Destructive Creation
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During World War II, the United States helped vanquish the Axis powers by converting its enormous economic capacities into military might. Producing nearly two-thirds of all the munitions used by Allied forces, American industry became what President Franklin D. Roosevelt called «the arsenal of democracy.» Crucial in this effort were business leaders. Some of these captains of industry went to Washington to coordinate the mobilization, while others led their companies to churn out weapons. In this way, the private sector won the war—or so the story goes. Based on new research in business and military archives, Destructive Creation shows that the enormous mobilization effort relied not only on the capacities of private companies but also on massive public investment and robust government regulation. This public-private partnership involved plenty of government-business cooperation, but it also generated antagonism in the American business community that had lasting repercussions for American politics. Many business leaders, still engaged in political battles against the New Deal, regarded the wartime government as an overreaching regulator and a threatening rival. In response, they mounted an aggressive campaign that touted the achievements of for-profit firms while dismissing the value of public-sector contributions. This probusiness story about mobilization was a political success, not just during the war, but afterward, as it shaped reconversion policy and the transformation of the American military-industrial complex. Offering a groundbreaking account of the inner workings of the «arsenal of democracy,» Destructive Creation also suggests how the struggle to define its heroes and villains has continued to shape economic and political development to the present day.
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Destructive Creation
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As the controversy over the Wheeler-Rayburn bill suggested, the Muscle Shoals fight had become part of a massive national political struggle over public enterprise. In the 1930s, a decade and a half after the end of Great War, progressive Democrats in Washington—now under the banner of the New Deal—were again making major intrusions into private industry. There were all sorts of public works and construction projects, built by several of the new “alphabet soup” of agencies. The largest of these, including the Civil Works Administration (CWA), the Public Works Administration (PWA), and the Works Progress Administration (WPA), each spent several billion dollars on construction. The PWA, which mostly paid private contractors to do the work, financed many big projects, including giant hydroelectric dams on the Columbia River in the Pacific Northwest. These operations were not entirely offensive, from the point of view of some businessmen, because they relied on private contractors. But the New Deal building agencies, like TVA, could also act as threatening rivals. The PWA actually worked hand in hand with the public power movement, by funding municipally owned electric utilities, some of which would buy electricity from the TVA or other public authorities.77 Even worse, from the point of view of private construction firms, was the use of “force account” projects, in which the government served as contractor and employer. This was the method often used by the CWA, and later by its successor, the WPA, which directly employed more than two million people at once. Both agencies were the subject of complaints about government competition, especially from private firms in the construction industry.78
The TVA, PWA, WPA, and other public enterprises were among the most powerful manifestations of the larger New Deal, which transformed the economic role of the national state. By the end of the 1930s, national government spending amounted to nearly 10 percent of GDP, almost triple what it had been in 1929. There were now one million civilian federal employees (leaving aside those employed temporarily by WPA), nearly double the number in 1930.79 The crisis of the Great Depression had helped usher in a more powerful, and more entrepreneurial, national state.
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