Penguin History of the United States of America (99 page)

So far so good; but the President’s hand was now being forced, for the first but not for the last time. The unemployed were getting help; now those still working, on short hours and for reduced wages, and their employers, who had almost forgotten what it was to make a profit, clamoured for assistance, to such effect that the Senate in early April passed a bill that Roosevelt thought was unconstitutional and unwise. He substituted a measure of his own, the National Industrial Recovery Act (NIRA), which suspended the anti-trust laws in return for certain concessions by big business, of which the two most important were that the workers might freely organize themselves into unions, and that a federal bureau, the National Recovery Administration (NRA), might lay down and enforce codes of conduct for each separate industry. The NRA was to have a short and stormy career, but the transformation it launched in American industrial relations was to be permanent, one of the New Deal’s most solid achievements.

Other important laws came thick and fast. A cherished dream of the liberals during the twenties, especially of the veteran old Progressive Senator George Norris of Nebraska, had been the scheme to use the federally owned dams at Muscle Shoals on the Tennessee river to generate cheap electrical power for the people of the Tennessee Valley. This project had been bitterly opposed by the electricity companies, and conservatives in Congress had tried to sell off the dams (which had been built to generate power for the production of nitrate for explosives during the First World War) to private concerns. Norris had been able to stop that, and now his dream came true. The Tennessee Valley Act set up the Tennessee Valley Authority as the first publicly owned electricity organization in the country. It was rank socialism, but no one seemed to care: the TV A created thousands of jobs as it built more dams and constructed power-lines; as a secondary activity it trained the farmers of the Valley in conservationist agricultural techniques; and its electricity not only began to reach hundreds of thousands of poor homes which would otherwise have had to do without refrigerators, electric stoves and electric light, but tempted industrialists to set up plants in what until then had been one of the most under-industrialized regions of the country.

The Glass-Steagall Banking Act, which consolidated the achievement of the spring emergency measure and added the exceedingly important
provision of a federal guarantee for bank deposits, and the Farm Credit Act, which consolidated the farm mortgage rescue, with NIRA, were passed by Congress on the hundredth and last day (16 June) of its session; the whole hectic period since the inauguration therefore became known as the Hundred Days. A legend of Napoleonic defeat was thus transformed into one of Rooseveltian victory.

It was, indeed, astonishing how far America had come. Never before had there been such an orgy of law-making, never before had so bold an attempt been made to adjust the country to new times. But the work was only beginning. The pace of that first spring was never again to be equalled, but a great transformation was under way. The demands made on the American people were not to slacken significantly until the eve of the Second World War. For the men and women round Roosevelt (Frances Perkins, the Secretary of Labor, was the first woman to become a Cabinet officer) were not content to pass emergency measures and then let the federal government sink back into the dignified indolence of the late nineteenth century. The Coolidge era was over for ever. Former Wilsonians, former Progressives, they each had one or more long-cherished reforms to push, now that they had the power and now that the temper of the country was so obviously propitious. They saw their opportunity, as Boss Plunkitt would have said, and they took it. They were no morning glories, but able, experienced, hard-driving professionals.

They were more single-minded than their chief, whose priorities were somewhat different. While happy to maintain the momentum of the Hundred Days and happy in bringing, first hope, then achievement, to the country, Roosevelt based his strategy on his perpetual preoccupation with leadership. During the first years of his Presidency his aspiration was to be the generally supported leader of all the people. The vision of national unity, which has shimmered before the eyes of so many great democratic politicians (the obvious British example being Lloyd George), shimmered before FDR. In some respects his instincts were profoundly conservative. He was a countryman, for example, who often found it difficult to realize the needs of the modern city-dweller; and his economic opinions were in many cases far from forward-looking. Thus, it is hard for the present generation, after a lifetime of inflation, to understand the passion and conviction with which men of Roosevelt’s day believed in the scientific necessity of balancing the national budget in order to avoid what was, in the thirties, an absolutely minimal risk of inflation.
³
. Their minds were
governed by abstractions, instead of their own concrete experience (besides, Henry Morgenthau, Roosevelt’s Secretary of the Treasury, was not really adequate to his job, though he had able assistants). Roosevelt was a committed anti-inflationist, so much so that in the end he sacrificed the New Deal to his principles. He believed in American capitalism as much as he believed in American democracy, and he hoped for the co-operation of the business class, in part because he was rescuing it from disaster and in part because, like Hoover, he thought, not wrongly, that without business support and confidence the economy could not make a complete recovery. Besides, he was temperamentally averse to harsh choices, which might limit his freedom of action. So he played down the Democratic party, in 1934 refusing even to go to its traditional beanfeast on Jefferson’s birthday, and as long as he could he played down his reformer’s role too.

In many respects this lofty pose of being above the battle paid him handsomely, making it easier for former Progressives and Republicans to desert to his standard. But essentially the aspiration was misconceived and it broke down on the stubborn facts of the situation. Only lavish government spending could pull the United States out of its downward deflationary spiral, and such spending inevitably made a balanced budget impossible. This alienated the conservatives. Furthermore, the New Deal programmes necessitated taxation increases (especially if the President was to keep alive his hopes of one day achieving solvency) and some of that increase (very little in practice) had to come out of the pockets of the rich. They did not like it, any more than they liked government-imposed reform of the economy they were used to ruling. From early 1934 onwards the alienation of the old business community – the magnates of New York, Philadelphia and Chicago (businessmen further west were less upset) – grew deep and bitter, until the rich alluded to the President only as ‘that man in the White House’. At the same time Roosevelt slowly learned to abandon his aspirations and to come out as the champion of the people against the ‘economic royalists’. By 1936 the lines were sharply drawn – more sharply, perhaps, than in any other election in American history – and the Republicans, identified as the party of Wall Street, were swept to what seemed to be eternal oblivion.

Other choices could not be made so easily, or if they were, were made badly. The most conspicuous example of the latter mistake was the sabotage of the London Economic Conference immediately after the Hundred Days had ended. This conference was a legacy of Herbert Hoover’s conviction that the root of the Depression lay in international trade relations. He had summoned the conference to put things right. It was unlikely to achieve any great success, since economic nationalism was rapidly gaining ground everywhere as a result of the slump; but its failure was disastrous. On 4 July 1933 Roosevelt rejected his emissaries’ attempts to achieve some sort of stabilization of the world currencies, on the grounds that this might interfere with his efforts to tempt businessmen to reinvest by pushing up prices in the United States. In the narrowest terms of economic advantage, he had
a case; but he overlooked America’s obligation, as the world’s leading industrial and financial power – a power, furthermore, which was largely to blame for the catastrophe – to do something to help the weaker trading nations; and he was totally blind to the consideration that this was a chance – the last, as it turned out – for a significant measure of international cooperation to rescue the world economy and thus avert the new world war which, as we have seen, was already beginning to grow out of the Depression. The most disturbing comment on his action was made by Hjalmar Schacht, the Nazis’ financier: he praised Roosevelt for being an economic nationalist like Hitler and Mussolini. By 1934 Roosevelt had begun to see that he had gone too far, and pushed a Trade Agreements Act through Congress, which enabled him to revise tariffs freely. A major source of domestic political strife was thus at last removed, but otherwise the Act led to very little. The New Deal never developed a coherent trade policy, and in that respect one of the chief causes of the Depression remained virtually untouched.

On the whole Roosevelt did better when he fudged the issues. There was profound disagreement among Americans as to exactly what the situation required, and what, indeed, the laws of the Hundred Days meant or implied. To the business community the battle had been won when public confidence in the future of the economy had been restored. Even though the more far-sighted among the millionaires, such as Joseph Kennedy, saw that the task would not be complete without some measure of banking and financial reform, most businessmen thought the job had been finished by the summer of 1933: the economy had plainly begun its long slow crawl up from the abyss. To the progressive reformers, as we have seen, the emergency was a priceless opportunity to put into effect reforms which had been waiting for their hour since 1917. A handful of more radical temperaments – many of them university graduates – were allured by the possibility of total political transformation, and drifted into the Communist party, or towards the Trotskyites. Probably the majority of Americans believed that the all-important task was that of getting work again; they showed themselves willing to try almost any panacea that was offered as an end to unemployment, and they judged politicians strictly by the state of the labour market; except for the farmers, who judged them by their traditional criteria – agricultural prices, the state of farm mortgages, the farm standard of living and the independence or otherwise of the small farmer. Clearly the President could not hope to satisfy all these groups all the time; but Roosevelt’s political genius was displayed in the brilliance by which he kept so many on his side for so long.

His chief instruments were the so-called alphabetical agencies. Such bodies had existed for decades. Their original was the Federal Trade Commission of 1887; since that date their establishment had become a traditional response to problems; but never had so many been set up in such a short period. They were uncountable. NRA, RFC, AAA (‘the Triple A’), PWA and WPA are the most important examples. It will be
convenient to examine them one by one, thus displaying the personalities of the New Deal, their achievements, their failures and, not least, their incessant rivalries and feuds, and in this way convey some sense of what the Rooseveltian transformation amounted to.

The National Industrial Recovery Act appropriated $3,300,000,000 for public works (a traditional method of relieving unemployment and economic stagnation which had enjoyed remarkable success under, for example, Napoleon III of France in the nineteenth century); and in its opening section set as ambitious a range of targets as could well be devised:

A national emergency productive of widespread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of co-operative action among trade groups, to induce and maintain unified action of labour and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor and otherwise to rehabilitate industry and to conserve natural resources.

Something for everyone. The key words are probably ‘co-operative’ and ‘unified’. They reflect Roosevelt’s early hope that he could lead a united country along the path of recovery. Big firms and little firms would co-exist without the ruthless trade wars of the past, the undercutting and the overselling and general social recklessness which had ruined the American economy; capital and labour would be reconciled in a common programme; town and country would harmonize their interests and ambitions, and the resources of the continent would be husbanded for the future. Congress delegated large powers to the President to see that it all came about. This vision (which has something in common with the rhetoric of Mussolinian Italy) represented one version of America’s destiny, and had long appealed to one sort of Progressive. It implied forceful political leadership, supplied either directly by a Roosevelt in the White House or by a Morgan pulling strings in Wall Street. It implied planning; it implied the suspension of the Sherman Act and the legitimation of some form of working-class organization – the AFL or a wider grouping. It corresponded to one of the deepest, most characteristic wishes of patriotic citizens, that their cherished democracy should show itself capable of disinterested, vigorous, single-minded action in a crisis. Unfortunately, aspirations are not enough. The
NIRA programme was too vast, put together in too much of a hurry, and it ran counter to too many political and economic realities for any success to be more than partial and temporary.