Nothing to Fear

by Adam Cohen

  Perkins was not taking any chances. She had checked with Wagner in advance to find out where he would be, and she asked Roosevelt if they could call him. Perkins got through to Wagner and told him that Roosevelt had agreed that he should include the public works provision in the bill. Roosevelt himself got on the line and said, “Frances says that she thinks it’s best, and I think it’s the right thing, don’t you, Bob?” Perkins knew that by having Roosevelt tell Wagner directly, the matter would finally be settled. Perkins had no regrets about her maneuvers, which she regarded as defensive. It was clear to her that Douglas would always try to go through the “back door” to get his way. “I never would have done it to Lewis Douglas,” she would later say, “if he hadn’t done worse to me.”103

  On May 17, Roosevelt sent the National Industrial Recovery Act to Congress. The bill’s purpose was to address a national emergency of “widespread unemployment” and “disorganization of industry.” Title I gave business leaders what they wanted: the right to work through trade or industrial associations to develop “codes of fair competition.” Industries would be able to set standards for what constituted “destructive . . . price cutting.” If the president determined that a company violated its industry’s code, he was authorized to revoke its license to do business. For workers, the bill provided that the codes of fair competition could include minimum wages, maximum hours, and child labor protections. It also included the union organizing protections of Section 7(a). Title II authorized $3.3 billion in public works. The bill enumerated a wide array of projects that the money would be used for, including construction and improvement of highways and public buildings; conservation of public lands; water power and electricity development; slum clearance; and construction of public housing. 104

  Roosevelt’s congressional message, which Moley drafted, declared that the NIRA would create “the machinery necessary for a great cooperative movement throughout all industry” that would “prevent unfair competition and disastrous overproduction.” The premise of the act, Roosevelt said, was that industry should be able to rein in excessive competition. The bill contained a “rigorous licensing power” to deal with the “rare cases of non-cooperation and abuse.” To make clear that business would not be the only beneficiary, Roosevelt emphasized that the machinery being created would also be used to expand the rights of workers. He also included a strong statement about the importance of public works. “A careful survey convinces me,” he said, “that approximately $3,300,000,000 can be invested in useful and necessary public construction, and at the same time put the largest possible number of people to work.”105

  Business rallied to the NIRA. Henry Harriman, the president of the U.S. Chamber of Commerce, declared that he considered it “one of the most important measures ever presented at any time to any Congress.” The National Electrical Manufacturers Association, representing companies that had employed 250,000 people in 1929, called the NIRA “wholly and utterly revolutionary” and gave the bill its enthusiastic endorsement. Organized labor also urged Congress to pass the NIRA. William Green declared it “the most outstanding, advanced and forward-looking legislation designed to promote economic recovery” that had ever been proposed, and predicted it would create six million new jobs.106

  In the House, critics leveled the now-familiar charge that the NIRA would give Roosevelt dictatorial powers. When one of the NIRA’s defenders argued that Roosevelt would be a benign dictator, James Beck, an anti-New Deal Republican from Pennsylvania, fumed that “you might as well talk of a peaceful murderer.” Arthur Krock, writing in The New York Times, gave support to the critics, having written a few weeks earlier that the laws already enacted and proposed by Roosevelt would give him “more absolute power than the sum of the arbitrary authority exercised at various times in history by Generals Washington, Lee, Grant, and Sherman, Presidents Jackson, Lincoln and Wilson, and all the Emperors of the Ming dynasty.” The alliance of business, organized labor, and the administration, however, proved unbeatable. The industrial relief bill passed 323-76.107

  There was more opposition in the Senate. Wagner, who introduced the bill, spoke eloquently for it. Organizing industry was “the necessary consequence,” the New York liberal told his colleagues, “of the growing complexity of our economic machinery, and of the increasing interdependence between one State and all States; between one industry and all industries; and between unemployment anywhere and employment everywhere.” Once again, there were charges that Roosevelt was seeking to become an autocrat. Weren’t the powers the bill gave him “too much to vest in a Mussolini or a Stalin or anyone?” the Oklahoma populist Thomas Gore asked. Senate critics were particularly troubled by the power the bill gave the president to withhold licenses from companies that failed to adhere to the industry codes. In a surprising revolt, the critics won a 12-7 vote in the Senate Finance Committee to strip out the licensing provisions. It was only after Roosevelt sent a letter to the committee that Chairman Pat Harrison, Democrat of Mississippi, was able to round up the votes to restore the licensing system, which the bill’s supporters were calling the “very teeth” of the law.108

  Business interests, led by the U.S. Chamber of Commerce, made a final effort to remove Section 7(a) from the bill. The president of the National Association of Manufacturers, Robert L. Lund, warned that the right to organize could “force employers to deal with communistic or racketeering organizations.” At a meeting of the group in Washington, the members made a personal appeal to Hugh Johnson to have Section 7(a) taken out. The unions fired back that the manufacturers were happy to have a law that pushed up their own profits, but they were unwilling to let working men and women benefit. Bennett Clark of Missouri introduced an amendment declaring that nothing in the law “shall be construed to compel a change in existing satisfactory relationships between the employees and employers of any particular plant, firm, or corporation.” Clark’s amendment would have undone the bill’s labor protections, but progressives, led by Senator George Norris, had the votes to defeat it.109

  Senate progressives had their own objections. They were convinced that if the antitrust laws were relaxed, corporations would use their new freedom to collude against the consumer. The populists insisted that big businesses would use the law to drive small ones out of business. The losers, Huey Long declared, would be the “molasses maker and country sausage packer down in my country.” Hugo Black protested that the NIRA would be “a very advanced step toward the ultimate concentration of wealth.” William Borah took on price fixing directly, introducing an amendment to make it illegal. Industry strongly opposed the Borah Amendment, and the bill’s sponsors worried that if it passed business leaders would block the bill. Wagner led the opposition to the amendment, insisting that the bill already contained sufficient protections against price fixing, including the president’s power to reject codes that he found unsatisfactory. “What the Senator fears,” Wagner insisted, “can result only from a faithless and disloyal administration of the act.” There were other forces working against the bill, including a growing sense that the economy was already rebounding, and a major industrial program was no longer needed. In the end, the bill passed the Senate 46-39 on June 13, without Borah’s anti-price-fixing language. It was “a tacit admission,” Time magazine noted, “that price-fixing is to form a part of most trade agreements.”110

  The discussion about who would administer the NIRA had begun before the bill was introduced. The head of the National Recovery Administration would be one of the most powerful officials in government. He would have a major role in regulating production, setting prices, and establishing work standards, and he would be able to discipline, and even shut down, businesses that broke the rules. He would also be in charge of dispensing $3.3 billion in public works funding. Roosevelt was inclined to choose Hugh Johnson, who was intimately familiar with the new law, and who had experience regulating business from his time with the War Industries Board. The choice of Johnson, a businessman with close ties t
o Bernard Baruch, would also be reassuring to industry. Like the appointment of Peek—another Baruch associate—to head the AAA, installing Johnson at the NRA would be a way of signaling that a pathbreaking New Deal agency would not go off in a radical direction. The main argument against choosing Johnson was Johnson himself. He struck many people as too militaristic, too quick to anger, and too prone to use profane language. “There were dead cats, stinking rats, and all kinds of things” when Johnson spoke, Douglas recalled. The little Perkins had seen of Johnson left her wary. Even Baruch did not think his longtime associate was a good choice. While the NIRA was pending in Congress, Baruch had visited Perkins and Rumsey in their Georgetown home. “He’s dangerous and unstable,” Baruch told Perkins. “He gets nervous and sometimes goes away for days without notice.” He would be a good number two or three, Baruch said, but not a number one.111

  Perkins relayed Baruch’s concerns to Roosevelt. When he asked Perkins what she thought, she conceded that Johnson might be a little unstable, but he also struck her as capable and hardworking. “It’s going to take a queer temperament to do this job,” she said of the industrial recovery part of the position, and a “good, flat-footed administrator would never walk into” it. Perkins was concerned, however, that Johnson was not as detail-oriented as an administrator of a $3.3 billion public works budget should be. She recommended that Roosevelt divide the job in two, something Secretary of the Interior Harold Ickes was also urging. Roosevelt named Johnson administrator of the NRA, and put the public works program under Ickes. Johnson was greatly disappointed. He saw public works as an integral part of industrial recovery, and intended to use the funds not merely to put the jobless to work, but to stimulate specific industries that needed help. Perkins, who had fought so hard for public works, was pleased to see that it was being put under the control of Ickes, who she thought could be counted on to administer the program with “the utmost of careful controls, of integrity, and of cautious, businesslike legal procedures.”112

  With the passage of the NIRA, the last important piece of Hundred Days legislation had fallen into place. Tugwell saw it as a counterpart to the Agricultural Adjustment Act. The AAA “authorized the shaping of agricultural policy by the voluntary cooperation of the nation’s farmers,” he said. “The recovery act would similarly authorize the shaping of industrial policy through the cooperation of its operating units.” Roosevelt was well aware that the NIRA envisioned fundamental changes in the nation’s economic system. When he was working on the second fireside chat, Moley pointed to a section that called for a “partnership” between government and industry. “You realize, then, that you’re taking an enormous step away from the philosophy of equalitarianism and laissez-faire?” Moley said. Roosevelt was silent, Moley recalled, and looked as grave as he had at any time since the inauguration. “If that philosophy hadn’t proved to be bankrupt, Herbert Hoover would be sitting here right now,” he responded. “I never felt surer of anything in my life than I do of the soundness of this passage.”113

  CHAPTER EIGHT

  “He Must Be Part of This Historic Show”

  Of all the changes the New Deal was ushering in, none was more radical than the administration’s approach to relief. The Hopkins-Hodson plan that Roosevelt had endorsed in mid-March was a sharp break with the nation’s traditions. American welfare policy had descended directly from the harshly punitive “poor laws” of Dickensian England. The English poor laws assumed that the poor were to blame for their condition, and that they had to be forced to overcome their laziness and go to work. When aid was absolutely necessary, English law held that it was a local responsibility, to be carried out at the parish level. American poor laws proceeded from the same ungenerous assumptions. They left care for the poor to local governments or private charities. To ensure that aid would go only to the truly needy, many jurisdictions gave it out in the form of “indoor relief,” which meant that the poor had to live in almshouses to receive it. Even when aid was given out as “outdoor” or “home” relief—aid that poor people could receive while living in their own homes—the eligibility rules were exacting, the benefit levels were low, and the money budgeted for relief was woefully inadequate.1

  The Depression challenged the nation’s beliefs about the poor. After the economic crisis threw millions of Americans out of work, it was clear that poverty could be caused by brutal economic circumstances, not just weak character. It was difficult to blame a once-successful lawyer who had lost all of his clients due to the Depression or a steelworker whose entire industry had ground to a standstill for being unable to earn a living. The economic crisis had also broken down the traditional methods of caring for the poor. Even wealthy cities like Philadelphia had run out of money to help their unemployed citizens. In less well-off parts of the country the situation was far worse. John L. Lewis, the United Mine Workers president, pointed out that many of his members lived in remote mining towns that barely had local governments, much less relief programs for destitute families. Private charities were unable to take up the slack. When the Depression began, charities were providing one-quarter of the relief given nationwide, but they could not keep up with the fast-growing demand. Between 1929 and 1932, about one-third of the private agencies that cared for the poor closed down for lack of money. Many of the remaining ones teetered on the brink of insolvency.2

  Progressives in Congress and advocates for the poor had tried to persuade Hoover to take a new approach to relief. Hoover, however, held firmly to his traditional views. His belief in rugged individualism had convinced him that government aid would harm the recipients. “Must Americans perish miserably,” The Nation magazine demanded of Hoover, “because of your fear that their characters may be sullied?” Hoover also believed strongly in local responsibility. If government had to get involved in distributing relief, his administration insisted, it should be the “local political division where such conditions exist.” Most of all, Hoover believed voluntary efforts by businesses and charities were the answer. He set up two committees to help the unemployed—the President’s Emergency Committee for Employment, and later the President’s Organization on Unemployment Relief—but only provided them with money for administrative expenses. The committees’ job, as Hoover saw it, was to lobby private industry to create more jobs. Congressional progressives introduced several strong relief and public works bills, but Hoover resisted all of them. John Nance Garner, who would soon be vice president, tried to rally support for a program to put the unemployed to work building post offices, but Hoover insisted that the plan was “not unemployment relief,” but rather “an unexampled raid on the public treasury.” Walter S. Gifford, the chairman of the President’s Organization on Unemployment Relief, testified before the Senate and said he had faith that states and localities could handle the crisis. When Senator Edward Costigan of Colorado snapped, “You are always hopeful,” Gifford responded, “I find it pleasant, Senator, to be hopeful.”3

  When Hoover finally yielded and supported a federal relief program, it was an inadequate one. Because he did not believe that relief was a federal responsibility, Hoover would only agree to a program that distributed aid to the states in the form of loans. Other constituencies were quick to impose their own conditions. Southerners, led by Senator Hugo Black of Alabama, insisted that states be given full control over how their funds were spent, to ensure that federal administrators could not require that blacks and whites be treated equally. Conservatives demanded that no new federal bureaucracy be created to manage the program. Wagner drafted a bill that took account of all of these concerns. It authorized the federal government to make $300 million in loans to the states. To avoid creating a bureaucracy, it called for the funds to be distributed by the Reconstruction Finance Corporation, an agency that already existed to help ailing businesses. States would be allowed to run their programs without federal intervention. The Emergency Relief and Construction Act proved woefully inadequate. The biggest problem was that allocating aid in the f
orm of loans did not work. The states in the worst financial shape, which needed relief funds the most, were the least willing to take on more debt. Although the law made $300 million available, by the end of 1932, the states had borrowed only $80 million, which barely began to address the needs of the nation’s millions of unemployed.4

  The Hopkins-Hodson plan would take relief policy in a new direction. The bill that Wagner, La Follette, and Costigan drew up at Roosevelt’s request, the Federal Emergency Relief Act of 1933, allocated $500 million to the states in the form of grants, rather than loans. Half of the funds would be distributed based on a formula of $1 for every $3 that states and localities contributed. The other half would go to states and localities with no requirement of a match, allowing the federal relief administrator to direct the funds to poor states that had little or no money of their own to spend. In defiance of congressional conservatives, the bill called for creating a new government agency, the Federal Emergency Relief Administration, to distribute the money. Over the objections of the Southerners, the bill authorized the FERA to set the rules for state relief programs.5

  The law rejected Hoover’s approach to relief, but it also marked a new direction for Roosevelt. As governor of New York, Roosevelt, who had a strong states’ rights streak, had resisted the idea of federal responsibility for relief, even though he could have used the aid. He emphasized that caring for the poor was a local responsibility. When he introduced the Temporary Emergency Relief Act in the New York state legislature, he had underscored “that the distribution of relief of the poor is essentially a local function.” Roosevelt had stuck to this principle during the 1932 campaign. In a speech in Detroit, he continued to insist that localities bore “the first responsibility for the alleviation of poverty and distress and for the care of the victims of the depression.” On the campaign trail, Roosevelt had criticized Hoover for many things, but—according to a book written in 1937 by two of Hoover’s Cabinet members—Roosevelt had never faulted Hoover for failing to establish a federal relief program. Now, Roosevelt was supporting not only a program to dispense $500 million in federal funds, but a federal agency to oversee it.6