by FDR
Woodin and Awalt took the case to the president. Roosevelt’s handling of the situation was masterly. He declined to take direct action and order Giannini’s bank reopened. Instead, he shifted the decision to Calkins. FDR instructed Woodin to call the San Francisco director and either convince him to agree to the bank’s opening or require him to take personal responsibility for keeping it closed. “The conversation was punctuated by some pretty strong language on Woodin’s end,” Moley recalled. When Woodin asked point-blank if Calkins would accept responsibility for keeping the Bank of America closed, he declined. “Well then,” said Woodin, “the bank will open.”27 Giannini was personally grateful to FDR and became a staunch supporter of the New Deal. Roosevelt, for his part, enjoyed taking personal credit, though his hand had been hidden. “It was the same old crowd trying to destroy competition,” he told California lawyer J.F.T. O’Connor.28
As soon as FDR signed the Emergency Banking Act, he moved to consolidate his conservative support. Just as he did after winning the nomination in Chicago, Roosevelt turned right before he turned left. Within the hour he summoned congressional leaders back to the White House to inform them he wanted authority to reduce government spending across the board.* Roosevelt sought to put the government’s house in order: to balance the federal budget before undertaking emergency relief. The two biggest culprits, in FDR’s eyes, were government salaries and bloated veterans’ benefits. He told the legislators he wanted to cut all government workers’ salaries by at least 15 percent to bring them into line with the reduced cost of living since 1928 and scale back the elaborate array of entitlements enacted for veterans since World War I—currently consuming roughly one quarter of the federal budget.29 Under Roosevelt’s proposal, for example, congressional pay would be reduced from $10,000 to $8,500 and his own salary would fall from $90,000 to $75,000. Shortly after midnight the leaders departed—some stunned, some enthusiastic, and a few, such as the populist John Rankin of Mississippi and progressive Robert La Follette, very angry at what the president proposed.
Roosevelt was undeterred. The following day, Friday, March 10, he sent a special message to Congress: “For three long years the Federal Government has been on the road to bankruptcy.” The growing deficit, he said, had increased economic stagnation, multiplied the unemployed, and contributed to the banking collapse. National recovery required the government’s credit to rest on a solid foundation, and that required that the budget be balanced. Roosevelt asked for broad authority to effect the economies he deemed necessary. “If the Congress chooses to vest me with this responsibility it will be exercised in a spirit of justice to all, of sympathy to those who are in need and of maintaining inviolate the basic welfare of the United States.”30 Attached to the message was “A Bill to Maintain the Credit of the United States” drafted by the Bureau of the Budget.31
Congress was incredulous, and for a moment the president’s control hung in the balance. Although conservatives such as Carter Glass and Mississippi’s Pat Harrison offered unstinting praise, liberal Democrats felt betrayed. The last thing the country needed at this time was more deflation, and FDR’s proposal was surely deflationary. In the House, Majority Leader Byrns refused to introduce the bill. When Speaker Rainey assembled the Democratic caucus Saturday morning, he failed to get the necessary two-thirds vote that would have bound the party to support the president. That afternoon the bill was introduced on the floor by Representative John McDuffie of Alabama, a skilled parliamentarian and rock-hard conservative who had been narrowly defeated for the speakership.32 After two hours of fierce debate, the bill passed 266–138. Ninety-two Democrats and five Farmer-Labor members voted against, but 69 Republicans led by the ultraconservative John Taber of New York crossed the aisle to support the president.* At the same time the House was acting, the Senate Finance Committee, chaired by Pat Harrison, reported the bill favorably, setting the stage for action by the full Senate on Monday. “I am for giving the President whatever he wants in the way of power,” said Senator Arthur Capper, a Kansas Republican. “This is an emergency situation.”33
Sunday evening, at the conclusion of his first week in the White House, FDR gave his first fireside chat. The banks were scheduled to reopen Monday, and Roosevelt wanted to avoid a panic. In simple language he analyzed the banking crisis and spelled out what had been done. “I do not promise you that every bank will be reopened or that individual losses will not be suffered, but there will be no losses that possibly could be avoided.”34 Will Rogers said the president had explained the banking situation so well that even the bankers understood it.35
Public response was overwhelming. “When millions of people can hear the President speak to them directly in their own homes, we get a new meaning for the old phrase about a public man ‘going to the country,’ ” said The New York Times. When the banks reopened Monday, reassured depositors returned much of the money they had withdrawn. Not only was there no run on the banks, but the Federal Reserve reported that deposits exceeded withdrawals by more than two to one despite the cash-starved existence most had led the past week. The banking crisis was over. On foreign exchanges the dollar soared. Raymond Moley proclaimed, “Capitalism was saved in eight days.”36 When the New York Stock Exchange reopened March 15 (it had been closed since March 3), stock prices rose by a whopping 15 percent—the greatest one-day rise in living memory.
Conservatives vied with liberals in shouting Roosevelt’s praise. “The new Administration in Washington has superbly risen to the occasion,” said The Wall Street Journal. Henry Stimson wrote FDR, “I am delighted with the progress of your first week and send you my heartiest congratulations.” Newton D. Baker called Roosevelt “a providential person at a providential moment.” William Randolph Hearst said, “I guess at your next election we will make it unanimous.”37
Roosevelt stayed on the offensive. At dinner the evening he delivered his fireside chat, the president told guests with a twinkle in his eye, “I think this would be a good time for a beer.”38 That sent Louis Howe scurrying for a copy of the Democratic platform. When FDR finished his radio address, he wrote a seventy-two-word message to Congress quoting word for word the Democratic pledge to amend the Volstead Act and permit the sale of beer and light wine.39* The message, perhaps the shortest on record, went to the House at noon Monday. Divided Democrats rallied back to the president’s side. The Ways and Means Committee drafted the requisite legislation within five hours of FDR’s request. On Tuesday, the House of Representatives, ignoring the pleas of the Anti-Saloon League and the Women’s Christian Temperance Union, voted for beer, 316–97. On Wednesday the Senate passed FDR’s economy measure 62–13, and on Thursday it voted to amend the Volstead Act 43–30. Roosevelt signed the Economy Act on March 20 and the Beer-Wine Revenue Act two days later. The administration was three for three, and the Democratic ranks were now more solid than ever.
Originally FDR had assumed that Congress would remain in session only so long as necessary to deal with the banking crisis. But with the legislative tide running so strongly in favor of the administration, he decided to hold it in Washington until the bulk of the New Deal program could be enacted. Public confidence had recovered, but the economy remained in the doldrums. Freight car loadings, electric power, and steel production continued to slide, employment had drifted downward, and there was as yet no glimmer of relief for farmers or those without work. “I haven’t any real news,” Roosevelt told his press conference on Wednesday, March 15. And after that casual disclaimer he broke the story that he was going to move immediately to assist the nation’s farmers and the unemployed. The banking bill, the economy measure, and the amendment of the Volstead Act had done nothing constructive for the economy, he said. What was needed was a definite effort to put people to work and a program to raise farm prices. FDR said he could not go into detail because the measures were still being worked out. But he made it clear that he planned no letup.40
Congress was ready to respond. A full third of the House (
144 of 435 members) were new to Washington, swept into office on FDR’s coattails. In the Senate, with fourteen new members, Democrats were in control for the first time since the election of 1916. Both houses turned to the president for leadership. And Roosevelt took no chances. Holding almost one hundred thousand full- and part-time jobs not subject to civil service rules, FDR let it be known that he would make no patronage appointments until the end of the session. John McDuffie drove the point home when he demanded a roll-call vote on the economy act. “When the Congressional Record goes to President Roosevelt’s desk in the morning he will look over the roll call we are about to take, and I warn you new Democrats to be careful where your names are found.”41*
On Thursday, March 16, FDR sent the first genuine New Deal measure to Congress, an agriculture bill intended to raise farm income by reducing agricultural surpluses through a system of domestic allotments. Farmers would be paid directly by the government not to produce crops beyond an allotment set by the secretary of agriculture. Funding for the allotment payments would be provided by processing taxes levied on millers, canners, packers, textile manufacturers, and commodity brokers. Farmers would derive immediate income through the allotment payments, and when the surpluses were reduced the price of farm products was expected to rise proportionately. It was a radical departure, providing unheard-of government control of agricultural production, historically the most individualistic segment of the economy. “I tell you frankly that it is a new and untried path,” Roosevelt told Congress, “but I tell you with equal frankness that an unprecedented condition calls for the trial of new means to rescue agriculture.”42 The measure, eventually known as the Agricultural Adjustment Act, was drafted by Secretary Wallace and Rexford Tugwell following a week of breakneck discussions with farm leaders throughout the country. The bill was followed three weeks later by Roosevelt’s request for legislation to provide federal funding to refinance farm mortgages threatened with foreclosure.43 Like the emergency banking legislation and the economy bill, the agricultural adjustment bill was considered by the House under a closed rule prohibiting amendments. Debate was limited to four hours. On March 22, less than a week after it had been received, the measure passed the House 315–98, all but 24 Democrats voting in favor.
The bill ran into trouble in the Senate. Food and fiber processors had time to mobilize against the processing levy, and a knock-down, drag-out fight ensued. Wallace and Tugwell urged the president to force the bill through without amendments, but FDR was not ready to risk his coalition on an issue so fundamental as farm relief. He instructed Majority Leader Robinson to accept whatever changes were necessary. If a senator’s support could be obtained by adding his amendment, he said, add it. The resulting bill, said one Washington observer, “sought to legalize almost anything anybody could think up.”44 The final sweetener came when Roosevelt agreed that all jobs created to administer the Agricultural Adjustment Act would be outside the civil service—a vast reservoir for legislative patronage. After five weeks of debate, the Senate approved the measure 64–20, having added the president’s mortgage protection plan to the bill. It was signed into law by FDR on May 12.45
Roosevelt saw the farm program as the centerpiece of the New Deal. Not only was agriculture the most perennially depressed sector of the economy, but ever since his experience as a state senator, FDR (who had chaired the Agriculture Committee in Albany) had stressed the relationship between farm prosperity and the well-being of the rest of the country. If farmers had no money to buy what industry produced, the cities suffered as well. The lopsided majority that eventually voted for the bill reflected Roosevelt’s skill in handling the Senate, almost on a man-to-man basis. The food processors were routed, and the New Deal coalition was solidified.* In that sense the passage of the Agricultural Adjustment Act had a significance considerably beyond its impact on America’s farms.
The legislative floodgates were open. The week after FDR sent his farm bill to Congress, he asked for quick authorization to establish a civilian conservation corps, which would employ young men in reforestation and flood control; requested $500 million in federal funds to provide direct relief for the unemployed; and urged the necessity of a public works program to put people to work. These were quickly followed by requests for regulation of the securities market, mortgage relief for home owners, establishment of a Tennessee Valley Authority, and the rehabilitation of the nation’s railroads.46 There was no particular order in which the bills were submitted. Roosevelt was still operating with only a handful of his own appointees. As soon as they were able to get on top of the situation and draft the necessary legislation, FDR sent it forward.
The Civilian Conservation Corps became one of the New Deal’s most popular programs. By the time the United States entered World War II, the CCC had put more than 3 million young men to work for $30 a month ($25 of which they were required to send home to their families) planting trees, thinning saplings, cutting firebreaks, building bridges, digging reservoirs—the gamut of vigorous outdoor activity to protect, enhance, and reclaim the nation’s natural resources.
The CCC was Roosevelt’s personal idea. Throughout his life FDR had an abiding interest in conservation, and reforestation ranked high on his list of personal priorities. At Hyde Park he sometimes planted 20,000 to 50,000 trees a year on his estate.47 As governor of New York when the Depression hit, he had initiated a work program that by 1932 employed 10,000 men planting trees throughout the state. In his acceptance speech at Chicago, he promised to put a million men to work fighting soil erosion and reforesting the landscape.48 And during his first week of office, when he was grappling with the banking crisis, he found time to draft a bill that would provide employment for 500,000 men in the nation’s forests.
On Thursday, March 9, the day Congress convened and the banking bill was passed, FDR explained his proposal to secretaries Ickes and Dern, gave them a one-page summary, and instructed them to draft the necessary legislation by nine that evening. After signing the banking bill, Roosevelt read over the draft, made a few changes, and invited Miss Perkins and Secretary Wallace to comment. During the next week the program was scaled back to an initial 250,000 men, but the basic structure of Roosevelt’s plan remained intact. The men, ages eighteen to twenty-five, would live in government-built camps, food and clothing would be provided, and the pay would be a dollar a day. Enlistment would be for six months, with possible renewals up to two years. The Labor Department would recruit the men, the Army would run the camps, and the Forestry Service would supervise the work.
“I think I will go ahead with this,” FDR told Moley, “—the way I did with beer.”49 At his press conference on March 15, Roosevelt revealed his plan on background, explaining in remarkable detail the ins and outs of forest management.50 The following week he sent his proposal to Congress. “I estimate that 250,000 men can be given temporary employment by early summer if you give me authority to proceed within the next two weeks.”51 Organized labor voiced misgivings: first at the dollar-a-day pay, which, they argued, would depress wages throughout the country; then at the regimentation of camp living. “It smacks of fascism, of Hitlerism, of a form of sovietism,” said William Green, president of the American Federation of Labor.52
Roosevelt moved quickly to douse the criticism. Yes, the pay was only a dollar a day, he told reporters on March 22, but it cost the government another dollar a day to feed and house the men. “Two dollars a day would probably be higher than what labor is being paid in a great many places.” As for the charge of militarization, FDR called it utter rubbish. “The camps will be run just like those in any big project—Boulder Dam or anything like that. Obviously, you can’t allow a man in a dormitory to get up in the middle of the night and blow a bugle. You have to have order—just perfectly normal order.”53
Stung by labor’s opposition, FDR made it clear he was not backing down. That evening he invited all members of the House and Senate Labor Committees to the White House to discuss the measure and to
emphasize the need for speed. Flattered by the president’s solicitation, the legislators agreed to expedite the bill’s passage by holding joint hearings of the two committees—an extraordinary procedure reserved for emergency situations. After two days of hearings dominated by administration spokesmen, the CCC bill was reported favorably. Two days later it was passed in the Senate by voice vote without a roll call. The House acted on March 30, again by voice vote, and Roosevelt signed the act on March 31.
In retrospect it seems incredible, but in less than a month, and aside from rescuing the banking system, FDR had taken on and defeated three of the most powerful special interests in the nation: veterans (with the economy bill), temperance (with the beer bill), and organized labor (with the CCC).
Neither FDR nor the union leadership could afford a permanent estrangement, and the fence-mending began immediately. To head the Civilian Conservation Corps, Roosevelt selected Robert Fechner, a vice president of the AFL who had worked with FDR and Howe on labor matters during World War I. A rough-at-the-edges trade unionist with remarkable administrative skills, Fechner proved to be an inspired choice and headed the CCC throughout its existence. And William Green was not neglected. When FDR made his first inspection tour of CCC camps in Shenandoah National Park in August 1933, he invited Green to accompany him. Green was thrilled with the invitation and later wrote Roosevelt that he “could not help but view the whole project in a most sympathetic way.”54 From that point on the CCC aroused no serious opposition from organized labor.
