Page 144 - Accelerating out of the Great Recession

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objective of balanced budgets and launched what was then the
largest stimulus plan in history—equivalent to around $500 bil-
lion today. However, relative to the size of the economy, the
New Deal stimulus expenditure was enormous: over a three-
year period, it averaged around 16.5 percent of U.S. GDP.
Initiatives such as the highway expansion program and the
rural electrification program resulted in large contracts for a
handful of private companies that had anticipated these oppor-
tunities. The early efforts of these companies to understand the
commercial implications of such programs gave them a decisive
advantage over their competitors. Indeed, so important was this
flow of spending that some Great Depression companies
became adept at lobbying government figures in order to influ-
ence spending allocations.
GE saw the potential of government contracts early on.
Starting in 1931, Gerard Swope, GE’s president, became an
active public campaigner for Keynesian government-spending
policies. GE capitalized on government spending across a range
of new federal programs. The Tennessee Valley Authority,
designed to provide economic development to the largely poor
and rural American South, began the construction of dams
across the Southeast. Construction of new electricity infrastruc-
ture, in turn, provided a large market for GE’s electricity gener-
ation and transmission products.
GE also benefited from second-order effects of the rural
electrification program. At the start of the 1930s, only 10 per-
cent of rural households in the United States had electricity. By
the end of the decade, this figure had jumped to 90 percent.
During that period, not surprisingly, demand for consumer
durable goods—especially those powered by the newly available
electricity—increased rapidly. In the early 1930s, GE had

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