by Studs Terkel
I was appointed by Governor Culbert Olson in 1938 as Chief of the Division of Immigration and Housing. It put me in touch with all the minority groups in the state: Mexican-Americans, Japanese-Americans, Chinese-Americans, Hindus, Filipinos. Negroes were not as significant as a group in California as they are today.
In the second half of the Thirties, about 350,000 Dust Bowl refugees flooded the state. They were promptly stereotyped, exactly like a racial minority. They were called Okies and Arkies: they were shiftless and lazy and irresponsible and had too many children, and if we improve the labor camps and put a table in, they would chop it up and use it for kindling. Once I went into the foyer of this third-rate motion picture house in Bakersfield and I saw a sign: Negroes and Okies upstairs.
When the war boom began in California around 1939, these Okies and Arkies were the salvation of the state. They promptly went into shipyards and defense plants. Within a couple of years, the stereotype began to fade. Now these people think of themselves as old Californians. Of course, they look down on the recent migrants from the South. The stereotype is the same.
When they first came in, they had no racist feelings. They were too preoccupied with their own distress. At the time of their migration, there were many Mexicans on public assistance, meager, inadequate. As the Okies came in, the authorities thought they could get rid of the Mexicans. I was eyewitness to many deportation trains that left the Southern Pacific station, taking thousands of Mexican-Americans back to Mexico, with their families and bundles of belongings. Of course, they’d turn right around and come back. And the process would be repeated.
I inspected labor camps. The conditions were not to be believed. There were no programs of aid for these people. The camps were filthy. We had a labor camp population of 175,000 in August and September, the harvest season. In the spring, they’d force people off relief rolls to take jobs at twenty cents an hour. I induced Governor Olson to let me hold some hearings. We recommended they not be cut off relief unless they were paid twenty-seven and a half cents an hour. The reaction could hardly have been more violent had we bombed San Joaquin Valley. Outrageous, that they should pay twenty-seven and a half cents an hour.
At his request, the La Follette Committee came to California in 1939 to investigate the denial of elementary liberties to farm workers and to probe the role of the Associated Farmers. Earl Warren, then Attorney General for the state, refused to cooperate, defending sheriffs in “every rural county of the state.” The mass evacuation of Japanese-Americans is recounted. Again, he opposed Warren, who was in its favor. “… his education and growth as a civil libertarian were unquestionably acquired in California. I smile when I see these signs: Impeach Earl Warren.”
The impulse of the New Deal was over by 1938. Its most creative years were 1934 to 1938. There were a lot of good times, too, because money was not so terribly important. A friend of mine and I had a protégé, a young writer. We rented him a room in Los Angeles and put up $5 a week to sustain him while he was doing a couple of books. He managed to live on $10 a week. On so meager an amount, we were philanthropists, you see. (Laughs.)
If such times were to come again, it would not be the same. Our discontents today are more vague and ill-defined. At the same time, we have an apparatus of police controls that could develop into a kind of American fascism. It would not be European style.
I think the New Deal saved American capitalism. It was a bridge. But it never really solved the problems.
BOOK THREE
Concerning the New Deal
Gardiner C. Means
Co-author (with A. A. Berle) of The Modern Corporation and Private Property.
“In the summer of ’33, I got a call from Rex Tugwell:98 would I consider coming down to Washington?”
He became Economic Adviser on Finance to Henry Wallace, Secretary of Agriculture. Among his other New Deal assignments were his work as a member of the Consumer Advisory Board of the NRA and as director of the Industrial Section of the National Resources Planning Board. During the war, he was chief fiscal analyst in the Budget Bureau.
AT THE BEGINNING of the New Deal, they called it a revolution. Then they began to say it wasn’t a revolution. Our institutions were being shored up and maintained. What really happened was a revolution in point of view. We backed into the Twentieth Century describing our actual economy in terms of the small enterprises of the Nineteenth Century.
We were an economy of huge corporations, with a high degree of concentrated control. It was an economy that was in no sense described by classical theory. What Roosevelt and the New Deal did was to turn about and face the realities.
It was this which produced the yeastiness of experimentation that made the New Deal what it was. A hundred years from now, when historians look back on it, they will say a big corner was turned. People agreed that old things didn’t work. What ran through the whole New Deal was finding a way to make things work.
Before that, Hoover would loan money to farmers to keep their mules alive, but wouldn’t loan money to keep their children alive. This was perfectly right within the framework of classical thinking. If an individual couldn’t get enough to eat, it was because he wasn’t on the ball. It was his responsibility. The New Deal said: Anybody who is unemployed isn’t necessarily unemployed because he’s shiftless.
Roosevelt was building up new ideas in a milieu of old ideas. His early campaign speeches were pure Old Deal. He called for a balanced budget. When he got into office, the whole banking system collapsed. It called for a New Deal.
I was never told what to do at any time, during those early days. I made my own way. We had meetings that would run into the early morning. A dozen of us sitting around the table, thrashing out problems. They were more than bull sessions, because we were making decisions.
I answered some of the mail for Wallace. Great quantities came pouring in, letters from everywhere. I must have handled some two, three hundred. They were proposals from people, solutions to all sorts of problems. Some of them crackpot, some of them quite good. Everybody had a suggestion. The country was aware, as it never was before, that it was on the edge of something.
Talking a couple of days ago with a couple of old New Dealers, we agreed it was a very exhilarating period. There was no question in our minds we were saving the country. A student of mine remembered how exciting it was to him. He worked in the Department of Labor. He said, “Any idea I had, I put down on paper. I’d send it up and somebody would pay attention to it—whoever it was, Madame Perkins, Ickes or Wallace.” This is how it was all the way through.
I remember a request from Mrs. Roosevelt. One of the big corporations had thumbed its nose at a stockholder. The woman had written to Mrs. Roosevelt: Have they a right to do this? She sent the letter to Tugwell, who sent it to me. I wrote an answer for Mrs. Roosevelt to send to her. I remember I did have a suggestion for her.
One of the first things I did was get in touch with Mary Rumsey. She was head of the Consumer Advisory Board of the NRA. It was she who sold Roosevelt on the idea of having the consumer represented. The first thing she did when we met was take me down to her limousine—she was Averill Harriman’s sister—and had her chauffeur drive us up and down the countryside as we talked. We spent all morning talking about the needs of the consumer, his protection. She was very perceptive.
Another thing I remember. I brought Leon Henderson into the NRA. We sent him up to discuss some problems with General Hugh Johnson, the chief. He was a blustery, flamboyant person. As Henderson started to talk, Johnson began to ride all over him. Leon swore back at him and pounded the table. Johnson loved it and made him his assistant. (Laughs.) This was the kind of climate in Washington at the time—highly personal and highly charged.
The NRA was one of the most successful things the New Deal did. It was killed when it should have been killed. But when it was created, American business was completely demoralized. Violent price cutting and wage cutting … nobody could make any plans for tom
orrow. Everybody was going around in circles. The NRA changed the attitudes of business and the public. It revived belief that something could be done. It set a floor on prices and on wages.
Pressures had been coming from business to get free of the anti-trust acts and have business run business. Pressure was coming from labor for a shorter work week to spread jobs. It was a whole institutional matter. Roosevelt put the two together. Mary Rumsey brought in consumers’ rights. So there were three advisory boards: Business, Labor and Consumer. Codes of behavior were set up. You couldn’t sell below cost…. Labor got collective bargaining rights. It was, in a sense, a prelude to the Wagner Act. The wage increases were worked out between business and labor.
Most important, laissez faire in the Nineteenth Century manner was ended. The Government had a role to play in industrial activity. We didn’t move into a fascist kind of governmental control, because we continued to use the market mechanism. In the two years of the NRA, the index of industrial production went up remarkably.
Things had been going downgrade—worse, worse, worse. More than anything else, the NRA changed the climate. It served its purpose. Had it lasted longer, it would not have worked in the public interest. Although toward the end, the consumer group was making progress.
Had the NRA continued, it would have meant dangerously diminishing the role of the market in limiting prices. You see, there was little Governmental regulation of the NRA. The Government handed industry over to industry to run, and offered some minor protection to others in the form of Labor and Consumer Advisory Boards. Industry became scared of its own people. Too much power was being delegated to the code authorities. It was business’ fear of business rather than business’ fear of Government, though they wouldn’t quite put it that way. You might say, NRA’s greatest contribution to our society is that it proved that self-regulation by industry doesn’t work.
Laissez faire as such certainly did not come to an end with the New Deal. We still have a tremendous amount of freedom of decision-making in the individual corporate enterprise. The new element is the government’s positive responsibility for making our economy run.
As for those first New Deal days, much of the excitement came from improvisation. Nothing was fully set in the minds of the people there. They were open to fresh ideas. Always. We wouldn’t have been where we are now, were it not for Washington improvisations….
This outflowing of people felt they were somehow on the way—though they were not sure how. A surprising number, we discovered, were sons of ministers, rabbis, missionaries. Yes, there was an evangelical quality, though it was non-religious. People who were personally concerned about a better world, came to Washington, were drawn to it. Even though where we were going was still to be worked out. There was an elan, an optimism … an evangelism … it was an adventure.
Raymond Moley
He is seated, on this Indian summer day, at his desk: one of Roosevelt’s original Brain Trust. “I had served him in various ways, from the time he ran for Governor. I wrote my first speech for him in ’28.
“My interest, as was his, was restoring confidence in the American people, confidence in their banks, in their industrial system and in their Government. Confidence was the buoyant spirit that brought back prosperity. This has been, always, my contention.”
DURING THE WHOLE ’33 one-hundred days’ Congress, people didn’t know what was going on, the public. Couldn’t understand these things that were being passed so fast. They knew something was happening, something good for them. They began investing and working and hoping again.
People don’t realize that Roosevelt chose a conservative banker as Secretary of Treasury99 and a conservative from Tennessee as Secretary of State.100 Most of the reforms that were put through might have been agreeable to Hoover, if he had the political power to put them over. They were all latent in Hoover’s thinking, especially the bank rescue. The rescue was done not by Roosevelt—he signed the papers—but by Hoover leftovers in the Administration. They knew what to do.
The bank rescue of 1933 was probably the turning point of the Depression. When people were able to survive the shock of having all the banks closed, and then see the banks open up, with their money protected, there began to be confidence. Good times were coming. Most of the legislation that came after didn’t really help the public. The public helped itself, after it got confidence.
It marked the revival of hope. The people were scared for a little while —a week. Then, Congress passed the bill, and the banks were opened. Roosevelt appealed to them on Sunday night, after the week of the closing. It was his very first fireside chat. They put their money back in the banks, the people were so relieved.
A Depression is much like a run on a bank. It’s a crisis of confidence. People panic and grab their money. There’s a story I like to tell: In my home town, when I was a little boy, an Irishman came up from the quarry where he was working, went into the bank and said, “If my money’s here, I don’t want it. If it’s not here, I want it.”
The guarantee of bank deposits was put through by Vice President Garner, Jesse Jones (a Texas banker), and Senator Vandenburg—three conservatives. They rammed it down Roosevelt’s throat, and he took credit for it ever after. If you can quiet the little fellows, the big fellows pretty much take care of themselves. If you can cover it up to $10,000, all the little fellows are guaranteed. So it’s O.K. You didn’t have any bank trouble after that.
Now that wouldn’t be agreed to by some liberals. But, after all, I was never a real liberal. I was an old-fashioned Democrat. I was a believer in our industrial system. It didn’t need a complete rehauling. I thought if we could get it back into operation and normal conditions return, we’d be all right. This happened.
Tugwell thinks we should have gone much further in shaping the economy, but I don’t. What we did accomplished its purpose. We don’t know what would have happened if something else had been done.
The first New Deal was a radical departure from American life. It put more power in the central Government. At the time, it was necessary, especially in the farm area of our economy. Left to itself, farming was in a state of anarchy. Beyond that, there was no need to reorganize in industry. We merely needed to get the farms prospering again and create a market for the industrial products in the cities.
The second New Deal was an entirely different thing. My disenchantment began then. Roosevelt didn’t follow any particular policy after 1936. Our economy began to slide downhill—our unemployment increased—after that, until 1940. This is something liberals are not willing to recognize. It was the war that saved the economy and saved Roosevelt.
We had a slight recession in 1937, which was occasioned by his attack on copper prices, specifically, and on business, generally. Of course, his Supreme Court packing plan shocked the people. They resented it. It was his first great defeat. Then he tried to purge Congress in ’38. Everyone he tried to purge was reelected, except one Congressman in New York.
I think if it weren’t for the war, Roosevelt probably would have been defeated in 1940. You would probably have had a more business-minded Administration: less centralizing on the part of Washington. More normal conditions would have prevailed.
During those first hundred days, wasn’t there a slight fear in some quarters that our society … ?
I never had any doubt that our society would survive—and survive in much the way that it had existed before. As Dirksen recently said: our society was not sick, it was mismanaged.
Remember, Roosevelt at the start was a very conservative President. People didn’t realize that. In the first place, he was a very prudent Governor of New York. He balanced his budget. He was not a spender. We resisted all the efforts of radicals, like La Follette and Tugwell, to spend a lot of money in public works. Roosevelt said: there aren’t more than a billion dollars of public works that are worth doing. They wanted five billion dollars. So he compromised on three billion … a split between what he said and what they wan
ted.
What led to Roosevelt’s shift from prudence to … ?
I think he was tired of reform. He began to bring in the radical elements, who up to that time had not been in support of him. Business went along with him in his early reforms, but after 1937, it began to be nervous about where he was going. He was improvising all the time. Hit or miss.
Unemployment insurance was unsound the way it was financed. When I wrote the original message in ’34, the idea was to invest the receipts from the tax in municipal and state bonds and high grade industrials. Congress created a phony trust fund, which was composed of IOU’s of the Government. It’s unsound. You collect money from the taxes, then you spend it and you put your IOU’s in the trust fund. If you did this in private industry, you’d be put in jail.
Unemployment insurance is a welfare measure. It isn’t insurance in any sense of the word. More and more people were living off fewer and fewer people. That’s when the unsound practices began. Until now, we’ve got it in a big way … even in a period of prosperity.
In 1935, I took a firm stand. I said welfare is a narcotic, because it will never end. We’ll have to stop this business and put people to work. The best way to put people to work is to encourage the development of industrial science. The Government can’t put people to work.
I began to have my doubts in 1935. I had many arguments with him. There were a lot of radicals. I had them in my group. Tugwell, for instance. He expressed sorrow that Roosevelt didn’t turn more radical in 1932. As a matter of fact, he doubted very much whether he’d vote for Roosevelt.
The whole city, Washington, began to fill up with these young radicals. They stayed down, many of them there, with Frankfurter. They were scattered all over the lot. Still, it was conservative until ’35.
