Forgotten Man, The (22 page)

 

We already have many cases before us in which evictions have been ordered, apparently in direct defiance of the contract…. In one case we find that the owner of a large plantation has recently acquired a new tract of land upon which lived eighteen sharecropper families. He has evicted nearly all these families…. The acres rented by the government are not being turned over to the tenants on the terms contemplated by the contract, if at all.

 

Tenant farmers overall “fared badly,” wrote one agricultural historian, “in part because the AAA programs were built around commodities instead of people.”

The AAA got its first serious negative publicity after Americans learned that a total of six million young pigs were killed before reaching full size over the course of September. “It just makes me sick all over,” one citizen would write, “when I think of how the government has killed millions and millions of little pigs, and how that has raised pork prices until today we poor people cannot have a piece of bacon.”

The move did drive pork prices up—a bit—but other agricultural products were not behaving despite such efforts. In October 1933 the commodity reports that Warren and Roosevelt watched so closely edged down or stayed flat. The Dow for its part repeatedly touched the 100 level it had seen earlier in the year, but refused to go much over it, retreating back into the 90s several times. Events overseas were also pressuring stocks. From Germany reports of Hitler’s new detention camps continued to flow. That month a German who made it over the French border reported that Hitler had locked up the ex-head of the German Broadcasting Company, his executives, the former president of the court of justice in Berlin, and a number of former mayors at Oranienburg.

But Roosevelt was not concerned about markets. He relished the fact that he had three and a half years in office still ahead—it seemed a luxury after the two-year terms of a New York governor. Relaxed, he persevered in his dollar experiment. After all, no one, even he, could fix everything at once. And at least one element of his money experiment was working. The gold price was rising; the dollar was down to a low against gold unimagined just a few years ago. Gold now cost $31 an ounce, up by half from its level under the gold standard. Roosevelt proceeded with vigor, though he was at moments concerned for the health of the members of his administration after such a blistering first few months. When Tugwell seemed tired, Roosevelt dispatched him to look at conditions out west. He traveled to Glacier National Park by train, taking his two assistants, Grace Falke and Fred Bartlett. They saw the new CCC camps and agricultural experiments, “apple, citrus, date, wine, rubber, erosion control,” Tugwell wrote in warm memory later. Falke kept notes on the trip.

On October 22, Roosevelt gave a Fireside Chat in which he told listeners that his aim was “to establish and maintain continuous control” of the dollar. The commodity market responded instantly, with wheat futures prices rising nearly 40 percent in the course of his broadcast. Historians report that in late October Roosevelt told George Harrison at the New York Fed that it was “imperative to get agricultural prices up before Congress meets and that if we did not, he was fearful of what Senator Thomas and the other inflationists might do.” On October 25 Roosevelt began the gold purchase program from his White House bedroom. When his attempts to influence the U.S. gold market failed, he and Warren went for the worldwide market in their purchases.

But some observers were becoming restive. July’s high of 109 for the Dow had not been repeated; a plateau pattern of around 100 seemed to be becoming a rule of life. Al Smith of New York, still a hard-money man, spoke out against Roosevelt’s “baloney dollars.” And toward the end of November, the city of New York staged an evening’s version of the national debate over money. At Carnegie Hall the pro-gold forces rallied—professors from New York Univer
sity, Wall Streeters, and once again, Matthew Woll of the AFL. Inflation, Mr. Woll lectured, was hardly in the interest of the worker—if only because of the instability it caused; the good was “to stabilize our currency as soon as possible.” The same evening at the city’s Hippodrome, Father Coughlin, the national radio star, hosted a pro-Roosevelt rally, arguing that Roosevelt must “be stopped from being stopped.” Six thousand people were in the hall, and thousands more, who had tried to get in, listened in through loudspeakers on the street. Roosevelt, Coughlin said, had done the right thing and “brought the dollar down to speaking terms with the English pound.” One of the guests at the Coughlin event was Henry Morgenthau, the father of the acting treasury secretary. Coughlin had spoken in the past publicly of “modern Shylocks.” Morgenthau declared the country’s policy “in excellent hands.”

The news about homeowners continued to be bad. A January 1934 report would show that in all of twenty-two cities surveyed, at least two in ten households with mortgages were either late on their payments or in default; in two cities, Birmingham, Alabama, and Indianapolis, at least half of mortgage holders were in trouble. In Cleveland, the rate was six in ten households.

Keynes was nonplussed. He penned an open letter of criticism to Roosevelt, saying he understood that in the terrible state of the U.S. economy, the currency and exchange policy should be “entirely subservient to the aim of raising output and employment.” Nonetheless, whatever he had written during the London conference, an uncertain and changing currency was also bad for both those goals. And the Roosevelt regime was causing the dollar to gyrate. Keynes, like Warburg with his images of the lost pilot, was so anxious to convince Roosevelt that he stretched for a metaphor he thought would impress the president. As the United States happened to be in the final stages of Prohibition’s repeal that autumn, Keynes told Roosevelt that his gold purchase program looked like a “gold standard on the booze.”

Roosevelt did not seem to react. To most of the country, Keynes was just another economist, and not an American one at that. By the
time Keynes spoke, Roosevelt was in any case working on helping the economy by another means.

For years now, Roosevelt had been reading Duranty in the
New York Times
on Russia. The godlessness troubled him—the purge of the churches. He told Perkins about his meetings with Maxim Litvinov, the Soviet envoy. “Well now, Max, you know what I mean by religion. You know what religion gives a man. You know the difference between the religious and the irreligious person.” He went on: “Look here, sometime you are going to die, Max, and when you die you are going to remember your old father and mother—good, pious Jewish people who believed in God and taught you to pray to God.” Roosevelt told Litvinov that religious freedom was important if the United States was to recognize the Bolsheviks, and he told Perkins he thought he had made an impression on Litvinov.

It seemed time to give Russia a chance. In the autumn he ended a sixteen-year U.S. policy toward Russia, and recognized the Soviet Union. “Huge Trade Orders Wait Our Credits,” blared the
Times
in a subheadline. The Soviet government owed the United States hundreds of millions of dollars; it would not pay all the money, but it could give the country credits with which to buy Soviet goods. At a moment when people were still hungry, the deal seemed pragmatic—as president, Americans understood, Roosevelt had to choose the lesser evil. In Danzig, a port city, Nazis that winter were tossing newspaper editors in jails; they were also taking over the courts of the Saar. Recognizing Russia was also a way of counterbalancing the Germans.

Finally, unexplainably, Roosevelt shifted on the money question. After numerous conversations on the phone with George Harrison of the Federal Reserve, he slowly edged away from his gold purchase program. Professor Warren faded. In January came proof that, without ever really conceding, Roosevelt was switching tactics: the president submitted a bill to return to the gold standard on the fifteenth. The new dollar would be $35 an ounce. Fisher grumbled at the time Roosevelt had wasted on his experiment, writing to his son in March
of 1934, “Yes, the gold act was a fine birthday present [for Fisher]; but I can’t help feeling that the president could have gone much faster if he hadn’t mixed in so many things which were holding us back instead of getting us out of the depression.” But now Roosevelt was inflating, and devaluing, and giving up on the day-to-day control. The dislocated shoulder was back in place. Those who wanted to do business with America—and in America—once again, knew the terms of the arrangement.

As it happened, the tragic news from Europe brought about an irony. Chancellor Hitler in Germany was moving past revolution to what he called a period of reconstruction, which Roosevelt could see was simple and effective retrenchment. Hitler was banning the Catholic Center Party, more evidence of descent into barbarism. The French were growing warier. As had been the case at the time of Gustav Stresemann’s death, desperate foreigners sent their gold and their money to the United States. American investors who had sent their cash and gold overseas also began to bring it back. The country’s gold stocks doubled in six months.

On a single heady day in February 1934, banks would report, $100 million in gold arrived at New York piers on two ocean liners, the
Paris
and
Europa.
The gold on board was, the papers noted, “expatriated capital which was turned homeward by the restoration of the gold standard.” As the supply of gold reserves in the American banks rose, so would the amount of money in circulation. What Roosevelt had tried and failed to achieve with his gold purchase program would come to pass—in part because he had recognized his error, and in part because of foreign events entirely outside his control. The New Deal recovery seemed to have a chance again. Roosevelt was indeed now the one with the luck.

November 1933
Unemployment: 23.2 percent and heading down
Dow Jones Industrial Average: 90

 

My name is William Edwards

I live down Cove Creek way,

I’m working on the project

They call the TVA

The government begun it

When I was but a child

And now they are in earnest

And Tennessee’s gone wild.

—American folk song

 

IN NOVEMBER
1933, the sound of hammers rang through a small town in Tennessee that had, until recently, been known as Cove Creek. Workmen were already completing the roof of a dorm for the workers on the New Deal’s most dramatic project, the Tennessee Valley Authority.

Roosevelt might be a politician on monetary policy; he might waffle on the gold standard. But there was a question for which he already did have an answer. It was the question of control of natural resources, and especially the hydroelectric power that could be generated by dams. Here, his progressive side, his Roosevelt side, his navy side, came to the fore. As governor, he had seen the issue as one involving the state authority and public control of the St. Lawrence River. As president, he saw the matter as Washington’s task. Power resources generally were too important to stay in the private sector. They belonged to the people. The president had an ally in George Norris in the Senate, who for so long had fought for public power. Felix Frankfurter, after all, had been teaching about this for years at Harvard. Most of the new president’s advisers agreed. Tugwell described himself as a “gas and water socialist,” writing: “I saw no reason to hesitate because the United States was larger than New York.” The press around the advisers produced supportive articles: Chase was writing these days about the importance of regional planning for power. There was even a way around the old constitutional obstacles to control by Washington of natural resources. You could circumvent the whole problem by creating a new regional level of government, and expand from there.

Not everyone found the idea of arranging the American economy by river basin intuitive. At his house in Tuxedo Park, New York, Alfred Lee Loomis was put off. He and his partner Landon Thorne had already retreated from Wall Street. Projects like the TVA convinced Loomis that he had better stay out. “He thought it would destroy the business world,” his son’s first wife later recalled. Loomis was a gifted scientist as well as a financier. In World War I he had invented a new way to measure the velocity of flying shells, later known as the Aberdeen chronograph. Now he was converting his Tuxedo Park compound into a scientists’ lab and think tank; with all the changes going on, this seemed the more productive way for him to work for the time being.

Still, the times made the argument for the TVA seem more logical than it might have in the 1920s. So many industries nowadays
seemed unable to complete what they had started. Perhaps that might also prove true for utilities and the electrification of the country. The price of power was coming down, but the poor could not afford to be lavish with electricity, even when they did have it—there would be a radio, but not a washing machine. Only government, many argued, had both the capital and the goodwill to rectify this situation.

Roosevelt decided now that whatever government control of electric power there was would remain; the government would also begin to control power in new areas. He had four goals. The first was to provide electricity to homes and farms—many farms were still without. The second was to increase use of electricity in all homes, providing Americans with a better standard of living. The third was to reduce the cost of electricity to the average consumer. And there was a fourth, more ephemeral goal: that through the electricity industry the New Deal might create a new and more prosperous form of society.

The ideal demonstration project was already in construction, the Hoover Dam on the Colorado River. The Hoover Dam would be a dam like a pyramid, something that matched Stalin’s Dnieprostroi. All it would take to make the Colorado dam seem like Washington’s project would be to legally and formally convert the multistate format of the Colorado project to a national one.

But there was a problem: the project was Hoover’s, hard for Roosevelt and the New Dealers to claim. At the Department of the Interior, Harold Ickes had even made a stab at taking credit for it. Not long after the election Ickes issued a special order changing the dam’s name—henceforward it was to be the Boulder Dam, after the original site picked by engineers.

It had been a bold move. After all, there was the Theodore Roosevelt Dam in Arizona, completed in 1911 as the first multipurpose project built by the Bureau of Reclamation. There was the Wilson Dam at Muscle Shoals. There was even the Coolidge Dam, in Arizona. The renaming of the Colorado River dam turned out to be so controversial that both publicly and privately, Ickes repeatedly found
himself forced to justify his action. In his diary, Ickes complained that “a number of insulting letters, some of them anonymous have been coming attacking me for changing the name of Hoover Dam to Boulder Dam.” After noting some of the details, he went on: “I have always called this the Boulder Dam myself, as do many people and I have continued that usage since I came to Washington. I consider it very unfair to call it Hoover Dam. Hoover had very little to do with the dam.”

FDR meanwhile was already turning his attention to the Tennessee Valley, which he knew from his many trips south. This was territory untouched—intentionally untouched, owing to those Hoover and Coolidge vetoes. Roosevelt knew well the frustration of the local officials, the sort who had written the telegram to Washington in the fear that electrification would pass the South by. He would not only reverse his predecessors’ decision on Muscle Shoals and build up the Wilson Dam there, he would create an intermediate-level entity on that regional level. A public authority, it would manage power, rivers, and economic development—all three—throughout the Tennessee Valley. Whereas Hoover had one dam, Roosevelt would have nine. And though Roosevelt had allowed Ickes to take Hoover’s name off the dam in Colorado, Roosevelt also allowed his advisers to give a politician’s name to one of his new dams: the Tennessee Valley Authority’s dam at Cove Creek would be Norris Dam, after George Norris.

The more he thought about it, the more Roosevelt warmed to the project. It had that expansive feel of reinvention that he liked. The three directors at the TVA would report directly to Roosevelt, an unusual arrangement that circumvented Ickes and other cabinet members. The men therefore could hear out Roosevelt on his specific thoughts—and he could hear them out, too.

From the start, the TVA had a utopian feel to it. It would create new towns. The most important of these, at Cove Creek, was approved at a meeting of the TVA board in the summer of 1933. It would be a model community; someone attending the meeting suggested that an appropriate name would be New Deal, Tennessee. But the board decided that the town, like the dam, should be called Nor
ris. That was not all: the TVA would flood over a vast area, 153,000 acres of land, and buy out 3,000 farm families to create space for a reservoir behind the dam. There would be disruption, but it would be worth it, for the Tennessee Valley Authority would provide power cheaply. The idea was to create a “yardstick” against which the rates charged by private companies could be measured. And this project might in its turn be a model for similar structures in other regions. After all, the switch that controlled electric power might also be the switch that controlled the economy. Roosevelt wasn’t actually sure how it would all hold together. But that did not necessarily matter for the moment.

Neither Tugwell, nor Chase, nor even Paul Douglas got a big role at TVA, but all three had something to say about it. And the management of the project did go to other progressives. The senior of the three directors was to be Arthur Morgan of Antioch College in Yellow Springs, Ohio. Decades earlier, Morgan had read Edward Bellamy’s
Looking Backward,
and he had attempted to create his own little educational utopia at Antioch, dividing students’ days into blocs of study and of work on a farm or in a factory. Antioch students founded companies—the Morris Bean Company, the Antioch bookplate company, the Antioch Press. Morgan was also an engineer, and had over-seen the construction of the dams along the Ohio Valley. He had voted for Hoover—another engineer, after all—but what Roosevelt cared about were his progressive ambitions: “I like your vision,” he told Morgan in 1933 at their interview. The second director was another university president, and another Morgan, Harcourt Morgan. The former president of the University of Tennessee, Morgan was expert in agriculture and entomology. This Morgan also had hopeful theories: he spoke about the environment as if it were a seascape, and envisioned a “common mooring” of air, soil, and water.

The third director was David Lilienthal, at thirty-three the youngest by more than a generation. Lilienthal was junior, but he had already collected credentials with the leading utilities reformers of the country. After his time at Frankfurter’s Harvard, and in Chicago with Richberg, Lilienthal had proposed and written utilities law
for Governor Phil La Follette, the son of “Fighting Bob,” in Wisconsin. Now Lilienthal himself had determined to expand the tradition. “You see,” Lilienthal wrote in those years, “I have a very strong feeling that if we cannot control our basic industries, and certainly nothing is more basic than the utilities industry, then we have no government in fact, merely a pathetic fiction of government.” Like the La Follettes, and Roosevelt for that matter, Lilienthal feared that once private power conquered the electricity market, it would abuse it. This was the sort of thing he and “FF”—Frankfurter—had discussed when Lilienthal saw him at the university, or at Frankfurter’s house at 192 Brattle Street in Cambridge.

While as serious as the two Morgans, Lilienthal was fundamentally different. If the two were dreamers of the nineteenth century, Lilienthal was a twentieth-century dreamer—the sort who believed that having adequate statutory language, the sufficient bureaucratic authority, and the sufficient budget were prerequisites to realizing a dream, not something one went out and retrieved as an afterthought. This difference between the Morgans on the one hand and Lilienthal on the other was emphasized by their appearance: the two older men wore round horn-rims and seemed a pair of owls; the younger man had glasses but did not wear them in all the early photos. From the start, Lilienthal worked hard to set himself off as less doctrinaire and more practical than the Morgans—“A river has no politics,” he would say again and again.

In throwing these three men together, Roosevelt was replicating what he had done by sending advisers with conflicting philosophies to the London conference. Again, he wasn’t sure whose model would predominate, or how the three would get along, or how the project would work. That did not matter for now. He would postpone his judgment, and so would the South. The project itself might be “neither fish nor fowl.” What mattered, he told Tugwell, was that “whatever it is, it will taste awfully good to the people of the Tennessee Valley.”

And Roosevelt was correct on the last. In the autumn of 1933, the New Deal project seemed worthy. The Tennessee River was what
the experts called a “flashy” river. In a minute or two the waters of a calm creek could rise into a giant wall of water, almost as the Mississippi had in 1927. There were highs, there were lows, and there were surprises. Around Muscle Shoals, for example, the water dropped 140 feet in 30 miles, as much as the Niagara Falls of Roosevelt’s own New York.

As for the people of the Tennessee Valley, they were among the poorest in the country, truly forgotten men. Their land was poor and overfarmed. Exactly how overfarmed, Tugwell, now assistant secretary of agriculture, was demonstrating in a report on Grainger County, part of the area to be purchased in the TVA plan. The report warned that the conditions of the land were now so bad that it might be impossible to restore it, and that the farming methods of the citizens were “little better, if any, than that of the early colonial farmers in the tidewater sections of Virginia and Maryland.” Tugwell concluded that the lands in the river basin of Wilson Dam “were approaching the limits of arability.”

The TVA, everyone hoped, would change all this. Even as the news of the TVA circulated, homeless families or families led by unemployed men started appearing around Muscle Shoals to watch as the first bits of construction started. Many did find work. Within a month after the start on Norris Dam, construction began on Wheeler Dam. The TVA management hired thousands of people. By the middle of 1934, there would be more than 9,000 employees at TVA. As locals watched, workmen erected seven more bunkhouses, a cafeteria that would serve 3,000 meals daily, a theater facility, a library, even Norris’s own post office. In the area around the valley, men from the CCC planted 3 million trees and laid 2.6 million square yards of brush to keep the soil in place. TVA workers in Norris received a wage above those in the area, and they could eat all they liked for twenty-five cents in the Norris cafeteria.

Arthur Morgan, who at first ran the whole project—especially the details at Norris—recognized that it was the greatest opportunity to build a community he would have in his lifetime. He and his wife, Lucy, poured energy into each detail of Norris. Houses had
electricity then. The walls of the houses in Norris—or at least some—were made of attractive local stone. Pedestrians would walk not on hard concrete sidewalks but rather on softer, curving footpaths constructed of natural earth.

The soul of the TVA worker also concerned Morgan. While riding on a train one day in 1933 from Washington back to Yellow Springs and Antioch, Morgan roughed out a moral code for the staff of the Tennessee Valley Authority. It included rules such as absolute openness. “A man who will lie for me will lie to me,” taught Morgan, accurately enough. TVA employees could not take gifts from contractors; employees should live modestly as well.