Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt (98 page)

A
THIRD FRONT
in the fascist war of conquest erupted halfway around the world during the summer of 1937. Japanese troops tangled with Chinese soldiers at the Marco Polo Bridge outside Peiping (later Beijing). The Japanese magnified the clash into an excuse to occupy Peiping and thrust south into the Chinese heartland. By autumn the fighting had grown into a full-scale war between Japan and China. As in the case of the Spanish war, Americans had little difficulty distinguishing the aggressors from the victims in the Sino-Japanese war. Their sympathies went out to the Chinese.

What else would go out to the Chinese was the question Roosevelt had to wrestle with. To invoke the neutrality law and embargo weapons to both sides would favor the Japanese, whose military-industrial base was far better developed than China’s. Yet
not
to invoke the law in what patently was a war would violate the law’s spirit and risk embroiling the United States in the East Asian conflict. Neither China nor Japan had chosen officially to declare their conflict a war, leaving the president room for discretion.

He measured domestic opinion during an October visit to Chicago. The visit started promisingly. Tens of thousands of Roosevelt’s supporters lined the route of his motorcade down Jackson Boulevard and fell in line behind the president’s car as it moved up Michigan Avenue. Airplanes circled overhead; boats on the Chicago River and Lake Michigan whistled and blared their greetings.

But the cheering stopped and the audience listened, many in hostile silence, as the president described the turbulent condition of world affairs. “The present reign of terror and international lawlessness began a few years ago,” Roosevelt explained. It had grown steadily worse as fascist aggressors, without bothering to declare war, wreaked havoc on the blameless. “Civilians, including vast numbers of women and children, are being ruthlessly murdered with bombs from the air…. Innocent peoples, innocent nations, are being cruelly sacrificed to a greed for power and supremacy.” Until now the violence afflicted only countries separated by wide oceans from America, and isolationists contended that it would remain a distant threat. But they deluded themselves, Roosevelt said. Should the violence continue, every part of the world would suffer. “Let no one imagine that America will escape, that America may expect mercy, that this western hemisphere will not be attacked.” One course only could avert disaster. “The peace-loving nations must make a concerted effort to uphold laws and principles on which alone peace can rest secure.” Roosevelt likened the wave of lawlessness to a medical contagion. “When an epidemic of physical disease starts to spread, the community approves and joins in a quarantine of the patients in order to protect the health of the community against the spread of the disease.”

Roosevelt didn’t specify what he meant by a quarantine. In fact, lest his audience—in Chicago and beyond—think he was advocating military action, he stressed the opposite. “It is my determination to pursue a policy of peace. It is my determination to adopt every practicable measure to avoid involvement in war.” Yet a desire for peace wasn’t enough. “There must be positive endeavors to preserve peace.”

R
OOSEVELT HAD WANTED
to get the attention of the country, and by the evidence of the press reaction, he succeeded. The tenor of the reaction—in particular to his mention of a “quarantine”—varied dramatically. The isolationist
Chicago Tribune
was deeply skeptical. “Japan will not easily be beaten to her knees,” the
Tribune
warned, “and the threat of a boycott may only serve to inflame the patriotic ardor of the Japanese.” The
Oregonian,
speaking for many on the West Coast, asserted that the interests of the other great powers in China were larger than the interests of the United States; those other powers ought to take the lead in chastising Japan. The
Baltimore Sun
adopted a different view, calling the speech “an admirable restatement of the principles of international morality.” The
Washington Post
read it as a rejoinder to the isolationists. “The forces now fighting intolerable aggression, whether in the case of the Chinese at Shanghai or the Spaniards defending Madrid, are neither cowards nor weaklings,” the
Post
said. “With the assurance that the United States has not forgotten all moral standards in its ostrich hunt for security, the strength of their resistance will be redoubled.”

The ambivalence afforded Roosevelt little guidance. “Do you care to amplify your remarks at Chicago, especially where you referred to a possible quarantine?” a reporter asked him at a news conference the next day.

“No,” Roosevelt answered, obviously uncomfortable.

The correspondents pressed him to say something.

“I can only talk really completely off the record,” the president said.

What did the president mean by a quarantine? a reporter asked. “As I interpreted it, you were speaking of something more than moral indignation…. Is anything contemplated?”

“No. Just the speech itself.”

Economic sanctions?

“Not necessarily. Look, ‘sanctions’ is a terrible word. They are out the window.”

What, then?

“I can’t tell you what the methods will be. We are looking for some way to peace.”

Would there be a conference of the opponents of fascism?

“No. Conferences are out the window. You never get anywhere with a conference.”

Roosevelt wished he had never raised the issue of a quarantine. “It is a terrible thing,” he told speechwriter Sam Rosenman, “to look over your shoulder when you are trying to lead, and to find no one there.”

35.

J
OHN
M
AYNARD
K
EYNES THOUGHT
R
OOSEVELT SHOULD HAVE THE
benefit of the best economic thinking in the world, which was why the English economist had written the American president in the aftermath of the Hundred Days. Keynes critiqued certain aspects of the New Deal even as he offered encouragement and a lesson in the theory of employment and money he was then developing. “You have made yourself the trustee for those in every country who seek to mend the evils of our condition by reasoned experiment within the framework of the existing social system,” Keynes said. “If you fail, rational change will be gravely prejudiced throughout the world, leaving orthodoxy and revolution to fight it out. But if you succeed, new and bolder methods will be tried everywhere, and we may date the first chapter of a new economic era from your accession to office.”

Keynes described Roosevelt’s leadership task as comprising economic recovery and institutional reform. The latter could wait; in fact it
ought
to wait. “Haste will be injurious, and wisdom of long-range purpose is more necessary than immediate achievement.” Recovery came first. In this realm the president had got some things right but others wrong. His administration should have paid more attention to increasing the purchasing power of consumers. “In the economic system of the modern world, output is primarily produced for sale; and the volume of output depends on the amount of purchasing power.” A depression was, by definition, a shortfall of demand; the remedy to a depression must come in one of three forms. Individuals could be induced to spend more, businesses could be persuaded to spend more, or government could decide to spend more. In a depression the first two sources of spending—individuals and businesses—typically failed. “It is, therefore, only from the third factor”—government—“that we can expect the initial major impulse.”

Roosevelt had read Keynes’s letter and filed it away. His view of Keynes coincided with his view of most other academic economists, which was that they didn’t understand how policy was made in the real world of politics. In any case, by the time Keynes wrote—in December 1933—the economy appeared to be recovering. The president saw no reason to jeopardize the recovery to suit the notions of an English intellectual.

Roosevelt had occasion to dust off Keynes’s letter in the autumn of 1937. At the very moment when he was trying to nudge Americans toward greater responsibility for world peace, the American economy was falling off a cliff. The 1937 plunge wasn’t as deep as the dive that followed the stock crash of 1929, but it was swifter and, because it came after four years of improvement, more disheartening. Industrial activity in early 1937 had finally topped that of 1929, while unemployment had diminished to less than 15 percent. Relief rolls were down and were scheduled to shrink further as Roosevelt’s determination to end relief in favor of jobs shaped the new laws of that season. As long as unemployment, a lagging indicator of the economy as a whole, remained in double digits, it would have been impolitic for Roosevelt to declare the depression ended. Yet it wasn’t unreasonable for him to think in such terms.

Then, for no good reason anyone could discern, the recovery suddenly lurched into reverse. The stock market collapsed, with the Dow Jones average plunging from 190 in August to 115 in October. Wealth vanished more rapidly than at the worst of the 1929 crash. Corporate profits plummeted by four-fifths. Steel production fell by three-quarters. Unsold autos jammed factory and dealer lots. As the furnaces were banked and the assembly lines shut down, two million people lost their jobs, crowding back onto the relief rolls Roosevelt had hoped to render obsolete.

The “Roosevelt recession,” as the president’s critics alliteratively labeled it (when they weren’t calling it the “Democratic depression”), reopened nearly every aspect of the debate that had surrounded the New Deal from its inception. Republicans and other conservatives naturally blamed the government’s intrusion into the private sector. No depression in American history had lasted so long, they correctly noted, and none had witnessed such overweening ambition on the part of government. Ergo, the ambition had prolonged the depression. “Right in the midst of good business, we have a loss of billions of dollars to thrifty folk,” asserted Bruce Barton, the ad man, who was now running for Congress on the Republican ticket. “There is only one reason: politics and the threat of more politics…. There is no possible explanation of the present fear and loss except one: too many politicians monkeying too much.”

A person didn’t have to be campaigning for office or to consider incumbents monkeys to credit at least some of Barton’s argument. The very flexibility on which Roosevelt prided himself had the perverse effect of rendering investors unable to make reasoned judgments about where to put their money. Lammot du Pont, the current spokesman of the famous family, explained the view from Wall Street:

Uncertainty rules the tax situation, the labor situation, the monetary situation, and practically every legal condition under which industry must operate. Are taxes to go higher, lower, or stay where they are? We don’t know. Is labor to be union or non-union?…Are we to have inflation or deflation, more government spending or less?…Are new restrictions to be placed on capital, new limits on profits?…It is impossible even to guess at the answers.

Nor was it only conservatives who held this opinion. Adolf Berle, of the original Brain Trust, conceded the capitalists’ argument. “Practically no business group in the country has escaped investigation or other attack in the last five years,” Berle said. “Irrespective of their deserts, the result has been shattered morale. We have not, in the absence of a large Government ownership program, any class or group to whom we may turn for economic leadership. It is, therefore, necessary to make that group pull itself together.” Henry Morgenthau argued a similar case. The Treasury secretary had advocated deficit reduction from the beginning, contending that a balanced budget would do more for the economy, by boosting business morale, than almost anything else the administration could do. The nosedive of 1937 strengthened his case. “We are headed right into another depression,” he told the president. Morgenthau granted, for tactical purposes if no other, that federal deficits had been acceptable during the president’s first term, to deal with the emergency. But conditions had changed. “The domestic problems which face us today are essentially different from those which faced us four years ago…. We want to see private business expand. We believe that much of the remaining unemployment will disappear as private capital funds are increasingly employed…. We believe that one of the most important ways of achieving these ends at this time is to continue progress toward a balance of the federal budget.”