In the 1930s, Investment Banks Lobbied For Pro-Growth Policies

A blog about business and economics.
Nov. 29 2012 2:46 PM

In the 1930s, Investment Banks Lobbied For Pro-Growth Policies

In one fascinating passage of Jean Edward Smith's FDR he notes that as Roosevelt was considering ditching the gold standard, JP Morgan analysts concluded that this would be a pro-growth policy and lobbied for it:

Rising above conventional wisdom, J. P. Morgan and his partners, Thomas Lamont and Russell Leffingwell, worried about the unrest that continued to sweep the farm belt and believed a rise in commodity prices was essential to ensure the nation’s political stability. The fastest way to achieve that was to go off the gold standard and let the market set the value of the dollar. A cheaper dollar would make American farm products more attractive to foreign buyers, and the increased demand would raise domestic prices. Morgan and his partners were not idle spectators. They made whatever overtures they could to the administration through Treasury secretary Woodin and enlisted Walter Lippmann, the nation’s premier political analyst, in the cause. “Walter,” said Leffingwell over lunch in New York, “you’ve got to explain to the people why we can no longer afford to chain ourselves to the gold standard. Then maybe Roosevelt, who I am sure agrees, will be able to act.”

What this reminded me of is the work of Jan Hatzius, chief economist at Goldman Sachs, who's written in favor of NGDP targeting and generally taken an expansionary line on fiscal and monetary policy. The difference is that while Hatzius has written and talked about that stuff, Goldman Sachs hasn't lobbied for it. When Goldman CEO Lloyd Blankfein talks public policy, he's overwhelmingly pushing for his favored tax and regulatory agendas. Ordinary business lobbying stuff. That his bank publishes some analysis of the fundamental macroeconomic situation is totally incidental to Goldman's lobbying and government affairs efforts, which are focused on Goldman's bottom line.

By contrast Morgan, Lamont, and Leffingwell seem to have really put some muscle into trying—and ultimately succeeding—in getting unorthodox monetary policy measures enacted.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

Yes, Black Families Tend to Spank More. That Doesn’t Mean It’s Good for Black Kids.

Why Greenland’s “Dark Snow” Should Worry You

If You’re Outraged by the NFL, Follow This Satirical Blowhard on Twitter

The Best Way to Organize Your Fridge


The GOP’s Focus on Fake Problems

Why candidates like Scott Walker are building campaigns on drug tests for the poor and voter ID laws.

Sports Nut

Giving Up on Goodell

How the NFL lost the trust of its most loyal reporters.

Is It Worth Paying Full Price for the iPhone 6 to Keep Your Unlimited Data Plan? We Crunch the Numbers.

Farewell! Emily Bazelon on What She Will Miss About Slate.

  News & Politics
Sept. 16 2014 7:03 PM Kansas Secretary of State Loses Battle to Protect Senator From Tough Race
Sept. 16 2014 4:16 PM The iPhone 6 Marks a Fresh Chance for Wireless Carriers to Kill Your Unlimited Data
The Eye
Sept. 16 2014 12:20 PM These Outdoor Cat Shelters Have More Style Than the Average Home
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Slate Plus Video
Sept. 16 2014 2:06 PM A Farewell From Emily Bazelon The former senior editor talks about her very first Slate pitch and says goodbye to the magazine.
Brow Beat
Sept. 16 2014 6:23 PM Bryan Cranston Reenacts Baseball’s Best Moments to Promote the Upcoming Postseason
Future Tense
Sept. 16 2014 6:40 PM This iPhone 6 Feature Will Change Weather Forecasting
  Health & Science
Sept. 16 2014 4:09 PM It’s All Connected What links creativity, conspiracy theories, and delusions? A phenomenon called apophenia.
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.