Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt (71 page)

Roosevelt had little love for the railroads, but he couldn’t ignore their plight. Dozens of railroads had gone into receivership by the time he took office; dividends were down by two-thirds. The roads had laid off more than 700,000 workers and had reduced or suspended service to thousands of communities. As bad as the economy already was, if the railroads sank further they would drag the broader economy still deeper into the pit. And until the railroads recovered, a general recovery would be almost out of the question.

There were other reasons for focusing on railroads, among the major industries. Roosevelt talked of broad-gauged government planning for the economy, but he had never actually attempted it. The railroads provided a place to start—a place to learn what worked and what didn’t. The railroads, moreover, engaged in interstate commerce, which brought them under the constitutional purview of the federal government. The Supreme Court, which was dominated by conservative justices appointed by Republican presidents, might challenge government planning for other industrial sectors, but it would be hard-pressed to toss out legislation regarding railroads.

Yet events conspired to blur Roosevelt’s focus on the railroads and to bring other sectors under the planning penumbra. Since the start of the depression, advocates of labor had suggested reducing the work week as a means of keeping people on payrolls. Presumably a company would employ a third more workers at thirty hours a week than it did at forty. But such could only be presumed, since workers were reluctant to see their paychecks cut in line with the reduction in their hours worked. The result, from management’s point of view, was that forty workers working thirty hours were likely to cost more than thirty workers working forty hours. Beyond this was the traditional resistance of owners and managers to any restraint on their freedom to run their businesses as they saw fit.

Nonetheless Hugo Black of Alabama introduced a thirty-hour bill in the Senate, and it promised to sweep all before it. Organized labor got behind the bill, with the American Federation of Labor threatening a general strike if it wasn’t enacted.

Roosevelt recognized the flaws in the thirty-hour concept, including the added labor costs to businesses that were often only a heartbeat from bankruptcy already, the difficulty of applying it to seasonal industries in which demand for labor varied from month to month, and the dubious constitutionality of the government’s stepping so egregiously between employers and employees. The Black bill proposed to get around the constitutionality issue by invoking the commerce clause of the Constitution and applying the thirty-hour rule only to companies that dealt in goods crossing state lines. Whether this device would withstand judicial scrutiny remained to be tested. Roosevelt wasn’t at all sure that it would, and he didn’t want to be the one making the test.

More fundamentally, Roosevelt’s understanding of the operations of a capitalist economy made him think a thirty-hour mandate was foolish and probably counterproductive. As much as Roosevelt favored economic planning, he didn’t think federal bureaucrats could do it alone—and still less did he think Congress was equipped for the job. The planners ought to include representatives of all those parties who would have to carry out the plans—owners, managers, workers, distributors.

Roosevelt urged the Senate to reconsider, but he couldn’t derail the thirty-hour bill, which rolled through the upper chamber by a large margin. The president’s only hope, it seemed, of heading off a similar success in the House was to get out in front of the whole issue of industrial planning, by something more sweeping than railroad reform.

As he prepared to do so, he reflected on his prior experience in the federal government. He recalled how America had mobilized during the World War and how the federal government had guided industry during that conflict. Wilson’s War Industries Board had apportioned production, orchestrated distribution, and otherwise directed the operation of the industrial economy. Though particular actions of the war board struck certain individuals and groups as unfair, arbitrary, or even irrational, on the whole its contribution to surmounting the crisis of the war was remembered favorably—even fondly, as the depression persisted. To many Americans at the time of Roosevelt’s inauguration, the war board offered a model for government leadership in the current crisis.

Robert Wagner, Roosevelt’s old colleague from the New York senate, wasn’t averse to the war board model, but he thought it didn’t give enough weight to the interests of workers. A federal senator since 1927, Wagner began drafting legislation for a national industrial board. Meanwhile Ray Moley lined up the Brookings Institution, a think tank with roots in the Progressive era and headquarters not far from the White House, to examine alternative paths to national economic planning. The commerce and labor departments likewise got in on the planning act, as did various outsiders who hoped to contribute to what promised—or threatened—to become the biggest expansion of government authority in decades.

Roosevelt, as was becoming his habit, let the different groups work away, saving his political capital for such decisions as couldn’t be made at a lower level. He weighed in periodically, as when he told reporters at an April press conference a story. “There was a certain little sweater factory in a little town—I won’t even give you the location of it—where they normally employed only about 200 people. It was the only industry in town. The owners of the little sweater factory and the employees had always been on exceedingly good terms.” But the depression had curtailed demand for sweaters, leaving this factory and its competitors overstaffed. “So the owners and the employees got together and talked the situation over. They only had about six weeks’ work in the whole past year, and all the other factories in the country had about the same kind of work—about six weeks out of the year. Well, the result was the population in this little town was practically starving to death. So they got together and decided that the thing they wanted to do was work, even though it would be at much reduced pay. So they figured out that if they could cut their wages 33 percent they could cut the cost of making these sweaters by the same amount, and in that way undersell every other sweater factory.” This was what they did. Their marketing agent, armed with the new price sheet, traveled to New York and filled his sales book with orders that would have gone to the company’s competitors. The result was a boom for the company, which now had enough work for three shifts a day.

The lesson Roosevelt drew was not the one many of the reporters must have expected. He didn’t praise the company and its workers for ingenuity and the shared willingness to sacrifice; instead he argued that the story revealed what was wrong with the current system. The sweater company’s policy was “bad business in all ways.” It was bad for the company’s workers, who were working harder than ever for less pay than before. It was bad for the sweater industry generally, because it forced several competitors out of business, with dire effects on their employees. It was bad for the morale of the region.

The solution to this problem and similar ones lay partly in the direction of the thirty-hour bill. The basic question, Roosevelt said, was “whether we can work out some kind of plan that will distribute the volume of consumption in a given industry over the whole industry.” The goal should be not to concentrate production in a small part of the industry—the lone sweater company, so to speak—but to share production among many firms. “We want to spread it out.”

Roosevelt sought allies in the business community for his planning concept. Somewhat surprisingly the U.S. Chamber of Commerce, the foremost business lobby in America, had signaled its approval of government planning of the economy. The chamber normally wanted to keep the government at a distance, but the depression had hit its members so hard that they were willing to countenance almost anything to get the economy moving again. The chamber held a dinner at the Washington Auditorium; Roosevelt arrived after the dishes had been cleared. He patted himself on the back for a “slight but definite upturn in most industries” in the two months since his inauguration, and he expressed hope that a recent uptick in commodity prices would benefit farmers directly and workers indirectly, as rising prices translated into more jobs.

But the president had come this night not to report what the captains of industry—“who represent, in all probability, the majority of the employers of the nation,” Roosevelt said—could read for themselves in the papers. He came instead to request their cooperation in the task the administration had undertaken. He asked them to refrain from further wage cuts and in fact to raise wages as prices rose. This was only fair. “It is a simple fact that the average of the wage scale of the nation has gone down during the past four years more rapidly than the cost of living,” he said. “It is essential, as a matter of national justice, that the wage scale should be brought back to meet the cost of living and that this process should begin now and not later.”

A second request involved “bringing order out of chaos,” as Roosevelt put it. “You and I acknowledge the existence of unfair methods of competition, of cut-throat prices, and of general chaos. You and I agree that this condition must be rectified and that order must be restored.” The government could lead the restoration, but it couldn’t put the economy back together alone. “The attainment of that objective depends upon your willingness to cooperate with one another to this end, and also your willingness to cooperate with your government.” Roosevelt didn’t give the moguls time to reflect on whether the government was actually theirs; instead he put words in their mouths. “In almost every industry an overwhelming majority of the units of the industry are wholly willing to work together to prevent overproduction, to prevent unfair wages, to eliminate improper working conditions. In the past, success in attaining these objectives”—that is, the objectives Roosevelt ascribed to the business leaders—“has been prevented by a small minority of units in many industries. I can assure you that you will have the cooperation of your government in bringing these minorities to understand that their unfair practices are contrary to a sound public policy.”

Here Roosevelt
was
accurately summarizing what the business leaders were thinking, and it was what he was counting on to convince the capitalists of the wisdom of his ideas on planning. Roosevelt wouldn’t admit it, and he might not have fully appreciated it at the outset, but industrial planning constituted, at bottom, a cartelization of America’s major industries, with the federal government acting as a non-profit partner. Big government would join with big business and perhaps big labor to prop up prices, apportion markets, and prevent small operators from undercutting the deal.

A third request was somewhat broader. Roosevelt scanned the business crowd carefully, as if to peer into the hearts beneath the dinner jackets of the guests. It was human nature, he said, to view problems from the perspective of one’s own self or company. But the economic crisis had revealed the bankruptcy of this approach.

It is ultimately of little avail to any of you to be temporarily prosperous while others are permanently depressed. I ask that you translate your welfare into the welfare of the whole, that you view recovery in terms of the nation rather than in terms of a particular industry, that you have the vision to lay aside special and selfish interests, to think of and act for a well-rounded national recovery.

The hall rang with applause. “The president’s speech was received with an enthusiasm which can hardly be overemphasized,” the business correspondent of the
New York Times
observed. Roosevelt had chosen his audience well. Some, no doubt, were moved by his appeal to a higher, national vision of prosperity, but the line that really got their attention and approval was the one about the government cooperating with corporations against the unfair business practices of their competitors. For decades the government had opposed efforts by big business to prevent smaller companies from spoiling the market by competing too hard; Roosevelt appeared to be saying that the government not only would drop its opposition but would actively join the effort to suppress the spoilers. The government would be more than a member of the cartel; it would be the cartel’s police force. No wonder the moguls put down their cigars to cheer the president.

W
INNING THE SUPPORT
of business turned out to be the easy part. Keeping the various intellectuals, bureaucrats, and members of Congress marching in more or less the same direction was harder. Roosevelt let the several groups working on planning proceed, guessing that many of the differences among their proposals would work themselves out before he had to step in and that a modest degree of confusion might actually work in his favor. “We’re fiddling along with more legislation than any one man or any legislative body can accurately digest,” Hiram Johnson, Theodore Roosevelt’s running mate in 1912 and currently a Republican senator from California, wrote his sons. Johnson remained progressive enough to wish the president well. “I am still in the mood of trying anything that may be suggested, and the country is still in the mood, in my opinion, of following Roosevelt in anything he desires.” Other members echoed Johnson’s view. “This is the president’s special session of Congress,” a Texas representative declared. “He is the Moses who is leading us out of the wilderness.”