New Deal hampered recovery by causing businessmen to fear policy changes that might render their investments unprofitable.)
Insull s Monstrosity
The 1935 Revenue Act wasn t the only measure that had businessmen and investors shuddering that August. Less than a week after it became law, FDR signed the still-more controversial Public Utility Holding Company Act, granting the SEC the power to break up the nation s utility holding companies.
On the eve of the Depression, Paul Mahoney explains, most U.S. electric and gas companies were directly controlled by trusts or holding companies. Groups of smaller utility holding companies were in turn controlled by a smaller number of larger holding companies, and so on for several layers. Three gigantic holding companies at the apex of this holding company pyramid ultimately controlled more than 80 percent of the nation s power companies.
The New Deal and Recovery, Part 12: Fear Itself SHARE This great Nation will endure as it has endured, will revive and will prosper. …[T]he only thing we have to fear is fear itself. FDR, in his first inaugural address. There is no place for industry; because the fruit thereof is uncertain. Thomas Hobbes, on the state of nature, in
Leviathan.
Not the Sum of its Parts
So far, I ve tended to look at the New Deal as a set or sequence of distinct government policies and programs, remarking on how each either contributed to or hampered economic recovery. I ve also dealt only with those New Deal policies generally understood to have had promoting recovery as their aim.
The New Deal and Recovery, Part 11: The Roosevelt Recession, Continued SHARE Massive jolts of New Deal spending had stopped the economic slide, [but the economy crashed again when] over two years, FDR slashed government spending 17 percent. (From a 2011 NPR presentation.)
In the last installment of this series, I discussed the hypothesis that the 1937 collapse resulted from an ill-conceived tightening of monetary policy to which both the Fed and the Treasury contributed.
While authorities differ in the degree of responsibility they assign to each, there s widespread agreement that, between them, instead of merely extinguishing a boom, as they intended to do, both Fed and Treasury officials helped bring about a crash that undid much of the post-1933 recovery.