The achievement of the New Deal, as my forthcoming book helps to show, was to harness the industrial era in the service of the nation. Roosevelt and his leading subordinates felt that the history of their whole lives in general and the great depression in particular illustrated the limitations of the private market. They did not expect it to fulfill all the nation's needs, and they thought government had to step in to fill the gaps that it left. That meant not only that the government, in the form of Harry Hopkins's WPA (Works Progress Administration) and Harold Ickes PWA (Public Works Administration) became the employer of last resort, but it meant that the Reconstruction Finance Commission (RFC--a creation of the Hoover Administration) would finance worthwhile projects that could not attract private capital. It also meant bringing electricity to rural areas that private companies didn't find profitable, and building huge dams to provide public power.
The same philosophy, I show in No End Save Victory, allowed them to prepare for war Roosevelt thought that air power would decide the Second World War, and he proposed an air force of enormous size in May 1940. Private aircraft companies were content to produce hand-crafted civilian aircraft, but the Administration managed to arrange for mass production and assembly lines. That meant more jobs. It also meant more aluminum was needed. This raised a series of complicated, interlocking questions.
The nation's aluminum production was largely in the hands of one company, ALCOA. After 1937, when FDR lost control of the Congress, he did what President Obama is now trying to do: to use executive power under existing laws to realize his goals. Antitrust actions were one way of doing that, and the Antitrust Division of the Justice Department moved aggressively on many fronts. One was to file suit against ALCOA as an illegal monopoly. That suit was pending when the rearmament program began, and nearly all the major officials of the Administration disliked the company on principle. They also had a useful lever with which to redirect production: the public power generated by the Tennessee Valley Authority, and also by the Bonneville and Grand Coulee dams in the Northwest. Secretary of the Interior Ickes worked used that lever to distribute new contracts. Some went to ALCOA, but others went to Reynolds Aluminum and Kaiser Aluminum, founded by industrialist Henry Kaiser (no relation.) One new plant, contracted for in the spring of 1940, was operating by the end of that year.
Aluminum is in the news today. Once again, perhaps the most powerful institutions in the country want it--but not to provide for the national defense, or to make useful and necessary goods. Th leading institution is Goldman Sachs, a combination commercial and investment bank of the sort that the New Deal had prohibited. As this remarkable article in Rolling Stone details, they have taken advantage of loopholes in the Gramm-Leach-Biley Act--the 1999 law that repealed the 1933 Glass-Steagall act that separated commercial and investment banking--to become the major players in the nation's aluminum market. They have bought warehouses and raw aluminum, held on to it to raise the price, charged users in all sorts of new ways, and, meanwhile, offered aluminum futures to customers who cannot possibly know as much about supply and demand for the product as they do. This is slowing our economy and redistributing yet more money from the productive sector the financial one. No one, as of now, is doing anything about it.
I am always struck by how any sector of our national life, when studied across a significant lapse of time, illustrates the broader changes that we have been going through. "National purpose" in the first two thirds of the twentieth century was more than a slogan in every major nation. In an era when all nations were preparing for a great war, it had to be. That became a lever which enlightened government could use for all sorts of beneficial purposes, as the New Deal did. Even in the 1950s and 1960s during the Cold War, the struggle with the Soviets helped the civil rights movement, because the nation had to show that it meant what it said about freedom to win hearts and minds in third world. It now seems that by far the biggest result of the end of the Cold War was drastically to shift the balance between public and private power. Perhaps it is no accident that Russia and the United States, the major protagonists in that conflict, are now, I believe, the nations with the highest rates of income inequality among advanced countries. All the energy which earlier in the twentieth century went into making their nations great now goes into making individuals and institutions rich. The results are not very inspiring.