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.