The Second Roosevelt Depression, II, 1938
As the recession continued only Treasury Secretary Henry Morgenthau seemed willing to confront it. He recommended to Roosevelt that he request an additional $250 million from Congress for putting another 650,000 unemployed on work relief and found the president enthusiastic. 1 He was also looking into tax revision and "re-examining everything that the Treasury is doing that affects business." He hoped by mid-February to be able to couple the announcement of an additional $250 million for relief and changes in the gold sterilization policy "with some kind of announcement that we have broken the log jam in the tax field." 2 Outside the administration, most criticism still centered on the undistributed profits tax, and on the "psychological" value for business that repeal or revision of the tax would provide. 3 What critics failed to realize was that, aside from its symbolic value, the repeal or substantial modification of that tax could do little to promote recovery now in a material sense. The tax had already done its damage, and money that might well have been spent on modernization and expansion, during the "boom" of late 1936 and early 1937 to aid in the transition from government to private spending, was not likely to be spent on such things now that the economy was back in the depths of a recession.
Bombarded with criticism from business leaders and unwilling to accept their recommendations, Roosevelt sought a more supportive business forum by calling a conference of supposedly friendly small businessmen to be held in Washington. Not only were the delegates hand-picked by the administration, but the agenda of the conference was also to be directed by the New Dealers. 4 Clearly, the