Forgotten Man, The

by Amity Shlaes

  The uncertainty of the interregnum took its toll. When the banking crisis grew yet worse, Hoover tried contacting Roosevelt, even sending at one point a lengthy personal letter. Historians would later note that Hoover’s sense of urgency even showed up in the way he addressed the letter, misspelling Roosevelt’s name “Roosvelt.” Roosevelt was cruising the coast of Florida; Hoover expected to meet on his return. But Roosevelt was not interested in cooperation. We will never know all his motives, but it was clear that a crisis now could only strengthen his mandate for action come inauguration in March. Hoover became incensed at the silence, and took to documenting his own goodwill in the name of an accurate history. In late February, one of the lowest moments—as the Dow stood at just above 50—a manufacturer would leave a phone message for Hoover. He had had a meeting with Tugwell, who had confirmed that the new administration had no interest in cooperating. Hoover wrote a formal letter to the manufacturer to put on record what the man had reported to his secretary: “I beg to acknowledge your telephone message received through Mr. Joslin, as follows: ‘Professor Tugwell, adviser to Franklin D. Roosevelt, had lunch with me. He said they were fully aware of the bank situation and that it would undoubtedly collapse in a few days, which would place the responsibility in the lap of President Hoover.’” Hoover added his analysis: “When I consider this statement of Professor Tugwell’s in connection with the recommendations we have made to the incoming administration, I can say emphatically that he breathes with infamous politics devoid of every atom of patriotism. Mr. Tugwell would project millions of people into hideous losses for a Roman Holiday.”

  The brain trusters were ferociously busy and in an expansive mood, a fact that their opponents were quick to take advantage of. Hoover was not the only one to quote remarks that Tugwell imagined he was making in private. In addition to his lunch with the manufacturer, Tugwell had granted an interview to a journalist who seemed to him “a kind of minor Lincoln Steffens”—a muckraker. He had not yet had too many experiences with newspapermen, and told the man “we were talking off the record.” The journalist interpreted this to mean he could write what Tugwell said and attribute it to him, but not quote it. On January 26, the New York World Telegram printed Tugwell’s thoughts, calling them “an authoritative outline of what the new administration plans”: “Drastically higher income and inheritance taxes,” large changes in agriculture, and other dramatic proposals.

  “I was appalled,” Tugwell wrote—not about the content of the article so much as about the high position he appeared to give himself, and about betraying Roosevelt’s plans too early. But Moley reassured him, he later wrote, that these things happened. Besides, Moley added, what Tugwell had laid out “wasn’t a bad program.” But in his diary, Tugwell made a vow: “I shall never trust another reporter.”

  Tugwell suggested that as agriculture secretary Roosevelt appoint Henry A. Wallace. “Rex, I really ought to be working for you,” Wallace said when he formally offered Tugwell the job of assistant secretary. Stuart Chase was not in the Roosevelt coterie but was finding a role as the brain trusters’ scribe and herald. In February 1933 Chase was traveling the country, arguing that purchasing power would help to restore the country. In the restaurant of the Hotel Utah at Salt Lake City—one of the scrip towns—he met Marriner Eccles.

  Over lunch, Eccles asked Chase about the brain trusters, and Chase asked Eccles for his views on the economy. Eccles lectured Chase on the need for spending to forestall inflation. Deficit spending could conceivably slow or reverse a downturn. This argument was a limited one, especially for its time. Even in 1932, government spending from Washington was such a small share of the economy that increasing it would not matter much. Still, Chase believed the idea that the economy needed more money was essentially accurate. “Why not get yourself a larger audience?” Chase, impressed, asked.

  Eccles already had a date to testify before the Senate Finance Committee. He would tell the committee that Washington needed a $2.5 billion spending plan, as well as higher estate and inheritance taxes. But Chase offered something that might lead to a longer stay in Washington than the overnight visit of a hearing witness: a letter of introduction to Tugwell, still in New York.

  Tugwell agreed to receive the banker from Utah at Columbia; he was, as Eccles later reported in his memoirs, late for the meeting because of a dentist appointment. The pair headed off for lunch at a drugstore booth. Eccles was amused by the venue choice; “the setting of food and pills was appropriate to the talk we had about the nation’s ills.” Tugwell was gloomy, and his gloom seemed justified: by inauguration day, a few days hence, most banks in the land would be closed or under some form of restriction. The early months of 1933 were seeing some of the worst joblessness of the slump—or in memory. At that point Washington did not quantify unemployment as it does today, but conservative estimates suggest that then, in the fourth year of the slump, up to three in ten workers were unemployed.

  In January, Germany held elections; this time, it looked as if Hitler would indeed be able to form a government. At the end of the month, president-elect Roosevelt received a letter from 800 professors and university presidents, a missive from the academy on a scale with the letter Hoover had received in regard to Smoot-Hawley. This time too the issue was the “critical world situation”—a phrase that referred to Germany but also, likely, to trade. The signatories included George Counts and John Dewey. The proposed solution was the academic club’s boldest gesture on behalf of the Soviet Union taken to date: Roosevelt should do what preceding presidents had not, and recognize Russia. Recognition became the central news story about Russia, obscuring other events there, including the news that Stalin was moving forward in the North Caucasus with the collectivization of agriculture.

  William Green of the American Federation of Labor instantly repeated his opposition to the prospect. But the world was changing. The same day the New York Times carried the report of the professors’ petition and Green’s objections, January 30, the paper also told of the meeting between Germany’s president Hindenburg and Hitler that would lead to Hitler’s ascent as chancellor. Several months later Mrs. Corliss Lamont, the daughter-in-law of Thomas Lamont, one of the top executives at J. P. Morgan, would announce the creation of an additional committee to recognize Russia. Another group of women also signed a recognition petition that went to the president—signers included Mrs. Lorado Taft, Paul Douglas’s new mother-in-law, and Jane Addams of Chicago, as well as Amelia Earhart, Ida Tarbell, and Irita van Doren in New York. It was not yet clear whether Roosevelt would actually act, but it was clear that he would take the idea of recognition far more seriously than had Hoover, Coolidge, Harding, or even Wilson’s secretary of state, Bainbridge Colby.

  Meanwhile, as a cultural accompaniment to the political theme of the Forgotten Man, Warner Brothers was readying a film for the inaugural year, titled Gold Diggers of 1933. At the end Joan Blondell sang a song about what the Depression had done to World War I doughboys:

  Remember my forgotten man,

  You put a rifle in his hand;

  You sent him far away,

  You shouted, “Hip, hooray!”

  But look at him today!

  Over the lengthy months before the March inauguration, and certainly through the weeks after, the country indeed saw Roosevelt as a savior—as his voice on the radio, and the money problem, had convinced them to do.

  “What matter,” Prince Edward would ask of Britain in these years, “if some trifling blunder is committed here, or some project fails there? The very attempt of the community to achieve some social betterment for the sake of the workers in their midst will lift the general level of hope and make easier every national solution by statesmen and economists.” The Britons placed their faith in royalty, and the Americans were placing their faith in Roosevelt. The scrip makers began trying out new designs. In at least two places, Albion, Michigan, and Evanston, Illinois, the new faith would shortly become explicit. The scrip craftsmen there
placed a likeness right on the front of their paper bills: the visage of FDR. In February, assassin Giuseppe Zangara shot at the president-elect in Florida. The bullet hit Chicago mayor Anton Cermak instead, and Cermak would die of the wound. Yet FDR bounced back quickly. “I have never in my life seen anything more magnificent than Roosevelt’s calm,” Moley wrote later. Moley, a criminologist by training, interviewed Zangara and determined he had acted alone. Roosevelt refused to let the Secret Service introduce a protective glass barrier between him and the crowds at the inaugural parade. Mrs. Roosevelt for her part opened herself to the country too, inviting citizens to write her once she arrived in Washington. On an auspiciously fair inauguration day, FDR pronounced his now famous phrase, “The only thing we have to fear is fear itself.” Here was a president who would not barricade himself at Rapidan. He was right there with them in this time of crisis. The pilgrims could not believe their luck. Tugwell, Chase, Moley, Berle, Frankfurter, and the others had waited so long for a chance to try out their ideas. Now they had one.

  the experimenter

  October 1933

  Unemployment: 22.9 percent

  Dow Jones Industrial Average: 93

  THEY MET IN HIS BEDROOM at breakfast. Roosevelt sat up in his mahogany bed. He was usually finishing his soft-boiled egg. There was a plate of fruit at the bedside. There were cigarettes. Henry Morgenthau from the Farm Board entered the room. Professor George Warren of Cornell came; he had lately been advising Roosevelt. So did Jesse Jones of the Reconstruction Finance Corporation. Together the men would talk about wheat prices, about what was going on in London, about, perhaps, what the farmers were doing.

  Then, still from his bed, FDR would set the target price for gold for the United States—or even for the world. It didn’t matter what Montagu Norman at the Bank of England might say. FDR and Morgenthau had nicknamed him “Old Pink Whiskers.” It did not matter what the Federal Reserve said. Over the course of the autumn, at the breakfast meetings, Roosevelt and his new advisers experimented alone. One day he would move the price up several cents; another, a few more.

  One morning, FDR told his group he was thinking of raising the gold price by twenty-one cents. Why that figure? his entourage asked. “It’s a lucky number,” Roosevelt said. “because it’s three times seven.” As Morgenthau later wrote, “If anybody knew how we really set the gold price through a combination of lucky numbers, etc., I think they would be frightened.”

  By the time of his inauguration back on March 4, everyone knew that Roosevelt would experiment with the economy. But no one knew to what extent. Now, in his first year in office, Roosevelt was showing them. He would present it all in what came to be known as the Hundred Days, that first frenzied period of legislative activity.

  Some of the projects were mere extensions of Hoover’s efforts, no matter what Hoover said. Roosevelt asked for war powers to handle the emergency, just as Hoover had suggested in a note during the interregnum. Hoover had called for a bank holiday to end the banking crisis; Roosevelt’s first act was to declare a bank holiday to sort out the banks and build confidence. Now Roosevelt’s team worked with Republicans to write the first emergency legislation to stop the bank runs. Hoover had had Ogden Mills; Roosevelt had another respectable man as treasury secretary, Will Woodin. Ray Moley would later write of that period, “Mills, Woodin, Ballantine, Awalt, and I had forgotten to be Republicans or Democrats. We were just a bunch of men trying to save the banking system.” In this period Washington asked the two banks in Detroit, Father Coughlin’s hometown, to merge, and Woodin placed or took a call with Coughlin to win his support. It succeeded, with Coughlin supporting the administration over the air. “Secretary Woodin asks me…,” listeners heard.

  There were further commonalities. Hoover had spent on public hospitals and bridges; Roosevelt created the post of relief administrator for the old Republican progressive Harry Hopkins. Hoover had loved public works; Roosevelt created a Public Works Administration and assigned Insull’s old enemy, Harold Ickes, to run it from the Department of the Interior. Hoover had known that debt was a problem and created the Reconstruction Finance Corporation; Roosevelt put Jones at the head of the RFC so that he might address the debt. Indeed, it was through the RFC that Roosevelt was making these gold purchases. Hoover had wanted to pass legislation to help farmers. So did Roosevelt. “When it was all over,” Tugwell would later write, “I once made a list of New Deal ventures begun during Hoover’s years as secretary of commerce and then as president…. The New Deal owed much to what he had begun.”

  Yet other projects were mere gentle departures from Hoover. Hoover had encouraged families to tend “subsistence gardens” so that they might feed themselves with their own vegetables. Roosevelt instructed Ickes to develop a subsistence homestead project where families might feed themselves on new farms. Hoover had signed a Glass-Steagall Banking Act in 1932, to expand credit; Roosevelt now prepared his own Glass-Steagall Act.

  Hoover had deplored the shorting of Wall Street’s rogues; Roosevelt set his brain trusters to writing a law that would create a regulator for Wall Street. The new Securities and Exchange Commission would turn the stock market from a free-for-all with hazy rules into a more comprehensible game, one in which the small player had a fairer shot. Hoover had expanded public works to create jobs; Roosevelt too would create job and relief programs. Hoover had not cared much about Prohibition, and neither did Roosevelt; he now sought an end to it.

  Perhaps, some thought, Roosevelt understood about the uncertainty problem. Mellon, the departing ambassador to London, paid a courtesy call in which he discussed with Roosevelt a plan to insure bank deposits, of which Mellon disapproved. Roosevelt assured Mellon that he agreed with the sentiment 100 percent, and Mellon left confident. But Roosevelt was feeling bold, ready to create a new country, or give the impression of doing so. Shortly afterward—to Mellon’s shock—he reversed himself, signing a bill that included deposit insurance. Shortly after, other differences emerged.

  The main tasks Roosevelt assigned himself were simple. The first was that there be a broad sweep of activity; Americans must know Washington was doing something. If there were contradictions between experiments and within them, well, that did not matter. Partly this came out of the restlessness of the invalid; Roosevelt had risen politically but he still could not stand unaided. But partly it came out of a grandeur of spirit. “Do I contradict myself?” Roosevelt seemed to be asking, as Walt Whitman had. “Very well then, I contradict myself. I am large, I contain multitudes.” The second goal was to get prices up, without much regard to whether the methods applied to achieve that goal made sense. The country was in no mood in any case to put Roosevelt’s concepts under a microscope. What mattered was change: like an invalid, the country took pleasure in the very thought of motion. Roosevelt invoked wartime powers, and to the people it seemed that he, like Abraham Lincoln in the Civil War, needed those powers.

  “Dominant note of courageous confidence,” summed up the Chicago Tribune after the president’s inaugural speech. “Country will back him,” said the News of Dallas. The St. Louis Globe’s headline called Roosevelt a man “who has will to do.” As the comedian Will Rogers said, “The whole country is with him…. If he burned down the Capitol, we would cheer and say, ‘well we at least got a fire started anyhow.’”

  The first great project was the National Industrial Recovery Act. Its purpose was clear: to drive prices up and “put people back to work,” as Roosevelt announced happily. The act established Ickes’s Public Works Administration on the thesis that spending would fix the economy. Second, the act created the new labor rights that Perkins, Douglas, and Bob Wagner had been seeking, on the thesis that a worker with more pay would spend more and strengthen the economy, a theory that owed something to both Henry Ford and Waddill and Catchings. Roosevelt named Perkins his labor secretary, the first woman in an American cabinet. There was a third part that made the other two look modest: the National Recovery Administration. Gener
al Hugh Johnson, who had spent evenings at Hyde Park, would lead this like a military campaign: a campaign in which industries and trades would join hands together with workers so inefficiencies—including labor unrest—might be diminished. The National Recovery Administration even had its own emblem: a blue eagle. The eagle was a clear invocation of war; it would inspire the economy to march.

  The NRA was the consummation of a thousand articles and a thousand trends. It was the ideas of Moley, the trade unions, Stuart Chase, Tugwell, Stalin, Insull, Teddy Roosevelt, Henry Ford, and Mussolini’s Italian model all rolled into one. The law worked on the assumption that bigger was better and that industry, labor, and government must work together, as in Italy, or risk staying in depression. It advocated both greater productivity and greater efficiency while forbidding price cutting, in order to nudge prices up. There was little escaping the NRA. Some 22 million workers came under its 557 basic codes. There would be a consumer advisory board, just to be sure the consumers’ thoughts were included—Paul Douglas, who “rejoiced” at the emergence of the more activist Roosevelt, would sit on that board. More than a hundred industries would establish codes of business, codes that included minimum wage rules, child labor rules, maximum hour rules. There was a long roster of other requirements, including health requirements or standards regarding customer choice.

  The authority of the NRA ranged widely, and the New Dealers were hoping to use it in original ways. In the oil industry, for example, prices were in collapse—a barrel of oil went for four cents in east Texas by May 1933. Under the NRA Ickes had authority to set production quotas, an authority he used to curtail supply in the name of driving up price. In other industries, the NRA rules were equally specific. NRA code determined the precise components of macaroni; it determined what tailors could and could not sew. In the poultry industry the relevant line of code had barred consumers from picking their own chickens. Customers had to take the run of the coop, a rule known as “straight killing.” The idea was to increase efficiency. If smaller businesses died out, that might be for the best anyhow.