by Adam Cohen
When Roosevelt announced Douglas’s appointment the next day, the reaction was largely positive. Conservatives were the most effusive. “I am well pleased with it,” Representative Robert Simmons, a Nebraska Republican, declared, “and the sentiment on the Republican side of the House is universally that way.” Business leaders were delighted, and a bit surprised, that someone who was committed to reduced spending and lower taxes would be presiding over the New Deal budget. “I would even have voted Democratic last fall,” H. N. Conant of United Investment Counsel in Boston wrote to Douglas, “if I had thought that at least one part of the government would be placed in such capable hands!” Anyone who had followed Douglas’s career knew what to expect of him. “Mr. Douglas has something of ruthlessness—but ruthlessness is necessary,” the New York Herald Tribune would soon declare. “We seem to be out of the hands of the Family Physician and into the hands of the surgeon.” Progressives like Tugwell were less jubilant, but they kept their reservations to themselves, out of deference to Roosevelt, and hoped for the best.37
Douglas began his new job warily. After all of his failed efforts to get Congress to back government economy, he would now be able to promote it from a powerful position in the executive branch, with a popular president backing him. But even under these favorable conditions, he knew it would be difficult during a depression to achieve the level of budget cutting he believed necessary. Douglas was also clear-eyed about the personal costs. As budget director, he would have a high profile, and he would be associated in the public’s mind with firing government workers and slashing the benefits of men who had served their country on the battlefield. Douglas understood that with times as hard as they were, these moves would make him many enemies. He realized, he later said, that “by accepting the position of Director of the Budget, I was bringing my own political career to an end.”38
Roosevelt’s plan was to introduce a budget-cutting bill right after Congress passed the emergency banking bill. Douglas had worked steadily on it in the weeks leading up to the inauguration, and the drafting had been grueling. J. Swagar Sherley was a “man of great character but very sensitive and very slow and very talkative,” Douglas wrote to his father. “The result,” he said, “was that I never ended a day until midnight.” On Wednesday, March 8, Douglas presented Roosevelt with a final draft. Moley liked the title Douglas had given it, “A Bill to Maintain the Credit of the United States.” It put the emphasis where Moley thought it should be, on the importance of spending cuts for economic recovery. Roosevelt quickly approved the draft and asked Moley and Douglas to draw up a congressional message to go with it.39
The Economy Act, as the bill came to be known, included the sort of cost-cutting measures Douglas had long championed. It gave the president the authority to reduce federal salaries by up to 15 percent, and to rewrite the rules for veterans’ pensions. Veterans who were injured moderately during their service could lose most of their benefits. “Presumptive cases,” the veterans who came down with illnesses like tuberculosis after their service was over, could lose all of their benefits. There was little doubt that some of the presumptive cases were taking advantage of the system, and of the veterans’ strong lobby, to get benefits for illnesses that were not related to their services. Douglas’s bill, however, swung the pendulum to the opposite extreme, allowing the administration to cut off even presumptive cases who could make a strong case that their illnesses arose from injuries they suffered during the war. Douglas estimated that his bill would save at least $400 million in veterans’ payments and $100 million in employee salaries. The $500 million that would be cut represented about 15 percent of the total federal budget. “The extremely onerous reductions,” Douglas wrote in a confidential memo, “will break many eggs, but they will balance the budget. They will insure a sound currency. They will lay the foundation for recovery.”40
While Congress finished up its work on the Emergency Banking Act, Moley and Douglas worked on their congressional message. They were aiming to persuade not only Congress, Moley said, but the general public, reminding them of Roosevelt’s deep concern about “sound fiscal administration.” Unlike the banking bill, which was broadly popular, the Economy Act was likely to face significant opposition in Congress. Moley and Douglas tried to ride the groundswell of support for the banking bill, arguing that the two pieces of legislation were similar. The federal budget was in as much of a crisis as the banking system, they argued in the congressional message, and required “equally courageous, frank and prompt action.” The message’s most famous line, one that the New Deal’s critics would quote for years, was Douglas’s. “Too often in recent history,” it warned, “liberal governments have been wrecked on rocks of loose fiscal policy.”41
Thursday evening, less than an hour after the banking act was signed into law, congressional leaders of both parties began arriving at the White House for a briefing on the new bill. Roosevelt explained why he regarded spending cuts as necessary for recovery. He tried to assuage the Congress members’ fears about budget cutting by emphasizing that the bill would make him responsible for deciding where to reduce spending. The congressional leaders stayed until nearly midnight, but when they left they were still wary. Roosevelt had not yet offered up a single bill to create jobs, and now he was proposing to make even more people unemployed. Members of Congress had shown with their swift passage of the banking act that they wanted to give Roosevelt the tools he asked for. The Economy Act sorely tested Congress’s willingness to defer to his leadership.42
The next morning, Douglas was back at the White House for a meeting of the bedside Cabinet. He asked Roosevelt if he wanted any last-minute changes in the Economy Act before it went to Congress later that day. It turned out that he did. Roosevelt wanted to add $300 million for a program to send unemployed young men out into nature to plant trees. It was a pet idea of his, and it would be a peace offering to progressives who were impatient for a program to help the unemployed. Douglas, who opposed the program on principle, couched his opposition in tactical advice. It would be a mistake, he told Roosevelt, to add public works to a budget-slashing bill. “Congress will either refuse to pass the Economy Act and appropriate the $300 million on the grounds that economy is not necessary, or it will pass the Economy Act and refuse the appropriation of $300 million on the grounds that economy is necessary,” he argued. “You shouldn’t, Mr. President, go in two directions at the same time. The Congress won’t.” Roosevelt agreed to keep his tree-planting program out of the bill.43
When the Economy Act was unveiled, the press generally greeted it with approval. The conservative Wall Street Journal praised Roosevelt for recognizing that “the national recovery depends upon maintenance of the national credit.” The most outspoken opposition, not surprisingly, came from veterans’ groups. Douglas had drafted the economy bill in secret so the veterans’ lobby would have little time to organize against it. When it arrived in Congress, however, they were quick to mobilize. The American Legion, which only learned of the bill the day before it was introduced, sent an urgent bulletin to its 900,000 members nationwide, asking them to “wire your congressmen and Senators immediately.” The veterans were not the only ones organizing against the Economy Act. Federal employees were upset with the sharp cuts in salaries and jobs. Women’s groups objected to a provision that called for firing all federal employees married to federally employed men. Eleanor was one of the critics of the marriage rule, and of the entire Economy Act. She believed there should be more government services, not less, paid for by taxes on wealthy individuals and profitable companies. When she wrote a column in the Women’s Democratic News opposing the bill, Roosevelt wrote his own column arguing for it.44
The Congress that received the Economy Act was one that was eager to give Roosevelt what he wanted. After the 1932 landslide, the Democrats controlled the Senate 60-35 and the House 311-116, and many of the Republicans were progressives, whose views were more in line with Roosevelt than with Hoover. Despite this st
rong pro-Roosevelt tilt, the economy bill was “a staggering dose for Congress to down,” Moley noted. Henry T. Rainey of Illinois, the lumbering, white-haired new Speaker of the House, introduced the bill in a meeting of the Democratic caucus on Saturday morning. If it got a two-thirds vote, every Democrat would be bound to support it on the floor. The bill, however, met with fierce opposition. A trio of southern populists—John Rankin of Mississippi, Gordon Browning of Tennessee, and Wright Patman of Texas—argued that the current economic crisis was no time for government to slash spending. John McDuffie, the Democratic whip, who had chaired the Economy Committee Douglas had served on, worked hard to round up support, but a coalition that included southern populists and representatives from New York’s Tammany Hall machine kept the vote under two-thirds. When the bill arrived on the floor, the Republican minority leader, Bertrand Snell of New York, assured McDuffie he could count on the overwhelming support of House Republicans. It was less clear how many Democrats would stand by their leadership and vote in favor. To keep the rebellions in check, McDuffie limited debate to two hours and barred amendments, restrictions that drew outraged protests from the bill’s opponents. 45
McDuffie, taking on the role that Douglas had once played in Congress, gave an impassioned speech on the floor in favor of government economy. He acknowledged that there were those who questioned the wisdom of cutting spending in a depression, but he insisted there was “no quicker way to shorten the bread lines” and “no quicker way to lessen unemployment in America than by putting this Nation on an even keel financially.” McDuffie took direct aim at the veterans’ lobby, arguing that it was “no time to talk about group legislation or hurting any one class of our people, when every citizen’s welfare is involved.” He concluded with a flourish that drew wild applause from the visitors’ galleries. “Your President,” he told his colleagues, “has called you to arms, and in the language of a great Federal naval hero of the glistening waters of Mobile Bay many years ago, the time has come to give the command, as Admiral Farragut did: ‘Full speed ahead! Damn the torpedoes!’ ”46
The Economy Act’s opponents were no less impassioned. John Rankin of Mississippi noted that the cuts would come right after the government’s rescue of the banks. If there was money to “take care of the big financiers,” he argued, there was money for “the disabled veterans of the World War and the Spanish-American war, and their widows and orphans.” Patman, whose rural Texas district was so poor that fewer than 2,000 of his 255,452 constituents paid income taxes, attacked the bill as a sop to oligarchs. “I tell you now, my friends, Mr. Morgan, Mr. Mellon, Mr. Meyers, Mr. Mills, and Mr. Mitchell are the gentlemen who are profiting by such legislation as this,” he declared. Gardner Withrow, a Wisconsin progressive, had a different objection, arguing that the bill could be an unconstitutional delegation of power to the president. “Mr. Speaker, if this measure is passed we should, in consistency, close the doors of Congress and go home,” he said to cheers from the galleries. William P. Connery, Jr., of Massachusetts, who had carried the American flag as a color sergeant in France, spoke for his fellow veterans. “I think of what the big businessmen of the country told us when we went off to France,” he said. “ ‘Goodbye, boys, good luck, God bless you,’ they cried. ‘When you come back nothing will be too good for you.’ And today they ask you to tear the hearts out of the disabled men by passing this bill.”47
For many members of Congress, what mattered was not the substance of the Economy Act, but giving Roosevelt authority to address the Depression as he saw fit. Mary Teresa Norton, a New Jersey Democrat, argued that the bill should pass “not because of its merit,” but because Roosevelt had asked for it. “The citizens of our country elected him with the largest majority ever given to a President, believing that he has the ability, desire, sound judgment, and humanity to lead a demoralized and heartbroken people,” she said. “Can we as patriotic American citizens do less than support him?” John Young Brown, a newly elected Kentuckian, felt the same way. “I had as soon start a mutiny in the face of a foreign foe as start a mutiny today against the program of the President of the United States,” he said. Even many Republicans were moved by a sense of loyalty to Roosevelt. “I am not going to throw a monkey wrench into the machine,” their floor leader, Snell, declared. “The President says this is necessary to meet the emergency and I shall support him.”48
Roosevelt, who would prove masterful at maneuvering bills through Congress, eased the Economy Act’s path through the House with some well-timed arm-twisting and a not-so-veiled threat. Word reached wavering members that if they voted against the bill, Roosevelt would take to the radio to denounce them. The prospect of being attacked by the immensely popular Roosevelt kept the progressive rebellion in check. In the end, the bill passed the House by a vote of 266-138, and Roosevelt had won the first contested battle of his presidency handily. “The President,” journalist Anne O’Hare McCormick declared, “holds all the cards in the new deal.” It was a triumph, but not for party unity. Even with all of the White House pressure, 92 Democrats had defected. The Economy Act only passed because 69 Republicans voted for it.49
The bill still had to pass the Senate. When Douglas testified there on Saturday, March 11, he was met with opposition from progressive senators who, like their House counterparts, insisted that it made no sense to cut spending and jobs during a depression. Douglas wrote to his father that he got “a good grilling from McAdoo”—William Gibbs McAdoo, the newly elected Democratic senator from California—“and a few others,” but he was convinced that “the Senate will stay with the President.” Huey Long protested that the bill would benefit “Mr. Morgan” and “Mr. Rockefeller,” while hurting the Depression’s victims. “Let them balance the budget by scraping a little off the profiteers’ profits from the war,” he urged. It was not only the progressives who were troubled. Arthur Robinson, an Indiana Republican whom Time magazine described as a “G. O. Partisan,” pointed to the “approximately 13,000,000 men” who were already “walking the streets tonight looking for work, with none to be found,” and argued that the Economy Act would only add to their number.50
The bill also had its supporters. There were fiscally conservative senators who shared Roosevelt’s concern about waste in the federal government. “I am not paying one dollar to any one who never heard a percussion cap or saw the Atlantic Ocean,” Carter Glass declared. Henry Fountain Ashurst of Arizona, a friend of Douglas’s, acknowledged the risk he was taking, since his state was home to so many veterans, but he said he had come to realize that while “the perpetuity of the Republic does not depend on my re-election to the Senate,” it might “depend upon granting to the President the authority for economies called for in his message to Congress.” As had been the case in the House, many of the bill’s supporters were driven mainly by loyalty to Roosevelt. Robert F. Wagner of New York spoke for many progressives when he mentioned the “heaviness of heart” with which he supported the Economy Act.51
Roosevelt was worried that a minority of the Senate might try to block the Economy Act by filibuster. As an incentive for it to act quickly, he declared Sunday night at the White House, “I think this would be a good time for beer.” Prohibition, which had been written into the Constitution in 1919, was on the way out. Congress had already passed the Twenty-first Amendment repealing Prohibition, which would soon be ratified by the states. In the meantime, Roosevelt was proposing a law to legalize beer of up to 3.2 percent alcohol content. Roosevelt’s beer bill got an enthusiastic reception in Congress, particularly from representatives of urban districts. The opposition from rural members was muted, in part because beer sales were being promoted as an economic stimulant. Thomas H. Cullen, the Brooklyn congressman who sponsored the House bill, said it would create 300,000 jobs immediately and 1,000,000 over time. Congress would go on to pass the bill quickly, easily overcoming the resistance of the once-mighty “dries,” including the Women’s Christian Temperance Union, which argued in vain that “no nati
on ever drank itself out of a depression.” Most of the nation rejoiced, especially the big cities. In New York, the Waldorf-Astoria Hotel announced plans to open a beer tavern called the Roosevelt Room.52
Roosevelt’s move to legalize beer had the effect he intended. It was, one journalist observed, “like a stick of dynamite into a log jam.” Progressive senators put forward a series of amendments to lessen the Economy Act’s impact. La Follette proposed limiting spending cuts to just 15 percent. Thomas Connally, a liberal Democrat from Texas, called for a limit of 25 percent. A third amendment, also from La Follette, proposed exempting federal salaries of less than $1,000. Roosevelt’s allies defeated all three amendments, but for the last two it had to rely on Republican votes. On Wednesday, March 15, the economy bill finally passed, on a 62-13 vote. There was no White House signing ceremony for the Economy Act. Rooosevelt signed it while eating lunch at his desk, looking up from a bowl of soup, and gave the pen to Douglas. The new law was, like the Emergency Banking Act, an extraordinary new grant of presidential power. The New York Times declared nervously that it would give Roosevelt “more arbitrary authority than any American statesman has had since the Constitution was framed.”53
