A Just and Generous Nation

by Harold Holzer

  The True Sons of Liberty as depicted in this 1918 Charles Gustrine print are black soldiers fighting in World War I. They are inspired into battle, the print suggests, by the image of a benevolent Lincoln and a paraphrased promise of equality from the Gettysburg Address. The Great Emancipator had introduced African American military service in 1863.

  COURTESY OF GILDER LEHRMAN INSTITUTE OF AMERICAN HISTORY, GLC09121

  But World War I became the last great cause of Woodrow Wilson’s progressive movement, and it proved to be the movement’s undoing. By 1919, when the president returned from Paris with the Treaty of Versailles and his elaborate plan for the League of Nations, the public was sick to death of war and equally weary of Wilson’s seemingly inexhaustible store of idealistic rhetoric. As long as Wilson’s vision remained focused on improving the lives of ordinary Americans, the public stood behind him. War in the name of an abstract idea of human progress, however, left a bitter taste.

  A prototypical African American veteran returns from the Great War to the embrace of his family—under the gaze of a Lincoln icon gracing the parlor wall. In truth the doughboy will receive a less enthusiastic reintroduction to segregated civilian life than promised in the title to this print: Welcome Home.

  FROM THE LINCOLN FINANCIAL FOUNDATION COLLECTION, COURTESY OF THE ALLEN COUNTY PUBLIC LIBRARY AND INDIANA STATE MUSEUM AND HISTORIC SITES

  Republicans correctly gauged the public mood and hit on an apt theme for the 1920 election: “Not heroism, but healing,” declared Republican candidate Warren G. Harding, “not nostrums, but normalcy.” The swipe at Wilson’s rhetorical grandiosity (dismissing it as so many “nostrums”) struck a powerful chord. The Republican ticket (Warren Harding and Calvin Coolidge) trounced the Democratic slate (James M. Cox and Franklin D. Roosevelt), winning 16 million votes to the Democrats’ 9 million.

  In one respect, Harding’s postwar administration harked back to President Ulysses S. Grant’s administration following the Civil War. It would be remembered for a string of spectacular scandals. Mercifully, perhaps, the president died of a sudden stroke in August 1923 before the malfeasance had come to light. But scandals were not the most important consequence of Harding’s presidential leadership. The real significance of the Harding administration was that it ushered in twelve years of unabashed probusiness Republican rule—a revival of laissez-faire economic doctrine and a return to the Gospel of Wealth.

  This time the public embraced the Republican probusiness approach with unparalleled fervor. The reason was simple: it seemed to work. The 1920s were a decade of dramatic economic growth and unprecedented rise in the living standards of most Americans. From 1921 through 1929, the gross national product expanded at an estimated real rate of 4.5 percent per year—well above the average annual growth rates of 3 percent per year in the post–World War II decades.

  The prosperity of the 1920s was not produced by laissez-faire magic. It was based on increasing consumer demand heavily financed by consumer borrowing. This was all well and good, as long as prosperity continued on the upswing. But amid the exuberance of the era, it was easy to forget an elementary truth: that borrowing carried risk.

  “The chief business of the American people is business,” affirmed President Calvin Coolidge in January 1925. The Republican administrations of the 1920s saw their economic mission as one of enabling business to do its job. For government, this meant mainly getting out of the way: lower taxes, less regulation, indeed virtually no regulation. Business should be helped or otherwise left alone. As business prospered, so would America. From their probusiness perspective, the 1920s Republicans claimed that prosperity was coming from the producer, from the top down. “Give tax breaks to large corporations,” Treasury Secretary Andrew Mellon famously said, “so that money can trickle down to the general public, in the form of extra jobs.”

  Americans for the most part were initially buoyed by the ride up the 1920s roller coaster, but the ride down was too terrible to forget. Following the stock market crash in October 1929, the American economy descended into a rapid tailspin. By 1932 12 million Americans were out of work—nearly a quarter of the labor force. Tens of thousands of men were riding railroad boxcars from town to town in a vain search of employment, and tens of thousands more were living in makeshift tent camps on vacant lots in major cities (derisively named Hoovervilles after Republican president Herbert Hoover). Countless families across the nation lacked shelter, heat, food, or even shoes and clothing for their children. The risk had simply become unacceptable. Business had taken the risks; now ordinary Americans were paying the terrible price. Overnight, the 1920s land of milk and honey had turned into a biblical land of famine.

  The Wanderer Finds Liberty in America was the title of this “Americanization” pageant staged for Jewish immigrant children in 1919 Milwaukee. The man in the Lincoln regalia is unidentified, but the costumed “Statue of Liberty” is believed to be Goldie Mabovitch Meyerson—who later migrated to Palestine and eventually became Israeli prime minister Golda Meir.

  COURTESY OF STATE HISTORICAL SOCIETY OF WISCONSIN, MADISON, WHI X3 22831

  For almost two decades, Theodore Roosevelt and Woodrow Wilson had done what they could to resurrect Lincoln’s vision and overturn the Gospel of Wealth. Now, however, it seemed as if the Gospel of Wealth, back with a vengeance, had utterly destroyed Lincoln’s vision of a middle-class society.

  Ten. For a Vast Future

  EXPANDING LINCOLN’S AMERICAN DREAM

  WHEN FRANKLIN D. ROOSEVELT entered the national stage as the Democratic presidential nominee in 1932, he appeared to be no less a captive of the generally accepted economic orthodoxy than the Republicans. During the campaign, Roosevelt attacked Herbert Hoover as a spendthrift and called for a balanced budget and a reduction in federal spending. In other words, Roosevelt assailed Hoover for just about the only thing that Hoover was doing right. “Given later developments, the campaign speeches often read like a giant misprint, in which Roosevelt and Hoover speak each other’s lines,” a New Dealer later observed. Still, however similar they sounded, Roosevelt succeeded in characterizing Hoover as a do-nothing president in a time of crisis. Roosevelt handily defeated Hoover in the election.

  Although he shared some of the orthodox beliefs of the time—in particular, favoring balanced budgets and sound money in 1932—Roosevelt departed from the orthodoxy in one critical respect. He believed strongly in Lincoln’s idea of constructive government action. Roosevelt was an heir to the twentieth-century progressive tradition on two different sides: he had served in Woodrow Wilson’s progressive administration (as assistant secretary of the navy), and he had married Theodore Roosevelt’s indomitable niece Eleanor. Watching Wilson, and for that matter Teddy, FDR internalized Lincoln’s belief that government could be an active instrument of change: it could be used to reshape economic life; it could establish a new and better set of rules for economic activity; it could be a tool for solving problems. It was a tool Roosevelt was fully prepared to use.

  When his first term began in March 1933, Roosevelt inherited a shattered economy from his Republican predecessors. The nation’s economic institutions were crumbling, the banking system was not functioning, and business confidence had collapsed. As distinguished journalist Walter Lippman observed, “Financial and industrial leaders had fallen from one of the highest positions of influence and power that they had ever occupied in our history to one of the lowest.” The public was in despair. President Hoover and his friends in the business community seemed to have no answers. The public had lost faith in the Republican leaders of the nation.

  Against the relative passivity of the Republicans—a legacy of their long-standing laissez-faire economic credo—Roosevelt proposed a bold course of government action. The byword of his approach was experimentation. “It is common sense to take a method and try it,” he said. “If it fails, admit it frankly and try another. But above all, try something.”

  “Try something.” The words spoke directly
to the dark public mood caused by pervasive unemployment, hunger, and homelessness. Do something, anything, to halt the slide into economic apocalypse. At the Democratic National Convention, Roosevelt pledged “a new deal for the American people.” “New Deal” became the slogan of his administration and the synonym for a revolution in federal government policy.

  Roosevelt’s New Deal was a modern version of Lincoln’s commitment to government action to support a prosperous middle-class society. FDR self-consciously defined his progressive policies in Lincoln’s language. In a fireside chat on September 30, 1934, Roosevelt said: “I believe with Abraham Lincoln, that ‘The legitimate object of Government is to do for a community of people whatever they need to have done but cannot do at all or cannot do so well for themselves in their separate and individual capacities.’”

  A month later, Roosevelt insisted again that his cause was the same as Lincoln’s, quoting his 1864 speech at Baltimore:

  I can better describe the kind of liberty which our Administration has sought and continues to seek by reading to you the simple words of a great President who believed in the kind of liberty that we believe in—the great President who preserved the American Union. . . .

  “The world has never had a good definition of the word liberty, and the American people, just now, are much in want of one. We all declare for liberty; but in using the same word we do not all mean the same thing. With some the word liberty may mean for each man to do as he pleases with himself, and the product of his labor; while with others the same word may mean for some men to do as they please with other men, and the product of other men’s labor.”

  Roosevelt found in Lincoln’s commitment to government “for the people” the basis for positive government action to restrain business managers from exercising unlimited power over their employees. He was fully prepared to take positive action to improve the economy. And so he did.

  Roosevelt’s commitment to the well-being of all citizens was manifested by his New Deal government stimulus programs to provide jobs for all able-bodied workers. Roosevelt treated the government as a direct employer not only of last resort but of first resort. He created the Civilian Conservation Corps, the Civil Works Administration, the Public Works Administration, and later the Works Progress Administration. His intention to take direct action was further signaled by the National Recovery Act, which brought together business leaders, labor leaders, and government officials under the same roof to undertake, industry by industry, national planning to manage economic growth.

  When Roosevelt took office in 1933, unemployment stood at an almost unbelievable 24 percent. The unemployment rate declined to 21.7 percent in 1934 and continued to drop to 14 percent by 1937. Roosevelt’s stimulus programs were viewed favorably by a substantial majority of American voters.

  By 1934 the country was on its way to recovery. With the economy on somewhat more stable ground and public antipathy toward the wealthy cooling slightly, members of the business community quickly tried to reclaim what they viewed as their “rightful” position of power and influence in society. Many wealthy Americans began to turn against Roosevelt, attacking his New Deal’s activist government as a threat to their economic power and their social position. They viewed Roosevelt as a “traitor to his class.” In their version of “class warfare,” wealthy Americans took the first steps in August 1934 to defend their upper-class status and economic profits by establishing the Liberty League. Their objective was not only to protect their incomes from taxation but also to promote their belief that economically successful Americans were superior people whose wealth and talent gave them the unique ability to manage public policy for the nation and the world.

  The Liberty League was funded by wealthy American families, including the DuPonts of Delaware, who felt threatened by Roosevelt and the New Deal. The objective of the Liberty League was to “teach the necessity of respect for the rights of persons and property.” The Liberty League claimed that the primary duty of government is to foster enterprise and initiative, and the government should in no way hinder one’s right to earn and retain profits and to acquire and retain property. The Liberty League undertook to achieve this goal by funding anti–New Deal candidates to regain power to ensure that probusiness policies would be supported by Congress and a new president.

  The battle between the Liberty League and Roosevelt’s New Deal came to a head at the beginning of election year 1936. Speaking to and for the Liberty League, former New York governor Al Smith accused Roosevelt’s New Deal of encouraging class warfare, squandering the taxpayers’ money, subverting the Constitution, violating states’ rights, and supporting socialistic and communistic policies. His criticisms were cheered by wealthy businessmen, men such as the head of General Motors, Alfred P. Sloan, Sewall Avery of Montgomery Ward, and Nathan Miller of U.S. Steel, who rallied behind the Liberty League in the hope that it would succeed in electing politicians who could defeat New Deal policies.

  Nothing energized Roosevelt more than strident opposition. Roosevelt decided to respond to the Liberty League with a point of view derived from Lincoln, who in his Annual Message to Congress on December 3, 1861, had rejected “the effort to place capital on an equal footing with, if not above, labor in the structure of government.” “Labor,” Lincoln had insisted, “is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

  In accepting the Democratic nomination for a second term in 1936, Roosevelt was similarly forceful in attacking those who, like the Liberty League, would claim that capitalists were superior to laborers. As FDR put it: “The royalists of the economic order have conceded that political freedom was the business of the government, but they have maintained that economic slavery was nobody’s business. They granted that the government could protect the citizen in his right to vote, but they denied that the government could do anything to protect the citizen in his right to work and his right to live.” Just as Lincoln had argued seventy-­five years earlier, Roosevelt was adamant that, “in the structure of government,” the citizen’s right to work and therefore live was more important than the businessman’s opportunity to maximize profits.

  Recognizing that “class conflict” was at the center of the 1936 campaign, Roosevelt described his upper-class opponents as “privileged princes” of new “economic dynasties”—not that different, perhaps, from the privileged slave owners Lincoln had criticized. Roosevelt argued that what they really feared was loss of their power. He weighed in “against dictatorship by mob rule and the over privileged alike” and went on to say, “Government can err, presidents do make mistakes, but . . . Divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales. Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a Government frozen in the ice of its own indifference.” In this first major battle between Roosevelt and the Liberty League, Roosevelt won. He was reelected in a landslide that November.

  Roosevelt summarized the basic elements of his ongoing economic policy in his State of the Union address on January 3, 1938. While he was proud of his actions in correcting the financial excesses that led to the banking crisis, Roosevelt now said his primary objective was to increase average family income and purchasing power. “Again I revert to the increase of national purchasing power as an underlying necessity of the day. If you increase that purchasing power for the farmers and for the industrial workers—especially those in both groups who have the least of it today—you will therefore increase the purchasing power of the final third of those professions which serve these groups, and therefore those of those professions who serve all groups.” Here Roosevelt was stressing that the economic fate of the country depended on adequate income for all segments of society: farmers and city workers, low-income workers, middle-income workers, and upper-income workers.
He looked forward to a future with an increasing number of families with middle incomes—fulfilling Lincoln’s vision of a middle-class society.

  Roosevelt described his prolabor and prounion policies as motivated by the necessity of increasing “the purchasing power of the nation as a whole.” He said: “I have spoken of labor as another essential in the three great groups of the population in raising the Nation’s income. . . . [D]efinite strides in collective bargaining have been made, the right of labor to organize has been nationally recognized. . . . [O]ur principal interest for the near future . . . [is] the immediate desirability of increasing the wages of the lowest paid groups in all industry.”

  Roosevelt was clear about his reaction to the competing claims of those who advocated balancing the federal budget. “We have heard much about a balanced budget. . . . But I lay down certain conditions which seem reasonable and which I believe all should accept. The first condition is that we continue the policy of not permitting any needy American who can and is willing to work to starve because the Federal Government does not provide work. Government has a final responsibility for the well-being of its citizenship.”

  Roosevelt’s commitment to the well-being of all citizens was manifested by his New Deal government stimulus programs to provide jobs for all able-bodied American workers. When Roosevelt took office in 1933, unemployment was at an almost unbelievable 24 percent. By the time of Roosevelt’s second inauguration in 1937, the country was on the mend—national income was improving and unemployment had declined to 14 percent. Roosevelt felt that he could now return to a balanced-budget approach. It had been the dominant economic orthodoxy when Roosevelt first took office in 1933 and remained so four years later. Roosevelt’s misguided effort to balance the budget by reducing government expenditures in 1938 and 1939 resulted in a temporary increase in unemployment to 19 percent in 1938 and 17 percent in 1939. Recognizing the negative consequences of his effort to balance the government budget, Roosevelt firmly returned to a policy of increasing government expenditures, and unemployment declined to 15 percent in 1940.