by Conrad Black
When the Union was strong enough to suppress an insurgency, a new leader, at the head of a new party, was elected on the promise that the rights of slaveholders would be protected but that slavery could not expand into areas where it was uneconomic and foreign, and when this was confirmed as unacceptable to the South, proceeded with judicious cunning until the South initiated hostilities. In a prolonged masterpiece of sage and benign execution, Lincoln kept foreigners at bay, built a mighty army, promoted outstanding generals, emancipated the slaves (prospectively, as 95 percent of them were in rebel states), so that the abolitionists and those who cared only for the Union were both satisfied, as the proclaimed emancipation incited slave resistance in the South. Lincoln won, slavery was abolished, the Union was saved and automatically became one of the most powerful nations in the world, just 82 years after its independence was achieved. A providential leader appeared with an unassailable intellectual and moral position and applied adequate pressure for long enough to crush the forces of disunion and start to “bind up the nation’s wounds.” The tactics of founding the new party, taking it over, and leading it to victory, and the strategy of formulating the issue and the execution of the conduct of the war, were all masterpieces of surpassing brilliance and nobility.
There followed a third of a century in which the national leadership was almost irrelevant; there was no need for a providential Washington, Jackson, or Lincoln. Immigration was open, the economy was unfettered, and millions of people poured from the bowels of European famine and oppression and pogroms into this astoundingly fecund country. They pledged allegiance to Madison and Hamilton’s Constitution, and they or their children made their way in the English language, and the organic growth of America, in its sustained swiftness and scale, surpassed anything in human history. The strategy was to let America be itself, and it was a brilliant strategy, the more so because it required almost no execution at all.
Just 50 years after the United States had crushed Mexico, it even more easily routed Mexico’s former colonial master, Spain, albeit only in overseas outposts. Theodore Roosevelt seized Panama and built the inter-ocean canal, arbitrated between the Russians and Japanese, pacified the Philippines, built up the United States Navy to be the third in the world after only the British and German Empires, and painted that navy white and sent it round the world.
And Woodrow Wilson, the desiccated but erudite and eloquent intellectual, intervened to assure the victory of the democracies in history’s bloodiest war, and created a vision of international cooperation, collective security, and the evangelization of democracy and national self-determination that briefly inspirited the war-ravaged world. More durably, he inserted a requirement in U.S. foreign policy of reasonable virtue as well as clear national interest. Without both those ingredients, ambitious foreign undertakings by American administrations are not really possible. Both Roosevelt and Wilson emphasized that the United States would now be an influence in the whole world, by its power and its moral authority. Roosevelt carried a big stick; Wilson at least had a big stick to hand, and both, in different ways, fired the imagination of the world. The strategy was the tentative assertion of American influence in the whole world, notice that the American era was imminent. Neither strategy had been thought out and Wilson’s execution was faulty, but they were both on to something, and the unnatural abstention of America from the world had to end.
Wilson lost his health and his judgment and was repudiated, and there followed a false era of hedonism and foreign policy posturing, and economic insouciance. By 1933, the economy had crashed, and the American idea was more violently afflicted than ever in its history The Civil War had threatened the nation’s integrality, but not the future of its constitutional democracy in 70 percent of the country. Now, the whole laissez-faire economic system that had fueled the meteoric rise of the nation and the individualistic philosophy that had idealized it were at risk.
There came now Franklin Delano Roosevelt to revive American optimism, reassert the nation’s exceptionalism, reform the system sufficiently to renew it and revive its inexorable rise, to restore America’s exalted destiny, and to lead it to its rightful place, as Benjamin Franklin had foreseen 175 years before, at the head of all the nations and peoples of the world. Up to now, there had been incremental strategies to create and conserve the nation, to preserve it against insurrection and the evils of slavery, and to bring it to the attention of the world and show the world some of the power of American industry and idealism. Now there was a grave challenge, and meeting the challenge would take America to the summit of the world, as a Manichaean struggle was approaching between the conservators and evocators of Western democracy and Judeo-Christian values, and the totalitarian apostles of racism, paganism, and Marxist materialism. American strategic thinking up to this point had been designed to build and promote America. Now, all that had been achieved had to be redeemed from the depths of economic and psychological depression and swiftly deployed to hold the battlements of the West in a world approaching a mortal crisis. America’s rendezvous with what no longer seemed a manifest destiny was almost at hand.
2. THE NEW DEAL
At his inauguration on March 4, 1933, Roosevelt said that his primary task was “to put people to work.” He promised bold experimentation, celebrated “the warm glow of national unity,” and observed that “There is plenty, but a generous use of it languishes at the very source of the supply.” And he rejoiced that “Our problems, thank God, concern only material things,” having asserted that “This great nation will endure as it has endured, will revive and will prosper.... The only thing we have to fear is fear itself, needless, unreasoning, unjustified terror.” He declared a general bank holiday, arranged for special banknotes to be available to cover excessive withdrawals, and began the reopening of the banks in stages by the district Federal Reserve banks, as they reached a point of designated invulnerability. Within three days of the end of the four-day bank holiday, three-quarters of the country’s banks had reopened. The Federal Reserve merged some banks and the RFC eventually became a preferred shareholder in many of them, withdrawing as conditions allowed. In the first of a great many such occasions, Roosevelt addressed the nation by radio in what were called “fireside chats,” in which he explained government policy in simple, familiar, and even intimate terms, and carried the country with him. The banking measures were an unqualified success and were shortly reinforced by a federal government guarantee of bank deposits.
Roosevelt called a special session of Congress that sat until June, in what became known as “the hundred days.” Roosevelt slashed government salaries and pensions to correspond to deflation, repealed Prohibition, and attacked joblessness with programs that directly, and through grants to states and municipalities, absorbed more than seven million of the 17 million unemployed in conservation and public works (what would today be called infrastructure) projects. Farm prices were supported by a program of voting among groups of farmers (according to what they farmed) a roll-back of production in exchange for payments that assured an adequate food supply at survivable prices. A competitive government alternative to private hydroelectric power was provided by the Tennessee Valley Authority, which was the forerunner of massive rural electrification, and included a general plan of flood and drought control, irrigation, canals, and industrialization across seven southern states. More than a million urban home mortgages and several hundred thousand farm mortgages were refinanced. There was a complicated system of agreeing on codes for pay scales by industry, cartels in pricing and collective bargaining to raise both prices and wages were tolerated, and basic wages and working conditions and hours were improved. The country departed the gold standard, though gold was retained to complete intergovernmental transactions. The stock market reacted very appreciatively to all this, and it was clear throughout that Roosevelt was carrying public opinion for his program, which initially enjoyed almost universal support.
There had been very little inflation in We
stern Europe or America from the late eighteenth century to the World War I, but there had been intermittent severe economic retractions. Roosevelt was moving decisively to alleviate a terrible economic depression, but he was using public spending and the devaluation of the dollar to fight deflation. It was a justifiable decision; public morale firmed up and the country endowed itself with immense accretions of assets: parks, highways, airports, public buildings, bridges and tunnels, and ultimately warships and munitions, while unemployment was massively alleviated, all at bargain cost. Roosevelt was a traditional hard-currency advocate, but he started the United States, following the major European powers, down the slippery slope away from stable currency value and into the temptations of inflation.
In 1934, Roosevelt set up the Securities and Exchange Commission to regulate stock exchanges and the sale of securities issues, and various corporate practices. It responded to general disgruntlement with the excesses of Wall Street in the twenties, but was not intended to be too restrictive. Roosevelt installed as its first chairman the flamboyant (and ethically doubtful) financier Joseph P. Kennedy, answering the question of an incredulous journalist about his nominee: “Set a thief to catch a thief.” In 1935, the administration established the Social Security Board to preside over a comprehensive, joint-contributory system of unemployment and old-age and survivor insurance and pensions, and relief for the destitute, and assistance to a range of social services for the most needful. This brought the United States fairly level with social programs in other advanced countries and completed a program of providing a safety net for all the victims of the Great Depression.
By late 1936, unemployment had declined from about 17 million, 33 percent of the work force, to about 10 million, 18 percent of an expanded work force, and the vast New Deal workfare programs absorbed more than seven million more in public works and conservation projects, another 14 percent of the work force, and the remaining 4 percent were supported by unemployment insurance. Comparative statistics with other countries are misleading, as, from 1935 on, Britain, France, Germany, Italy, and Japan were drawing steadily larger numbers of people into their armed forces and defense industries, who were counted as employed, while American participants in workfare programs, doing more productive work for the state than military drilling and munitions making, were not. Yet each category of state employee was, in strict economic terms, artificial, and a form of public sector pump priming. Workfare benefits were distributed equally to whites and African Americans, though the work units were segregated, and this was something of an upward revolution for the black communities.
In 1935 and 1936, Roosevelt put through modest tax increases on large personal and corporate incomes to fend off redistributionist movements that sprang up outside the traditional political parties. He engaged in a certain amount of rhetorical fireworks about completely imaginary groups of wrongdoers—“economic royalists, malefactors of great wealth, munitions makers, war profiteers,” and so forth. There were no such groups, but by channeling the anger and frustration of the time into a cul de sac of fictitious categories of unnamed people, Roosevelt preserved the moral integrality of the nation, so he could concentrate its hostility on the true enemies of America, Nazi Germany and Imperial Japan. Had he named wealthy people, as some of his opponents did, as public enemies, civil strife would have ensued. By the end of 1935, the immediate crisis of food and shelter for millions of families was under control, and industrial production and consumer prices had increased more than 40 percent and stock prices had more than doubled since inauguration day.
There was no question of the strength of the U.S. currency or its financial system generally. The president was set at the head of a broad political coalition and enjoyed the support of a larger percentage of Americans than leaders in other important democratic countries commanded.
3. FRANKLIN D. ROOSEVELT AND THE WORLD
By the mid-thirties, foreign affairs were resuming an importance they had not had since the dying days of the Wilson administration. The new secretary of state was 11-term Tennessee congressman and then senator Cordell Hull. He had no particular qualifications for the position, but Roosevelt thought his popularity in Congress would be helpful. The president had a low opinion of the State Department from his service in World War I, and intended to conduct his own foreign policy. Roosevelt was fluent in French and German and knew Britain and the other principal Western European countries well. He had many friends and connections in the British Isles, France, and Germany.
In his inaugural address, Roosevelt exercised in many places his knack for the catchy phrase, including by promising the hemisphere that America would be a “good neighbor.” This was not altogether the conception of the country that Latin Americans had held. In December 1933, Hull supported a pact at the Montevideo hemispheric conference that abjured armed intervention, which Roosevelt publicly endorsed as henceforth the policy of the United States, a revocation of his cousin’s attitude and a considerable relief to many of the Latin American countries accustomed to the arrival of the U.S. Marines on the feeblest pretext. Roosevelt and Hull’s emphasis was on pan-American solidarity against any outside interference. Roosevelt was always concerned about German and Italian penetration of the large ethnic communities of those nationalities in Argentina and Brazil.
Roosevelt sent his school friend, and one of the few American diplomats he respected, Sumner Welles, as ambassador to Cuba in 1933, and Welles negotiated a truce between feuding factions and virtually installed what would prove a nearly 30-year preeminence of Fulgencio Batista as the Cuban leader. Roosevelt arranged a reduction in the tariff on Cuban sugar and approved the repeal of the Platt Amendment of 1901, which had constrained Cuban finances and authorized the United States to intervene in that country under almost any pretext. Roosevelt withdrew all American forces from Haiti in 1934, and in 1936 agreed to the renunciation of many of the inequities of the Hay-Bunau-Varilla Treaty of 1903 with Panama. Roosevelt effectively acknowledged the full sovereignty of the Latin American states on condition that they resisted any influences from outside the hemisphere.
The London Economic Conference opened in June 1933. The gold bloc, led by France, Italy, and the Netherlands, but joined by Britain, although it had abandoned the gold standard, sought a fixed rate of exchange with the dollar, which Roosevelt profoundly suspected as an effort to overprice the American currency, and which he considered impractical between gold-backed and free-floating currencies. He thought the other leaders, like Hoover, were focusing on secondary issues and that each nation had to put its own unemployed back to work by stimulating its own economy and reviving the velocity of transactional activity. He instructed Hull to avoid any agreement except bilateral tariff reductions, as he was, at heart, more a free trader than a protectionist, favoring lower prices for lower income earners over special protection for manufacturers, as long as the dollar was fairly valued opposite other currencies. Roosevelt effectively blew up the conference with messages sent via the cruiser Indianapolis from his summer home at Campobello, New Brunswick, Canada, to which he had returned, by self-navigated sailboat (through dense fog in a remarkable feat of memory of the waters and sail navigation), for the first time since he had been evacuated from it with polio 12 years before. The Indianapolis fired a 21-gun salute as Roosevelt’s sailboat emerged from the fog, and thousands of well-wishers lined the shore and welcomed him back.
In November 1933, after Stalin, on Roosevelt’s invitation, had sent foreign affairs commissar Maxim Litvinov to Washington, the United States and the Soviet Union exchanged embassies, under a treaty in which the USSR. promised not to disseminate propaganda or otherwise interfere in domestic American affairs. There were also promises of fair treatment of American citizens in Russia and a supposed prospect of agreement on Russian indebtedness to the United States. In a pattern that was to become familiar, Stalin reneged on all aspects of the agreement, and the anticipated spike in trade between the two countries did not materialize. Stalin d
iscouraged imports, apart from sophisticated military hardware, which Roosevelt was not prepared to sell him (until conditions had changed radically almost a decade later), and Russian goods were not of sufficient quality to be marketable in the United States. Neither country lacked raw materials or natural resources.
Roosevelt received a steady stream of prominent Europeans, and followed European affairs closely. He believed from the beginning that Hitler would prove impossible to contain, and urged a robust resistance to Nazi advances on Britain, France, and even Italy, until Mussolini delivered himself over to Hitler like a trussed-up partridge. British prime minister Ramsay MacDonald visited in 1933, essentially on economic matters, but he was already very worn down and had no real support in the coalition the king had created for him. The talks were cordial, but came to nothing. The visit of French premier Edouard Herriot was no more productive, as French premiers came and went with great frequency. German finance minister Hjalmar Horace Greeley Schacht (his father had lived in the United States during the Civil War) also visited early in Roosevelt’s term, and advised that Germany would not be paying any debts or reparations. Roosevelt conversed with him in German, and concluded that although he was not a militant Nazi, and was economically literate, he was an authentic German nationalist of the kind that Roosevelt had known since his mother had taken him to the Wagner Ring Cycle in Bayreuth in 1896 (when he was 14 and concluded that the Germans were falsely romantic racist warmongers), and Schacht confirmed Roosevelt’s conviction that Germany was bent on a terrible revenge on her former foes.