http://crs.sagepub.

com/
Critical Sociology
http://crs.sagepub.com/content/29/3/393
The online version of this article can be found at:

DOI: 10.1163/156916303322591121
2003 29: 393 Crit Sociol
Tim Woods
Capitalist Class Relations, the State, and New Deal Foreign Trade Policy

Published by:
http://www.sagepublications.com
can be found at: Critical Sociology Additional services and information for

http://crs.sagepub.com/cgi/alerts Email Alerts:

http://crs.sagepub.com/subscriptions Subscriptions:
http://www.sagepub.com/journalsReprints.nav Reprints:

http://www.sagepub.com/journalsPermissions.nav Permissions:

http://crs.sagepub.com/content/29/3/393.refs.html Citations:

What is This?

- May 1, 2003 Version of Record >>

by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations, the State,
and New Deal Foreign Trade
Policy
*
TIM WOODS
(Trinity College)
ABSTRACT
In this paper, I focus on the political inuence of class
forces surrounding the 1934 Reciprocal Trade Agreements Act
(RTAA). The RTAA was instrumental because it shifted much
of the trade-policy process from Congress to the Executive
Branch. I nd that capitalist class relations had a great
impact on the development and passage of the RTAA. Despite
the concerns of capitalists from the nationalist segment over
their ability to inuence Executive Branch policy making, the
nationalist segment unied with capitalists from the increasingly
powerful internationalist segment and were successful in their
combined efforts to change the institutional arena within which
trade policy was formulated. This research bolsters support
for the class embeddedness perspective of trade policy as
portrayed in the works of Domhoff (1990), Prechel (1990),
and Dreiling (2000). Further, it contributes to this work by
explaining the historical foundation for the class embeddedness
of contemporary foreign trade policy debate as established by
capitalist class relations and changes in state organizational
structures during the New Deal.
*
The author would like to thank G. William Domhoff, Theresa Morris, Marty
Oppenheimer, and Harland Prechel, for their comments and suggestions on this paper.
Critical Sociology, Volume 29, issue 3 also available online
2003 Koninklijke Brill NV, Leiden www.brill.nl
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
394

Woods
Introduction
While social scientists are increasingly interested in contemporary trade
policy processes such as the North American Free Trade Agreement
(NAFTA) and the inuence of trade policy on business, labor, and
environmental groups (e.g. Conforti 1995; Russell 1995; Dreiling 2000),
there is little sociological research examining the historical evolution of
the state institutional structures governing contemporary trade policy. If
business dominates contemporary trade policy through facilitative state
structures (Dreiling 2000:41-2), what are the historical organizational
processes leading to the class embeddedness of these state structures? In
this paper, I nd that the foundation of class embeddedness surrounding
current trade policy is explained by changes in the organizational
relations of trade policy during the New Deal era. Thus, I focus on the
political inuence of class forces surrounding the 1934 Reciprocal Trade
Agreements Act (RTAA).
Most scholars agree that the New Deal period marked a major
restructuring of the state-society relationship regarding domestic policy. As
a result, sociologists have written much about the 1930s economic crisis
and subsequent attempts to resolve the crisis through domestic industrial
and welfare policy. While providing important theoretical and empirical
insights into this historical period, most sociological research on the New
Deal is limited to domestic policy to the exclusion or limitation of foreign
policy (e.g., Levine 1988; Finegold and Skocpol 1995). Less well known or
understood, but just as important, the New Deal included legislation that
dramatically altered the states organization of foreign trade and investment
policy and, as a result, affected the relationship between state managers
and social movement organizations in the foreign policy arena. Because
of the lack of research into this topic, we know little about the nature of
New Deal organizational changes on trade policy and even less about the
economic and political forces that produced them.
Of the limited research addressing foreign policy components of the
New Deal, most scholars pursue a statist objective that leads them to ignore
class forces (e.g., Haggard 1988; Goldstein 1993). By producing a detailed
analysis of the political origins of the RTAA, I hope to shed light on
the political-organizational origins of contemporary class embedded trade
policy. I examine the political struggles leading to the 1934 Reciprocal
Trade Agreements Act and analyze the effects of class forces in that
struggle.
The RTAA is a pivotal act in the history of U.S. trade policy.
In fact, most trade analysts identify the shift in trade policy power
from Congress to the executive branch [occurring during the New
Deal] as the single most important change in the institutional history
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

395
of U.S. trade policy (Rhodes 1993:53). American nancial capitalists
and some members of the Roosevelt administration viewed trade policy
expansion as the most important New Deal legislation and the key to
domestic (and world) economic recovery. Inuenced by the international
economic crisis of the Great Depression and the increasing power of
internationally oriented American nancial capitalists, the RTAA altered
the organizational structure of the state by rationalizing decision making
over trade policy. New Deal trade policy is an important research topic to
sociologists given the above issue and for at least two other reasons. First,
organizational changes contained in New Deal policy changed the trade
policy process, thus affecting the nature of the state-society relationship for
the rest of the century. In response to shifting relations among capitalist
segments and the economic crisis of the Great Depression, this Act created
major changes in the organization of trade policy within the state. With
its passage of the RTAA, Congress relinquished control over trade policy
to the Executive Branch. Originally proposed and passed as a temporary
measure to aid the state in dealing with the economic crisis, Executive
Branch authority over trade policy continued after the New Deal and
became the dominant institutional structure characterizing the relationship
between capital segments and the state in the post-WWII trade policy
arena. Thus, any sociological understanding of current politics of domestic
trade policy (e.g., Dreiling 2000) relies on an historical awareness of the
politics of trade during the New Deal period.
Second, it was partly through this policy that the internationalist
business segment established its hegemony within the U.S. state and global
economy. While not unconstrained, the institutional relationship between
the internationalist business segment and the Executive Branch established
by the RTAA played an important role in the creation of the General
Agreement on Trade and Tariffs (GATT) and the overall expansion of
U.S. foreign policy during the post-WWII era.
In this research, I analyze archival documents in order to examine
the role that capitalist groups played in the creation of New Deal trade
policy. First, I examine the historical environment preceding the New Deal
era. Specically, I discuss the growth of an internationalist segment of
American capital oriented toward foreign trade expansion, alongside a
congressionally entrenched and powerful nationalist segment. Second, I
examine the evolution of foreign trade policy as a major New Deal policy
aimed at ending the capital accumulation crisis of the Great Depression.
I trace the early development of foreign trade policy initiatives to capitalists
within the internationalist segment and examine the relationship between
this segment and state managers within the Executive Branch. Third,
I focus on the role of the powerful nationalist segment in limiting New Deal
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
396

Woods
trade policy and the effects of this segment, especially within Congress, on
the policy process. Lastly, I examine the trade policy outcome (i.e., RTAA)
as an attempt by the state to mediate the conict over foreign trade policy
between the internationalist and nationalist capitalist segments.
Theory
State Autonomy Approach
The dominant model of American foreign policy is one of an autonomous
state. While social scientists tend to characterize the American state as
a relatively weak state in other policy arenas, they point to foreign
policy as the one exception (Krasner 1978:75). For example, Feingold and
Skocpol have argued that while the US bureaucracy tends to be weak,
this generalization does not t American foreign policy branches that are
characterized by persistent traditions of independent and effective action.
(1995:53).
The autonomy of American foreign policy vis--vis domestic policy is
rooted in the organization of decision making across state structures (Kras-
ner 1978:55-90). State autonomy research contends that Congressional de-
cision making is more open to and dependent on the inuence of specic
societal groups. In contrast, decisions within the Executive Branch reect
the lack of dependency of this branch on specic societal groups (Krasner
1978:75, 86). With the autonomy that the Executive Branch instills from
specic societal groups, Executive Branch ofcials are able to overcome
foreign policy disagreements between businesses (or other conict groups)
in order to arrive at policies that reect the collective interests of the nation
(i.e., national interest).
Further, most state-centered researchers view the New Deal as an
important juncture in the rationalization of trade-policy decision-making.
State-centered researchers argue that Congress was increasingly burdened
by the complexity of the international and domestic economic environment
during the New Deal. As a result, state managers developed a program
to rationalize foreign policy decision-making by shifting the locus of the
conceptualization of trade policy to the bureaucratic structures of the
Executive branch. Proponents of New Deal trade policy rationalization
argued that, like other forms of bureaucratization (see Beetham 1987:60),
shifting decision making to the Executive Branch would increase the
states ability to coordinate action over a large geographic area and
would lead to a continuity of operations within foreign policy. Most
importantly, rationalization of trade policy would end the inuence of
specic businesses or business sectors because the Executive Branch would
operate autonomously from these demands.
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

397
Feingold and Skocpol (1995:53) argue that state autonomy often
emerges in the circumstances of particularly critical periods. This holds
specic signicance for my present study because state-centered researchers
often look to the economic crisis of the Great Depression and the resulting
political crisis of the New Deal as historical evidence of increasing state
autonomy. Along these lines, Krasner (1978:87) uses the 1934 Reciprocal
Trade Agreement as his primary example of the shift toward state
autonomy during the New Deal. Krasner argues that as a result of the
Great Depression, political leaders developed new visions concerning
foreign policy and the national interest (1978:87). These new visions led
to changes in the organization of foreign policy decision-making and to
changes in the relative inuence of political groups in the trade policy
process (Krasner 1978:87). Under Congressional decision-making, foreign
trade policy reected the multiple and contradictory demands of specic
industries and businesses. Following the 1934 RTAA, however, foreign
trade policy was established by the Executive Branch and, thus, reected
the national interests.
State-centered research provides much insight into the sociology of
New Deal trade policy by focusing on individual state managers and
organizational structures within the state and their impact on decision
making. However, this research tends to overlook evidence pointing to the
inuence of business and other groups in state policy making during the
time period.
Class Dominance Approach
While recent sociological research (Dreiling 2000) has shed light on the
class-embedded nature of contemporary trade policies such as the NAFTA,
there exists little research into the precise nature of class conict and
business inuence over New Deal trade policy. While hypothesizing that
class forces played an important role in New Deal trade policy, class
dominance theorists have stopped short of documenting this inuence
(e.g., Domhoff 1990:210; Freiden 1988). As Domhoff (1990:210) has noted,
Although there is no detailed study of the involvement of private groups
in the creation of the Reciprocal Trade Act, there is evidence that
internationalist business leaders enthusiastically supported the Act.
Recent improvements in the class dominance approach may provide a
more detailed and complete understanding of trade policy by focusing on
the intersection of state institutions and business power. This class embed-
dedness model of political sociology focuses on the precise relationships
between actors and organizational structures within the state and power-
ful non-governmental organizations (NGOs) attempting to inuence state
policy. The class embeddedness model (see Domhoff 1990; Prechel 1990;
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
398

Woods
Akard 1996; Skidmore & Glasberg 1996; Dreiling 2000) moves beyond the
state-society dichotomy by focusing specically on the processes through
which class relations become embedded in state organizational structures.
Thus, while the state-centered model explains New Deal trade policy
as a reection of political-organizational forces within the state, the class-
embeddedness model shows that organizational structures within the state
are important not because they ensure state autonomy as state-centered
arguments suggest (Skocpol 1980, 1985), but rather because they provide
the means for . . . class segment[s] to exercise control over the state
(Prechel 1990:664). The present study expands upon this later point by
focusing on the historical convergence of class forces and their role in the
creation of state structures that facilitate business interest in trade policy.
Domestic Trade Politics: Historical Background
Between World War I and World War II a new class segment emerged
among American capitalists (Freiden 1988). This class segment, aligned to-
ward international trade and investment, signicantly altered the domestic
politics of trade policy. Trade-policy politics became characterized by con-
ict between two capitalist class segments: (1) an internationalist segment
oriented toward expanding foreign trade and investment and (2) a nation-
alist segment that, while not expressly opposed to foreign trade, desired to
protect the U.S. market from foreign products when these products threat-
ened domestic industry (Domhoff 1970). It is within this environment of
emerging class conict between capitalist segments that major trade pol-
icy changes were formulated and eventually implemented within the U.S.
state. These changes in trade policy represent one component in a larger
effort by both business and the state to expand capital accumulation during
the New Deal period (see Levine 1988).
World War I marked the beginning of the United States as the worlds
key supplier of foreign capital.
1
While European bankers had dominated
foreign nancial markets before the war, WWI eroded their ability to
provide investment capital both to their domestic industries and to foreign
nations. As a result, while some U.S. companies were heavily involved
in foreign markets before this period, foreign dependency on U.S. capital
greatly expanded during and following WWI (Block 1977a:12-31; Arrighi
1
Although an internationalist segment had existed among American capitalists since the
beginning of the nation, it was not until World War I that this group consolidated its power
over foreign markets and, thus, increased its political power over the state. Before the war,
European capital dominated international investment markets mostly through a system of
colonial rule. The hegemony of European capital thus limited the ability of American
capital investments to expand before World War I.
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

399
et al. 1999). The most prominent organization assembled by American
capitalists to expand U.S. nancial interest abroad was the American
International Corporation (AIC). National City Bank founded the AIC in
1915 and controlled the organization through fty-percent stock ownership.
However, many prominent American businesses were also involved in
providing capital for and directing the organization, including General
Electric, Great Northern Railway, W.R. Grace & Co., International Nickel,
the Rockefeller family, Westinghouse Electric, and AT&T, among others.
2
In founding the AIC, Frank Vanderlip, President of National City Bank,
declared, We have the opportunity now to become the wellspring of
capital for the world. Anxious hands are reaching towards the U.S. from
every corner (cited in Scheiber 1969:500).
Besides banking, large American industrial corporations also expanded
their foreign investments during the 1920s.
3
By 1929, American mining
and petroleum producers had nearly eighteen percent of their xed capital
investments in the form of foreign direct investment. Similarly, automobile
producers held almost fteen percent of their assets in foreign direct
investments (Freiden 1988:65).
The expansion of American overseas investment and loans during WWI
greatly inuenced the trade policy process. Conict over trade policy
between capitalist segments dramatically increased. Because of their loans
and investments in Europe, U.S. international nanciers desired expanded
foreign trade. In order for foreign countries to gain the dollars they needed
to repay their loans to U.S. investors, foreign corporations would need
increased exports to the U.S. market. As a result, capitalists within the
American nancial segment were more concerned with lowering American
tariffs on imports from foreign countries than they were with lowering
foreign tariffs on American produced goods. As Dwight Morrow of J.P.
Morgan & Company explained:
I believe that the exports from the United States to Europe must gradually
diminish and the imports from Europe must increase. . . At a time when we
are complaining of the high cost of living we should welcome an increase of
our imports of those things that Europe can make for US better than we can
2
Other individuals, corporations, and/or organizations supporting or investing in
the AIC include: U.S. Steel; National Foreign Trade Council; Berwind-White Mining
Company; Secretary of Commerce, William Redeld; Herbert Hoover, Director General
of Relief for Europe; Assistant Secretary of Treasury, Norman Davis, bankers Otto Kahn
and Paul M. Warburg, among others (Wilson 1971).
3
One factor, among many, in the expansion of foreign direct investment by American
multinational industrial-sector corporations was the ability to circumvent existing tariff
barriers by locating production facilities overseas (Freiden 1988:65).
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
400

Woods
make them for ourselves. (New York Times Oct. 24, 1919, cited in Abrahams
1969:580).
However, the expansion into foreign markets was not equally distributed
across all industries. By the end of this historical period (i.e., 1914-1929),
most American companies had little or no stake in the international
economy. With the exception of automobile, electrical appliance, rubber
and chemical producers, most American manufacturers produced only for
the domestic market (see Freiden 1988). Because of their limited foreign
investments, the nationalist segment of American capital pressured the
state to restrict foreign trade, especially during economic recessions when
increasing European competition with American goods were pointed to as
the cause of stagnation for domestic industrial producers.
The end result of the expansion of U.S. loans, foreign direct invest-
ments, and trade to foreign countries between the WWI and 1929 period
was a strengthened gap between a newly formed internationalist segment
and an established and powerful nationalist segment of American business.
Composed of American based multinational manufacturing and nancial
corporations supplying capital to foreign countries, the internationalist seg-
ment pressed for the liberalization of U.S. foreign policy in order to pro-
tect and/or expand their interests abroad. Alternatively, those domestic
business organizations without signicant international operations or those
dependent on domestic markets (e.g., steel, foodstuffs, and rubber) desired
foreign policy designed to protect their interests from foreign competition.
These two groups dened the political debate over trade policy during the
1930s.
The Smoot-Hawley Act
What began as a political move in Congress to aid weakened domestic
agricultural producers in the mid-1920s quickly expanded to encompass
most business segments, as capital accumulation diminished following the
stock market crash of 1929. One of the rst responses of capitalists within
the nationalist segment was to propose an expansion of the protectionist
agricultural tariff policy to other economic sectors as an effort to shore
up the increasingly volatile domestic economy. Because Congress had
been revising tariff policy for agriculture, Congressional representatives
and nationalist business organizations saw the evolving tariff policy as a
chance to tack on relief for their industries as well. Thus, what began as a
rather minor policy goal aimed at promoting capital accumulation in one
segment (i.e., agriculture) evolved into the most infamous trade policy in
U.S. history, the Smoot-Hawley Act. The policy process encompassing the
passage of this act is referred to as a favorite case in pressure-politics (see
Schattschneider 1935).
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

401
Capitalists from across the nationalist segment mobilized in support of
tariff increases, and many participated directly in Congressional hearings
on the Smoot-Hawley Act. In contrast, the internationalist segment
opposed the Smoot-Hawley Act because, as they explained, tariff barriers
at home did not accord with Americas postwar creditor position, would
not facilitate repayment of debts owed the United States, and did not
encourage the expansion of foreign markets (Wilson 1971:80). However,
despite their growing power in international markets after WWI, at this
historical juncture the internationalist segment was still relatively weak
in comparison to domestic industry composing the nationalist segment
(Freiden 1988).
Through the concerted political efforts of individual corporations and
trade organizations in the nationalist segment (e.g., American Tariff
League), the Smoot-Hawley Tariff Bill amended tariff rates on over
twenty thousand items, almost all of them increases (Pastor 1980:77-
78). Despite protests from domestic importers, American corporations with
foreign interests, and the American banking industry, Congress passed
the Smoot-Hawley Bill in June 1930. Following the same foreign policy
prescriptions as the Smoot-Hawley Act (and somewhat in reaction to the
policy), other nations enacted similar protectionist trade policy provisions.
International trade restrictions combined with world economic declines to
sharply reduce trade ows in the early 1930s. U.S. exports declined from
$5.4 billion in 1929 to $1.6 billion in 1932 (Ratner 1972:54). The League
of Nations reported that the total volume of goods exchanged between
[world] countries has diminished by about thirty percent in comparison
with 1929 (Ratner 1972:54). Whether seen as a cause or consequence,
foreign trade policy played an important role in the economic crisis of the
Great Depression.
Class Politics and the Making of New Deal Trade Policy
Nationalists Continue to Press for Protection
Throughout the Depression, nationalist organizations with long-standing
political power within Congress continued their pressure on state ofcials
for trade protection. The same businesses had played an instrumental role
in the establishment of the protective Smoot-Hawley Act. The increasing
severity of the Great Depression only increased this segments resolve to
protect its industries from foreign competition. The nationalist segment
continued its political pressure against free trade by mobilizing through
collective organizations such as the National Association of Manufacturers
(NAM). At this time, the members of both the U.S. Chamber of Commerce
and the NAM were wrestling over the internationalist/nationalist conict
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
402

Woods
(Wilson 1971:75-6). However, with their membership historically tied to
industrial corporations (Levine 1988) these organizations continued to
oppose global trade expansion at this historical juncture. H.L. Derby,
chair of the tariff committee of the NAM, responded to the internationalist
segments demand for trade expansion by explaining that the NAM was
unilaterally opposed to any renewal of tariff tinkering in Congress (New
York Times, May 11, 1931:36). The NAM explained:
In the past a high tariff has not prevented the importation of foreign goods,
but a protective tariff does have the result of raising the standard of living
of American workmen and the resulting purchasing power in turn always
results in increased importation. The exible provisions of the 1930 Tariff
Act constitute a forward step in tariff administration which the nation cannot
surrender without setting the industrial progress of the nation back many years.
(Letter reprinted in the New York Times, May 11, 1931:36)
In December of 1931, the NAM came out again openly opposed to tariff
reductions. The organization attacked proposals for tariff reductions as
absurd and unthinkable (New York Times, Dec. 7, 1931).
The Internationalist Segment and the New Deal
By the early 1930s, the political effectiveness of the internationalist segment
began to increase at the same time that their ties to the state were
further entrenched. These events, coupled with Roosevelts appointment
of outspoken free-trader Cordell Hull as Secretary of State, became crucial
factors affecting trade policy during the New Deal period. While many
capitalists originally argued that the economic downturns were temporary
and required little, if any, state intervention, by 1931 business organizations
began pressuring the state to develop policies to restore conditions to ensure
an adequate rate of capital accumulation.
In May of 1931, capitalists from the internationalist segment mobilized
politically in an effort to cut tariffs and stimulate capital accumulation.
The Council for Tariff Reductions was formed by a group of prominent
manufacturers, economists and lawyers in an effort to politically mobilize
the capitalist class toward trade expansion (New York Times, May 7,
1931:1). Further, both the National Association of American Importers and
Exporters and the American Importers and Exporters Association called
for Congress to hold a special session wholly devoted to tariff cuts (New
York Times, May 31, 1931:Sect II, p. 11).
In December of 1931, the American Exporters and Importers Associ-
ation drew up their proposal for trade expansion. Their plan was based
on the expansion of domestic capital accumulation through the absorption
of surplus production by expanding foreign markets. The group proposed
that the quickest and safest way to advance this policy was to move the
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

403
trade policy process from Congress to the Executive Branch. Only in the
Executive Branch could foreign policy operate in the national interest,
as the President would be isolated from the inuence of special interest
groups plaguing Congressional policy making. Joseph Allen, representative
of the association, explained:
It is useless to expect any remedial action through . . . [Congress]. The minute
such a move is started groups representing special interests will wheel into
action. A long-drawn-out battle with no conclusive results will ensue. On the
other hand, a bill authorizing the President to negotiate special tariff treaties,
subject to ratication by Congress, stands a good chance of passing. Some
plan must be worked out quickly if huge surpluses, proving important factors
in blocking resumption of normal business, are to be sold in international
markets. [The surplus production] must be sold abroad in the near future if
business is to revive. It cant be marketed now because most nations incensed
at our tariff policy, have erected trade barriers against us. (New York Times,
December 20, 1931:19)
The National Foreign Trade Council, the National Automobile Chamber
of Commerce, the American Manufacturers Export Association, and
the Foreign Commerce Club of New York each issued statements of
support for the reciprocal tariff policy (New York Times, July 27, 31 and
Oct 20, 1932). Organized in 1914, the National Foreign Trade Council
(NFTC) was one of the most important organizations inuencing the
Executive Branchs New Deal monetary and trade policy. During the
Wilson Administration, the NFTCs close connections to Secretary of
Commerce William Redeld had made it the nations most inuential
association for trade promotion (Kaufman 1971:350).
4
Internationalist Inuence and the Roosevelt Administration
In response to pressure from the internationalist segment, the Executive
Branch began exploring ways to stimulate capital accumulation while
mediating conict over trade policy between the internationalist and
nationalist segments of capital. The Roosevelt Administration concentrated
initially on domestic policy responses to the economy. Early on, the
conict over national versus international interests was embedded within
the Administration. During the First One Hundred Days, the Roosevelt
Administrations solution to the Great Depression came in the form
of the National Industrial Recovery Act (NIRA) and the Agriculture
Adjustment Act (AAA). Both of these acts were aimed at improving
the domestic economy by means of strict state control over domestic
4
Prior to serving as Secretary of Commerce for Wilson, Redeld was the past president
of the American Manufacturers Export Association (Whoss Who in America 1932:1910).
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
404

Woods
production. Neither act reected the interests of internationalist business
groups. However, as the internationalist segment increased pressure on the
state to expand trade, the network of relationships between the Roosevelt
administration and important capitalists within the internationalist segment
became increasingly evident, and President Roosevelt himself gravitated
toward his Secretary of State for trade policy provisions.
5
Prior to entering ofce, Roosevelt selected Senator Cordell Hull to be
the administrations Secretary of State. As a Congressional representative
from Tennessee and as a Democratic Party ofcial, Hull had been an
outspoken opponent of the Smoot-Hawley Act and believed that the act
was the primary factor leading to Americas economic crises. He had
long rallied Congress for the expansion of free trade and believed that
its expansion would lead to both economic prosperity and international
peace.
6
The Democratic Party had long proposed trade expansion.
However, outgunned by the economic and political strength of domestic
industrialists, Democrats were limited in their efforts by the ties of domestic
industrialist to the Republican Party. For this reason, US trade policy
veered toward sector specic protection, especially during periods of
contractions in capital accumulation (e.g., Smoot-Hawley Act).
The political strength of Democrats changed during the New Deal
period not only because domestic industrialists lost political power over
the state as their prots declined (Block 1977b), but also because of
the important links that the Roosevelt Administration (and especially
Hull) forged with the increasingly powerful nancial capitalists. As a
Democratic Senator from the rural South and Chair of the Democratic
National Committee, Hull epitomized the Democratic Partys stance
toward expanded world trade. However, Hulls stance in support of free
trade went well beyond his personal convictions. Also important was the
Secretary of States strong personal ties to members of the increasingly
powerful internationalist segment of American business.
Perhaps the most indicative and politically important of the extensive
network between internationalists and the Roosevelt Administration was
Hulls connection to Norman H. Davis, the inuential New York banker
and soon-to-be President of the Council on Foreign Relations. In fact, it
was Norman H. Davis who urged Hull to take the Secretary of State post
5
For accounts of the national/international split within the early Roosevelt adminis-
tration and the processes through which the internationalists became entrenched, see the
personal accounts of Secretary of State, Hull (Memoirs), and the AAA administrator, George
Peek (1936).
6
Interestingly, Cordell Hulls free-trade philosophy was spurred partially by his reading
of the works of the famous sociologist William Graham Sumner (Hull 1948:147).
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

405
after being offered it by Roosevelt (Hull 1948:157).
7
Norman Davis was
a fellow Tennessean and Secretary of State Hull counted him as one of
his closest friends (Hull 1948:157). He reports that Norman Davis had
frequent and thorough access to and inuence over the Administrations
foreign policy agendas and meetings. In fact, the Administration sent
Davis as a U.S. representative to the organizing committee of the London
Economic Conference in 1933, where he and Hull, with the Presidents
concurrence, proposed a temporary tariff truce among all member nations
(Hull 1948:249). More than any other single capitalist, it appears that
Norman Davis had signicant inuence over the Administrations trade
policy proposals. In his Memoirs, Hull explains that,
He [Norman Davis] would come in on any conference I was having . . . and
shed some light upon it. He came and went in that fashion. He would push
the door open, see whether I was engaged, and in ordinary proceedings would
always come in. He occupied a unique position, was a great help, never for
an instant gave away a secret, and could be sent anywhere. (Hull 1948:224)
Borrowing heavily from the recommendations of the American Importers
and Exporters Association and the National Foreign Trade Council, in
June of 1932, Hull publicly announced that trade expansion was a goal of
the Presidents New Deal program. However, he explained that this goal
could only take place if the Executive Branch was given authority from
Congress on trade issues. Hull expressed the idea that once the Executive
Branch had such authority,
[t]he New Congress and the President would then cooperate within their
respective functions in the combined task of lowering customs duties and
establishing liberal commercial policy. The President on his part would
negotiate tentative reciprocal or bargaining arrangements or agreements for
tariff concessions or reductions, both general and special. (New York Times,
June 2, 1931:27)
Under the U.S. Constitution, American foreign-trade policy was originally
structured such that Congress would authorize custom duties and the
Executive Branch would make foreign treaties with the advice and
consent of Congress (Eckes 1995). Article I, Section 8 of the Constitution
7
Norman H. Davis had a long history of ties to the state and was, perhaps, the most
important nancial capitalist with ties to the state in the post-war Era. After organizing
and serving as President of The Trust Co. of Cuba, in 1917 he became advisor to the
Treasury Department. He later served in the Wilson Administration as Financial Advisor,
Under-Secretary of State, Delegate to the League of Nations, and a Delegate to the 1927
and 1932 Economic and Disarmament Conferences in Geneva, Switzerland (Whos Who in
America 1932:666).
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
406

Woods
grants Congress direct responsibility over the content of bilateral and
multilateral trade agreements (Audley 1997:25). Any treaty negotiated by
the Executive Branch would have to be approved by the Senate, and only
Congress could adjust tariff rates (Eckes 1995:10).
Prior to New Deal legislation, the Executive-Congressional relationship
on trade policy was conducted as set out in the Constitution. The President
could (and often did) make recommendations to Congress and could meet
with other nations regarding foreign trade. However, exchanges between
business organizations and the state took place through Congressional
representatives and public hearings by Congressional committees, as
exemplied by the Smoot-Hawley Act. In the end, all tariff changes came
down to a nal vote in the House and Senate.
At their national meeting on April 27, 1933, the National Foreign Trade
Council developed a report entitled Essential Principles and Mechanisms for
a Reciprocal Tariff Program. The thrust of this framework included major
changes to be made in the organization of trade policy. The Council
proposed that Congress grant to the Executive Branch the authority to
make trade policy decisions and that these decisions become law without
the prior ratication of Congress. Further, the Council proposed that the
Executive Branch trade policy be based on both the most favored nation
rule and take place as reciprocal agreements between two or more nations.
As the Councils report explained:
History shows very few cases of successful outcome when reciprocal tariff
treaties required Congressional ratication. Moreover, with such power
denitely delegated to the executive branch of government, the President or
his representatives would be in a much stronger position in negotiations with
foreign governments. . . Finally, this method would avoid the frequent opening
up of the tariff issue in Congress with every reciprocal treaty negotiated and
the danger of conict of local tariff interests submerging the broader national
interests by which the executive branch of the government would presumably
be guided in its treaty negotiation. (New York Times, April 16, 1933, Sec2:15)
Thus, the National Foreign Trade Council wished to promote international
trade as a remedy to the depression and pressured the state towards this
agenda. Further, the organization promoted the idea that, in order for
effective trade expansion to take place, a reorganization of the trade policy
processes was required. The trade policy process should be shifted from
Congress to the Executive Branch, wherein the broader national interests
would be considered.
While there had been numerous business organizations pressuring the
state for trade expansion in the early 1930s, there was no overarching
organization to unify the internationalist segment. In September of 1933,
capitalists from the internationalist segment combined their political efforts
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

407
towards trade expansion into one policy formation organization. Gardner
Harding, secretary of the National Foreign Trade Council announced that
beginning October 1, 1933, the Organization of the National Federation of
Foreign Trade Associations (National Federation) would begin functioning.
This new organization would unite existing organizations in order to
more effectively unify the internationalist segment around the trade agenda
established by the National Foreign Trade Council (New York Times, Sept.
11, 1933:32). One of the rst actions of the National Federation was
to petition the State Department for the negotiation of reciprocal trade
agreements and the reduction of tariffs and secondary levies on U.S.
exports abroad (New York Times, Oct. 15, 1933, II:15).
Business pressure on the Administration combined with Secretary of
State Hulls trade agenda to move the administration toward advancing the
pace of the trade policy agenda within the state. In response, on November
11, 1933, President Roosevelt appointed an Executive Committee on
Commercial Policy to write a new tariff bill. The committees proposed
measures represent one of the most important historical turning points
in U.S. trade policy. Reecting on the policy process that led to
the protectionist Smoot-Hawley Act, capitalists from the internationalist
segment combined efforts with Secretary of State Hull and others within
the Roosevelt administration to identify the organization of trade-policy
decision making as the most important block standing in the way of free
trade.
In accordance with the administrations New Deal framing of the trade
problem, most historical sources describe the policy process surrounding
the Smoot-Hawley Act as exemplied by organizational inefciency in the
Congressional decision-making structure (see Schattschneider 1935). The
collegial organization of Congress and the fact that business groups were
easily able to use ties with Congressional representatives in their districts to
pressure them for trade protection led to the logrolling of Congressional
trade policy. Once one corporation or industrial group received protection,
other corporations pressured for their own protection, as illustrated by the
Smoot-Hawley Bill.
The Roosevelt administration thus followed the rhetoric of the inter-
nationalist segment by proposing that the aim of changes in the trade
policy process was to overcome the inefciencies in Congressional decision-
making in order to ensure the national interests. From the internationalist
segment and the Administrations viewpoint, the only way to accomplish
this goal was to rationalize the organization of trade policy decision mak-
ing. As was stated in the NFTCs report to the administration, this was the
way that all other nations were advancing their economic interests, and it
was the only way for the United States to do the same.
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
408

Woods
The Roosevelt proposal asked Congress to shift the trade-policy process
to the Executive Branch (U.S. Congress, House 1934a). The administration
outlined several reasons that Executive Branch authority was needed in
trade policy (U.S. Congress, House 1934a). First, the decline in world trade
since 1929 was a major factor in the decline of the domestic economy. The
contraction of world trade has meant idle hands, still machinery, ships
tied to their docks, despairing farm households, and hungry industrial
families. Equally clear is the fact that a full and permanent domestic recovery
depends in part upon a revived and strengthened international trade (U.S. Congress,
House 1934a:1, emphasis added). Second, the Administration argued that
America risked being shut out of world markets if it did not quickly adopt
reciprocal trade agreements. Other nations were increasing their share
of international trade through reciprocal trade agreements, and, without
similar policies in the US, the government could not adequately protect
US economic interests (U.S. Congress, House 1934a).
Roosevelts trade policy proposal was responsive to the interests of the
internationalist capital segment. It was written to convey the sense that
this shift in the organization of trade policy was meant as an emergency
measure. Further, it was to be seen as one part of the larger recovery
program. The proposal stated that this was an emergency program
necessitated by the economic crisis and that in the execution of this
program the Executive must pay due heed to the requirements of
other branches of our recovery program, such as the National Industrial
Recovery Act (U.S. Congress, House 1934a). On March 2, 1934,
President Roosevelt sent the proposal to Congress. With it, he explained
that, [f]or this reason any smaller degree of authority in the hands
of the Executive would be ineffective. The executive branches of all
other important trading countries already possess some such power (U.S.
Congress, House 1934a).
In summary, the Roosevelt administration was convinced by members
of the internationalist capital segment and the State Department that for-
eign trade policy was directly linked to domestic economic recovery. Inter-
nationalist business organizations had been pressuring the administration
toward foreign-trade expansion prior to Roosevelts election. Further, the
administrations proposal to shift the trade-policy process to the Execu-
tive Branch mirrored earlier proposals sent to the administration by the
organizations representing the internationalist segment. However, the ad-
ministrations proposal for trade-negotiation authority was dependent upon
Congressional ratication, and a powerful nationalist segment of American
business opposed such measures in Congress.
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

409
Congressional Mediation and the Relinquishment of Trade
Authority
The Congressional hearings surrounding the 1934 Reciprocal Trade
Agreements Act differed dramatically from the Smoot-Hawley hearings
conducted only a few years earlier. First, far fewer business organizations
directly participated in the 1934 Congressional hearings. Further, the
Congressional interaction with business groups included only two scheduled
hearings, the rst before the House Ways and Means Committee (March
8-24, 1934) and the second before the Senate Finance Committee (April
26-May 1, 1934).
During these limited Congressional hearings, the internationalist seg-
ment combined with members of the Roosevelt administration (particularly
Secretary of State Hull) to pressure Congress to support the RTAA. The
major point articulated by the internationalist segment and the Adminis-
tration was that the act was an emergency measure needed to stimulate
domestic capital accumulation. State Department ofcials combined with
the internationalist business segment to promote foreign trade as the key
cause of the world wide economic downturn. Internationalist organizations
thus argued that by passing the Smoot-Hawley Act, Congress had con-
strained foreign trade to such a limit that economic depression resulted.
Therefore, if the contraction of foreign trade was a cause of the depres-
sion, it followed that the expansion of foreign trade was a key factor in
stimulating domestic, as well as world, economic production.
In this way, the economic crisis of the Depression provided internation-
alist business organizations with an opportunity to advance their economic
interests. Finding lack of foreign trade as the key factor in the domestic eco-
nomic downturn allowed these groups to argue that their business interests
were aligned with the national interests. Further, aligning their interests
with the national interests allowed them to argue for a change in the
trade-policy procedures from Congress to the Executive Branch. As they
argued, it was the Congressional policy-making process that was the root
problem and cause of the protectionist policies under the Smoot-Hawley
Act. Thus, not only did the internationalist segment and the Executive
Branch assert that foreign trade expansion was needed for domestic eco-
nomic recovery, they also asserted that a change in the location of the
policy-making process from Congress to the Executive Branch was the
only method of politically ensuring foreign trade expansion.
Emergency Measures
Noting the severity of the Depression, Congress had already taken steps
to relegate to the President emergency controls over domestic and foreign
economic policy provisions. Passed by Congress in June 1933, Section 3(e)
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
410

Woods
of the National Industrial Recovery Act (NIRA) provided the President
with the authority to control imports in an attempt to insulate the domestic
economy from external markets. Following this logic, the Executive Branch
as well as capitalists from the internationalist segment pressured Congress
to provide the administration with the same emergency powers over all
trade policy provisions. Their strategy in gaining Executive authority was
to convince Congress that foreign trade policy was central to the recovery
of the domestic economy. Thus, Harry Tipper, Executive Vice President
of the American Manufacturers Export Association (AMEA), testied:
We [the AMEA] believe that it is of the utmost importance to this country,
the nal key to the recovery of our prosperity, and that it should be handled
for all the citizens of the country, examined from its capacity to produce
employment and income for the citizens. We believe that the President
and his advisors are in a particularly favorable position to deal with the
subject from this standpoint. . . [Further,] we believe that these matters can
be handled only when the executive is granted this authority. . . The supreme
importance of developing our foreign trade, to establish the recovery by
providing employment to our citizens, calls for the immediate action and
we, therefore, respectfully urge . . . the desirability of providing the President
with these powers, so that he can proceed immediately with the completion of
negotiations with other nations. (U.S. Congress, House 1934a:267)
Administrative ofcials and internationalist business organizations before
the Senate Finance Committee hearings echoed the same sentiment. For
example, the National Council of American Importers supported foreign
trade as emergency legislation aimed at ensuring domestic economic
recovery (U.S. Congress, Senate 1934:300).
In response to critics who noted that U.S. exports included only
around eight to twelve percent of total national economic output,
the American Manufacturers Export Association provided even stronger
arguments for the role of foreign trade expansion in domestic recovery.
The organizations representative recognized the general accuracy of the
minimal dollar amount of exports compared to the total domestic output.
However, he went on to argue that the ofcial statistics did not accurately
reect the signicant impact of foreign trade on the nations economic
viability:
Foreign trade is an integral part of [the nations] economic fabric [and, as
such,] it cannot be segregated from the commercial life of the Nation as a
whole . . . it is of vital importance to every economic segment. [In summary,]
if the foreign trade of the United States does not develop, but diminishes, the
economic structure will bleed seriously, with the resulting waste of purchasing
power and lower standards of living. (U.S. Congress, Senate 1934:301)
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

411
Arguing before the Senate hearings on the bill, Secretary of State Hull
explained that the bill was meant as an emergency measure. Its support
[in Congress] is only urged as an emergency measure to deal with a
dangerous and threatening emergency situation. It should be acted upon
in that light (U.S. Congress, Senate 1934:5).
Unifying Capitalist Segments
While capitalists from the nationalist and internationalist segments were
in disagreement over foreign trade expansion, both segments supported
efforts to reorganize the trade negotiation process. Both segments unied
around policies to provide the Executive Branch with trade negotiating
power, although they disagreed on the scope of that power. For example,
the National Association of Manufacturers (NAM) argued that any appeals
for tariff reductions be sent to the Executive Branch and not to Congress.
As the groups representatives explained, the Executive Branch provides
an orderly and scientic procedure while Congressional trade policy is
a return to a method of tariff making discarded by all the leading countries
of the world (New York Times, Dec. 7, 1931:A27).
However, the nationalist segment supported the change in trade policy
process only to the extent that safeguards be placed within the Executive
Branch structure to ensure that their interests be represented in Executive
Branch negotiations. The rst organization representing the nationalist
segment to provide testimony in the House hearings was the Tariff
Committee of the NAM. The NAMs strategy in the Congressional
hearings was to ensure the continued protection of domestic industry. In
doing so, the organization directly confronted the internationalist segments
interpretation of the Depression. The NAM asserted that the Depression
was decidedly a domestic issue and, as such, the state should focus on
domestic policy and the protection of domestic industry as the key to
economic recovery. The NAM, however, fell short of publicly disagreeing
with the internationalist segments agenda to expand foreign trade. In fact,
the organization ensured Congress that it promoted the general ideals of
free trade, but only so much as the nationalist segment was protected
from foreign competition. Summarizing the NAMs stance, Mr. Emery
stated to the House that the organization asserts particularly at the
present time the necessity of maintaining reasonable methods of protections
where demonstrable foreign competition adversely threatens American
industries and their capacity for employment. Our major depressional problems
are emphatically domestic, and should receive our major attention (U.S. Congress,
House 1934b:395, emphasis added).
NAMs representative, James Emery, noted that the NAM tariff com-
mittee had been engaged in the study of the bill since its inception (U.S.
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
412

Woods
Congress, House 1934a:393). Mr. Emery expressed that the Executive
Branch could negotiate policies with foreign nations, but these negotia-
tions should then go to Congress for nal approval. Mr. Emery explained:
[The NAM] believes he [the president] should be authorized to negotiate any
trade agreement that may advance the foreign commerce of the U.S., . . . but it
can not believe, however, that the President should be authorized to conclude
agreements as are here proposed and make them effective without reference
to Congress, (a) because it doubts it to be a valid exercise of what it believes
is a treaty-making power and (b) because the industries affected should have
knowledge of proposals vitally affecting not only their employing capacity, but
perhaps their very existence. (U.S. Congress, House 1934a:395)
The NAM insisted that any policy to shift trade authority to the
Executive Branch should (1) include provisions requiring Congressional
approval (as outlined above); (2) be limited in time; and (3) ensure
the protection of domestic industry. Using the internationalist segments
argument concerning the crisis condition of the domestic economy,
capitalists from the nationalist segment argued that, because of the nature
of the crisis, denite time limits should be placed on any trade treaties
made during this crisis. They argued that the instability of world markets
required that the U.S. not make long-term commitments in trade policy.
Rapid changes in the world economy may from time to time create
circumstances necessitating the termination of agreements upon due but
fairly short notice (U.S. Congress, House 1934a).
The Chamber of Commerce (COC) also pressured Congress for the
protection of nationalist segments of capital. James Farrell, representing
the Foreign Commerce Committee of the COC, testied before the Ways
and Means Committee and called upon Congress to adopt the presidents
proposal. Like the NAM, the COC wanted to convey the sense that it
supported the change in the trade process, while at the same time ensuring
nationalist protection. Thus, in May of 1933, the COC voted in favor of
reciprocal trade agreements (U.S. Congress, House 1934b:505). However,
in their approval of the RTAA, the COC insisted that the rst principle
of any U.S. trade policy should be reasonable protection for American
industries subject to destructive competition from abroad. . . This, we think
should be the rst consideration. Reciprocal tariff negotiations should be
secondary to it (U.S. Congress, House 1934b:507).
In light of these reservations, the COC asserted the importance of
Congress establishing detailed provisions dening the process of trade-
policy formation within the Executive branch. The most important
provision from the COCs perspective was for Congress to ensure that
nationalist industry always hold a role in the trade policy process. As Mr.
Farrell, representative of the COC, stated:
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

413
A feature of the pending bill which will, I am sure, meet with opposition on the
part of American industry is the failure of the bill to provide ample opportunity
for hearings and investigation. It has long been recognized as fair play
that both the American producer and the foreign producer have a chance to
present facts bearing upon tariff changes. It is part of our procedure under the
National Recovery Act. I would recommend therefore that adequate provisions
be made in this legislation for hearings and investigation in connection with
contemplated changes under reciprocal agreements. (U.S. Congress, House
1934b:509)
In summary, the nationalist capital segment mobilized pressure on
Congress to ensure that they would continue to be an active participant in
the formation of trade policies. Neither the COC nor the NAM directly
resisted the internationalist capital segments agenda to change the trade
policy process to the Executive Branch. However, the nationalist segments
support for the RTAA was contingent upon ensuring that the Executive
Branch process offer continued protection from foreign competition for
nationalist industry.
The Policy Process and the Mediation of Class Conict
Both branches of Congress were persuaded by the demands of the
nationalist segment that safeguards be placed within Executive-Branch
policy making in order to ensure protection of domestic industry. While
accepting the internationalist segments proposal of Executive-Branch
authority, both the House and the Senate made important amendments
to the nal bill that reected the nationalist segments demands (U.S.
Congress, House 1934a,b; Senate 1934).
First, under the RTAA the authority of the President to enter into
foreign trade agreements . . . shall terminate on the expiration of three years
from the date of the enactment (U.S. Congress, Senate 1934). Like other
aspects of New Deal economic planning, Congressional representatives
originally viewed the RTAA as an emergency measure designed to
stimulate economic expansion during the Great Depression and not a
long-term course of action. Second, the President would be restricted to
negotiations that would decrease existing tariff rates up to 50 percent
of existing rates. Further, he could not transfer any article between the
dutiable and free lists (U.S. Congress, Senate 1934). Third, the President
would have to seek public advice as to any trade policy the administration
would enter into. However, this rule was the least specic and left the
Executive Branch with great latitude concerning Congressionally mandated
public input into the negotiation process. In general, the rule required
the President before any foreign trade agreement is concluded provide
reasonable public notice . . . such that any interested person may have an
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
414

Woods
opportunity to present his views to the Executive Branch (U.S. Congress,
Senate 1934).
Thus, with the 1934 Reciprocal Trade Agreement, the Executive
Branch and capitalists from the rising internationalist segment were
successful in their efforts to fundamentally alter the basis of the American-
foreign-trade-policy process. Aware of the economic crisis of the Depression
and the impending political crisis of the state, Congress provided the
Executive Branch with the ability to negotiate expansionary trade policy
agreements. However, the continued power of the nationalist segment
of American capital was apparent in Congressional attempts to curb
Executive Branch trade authority. From the wording of the bill, it is
clear that Congress saw the RTAA as a temporary measure aimed
at domestic economic recovery. In support of this conclusion Section
350 of the nal act states: This Act is for the purpose of expanding
foreign markets for the products of the United States (as a means of
assisting in the present emergency in restoring the American standard of
living, in overcoming domestic unemployment and the present economic
depression. . .) (U.S. Congress, Senate 1934). Congress approved the
Reciprocal Trade Agreements Act on June 12, 1934.
Discussion and Conclusions
Summarizing the debate over trade expansion during the New Deal, we
nd the existence of a small but increasingly inuential internationalist
segment of the capitalist class. The shifting capitalist class structure
brought about by the ascension of the internationalist business segment
opened up new areas of class conict and affected political alliances
over trade policy. As the Great Depression persisted, the capitalist class
increased its pressure on the state to stimulate capital accumulation by
establishing new organizational arrangements to govern trade policy. While
the internationalist and nationalist segments disagreed over whether trade
policy should be protectionist or expansionary, at this historical juncture,
they agreed on the issue of changes in the trade policy decision making
structure. Despite the concerns of the nationalist capital segment over their
ability to inuence Executive-Branch policy making, both segments of the
capitalist class were successful in their combined efforts to change the
institutional arena within which trade policy was formulated from Congress
to the Executive Branch.
This research bolsters support for the class embeddedness perspective
of trade policy as portrayed in the works of Domhoff (1990), Prechel
(1990) and Dreiling (2000). In opposition to studies that depict the
American foreign trade policy process as dominated by state institutions
and important state managers (e.g., Lake 1988, Goldstein 1993), class
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

415
embeddedness research indicates that powerful business groups have had
major inuences on foreign trade policy. During the New Deal period,
both internationalist and nationalist capital segments viewed foreign trade
policy as a signicant issue surrounding the economic crisis of the Great
Depression and pressured the state to change the trade policy process.
State managers (e.g., Cordell Hull, Roosevelt) played an important role in
its formulation. However, in contrast to studies that depict the RTAA as
singularly constructed and pushed through Congress by Secretary of State
Hull (e.g. Cohen 1994) or as caused by institutional constraints of the state,
I nd that political pressure from internationalist and nationalist business
organizations (e.g., National Foreign Trade Council, National Association
of Manufacturers) as well as individual members of those class segments
(e.g., Norman Davis) played a key role in the formulation and passage of
New Deal trade policy.
While both nationalist and internationalist capital segments were
divided over trade expansion, in the end, the Congress mediated these
differences, and both segments supported moving the trade policy process
to the Executive Branch. Nationalist support for these changes, however,
was tied to Congressional oversight of Executive Branch policies, some of
which were included in the RTAA, although in a limited way. The trade
policy outcome (i.e., the RTAA) mediated business conict. Further, the
RTAA provided legitimation for the organizational change in trade policy.
State managers as well as nationalist and internationalist business segments
portrayed the changes in the trade-policy process as ones reecting
increased efciency and rationality in decision making. In this way, the
state could ensure legitimacy by arguing that the changes in organizational
structure of the state were meant to ensure that trade policy operates in
the national interests.
Most importantly, The 1934 RTAA changed the organization of trade
policy within the state. While trade policy had historically (and according to
the Constitution) been the authority of Congress, with the RTAA, Congress
conceded this authority to the Executive Branch. These changes are crucial
factors in understanding the politics of U.S. trade policy since the New
Deal. The contemporary class embeddedness surrounding the NAFTA and
other recent trade policies has evolved historically from the class politics
and resulting emergency trade measures of the New Deal period. One
need only to look at the present debate over global trade expansion and
fast-track trade promotion authority to recognize the historical signicance
of the 1934 RTAA.
In conclusion, what sociologists can learn from an understanding
of New Deal trade politics may play a vital role in explaining the
historical processes through which trade policy became embedded with
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
416

Woods
class interests. Further, these embedded class interests have an impact
on the policy processes and economic effects of future trade policy
developments, such as the NAFTA (Dreiling 2000) and other recent trade
policy initiatives (e.g. Free Trade of the Americas).
References
ABRAHAMS, PAUL P.
1969 American Bankers and the Economic Tactics of Peace: 1919. Journal of
American History 56(3):572-583.
AKARD, PATRICK J.
1996 The Political Origins of Supply-Side Economic Policy: The Humphrey-
Hawkins Bill and the Revenue Act of 1978. Political Power and Social Theory
10:95-148.
ARRIGHI, GIOVANNI, PO-KEUNG HUI, KRISHNENDU RAY AND THOMAS E.
REIFER
1999 Geopolitics and High Finance. Pp. 37-96 in Chaos and Governance in the Modern
World System, edited by Giovanni Arrighi and Beverly Silver. Minneapolis:
University of Minnesota Press.
AUDLEY, JOHN J.
1997 Green Politics and Global Trade: NAFTA and the Future of Environmental Politics.
Washington, DC: Georgetown University Press.
BEETHAM, DAVID
1987 Bureaucracy. Minneapolis: University of Minnesota Press.
BLOCK, FRED
1977 The Origins of International Economic Disorder: A Study of United States International
Monetary Policy from World War II to the Present. Berkeley: University of California
Press.
1977b The Ruling Class does not Rule. Socialist Review 7:6-28.
CONFORTI, JOSEPH M.
1995 New Class Divisions in the United States. Critical Sociology 21(2):43-52.
COHEN, STEPHEN D.
1994 The Making of United States International Economic Policy, Fourth Edition. Westport,
CT: Praeger Publishers.
DOMHOFF, G. WILLIAM
1970 The Higher Circles. New York: Random House.
1990 The Power Elite and the State: How Policy is Made in America. New York: Aldine
De Gruyter.
DREILING, MICHAEL C.
2000 The Class Embeddedness of Corporate Political Action: Leadership in
Defense of the NAFTA. Social Problems 47(1):21-48.
ECKES, ALFRED E., JR.
1995 Opening Americas Market: U.S. Foreign Policy Since 1776. Chapel Hill, NC:
University of North Carolina Press.
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
Capitalist Class Relations

417
FINEGOLD, KENNETH AND THEDA SKOCPOL
1995 State and Party in Americas New Deal. Madison: University of Wisconsin Press.
FREIDEN, JEFF
1988 Sectoral Conict and U.S. Foreign Economic Policy, 1914-1940. Pp. 59-90
in The State and American Foreign Economic Policy, edited by John G. Ikenberry,
David A. Lake and Michael Mastanduno. Ithaca, NY: Cornell University
Press.
GOLDSTEIN, JUDITH
1993 Ideas, Interests, and American Trade Policy. Ithaca, NY: Cornell University Press.
HAGGARD, STEPHEN
1988 The Institutional Foundations of Hegemony: Explaining the Reciprocal
Trade Agreements Act of 1934. Pp. 91-119 in The State and American Foreign
Economic Policy, edited by John G. Ikenberry, David A. Lake, and Michael
Mastanduno. Ithaca, NY: Cornell University Press.
HULL, CORDELL
1948 The Memoirs of Cordell Hull. New York: Macmillan Company.
KAUFMAN, BURTON IRA
1971 United States and Latin America: The Wilson Years. Journal of American
History 58(September): 342-63.
KRASNER, STEPHEN D.
1978 Defending the National Interest. Princeton, NJ: Princeton University Press.
LAKE, DAVID A.
1988 The State and American Trade Strategy in the Pre-hegemonic Era. Pp. 33-
58 in The State and American Foreign Economic Policy, edited by John G. Ikenberry,
David A. Lake and Michael Mastanduno. Ithaca, NY: Cornell University
Press.
LEVINE, RHONDA
1988 Class Struggle and the New Deal. Lawrence, KS: University of Kansas Press.
MARQUIS, ALBERT NELSON
1932 Whos Who in America, Volume 17. Chicago: The A.N. Marquis Company.
PASTOR, ROBERT A.
1980 Congress and the Politics of U.S. Foreign Economic Policy, 1929-1976. Berkeley, CA:
University of California Press.
PEEK, GEORGE
1936 Why Quit Our Own. New York: D.Van Nostrand Company, Inc.
PRECHEL, HARLAND
1990 Steel and the State: Industry Politics and Business Policy Formation, 1940-
1989. American Sociological Review 55(5):648-668.
RATNER, SIDNEY
1972 The Tariff in American History. New York, NY: D. Van Nostrand Company.
RHODES, CAROLYN
1993 Reciprocity, U.S. Trade Policy, and the GATT Regime. Ithaca, NY: Cornell
University Press.
RUSSELL, JAMES W.
1995 Operation Bootstrap and NAFTA: Comparing the Social Consequences.
Critical Sociology 21(2):91-108.
SCHATTSCHNEIDER, E.E.
1935 Politics, Pressures and the Tariff. New York, NY: Arno Press.
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from
418

Woods
SCHEIBER, HARRY
1969 World War I as Entrepreneurial Opportunity: Willard Straight and the
American International Corporation. Political Science Quarterly 84(3):486-511.
SKIDMORE, DAN AND DAVITA SILFEN GLASBERG
1996 State Theory and Corporate Welfare: The Crisis and Bailout of the Savings
and Loan Industry From a Contingency Perspective. Political Power and Social
Theory 10:149-191.
SKOCPOL, THEDA
1980 Political Response to Capitalist Crisis: Neo-Marxists Theories of the State
and the Case of the New Deal. Politics and Society 10:155-201.
1985 Bringing the State Back In: Strategies of Analysis in Current Research. Pp.
3-37 in Bringing the State Back In, edited by Peter Evans, Dietrich Rueschemeyer
and Theda Skocpol. Cambridge, MA: Cambridge University Press.
U.S. CONGRESS, HOUSE
1934a Message from the President of the United States Transmitting A Request to Authorize
the Executive to Enter Into Executive Commercial Agreements with Foreign Nations. 73
rd
Congress, 2
nd
Session. Washington, DC: Government Printing Ofce.
1934b Committee on Ways and Means. 1934b. Amend Tariff Act of 1930: Reciprocal
Trade Agreements. 73
rd
Congress, 2
nd
Session. Washington, DC: Government
Printing Ofce.
U.S. CONGRESS, SENATE
1934 Public No. 316. Reciprocal Trade Agreements Act. 73
rd
Congress. Washington,
DC: Government Printing Ofce.
WILSON, JOAN HOFF
1971 American Business & Foreign Policy 1920-1933. Lexington, KY: University Press
of Kentucky.
by Pepe Portillo on August 7, 2014 crs.sagepub.com Downloaded from