by Amity Shlaes
The shift started with the NRA itself and the discovery of its punitive side. The Schechters were not the only NRA violators headed for prison. In York, Pennsylvania, a former Cornell full-back named Fred Perkins had paid 20 cents an hour to a staff of ten who built lighting batteries for him. NRA officials had insisted that he pay the code rate—40 cents an hour. Perkins had showed his books to the officials—his profits for 1933 were only $2,531—and offered to raise the wage to 25 cents. Then he had asked for an exemption to the relevant code—he was denied. The government prosecuted, Time magazine reported. Not able to pull together the $5,000 required for bail, Perkins spent weeks in prison even before his autumn trial. He lost.
In Alabama, there was another, similarly ugly story. The day before the Schechters had lost their first case, the federal judge in Birmingham, William I. Grubb, dismissed code violation indictments against an Alabama lumberman. The judge had agreed with Belcher that his decision to allow his employees to work more than forty hours a week was not something that federal law could address.
Many economists were disturbed. Irving Fisher, in a letter to his son, quoted another professor who said the letters “NRA” stood for “National Retardation Affair.” Senator Huey Long of Louisiana, always eager to tilt with Roosevelt, was urging citizens to ignore the NRA codes. Long, more primitive than either Roosevelt or Hoover, saw similarities between the two presidents. At one point he would tell the Senate, “Hoover is a hoot owl. Roosevelt is a scrootch owl. A hoot owl bangs into the nest and knocks the hen clean out and catches her while she’s falling. But a scrootch oil slips into the roost and scrootches up to the hen and talks softly to her. And the hen just falls in love with him. And the first thing you know—there ain’t no hen.” In the end, the Justice Department withdrew on Belcher, fearful of losing.
Some unions still liked the National Recovery Administration and hoped, of course, that its labor provisions might be preserved no matter what. That spring William Green of the AFL would call for a general strike by 18,000 New York clothing workers if Congress did not extend the NRA for two more years. But business was finding its voice on the topic. The man who sold that clothing, Percy Straus, the chairman of R. H. Macy, the department store, criticized the codes bitterly for the way they pushed up prices: at a time when no one had enough cash, “the consumer is forgotten.” It was rather the employer who was forgotten, alleged the executive director of a retailers group, the National Dress Manufacturers Association. Mortimer Lanzit told a crowd at the Hotel Astor in January that the industry’s code was hurting employers by giving them fewer rights than workers. Turning FDR’s phrase against him, Lanzit argued that it was the employer who was the “Forgotten Man,” and that the International Ladies Garment Workers Union placed so many demands on companies that they “blocked reemployment.”
In New York, Ray Moley was now playing broker between the administration and business, hosting what quickly became known as “Moley dinners.” In late January, Tugwell attended one. He wrote in his diary that he “was, so to speak, put on the spot. I spoke for about twenty minutes or half an hour respecting the administration.” Tugwell went on: “After I had spoken about fifteen of the businessmen spoke in turn. The general burden of their talks were rather querulous complaints about the unfriendliness of the administration and about the lack of confidence which businessmen have in the present administration. They rather indicated that until there was greater confidence, prosperity would not return.” He added that “Willkie was present and did a good deal more than his share of the complaining.”
Even within the NRA, there was disagreement. From the Consumers’ Advisory Board of the NRA, Paul Douglas wrote dissents to the codes. He was, after all, the same old Douglas, happy to point out something that seemed wrong, even if he was going against the group in doing so. It seemed wiser to Douglas that the administration spend its energy on unemployment insurance and the broader concept of what was sometimes called “social security.” Other critics on the left pointed out that the NRA helped big business at a cost to smaller businesses. This argument was valid. A price set to suit a big firm, with its economies of scale, was low enough to drive a smaller firm out of business; a wage set high enough to meet Washington’s goals might be tolerated by a larger firm, but it killed off a smaller one. The NRA institutionalized cartels. And cartels were perceived by most citizens as one of the principal reasons the average fellow now had so much trouble.
General Johnson and the NRA now occupied Hoover’s new Commerce Department. The task had expanded to fit the building. Nineteen thirty-five was the year when a new board game invented by a Philadelphia man was becoming a surprise best seller: its name was Monopoly.
A woman from Connersville, Indiana, wrote to President Roosevelt:
I have been employed as a clerk at E.J. Schlichte Company this city for seven years five months until the N.R.A. went into effect. They let me out said they coulden’ pay me $14 a week. When the NRA Went into effect, I was so happy I had planned to lay in some coal and pay on some bills I owe, I guess I was too happy.
Yet other critics focused on the sheer unreality of the top-down culture of the NRA. Its demands for synchronization of wages and salaries were, when one thought of it, worthy of parody. As the humorist Ogden Nash put it in a poem:
Mumbledy pumbledy, my red cow,
She’s cooperating now.
At first she didn’t understand
That milk production must be planned…
…But now the government reports
She’s giving pints instead of quarts.
In words less succinct but equally authoritative, the scholars at the Brookings Institution came to the same conclusion. The codes didn’t work. “In trying to raise the real purchasing power the NRA put the cart before the horse,” wrote the Brookings authors. The idea of increasing national income—getting true growth—by “a general increase in nominal wages,” was, the authors said, a doubtful one. “The conclusion indicated by this résumé is that NRA on the whole retarded recovery.” In Congress, Roosevelt managed to win a commitment of a one-year extension for the NRA. Still, he now knew that the Supreme Court test would be decisive.
Roosevelt and the New Dealers figured that if they pulled in their horns a bit, the assaults on the NRA might abate. At the AAA, that meant the firing of Jerome Frank, the left-leaning general counsel. The occasion was a contract the former clerk of Oliver Wendell Holmes, Alger Hiss, had written requiring landlords to keep tenant farmers for the length of their cotton contracts. Frank was out, as well as Lee Pressman, with whom Tugwell would work again. But Hiss, lower ranking, stayed on for a time. Still, as Tugwell, who supported Frank, wrote in his diary, the issue was really part of a new plan “to rid the Department of all liberals.”
Frances Perkins likewise proceeded cautiously. In February, the giant Labor Department building whose cornerstone Hoover had laid was finally finished, and Frances Perkins and her department moved in—the department men’s chorus, Crescendo, sang at the occasion. But Perkins and her staff were not entirely comfortable with the grandiose feel. They had come into office claiming differences with Hoover, and yet the building was a daily reminder of the similarity of the two administrations’ work. She and Douglas had their plans for unemployment insurance and pensions for senior citizens in draft bill form. At a tea at his house the year before, Perkins had sat beside Justice Harlan Stone, and he gave her a tip. She had confided her fears that any great social insurance system would be rejected by his court. Not so, he said, and whispered back the solution: “The taxing power of the federal government my dear; the taxing power is sufficient for everything you want and need.” If the Social Security Act was formulated as a tax, and not a government insurance, it could get through.
Still the legislation she developed did not speak of taxes or entitlements. It spoke of an old-age reserve “account,” the implication being that an account with the government was safer than one at a local bank. This was a powerful argument, given th
e rate at which banks had so recently collapsed. The administration depicted the whole program as government insurance for senior citizens, insurance that would come in tandem with unemployment insurance for workers and aid for the indigent.
Even this model, however, was encountering resistance. Roosevelt himself saw that while the program’s revenues might cover its costs now, the numbers from the actuaries suggested that there would not be enough money for old-age pensions for future generations. Morgenthau too made it clear to Perkins that he disapproved of any demands on the Treasury, even in future.
“Ah,” Perkins reports Roosevelt saying, “but this is the same old dole under another name. It is almost dishonest to build up an accumulated deficit for the Congress of the United States to meet in 1980. We can’t do that. We can’t see the United States short in 1980 any more than in 1935.” Perkins noted—as others before her had in similar situations—that the president was “in the midst of one of the minor conflicts of logic and feeling which so often beset him but kept him flexible.” Roosevelt’s opponents were firmer, especially Bennett “Champ” Clark, a Democratic senator from Missouri. If the Social Security program was entirely about social welfare, he said, then why not allow private companies with pension programs already in place to choose to stay out of the government program? This would allow a genuine private-sector counterpart against which to measure the government program. Clark argued hotly that adding the Social Security levy to the costs of supplying the private pension would be onerous for some employers, and prohibitive for others. Without the opt-out of the Clark Amendment, companies would give up supplying private pensions. Why should they pay double when the government would do their work for them?
Outside Congress, there were also challenges. On January 2, 1935, the old chairman of the Democratic National Committee, Jouett Shouse, published a major article pointing out that the New Deal had created thirty agencies, nearly all close to the executive, leaving “the average citizen bewildered.” Shouse was joining up with Al Smith, Roosevelt’s old ally, to form a group called the Liberty League, whose goal was defeating him in the 1936 contest. James Warburg, angrier as the months passed, was giving speeches against Roosevelt’s “planned economy.” He was preparing to publish yet another book about Roosevelt. This time his title was Hell Bent for Election. In his introduction, Warburg would describe a party program that sounded just like Roosevelt’s—one that planned public pensions, more rights for organized labor, and so on. Then he would point out that that agenda had been not Roosevelt’s in 1932 but rather that of Norman Thomas, Jim Maurer, and the Socialist ticket. It was a rant, but a rant that would sell nearly a million copies.
In this, the sixth year of the Depression, people were developing new responses to adversity, some of which competed. Francis Townsend, a doctor, was selling his own pension scheme, at campfire hearths and in meeting halls across the land. Father Coughlin was on the radio, railing about the evil dole and “relief that has failed to relieve.” Huey Long had his new post in the Senate.
But there were also those whose responses existed on an entirely different plane—the spiritual, or the personal. One was Father Divine. More aggressive than the Schechters, the cult leader sought out chances to provoke—his own form of civil disobedience. In New York City, his Peace Restaurant mounted an anti-regulatory battle of its own, refusing to post hours of labor as required by New York State law, provoking action by state authorities. He operated a boardinghouse without a license, so that officials pulled him into court. He allowed his truck drivers to drive without licenses—another clash. Father Divine’s followers sought to register to vote under their quirky names; a judge rejected the application by sisters Truth Delight, Charity Star, Mary Magdalene Love, and Joy Praise to vote under those names. On the names, city officials were as intolerant as the Schechter prosecution: “We do not intend to let them make this department ridiculous,” the chief clerk said.
Father Divine’s power was impressive. By now, a letter addressed simply “God, Harlem, USA” would reach him. On Easter Day of 1935, ten thousand of Father Divine’s followers, mostly black, a few white, mounted a four-hour parade along Harlem’s Seventh Avenue, singing “The world in a jug, and the stopper in his hand.” Father Divine himself rode, the paper reported, in a blue Rolls-Royce Victoria, “a white policeman standing like a footman on the right running board, and a negro policeman poised likewise on the other.” Father Divine wore Easter gray. Faithful Mary, his chief aide, followed him.
Father Divine was also developing a new plan—to make a statement through property purchases. He was buying up cheap farmland along the west side of the Hudson, widening his empire. He was also considering whether he might lead his flock into politics.
Bill Wilson, the hard-drinking stock analyst, for his part, was also developing a new response to adversity. He didn’t like the New Deal—a Green Mountain man like Coolidge, he found that his instincts ran against it—and he wrote letters to Roosevelt, longhand, as he drank. People should find a way to solve their problems closer to home. His wife, Lois, collected the little pieces of paper—she didn’t know why, but she later said she had thought they might be of value some day.
In May, Wilson headed out to Akron to see if he could gain control of a company through a proxy battle. The deal failed, humiliatingly, and he found himself standing in the Mayflower Hotel bar with only $10. Frantically he phoned a local minister, Reverend Walter Tunks, who gave him the name of Henrietta Seiberling, a woman who had tried to help another alcoholic, a doctor named Robert Smith.
The next day Wilson and Smith met, in the afternoon, after Smith had slept off a binge. The meeting changed their lives. “Dr. Bob,” as he was known, was also from Vermont—St. Johnsbury, where Coolidge had attended school for a time. The two alcoholics decided that by sharing their challenge, they could help one another. Then and later, they talked out a few precepts: professionals weren’t necessary; alcoholism was a sickness, not a moral weakness; alcoholics were never cured, but a group might keep them on the wagon. Their insight was in part medical, in part psychological, and in part sociological. Part of the problem of the alcoholic was loneliness, especially nowadays—there was no longer the sort of New England village green where the men had grown up, to find consolation. Yet the traditional answer—going to a clergyman, or a doctor—did not seem to work for them. The two could not retrieve the old Vermont village, but they could build a new village, a community of alcoholics.
The Roosevelt entourage was working on another plane entirely, busy consolidating after the midterm election results. Chase was writing an article for the magazine Current History declaring that the New Deal was a victory for collectivization. Tugwell entertained the president with work on his favorite topic, agriculture. The descendant of fruit farmers reconnected with the descendant of Dutchmen on a topic dear to both their hearts: trees. Carrying mounted specimens of insects and leaves over to the White House from the Agriculture Department, Tugwell showed the president the damage that a new tree blight—Dutch elm disease—was doing to trees in the fifty-mile radius of Manhattan. As undersecretary of agriculture, Tugwell was spending $560,000 to forestall further devastation. Roosevelt was in the process of giving Tugwell his own agency, a resettlement administration, where he would be less likely to quarrel with agriculture secretary Henry Wallace. There he would rehabilitate poor people and poor land together—the unity of it pleased Tugwell. Roosevelt established the Resettlement Administration by executive order, thereby avoiding the need for congressional approval. The RA would be funded with emergency funds in another bill, one that could not be labeled “Tugwell.” Roosevelt admitted to himself that he was finding it costly to defend Tugwell. Frankfurter was back in the country after his own pilgrimage, to Britain, and two of his protégés, Tom Corcoran and Ben Cohen, had jobs in Washington. Already, the year before, the pair had written to Frankfurter in Britain that “[t]he Tugwell crowd has been pushed by its enemies—and its own loose talk—away
over to the left. Ray is vacillating considerably toward the right”—the Ray was Moley.
There was one place where resistance built that the administration could not ignore: the courts. On January 7, Supreme Court justices had rejected the government’s defense of presidential authority in the “hot oil” cases. This was an affirmation, at least in part, of the public’s sense that the NRA’s activities could go too far.
The Justice Department took consolation in the fact that the opinion left unaddressed whether Congress had the power to regulate industry—and fought its other battles. The very next day, January 8, Attorney General Homer Cummings donned a pair of gold cuff links that had been given to him by the president and began the oral arguments in the gold case. Cummings reminded the justices of the emergency of the Depression, and railed against the “supposed sanctity and inviolability of contractual obligations.”
Roosevelt, uneasy, sought to determine what his options would be if the Supreme Court ruled that his gold policy was unconstitutional. Days after the oral argument began, he told Secretary Henry Morgenthau and Homer Cummings at lunch that he hoped to keep the bond market in confusion until the Supreme Court decided the gold-clause issue. Then, if the Court decided against the administration, things would still be so rough that the people would turn to the president and say: “For God’s sake, Mr. President, do something.”
Cummings liked the tactic. Morgenthau was horrified. “Mr. President,” he told Roosevelt, “you know how difficult it is to get this country out of a depression and if we let the financial markets of this country become frightened for the next month it may take us eight months to recover the lost ground.” Morgenthau might be Roosevelt’s yes man, but he had already learned a few things at Treasury. Roosevelt indicated to Morgenthau the next night that he had been kidding, but Morgenthau believed the reality might also be that the president had simply, upon consideration, changed his mind.
