Forgotten Man, The (19 page)

“What matter,” Prince Edward would ask of Britain in these years, “if some trifling blunder is committed here, or some project fails there? The very attempt of the community to achieve some social betterment for the sake of the workers in their midst will lift the general level of hope and make easier every national solution by statesmen and economists.” The Britons placed their faith in royalty, and the Americans were placing their faith in Roosevelt. The scrip makers began trying out new designs. In at least two places, Albion, Michigan, and Evanston, Illinois, the new faith would shortly become explicit. The scrip craftsmen there placed a likeness right on the front of their paper bills: the visage of FDR. In February, assassin Giuseppe Zangara shot at the president-elect in Florida. The bullet hit Chicago mayor Anton Cermak instead, and Cermak would die of the wound. Yet FDR bounced back quickly. “I have never in my life seen anything more magnificent than Roosevelt’s calm,” Moley wrote later. Moley, a criminologist by training, interviewed Zangara and determined he had acted alone. Roosevelt refused to let the Secret Service introduce a protective glass barrier between him and the crowds at the inaugural parade. Mrs. Roosevelt for her part opened herself to the country too, inviting citizens to write her once she arrived in Washington. On an auspiciously fair inauguration day, FDR pronounced his now famous phrase, “The only thing we have to fear is fear itself.” Here was a president who would not barricade himself at Rapidan. He was right there with them in this time of crisis. The pilgrims could not believe their luck. Tugwell, Chase, Moley, Berle, Frankfurter, and the others had waited so long for a chance to try out their ideas. Now they had one.

October 1933
Unemployment: 22.9 percent
Dow Jones Industrial Average: 93

THEY MET IN HIS BEDROOM
at breakfast. Roosevelt sat up in his mahogany bed. He was usually finishing his soft-boiled egg. There was a plate of fruit at the bedside. There were cigarettes. Henry Morgenthau from the Farm Board entered the room. Professor George Warren of Cornell came; he had lately been advising Roosevelt. So did Jesse Jones of the Reconstruction Finance Corporation. Together the men would talk about wheat prices, about what was going on in London, about, perhaps, what the farmers were doing.

Then, still from his bed, FDR would set the target price for gold for the United States—or even for the world. It didn’t matter what Montagu Norman at the Bank of England might say. FDR and Morgenthau had nicknamed him “Old Pink Whiskers.” It did not matter what the Federal Reserve said. Over the course of the autumn, at the breakfast meetings, Roosevelt and his new advisers experimented alone. One day he would move the price up several cents; another, a few more.

One morning, FDR told his group he was thinking of raising the gold price by twenty-one cents. Why that figure? his entourage asked. “It’s a lucky number,” Roosevelt said. “because it’s three times seven.” As Morgenthau later wrote, “If anybody knew how we really set the gold price through a combination of lucky numbers, etc., I think they would be frightened.”

By the time of his inauguration back on March 4, everyone knew that Roosevelt would experiment with the economy. But no one knew to what extent. Now, in his first year in office, Roosevelt was showing them. He would present it all in what came to be known as the Hundred Days, that first frenzied period of legislative activity.

Some of the projects were mere extensions of Hoover’s efforts, no matter what Hoover said. Roosevelt asked for war powers to handle the emergency, just as Hoover had suggested in a note during the interregnum. Hoover had called for a bank holiday to end the banking crisis; Roosevelt’s first act was to declare a bank holiday to sort out the banks and build confidence. Now Roosevelt’s team worked with Republicans to write the first emergency legislation to stop the bank runs. Hoover had had Ogden Mills; Roosevelt had another respectable man as treasury secretary, Will Woodin. Ray Moley would later write of that period, “Mills, Woodin, Ballantine, Awalt, and I had forgotten to be Republicans or Democrats. We were just a bunch of men trying to save the banking system.” In this period Washington asked the two banks in Detroit, Father Coughlin’s hometown, to merge, and Woodin placed or took a call with Coughlin to win his support. It succeeded, with Coughlin supporting the administration over the air. “Secretary Woodin asks me…,” listeners heard.

There were further commonalities. Hoover had spent on public hospitals and bridges; Roosevelt created the post of relief administrator for the old Republican progressive Harry Hopkins. Hoover had loved public works; Roosevelt created a Public Works Administration and assigned Insull’s old enemy, Harold Ickes, to run it from the Department of the Interior. Hoover had known that debt was a problem and created the Reconstruction Finance Corporation; Roosevelt put Jones at the head of the RFC so that he might address the debt.
Indeed, it was through the RFC that Roosevelt was making these gold purchases. Hoover had wanted to pass legislation to help farmers. So did Roosevelt. “When it was all over,” Tugwell would later write, “I once made a list of New Deal ventures begun during Hoover’s years as secretary of commerce and then as president…. The New Deal owed much to what he had begun.”

Yet other projects were mere gentle departures from Hoover. Hoover had encouraged families to tend “subsistence gardens” so that they might feed themselves with their own vegetables. Roosevelt instructed Ickes to develop a subsistence homestead project where families might feed themselves on new farms. Hoover had signed a Glass-Steagall Banking Act in 1932, to expand credit; Roosevelt now prepared his own Glass-Steagall Act.

Hoover had deplored the shorting of Wall Street’s rogues; Roosevelt set his brain trusters to writing a law that would create a regulator for Wall Street. The new Securities and Exchange Commission would turn the stock market from a free-for-all with hazy rules into a more comprehensible game, one in which the small player had a fairer shot. Hoover had expanded public works to create jobs; Roosevelt too would create job and relief programs. Hoover had not cared much about Prohibition, and neither did Roosevelt; he now sought an end to it.

Perhaps, some thought, Roosevelt understood about the uncertainty problem. Mellon, the departing ambassador to London, paid a courtesy call in which he discussed with Roosevelt a plan to insure bank deposits, of which Mellon disapproved. Roosevelt assured Mellon that he agreed with the sentiment 100 percent, and Mellon left confident. But Roosevelt was feeling bold, ready to create a new country, or give the impression of doing so. Shortly afterward—to Mellon’s shock—he reversed himself, signing a bill that included deposit insurance. Shortly after, other differences emerged.

The main tasks Roosevelt assigned himself were simple. The first was that there be a broad sweep of activity; Americans must know Washington was doing something. If there were contradictions between experiments and within them, well, that did not matter.
Partly this came out of the restlessness of the invalid; Roosevelt had risen politically but he still could not stand unaided. But partly it came out of a grandeur of spirit. “Do I contradict myself?” Roosevelt seemed to be asking, as Walt Whitman had. “Very well then, I contradict myself. I am large, I contain multitudes.” The second goal was to get prices up, without much regard to whether the methods applied to achieve that goal made sense. The country was in no mood in any case to put Roosevelt’s concepts under a microscope. What mattered was change: like an invalid, the country took pleasure in the very thought of motion. Roosevelt invoked wartime powers, and to the people it seemed that he, like Abraham Lincoln in the Civil War, needed those powers.

“Dominant note of courageous confidence,” summed up the
Chicago Tribune
after the president’s inaugural speech. “Country will back him,” said the
News
of Dallas. The
St. Louis Globe
’s headline called Roosevelt a man “who has will to do.” As the comedian Will Rogers said, “The whole country is with him…. If he burned down the Capitol, we would cheer and say, ‘well we at least got a fire started anyhow.’”

The first great project was the National Industrial Recovery Act. Its purpose was clear: to drive prices up and “put people back to work,” as Roosevelt announced happily. The act established Ickes’s Public Works Administration on the thesis that spending would fix the economy. Second, the act created the new labor rights that Perkins, Douglas, and Bob Wagner had been seeking, on the thesis that a worker with more pay would spend more and strengthen the economy, a theory that owed something to both Henry Ford and Waddill and Catchings. Roosevelt named Perkins his labor secretary, the first woman in an American cabinet. There was a third part that made the other two look modest: the National Recovery Administration. General Hugh Johnson, who had spent evenings at Hyde Park, would lead this like a military campaign: a campaign in which industries and trades would join hands together with workers so inefficiencies—including labor unrest—might be diminished. The National Recovery Administration even had its own emblem: a blue eagle. The eagle
was a clear invocation of war; it would inspire the economy to march.

The NRA was the consummation of a thousand articles and a thousand trends. It was the ideas of Moley, the trade unions, Stuart Chase, Tugwell, Stalin, Insull, Teddy Roosevelt, Henry Ford, and Mussolini’s Italian model all rolled into one. The law worked on the assumption that bigger was better and that industry, labor, and government must work together, as in Italy, or risk staying in depression. It advocated both greater productivity and greater efficiency while forbidding price cutting, in order to nudge prices up. There was little escaping the NRA. Some 22 million workers came under its 557 basic codes. There would be a consumer advisory board, just to be sure the consumers’ thoughts were included—Paul Douglas, who “rejoiced” at the emergence of the more activist Roosevelt, would sit on that board. More than a hundred industries would establish codes of business, codes that included minimum wage rules, child labor rules, maximum hour rules. There was a long roster of other requirements, including health requirements or standards regarding customer choice.

The authority of the NRA ranged widely, and the New Dealers were hoping to use it in original ways. In the oil industry, for example, prices were in collapse—a barrel of oil went for four cents in east Texas by May 1933. Under the NRA Ickes had authority to set production quotas, an authority he used to curtail supply in the name of driving up price. In other industries, the NRA rules were equally specific. NRA code determined the precise components of macaroni; it determined what tailors could and could not sew. In the poultry industry the relevant line of code had barred consumers from picking their own chickens. Customers had to take the run of the coop, a rule known as “straight killing.” The idea was to increase efficiency. If smaller businesses died out, that might be for the best anyhow.

“Must we,” Roosevelt himself asked the people as he announced the NRA on June 16, “go on in many groping, disorganized, separate units to defeat or shall we move as one great team to victory?” Gen
eral Johnson and FDR picked an old progressive to be the NRA’s general counsel: Donald Richberg, who had hired young Lilienthal in Chicago and who with Douglas had battled Insull over those tram lines.

Roosevelt and the brain trusters also created a twin for the NRA: the Agricultural Adjustment Administration, to sort out farming. Henry Morgenthau Jr. had been Roosevelt’s conservation commissioner in New York State and had been “crestfallen” about not getting a cabinet post, his son later recalled—he had watched his father get the news while visiting him at boarding school. But he still had plenty to do helping out farms. At the Agriculture Department, Henry A. Wallace advocated a weaker dollar and price supports for farmers. Tugwell would serve as well, though Columbia’s president, Nicholas Murray Butler, had been flatteringly reluctant to let him go, telling Tugwell he might come back after a year’s leave or so. He would be Wallace’s assistant secretary and work on developing his own notions of planned capitalism. Americans had already retreated to the land in some respects with the onset of the Depression: Roosevelt was now blessing that move and assuring the country that he would seek to make it financially sustainable.

Wall Streeters thought nearly any Roosevelt policy would be better than the uncertainty of the winter, and flocked around. One new adviser was James Warburg of the banking dynasty, who rode to the rescue, believing that Roosevelt needed help since “no president ever took over a nastier, stickier, more complicated mess.” Of their first meeting Warburg wrote: “I vividly remember my first impression of FDR’s massive shoulders surmounted by his remarkably fine head, his gay smile with which he greeted his guests, and the somewhat incongruous, old-fashioned
pince nez
eyeglasses that seemed to sit a little uncertainly on his nose.” Irving Fisher, the Yale professor, had a similarly transporting experience. He had made a career of getting close to presidents; over the course of his life he had met with Teddy Roosevelt, Taft, Wilson, Harding, and Hoover. It was not hard for a charmer like Roosevelt to win Fisher over, and
he did. Leaving a meeting with the president that year, Fisher would write, “It was the most satisfactory talk I ever had with a President and the most important…. They were all very nice to me but I never felt I got as good a reception of my message before.” In April, thinking Roosevelt would go along with his plans for inflating, Fisher euphorically wrote his wife: “I am now one of the happiest men in the world…. I feel that this week marks the culmination of my life work.” The intoxication of being with Roosevelt changed yet another life.

Another adviser was Alfred Lee Loomis of Bonbright, who had hired Willkie and sat on his board. Lew Douglas, likewise a conservative, became Roosevelt’s budget director. A final conservative was William Woodin, who filled the spot of treasury secretary: in the first scary week of the bank holiday, Woodin cajoled not only Coughlin, but many banks into staying open when he believed they should. As for the undergraduates of Vassar, Mary McCarthy would note, they were thrilled: their trustee, their own neighbor by the Hudson River, was now in the White House.

The next stage, governing, came quickly, with the largest item on the agenda being farm prices. In the spring of 1933 agricultural prices stood at 40 percent of their 1926 level; farmers threatened a general strike. Henry Wallace and others told Roosevelt that this must mean there was too much supply and too little demand. They suggested correcting supply. If farmers sold less, their prices would go up. The AAA’s official purpose was to be to “relieve the national emergency by increasing purchasing power”—especially the power of farmers. Unlike many offices in the New Deal, the AAA did hire a number of true leftists, including people who later turned out to be Communists, or spies, such as Alger Hiss. The politics of the individual staff members were not especially evident—Tugwell would later write that if Hiss was a Communist, he was “so far underground that even his close associates did not know it.” The AAA was itself radical, both in the scope of the legislation and the authority it gave officials. The man named to lead the AAA was George Peek of
Moline, Illinois. Peek declared that the AAA was not about helping farmers; rather, it would enable them “to do something for themselves that they have been prevented from doing.”

The act established that farmers deserved the level of price they had received prior to World War I, labeled the fair price. The AAA began paying farmers to produce less. The government also encouraged farmers to sell less by offering them favorable loans in exchange for restraint. To fund all these changes, the AAA taxed middlemen—distributors—an idea that made particular sense to Tugwell. To him middlemen were the profiteers in a system; if a retail price for food was simply too high, then it was the middlemen who, through their cut, were pushing up retail prices. An old folk song line seemed truer than ever: “the middleman’s the one who gets it all.”