaknesses in civilian-state control of mobilization responsibilities. Additional Report, 77th Cong., 2d sess., RPt. 480, Pt. 5 (1941).

43. Gunnar Myrdal, in a 1944 analysis of the postwar economic prospects of the United States, referenced a November 1941 Fortune poll in which only 7.2 percent of corporate executives believed… that this system (of private enterprise] would actually survive the war.” Economic Developments and Prospects in America, address to the National Economic Society of Sweden, 9 03 1944, 11Google Scholar ; copy in Wayne Coy Papers, Box 7, FDRL.

44. For an analysis of prewar administrative developments, see Waddell, Brian, “Economic Mobilization for World War II and the Transformation of the U.S. State,” Politics & Society 22 (1994): 165–94.Google Scholar For an analysis of how capitalist power varies with changing political and market conditions, see Luger, Stan, “Government Policy Towards the Automobile Industry: Social Constraints, Economic Conditions, and Interest Group Power,” Journal of Policy History 4 (1992): 418–35Google Scholar.

45. “Report of the War Resources Board,” 7; President's Secretary's Files, Box 173, File “War Resources Board,” FDRL.

46. For interwar shifts in business-military relations, see Koistinen, Paul A. C., “The Interwar Years,” in The Military-Industrial Complex (New York, 1980)Google Scholar ; Millett, John D., The Organization and Role of the Army Service Forces (Washington, D.C., 1954), 1419Google Scholar ; Smith, R. Elberton, Army and Economic Mobilisation (Washington, D.C., 1959), 35-47, 7381Google Scholar.

47. In fact, wartime congressional investigative committees assailed the military's planning and administrative inadequacies. See, for example, Senate Special Committee to Study the Problems of American Small Business (Murray Committee), 77th Cong., 2d sess., Additional Report, Rpt. 479, Pt. 2 (1942), 13Google Scholar ; Truman Committee, 77th Cong., 2d sess., Report Concerning Priorities and the Utilization of Existing Facilities, Rpt. 480, Pt. 3, reprinted First Annual Report (1942), 1934.Google Scholar See also , Smith, Army and Economic Mobilisation, 111Google Scholar ; , Millett, Army Service Forces, 283Google Scholar.

48. United States Civilian Production Administration (hereafter USCPA), Industrial Mobilisation for War (Washington, D.C., 1947), 472Google Scholar ; , Smith, Army and Industrial Mobilisation, 561Google Scholar.

49. , Skowronek, Building, 238.Google ScholarEberstadt, Ferdinand, “Diary Entries, October 31, 1941,” emphasis added, Box 12, “ANMB Files,” Eberstadt Papers, Seeley Mudd Library, Princeton UniversityGoogle Scholar.

50. Sitterson, J. Carlyle, Development of the Reconversion Policies of the War Production Board, April 1943 to January 1945, USCPA Special Study No. 15 (Washington, D.C., 1946), 1314Google Scholar ; and Peltason, Jack, “The Reconversion Controversy,” in Stein, H., ed., Public Administration and Policy Development (New York, 1952), 229–30Google Scholar.

51. Memo from C. E. Wilson, WPB Executive Vice Chairman, to members of WPB, 1 July 1944, Gladieux Papers, National Archives (NA) RG 250, Box 6, “Reconversion”; USCPA, Indus-trial Mobilisation, 739, 8013Google Scholar ; , Sitterson, Reconversion Policies, 227, 115-17Google Scholar ; , Peltason, “Reconversion Controversy,” 238–39Google Scholar.

52. Bernstein, Barton J., “The Removal of War Production Board Controls on Business,” Business History Review 39 (1965): 244, 251Google Scholar ; and, , Sitterson, Reconversion Policies, 69, 77Google Scholar.

53. Quoted in , Sitterson, Reconversion Policies, 54Google Scholar.

54. Tom Clark, U.S. Attorney General, reported in 1943: “at the beginning of our war pro-gram 175,000 companies were providing 70% of the nation's manufacturing output and 100 corporations were producing 30%. Today, two and one-half years later, this ratio has been re-versed; now 100 corporations hold 70% of the war and essential civilian contracts, while 175,000 small companies hold 30%.” Quoted in Monsees, Carl Henry, Industry-Government Cooperation (Washington, D.C., 1944), 12Google Scholar . See Smaller War Plants Corporation Report, Economic Concentration and World War II, 79th Cong., 2d sess., Doc. 206 (1946)Google Scholar.

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57. See Nelson, Donald, Arsenal of Democracy (New York, 1946), 398–99.Google Scholar

58. The (Bernard) Baruch-Hancock Report on War and Post-War Adjustment Policies served as a guide for these tasks since it focused on the nuts-and-bolts issues of getting industry quickly back to civilian production. I. F. Stone called the report a “Beveridge Plan for Millionaires.” Nation, 25 March 1944.

59. “CIO Reconversion Statement” of 1 May 1956. Robert Nathan Papers, NA, RG250, Box 230.

60. “CIO Reconversion Statement.”

61. Lekachman, Robert, The Age of Keynes (New York, 1968), 287.Google Scholar

62. See Sherry, Michael, Preparing for the Next War: American Plans for Postwar Defense, 1941-45 (New Haven, 1977).Google Scholar

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64. As Schriftgeisser explains, the Employment Act “was, in fact, a conservative measure. The use of the fiscal instrument, called for in the bill, was not a revolutionary change in our economic life, but one which leaves the fundamental directives and arrangements of the free enterprise system untouched.” Schriftgiesser, Karl, Business Comes of Age (New York, 1960), 93Google Scholar.

65. Domhoff helpfully discerns that the conservative alliance between societal elites (best exemplified by nationalist and labor-intensive manufacturing firms, on the one hand, and the southern planter elite, on the other) with congressional conservatism provides a blunt barrier to most positive governmental programs that can be overcome only if the “sophisticated conservatives” of the internationalist, capital-intensive or mass consumption segment see such reforms as necessary to co-opt more radical measures or as in their own perceived economic interest. G. William Domhoff, The Power Elite and the State. See also Ferguson, Thomas, “From Normalcy to New Deal: Industrial Structure, Party Competition, and American Public Policy in the Great Depression,” International Organization 38 (1984): 4194Google Scholar.

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68. , Schriftgiesser, Business Comes of Age, 17.Google Scholar, Collins also notes that BAC personnel “would fill many of the top positions in mobilization agencies.” Business Response to Keynes, 62Google Scholar.

69. Hoffman and Benton came in contact early in 1941. Hoffman wrote Benton on 12 May 1941 saying, “The big question, of course, is whether the project can be financed. Of equal importance is the question of who finances it. I believe we can find ten business men of liberal views who could be interested and who would contribute $3,000 each to the project.” Hoffman to Benton, 12 May 1941, Hoffman Papers, Box 40, “CED, 1941-1942,” Harry S. Truman Library (hereafter HSTL).

70. , Schriftgiesser, Business Comes of Age, 24.Google Scholar

71. Jones to Roosevelt, 12 June 1942, Official File 4351, Box 1, “Postwar Problems, 1942,” FDRL.

72. McQuaid views the CED as a surrogate for the BAC, which was viewed with much skepticism by traditional business conservatives. (Big Business, 114-17). See also Hill, William Steinert Jr “The Business Community and National Defense: Corporate Leaders and the Military, 1943-1950” (Ph.D. Dissertation: Stanford University, 1980), 25Google Scholar.

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74. “Expansion of Private Enterprise and World Markets,” Hoffman before Internationalm Chamber of Commerce, London, 17 August 1945. Hoffman Papers, Box 108, “Speech File, 1945,” HSTL.

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76. , Schriftgiesser, Business Comes of Age, 16.Google Scholar

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78. Schriftgiesser describes the division of labor between the Commerce Department and the CED. Business Comes of Age, 17-27.

79. Hoffman to Truman, 4 August 1945. Nathan Papers, NA, RG 250, Box 230, “C.E.D.”

80. Gary Mucciaroni observes how the CED's efforts produced a unique form of Keynesianism. Political Learning and Economic Policy Innovation: The United States and Sweden in the Post-World War II Era,” Journal of Policy History 1 (1989): 398, 406Google Scholar; see also Block, Fred, The Origins of International Economic Disorder (Berkeley and Los Angeles, 1977), 35Google Scholar.

81. As Hoffman testified to the Senate committee considering the Full Employment bill: “I think, first of all, we ought to get this Budget made automatically stabilizing insofar as we can and only go on spending as a last resort.” Hoffman before U.S. Senate, Subcommittee of the Committee on Banking and Currency, Hearings, 79th Cong., 1st sess., Part 10, 30 August 1945,940.

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88. Budget Director Harold Smith's diary records Truman's concern: “He was worried about the international situation. He indicated that Byrnes (Secretary of State) had expressed great con-cern to him and that he had begun to wonder if we might not be demobilizing too fast. He commented, ‘There are some people in the world who do not seem to understand anything except the number of divisions you have.’ I remarked, ‘Mr. President, you have an atomic bomb up your sleeve.’” Smith Papers, Box 3, “Conferences with President Truman,” 5 October 1945, FDRL.

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94. As Hoffman wrote to a colleague shortly after taking his job: “I have to listen patiently while representatives of both the democratic and republican parties extol the merits of party hacks they want us to employ.… Despite all the efforts to force incompetents into this new organization, I am glad to report that the few people we have taken on are right out of the top drawer.” (Hoffman to E. R. Carpenter, 28 April 1948, Paul Hoffman Papers, Box 1, “Chronological File, 1946-48,” HSTL). See also , Schriftgiesser, Business Comes of Age, 133Google Scholar ; , Hogan, Marshall Plan, 139–40Google Scholar.

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97. For insights into the economic containment thrust of U.S. foreign policy, see Pollard, Robert A., Economic Security and the Origins of the Cold War, 1945-1950 (New York, 1985).Google Scholar For the shift to military containment, see , Hogan, Marshall Plan, 336ffGoogle Scholar.

98. See , Leffler, Preponderance of Power, 148–51Google Scholar ; , Dorwart, Eberstadt and Forrestal, 102.Google Scholar In some, particularly James Forrestal, paragon of Wall Street, Secretary of the Navy, and first Secretary of Defense, security anxieties became an obsession.

99. Higgs, Robert writes about the “ratchet effect” of large-scale governmental expansions such as during World War II. Crisis and Leviathan (New York, 1987).Google Scholar And Frank Kofsky writes about the early postwar attempts to secure the military-industrial complex in Harry S. Truman and the War Scare of 1948 (New York, 1993).Google Scholar See also Hooks, Forging the Military-Industrial Complex.

100. Myrdal, Economic Developments and Prospects in America.

101. See Sherry, Michael, The Shadow of War (New Haven, 1996).Google Scholar

102. Hooks suggests with his first hypothesis: “Administrative advances and strategic policy tools forged by the New Deal were absorbed by and adapted to the nascent national security state during and after World War II.” Forging the Military-Industrial Complex, 5.

103. Terms are Bob Jessop's, State Theory.

104. , Skowronek, Building, 290.Google Scholar