Penguin History of the United States of America

by Hugh Brogan

  It was, indeed, astonishing how far America had come. Never before had there been such an orgy of law-making, never before had so bold an attempt been made to adjust the country to new times. But the work was only beginning. The pace of that first spring was never again to be equalled, but a great transformation was under way. The demands made on the American people were not to slacken significantly until the eve of the Second World War. For the men and women round Roosevelt (Frances Perkins, the Secretary of Labor, was the first woman to become a Cabinet officer) were not content to pass emergency measures and then let the federal government sink back into the dignified indolence of the late nineteenth century. The Coolidge era was over for ever. Former Wilsonians, former Progressives, they each had one or more long-cherished reforms to push, now that they had the power and now that the temper of the country was so obviously propitious. They saw their opportunity, as Boss Plunkitt would have said, and they took it. They were no morning glories, but able, experienced, hard-driving professionals.

  They were more single-minded than their chief, whose priorities were somewhat different. While happy to maintain the momentum of the Hundred Days and happy in bringing, first hope, then achievement, to the country, Roosevelt based his strategy on his perpetual preoccupation with leadership. During the first years of his Presidency his aspiration was to be the generally supported leader of all the people. The vision of national unity, which has shimmered before the eyes of so many great democratic politicians (the obvious British example being Lloyd George), shimmered before FDR. In some respects his instincts were profoundly conservative. He was a countryman, for example, who often found it difficult to realize the needs of the modern city-dweller; and his economic opinions were in many cases far from forward-looking. Thus, it is hard for the present generation, after a lifetime of inflation, to understand the passion and conviction with which men of Roosevelt’s day believed in the scientific necessity of balancing the national budget in order to avoid what was, in the thirties, an absolutely minimal risk of inflation.3. Their minds were governed by abstractions, instead of their own concrete experience (besides, Henry Morgenthau, Roosevelt’s Secretary of the Treasury, was not really adequate to his job, though he had able assistants). Roosevelt was a committed anti-inflationist, so much so that in the end he sacrificed the New Deal to his principles. He believed in American capitalism as much as he believed in American democracy, and he hoped for the co-operation of the business class, in part because he was rescuing it from disaster and in part because, like Hoover, he thought, not wrongly, that without business support and confidence the economy could not make a complete recovery. Besides, he was temperamentally averse to harsh choices, which might limit his freedom of action. So he played down the Democratic party, in 1934 refusing even to go to its traditional beanfeast on Jefferson’s birthday, and as long as he could he played down his reformer’s role too.

  In many respects this lofty pose of being above the battle paid him handsomely, making it easier for former Progressives and Republicans to desert to his standard. But essentially the aspiration was misconceived and it broke down on the stubborn facts of the situation. Only lavish government spending could pull the United States out of its downward deflationary spiral, and such spending inevitably made a balanced budget impossible. This alienated the conservatives. Furthermore, the New Deal programmes necessitated taxation increases (especially if the President was to keep alive his hopes of one day achieving solvency) and some of that increase (very little in practice) had to come out of the pockets of the rich. They did not like it, any more than they liked government-imposed reform of the economy they were used to ruling. From early 1934 onwards the alienation of the old business community – the magnates of New York, Philadelphia and Chicago (businessmen further west were less upset) – grew deep and bitter, until the rich alluded to the President only as ‘that man in the White House’. At the same time Roosevelt slowly learned to abandon his aspirations and to come out as the champion of the people against the ‘economic royalists’. By 1936 the lines were sharply drawn – more sharply, perhaps, than in any other election in American history – and the Republicans, identified as the party of Wall Street, were swept to what seemed to be eternal oblivion.

  Other choices could not be made so easily, or if they were, were made badly. The most conspicuous example of the latter mistake was the sabotage of the London Economic Conference immediately after the Hundred Days had ended. This conference was a legacy of Herbert Hoover’s conviction that the root of the Depression lay in international trade relations. He had summoned the conference to put things right. It was unlikely to achieve any great success, since economic nationalism was rapidly gaining ground everywhere as a result of the slump; but its failure was disastrous. On 4 July 1933 Roosevelt rejected his emissaries’ attempts to achieve some sort of stabilization of the world currencies, on the grounds that this might interfere with his efforts to tempt businessmen to reinvest by pushing up prices in the United States. In the narrowest terms of economic advantage, he had a case; but he overlooked America’s obligation, as the world’s leading industrial and financial power – a power, furthermore, which was largely to blame for the catastrophe – to do something to help the weaker trading nations; and he was totally blind to the consideration that this was a chance – the last, as it turned out – for a significant measure of international cooperation to rescue the world economy and thus avert the new world war which, as we have seen, was already beginning to grow out of the Depression. The most disturbing comment on his action was made by Hjalmar Schacht, the Nazis’ financier: he praised Roosevelt for being an economic nationalist like Hitler and Mussolini. By 1934 Roosevelt had begun to see that he had gone too far, and pushed a Trade Agreements Act through Congress, which enabled him to revise tariffs freely. A major source of domestic political strife was thus at last removed, but otherwise the Act led to very little. The New Deal never developed a coherent trade policy, and in that respect one of the chief causes of the Depression remained virtually untouched.

  On the whole Roosevelt did better when he fudged the issues. There was profound disagreement among Americans as to exactly what the situation required, and what, indeed, the laws of the Hundred Days meant or implied. To the business community the battle had been won when public confidence in the future of the economy had been restored. Even though the more far-sighted among the millionaires, such as Joseph Kennedy, saw that the task would not be complete without some measure of banking and financial reform, most businessmen thought the job had been finished by the summer of 1933: the economy had plainly begun its long slow crawl up from the abyss. To the progressive reformers, as we have seen, the emergency was a priceless opportunity to put into effect reforms which had been waiting for their hour since 1917. A handful of more radical temperaments – many of them university graduates – were allured by the possibility of total political transformation, and drifted into the Communist party, or towards the Trotskyites. Probably the majority of Americans believed that the all-important task was that of getting work again; they showed themselves willing to try almost any panacea that was offered as an end to unemployment, and they judged politicians strictly by the state of the labour market; except for the farmers, who judged them by their traditional criteria – agricultural prices, the state of farm mortgages, the farm standard of living and the independence or otherwise of the small farmer. Clearly the President could not hope to satisfy all these groups all the time; but Roosevelt’s political genius was displayed in the brilliance by which he kept so many on his side for so long.

  His chief instruments were the so-called alphabetical agencies. Such bodies had existed for decades. Their original was the Federal Trade Commission of 1887; since that date their establishment had become a traditional response to problems; but never had so many been set up in such a short period. They were uncountable. NRA, RFC, AAA (‘the Triple A’), PWA and WPA are the most important examples. It will be convenient to examine them one
by one, thus displaying the personalities of the New Deal, their achievements, their failures and, not least, their incessant rivalries and feuds, and in this way convey some sense of what the Rooseveltian transformation amounted to.

  The National Industrial Recovery Act appropriated $3,300,000,000 for public works (a traditional method of relieving unemployment and economic stagnation which had enjoyed remarkable success under, for example, Napoleon III of France in the nineteenth century); and in its opening section set as ambitious a range of targets as could well be devised:

  A national emergency productive of widespread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of co-operative action among trade groups, to induce and maintain unified action of labour and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor and otherwise to rehabilitate industry and to conserve natural resources.

  Something for everyone. The key words are probably ‘co-operative’ and ‘unified’. They reflect Roosevelt’s early hope that he could lead a united country along the path of recovery. Big firms and little firms would co-exist without the ruthless trade wars of the past, the undercutting and the overselling and general social recklessness which had ruined the American economy; capital and labour would be reconciled in a common programme; town and country would harmonize their interests and ambitions, and the resources of the continent would be husbanded for the future. Congress delegated large powers to the President to see that it all came about. This vision (which has something in common with the rhetoric of Mussolinian Italy) represented one version of America’s destiny, and had long appealed to one sort of Progressive. It implied forceful political leadership, supplied either directly by a Roosevelt in the White House or by a Morgan pulling strings in Wall Street. It implied planning; it implied the suspension of the Sherman Act and the legitimation of some form of working-class organization – the AFL or a wider grouping. It corresponded to one of the deepest, most characteristic wishes of patriotic citizens, that their cherished democracy should show itself capable of disinterested, vigorous, single-minded action in a crisis. Unfortunately, aspirations are not enough. The NIRA programme was too vast, put together in too much of a hurry, and it ran counter to too many political and economic realities for any success to be more than partial and temporary.

  The chosen head of the National Recovery Administration (NRA) was General Hugh Johnson, a veteran of the Wilson administration’s organization for the First World War (he had worked under Bernard Baruch on the War Industries Board). A torrent of a man, with a wild tongue and a weakness for drink, he incarnated the will to succeed, to transcend the feuds and pettinesses of everyday life in one vast national effort to end the Depression – for America, a crisis so much worse than the war had been. He was a champion booster, and at first swept all before him. He gave the NRA a symbol, the Blue Eagle,4 which was displayed on flags, buildings, letterheads, newspapers – wherever Americans identified themselves with his programme. He held huge parades of NRA participants, the largest of which, a quarter of a million strong and watched by a million and a half, choked the streets of New York from morning until long after nightfall on 13 September 1933. It was twenties hoopla turned to useful purposes; the chief participating dignitary was no longer the corrupt gladhander Jimmy Walker (who, following exposure, had been induced to take a permanent holiday) but Governor Herbert Lehman, the rightful heir, at state level, of Al Smith and FDR himself. Like a frantic entrepreneur, Johnson flew from city to city in an army plane, rounding up pledges and promises; his agency negotiated codes of conduct for the great industries of America, and the manufacturers undertook to observe them. In short, the practices of industrial capitalism were to be reformed, ‘unfair’ competition was to be eliminated, making it possible to maintain prices or even to increase them; and businessmen, stimulated by the renewed prospects of profit which this offered, would begin to invest again. They would be able to pay wages and open factories once more, and the ordinary American, at present on the dole, would become a consuming, producing citizen again.5 Workers would be guaranteed a minimum wage and the forty-hour week, and under Section 7(a) of the NIRA, in return for letting capital have a free hand in ordering its side of business, would have the right of collective bargaining and the right of organizing freely. Company unions were thus undermined; the brutal strike-breaking practices of the recent past were outlawed. The AFL leadership did not see, or did not like, this opportunity; but John L. Lewis of the United Mineworkers did, and his energetic and astonishingly successful efforts to promote unions in the major industries soon brought about a decisive split in the ranks of organized labour.

  Yet it all proved a bubble. In the first place, Roosevelt, for reasons good and bad, detached the public works programme authorized by the NIRA from Johnson’s agency and handed it over to his Secretary of the Interior, Harold Ickes, a former Bull Mooser. Ickes, a man of prickly, indeed spiny integrity (he loved to think of himself as a ‘curmudgeon’), turned the Public Works Administration (PWA) into a great creative agency; the American landscape owes more to him, in the way of bridges, highways, dams and public buildings generally, than to any other individual in history, and scarcely a penny was lost in the traditional way of corruption. But neither Ickes nor the President had yet understood the capacity of a public works programme to stimulate the economy; so the PWA did no more than keep the construction industry alive, whereas, thanks to the multiplier effect, it might have been the engine of a real recovery; while Johnson, who did grasp this point, was left to cajole industry into good behaviour without either carrot or stick to make it keep its promises.

  At first, mesmerized by Johnson’s enthusiasm, or the general euphoria at having an activist government at last, or by the willingness to try any port in a storm, or by the suspension of the Sherman Act, or by all these things together, the industrialists co-operated. The best-known, earliest and most successful of the codes was that for the cotton textile industry, which among other things ended the scandal of child labour in the cotton-mills and thereby prompted Roosevelt to remark, ‘That makes me personally happier than any other one thing which I have been connected with since I came to Washington.’6 The coal code eliminated child labour in the mines, equalized wages and introduced a thirty-five-hour week. But it was easier to get codes agreed than to secure compliance with them, especially since, fearing that the whole NIRA was unconstitutional (he had good reason, as events were to show), Johnson did not dare to use the draconian powers it gave him lest he be challenged in the courts. And the commitment to minimum wages, maximum hours and regulated prices, loudly proclaimed by the administration, not only implied that businessmen might have to accept increased costs without the compensation of increased profits, but went counter to the policy of reactivating American industry by conciliating its owners. There were some astonishing victories: Henry Ford, for instance, who refused to subscribe to the automobile code, nevertheless observed its wages and hours provisions; but they could not compensate for the discontent which began to engulf the NR A from all sides, nor, above all, for the fact that the economy showed few signs of immediate, complete recovery. The NRA became, unfairly, the scapegoat for this failure, although it created no fewer than two million jobs. Nor could it fight back effectively: it was too riddled
with contradictions,7 reflecting the confused economic thought at the very heart of the New Deal, where a dozen different advisers with a dozen different points of view (all of them at least partially valid) struggled to win the President’s backing. As 1933 wore into 1934 controversy grew ever noisier and more vigorous. Personal antagonisms at the top did not help, nor did the widespread feeling that the NIR A gave altogether too much power to the government in Washington to regulate American lives and businesses: old Carter Glass actually accused it of transplanting Hitlerism to every corner of the nation. In September 1934, Hugh Johnson resigned and the agency was reorganized; but it was too late. The case of Schechter Poultry Corporation v. United States was already finding its way through the courts, and on 27 May 1935, the New Deal’s ‘Black Monday’, a unanimous Supreme Court declared the NRA unconstitutional, on two grounds. The lesser was that the industrial code that was being challenged regulated the trade in kosher fowls in the New York area (it was alleged that the Schechter Corporation had violated various provisions of the code eighteen times) and as such was an interference in intra-state trade: the commerce clause of the Constitution8 did not give Congress or the President the right so to interfere. The press and the radio seized on the fact that one of Schechter’s alleged offences was the sale of’an unfit chicken’ to a butcher: so posterity knows this landmark decision as ‘the sick chicken case’. The nickname is not altogether unfair, for certainly the NRA codes had become tinged with absurdity: before Roosevelt put a stop to it, diligent bureaucrats had come up with a Dog Food code and a Shoulder Pad code and a Burlesque Theatrical (strip-tease) code. This was added prima facie evidence of the sort of unconstitutional abuse and extension of power which the Court condemned; though it is only fair to add that its reliance on a restrictive interpretation of the commerce clause caused a storm of criticism at the time, which has not yet altogether abated.