Herbert Hoover, Franklin Delano Roosevelt and the Emergence of the an Tional Industrial Recovery Act of 1933 Angella Lanette Smith Wayne State University
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Wayne State University Wayne State University Dissertations 1-1-2015 Economic Revolution From Within: Herbert Hoover, Franklin Delano Roosevelt And The Emergence Of The aN tional Industrial Recovery Act Of 1933 Angella Lanette Smith Wayne State University, Follow this and additional works at: https://digitalcommons.wayne.edu/oa_dissertations Part of the United States History Commons Recommended Citation Smith, Angella Lanette, "Economic Revolution From Within: Herbert Hoover, Franklin Delano Roosevelt And The meE rgence Of The National Industrial Recovery Act Of 1933" (2015). Wayne State University Dissertations. 1381. https://digitalcommons.wayne.edu/oa_dissertations/1381 This Open Access Dissertation is brought to you for free and open access by DigitalCommons@WayneState. It has been accepted for inclusion in Wayne State University Dissertations by an authorized administrator of DigitalCommons@WayneState. ECONOMIC REVOLUTION FROM WITHIN: HERBET HOOVER, FRANKLIN DELANO ROOSEVELT AND THE EMERGENCE OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF 1933 by ANGELLA LANETTE SMITH Submitted to the Graduate School of Wayne State University, Detroit, Michigan in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY 2015 MAJOR: HISTORY Approved By: _________________________________ Advisor Date _________________________________ _________________________________ ________________________________ TABLE OF CONTENTS Chapter 1: Introduction 1 Chapter 2: The Industrial Modifications to the American Economy in the 1920s 34 Chapter 3: The Great Crash of 1929 73 Chapter 4: Herbert Hoover, Franklin Delano Roosevelt and Their Economic Visions 115 Chapter 5: Hoover, The Economic Crisis and the Interregnum of 1932-1933 150 Chapter 6: Economic Change in the United States: The Development and Passage of AAA and NIRA during the One Hundred Days 186 Chapter 7: Creating the NRA and the Codes of Fair Competition: The Petroleum and Automobile Industries 232 Chapter 8: Opposition to the NRA and Challenges in Federal Courts 286 Epilogue: The Legacy of the National Industrial Recovery Act of 1933 337 References 349 Abstract 405 Autobiographical Statement 407 ii 1 CHAPTER 1: INTRODUCTION The Great Crash of 1929 and the subsequent economic crisis were watershed events in modern American history. 1 The economic crisis forced American citizens to re-think the concepts of economic independence and interdependence that had long characterized their political culture.2 It set in motion a series of political and economic debates in the United States. As citizens faced unemployment and failing wages, they came increasingly to believe that federal, state and local authorities should intervene in the national economy. Further, for many, the events confirmed, the idea that social inequality would be difficult to address and eradicate. If the problems that stemmed from social inequality and economic crisis were to be solved, then efforts had to be made to redistribute wealth more equitably, and regulate the market so that some measure of fair competition and uniform standard pervaded. During the presidencies of Herbert Hoover and Franklin Delano Roosevelt, these ideas were tested and expanded. Even though their administrations created new government agencies to deal with specific aspects of the continuing economic depression, debates over the adequacy and appropriateness of government intervention in the private economy dominated public life and discourse. The subject of this dissertation is to explore the National Industrial Recovery Act of 1933, its origins, and its significance as it paved the way for dynamic economic and 1 Christina D. Romer, “The Great Crash and the Onset of the Great Depression,” The Quarterly Journal of Economics 105, no. 3 (August 1990): 597-598, 614, 616, 618; William L. Anderson, “Risk and the National Industrial Recovery Act: An Empirical Evaluation,” Public Choice 103, no. ½ (April 2000): 139; Hugh Jebson, “The Great Crash of 1929,” Hindsight , January 2005, 22. 2 Lionel D. Edie, “The Banks and the Stock Market Crisis of 1929, ” Journal of Business of the University of Chicago 3, no. 1 (January 1930): 21; Elliot A. Rosen, Hoover, Roosevelt and the Brains Trust: From Depression to the New Deal (New York: Columbia University Press, 1977), 5; Amity Shlaes, “How Presidential Administrations Cheat at Monopoly,” USA Today Magazine , January 2011, 12. http://www.usatodaymagazine.net . (accessed March 14, 2015); Joseph Nolan, “Boom and Bust in the 1920s,” Vital Speeches of the Day ,” December 1, 1995. 2 industrial change in the United States. The National Industrial Recovery Act was designed to target high unemployment rates in the private sector and improve wages through the use of industry codes. 3 It, also, reduced child labor, which enabled American corporations to hire more able-bodied and older Americans. Tentatively, it established collective bargaining rights that allowed some workers to negotiate for better labor conditions and benefits. These policies aided citizens participating in the labor market, where they could make more money and earn a higher standard of living. In its design, the NRA differed from the beggar-thy-neighbor policies of the early years of the depression that reduced the prices of consumer goods and commodities, due to excessive competition in industrial sectors and stagnant wages. 4 Even as the national economy became more consumer- oriented, the Roosevelt administration did not want to leave working and middle class citizens on the wrong side of the financial road. President Roosevelt believed in an expanded role for the federal government, while his predecessor, Herbert Hoover relied chiefly on the private sector to take control of recovery efforts, with the limited federal government assistance. 5 The Roosevelt administration acted on the belief that a laissez-faire national economy had not and could 3 Meg Jacobs, Pocketbook Politics: Economic Citizenship in Twentieth Century America (Princeton: Princeton University Press, 2005), 107-109. 4 Frederic F. Clairmont, “The Grand Malediction: Bretton Woods in Retrospect,” Economic and Political Weekly 29, no. 42 (October 15, 1994): 2728, 2730; Ellis Hawley et al., Herbert Hoover and the Crisis of American Capitalism (Cambridge, Mass.: Schnenkman Publishing Company, 1973), viii. Welfare capitalism that characterized American life before WWI consisted of the belief that business executives were enlightened corporate leaders who provided public services. Business leaders worked on American prosperity and benefited their workers through a host of programs designed to improve their day-to-day lives. 5 Thomas E. Cronin and William R. Hochman, “Franklin D. Roosevelt and the American Presidency,” Presidential Studies Quarterly (Spring 1985): 278; Telegrams to Governors Urging Stimulation of Public Works to Aid the Economy, The Public Papers of the Presidents of the United States, Volume 1: Herbert Hoover, November 23, 1929, Herbert Hoover Papers; Herbert Hoover Presidential Library website, West Branch, Iowa; William F. Jasper, “The Rise of the Administrative State,” The New American , January 21, 2013. http://www.thenewamerican.com . (accessed March 12, 2015). 3 not address the growing financial needs of ordinary Americans nor could it resolve the public’s concerns. Given the scale of the economic crisis, the federal government had to step in. This dissertation seeks to clarify the role of the Roosevelt administration in pursuing that line in comparison to its predecessor, Herbert Hoover.6 The National Recovery Administration was a central political agency in this process and enabled Roosevelt to approve dynamic changes to the national economy and manufacturing sector. Without the NRA, industrial codes, and other economic and industrial reforms would have been non-existent. Thus, both policymakers played important roles as president in trying to spur economic recovery. Some scholars argue that Hoover only wanted to support private sector efforts. He declined to support an expansion of public works and federal relief as solutions to economic deprivation among American families.7 The majority of historians argue, however, that the belief in limited government had to change if the United States was to move forward and revitalize the national economy.8 Scholarly and Historical Context 6 Ellis Hawley, Herbert Hoover and the Crisis of American Capitalism , ix. Most Republican policymakers following the Harding administration argued for public works, but only during times of economic depression. In 1928, Hoover campaigned on the premise that, during times of plenty, revenues should be set aside for periods of economic stress, which led to the promotion of public works projects that stimulated high employment levels. 7 Statement Announcing a Series of Conferences with Representatives of Business, Industry, Agriculture and Labor, The Public Papers of the Presidents of the United States, Volume 1: Herbert Hoover, November 15, 1929, Herbert Hoover Papers; Herbert Hoover Presidential Library website, West Branch, Iowa. 8 Please see the following sources that are used throughout the dissertation: John Kenneth Galbraith and Liaguat Ahamed are two scholars who focus on the roles of the stock market, central bankers and other economic actors to discover the causes of the Stock Market Crash of 1929. Herbert Hoover in his memoirs and pamphlets discussed how American Individualism shaped American thought about conservative fiscal and financial values that dominated American