The Corporation and the Twentieth Century

16. On April 14, 1938, Roosevelt asked Congress for $3 billion worth of lending and spending, which Congress granted in June; these expenditures weren’t actually made until well after the economy had already begun turning up.

17. Hawley (1966, pp. 387–414); Leuchtenburg (1963, pp. 245–57).

Notes to Chapter 7 617

18. Lee (1988).

19. Carliss Baldwin (1983) points out that this assertion flies in the face of another, more plausible, assertion about corporate planning: that large enterprises need to coordinate high- throughput production through capital-intensive processes and would therefore be loath to channel adjustment onto the output margin. She suggests that inflexible prices have more to do with the need for inflexible contracting in underdeveloped markets and that—as we will see— the development of markets has increasingly impelled firms to use market hedges and greater price flexibility to coordinate production. On this see also Carlton (1982).

20. “The presence of administered prices does not indicate the presence of monopoly nor do market prices indicate the absence of monopoly. In many highly competitive industries, such as the automobile industry, prices are made administratively and held for fairly long periods of time” (Means 1935, p. 1).

21.FranklinD.Roosevelt,PressConference,TheAmericanPresidencyProject,https://www .presidency.ucsb.edu/node/209472 (accessed August 7, 2022). Although it was written almost entirely by Means (Barber 1996, p. 113), the statement claimed to have been “prepared at the President’s request by Henry Morgenthau Jr., secretary of the Treasury; Henry A. Wallace, Sec- retary of Agriculture; Frances Perkins, Secretary of Labor; Marriner Eccles, Chairman of the Board of Governors of the Federal Reserve System; and economists of various executive departments.”

22. Lee (1990a). The NRPB would be unwound during World War II. 23. Roosevelt (1942, p. 122).

24. Roosevelt (1942, p. 121).

25. Hawley (1966, pp. 412–13).

26. Brinkley (1989, p. 92). This is one of many estimates. No two sources agree on the exact numbers, though they are all in the same ballpark.

27. Miscamble (1982).

28. Waller (2005, p. 81).

29. For Arnold, “the antitrust laws were the answer of a society which unconsciously felt the

need of great organizations, and at the same time had to deny them a place in the moral and logical ideology of the social structure. They were part of the struggle of a creed of rugged indi- vidualism to adapt itself to what was becoming a highly organized society” (Arnold 1937, pp. 211–12).

30. Arnold (1937, p. 217).

31. Brinkley (1993, p. 571). Like Veblen, we might say, Arnold was a practitioner of semiotics who derided the very enterprise of making signs and symbols and who preferred instead a cool efficiency.

32. Gressley (1977, p. 47).

33. Arnold (1935).

34. Brinkley (1993, p. 569).

35. In a revealing remark in 1940, Arnold wrote that the “maintenance of a free market is as

much a matter of constant policing as the free flow of traffic on a busy intersection. It does not stay orderly by trusting to the good intentions of the drivers or by preaching to them. It is a simple problem of policing, but a continuous one” (Arnold 1940, p. 122). This is, of course, a bizarre alteration of precisely the kind of anecdote that economists typically use to persuade

618 Notes to Chapter 7

students that markets work without constant policing. (See for example Klein [2012].) Of course, economists believe that markets work without constant direction from above not in the abstract but rather to the extent that there are rules and institutions, notably property rights, that channel rent-seeking behavior in positive-sum directions. Policing is required to make sure drivers follow what are clear abstract rules, not to micromanage traffic.

36. Brinkley (1989, p. 91).

37. The ideas of Arnold and of the Chicago School law-and-economics approach to antitrust are related forms of legal realism: they both believe that legal decisions should be driven not by abstract rules but by consideration of social outcomes (Posner 1992). The principal difference is that although the Chicago School is loosely described as demanding a criterion of consumer benefit, their criterion is really economic efficiency. Efficiency typically results in greater con- sumer surplus; but, strictly speaking, the efficiency criterion requires maximizing of the sum of both consumer and producer surplus.

38. Gressley (1964, p. 230).

39. Lee (1988, p. 184).

40. The NRA had contained a Consumer Advisory Board, chaired by Mary Rumsey, the

daughter of Edward Harriman and sister of Averill Harriman. But its role was entirely symbolic in an agency driven by producer interests.

41. Hawley (1966, p. 203).

42. Brinkley (1993, p. 571).

43. Arnold (1940, p. 9).

44. Edwards (1943, p. 342).

45. Arnold (1940, pp. 192–95).

46. “The milk farmer still maintained a floor under his prices because of special legislation,”