The Swope Plan

I think this is as revolutionary as anything that happened in this country in 1776, or in France in 1789, or in Italy under Mussolini or in Russia under Stalin.
Senator Thomas P. Gore in the National Recovery Administration Hearings, U.S. Senate Finance Committee, May 22, 1933.

Although the New Deal and its most significant component, the National Recovery Administration (NRA), are generally presented as the progeny of FDR's brain trust, as we have seen the essential principles had been worked out in detail long before FDR and his associates came to power. The FDR group did little more than put the stamp of academic approval to an already prepared plan.
The roots of the Roosevelt NRA are of peculiar importance. As we have seen in Chapter 6, allowing for vast changes in the industrial structure, NRA approximated a schema worked out in 1841 by FDR's ancestor, Assemblyman Clinton Roosevelt of New York. Then we noted that wartime dictator Bernard Baruch was preparing an NRA-like program in the 1920s and that he and his assistant Hugh Johnson were very much an integral part of the preliminary planning. Further, the Roosevelt NRA was in its details a plan presented by Gerard Swope (1872-1957) long-time president of General Electric Company. This Swope Plan1 was in turn comparable to a German plan worked out in World War I by his opposite number Walter Rathenau, head of German General Electric (Allgemeine Elektizitäts Gesellschaft) in Germany, where it was known as the Rathenau Plan. So let's take a closer look at the Swope Plan.


The Swope family was of German origin. In 1857 Isaac Swope, a German immigrant, settled in St. Louis as a manufacturer of watch cases. Two of Swope's sons, Herbert Bayard Swope and Gerard Swope, subsequently rose to the peak of American enterprise. Herbert Bayard Swope was long-time editor of the New York World, a racetrack devotee, a close friend of Bernard Baruch, and used by FDR as an unofficial envoy during the New Deal period. Herbert's brother Gerard made his career with General Electric Company. Swope started as a helper on the factory floor in 1893, became a sales representative in 1899, manager of the St. Louis office in 1901, and director of the Western Electric Company in 1913. During World War I Swope was assistant director of purchase, storage, and traffic in the Federal government under General George W. Goethals and planned the U.S. Army procurement program. In 1919 Swope became the first president of the International General Electric Company. Successful promotion of G.E.'s foreign business brought him to the presidency of G.E. in 1922 to succeed Edwin Rice, Jr. Swope remained as G.E.'s president from 1922 until 1939.

General Electric was a Morgan-controlled company and always had one or two Morgan partners on its board, while Swope was also a director of other Wall Street enterprises, including International Power Securities Co. and the National City Bank.

Gerard Swope's political development began in the 1890s. Biographer David Loth reports that, soon after coming to Chicago, Swope was introduced to socialists Jane Addams, Ellen Gates Starr, and their Hull House Settlement. This interest in social affairs developed to culminate in the 1931 Swope plan for stabilization of industry, 90 per cent of which consisted of a scheme for workmen's compensation, life and disability insurance, old-age pensions, and unemployment protection. The Swope plan is an extraordinary document. One short paragraph removes all industry from the anti-trust laws—a long-time industrial goal—while numerous lengthy paragraphs detail proposed social plans. In sum, the Swope Plan was a transparent device to lay the groundwork for the corporate state by defusing potential labor opposition with a massive welfare carrot.

The Swope Plan and Bernard Baruch's earlier and similar proposal became the Roosevelt National Recovery Act. The Wall Street origins of NRA did not go unnoticed when the act was debated by Congress. Witness for example, the indignant, but not altogether accurate, outburst of Senator Huey P. Long:

I come here now and I complain. I complain in the name of the people of my country, of the sovereign State I represent. I complain in the name of the people wherever else it may be known. I complain if it be true, as I am informed by Senators on this floor, that under this act Mr. Johnson, a former employee of Mr. Baruch, has been put in charge of the administration of the act, and has already called as his aides the head of the Standard Oil Co., the head of General Motors, and the head of the General Electric Co.
I complain if Mr. Peek, who is an employee of Mr. Baruch, or has been, as I have been informed on the floor of the Senate, has been placed in charge of administering the Farm Act, however good a man he may be and whatever his ideas may be.
I complain if Mr. Brown, who, I am informed on the floor of the Senate, has been made an influential manipulator of the office of the Bureau of the Director of the Budget, has been an employee of Mr. Baruch, and is now given this authority. I complain because, on the 12th day of May 1932, before we went to Chicago to nominate a President of the United States, I stood in this very place on this floor and told the people of this country that we were not going to have the Baruch influence, at that time so potent with Hoover, manipulating the Democratic Party before nomination, after nomination, or after election.2

Huey Long was correct to point up the Wall Street dominance of NRA, but his identifications are a little haphazard. Hugh Johnson, long-time associate of Bernard Baruch, was indeed appointed head of NRA. Further, Johnson's principal assistants in NRA were three corporate heads: Walter C. Teagle, president of Standard Oil of New Jersey; Gerard Swope, president of General Electric and author of the Swope Plan; and Louis Kirstein, vice president of William Filene's Sons of Boston. As we have seen (p. 80) Filene was a long-time proponent of corporate socialism. The "head of General Motors" cited by Senator Long was Alfred P. Sloan, not related to NRA, but G.M. vice president John Raskob, who was the big fund raiser in 1928 and 1932 and behind-the-scenes operator promoting the election of Franklin D. Roosevelt in 1932. In other words, key positions in NRA and in the Roosevelt Administration itself were manned by men from Wall Street. The Public relations explanation for business men turned bureaucrats is that businessmen have the experience and should become involved in public service. The intent in practice has been to control industry. It should not, however, surprise us if the corporate socialists go to Washington D.C. after election of their favorite sons to take over the reins of monopoly administration. One would have to be naive to think it would be otherwise after the massive election investments recorded in Chapter 8.

Before President Roosevelt was inaugurated in March 1933, a so-called brain trust was more or less informally put to work on economic plans for the Roosevelt era. This group comprised General Hugh Johnson, Bernard Baruch (see p. 106 for his political contributions), Alexander Sachs of Lehman Brothers (see p. 117 for political contributions), Rexford G. Tugwell, and Raymond Moley. This small group, three from Wall Street and two academics, generated Roosevelt's economic planning.
This link between Bernard Baruch and NRA planning has been recorded by Charles Roos in his definitive volume on NRA:

Early in March 1933 Johnson and Baruch started on a hunting trip and en route stopped in Washington. Moley had dinner with them and proposed that Johnson remain in Washington to draft a plan for industrial recovery. . . . The idea appealed to Baruch, and he promptly granted Johnson leave of absence from his regular duties. Then Johnson and Moley, after some study of the various proposals believed by the latter to have merit, proceeded to draw up a bill which would organize industry in an attack on the depression.3

According to Roos, Johnson's first NRA draft was on two sheets of foolscap paper and provided simply for suspension of the anti-trust laws, together with almost unlimited authority for President Roosevelt to do almost anything he wished with the economy, including licensing and control of industry. According to Roos, "It was, of course, rejected by the Administration, since it would have made the President a dictator, and such power was not desired."

This seemingly incidental rejection of unwanted dictatorial power by the Roosevelt administration may be of some significance. In Chapter 10 we will describe the Butler affair, an attempt by the same Wall Street interests to install Roosevelt as a dictator or replace him with a more pliant figurehead in case of his objection. Johnson's first draft attempts were to set up NRA in a form consistent with Roosevelt as an economic dictator, and its rejection by Roosevelt is consistent with serious charges laid at the feet of Wall Street (p. 141). At this point in the planning, according to Roos, Johnson and Moley were joined by Tugwell and later by Donald R. Richberg, a Chicago labor attorney. The three proceeded to draft a more "comprehensive" bill, whatever that meant.

General Hugh Johnson, was appointed head of the National Recovery Administration created under the title of the N.I.R.A. and believed for a while that he was also to head the Public Works Administration. The plans and diagrams drawn up by General Johnson and Alexander Sachs of Lehman Brothers assumed that the NRA head would also direct the public works program.
Consequently, we can find the roots of the NRA bill and the Public Works Administration in this small Wall Street group. Their effort reflects both the Swope and the Baruch plans for corporate socialism, with an initial attempt to provide for a corporate dictatorship in the United States.


There were, of course, many other plans in the early 1930s; indeed, economic planning was endemic among the academics, politicians, and businessmen of this era. The weight of informed opinion considered economic planning essential to raise America from the depression. Those who doubted the efficacy and wisdom of economic planning were few and far between. Unfortunately, in the early 1930s no empiric experience existed to demonstrate that economic planning is inefficient, creates more problems than it solves, and leads to loss of individual freedom. To be sure, Ludwig von Mises had written Socialism and made his accurate predictions on the chaos of planning, but von Mises was even then an unknown economic theoretician. There is a mystical lure to economic planning. Its proponents always implicitly visualize themselves as the planners, and the anti capitalist psychology, so well described by von Mises, is the psychological pressure behind the scenes to make the plan come about. Even today in 1975, long after economic planning has been totally discredited, we still have the siren song of prosperity by planning. J. Kenneth Galbraith is one prominently vocal example, no doubt because Galbraith's personal estimate of his abilities and wisdom is greater than that of America at large. Galbraith recognizes that planning offers a means to exercise his assumed abilities to the full. The rest of us are to be coerced into the plan by the police power of the state: a negation of liberal principles perhaps, but logic was never a strong point among the economic engineers.

In any case, in the 1930s economic planning had many more enthusiastic proponents and far fewer critics than today. Almost everyone was a Galbraith, and the basic content of the plans proposed was notably similar to his. The table below lists the more prominent plans and their outstanding attributes. Industry, always anxious to find shelter from competition in the police power of the state, itself proposed three plans. The most important of these industry plans, the Swope plan, had compulsory features for all companies with more than 50 employees, combining continuous regulation with, as we have noted, extraordinarily costly welfare proposals. The Swope plan is reproduced in full as Appendix A; the full text reflects the lack of well thought-out administrative proposals and the preponderance of irresponsible give-away welfare features. The first few paragraphs of the plan give the core of Swope's proposals: trade associations, enforced by the state and with power of enforcement concentrated in the hands of major corporations through a system of industrial votes. While 90 per cent of the proposal text is devoted to give-away pensions for workers, unemployment insurance, life insurance and so on, the core is in the first few paragraphs. In brief, the Swope Plan was a carrot to get what Wall Street so earnestly desired: monopoly trade associations with the ability to use state power to enforce monopoly—Frederic Howe's maxim of "get society to work for you" in practice.

Economic Stabilization Plans: 1933

Name of Plan
Proposal for Industry
Government Regulation
Welfare Proposals
Industry Plans
Swope Plan (General Electric) Trade Associations, membership compulsory after three years for companies with 50 or more employees. Rulings mandatory Continuous regulation by Federal Trade Commission Life and disability insurance, pensions, and unemployment insurance
U.S. Chamber of Commerce Plan National Economic Council; power not mandatory No regulation Individual corporation plans; public works planning
Associated General Contractors of America Plan Grant by Congress of greater power to Federal Reserve Board. Bond issues to be authorized for revolving fund for construction; bond for increasing public and semi-public construction. Federal Reserve to guarantee solvency of banks Financial regulation. Licensing of contractors. Establishment of construction credit bureaus Stimulation of employment through greater building and construction activity. State bonds for public buildings; development of home loan bank
Labor Plans
American Federation of Labor Plan National Economic Council; power not mandatory No regulation Spread jobs; maintenance of wages; guarantees of jobs; long range stabilization plans. Five day week and shorter day immediately. Program of public building
Academic and General
Stuart Chase Plan Revival of War Industries Board using coercive, mandatory power, confined to 20 or 30 basic industries Continuous regulation National employment bureaus; reduction of hours; unemployment insurance; raising of wages; allocation of labor
National Civic Federation Plan "Business Congress" of industrial organizations. No limitations or restrictions; full and complete power to fix prices or combine Continuous regulation Unemployment insurance plan. Raise wages
Beard Plan National Economic Council," authorized by Congress, to coordinate finance, operation, distribution, and public service enterprises. Each industry governed by subsidiary syndicates Continuous regulation Use of unemployed on housing and public project programs

The U.S. Chamber of Commerce plan was similar to the Swope plan, but required only voluntary compliance with the code and did not embody the extensive welfare clauses of the Swope plan. The Chamber of Commerce plan was also based on voluntary compliance, not the coercive government regulation inherent in the Swope proposal.

The third industry plan was put forward by the Associated General Contractors of America. The AGC plan proposed that greater powers be granted the Federal Reserve System to guarantee banks bonds for public construction and, not surprisingly, establishment of special construction credit bureaus financed by the state, coupled with licensing of contractors. In brief, the AGC wanted to keep out competition and tap Federal (taxpayers') funds for promotion of the construction industry.

The American Federation of Labor plan proposed a National Economic Council to spread and guarantee jobs and embark on economic planning for stabilization. The unions did not push for government regulation.

The academic plans were notable in the sense that they supported industry objectives. Stuart Chase, a well-known socialist, came up with something very close to the Wall Street plans: in effect, a revival of Bernard Baruch's 1918 War Industries Board, with coercive power granted to industry, but confined to 20 or 30 basic industries, with continuous regulation. The Chase plan was an approximation of Italian fascism. The Beard plan also proposed syndicates along Italian lines, with continuous regulation and use of the unemployed in public programs á la Marx and The Communist Manifesto. The National Civic Federation advocated the total planning concept: full and complete power to fix prices and combinations, with state regulation and welfare features to appease labor.

Almost no one, except of course Ludwig von Mises, pointed to the roots of the problem to draw the logical conclusion from economic history that the best economic planning is no economic planning.4


Orthodox socialists greeted Swope's plan with a curious, if perhaps understandable, restraint. On the one hand, said the socialists, Swope had recognized the evils of unrestrained capitalism. On the other hand the Swope system, complained the socialists, would leave control of industry in the hands of industry itself rather than to the state. As Norman Thomas explained:

Mr. Swope's scheme of regulation is a probably unconstitutional plan for putting the power of government behind the formation of strong capitalist syndicates which will seek to control the government which regulates them and, failing that, will fight it.5

Socialist criticism of General Electric's Swope did not consider whether the Swope system would work or had operational efficiency or how it proposed to work; orthodox socialist criticism was limited to the observation that control would be in the wrong hands if industry took over and not in the right hands of the government planners, that is, the socialists themselves. In sum, the dispute was over who was going to control the economy: Mr. Gerard Swope or Mr. Norman Thomas.

Consequently, the Thomas criticism of Swope has a curious duality, sometimes praiseful:

Certainly it is significant that at least one of our authentic captains of industry, one of the real rulers of America, has overcome the profound and bewildered reluctance of the high and mighty to go beyond the sorriest platitudes in telling us how to break the depression they did so much to cause and so little to avert. Obviously Mr. Swope's speech had its good points . . .6

At other times Thomas is skeptical and points out that Swope, ". . . no longer trusts individual initiative, competition and the automatic working of markets," but proposes to gear the system to the benefit of "the stockholding class."
There is no evidence that Gerard Swope and his associates ever trusted individual initiative, competition, and free markets any more

than did Norman Thomas. This is an important observation because, once we abandon the myths of all capitalists as entrepreneurs and all liberal planners as saviors of the little man, we see them both for what they are: totalitarians and the opponents of individual liberty. The only difference between them is who is to be the director.


The National Recovery Administration, most important segment of the New Deal, was then designed, constructed, and promoted by Wall Street. In essence, the NRA originated with Bernard Baruch and his long-time assistant General Johnson. In detail, NRA was the Swope Plan, and its general principles were promoted over the years by numerous prominent Wall Streeters.

There were, of course, planning variants from the socialists and Marxist-influenced planners, but these variants were not the versions that finally became NRA. NRA was essentially fascist in that industry, not central state planners, had the authority to plan, and these industrial planners came from the New York financial establishment. Bernard Baruch's office was at 120 Broadway; the offices of Franklin D. Roosevelt (the New York offices of Fidelity & Deposit and the law offices of Roosevelt & O'Connor) were also at 120 Broadway. Gerard Swope's office and the executive offices of General Electric Company were at the same address. We can therefore say in a limited sense that the Roosevelt NRA was born at 120 Broadway, New York City.

General Hugh Johnson had three principal assistants in NRA, and "these three musketeers were on the job longer and they walked in and out of my office whenever they discovered anything that needed attention."7 The three assistants were Wall Streeters from major industries who themselves held prominent positions in major firms in these industries: Gerard Swope, president of General Electric, Walter C. Teagle, of Standard Oil of New Jersey, and Louis Kirstein of William Filene's Sons, the retail merchants. Through this trio, a dominant element of big business was in control at the very peak of NRA. This concentration of control explains the thousands of complaints of NRA oppression that came from medium and small businessmen.

Who were these men? As we have noted, Gerard Swope of General Electric had been assistant to General Johnson in the War Industries Board of World War I. While NRA was under discussion, Johnson "suggested his name to Secretary Roper at once." General Electric was in 1930 the largest of the electrical equipment manufacturers, with Westinghouse holding many of the basic patents in the field, as well as a large interest in RCA and many international subsidiaries and affiliates. In the late 1920s G.E. and Westinghouse produced about three quarters of the basic equipment for distributing and generating electric power in the U.S. General Electric, however was the dominant firm in the electrical equipment industry.8 Under NRA the National Electrical Manufacturers Association (NEMA) was designated as the agency for supervising and administering the electrical industry code. NEMA moved promptly and by July 1933 presented the second code of "fair competition" for the President's signature.

Johnson's second musketeer was Walter Teagle, chairman of the board of the Standard Oil of New Jersey. Standard of New Jersey was the biggest integrated oil company in the U.S., and only Royal Dutch challenged it in international sales. Jersey Standard was controlled by the Rockefeller family, whose holdings in the early 1930s have been estimated at between 20 and 25 per cent.9 One might therefore say that Teagle represented the Rockefeller interests in NRA, whereas Swope represented the Morgan interests. It is interesting to note in passing that the largest Standard competitor was Gulf Oil, controlled by the Mellon interests, and there were persistent efforts early in the Roosevelt administration to prosecute Mellon for tax evasion.

The third of Johnson's three musketeers at NRA was Louis Kirstein, vice president of Filene's of Boston. Edward Filene is notable for his books on the advantages of trade associations, fair competition, and cooperation (see page 81 below).

The peak of the Roosevelt National Recovery Administration consisted of the president of the largest electrical corporation, the chairman of the largest oil company, and the representative of the most prominent financial speculator in the United States.

In brief, the administration of NRA was a reflection of the New York financial establishment and its pecuniary interests. Further, as we have seen, since the plan itself originated in Wall Street, the presence of businessmen in the administration of NRA cannot be explained on the basis of their experience and administrative ability. NRA was a creature of Wall Street implemented by Wall Streeters.


The proponents of the National Industrial Recovery Act made a great show that NRA would protect the small businessman who, it was alleged, had suffered in the past from unfair application of the anti-trust laws; the suspension of the anti-trust laws would remove their more unwelcome features, while NRA would preserve their welcome antimonopoly provisions. Senator Wagner stated that all industry would formulate the proposed industrial codes, not just big business. Senator Borah, on the contrary, contended that "monopoly" was about to receive a service it had coveted for over 25 years, that is, "the death of the antitrust laws" and that the NRA industrial codes "are going to be combinations or contracts in restraint of trade, or it would not be necessary to suspend the antitrust laws." Senator Borah also pointedly accused Senator Wagner of betraying the legitimate businessman for the sake of Wall Street:

The elder Rockefeller did not need any criminal law to aid him when he was building up his wealth. He destroyed the independents everywhere; he scattered them to the four winds; he concentrated his great power. But the Senator would not only give to the combines all the power to write their code, but would give them the power to indict and prosecute the man who violated the code, although he might be pursuing a perfectly legitimate business.
Mr. President, I do not care how much we strengthen, how much we build up, how much we buttress the antitrust law; I object to a suspension in any respect whatever, because I know that when those laws are suspended, we give these 200 non banking corporations, which control the wealth of the United States, a stupendous power, which can never be controlled except through the criminal laws enforced by the courts.10

Senator Borah then cited Adam Smith (see p. 99) to effect, pointing out that no definition of fair competition was in the bill and that codes of fair competition would degenerate into the dictates of the major corporations. Similarly, Senator Gore pointed to the possibility that the President could require all members of an industry to be licensed and that this meant that the President could revoke a license at his pleasure, an obvious infringement on due process of law and basic property rights:

SENATOR GORE. Could the President revoke that license at this pleasure?
SENATOR WAGNER. Yes, for a violation of the code imposed by the Federal Government.
SENATOR GORE. On what sort of hearing?
SENATOR WAGNER. After a hearing. It is provided that a hearing may be had, before a license can be revoked.
SENATOR GORE. That is something that really affects the life and death of a particular industry or enterprise, if he has the power to revoke the license.
SENATOR WAGNER. Yes; it is a sanction.
SENATOR GORE. What I wanted to ask you. Senator, is this: Do you think you could place that power in the hands of an executive officer?
SENATOR WAGNER. I do, in the case of an emergency.
SENATOR GORE. To exterminate an industry?
SENATOR WAGNER. All of these powers, of course, are lodged in one individual, and we have just got to rely upon him to administer it fairly and justly. We had the same sort of power during the war.
SENATOR GORE. I know that, and Mr. Hoover, if I may use these words, put free-born American citizens out of business without trial by jury.
SENATOR WAGNER. The philosophy of this bill is to encourage voluntary action and initiative on the part of industry, and I doubt whether or not these compulsory methods will be used at all except on very rare occasions; but if you are going to lift the standard, you have got to have some sanctions in order to enforce the code that may be adopted.
SENATOR GORE. I understand, but if you are going to carry out this system you have to have power to carry it out. My point is why in a free country a free man ought to be required to take out a license to engage in legitimate industry, and why somebody under our constitutional system should be given the power to destroy the value of his property, which you do when you bring about a situation where he cannot operate. That seems to me approaching the point of taking property without due process of law.11

When we examine the results of the N.I.R.A., even a few short months after passage of the bill, we find that these Senatorial fears were fully justified and that President Roosevelt had abandoned the small businessman of the United States to the control of Wall Street. Many industries were dominated by a few major firms, in turn under control of Wall Street investment houses. These major firms were dominant, through the three musketeers, in establishing the NRA codes. They had the most votes and could and did set prices and conditions ruinous to smaller firms.

The iron and steel industry is a good example of the manner in which large firms dominated the NRA code. In the 1930s two leading companies, United States Steel, with 39 per cent, and Bethlehem Steel, with 13.6 per cent, controlled over half of the country's steel ingot capacity. The board of U.S. Steel included J.P. Morgan and Thomas W. Lamont, as well as chairman Myron C. Taylor. The board of Bethlehem included Percy A. Rockefeller and Grayson M-P. Murphy of Guaranty Trust, whom we shall meet again in Chapter 10.

In 1930 the largest stockholders of U.S. Steel were George F. Baker and George F. Baker, Jr., with combined shares of 2000 preferred and107,000 common; Myron C. Taylor head of the Finance Committee of U.S. Steel owned 27,800 shares of common; J.P. Morgan held 1261 shares; and James A. Farrell had title to 4850 shares of preferred stock. These men were also substantial Presidential campaign contributors. For example, in Hoover's 1928 campaign they contributed

J.P. Morgan.................................................... ...$5,000
J.P. Morgan Company....................................$42,500
George F. Baker..............................................$27,000
George F. Baker Jr..........................................$20,000
Myron C. Taylor..................................................$25,00

In the NRA, we find that U.S. Steel and Bethlehem Steel effectively controlled the whole industry by virtue of their votes in the industrial codes; of a total of 1428 votes, these two companies alone were allowed a total of 671 votes, or 47.2 per cent, perilously close to outright control and with undoubted ability to find an ally among the smaller but still significant companies.

NRA-Voting Strength in the Iron and Steel Industry Code

Votes in Code Authority
Percentage of Total
U.S. Steel
Bethlehem Steel
Republic Steel
National Steel
Jones and Laughlin
Youngstown Sheet & Tube
Wheeling Steel
American Rolling Mill
Inland Steel
Crucible Steel
McKeesport Tin Plate
Allegheny Steel
Sharon Steel Hoop
Continental Steel

Source: NRA Report Operation of the Basing Point System in the Iron and Steel Industry.

Although U.S. Steel and Bethlehem were the major units in the iron and steel industry before passage of the NRA, they were unable to control competition from numerous smaller firms. After the passage of NIRA, these two firms were able, through their dominance of the code system, also to dominate the iron and steel industry.
John D. Rockefeller organized the Standard Oil trust in 1882 but, as a result of court orders under the Sherman Act, the cartel was dissolved into 33 independent companies. In 1933 these companies were still controlled by the Rockefeller family interests; the Sherman Act was more shadow than substance:
Net income (1930) in Million $$
Standard Oil of New Jersey
Standard Oil of Indiana
Standard Oil of California
Standard Oil of New York

Offices of the "independent" Standard companies continued to be located at Rockefeller headquarters, at this time at 25 and 26 Broadway. During the 1920s new capital entered, and there was a relative shift in the importance of the various Standard Oil companies. By the time of the New Deal the largest single unit was Standard Oil of New Jersey, in which the Rockefeller interests held a 20 to 25 per cent interest. The president of New Jersey Standard, Walter S. Teagle, became one of the three musketeers of NRA.
When we look at the auto industry in 1930 we find that two companies, Ford and General Motors, sold about three quarters of the cars produced in the United States. If we include Chrysler, the three companies sold about five sixths of all U.S. automobiles produced:

Ford Motor Co....................................................... 40 per cent
General Motors...................................................... 35 per cent
Chrysler Corp........................................................... 8 per cent

Under its founder, Henry Ford, the Ford Motor Company had little use for politics, although James Couzens, one of the original Ford stockholders, later became Senator from Michigan. Ford maintained its executive offices in Dearborn, Michigan and only a sales office in New York. Ford was also vehemently anti-NRA and anti-Wall Street, and Henry Ford is notable by reason of his absence from the lists of contributors to Presidential campaigns.

On the other hand, General Motors was a creature of Wall Street. The firm was controlled by the J.P. Morgan firm; the chairman of the board was Pierre S. Du Pont, of the Du Pont Company, which in 1933 had about a 25 per cent interest in General Motors. In 1930 the General Motors board comprised Junius S. Morgan, Jr. and George Whitney of the Morgan firm; directors from the First National Bank and Bankers Trust; seven directors from Du Pont; and Owen D. Young of General Electric.

Another example is the International Harvester Company, in 1930 under its president Alexander Legge the giant of the agricultural equipment industry. Legge was part of the NRA. The agricultural equipment combination was formed in 1920 by the J.P. Morgan Company and controlled about 85 per cent of the total production of harvesting machines in the United States. In 1930, the firm was still dominant in the industry:

Percentage of Market
International Harvester (11 Broadway) $384 million (1929)
Deere & Co. $107
J.I. Case $55
Others $100
Total $646 million

In 1930 at least 80 large companies were mining bituminous coal in the United States; of these, two—Pittsburgh Coal and Consolidation Coal—were dominant. Pittsburgh Coal was under control of the Pittsburgh banking family, the Mellons. Consolidation Coal was largely owned by J.D. Rockefeller, who owned 72 per cent of the preferred and 28 per cent of the common stock. Both the Mellons and the Rockefellers were heavy political contributors. Similarly, anthracite production was concentrated in the hands of the Reading Railroad, which mined 44 per cent of U.S. hard coal. Reading was controlled by the Baltimore and Ohio Railroad, which held 66 per cent of its stock, and the chairman of B & 0 was E.T. Stotesbury, a partner in the Morgan firm.
When we look at machine-building firms in the United States in 1930, we find that the largest by far was General Electric—and president Swope of G.E. was intimately connected with NRA.

Major Machine Building Firms (1929)

Assets in Millions
Profits (1929) in Millions
Sales (1929) in Millions
General Electric, 120 Broadway
American Radiator & Standard Sanitary, 40 W. 40th St.
Westinghouse Electric, 150 Broadway
Baldwin Locomotive, 120 Broadway
American Locomotive, 30 Church St.
American Car & Foundry, 30 Church St.
International Business Machines, 50 Broadway
Otis Elevator, 260 11th Avenue
Crane Company

As we glance down the list we note that American Car & Foundry (whose president, Woodin, became Secretary of the Treasury under Roosevelt), American Radiator & Standard, and Crane Company were all prominent contributors to FDR.

Given this dominant influence of large firms in the NRA and the Roosevelt administration, it is not surprising that NRA was administered in a manner oppressive to small business. Even in the brief life of NRA, until it was declared unconstitutional, we find evidence of oppression: witness the complaints by small business in the industries we have discussed compared to other industries in small business with many more units:

Industry Numbers of Complaints of Oppression (January-April 1934)
Major Industry
Iron and Steel
Investment Banking
Electrical Manufacturing
Small Business
Cleaning and Dyeing
Boot and Shoes

Source: Roos, NRA Economic Planning, p. 411, from unpublished NRA data.


1. See Appendix A for the full text.

2. Senator Huey P. Long, Congressional Record, June 8, 1933, p. 5250.3. Charles F. Ross, NRA Economic Planning (Indianapolis: The Principia Press 1937), p. 37.

4. Should the reader wish to pursue the explanation for this pervasive inability to see the obvious, he could start in no better place than Ludwig von Mises, The Anti-Capitalistic Mentality (New York; Van Nostrand, 1956).

5. "A Socialist Looks at the Swope Plan," The Nation, Oct. 7, 1931, p. 358.

6. Ibid., p. 357.

7. Hugh S. Johnson, The Blue Eagle from Egg to Earth, op. cit., p. 217.

8. For more information see Harry W. Laidler, Concentration of Control in American Industry (New York: Crowell, 1931), Chapter XV.

9. Ibid., p. 20.

10. Congressional Record, 1933, p. 5165.

11. United States Senate, National Industrial Recovery, Hearings before Committee on Finance, 73rd Congress, 1st Session, S.17and H.R. 5755 (Washington: Government Printing Office, 1933), p. 5.

12. In addition, the following smaller firms had votes: Acme Steel (9), Granite City Steel (8), Babcock and Wilcox (8), Alan Wood (7), Washburn Wire (7), Interlake Iron (7), Follansbee Bros. (6), Ludlum Steel (6), Superior Steel (6), Bliss and Laughlin (6), Laclede Steel (5), Apollo Steel (5), Atlantic Steel (4), Central Iron and Steel (4), A.M. Byers Company (4), Sloss-Sheffield (4), Woodward Iron (3), Firth-Sterling (2), Davison Coke and Iron (2), Soullin Steel (1), Harrisburg Pipe (1), Eastern Rolling Mill (1), Michigan Steel Tube (1), Milton Manufacturing Company (1), and Cranberry Furnace (1).