Even more than his masterful inaugural address, which had been formal and traditional, this first “fireside chat”—a network announcer invented the phrase on the spur of the moment—was a milestone in American democratic rhetoric. Despite the availability of radio for nearly a decade, neither American nor European politicians (with the exception of Britain’s Stanley Baldwin) had tried to use it as a mode of intimate contact with constituents. Roosevelt’s instincts were those of a visionary who grasped the future of political communications.10
The opening phrase, “My friends,” would become a trademark Roosevelt opening intended to diminish the distance between himself and the humble citizen. In this first chat he acknowledged the confusion most people felt, then sketched in the simplest terms the workings of a banking system that accepted deposits, loaned most of the money out, and could not possibly meet demands for mass withdrawals. The government was rehabilitating that system through regulations that would provide for continuity. Most banks were sound. They would reopen, cushioned with ample supplies of money issued by the Federal Reserve. The reopening would have to be phased. Listeners should not worry if their own bank was slow to open. Any bank that reopened was sound; their money was safer there than under a mattress. “You people must have faith; you must not be stampeded by rumors or guesses. Let us unite in banishing fear. We have provided the machinery to restore our financial system; and it is up to you to support and make it work.”11
The delivery was perhaps a trifle fast, but the voice was firm and authoritative, the contrast with the glum-sounding Hoover great. As banks resumed business over the following weeks, customers flocked to them, making deposits that far exceeded withdrawals. Roosevelt had established a new and formidable mode of presidential leadership.
On March 10, in a bow to fiscal conservatives, he sent an economy bill to Congress. Warning that “too often in recent history liberal governments have been wrecked on rocks of loose fiscal policy” and raising the specter of national bankruptcy, he expressed alarm at a national debt headed toward $5 billion and called for broad authority to make drastic spending cuts. He got the legislation ten days later. It cut veterans benefits—half the national budget—by 50 percent and prescribed significant decreases in salaries for most federal employees. The pain thus inflicted was real and perhaps necessary, but it would not prevent the president from making enormous emergency expenditures.12
In order to raise revenues and redeem a promise of real significance to the urban wing of the Democratic Party, the president also sent up a bill permitting the sale of beer and wine of “such alcoholic content as is permissible under the Constitution” and establishing federal taxes on the legalized beverages. Congress quickly complied by specifying that a 3.2 percent alcoholic content was permissible under the Eighteenth Amendment, thereby clearing the way for a new stream of federal revenue. A few months later, state conventions would adopt the Twenty-First Amendment to the Constitution, repealing Prohibition and enabling a complex patchwork of state and local regulations on the subject. A divisive distraction vanished from American politics.
These early moves established some baselines for the new presidency: change, unorthodoxy, a willingness to lead, and a patina of fiscal caution. Roosevelt had won the confidence of a solid majority, but he had yet to address the fundamental problems of Depression and mass joblessness. Unemployment was at 25 percent, farm prices at all-time lows, mortgage foreclosures peaking, business plumbing new depths, and extreme hardship a way of life for millions of Americans. All this required far more than a banking act and government economy. The president and the people around him began rolling out a program that Roosevelt would later characterize as one of relief, reform, and recovery. It kept Congress in session for the rest of the spring and transformed the nation’s political economy.13
Relief came most visibly and quickly. Two and a half weeks after the inauguration, the White House sent Congress a bill to establish a Civilian Conservation Corps (CCC), akin to the agency he had authorized in New York. Ten days later, he signed the act into law. Over the next ten years, the CCC would cycle two volatile sources of social instability—250,000 rootless World War I veterans and 3 million young unemployed men between the ages of eighteen and twenty-five—into quasi-military camps run by the US Army. The Department of Labor recruited the enrollees. The Departments of Agriculture and the Interior selected conservation projects: reforestation, erosion control, dam construction, and park maintenance and development. Robert Fechner, a vice president of the American Federation of Labor, served as the CCC’s civilian director.
The camps, typically located in rural areas near small towns, instilled discipline in their inhabitants, who usually wore army-style uniforms when off base. The work, mostly manual labor, was healthy, the food simple and plentiful. The experience provided structure and basic skills. The CCC’s mission embodied the passion for conservation that Roosevelt’s own rural background and the example of TR had stoked within him. It also appealed to a national sense that America’s natural heritage must be preserved. The CCC was probably the most popular of all the New Deal programs. In 1934, Congress established it as a permanent agency and authorized an increase to 360,000 enrollees.14
On May 12, Roosevelt signed into law an act establishing a Federal Emergency Relief Administration (FERA). To administer the new program, he called to Washington his old New York relief impresario, Harry Hopkins. A relentless pragmatist, Hopkins attacked problems head-on. Arriving at his new, still unfurnished Washington office, he found a desk in the hallway, sat down at it, and quickly authorized $5 million in expenditures.15
The agency’s then large appropriation of $500 million went mostly to state relief programs, which usually made direct payments to the destitute. The FERA also provided funds for public works projects, some paid for entirely with federal money, others funded jointly with states. Hopkins, from the beginning, favored work relief. The “dole” might work for England, Hopkins conceded, but it deprived its recipients of “their sense of independence and strength.” The FERA pursued primarily small-scale projects, such as road improvements and modest public buildings. It would be the main conduit of help to the poor and the unemployed for the first two years of the Roosevelt presidency until superseded by the Works Progress Administration and the Social Security Act in 1935.16
A chain-smoking obsessive, Hopkins fashioned projects for unemployed artists, professionals, and manual laborers alike. He attempted, not very successfully, to fend off politicians who saw the FERA as a patronage vehicle. The nation’s foremost advocate for the jobless and the face of New Deal relief, he was on his way to becoming indispensable to the president.17
On May 18, Roosevelt signed the Tennessee Valley Authority (TVA) Act, the legislative embodiment of a promise to Nebraska senator George Norris to establish a regional development agency that would not simply harness the electrical generating capabilities of the World War I dam on the Tennessee River at Muscle Shoals, Alabama, but also pursue conservation programs, produce cheap electricity, tame the flood-prone Tennessee, and engage in economic development.
The most imposing public planning project in American history, TVA affected seven states and envisioned the construction of an additional sixteen dams. It converted a raging river into a navigable waterway, established planned communities, produced fertilizers marketed by the government, and generated inexpensive electricity that would attract industry to a largely agricultural region. Headquartered in Knoxville, Tennessee, it seemed a major example of the Jeffersonian decentralization that remained important to many Democrats. Its founders proudly, and with some exaggeration, touted it as an example of “grassroots democracy.” Over the next several years, it provided jobs aplenty, but from the beginning, it also challenged traditional notions about the baseline importance of private enterprise in American society, especially corporate capitalism as embodied in the electrical utility industry.18
Relief
also meant mortgage assistance. Farmers, who had suffered from depressed commodity prices since the end of World War I, had taken a beating in the twenties. The Depression turned all but the most efficient farm operations into money losers; mortgage foreclosures mounted ominously. On March 27, Roosevelt signed an executive order merging nine separate federal rural credit agencies into one Farm Credit Administration (FCA) and appointed his loyal friend Henry Morgenthau Jr. to head it. On June 16, the Farm Credit Act equipped the FCA with broad authority to refinance farm mortgages, issue new loans, establish local debt-adjustment committees, and assist agricultural cooperatives.19
Since the beginning of the Depression, foreclosures had blighted not just the countryside but also the urban neighborhoods of middle-class America. Roosevelt and the New Dealers had not taken office with a master plan to enlarge homeownership in the United States, but their efforts moved almost irresistibly in that direction. The Hoover administration had established a network of Federal Home Loan Banks to underwrite mortgages. Roosevelt greatly enlarged the system with the establishment of the Home Owners Loan Corporation (HOLC), which became law on June 13. The HOLC subsequently acquired approximately 75 percent of the total value of nonfarm home mortgages in the United States. The establishment of the National Housing Administration in 1934 would provide federal underpinning for long-term mortgages financed through federally chartered and insured savings and loan associations.20
The first hundred days provided relief from the ravages of the Depression on an unparalleled scale. For those at the receiving end, the New Deal was all about government assistance; this was the primary source of allegiance for many voters. Roosevelt and his advisers were more expansive in their ambitions. The Depression, as they saw it, provided an opportunity to reshape the American economy.
The president and the people around him believed that government needed to play a much bigger role in the economy as regulator, promoter, and balance wheel. The general idea was not new. During the last comparable national emergency, the World War, the government had assumed active management of agriculture through Herbert Hoover’s Food Administration and of industry through Bernard Baruch’s War Industries Board. Roosevelt and the New Dealers downplayed Hoover’s past as an economic manager but wanted to build on his rudimentary efforts in the 1920s to organize the American economy, first as secretary of commerce, then as president. The state, as they saw it, could partner with business, labor, and agriculture. Reform, they had no doubt, would facilitate, not hinder, recovery. From that perspective, the centerpieces of the New Deal were not the relief efforts, worthy though they might be, but the agricultural and industrial programs.21
Farming had been the sick man of the American economy since the end of the World War. From the earliest days of the republic, agriculture had comprised two socioeconomic strata: impoverished operators, struggling for a bare subsistence on marginal land they frequently did not own, and middling to large operators, often heavily in debt, producing for a market over which they had no control. Most New Deal legislation for agriculture targeted the latter group.
The marginal farmers, pursuing hard lives that provided no promise of prosperity, were mostly relief problems. The larger farmers constituted a necessary agricultural adjunct to an industrial economy. Especially in the South they might be exploiters of the marginals, whom they employed as sharecroppers or tenants. Nonetheless their production fed and clothed a nation and attracted the attention of congressmen and federal officials. Large organizations—the Farm Bureau Federation, the National Farmers Union, and the National Grange—spoke for them in Washington and developed local followings through cooperatives that sold insurance, processed crops, and ran retail farm supply operations. The Department of Agriculture was already a sprawling bureaucracy, centered in Washington but reaching out to the state and county levels through the land-grant agricultural and mechanical college system that could be traced back to Lincoln and the county agent program established under Woodrow Wilson. The still-powerful Jeffersonian folk belief that tilling the soil was a uniquely virtuous occupation deserving of national support reinforced this highly organized web of political power.
Nearly half of all Americans depended economically on agriculture, either as farmers or as residents of small towns and cities in rural areas. Agricultural regions were palpably overrepresented in Congress. (The Supreme Court mandate for equalization of legislative districts was decades in the future.) The South, the core region of the Democratic Party, was heavily agrarian in its politics and economy.
For all its organization and emotional support, agriculture had enjoyed scant success in its drive for assistance during the 1920s, achieving only some minor legislative victories during the presidency of Warren G. Harding before slamming into the free market ideology of Calvin Coolidge. American farming was deeply divided between five basic commodities—wheat, corn, cotton, rice, and tobacco—predominant in different areas of the country and subject to different market conditions. In addition, many agriculturalists produced specialized crops that ranged from hops and barley to citrus fruit, or they derived their income from milk or raised livestock for slaughter. Nor was there one single farm ideology or political agenda. The farm organizations proposed remedies ranging from price supports to export subsidies to Bryanite currency inflation.
Two things were certain: the Depression had flattened about every variety of farm income, and the unrest in rural America was nearly revolutionary. Here and there, armed bands of farmers blocked foreclosure sales. In Iowa, a spontaneous movement, the Farmers’ Holiday Association, headed by a firebrand named Milo Reno, set up roadblocks manned by shotgun-wielding dairy farmers to intercept and dump milk on the way to processing plants. The movement, although illegal and ineffective, enjoyed widespread local support.
Against this background of armed agrarians attempting to stave off personal and financial ruin, Congress and the administration labored to put together an agricultural relief and recovery program. The effort consumed ten weeks following Roosevelt’s inauguration.
Secretary of Agriculture Henry Wallace, aided by Rexford Tugwell and the department’s Bureau of Agricultural Economics, developed a new approach to the problem of chronic surpluses. Farm leaders had wanted the government to buy excess production and dump it overseas, but such an exercise would generate ever-greater surpluses and require unsustainable funding. Wallace and his advisers believed that a farm program had to consist primarily of payments for cutting production. Their system, “domestic allotment,” would have large components of decentralization and individual choice. Administered by local committees organized by the Agricultural Extension Service and its county agents, the program would assign to farmers in every county a certain number of acres to be withdrawn voluntarily from production in exchange for a generous government payment. The resulting drop in production would swing supply into balance with demand, increase commodity prices sharply, and bring prosperity back to the countryside. Rotation of fallow acreage over a cycle of years would moreover serve as a conservation measure.
The concept was attractive to academic planners. But would it actually reduce production? Might it instead encourage farmers to use their allotment payments to finance equipment, fertilizers, and hybrid seed that would get more from less soil? Was it moral in a time of widespread want to restrict production? What kind of big-brother government would be needed to police the plan?
A surprising number of politicians and farm leaders argued for full production and lavishly subsidized exports. Others fell back on the old agrarian nostrum of currency inflation. John A. Simpson, president of the National Farmers Union, advocated a government guarantee of the “cost of production,” which of course was easier to talk about than to determine. Rural legislators led by Senator George Norris lined up to support the proposal. Roosevelt, determined to keep the costs of farm support within reasonable bounds, got it killed.22
On May 12 the congressional sau
sage grinder finally sent the president an omnibus bill that combined three major strands of legislation: mortgage relief, agricultural organization, and monetary expansion. The heart of the bill provided for the establishment of an Agricultural Adjustment Administration (AAA) built around the domestic allotment concept but containing far-reaching authority to limit production by other means, including subsidization of agricultural exports. Its first head, George N. Peek, had spearheaded the drive for full production and export subsidies during the previous decade. The monetary provisions gave the president wide authority to devalue the dollar by adjusting the official Treasury price of gold, establishing silver as a basis for American currency, or simply printing greenbacks. They established much of the legal basis for Roosevelt’s monetary experiments over the next year.
On May 7, with passage of the agriculture bill imminent and enactment of an industrial recovery bill within sight, Roosevelt delivered a second fireside chat. Laying out as nonthreateningly as possible his vision of the administration’s mission, speaking in measured and authoritative cadences, and ad-libbing frequently to make the formal text more conversational, he declared it “wholly wrong” to characterize his program as one of government control of farming, industry, and transportation. “It is rather a partnership.”23
The linchpin of the emerging “partnership” for industry was the National Industrial Recovery Act (NIRA), passed on June 16, just before the special session of Congress adjourned. The industrial economy far outstripped agriculture in importance and long had been the dynamic source of economic growth in the country. The New Deal would stand or fall as an economic recovery program on this legislation.
Man of Destiny: FDR and the Making of the American Century Page 25