Economic History Association
A Reassessment of Investment Failure in the Interwar American Economy
Author(s): Michael A. Bernstein
Source: The Journal of Economic History, Vol. 44, No. 2, The Tasks of Economic History
(Jun., 1984), pp. 479-488
Published by: Cambridge University Press on behalf of the Economic History Association
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A Reassessment of Investment Failure
in the Interwar American Economy
MICHAEL
A. BERNSTEIN
A radicalshift in the industrialcompositionof investmentandfinaldemandplayed
an importantrole in delayinga complete recovery fromthe troughof 1932.Under
the conditionsof technologicaldiscovery prevailingin the 1930s, this shift in the
compositionof demandmade full employmentvirtuallyimpossibleto achieve as
recovery from the crash got underway. A complete recovery requireda mass of
interrelatednew techniques and humanand physical capital which, in the timid
financialenvironmentprevailing after 1929 (and given the uncertaintiesof the
New Deal), could not be organizedon the necessary scale by privateinvestment
markets.These findingspose a new agendafor researchon the politicaleconomy
of the New Deal and on the economic history of the post-WorldWar II era.
AS
the perspective affordedby a half century brings them into better
view, the Great Depression and New Deal of the 1930scontinue to
receive attention from economists, historians, and political scientists.
The questions scholars have posed about the economic crisis and
governmentpolicies of the interwarperiod generallyhave been molded
by the theoretical apparatusused to analyze the depression itself. For
example, monetarists have been predisposed to focus on the actions of
the Federal Reserve Board; Keynesians, on government spending
policies; "new" macroeconomists, on labor-marketbehavior and the
determinantsof the naturalrate of unemployment.' In this regard, my
research is no exception.
I have a dual purpose here. The first, which occupies most of my
remarks,is to present some results of my work on the GreatDepression
in the United States. The second, which is necessarily more brief, is to
suggest that on the basis of my findings there are some unanswered
questions about economic policy during and after the New Deal that
need to be examined. Indeed, these questions may even have contemporary relevance.
Journal of Economic History. Vol. XLIV, No. 2 (June 1984). ? The Economic History
Association. All rightsreserved. ISSN 0022-0507.
The authoris Assistant Professor of History at PrincetonUniversity. He thanks Carol Heim,
PatrickO'Brien, WilliamParker,RichardSylla, Hermanvan der Wee, David Weiman,and the
participantsof the 22nd AnnualCliometricsConferenceand of the economic history seminarsat
Columbiaand HarvardUniversitiesfor commentson variousaspects of the largerprojectof which
this paperis a part. The aid of the PrincetonUniversityCommitteeon Researchin the Humanities
and Social Sciences is gratefullyacknowledged.
' I cannot give an exhaustive list of the literatureto which I allude here. Some examples are
Milton Friedman, Anna Schwartz, A Monetary History of the United States: 1867-1960 (Princeton,
1963);Alvin H. Hansen, Full Recoveryor Stagnation?(New York, 1941);and R. E. Lucas and L.
A. Rapping,"Unemploymentin the Great Depression:Is There a Full Explanation?"Journalof
Political Economy, 80 (Jan./Feb., 1972), 186-91.
479
480
Bernstein
I wish to begin by posing a simple analyticalframeworkwith which to
address one of the most perplexingaspects of the Depression-namely,
its length. Having done so, I shall move on in the second part of this
paper to present evidence concerningthree majoraspects of what I call
the investment failure of the 1930s. This will provide a foundation for
some speculative remarks in my conclusion concerning government
policy during the Depression and macroeconomic performance in
general in the post-war era.
With the financial panic of 1929-and the severe disruption of the
banking system that followed in its wake-the American economy
entered a decade of crisis. Not until the outbreakof war in Europe did
industrialproductionreach its pre-crashpeak levels, nor did unemployment fall below a decennial average of 18 percent.2For the macroeconomist as well as the economic historian, the puzzle of the Great
Depression lies in this longevity. Why did a spontaneous and full
recovery not occur? If one abstracts from the net trade balance (which
seems legitimate for the interwar period), the question becomes a
consideration of the time-series on consumption, investment, and
governmentexpenditures. As the title of this paper suggests, I choose to
focus on the investment variable in the national income accounts. I do
this for several reasons.
The inability of consumption expenditures to recover from the 1932
trough may be explained in a rather straightforwardway. The destruction of wealth holdings occasioned by the crash, and the high levels of
unemployment which were generated crippled consumer spending.
Moreover, it appears that there were also at work certain demographic
trends that may have lowered the aggregate average propensity to
consume.3As for governmentspending,both Alvin Hansen and E. Cary
Brown have shown that the New Deal was hardly committed to a
strategy of aggressive pump-priming.4To be sure one could, with the
benefit of hindsight, engage in some forceful criticism of fiscal and
monetary policy during the 1930s. It seems to me, however, that this
would be futile. After all, in many respects the Roosevelt administration
did what many predecessors had done in the face of a cyclical
2 I am usingLebergott'sdata. I believe they remainthe most appropriate.See StanleyLebergott,
Manpower in Economic Growth: The American Record Since 1800 (New York, 1964); also cf. M.
R. Darby, "Three-and-a-HalfMillionU.S. Employees Have Been Mislaid:Or, an Explanationof
Unemployment,1934-1941,"Journal of Political Economy, 43 (June 1983),487-93.
3 See, for example,R. B. Zevin, "The Economicsof Normalcy," this JOURNAL, 42 (Mar.1982),
43-52; F. S. Mishkin, "The Household Balance Sheet and the GreatDepression," this JOURNAL,
38 (Dec. 1978),918-37; and B. Bloch and J. Pilgrim,"A Reappraisalof Some FactorsAssociated
with Fluctuationsin the U. S. in the InterwarPeriod, "SouthernEconomicJournal,39 (Jan.1973),
327-44.
4 See A. H. Hansen, "Was Fiscal Policy in the Thirtiesa Failure?"Review of Economics and
Statistics,45 (Aug. 1963),320-23; andE. C. Brown, "Fiscal Policyin the Thirties:A Reappraisal,"
American Economic Review, 46 (Dec. 1956), 857-79.
Interwar Investment Failure
481
downturn.If G or, say, the reserve ratio are the crucial variables for
understandingthe length of the Great Depression, one must ask how
governmentofficials suddenly became so inept in the interwarperiod.5
Moreover, the question remains: Why were traditionalpolicies, which
had seemingly worked in the past and which reflected a theoretical
consensus of generations of economists, contraindicatedin the 1930s?
Investment behavior has been the least examined aspect of the
Depression, yet it holds the key to understandingcyclical instability.
Indeed, several economists and historianshave arguedthat the lengthof
the Depression and the abortive recovery of 1936-1937 were a direct
result of the fact that a small recovery of consumer spending, sparked
by New Deal relief policies, was not linked with an upturn in net
investment. One investigator has even reported a negative rate of
aggregatenet investmentfor the decade 1929-1939.6Did the investment
function of the American economy of the 1930s simply disappearinto
Keynes's liquidity trap?
A disaggregated view of the performance of major manufacturing
industries during the decade shows that this was not the case. There
were ratherlarge variations in the speed with which individualsectors
recovered from the trough of 1932 with respect to production and
investment. Certainindustriesseemed virtuallyuntouchedby the crash,
although all suffered a bad year in 1932. Firms in the food products,
tobacco products, chemicals, and petroleumindustriescame out of the
troughrelatively quickly. Those in textiles, lumber, metals, and transportation equipment did not (see Table 1). Indeed, withinthe latter
groupof industriescertain marketsdid thrive after 1932,and it was only
those firms committed to or moving into those markets which avoided
the severe hardshipsof the decade.7All this suggests an uneven pattern
of investment resulting, at the macroeconomic level, in apparent
stagnation. My research shows that many of the reasons for this
disproportionatecharacter of recovery are found in certain long-term
trends of development in the Americaneconomy of the early twentieth
century.
THREE ASPECTS OF INVESTMENT FAILURE IN THE INTERWAR PERIOD
In order to be more specific about the long-term causes of the
investment failure of the 1930s, I focus on three major sources of
S This is not to suggestthatpoliticaland internationalbarriersto deficitspendingandeasy money
shouldbe ignored.
6 See Hansen, Full Recovery or Stagnation?, pp. 274-82; and Joseph Steindl, Maturity and
Stagnation in American Capitalism (New York, 1976), p. 160.
7 See Michael A. Bernstein, Long-Term Economic Growth and the Problem of Recovery in
American Manufacturing: A Study of the Great Depression in the United States, 1929-1939,
unpublishedPh.D. dissertation(Yale University, 1982), Chs. 3-4.
482
Bernstein
TABLE 1
NET INVESTMENT IN EQUIPMENT AS A PERCENTAGE OF THE 1929 LEVEL OF NET
INVESTMENT
Year
Industry
1937
1938
1939
Chemicals and Allied Products
Stone, Clay, and Glass Products
Petroleum and Coal Products
Tobacco Products
Food and Kindred Products
Non-Electrical Machinery
Apparel and other Textile Products
Rubber and Plastic Products
Transportation Equipment
Paper and Allied Products
Primary Metal Industries
Fabricated Metal Products
Printing and Publishing
Leather and Leather Products
Lumber and Wood Products
Textile Mill Products
369.9
850.3
131.9
130.2
178.2
96.9
32.6
22.2
34.7
27.4
38.6
18.7
Neg.
19
Neg.
Neg.
256.5
422.9
50.1
85.6
61.2
58.5
Neg.
14.8
8
8.6
Neg.
25.3
Neg.
Neg.
Neg.
Neg.
401
306.3
21.2
159.6
115.7
148.9
114.4
74
53.2
29.5
Neg.
100.2
Neg.
3.6
Neg.
Neg.
Note: Neg. indicates net disinvestment.
Source: Michael A. Bernstein, Long-Term Economic Growth and the Problem of Recovery in
American Manufacturing: A Study of the Great Depression in the United States, 19291939, unpublished Ph.D. dissertation (Yale University, 1982), Ch. 2, Appendix C.
evidence. The first of these concerns the changingnatureof investment
demand during the interwar decades. This information, along with a
second set of data concerning alterations in the composition of final
demand during the same period, shows that certain markets, and
thereforeindustries, were in secular decline and others newly emergent
at the time of the 1929 crisis. Finally, evidence concerning long-run
changes in the industrial distribution of employment provides new
informationconcerningthe persistence of the effective demandcrisis of
the 1930s.
Capital Goods ExpenditurePatterns
Withinthe constraintsof available data, it is possible to discern some
general patterns in the capital goods demands of major manufacturing
industries. These patterns serve to demonstratewhich industries were
expandingand which were contractingduringthe interwarperiod. For
example, an average of 2.1 percent of the total real expenditures on
capitalgoods in the Americaneconomy was made in the processed food
products sector during the 1920s. That average rose to 2.5 percent
duringthe decade of depression. By contrast, in the textiles industry,
the mean was 1.5 percent duringthe 1920s, and fell to 1.2 percent during
the 1930s. The same shrinkage occurred in the lumber industry, the
relevant figures being .8 percent in the 1920s, and .4 percent in the
Interwar Investment Failure
483
1930s.There were ratherdramaticincreases in the average percentages
for the petroleum sector, the chemicals industry, and the airplane
manufacturingsector. In iron and steel production and in the automobile sector rises were more moderate.
I have undertaken elsewhere a more detailed consideration of the
precise markets in which the expanding sectors fluorished during the
interwarperiod.9 In the most general terms, such sectors were those
producing consumer nondurable goods, services, and newer durable
products such as appliances, automobiles with luxury amenities, and
communicationsequipment. To be sure, it is rathertypical that durable
goods industriessufferproportionatelymore than others duringcyclical
fluctuations.But the evidence from the interwarperiod suggests that a
secular dynamic was at work as well-one that favored the emergence
of industriesproducingfor a more affluentpopulationsubsistingwithin
a relatively sophisticated and fully developed infrastructure.
Alterations in the Composition of Final Demand
If trends in the composition of final demandexpendituresare considered, the same pattern of inter-industryvariationsin interwarperformance emerges. The percentage of real consumer spending devoted to
food, liquor, and tobacco products rose duringthe 1920sand 1930s;the
tendency was even more dramatic if we net out the influence of
Prohibitionand its repeal. The percentage also rose in such categories
as household equipment and operation, medical care and insurance,
recreation, education, and welfare. The share fell for clothing and its
accessories and for housing and utilities. Generally speaking, the
proportionof disposable income expended on durablegoods fell during
the interwar period, while that spent on non-durables and services
rose. l0
Time and space limitations prevent a more detailed considerationof
these trends, although their resemblance to Engel Curve phenomena
cannot be overlooked. Some of these changes in consumer demand
were linked with the changing occupational distributionof the labor
force and with secular changes in the distribution of the national
income. The proportion of white-collar workers in the economically
active population rose steadily from 1900 to 1940, these workers'
earningsbeing roughly double those of blue-collarworkers duringthe
8 This evidence is compiled and reportedin J. Frederic Dewhurstand Associates, America's
Needs and Resources (New York, 1947), Appendix 21. The data were deflatedto 1967 dollars
before the percentagecalculationswere made.
9 See M. A. Bernstein, "The Response of American ManufacturingIndustriesto the Great
Depression," unpublishedpaper(PrincetonUniversity, 1983).
l See J. Frederic Dewhurst and Associates, America's Needs and Resources, Table 27 and
Appendix7; and U. S. Departmentof Commerce, Survey of CurrentBusiness (May 1957), as
reported in John P. Henderson, Changes in the Industrial Distribution of Employment: 1919-59,
Universityof Illinois, Bureauof Economic and Business Research, Bulletin87 (1961).
484
Bernstein
interwarperiod. Moreover, the distributionof income duringthe 1920s
became more unequal." All this appearsto have been responsiblefor an
increasing strength in newer, more affluent consumer markets. It is
significant in this regard that not only did the Depression create
proportionatelymore unemployment among blue-collar workers, but
also the relative buying-power of those who retained their jobs was
magnifiedby the deflationgenerated in the wake of the crash.
Changes in the Distribution of Employment
A thirdaspect of the investment failureof the 1930swas the changing
distributionof employment. Inter-industryvariationsin rates of recovery generatedan aggregateresult of virtual stagnationduringthe 1930s.
What was happeningin labor markets?It appearsthat althoughcertain
sectors were expandingafter 1932, and indeed throughoutthe interwar
period as a whole, they were nonetheless failing to absorb the unemployed from the declining industries. In the tobacco products, petroleum, and chemicals industries, the relative capital intensity of new
productionmethods was a factor. In other recovering sectors their rates
of expansion were not sufficientto overcome the rate in others at which
unemploymenthad been or was being generated.
Those sectors that were growing the fastest and that recovered after
1932 with the most vitality, maintainedmeager shares of total employment throughoutthe 1930s. For example, the chemical industryby the
mid-1930s ranked twenty-fifth among all industries in its share of
national employment; the petroleum sector, twenty-first; the tobacco
industry, sixty-seventh; the food products firms, fourteenth. By contrast, those sectors hit hardestby the crash and slowest to recover were
responsible for the predominantshare of nationalemploymentin 1935.
Primary metals producers ranked first in their share; textile mills,
second; lumber mills, third.12 Without general investment recovery
there was little absorption of unemployment-even by the growing
sectors. With the persistence of unemployment, the effective demand
problem was made worse. This was the basis of the vicious circle of
excess capacity and inadequate demand which was, in essence, the
calamity of the 1930s.
Thus, a massive structuralunemployment problem emerged during
the 1930sthat in the absence of an exogenous shock like war would have
taken several years to solve. But the problemactually emerged priorto
l See JurgenKocka, WhiteCollar Workersin America:1890-1940(London,1980),pp. 19, 159,
180, 196;JeffreyG. Williamson,PeterH. Lindert,AmericanInequality:A MacroeconomicHistory
(New York, 1980), pp. 315-16; and C. F. Holt, "Who Benefited from the Prosperityof the
Twenties?," Explorationsin Economic History, 14 (July 1977),283.
12 See U. S. Departmentof Commerce,Bureauof the Census, BiennialCensusof Manufactures,
1921-1937(Washington,D. C., 1924-1939);and Henderson,Changesin the IndustrialDistribution
of Employment,1919-59, Tables 5 and 6.
485
Interwar Investment Failure
1929.Throughoutthe 1920sthere had been a rathersteady decline in the
percentageof nationalemploymentaccountedfor by manufacturingand
constructionsectors. The same was the case for agricultureand mining.
In the service industries (transportation,trade, finance, selected services, and government operations) there had been a rise (see Table 2).
Even if there had been no crash in 1929, these trends suggest that
structural unemployment would have been a major problem in the
interwarperiod.
SOME SPECULATIONS ON GOVERNMENT POLICY AND MACROECONOMIC
PERFORMANCE
This approach to analyzing the Great Depression as a long-term
phenomenonposes some new questions about the political economy of
the New Deal and the general economic history of the post-war era. It
also provides a new perspective on the efficacy of New Deal policy
itself-one that offers more insight into the motivations of the Brains
TABLE 2
PERCENTAGEDISTRIBUTIONOF EMPLOYMENT
BY MAJORGROUPS, 1919-1939
Secondary industries
Service industries
Year
Primary industries
1919
1920
28.5
28.9
29.4
28.6
42.1
42.5
1921
30.2
25.1
44.7
1922
1923
1924
1925
1926
1927
28.9
27.6
27.3
26.8
26.3
25.5
26.8
28.2
27.3
27.7
27.8
27.7
44.3
44.2
45.4
45.5
45.9
46.8
1928
25.4
27.5
47.1
1929
1930
1931
1932
1933
1934
25.1
25.8
27.1
28.7
30.1
27.0
28.1
26.6
24.5
22.5
22.7
24.8
46.8
47.6
48.4
48.8
47.2
48.2
1935
26.6
25.5
47.9
1936
1937
25.3
24.0
26.6
27.6
48.1
48.4
1938
24.5
25.5
50.0
1939
23.6
26.8
49.6
a
Agricultureand mining.
Contractconstructionand manufacturing.
c Transportation,trade, finance, selected services, and government.
Source: U.S. Departmentof Labor,Bureauof LaborStatistics,Employmentand Earnings,Vol. 7,
b
No. 1, p. 11, as cited in John P. Henderson, Changes in the Industrial Distribution of
Employment:1919-59, Universityof Illinois,Bureauof Economicand BusinessResearch,
Bulletin87 (1961), p. 10.
486
Bernstein
Trust and the relationship between what we have come to call the
"three Rs"-relief, recovery, and reform.
The New Deal traditionallyhas been given high marks for its relief
policies, and to an extent the same can be said for its reform components. But economic recovery was not one of its accomplishments.
What is interesting, however, is the fact that at least some members of
Roosevelt's inner circle appearto have been concerned with the need to
get capital flowing out of moribundindustriesinto more dynamic ones.
The undistributedprofits tax, for example, which was and is generally
regarded as an example of the punitive, anti-business stance of the
Second New Deal, was thought of as a device to achieve such a
reallocation of capital-at least in the eyes of people like Rexford
Tugwell, Hans Morgenthau, and MarrinerEccles."3 Could it be that
Roosevelt's advisors were concerned not only with maintainingthe
political viability of the New Deal Coalition, but also with what we
today would call industrialpolicy? Preliminaryevidence suggests that
the answer is yes.
With respect to the political economy of the New Deal, my research
suggests that the attitude of the business communitytoward Roosevelt
and the NRA was far more complex than the monolithicterm "business
community" implies. To be sure, when the NIRA was enacted, the
reaction of almost all business leaders was positive. By 1940, however,
a Fortune survey of nearly 15,000 businessmen found less than 6.9
percent approval for a revival of the Act.14 But just as the economic
actions of industries during the 1930s were not uniform, the political
response of firms to the New Deal was more subtle than some
scholarshiphas averred.
The dynamic industries of the interwarperiod tended to be hostile to
the government intervention undertaken by Roosevelt. The declining
and moribundfirms were far more receptive, and in many cases were
instrumentalin the early success of the NRA. For example, as Louis
Galambos has argued, within the textiles industry there was a split
between the newer, leaner, more dynamic firms of the South, and the
older, overbuilt, and declining companies to the north. The former
resisted the cartelizingefforts of the New Deal; the latterregardedthem
as the only means of survival in hard times.15 All this suggests that a
subtleranalysis of the political economy of the New Deal is required.A
13 See RexfordG. Tugwell, The Democratic Roosevelt (GardenCity, New Jersey, 1957),p. 467;
BernardSternsher,Rexford Tugwelland the New Deal (New Brunswick,New Jersey, 1964),pp.
316-17; MarrinerS. Eccles, BeckoningFrontiers(New York, 1951),p. 260;John M. Blum,From
the Morgenthau Diaries: Years of Crisis, 1928-1938 (Boston, 1959), p. 307; and John M. Blum, The
Progressive Presidents (New York, 1980), p. 128.
14 See "WhatBusiness Thinks," Fortune, 20 (Oct. 1939),52ff;and "The ThirdFortuneForum
of Executive Opinion,"Fortune, 22 (Dec. 1940), 103ff.
15
See Louis Galambos, Competition and Cooperation: The Emergence of a National Trade
Association (Baltimore,1966), p. 160.
Interwar Investment Failure
487
more detailed analysis of the components of Roosevelt's coalition
would provide greaterunderstandingof the reasons for its early success
and subsequent weakness. It would also overcome the distortions
inherentin the bold tri-partitedivision most often used to describe itthat is, the categorization of "farmers," "laborers," and "businessmen."
The problemof industrialtransformationwhich emerged in the 1930s
was quickly overcome by the advent of war. Clearly what the war
provided was a twofold stimulus. First, the more mature industries of
the interwarperiod were broughtout of their doldrumsby the particular
demands of making war. Second, the new industries were "pulled
along" by government orders as a result of the general increase in the
GNP that fiscal spending provided, and as a result of the particular
demandsthat such sectors could meet-the latter most notably the case
for the petroleum, chemicals, electronics, and aviation industries. On
the one side, matureand declining sectors were broughtback to life. On
the other, new industries were at last provided with the generally high
level of demand that the full emergence of new products and processes
required.Indeed, the war itself spawned the developmentof even more
new industries, products, and processes. Thus did the 1940slay in part
the foundations for the prosperity of the 1950s and 1960s.
It has long been accepted that the war years brought the American
economy out of the depression by means of an unprecedented fiscal
stimulus. Moreover, more recent scholarship(typically labelled "New
Left") has argued that war-time productionand militaryprocurement
generally have been responsible for the prosperity of the American
economy in the entire post-war era.'6 But this agrumenthas perhaps
been overstated.
The meldingof industrialdecline in some and birthin other sectors is
a difficultand discontinuous process.17 Nowhere is this better demonstratedthan in the historical record of the Great Depression. Transformations in the composition of national output, however, were and are
not entirely aided by fiscal stimuli such as those provided by war or
militarization.For example, during the Civil War in this country, the
emergence of new technologies in steel productionwas slowed-indeed
halted-by the influx of large, standardorders for war productionthat
encouraged producers to continue in old habits. The demise of the
Trenton iron works after the 1860s can be linked to the fact that
attempts in the 1850s to meet the competition of the new process in
16 See, for example, the classic study by Paul A. Baranand Paul M. Sweezy, MonopolyCapital
(New York, 1966).
1 Some reflectionson the disruptiveimpact of shifts in industriallife cycles are offeredin M.
Abramovitz,"WelfareQuandariesand ProductivityConcerns," AmericanEconomicReview, 71
(Mar. 1981), 1-17.
488
Bernstein
Pittsburghwere abandoned with the onset of war.18 During the 1930s
the Ford Motor Companybegan experimentingwith the developmentof
plastic car bodies. Such research was abandonedwith the inflow of war
orders in 1939.19The American steel industry by 1950 was ready to
engage in the full scale development of new mechanized processes and
the scaling down of capacity in anticipationof the shrinkageof war-time
orders. The Korean conflict reversed this trend.20
These brief examples suggest that war-timestimuli, althoughproviding a general expansion of GNP that can aid the emergence of new
industries and techniques, and that can of course salvage the sales of
more mature sectors, may also encourage in some sectors a kind of
technological conservatism with long-run consequences of a most
negative sort. Had the Americanautomobileindustrydeveloped plastic
car bodies in the 1930s, had the steel industry developed more mechanized processes as early as the mid-fifties,would the hardshipsafforded
by foreign competition be with us to the same extent today? This
speculationsuggests that our contemporaryforeigncompetitors,insofar
as their industries have been recently rebuilt in the relative absence of
militarydemands, may be enjoyingthe consequences of the "Arsenalof
Democracy" of the 1940s, 1950s, and even more recent decades. The
"New Left" scholarship may need to be turned on its head. Government spending,and in particularmilitaryprocurement,althoughproviding a short-run stimulus to GNP, may in the long run be enervating
majorsectors of the economy and curtailingtheir ability to develop and
compete on a world scale.
I regrethavingto conclude on so agnostic a note. There is a great deal
of researchyet to be done. I certainlydo not wish to deny that short-run
shocks to our economy in the past 15 years have taken their toll, but I
have tried to suggest here that our currentproblems also have an older
heritage. It is time we took that more into account. The problems and
lessons of the interwar period should indeed continue to receive our
attention, for they are still very much with us.
18 This intriguingfact was unearthedby ChristopherBarrett,a candidatefor the A. B. degree in
the Departmentof History, PrincetonUniversity, in the course of his researchon the nineteenthcenturyhistory of Trenton, New Jersey.
19See J. C. Furnas, "Ford's Leftover Idea, " Letter to the Editor, New YorkTimes(Feb. 16,
1983),A-30.
20
See Henry W. Broude, Steel Decisions and the National Economy (New Haven, 1963), Ch. 5.