Nothing to Fear

by Adam Cohen

  The drafting work that Johnson, Wagner, Tugwell, Perkins, and the others were doing on the industrial recovery bill provided Douglas with a new argument against public works. He could now argue that the new law would go a long way toward reviving the economy and putting people back to work. That being the case, he insisted, there was no need for a large-scale public works program to do the same thing. Perkins was convinced that Douglas’s uncharacteristic optimism about the industrial bill was insincere, and that it was merely a tactic to bring Roosevelt to his position on public works. Perkins was always open about her support for large-scale public works, and for the workers’ rights agenda she was promoting. It disturbed her, she would later say, that Douglas was “so polite and so plausible, and yet deceitful.”83

  When Douglas was not fighting public works, he was using his powers under the Economy Act to slash spending. He came to the March 28 Cabinet meeting with detailed calculations of how much each department would have to reduce its budget. Cabinet members were not happy to be told that they had to cut back on programs when there was so much work to be done, or to fire workers who would have difficulty finding new jobs. Ickes, in his diary, called it “the saddest Cabinet meeting yet.” When Cabinet members appealed these budgetary edicts, they invariably found that Roosevelt supported Douglas. He “took a great deal of pleasure in telling folks that they had to cut their appropriations way down,” Wallace recalled, and he enjoyed saying, “ ‘here’s the man who’s going to do the job on you.’ ”84

  Wallace did his best to resist. He was particularly incensed that Douglas wanted to eliminate practically all of the scientific research in the Agriculture Department, work for which Wallace felt a particular affinity. He considered Douglas “a very decent fellow,” but he was convinced the budget director had a special antipathy for his department. Wallace found that it was impossible to argue about the cuts with Douglas, who was, in Tugwell’s words, “stubbornly uninterested.” Wallace focused on saving the state agricultural experiment stations, and he was not above making a political case for them. Most of the people he knew who would lose their jobs, he told Roosevelt, were Midwestern Republicans who had voted Democratic in the last election. “It is my opinion,” Wallace warned, “that if the Douglas program is carried through there will be such a large number of well-informed and disillusioned, highly trained, intelligent and influential people thrown into the ranks of the malcontents that the Democratic Party will probably never be able to carry the Middle West again.” Douglas eliminated more than five hundred jobs in agricultural research projects and slashed the salaries of many workers who remained, but Wallace was able to keep the projects alive. Douglas became “incensed” and “vindictive,” Tugwell recalled, when anyone talked Roosevelt out of his proposed cuts, and as a result, Wallace and Douglas “were pretty much at war.”85

  Douglas had similar battles with other departments, and with members of Congress. When senators and representatives objected to his cuts, Douglas told them that if they wanted to restore funding for their favorite programs they had to come up with alternative cuts. “I’ve placed the top limit,” he said. “I’m not primarily concerned with the distribution of the limit.” Douglas won most of his battles, but the fighting took a toll on him. The first few weeks of April were “even worse” than the fights over the Economy Act in March, he wrote to his father.86

  The department that put up the biggest fight of all was the army. Douglas proposed substantial cuts, and MacArthur, the army chief of staff, demanded a hearing to challenge them. MacArthur, who appeared at the Budget Bureau in full uniform, spoke for forty minutes about the damage the cuts would do to the national defense. His appeal was, Douglas conceded, “one of the most dramatic and one of the most brilliant displays of oratory fireworks that I have ever heard.” When MacArthur was done, Douglas did what he would later say was “one of the meanest things I have ever done in my life.” He asked MacArthur if he was anticipating violent dysentery breaking out in the following year. “No,” the general replied. “Why, may I ask, do you ask?” Douglas said the army had put in for 378,000 sheets of toilet paper for each enlisted man and officer. “You could see the rage rising within him,” Douglas later recalled. MacArthur stormed out of the hearing.87

  Douglas was so successful in implementing his budget cuts that Raymond Clapper, United Press’s Washington bureau chief, dubbed him “The Great High Executioner of Department Spending.” Douglas extracted $80 million from the army, $75 million from the Post Office, and tens of millions more from other departments. Farley, the postmaster general, had a bitter view of Douglas’s cuts, and his motives. As Farley saw it, Douglas reflexively represented big business and the wealthy, and his interest in government did not extend beyond balancing the budget and keeping taxes low. “He never, as far as I could discover, had anything definite to offer on how to feed the millions of people who were suffering from loss of jobs, loss of income, and loss of savings,” Farley said.88

  On April 29, Roosevelt made another attempt to resolve the issue of public works. He invited Perkins, Wallace, Ickes, Dern, and Douglas to the White House to discuss what a large-scale public works program would look like. Perkins came armed with a draft bill that called for $5 billion in grants. Roosevelt was by now prepared to go along with a major public works program, but he was balking at the $5 billion that Perkins and other progressives were asking for. At a recent press conference, he had called the figure “wild.” Roosevelt put a damper on the enthusiasm in the room by asking Douglas to talk about the impact large-scale public works would have on the budget. Douglas provided the grim prognosis everyone expected from him. Roosevelt then asked Perkins what projects there were to justify the large expenditures she was asking for. Perkins presented a list of projects that had been suggested by the construction industry. Roosevelt focused on the New York projects, which he was in the best position to evaluate, and, as Ickes recalled, he “proceeded to rip that list to pieces.” Ickes wanted to come to Perkins’s rescue, but he found that “she was perfectly able to handle it herself.” Perkins did not convince Roosevelt to support $5 billion in public works, but he was becoming more comfortable with the idea of spending a substantial amount of money.89

  In the end, Wagner’s draft industrial relief bill included $3.3 billion in public works spending. There were various explanations for how the figure was arrived at. After Roosevelt’s resistance to approving $5 billion, $3.3 billion may have been the most the progressives thought he would accept. Another explanation was that $3.3 billion was the cost of all of the worthwhile public works projects the drafters could identify. According to Ickes, the dollar amount was arrived at by accident. While Wagner was reviewing the draft bill he is said to have shouted to his secretary, Simon Rifkind, “Does the three billion for public works include the three hundred million for New York?” Rifkind replied, “I put it in,” but Wagner only heard the last three words. Wagner crossed out the $3 billion in the draft, Ickes said, and wrote in $3,300,000,000. When Roosevelt called him in to discuss the bill, Wagner said his group had decided $3.3 billion was the amount that was needed to provide relief to the unemployed and to prime the pump. Roosevelt accepted the figure.90

  On May 7, Roosevelt delivered his second fireside chat, which Moley had drafted. While the first had been focused on reassuring a frightened nation about the banks, this fireside chat laid out the administration’s broader vision for recovery. Mere words and optimism would not be enough, Roosevelt said—“we cannot ballyhoo ourselves back to prosperity.” He went through the bills that had already been enacted, or soon would be—the laws creating the CCC and the Tennessee Valley Authority; farmers and homeowners’ mortgage relief and the federal emergency relief bill, both of which would soon become law. They were all, he insisted, part of a “well-grounded plan.” What remained to be added, Roosevelt said, was an industrial recovery bill. One was being developed, he said, that would create a partnership between government and industry—“not partnership in pr
ofits, for the profits still go to the citizens, but rather a partnership in planning, and a partnership to see that the plans are carried out.”91

  Roosevelt explained what he intended to do using cotton as an example. Probably 90 percent of cotton manufacturers would be willing to stop over-production—and to stop overlong hours, starvation wages, and child labor. That did not matter, he said, as long as the other 10 percent refused to go along. Government should have the power to intervene to end the unfair practices. The antitrust laws would have to be readjusted. They were still needed to prevent monopolies, Roosevelt said, but they were never meant to “encourage the kind of unfair competition that results in long hours, starvation wages and overproduction.” Roosevelt also explained his decision to abandon the gold standard. It was inevitable, he argued, since the nation only had enough gold to redeem about 4 percent of the currency and securities that were nominally backed by gold. Going off gold allowed the government to manage the dollar, inflating it so debtors could pay off loans with dollars of the same value they had borrowed. He promised to get the balance right and not allow so much inflation that lenders were cheated. “We seek to correct a wrong,” he said, “and not to create another wrong in the opposite direction.”92

  On the same day as the fireside chat, The New York Times ran an article on Perkins. She had put aside her aversion to reporters long enough to talk about the need to increase work, wages, and buying power. Drawing on the ideas of her old economics professor Simon Nelson Patten, she argued that greater consumption was needed to revive the economy. When families had no money, she said, neighborhood stores were empty. That meant the stores’ suppliers also suffered, as did everyone those suppliers did business with. “Like the ripples eddying out from the pebble dropped into a pool, the circle grows until it has reached every part of the social structure,” she said. “A general paralysis ensues—the lawyer, the physician, the artist, the music teacher are as much affected as is the wage earner. The spring of economic life dries up at its source.” Perkins believed public works could play a major role in increasing consumption and reviving the economy, but she also, perhaps out of loyalty to the administration, expressed mild support for the government-industry partnership Roosevelt was moving toward. “There isn’t a day when some big employer doesn’t walk in to me and figuratively try to throw his industry on the bosom of the government,” Perkins said. Industry had become so competitive that it was leading to quick and deep wage cuts, which were drying up the nation’s purchasing power. It might be, she said, that only “a disinterested agency” could help industry to right itself.93

  It was time, Roosevelt decided, to come up with a final version of the industrial relief bill. He asked Perkins and Wallace to bring the Johnson and Wagner groups together to try to broker a compromise. The Johnson and Wagner bills were similar in their overall approach to industrial relief, but there were differences. Johnson’s draft contained tough licensing requirements, which would help the government to enforce the codes of fair competition. The Wagner draft had less draconian enforcement rules. The two groups also differed on which industries should be covered. Johnson wanted codes to be written for all industries engaged in interstate commerce. Wagner, afraid that a sweeping approach could create practical and constitutional problems, wanted codes only for major industries like automobiles and steel. The two groups were unable to bridge their differences. Johnson was “extremely sensitive,” Tugwell complained in his diary, and did not “cooperate too well in working out ideas.”94

  On May 10, Roosevelt invited the two camps to the White House. He “lectured them a little bit about what a grand idea” industrial relief was, Perkins recalled, and told them to lock themselves in a room and work out their differences. He wanted them to finalize a draft bill that included both industrial policy and public works, and he wanted it ready to submit to Congress by the week’s end. Roosevelt told Wagner, Johnson, and Richberg to take charge, and he asked Perkins to keep him informed about the group’s progress. Those four, along with Tugwell, Dickinson, and Douglas, met in Douglas’s office. Tugwell dropped his idea of a processing tax on industries, which attracted little support. The negotiations were often heated, but in the end, the group agreed on a draft. Johnson prevailed on the question of the scope of the law, which would cover all industries engaged in interstate commerce, and on having tough penalties. The final bill included a strong system of licenses for businesses, which the government could withdraw from companies that violated the codes. Douglas’s attempts to remove public works from the bill were again unsuccessful.95

  While Roosevelt and his advisers struggled to develop solutions, the nation remained in a state of crisis. Americans wanted to believe they would be able to turn the nation around, but they continued to fear the worst. Charles Wyzanski, the young lawyer Perkins hired as her counsel, would later say that Washington was more chaotic than at any other time he lived there, including when a world war broke out. “The country was on the verge of a panic,” he recalled.96

  The panic even extended to members of the administration. Perkins bumped into Adolf Berle, the former Brain Truster who had been informally advising the White House on economic policy, and was shocked to see how anxious he was. “The people can’t stand this, you know,” Berle said gloomily. “Don’t you understand, Miss Perkins, that human beings will not endure suffering beyond a certain point, and the suffering has got so intense that it cannot be relieved and cannot be endured?” “Oh, nonsense, Mr. Berle,” Perkins responded. “You’ve no idea how much more human beings can endure, particularly if they see a ray of hope.” She reached for a sturdy New England image. “Didn’t you ever swim against the tide when it seemed as though it was out of the question? Some stronger swimmer says, ‘Come on, we’ll make the point.’ Then you go on.”97

  Berle remained uneasy. “Miss Perkins, the date of the trouble is June 15. It won’t go beyond June 15. Something will happen.” He added somberly: “I am getting my family out of the city and out into the deep country. I advise you to do the same well before the 15th of June. The cities will not be safe.”98

  Berle’s apocalyptic vision did not faze Perkins, who had spent her youth tramping through tough urban neighborhoods and was not inclined to panic. She would not be able to get her family out of New York City by June 15, and in any case, they were already scheduled to leave for Maine later that month. Still, the encounter with Berle stayed with Perkins. “He spoke as though he thought a violent physical revolution was about to take place in which the sans culottes would murder all of the rest of us and our children in their beds,” she said later. “The sense of impending disaster was considerable.”99

  Roosevelt planned to introduce the industrial relief bill in Congress on May 17, but there were some last-minute conflicts to be resolved. Under pressure from Perkins, Wagner, and several other negotiators, the right of unions to organize had been included in Section 7(a) of the bill, which required that every code of competition approved under the law guarantee workers the right to organize “through representatives of their own choosing.” Business leaders strongly opposed the provision and tried to get it removed. Perkins and Wagner, however, held firm. “No 7(a),” Wagner said, “no bill.” The dispute went all the way to Roosevelt. Perkins brought Green to the White House to emphasize how important the provision was to organized labor. Roosevelt ruled in favor of Section 7(a), which would later come to be known as the Magna Carta of the labor movement. With his endorsement “the die was cast,” Perkins would later say. “It was as casual as that.”100

  There was one final fight over public works. Perkins found out on Friday, May 12, that the $3.3 billion program that had been agreed to was no longer in the bill. It had been dropped so quietly that even Wagner, who would be introducing the bill in a matter of days, was not aware of it. The omission was not entirely surprising. Even after he gave his approval, Roosevelt had remained ambivalent about the public works provision. Perkins suspected that Douglas had lobbied beh
ind the scenes for its removal and Roosevelt had acquiesced. When she investigated, she quickly learned that her suspicions were correct. Douglas had met privately with Roosevelt and persuaded him to put public works in a separate bill, intending to kill it later. Perkins was indignant that Douglas had not acted “on the level.” When she called him up, he admitted that he had spoken to Roosevelt, but he insisted that it had been Roosevelt who wanted public works separated out. “I know as much about what the President thinks as you do,” Perkins thought to herself. “I know you’re putting things into his mind, if not words into his mouth.” She called Roosevelt and said she needed to talk to him right away. He invited her to meet him in his study the next day, Saturday, at two p.m. She checked with his secretaries—“I wasn’t above that,” she would later recall—and learned that Douglas had asked to speak with Roosevelt about a matter of importance earlier the same morning.101

  Perkins stayed up all night to prepare for the meeting. She brought along Wyzanski, the Labor Department’s top lawyer, to help make the case. At the meeting, she repeated her familiar arguments for public works, insisting that it would benefit not just the unemployed, but the entire country. She reminded Roosevelt of the conference he had held for governors of eastern states in early 1931, and of how it had recommended public works as a practical, substantial thing that could be done to stimulate employment. “You’ve got to decide it right now, Mr. President,” Perkins said. “Here on this beautiful sunshiny afternoon we have to decide if we shall put it in or leave it out.” If it was left out, Perkins insisted, public works would not pass that year, when it was desperately needed. Roosevelt was persuaded and told Perkins that she should direct Wagner to put the $3.3 billion public works provision back into the bill.102