The American Pageant (12th Edition)

Chapter 34 – Page 787

Our Critique

786–87 “Not every WPA project strengthened the infrastructure: for instance, one controlled crickets in Wyoming, while another built a monkey pen in Oklahoma City. Predictably, missions like these caused critics to sneer that WPA meant ‘We Provide Alms.’ But the fact is that over a period of eight years, nearly 9 million people were given jobs, not handouts.”

Bailey does admit to one of the three key problems with the WPA—it often supported make-work projects that added little value to the economy. But notice his positive conclusion on the WPA—hey, it gave “nearly 9 million people” jobs. That view is short-sighted for two reasons. First, those nine million WPA workers, often with make-work jobs, had little security because they had to play politics to survive. In New Jersey, for example, Frank Hague, the WPA director—a corrupt but candid man—answered his phone, “Democratic headquarters.”

The WPA files in Washington, DC, for New Jersey alone are loaded with comments from WPA workers that said the following: “At Atco they collected two dollars from the WPA workers for the campaign.” “The WPA [workers] had to vote for him (Freeholder Emil McCall) or lose their jobs.” No wonder freshman congressman Frank Towey of New Jersey announced at a Democrat rally in Newark, “In this county there are 18,000 on the WPA. With an average of three in a family you have 54,000 potential Democratic votes. Can anyone beat that if it is properly mobilized?”

Second, the jobs created at the WPA were offset by the jobs lost by taking taxes from people who otherwise would have spent that money on products that would have given people employment. Every dollar spent on the WPA had to be taken from a dollar of taxes. We see nine million people doing various jobs—some useful, some not—but we don’t see the jobs not created because the people paying the taxes never had a chance to buy shirts, shoes, or cars—all of which would have created jobs.

At best, the WPA shifted spending from people spending their own money to government spending other peoples’ money. And the make-work projects and the corruption suggest the government did not spend the money as well as people could have spent their own money, which helps explain why the Great Depression persisted under FDR.

787 “A daring attempt to stimulate a nationwide comeback was initiated when the Emergency Congress authorized the National Recovery Administration (NRA). This ingenious scheme was by far the most complex and far-reaching effort by the New Dealers to combine immediate relief with long-range recovery and reform. Triple-barreled, it was designed to assist industry, labor, and the unemployed.”

Notice that Bailey again judges a New Deal program, this time the NRA, by its intentions, not its results. Bailey praises the NRA as an “ingenious scheme” that was “A daring attempt to stimulate a nationwide comeback … designed to assist industry, labor, and the unemployed,” [emphasis added] but did it actually do so? Oddly, Bailey never tells students in his text how the NRA worked. If he had, students might be shocked. Here is how it was set up. The NRA allowed leaders in many industries to write “codes of fair competition” that would legally set the prices of their products, and even the wages and hours that went into making those products. Leaders in about five hundred industries—from steel and coal to shoulder pads and dog food—were able to set prices for their products that were legally binding on all producers.

America’s traditional free-market system, where businesses compete and innovate to sell products of varying prices and quality to choosy customers, was overthrown. With the NRA, a majority in any industry had government approval and legal force to determine how much a factory could expand, what wages had to be paid, the number of hours to be worked, and the prices of all products within the industry. Businessmen who gave discounts below the set price were subject to fines or jail terms.

Hugh Johnson, the man Roosevelt put at the head of the NRA, called it a “holy thing … the greatest social advance since the days of Jesus Christ.” But a businessman who disagreed with prices his fellow industrialists set could not give discounts to get customers. Senator William Borah of Idaho received about nine thousand complaints from businessmen all across the country who complained at being told what prices they had to charge and what wages they had to pay. These nine thousand complaints are on file in the Borah papers of the Library of Congress, and some of these angry letters are from businessmen on their way to jail for giving discounts to customers—customers who needed the discounts because of the hard times they faced during the Great Depression. When government expands, liberty retreats. After three years of the NRA, what Bailey describes as an “ingenious scheme,” the Supreme Court struck it down in a 9-0 vote. At last, American entrepreneurs would be free to innovate, cut costs, and cut prices for customers.

787 “[During the operation of the NRA] critics began to brand NRA ‘National Run Around’ and ‘Nuts Running America,’ symbolized by [a blue eagle] what Henry Ford called ‘damn Roosevelt buzzard.’”

Ford had every right to be angry with the NRA. He refused to sign the NRA code for auto makers. He said, “I do not think this country is ready to be treated like Russia for a while.” Roosevelt and Hugh Johnson tried to pressure Ford into signing the NRA code, and when he refused they tried force. Ford would receive no government contracts until he signed—and with the large increase in government agencies during the 1930s, that meant a lot of money. For example, the bid of a Ford agency on five hundred trucks for the Civilian Conservation Corps was $169,000 below the next best offer. The government announced, however, that it would reject Ford’s bid and pay $169,000 more for the trucks because Ford refused to sign the auto code. As Roosevelt announced at a press conference, “We have got to eliminate the purchase of Ford cars” for the government because Ford had not “gone along with the general [NRA] agreement.”