Forgotten Man, The

by Amity Shlaes

  Frankfurter, still a professor, then wrote Molly Dewson, an old acquaintance who had been at the convention, asking “to acquire detailed knowledge about Roosevelt’s work” as governor, including work on financial policy, social legislation, water power, other public utilities, unemployment relief, and agriculture. There were some differences among advisers. Tugwell, like Insull, liked the idea of big companies and thought that, as he would later write, “modern concentrations” could be taken advantage of, that government could become a “senior partner in industry-wide councils.” Frankfurter, like Brandeis and indeed Woodrow Wilson, believed in trust-busting as the progressives’ rule. In their discussions Roosevelt’s advisers cited a book that Berle would shortly publish with coauthor Gardiner Means, The Modern Corporation and Private Property. The thesis of the book was that U.S. industry would be controlled by ever fewer hands. Tugwell found himself annoyed by the outrage of some of the Roosevelt advisers over this idea; he thought assaulting big business and trust-busting a “diversion” from more important economic work.

  But the battles among the progressives did not have to be fought yet—the campaign was still on. Reporter Anne O’Hare McCormick—the same reporter who had attended the Stalin interview—now landed an interview with Roosevelt at the governor’s mansion, a Victorian, in Albany. Roosevelt did not know exactly what he was, but, he assured her, he was no engineer. He told the writer that the presidency was “more than an engineering job, efficient or inefficient. It is preeminently a place of moral leadership.” Her article conveyed the mood of excitement at the house. Callers came and went; books lay strewn about in the hall and in the offices. The day she was there, McCormick noted, “a reporter picked up a copy of Stuart Chase’s book, A New Deal, and discovered fifty new one-dollar bills between the pages sent as a campaign donation” by a citizen.

  Now the Brain Trust team set to their work with new energy. They also vied for FDR’s attention, and, inevitably, jobs. At points in the campaign Roosevelt declared himself for “sound money,” by which most people assumed he meant a gold-backed currency. But he was ambivalent. Beatrice Berle wrote about it in her diary. “The first debate, I believe, was on inflation, Roosevelt at that time being in favor of it. Bernard Baruch then stepped in and wanted FDR to pronounce himself against inflation under any circumstances. A. [her husband, Adolf] did not want this and apparently pacified Baruch.

  “From that time on, A. has been in great and constant demand at Albany and Hyde Park. Moley is the constant companion but A. seems to be the inspirer!…The triumvirate of Moley, Johnson and A. remains. A., certainly had a frabjous time!” As for Beatrice herself she noted, with irony, that Sara Roosevelt, the governor’s mother, liked to have her at her table in Hyde Park—perhaps because Beatrice too was descended from the old Dutch aristocracy along the Hudson.

  In September 1932 Berle and Beatrice sat down to write an address that Roosevelt would give at the Commonwealth Club of San Francisco. The pair worked hard to find the right phrases for Roosevelt to use when he attacked the wealthy. “A. dictated a first draft which I thought very sloppy so I chewed the pencil, and did a powerful lot of pruning and rewriting. By that time he had clarified his thinking and wrote off the end in fine shape thus at last getting off ‘the princes of property.’ A. has the draft in our joint handwriting.” They sent it to Moley in Portland, where the candidate was giving another speech laying out his ideas on power. A few days earlier, the U.S. attorney’s office had moved to investigate Sam Insull’s network of utilities companies; the aim was to uncover any criminal violations of federal law, and to that end, authorities sifted through postal documents and tax returns. Now, in the Portland speech, Roosevelt convicted Insull before a trial, referring to the “Insull monstrosity.”

  Within days the candidate Roosevelt gave the second, more general speech in Hoover’s own home territory, downtown San Francisco. Laissez-faire had functioned, he argued, as long as the American frontier was open. “Depressions could, and did, come and go; but they could not alter the fundamental fact that most of the people lived partly by selling their labor and partly by extracting their livelihood from the soil, so that starvation and dislocation were practically impossible.” But now, building on the ideas of his old professor Frederick Jackson Turner, Roosevelt reminded his listeners of the importance of the fact that “our last frontier” had long since been reached. It was time for the “princes of property,” the wealthy, to share their resources. Growth would not provide for the poor; only redistribution could.

  The new situation had made the trusts all the more dangerous. The speech cited Berle’s academic work: “Recently a careful study was made of the concentration of business in the United States. It showed that our economic life was dominated by some six hundred-odd corporations who controlled two-thirds of American industry. Ten million small business men divided the other third.” Many of those big magnates were not acting in the citizens’ interest. The Berles had written of an emblematic “Ishmael,” the malevolent figure in the economy who turned against the small man. Roosevelt changed the text so that it also, again, attacked Insull. He spoke of the “Ishmael or Insull, whose hand is against every man’s.”

  This vision was a darker one than had prevailed in the 1920s. Where Americans—even the very poorest of Americans, such as Father Divine’s constituent souls—had believed in a future of plenty, Roosevelt believed in a future of scarcity. The paradox was that he presented the message in a framework of optimism, to the music of the tune “Happy Days,” and with, simultaneously, an unspoken offer of an end to Prohibition. More and more voters began turning to Roosevelt.

  Willkie gave up on Baker and lined up behind Roosevelt, donating $150 to the governor’s campaign. Willkie’s industry suffered too with the Depression—C & S dividends had dropped from seventy cents to one cent—and Willkie thought he might team up with a new administration to change things. In his own state, Indiana, families were losing their farms; later Willkie would buy up distressed farms and have family members, friends, or employees turn them around. If Roosevelt was prosecuting someone else in his industry—Insull—that was perhaps just as well.

  That same September, Treasury Secretary Ogden Mills traveled to a key state that held its congressional and gubernatorial elections two months early—Maine. Mills had been at Harvard like FDR, and he would try to woo back the voter by reminding him of the other definition of the Forgotten Man. Reading aloud from Sumner’s original essay, Mills recalled Sumner’s “forgotten man” and pointed out that he was different from Roosevelt’s. The true forgotten man was not “inert and helpless” but rather “the backbone of the nation” and certainly not “industrial cannon fodder.” Then Mills asked the voter not to change horses while the country rode through a storm. The remarks fell flat. Democrats did so well in Maine that their main debate point, among themselves, was not whether Roosevelt would win the country but by how many millions.

  THE PROSPECT OF A ROOSEVELT victory had a mixed meaning for the national economic outlook. Inauguration in those years did not come until March. Before, Hoover had assumed that did not matter, because he assumed he would be reelected in November. But if Roosevelt won, for four long months no one would be in charge—a devastating situation for already teetering banks.

  Perplexed, yet courageous, American towns and neighborhoods rallied one more time. They made a last effort to solve the money problem on a local level. Salt Lake City had now gone further than barter. The townspeople had banded together and created a group, the Natural Development Association (NDA), that made its own money. They had given their unit the reverberating name of the vallar.

  Citizens could work to earn vallars. They came in different denominations: V5, V10, V15, V20, and V25. They then in turn could use those vallars to buy and sell oil, soap, coal, food, furniture, meals at a restaurant, and even medical treatment. A music company had sold forty pianos for vallars.

  The vallar traders created their own newspaper, the Pro
gressive Independent, whose masthead blared its purpose: “A New Economic System: For Human Welfare, Man Above Money.” Salt Lake City banks cleared the new money. By the end of 1932, some 10,000 people would be, somehow or other, in the vallar system.

  Salt Lake City had a “daylight restaurant,” because the local power company would not accept the scrip. Ventura, California, Minneapolis, and Yellow Springs, Ohio, were all also making some form of scrip. In Arizona, the state’s governor enforced a three-day bank holiday—banks were closed. The legislature, by a special act, ordained a state scrip, to be issued in denominations up to $20. Three million in scrip was to be lithographed by a private firm. As it happened, this scrip was not used. But that did not stop other private firms from generating their own. The Nogales Herald, which had the advantage of possessing its own printing press, issued its own bills. In areas near the border, Mexican pesos began to trade at a premium; the peso, at least for a short moment, had become another form of American money.

  Obscure nonprofits and citizens’ groups, towns and businesses, were all creating money: the Business Men’s Club of Oak Hill, West Virginia, issued coins. The Lane Bryant Store issued money in Indianapolis, not fifty minutes from Willkie’s hometown. City and state governments also got into the money business. The state of Washington issued money, as did the Port Authority in New York and the Village of Chatham, New York (its money was orange). Sometimes towns paid their workers in scrip; Hawarden, Iowa, was one. A clothing store owner reported that he “even paid a life insurance premium to a Hawarden agent in scrip.” In Inwood, a “Mutual Exchange” on upper Broadway created credit tokens for trading among other exchange members. Thus, for example, a farmer near New Hope, Pennsylvania, asked the exchange to send him workmen. They came and were paid for their construction job with 134 bushels of winesap apples. Some of the apples were then sold for credits, in order to increase the credits’ circulation; some were even converted to jelly, promptly labeled “Barter Brand.” “Barter apples, the best you ever ate.”

  In Manhattan itself, there was the Inwood office’s affiliate, the “Emergency Exchange of New York City.” Its board was supervised by an individual no less respectable than the assistant chairman of the New York State Power Authority, Leland Olds—who had also had a hand in FDR’s speech about power, in Portland. The exchange opened its first temporary office at 52 Vanderbilt Avenue, just around the corner from Grand Central Station. People who owned homes were losing them because the barter did not help with the bank, but at least the emergency exchange might get them something to eat. One of the economists to join those working on the barter money project in New York was Stuart Chase.

  The barter systems kept growing; by the spring there would be some 150 barter and/or scrip systems in operation in thirty states. Tens of thousands of people—perhaps hundreds of thousands—used barter money. Barter enthusiasts claimed the number of those engaging in some form of barter had hit a million.

  The notion of scrip seemed enormously satisfying. Holding one of the slips of paper, one could feel the pleasure of people who, lacking a basic thing once supplied by a faraway bank, had now crafted it for themselves on a small scale. There was also the pleasure of establishing value where there had been only paper before. Citizens liked the idea of reverting to pioneer mode, of confronting economic problems and working them out themselves.

  Still, trading in kind, especially when one did not live on a farm, did not feel like progress. Even vallars could not keep mortgage holders from losing their homes. People were beginning to realize that the problem was simply not something they could solve in the neighborhood, or even in the state. The hour of the vallar was merely that—an hour.

  From Northampton, on November 7, Coolidge did his duty and issued a final plea for reelection. “All the teachings of common sense require us to reelect Hoover,” he told radio listeners.

  As for Roosevelt’s advisers, they were now in an intense negotiation for jobs in his administration. Henry A. Wallace, the son of the old agriculture secretary, published a puff piece in the New York Times about the merits of Roosevelt’s outreach to farmers; Hoover was staged, while Roosevelt had “genuineness,” he wrote. There was another set of Henrys: Morgenthau, a Democratic leader, badly wanted his son, Henry Jr., to have a role in the new government. Henry Jr. was trying out a life at farming, in Roosevelt’s Dutchess County. Both men hoped that Roosevelt would name Henry Jr. to the post of agriculture secretary as the second Jewish cabinet member, the first having been Oscar Straus under Teddy Roosevelt. The chances looked pretty good—the Roosevelts and Morgenthaus were neighbors in Dutchess County.

  At Albany, and in New York, other job applicants were gathering. Lilienthal, perhaps unaware that Frankfurter himself had been playing catch-up as recently as the convention, nursed his contact with Frankfurter. He also tried to build connections with any other New Dealers he could throughout the 1932 campaign. October found him in Washington interviewing with Berle, the speechwriter. Lilienthal also saw Frankfurter and Justice Brandeis. And that same month Lilienthal delivered a speech—a sort of public job application—arguing that holding companies represented “a social loss to the community.” Frankfurter reported back that his words had earned “high praise.” Whatever came after the election, Lilienthal wanted to be part of it.

  Early in November, Roosevelt defeated Hoover by seven million votes. The victory was so thorough that Hoover was shocked. Even Boulder City, the town created by the project that he had brokered, wanted him out: 1,620 out of 2,074 voters went for Roosevelt. Hoover nonetheless headed out west to look at the one project he still had the most hopes for. Around the world, the papers trumpeted the new U.S. president. Among the most pleased were the Soviet leaders. “Russians Hopeful of ‘a New Deal,’” ran the headline of a dispatch from New York Times correspondent Walter Duranty on November 10. The Soviet Union’s leaders hoped that people like the travelers would now convince FDR, finally, to recognize Russia.

  But in America, at least at the outset, there was little sense that Roosevelt would create a leadership of the Left. Instead the view was that this crisis would need men from all political backgrounds. Now a number of Wall Streeters joined the brain trust and gathered around the new president, knowing that only Washington and Wall Street together could fix the monetary situation. Among those who visited with the president were James Warburg, the young banker who had walked away from Hoover’s Commerce Department offer, and Alfred Lee Loomis, the venture capital man. On Thanksgiving, the victorious FDR struck an especially intimate tone with his radio audience when he referred to a section of the Episcopalian’s Book of Common Prayer that was intended for worship within the family: “Remember in pity such as are this day destitute, homeless, or forgotten of their fellow-men.” The effect of the phrase was subtle; Roosevelt was suggesting his motto had a provenance—not the Sumner essay, but the prayer book. Sumner, himself trained as an Episcopalian clergyman, would have approved heartily of the use of the phrase in a religious context, meaning the man deserving of charity, for example. But Roosevelt was not so much thinking of religion as allowing that the religious impulse of charity should find expression in the political sphere.

  Hoover, meanwhile, was still trying to absorb what had happened to him. He paid a surprise visit to the Hoover Dam—“I never in my life saw a man look so worn out,” recalled an observer at Boulder City. Recognizing, better perhaps than any man, that something had to be done over the course of the winter to slow an alarming spread of the bank crisis, he made a point of showing himself to be a good soldier. He wrote memos. He telegraphed Roosevelt to ask for a meeting on the international debt problem—but also, really, in the hopes the two could be partners over the coming months. His moratorium was coming to an end and Britain and France were begging for reconsideration. Hoover, his Treasury Secretary, Ogden Mills, Roosevelt, and Ray Moley met at the White House, all so nervous that they smoked—Hoover had a fat cigar. Fixing his eyes on the presidential seal, or
occasionally Moley, Hoover spent an hour reviewing the problem, and while they agreed on some things, he did not convince Roosevelt to join him in a plan to work together throughout the interregnum.

  But there was always hope Roosevelt would shift. While Hoover waited, he laid the cornerstone for yet another large building—the new Labor Department; the masons who helped him used the same trowel and gavel used by Washington himself at the construction of the Capitol in 1793. He spoke of the wonders of American labor, which functioned well in a country with no “class distinctions.”

  Early in January Roosevelt joined Senator Norris at Muscle Shoals, a clear signal from him that the Tennessee River was replacing Niagara Falls in his thoughts.

  Days later, Coolidge died suddenly at his home in Northampton, Massachusetts, the Beeches. Mellon, aboard the SS Majestic on one of his transatlantic crossings, sent a radio note of condolence: “Coming in the vigor of his activity, it is indeed a loss for all our people.” The effect of the death was to seal the conviction that the country could not go back to the 1920s, even if it wanted to. Willkie at this time had some news of his own. He became president of Commonwealth and Southern. He was also doubtless concerned about what was going on at home: farmers from Indiana, like those from six other states, were striking at the state capitals to win moratoria on their crushing debt and tax burdens.