New Deal Fat Cats: Business, Labor, and Campaign Finance in the 1936 Presidential Election

Published by EH.NET (July 2002)

Michael J. Webber, New Deal Fat Cats: Business, Labor, and Campaign Finance

in the 1936 Presidential Election. New York: Fordham University Press,

2000. xvi + 180 pp. $39.95 (hardback) ISBN: 0-8232-2004-4; $19.95 (paperback),

ISBN: 0-8232-2005-2.

Reviewed for EH.NET by Jim F. Couch, Department of Economics, University of

North Alabama.

In New Deal Fat Cats, Michael Webber (University of San Francisco,

Department of Sociology) analyzes campaign finance in the 1936 election. The

1936 election is of particular interest because by this date, most of the New

Deal legislation was in place and also by this date, Roosevelt’s hostility

toward the business sector was apparent. Many economic historians have argued

that this hostility probably slowed recovery and extended the misery brought on

by the Great Depression.

The author quotes Herbert Alexander (Money in Politics, Washington, DC:

Public Affairs Press, 1972, p. 11), “Because of its universality, money is a

tracer element in the political process, marking the tracks both of the

individual or groups seeking influence and of the candidate and the party

seeking election to office.” Examining the contributions of corporate board of

directors, Webber hopes to identify the tracks of business influence in the

political process. He sums up his own methodology: “The guiding thread of this

study is the assumption that campaign finance contributions can be a reliable

indicator of the political preferences of people following their real material

interests” (p. 9).

Webber first establishes a baseline of Democratic support within the business

community by investigating donors of over $100 listed in Poor’s Register of

Directors of the United States and Canada, 1936. Once this baseline of

support is established, he is able to compare this measure of support with

support from various business sectors including the oil industry, commercial

banks, the textile industry, the food and beverage industry and chain stores

and mail order houses to name a few.

Webber offers evidence that conflicts with a number of claims made by political

scientists regarding the New Deal. For example, he finds no support for the

notion that bankers deserted the Democrats in the 1936 election. In addition,

he challenges Ferguson’s assertion that a capital-intensive, internationalist

sector of industry favored the Democrats (Thomas Ferguson, “From Normalcy to

New Deal: Industrial Structure, Party Competition and American Public Policy in

the Great Depression,” International Organization 38 (Winter, 1984):

41-92). The analysis also reveals that region and religion played a large role

in shaping corporate political preferences. However, Webber misses an

opportunity to compare the contributions of older technology, more established

business firms that benefited from the codes established by the National

Industrial Recovery Act against the contributions of newer, more efficient

firms that were penalized by these same codes.

In examining southern political support for Roosevelt, Webber blames the

failure of the New Deal to bring recovery on the recalcitrance of southern

political leaders. “Although the New Deal did bring relief to many, the failure

of some states to provide matching funds for federal projects and the

reluctance of local elites to interfere with the low-wage economy and the

racial status quo meant that federal programs did not bring relief that many

poor Southerners anticipated” (p. 102).

There simply is no basis for this claim, however. Southern politicians did

complain about low wages — the discriminatory low wages paid by the Roosevelt

administration to their constituents. Senator Richard Russell of Georgia

expressed his displeasure: “For the performance of labor of the same general

type . . . a laborer in Tennessee will receive 18 cents per hour compared to

102.5 cents an hour in certain sections of the State of Illinois. The pay of

skilled labor varies from a low of 31 cents per hour in the States of Alabama,

Kentucky, Tennessee, and Virginia to a high of $2.25 per hour in the State of

New Jersey” (Congressional Record, 1938, p. 911). Senator Miller of

Arkansas declared, “I see no reason why a man working on a road in Arkansas or

Georgia should not receive the same amount of pay that the man working on a

road in the State of New York or elsewhere receives from Federal Funds. If the

policy of the Congress is to be that we are to have a uniform rate of pay in

industry, it appears to me, unless there is some good reason to the contrary

unknown to me, that the Government ought to meet the situation”

(Congressional Record, 1938, p. 913). Senator Clark of Missouri

complained, “The men were to be engaged in doing precisely the same work, that

is, clearing timber on precisely the same project, except that part of them

happened to be on the Illinois end of the dam and the other part on the

Missouri end of the dam. A discriminatory ratio was set up of 64 cents an hour

on the Illinois side, as against 40 cents an hour on the Missouri side, on the

same project, for doing precisely the same work (Congressional Record,

1938, pp. 921-22). Senator Reynolds of North Carolina wanted to know “why the

people of North Carolina are not entitled to the same remuneration as are those

who reside in the State of New York. Can it be that the people of North

Carolina are not just as patriotic as are the people of New York? I should like

to be advised, what causes the situation, in order that I may tell the people

of North Carolina” (Congressional Record, 1939, p. 912).

Webber’s assertion that Southern States were unwilling to provide matching

funds is nonsense as well. Georgia Senator Richard Russell complained of the

administration’s bias. “The poorer states — discriminated against as they are

in the matter of per capita expenditure, in monthly wage, and in hourly wage —

are, in addition, required to contribute more from their poverty toward

sponsored projects than the wealthier states are. Not only is the per capita

expenditure shown to be high where per capita income is high, but the

requirements of sponsors for contributions to projects is lower in the rich

States and is higher in the poor States, and has been throughout the

administration of this program” (Congressional Record, 1939. p. 921).

The relatively poor states, Tennessee, Mississippi and North Carolina

contributed 33.2, 24.8 and 23.5 percent respectively while the relatively rich

states, California, Pennsylvania and New York contributed 16, 10.1 and 11.6

percent respectively. Efforts by southern politicians to create a uniform match

of 25 percent for all the states were consistently defeated by politicians from

the rest of the country with the support of FDR. The Roosevelt administration

consistently used the New Deal for reelection purposes while neglecting the

plight of the truly impoverished.

Perhaps the most interesting statement in Webber’s book is found at the end of

the first chapter. “One of the most striking findings in the analysis of each

business sector is how small a percentage of business people gave money to

either party” (p. 15). Attempts to influence politicians with campaign

contributions were not present until the federal government began to exert its

influence in the private marketplace. Today’s debate regarding campaign finance

reform can perhaps trace its origins to the New Deal. Webber’s book supports

this argument and suggests that big government — a government that selects

winners and losers by enacting certain policies — came first, then large

contributions from interest groups followed.

Jim F. Couch is Professor of Economics, University of North Alabama. Dr. Couch

is the coauthor of The Political Economy of the New Deal, Edward Elgar,

1998 and is currently working on another book entitled The Ways of the

King.