The Big Picture Of The Great Depression


That capital and labor should join together to promote efficiency and harmony, and that companies making the same products should consult in order to fix prices and allocate output and thus put a stop to cutthroat competition, all under the watchful eye of the government, were central concepts of Italian fascist corporatism in the 1920s and of the less formal but more effective German system of cartels in that period. The Nazis organized German industry along similar but more thoroughly regimented lines at about the same time as the NRA system was being set up in America. Great Britain also employed this tactic in the 1930s, albeit on a smaller scale. The British government allowed coal companies to limit and allocate production and to fix prices, and it encouraged similar practices by steel and textile manufacturers. The only major industrial power that did not adopt such a policy before the passage of the National Industrial Recovery Act was France. Later, in 1935, the Chamber of Deputies passed a measure that permitted competing companies to enter into “accords” with one another “in tinie of crisis.” The measure would have allowed them to adjust, or put in order, the relations between production and consumption, which is essentially what NRA was supposed to make possible. This projet Marchandeau died in the French Senate, but some industries were encouraged to cooperate for this end by special decree.

But the area in which American historians of the Depression have been most myopic is New Deal agricultural policy. The extent to which the Agricultural Adjustment Act of 1933 evolved from the McNary-Haugen scheme of the Coolidge era and the Agricultural Marketing Act of the Hoover years has been universally conceded. Beyond these roots, however, historians have not bothered to dig. The stress on the originality of the AAA program has been close to universal. Arthur Schlesinger, Jr., put it clearly and directly when he wrote in his book Coming of the New Deal that “probably never in American history has so much social and legal inventiveness gone into a single legislative measure.”

Schlesinger and the other historians who expressed this opinion have faithfully reflected statements made by the people most closely associated with the AAA at the time of its passage. Secretary of Agriculture Henry A. Wallace said that the law was “as new in the field of social relations as the first gasoline engine was new in the field of mechanics.” President Roosevelt told Congress in submitting the bill that it was a new and untried idea.

In fact, Wallace and Roosevelt were exaggerating the originality of New Deal policy. The AAA did mark a break with the past for the United States. Paying farmers not to grow crops was unprecedented. Yet this tactic merely reflected the constitutional restrictions of the American political system; Congress did not have the power to fix prices or limit production directly. The strategy of subsidizing farmers and compelling them to reduce output in order to bring supplies down to the level of current demand for their products was far from original.

As early as 1906 Brazil had supported the prices paid its coffee growers by buying up surpluses in years of bountiful harvests and holding the coffee off the market. In the 1920s France had tried to help its beet farmers and wine makers by requiring that gasoline sold in France contain a percentage of alcohol distilled from French beets and grapes. More important in its effect on the United States, Great Britain had attempted in the 1920s to bolster the flagging fortunes of rubber planters in Britain’s Asiatic colonies by restricting production and placing quotas on rubber exports. This Stevenson Plan, referred to in the American press as “the British monopoly,” aroused the wrath of then Secretary of Commerce Herbert Hoover. It also caused Henry Ford and Harvey Firestone, whose factories consumed huge amounts of imported rubber, to commission their mutual friend Thomas A. Edison to find a latex-producing plant that could be grown commercially in the United States. (Edison tested more than ten thousand specimens and finally settled on goldenrod. Ford then bought a large tract in Georgia to grow the stuff, although it never became profitable to do so.)

After the Great Depression began, growers of staple crops in every corner of the globe adopted schemes designed to reduce output and raise prices. In 1930 British and Dutch tea growers in the Far East made an agreement to cut back on their production of cheaper varieties of tea. British and Dutch rubber planters declared a “tapping holiday” in that same year, and in 1931 Cuba, Java, and six other countries that exported significant amounts of cane sugar agreed to limit production and accept export quotas. Brazil began burning millions of pounds of coffee in 1931, a tactic that foreshadowed the “emergency” policy of the AAA administrators who ordered the plowing under of cotton and the “murder” (so called by critics) of baby pigs in 1933.