Forgotten Man, The

by Amity Shlaes

  Willkie moved on, putting people he already knew out there, if only to show their relationship. Jackson was an antitrust man, and he ought to understand that taxation hurt the smaller business. For small businesses had no extra resources to handle tax work. The Roosevelt tax program was punishing the very same people whom Jackson was being so solicitous about. Especially problematic was the undistributed profits tax, which punished cautious business for failing to spend: “If there is any strike of capital it comes from those millions of small investors, not from the wealthy few.” And punishing the rich at punitive rates encouraged them to escape. “As a matter of fact because of income tax laws which take up 83 percent of a rich man’s investment in private enterprise most of the very rich have been investing more and more in the flood of tax-exempt government securities”—just as Mellon had said.

  In their attacks on business, the New Dealers were forgetting their decency and their dignity. What, after all, asked Willkie, was the purpose of going after the rich? It seemed “a little ironical for government officials to be lecturing big business on the desirability of low price and large volume”—since, after all, the private sector had developed these concepts in the days of Ford. Phrases like “Bourbons” or “moneyed aristocrats” or “economic royalists”—the phrase Roosevelt had used in the campaign—were unworthy.

  Then Willkie came to his own area—utilities. The government acted as though utilities were demons. In fact, of all industries, utilities, which were growing so fast, were central to recovery. Over the course of this bitter decade, the utilities had done their part. Prices overall since the period before World War I had risen 40 percent; yet the price of electric power was down by the same share. In Washington, where Jackson’s own Justice Department pursued holding companies, electricity prices were low because the area was served by the Great Northern American Holding Company. The average rate was 3 cents per kilowatt-hour. But outside Washington, where a smaller company served the customer, the rate was 4 cents. The savings was one and a half million a year on the city electricity bill. Big private companies served Americans. Was it really economical for the country to destroy the holdings?

  In the same weeks Roosevelt and Democratic leaders were successfully erasing the deficit of the Democratic Party by hosting a series of Jackson Day Dinners in honor of Andrew Jackson across the country. Time magazine noted that the president had already formed a concrete vision of his own role in history. Roosevelt very much enjoyed, the editors wrote, “projecting himself far into the future and viewing himself retrospectively in the grandeur he will have assumed 100 years hence.” Just a week after the town hall meeting, Roosevelt would appear before the press to explicitly emphasize that he still wanted a “death sentence” for utility holding companies. As for holding companies, he would ask, “Why should there be any holding companies?” The very next day, following Roosevelt’s press conference, Willkie would begin to do what he had always known he might have to: break up much of Commonwealth and Southern, selling 60 percent of the company to the Tennessee Valley Authority. It would be Willkie’s last great offer, a “desperate” offer, as he would characterize it.

  Willkie wanted to let the audience know that he was still pro-reform. He agreed that some of the ideals of the New Deal were all right. It was even all right to have some of the New Deal programs. They existed now and could be modified to be made even more useful. In the case of Social Security, for example, Willkie was anxious that the system be adjusted so that the money paid by workers went exclusively to fund pensioners, and not be diverted to other government projects.

  Jackson was especially wrong to contrast big business with small business. It just didn’t make sense—what mattered was the effort of enterprise, big or small, and everyone ought to be for that. The suggestion was clear: it was wrong to argue that a Jackson, or a Lilienthal, was inherently more virtuous than a Mellon, a Schechter, or even an Insull. It might be amusing to make the national battles seem to be those of the businessman versus the government man. But observers should not delude themselves; government men and businessmen had similar sins and virtues. “I find no halo on the head of either,” said Willkie, in a vein similar to Keynes.

  Finally, Willkie made a more general point. New Deal fervor was overshadowing the reality of what it was doing to business. The government tended to underestimate the terrifying affect its random targeting of businesses had on the general economy. That was the cause of the capital strike. “If there is a smallpox epidemic in a city,” Willkie said, “you cannot convince a man he is in no danger because at the moment only 15 percent of the city is affected.” So it was with business: if investors even suspected the government would take over a certain industry, they would withhold their investment—that “idle money.” The New Deal was an inspiring phrase, but Willkie—like Morgenthau with his son—wondered what it actually described. Oliver Wendell Holmes was one of the Roosevelt crowd’s favorite justices. Now Willkie quoted Holmes back at them: “A good catchword can obscure analysis for fifty years.”

  One listener asked whether the threat of the concentration of government wasn’t stronger than the threat of concentrated business. Jackson, defensive, said that the United States would never have concentrated government in Washington if business had not become so powerful. The states alone were obviously not sufficient to regulate big utilities, Jackson argued: “How can a single state regulate Mr. Willkie?” Americans needed to regulate to stop the concentration of business.

  No, said a voice from the audience. “That might be in Italy or Germany, but it isn’t that in the United States of America.” Applause. Another questioner in the audience drove the uncertainty problem home again in a question to Jackson. William Knudsen of General Motors had said people now had the money to buy cars but were still not buying because of the general uncertainty. What would Jackson do about that? Someone in the crowd asked why the federal government did not acknowledge that it wasn’t including in its statements on the TVA the cost of money that taxpayers put into the authority. As a result, the questioner reminded, an “incomplete balance sheet is presented to the American people.” The yardstick was fake. The TVA was questionable, just as the workings of private sector utilities were questionable. “What is the difference between this procedure and Mr. Insull’s?”

  The published transcript shows that Jackson confined his answer to replying that he wasn’t an accountant, and he wouldn’t get into details. But his recounting of the event a decade and a half later in his papers shows that he believed that the town hall debate had been a setup, and that that had helped Willkie. Each speaker had been given tickets, but Willkie had got extras—hundreds extra, Jackson believed—and packed the hall. What’s more, Willkie had spoken seven minutes overtime, whereas he, Jackson, had punctiliously followed the rules. As Jackson recalled of the debate: “I had a talk with the President and told him about the program. He was annoyed at it and wasn’t greatly surprised at Willkie. But he was surprised at the Town Hall outfit.”

  It is hard to imagine that Willkie’s dominance in the debate can be entirely attributed to his overtime minutes, or even a hall packed in his favor. For the national response was strong—as strong as the response to some of Roosevelt’s speeches. The next day the New York Times headlined the report “Industrial Leader Asks End of Government Catchword,” noting especially Willkie’s defense against “Slurs on Business.” General Johnson howled that Willkie had made a “perfect monkey” of Jackson. Moley wrote that Jackson hadn’t done badly, but “Willkie so utterly outclassed him that the Jackson buildup dissolved into the elements from which it came.”

  Willkie’s friends in Henry Luce’s empire were pleased. The Town Hall debate was exciting because it revealed that, given the right context, the argument against interventions could resonate. The problem in 1937 and 1938 was not that the New Deal was mismanaging or helping or punishing one sector of the economy over the other. It was, just as even Democrats now knew, that it was competing
with the private sector, and frightening it. The solution to the depression within the Depression was not anything either of the two squabbling sides in the administration was contemplating. If Roosevelt wanted the economy to thrive in peacetime, he had to call off the competition.

  Finally, the spluttering Republicans and disillusioned Democrats had found a voice. Willkie was different from the xenophobes and the isolationists. A year later, in 1939, the editors at the Saturday Evening Post would capture Willkie with the headline “The Man Who Talked Back.” A messenger had been found. Now all that remained was to determine the rest.

  14

  “brace up, america”

  January 1938

  Unemployment: 17.4 percent

  Dow Jones Industrial Average: 121

  THE COUNTRY WAS NOW AT AN ODD MOMENT. There was a new sense of permanence about the Depression. Being poor was no longer a passing event—it was beginning to seem like a way of life. Roo-sevelt’s prophesies about America seemed to be coming true—the country might be like old Europe, frontierless, something out of Dickens. The story of William Troeller, the boy who killed himself to spare the family food, recalled Oliver Twist asking for “more” at the orphanage.

  Some suicides were committed by people who had played and played for time but now were giving up. In East Orange, New Jersey, on Harrison Street, Emmet Faison, the owner of the failing Orange Engraving Company, concocted a desperate plan to save his company. He might die, but the life insurance payment would rescue his company from bankruptcy. After he poisoned himself, his family discovered that a clause in the contract precluded payment after suicide. The first crash had seemed like a nightmare; this crash felt like a life in the dark.

  But two new factors were also at work. Americans were becoming experienced at finding light in the dark—even creating their own light. There was a new sense of concern about what was going on abroad. Very few Americans wanted to hear about trouble overseas. In 1935, Congress had passed a Neutrality Act, and Roosevelt had signed it. Republicans were still leading the isolationist charge. But the news from Europe and Asia was so awful that both parties were beginning to look like bad watchmen. The darkness in Europe might in the end prolong the night of the United States.

  As 1938 unfolded, it was the first matter, finding one’s own way at home, that dominated. In New York Bill Wilson was struggling. He and his wife, Lois, had no cash, and were moving about—they would move dozens of times in these years. But Wilson was not drinking. He thought he really could make a go of his new system, in which alcoholics helped one another. He wrote notes to himself, steps that each boozer would have to get through if he was going to achieve his own recovery. He was also dictating and writing out longhand on legal pads something larger—what came to be known as The Big Book, a primer for his movement. In The Big Book, he sought to solve a problem for his growing group, with members ranging from the pious to the atheist to the agnostic. He settled for a kind of spiritualism, writing of “God as we understand Him,” or a “power greater than ourselves.” That past winter, hearing word of Bill Wilson’s new ideas about helping drinkers, a Rockefeller Foundation executive named Willard Richardson met with Wilson. Richardson, who was also ordained as a minister, sat with him at lunch, along with Dr. Bob, who had come in from Akron, and William D. Silkworth, a doctor who had helped Wilson dry out in New York. John D. Rockefeller Jr. himself wrote a check—for only $5,000, but it was enough for Bill and the others to start a foundation, the Alcoholic Foundation, to solidify the new project.

  Jobs were becoming scarcer: by April unemployment, the scholars would later estimate, was again hitting a full two in ten. There were others who were further along than Bill Wilson in developing new communities, communities that operated outside political life, or tried to change politics from outside. One was Dale Carnegie, whose How to Make Friends and Influence People had held a place on the best-seller list for so many weeks. Aimee Semple McPherson preached virtue nationally from her base at the Angelus Temple in Los Angeles.

  The most idiosyncratic community leader, though, was Father Divine. He took money from his constituents and spent it as he liked; several of them had left the cult and were constantly after him in court. His properties, often shabby, ill-kept places, burned down from time to time. And the papers still ridiculed Father Divine’s use of the phrase “Heaven” to describe his empire, carefully placing quotation marks around each mention.

  Nonetheless, Father Divine’s “Heaven” was increasingly a fact: he was continuing to acquire property. Even as he tangled with the law, he bought houses and storefronts by the dozen, many of them beyond Harlem, in the country up the Hudson River. By 1937, he had twenty-five properties operating in New York’s Ulster County, mostly as farms. One, at Elting’s Corners, had burned in April of that year, but that was a small setback. He was making his economic community, something like the agricultural communities that Upton Sinclair had led in California. “Father is going to make Ulster County into a model community that will be an example for the United States government,” his spokesman, John Lamb, told the papers. The New York Times reported that some in the area, nearly entirely white, were not happy. “News that the county was going to be used as a lab for a negro collectivization experiment in camp meeting tempo was received with wrath by the Ulster County farmers and businessmen yesterday,” the paper wrote. But Divine was serious: he had announced plans for canneries, farms, and eventually even automobile manufacturing. His followers numbered in the thousands, perhaps the tens of thousands, but he envisioned far more.

  Father Divine had failed in 1936 to affect the presidential election. But he was still trying to provoke when he could. One of his great precepts was schooling; he insisted his followers improve themselves through training and education. In June of 1937, several had competed in a spelling bee at a PWA adult education program.

  More important to him was antilynching legislation, still, shamefully, blocked in Congress. In 1937, Father Divine had watched as Senator Hugo Black, a former Klansman, won confirmation and replaced Van Devanter. And now, yet again, southern lawmakers were filibustering rather than allow the legislation to pass. Walter White of the National Association for the Advancement of Colored People was waging the fight of his life with Congress, but Roosevelt was not backing him sufficiently to break the filibuster. The delay was infuriating, for all through the decade, blacks had been lynched in the South. When would the country be ready to stop the violence? Father Divine’s movement was a peace movement, which made sense for many blacks at the time. Foreign wars kept civil rights legislation from making it to the top of American priorities. In New York, several years later, a black doctor would post a sign on his car after a black man was attacked in the South: “Is There a Difference? Japs Brutally Beat American Reporters. Germans Brutally Beat Several Jews. American Crackers Beat Roland Hayes and Negro Soldiers.” Father Divine was coming to believe that the filibuster itself must be altered if it continued to block legislation to stop lynching—that it was, as he would later put it, “not an expression of freedom of speech, but it is an act of abuse.” Father Divine wanted to pressure politicians on it—all politicians. But Roosevelt was the president, and therefore he would press Roosevelt hardest of all.

  Meanwhile, foreign stories were intruding. A seventy-five-year-old-treaty permitted U.S. boats to patrol Chinese rivers. Yet at the end of the last year the Japanese had sunk a U.S. gunboat, the Panay, on the Yangtze River. Roosevelt accepted an apology but took the event as a sign of perhaps more trouble to come. In February, the papers reported that a car had carried the desperate Austrian prime minister, Kurt von Schuschnigg, over the Bavarian border to Hitler’s mountain headquarters at Berchtesgaden. Hitler forced Schuschnigg to agree to free all the prisoners in Austria, a move that could only strengthen the Nazis within Austria and open the door for Hitler’s entry there. The isolationist Time magazine frantically tried to put a good face on it, praising Schuschnigg for “yielding much without yieldi
ng Austria’s territorial integrity.” But it was getting harder for this position not to sound apologist. Within a month, Time looked the fool: German troops marched into Austria.

  Time’s flat-footedness reflected a similar awkwardness in the Republican Party. Its isolationism looked worse by the day. The Republicans had a sense now that fighting for economic liberalization at home, the old-fashioned kind, might be worthwhile, that it might help the party in midterm elections that year. But to fight for liberalization at home while ignoring the illiberal spirit of new governments in Europe was inconsistent.

  Roosevelt planned to spend time that summer at Hyde Park. If there was no European war before July 16, he wrote Felix Frankfurter, then he hoped to sail around in July and see Frankfurter and Marion in August on the Hudson. Now Father Divine dropped his own well-timed bombshell. The papers reported that he had bought an estate on the Hudson—directly across the river from Hyde Park. The seller was Howland Spencer, Roosevelt’s old acquaintance. Spencer’s property name dispute with the president had not ended: Roosevelt was still calling his property Krum Elbow, the name that Spencer believed belonged only to his bank of the Hudson. Spencer told a reporter he was especially furious because federal officials had come “and placed brass markers on my property, naming it ‘Spencer Point.’” With the announcement of his purchase of the 500-acre Spencer property, Father Divine let it be known that he would retain the property name of Krum Elbow.

  Spencer was an uneven, difficult man. It was not even clear he owned the estate, for several of his relatives had taken out mortgages on it. Spite mixed with politics among his motives. “The president is heading for a Russian state,” he told reporters who visited him at the announcement of his sale. “Father Divine on the other hand will not accept as his follower a man who is on relief until he has paid the government what is owed.” For Spencer, it was a joke, and a nasty one, in which Father Divine was also a target: “We have a ‘messiah’ in Washington and now we have a ‘god’ at Krum Elbow.”