Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt (78 page)

J
OHNSON’S EVENTUAL
success with the coal men—“a pretty tough baby,” he called the coal code at the signing ceremony—might have been expected to serve as a precedent for other major codes. Roosevelt hoped it would, and to some extent it did. But each industry had its own history, problems, and grievances. The American oil industry was particularly troubled, and never more than during the 1930s. The first American oil boom had occurred in western Pennsylvania after Edwin Drake struck the slippery stuff near Titusville in 1859. The black-gold rush that followed was brought under comparative control only when John D. Rockefeller perfected his Standard Oil monopoly in the 1870s. A second boom developed in Texas and along the Gulf Coast after the 1901 blow-in at Spindletop, near Beaumont. This surge rose higher than the first, driving and being driven by the technological shift from steam power to internal combustion.

The third oil boom burst forth amid the Great Depression. Drillers in East Texas struck oil a year after the stock market crash, and during the next several months they and the thousands who raced to the region to exploit the find ascertained that this field dwarfed anything discovered in America previously. But far from being a bonanza, the East Texas boom nearly destroyed the American oil industry. The oil flooded the market and caused prices to collapse, making oil, at times, cheaper than water in the oil regions. Simple capitalist competition explained some of the overproduction, but the rest resulted from the peculiarities of geology and of petroleum law. An oil field can be likened to an oversized ice cream soda with many straws and sippers. The more that goes out one straw, the less there is for everyone else. And the “rule of capture,” a common-law principle that dated from the Saxon days in England, where it applied to water rights, and that had been applied to oil law by the Supreme Court in the 1880s, awarded ownership to whoever pumped the oil from the ground, regardless of where that oil originated. The resulting overproduction not only ravaged prices in the short term but threatened the long-term productivity of the fields, in that too rapid depletion could disrupt the fluid mechanisms that caused the oil to flow in the first place.

The situation was one that cried out for the guiding hand of government. The Texas Railroad Commission made a start, having inherited—or seized, depending on one’s point of view—responsibility over oil in the state during the days when oil typically traveled by rail. The railroad commission contrived to ration production among the various leaseholders and nudge prices upward. Yet the arrangement was tenuous, despite Governor Ross Sterling’s dispatch of the Texas national guard and the Texas Rangers to the oil fields to catch and punish cheaters, and the oil men looked to Washington for additional help just as the NRA’s Blue Eagle was being hatched.

Compared with textiles, an industry with hundreds of products, and coal, with its long history of murderous labor relations, the oil business was straightforward; the essence of any code would be caps on production. Yet these would have to be flexible, given the volatility of demand, both foreign and domestic, for oil. The solution, embodied in the NRA code established during the summer of 1933, was for the secretary of the interior, Harold Ickes, to act as national oil director, each month apportioning production among the several oil states. In his first order, issued in early September, Ickes mandated that the country’s production be slashed by 300,000 barrels. This order overturned not merely the market mechanisms of capitalism as they applied to oil but also the Supreme Court decision grafting the rule of capture onto the oil industry.

The oil men weren’t accustomed to such decisiveness from Washington. Some resisted, contending that the government ought to guarantee prices rather than restrict output. “If you do not give us price regulations,” an official of Standard Oil of California declared, “you can make codes from now to doomsday and you will get nowhere.” But others were grateful for anything that might save the industry from itself. When prices, which had fallen to four cents a barrel in East Texas that spring, began climbing toward the glorious figure of a dollar, they looked upon Franklin Roosevelt and his New Deal with a fondness they never would have anticipated only a few years before.

T
HE AUTO CODE
suffered from a boycott by Henry Ford. Thirty years earlier, Ford had been a populist hero, building cars for the masses. Ten years after that, he had been the most enlightened of employers, paying his employees five dollars a day at a time when the industry standard was scarcely half as much and putting the American economy on the high-wage, high-productivity path that buried forever—or at least until the Great Depression set in—Karl Marx’s prediction about the inevitable immiseration of the working class.

But time and the automobile industry had passed Ford by. Other companies caught on to the secrets of the assembly line, and his Model T looked increasingly stodgy beside the sleek new models put out each year by General Motors. Ford himself grew cranky. His
Dearborn Independent
blamed international Jewry for the problems that afflicted the planet, and he began to see enemies everywhere. He planted spies in his own factories to forestall unionization, and he loudly proclaimed his right to run his company on his terms.

Not surprisingly, this attitude didn’t lend itself to the cooperation the NRA codes required. Hugh Johnson had worked with Ford during the war and had found him as public-spirited as any industrialist. Johnson hoped Ford might be brought around again. But he recognized Ford’s touchiness, and so he approached the old man, who turned seventy that summer, carefully and surreptitiously. He left his Washington office after work one day, boarded the fastest plane in the army’s air force, arrived in Dearborn, spoke with Ford for a few hours, and returned to Washington to be at his desk when the office opened the next morning. None but those actually involved knew anything about the meeting.

Johnson believed things had gone well with Ford. “I thought that he said that he would support what I was doing to the limit and even beyond,” Johnson recalled. Ford Motor representatives joined the negotiations on the automobile code and seemed as amenable to a coordinated policy as the representatives from General Motors and the other companies. But at the last minute they pulled out, obviously on orders from Ford himself.

Johnson flew to Michigan once more. This time he talked to Ford’s son, Edsel, who seemed upset about the whole affair. He wanted to help but couldn’t get around his father’s phobia about unions. He told Johnson that Ford Motor would sign the code if the government could assure the company that it wouldn’t have to recognize the auto workers’ union. Because this was an essential part of the pact, and in keeping with one of the premises of the New Deal, Johnson rejected the offer.

Johnson thereupon applied the kind of moral pressure that was supposed to be a hallmark of the NRA. Ford’s refusal to join the auto code was a matter of public record, even if Johnson’s conversations with the company’s principals were not. A reporter approached Johnson regarding what the NRA intended to do about Ford. “General,” the newsman asked, “how long will Ford have before you take steps?”

“I do not know,” Johnson said—neither confirming nor denying that he was considering steps.

“Before you crack down on him?” the reporter pressed. “Will you crack down on him?”

“I think maybe the American people will crack down on him when the Blue Eagle is on other cars and he does not have one.”

“In other words, you will not give it to him if he does not sign?”

“Of course not.”

Johnson and Roosevelt generally spoke and acted as though compliance with the NRA were voluntary. This wasn’t entirely true, as Johnson’s implicit appeal to American consumers to boycott Ford revealed. And the administration’s leverage went further than that. Another reporter asked if government agencies would divest themselves of the Fords and Lincolns in their auto fleets. Johnson said they would not. “There would be no point in getting rid of those that they have,” he said, before adding significantly: “But they won’t get any more. The government has signified its intentions of buying only from those industries which display the Blue Eagle.”

Reporters asked Roosevelt at the president’s next press conference whether Johnson’s position reflected that of the White House. Would the administration countenance a boycott against Ford? Roosevelt didn’t want to pick a fight with Ford or to be seen as taking sides in a code dispute. He selected his words with care. “I don’t think he has put it quite that way,” Roosevelt replied. “I think he put it entirely in the negative way instead of the positive way. In other words, raising the question as to whether—not any suggestion from topside of a boycott, but as to whether people actually would, of their own volition, buy a car that did not have NRA on it. That is a very different thing.”

“Just a suggestion?”

“No, not a suggestion. It is just asking a hypothetical question.”

It wasn’t hypothetical at all. Johnson had raised the issue of a consumer boycott, and though Roosevelt danced around it, he enforced Johnson’s threat to halt purchases of Ford products. After the auto code took effect among the other manufacturers, and among auto dealers across the country, Ford continued to resist Johnson’s effort to get him to join. A reporter queried Roosevelt: “Can you tell us anything about that controversy?”

“I have not had any part in it at all, except what I read,” the president answered. But Congress had banned government purchase of noncompliant products, and he was bound to enforce the law. “We have got to eliminate the purchase of Ford cars,” Roosevelt said.

A
S BOLD AS
the NRA was in conception, it was more audacious in action. By the autumn of 1933 the major codes were in place and the principal industries were adjusting to their demands. The Blue Eagle was the symbol of the new regime of planned and guided capitalism, and Hugh Johnson was its embodiment. On his good days Johnson reveled in the authority, even as he maintained sufficient savvy to deny he wielded it. “I want to avoid even the smallest semblance of czarism,” he asserted. “It is industrial
self
-government I am interested in. The function of this act”—the Recovery Act—“is not to run out and control an industry, but for that industry to come to this table and offer its ideas as to what it thinks should be done.” Johnson contrasted the NRA to its farming counterpart, the Agricultural Adjustment Administration, at least as he perceived the two agencies. “AAA thinks that government should run business. NRA thinks that business should run itself under government supervision.”