But, just across the way, prominent progressive journalist Walter Lippmann didn’t shudder; he smiled. A few days earlier, he’d advised FDR that the situation was critical and that the new president might have no alternative but to assume dictatorial power. Lippman had assumed that it would take a lot of coercing and pressure over the following months to get FDR to agree.
Little did he know that the newly minted president would need no cajoling.
THE MAKING OF A “LIBERAL”
* * *
What exactly did Franklin Roosevelt have in mind as he delivered his first inaugural address with America in the throes of the Depression?
Well, it’s very likely the exact same sentiment that future Democratic operative Rahm Emanuel later expressed as “Never let a serious crisis go to waste.”
In his 1932 Commonwealth Club address, the more tactful Roosevelt had said that the statesman’s job was to redefine rights based on a “changing and growing social order.” Conditions had changed during the Depression, he believed, and so government, as well as the rights it was charged with securing, would have to change, too.
Roosevelt’s philosophy was perhaps best articulated by the man who helped author his first inaugural address. This little-known Columbia University professor, who would help form the inner intellectual sanctum of FDR’s presidency—the “Brain Trust”—wrote of FDR:
He believed that government not only could, but should, achieve the subordination of private interests to collective interests, substitute co-operation for the mad scramble of selfish individualism. He had a profound feeling for the underdog, a real sense of the critical unbalance of economic life, a very keen awareness that political democracy could not exist side by side with economic plutocracy.
The professor noted that, as with other “inglorious liberal[s]” in America, Roosevelt drew directly on the likes of Woodrow Wilson, Herbert Croly, and Walter Lippmann, among a who’s who of other progressives.
But, perhaps learning from the progressive titans before him, FDR knew he had a branding problem. The term progressivism was waning in the 1920s. The years between Wilson and FDR had witnessed America’s return to its small-government roots under Presidents Harding and Coolidge. In foreign affairs, the horrors of World War I called into question the idealistic notion that mankind was becoming more humane and more perfect with each successive generation.
Progressivism was also being identified—rightly—with German philosophy, which had become far less appealing once the kaiser unleashed a calamitous war on the world. At home, the American economy was booming. So while Herbert Hoover had been technocratic (like George W. Bush preceding Barack Obama, he laid the groundwork for programs that Roosevelt would later expand in crisis), progressivism receded.
All of this led to FDR’s purposeful rebranding of the progressive ideology. During the 1932 Democratic National Convention, he explained, “Ours must be a party of liberal thought, of planned action, of enlightened international outlook, and of the greatest good to the greatest number of our citizens.”
FDR’s new “liberalism” clearly betrayed the classical liberal thought of John Locke and Adam Smith, not to mention the men who signed the Declaration of Independence and the Constitution. It was a noble lie, a label cynically reappropriated to obscure the total break from an older meaning and tradition that progressive ideology represented. This new interpretation of American politics and governance that elevated the state above the individual had begun under Teddy Roosevelt and Wilson, but it accelerated under FDR. Rights no longer came from the individual, much less God, but directly from government. This was everything that classical liberals had come to reject about the “divine right” of monarchs and the tendency of the state to trample individual liberty.
Before the 1930s, liberalism hadn’t been a term used to describe any political group in the United States. But FDR, above all else, was a good marketer. Progressivism was now too closely associated with Wilson and failed third-party efforts. Adopting liberalism would also deprive Republicans of their intellectual heritage while associating progressivism directly with the nation’s founding.
Republican President Hoover had tried to describe his policies as “liberal” during his time in office, but FDR suggested a new word for Republicans: conservatives. At the time, the term sounded distinctly un-American and out of the mainstream, something like Tory, vaguely monarchical and fascist. If FDR was liberal, by definition, his opponents were illiberal.
He explained this further in his 1932 nomination acceptance speech:
There are two ways of viewing the Government’s duty in matters affecting economic and social life. The first sees to it that a favored few are helped and hopes that some of their prosperity will leak through, sift through, to labor, to the farmer, to the small businessman. That theory belongs to the party of Toryism, and I had hoped that most of the Tories left this country in 1776. But it is not and never will be the theory of the Democratic Party.
John Dewey, the dean of progressive education, argued that the more politically expedient word was liberalism, snatching its use from real liberals—classical liberals who believed in individual freedom and limited government—in a bit of verbal jujitsu. Dewey argued in a 1934 speech that liberalism no longer signified natural rights, individual liberty, and a state subservient to the people (rather than their master). He instead contended that liberalism was “committed to the idea of historic relativity. It knows that the content of the individual and freedom change with time.”
According to Dewey, what the Founders meant when they spoke about liberty was specific to their time and place. To help people achieve liberty now would require enlightened experimentation.
And with that, the transformation of the word liberal was virtually complete.
A nation run on scientific principles by intelligent men of goodwill was the engine powering the administrative state FDR was to build. At Oglethorpe University in May 1932, the president declared that the nation demanded “persistent experimentation.”
HERBERT HOOVER AND THE GREAT MISSISSIPPI FLOOD
He stood at the edge of the waters, his entourage of engineers, military officers, and local businessmen yards behind him, watching the portly man ankle-deep in mud. Fourteen percent of Arkansas was under as much as twenty-two feet of water. More than twenty-seven thousand square miles of the lower Mississippi delta was completely flooded, incapacitating hundreds of thousands of Americans, most of them farmers, sharecroppers, or black laborers. The rest of America might have been roaring during the 1920s, but the flooding had precipitated a humanitarian crisis that was dragging Arkansas back into primitive times.
The great engineer charged with fixing the crisis had been granted sweeping powers by the president to handle the emergency. Telegrams had been dispatched from the White House to state governors, to Army generals, even local sheriffs and bank managers, ordering them to comply with any orders he might give them. There was no specific constitutional clause that enabled this authority, but that had never stopped him before. Ten years earlier, as America declared war on Germany and entered the Great War, he’d been appointed to head the U.S. Food Administration (USFA), an innocuous-sounding agency responsible for ensuring that U.S. soldiers and refugees in Europe didn’t starve.
The USFA had created nationwide mandatory rationing programs, combined with patriotic marketing campaigns designed to inspire voluntary participation, since the agency itself had limited legal authority to force civilians to comply. His “Tomato Tuesdays” and “Potato Wednesdays” had largely been successful, encouraging millions of American families to set aside certain items on certain days in jars, cans, or bags to be donated to local food banks.
Now, standing in the flood plain with his hands on his hips, looking at billions of gallons of soil-blackened water, Herbert Hoover had a new mission, along with a handful of executive orders granting him powers over local, state, and federal government authorities. Even the three-star general sta
nding behind him was directly beholden to his command. He also had authority to conscript private property, equipment, and manpower by invoking eminent domain.
Hoover was a results-oriented, no-nonsense fellow. It wasn’t how that mattered but only the outcomes. Over the coming months, he would conscript tens of thousands of men, mostly blacks, into forced-labor parties to dig ditches, fill sandbags, load boats, tear down homes, and clear debris. By the end of 1927, he had ordered the demolition of more than eight thousand damaged homes and businesses. He had claimed government ownership of thousands of square miles of riverbank and seized and slaughtered tens of thousands of farm animals, including horses, to be used to feed refuges.
When refugee camps became overfilled, Hoover struck deals with railroads to carry supplies into besieged areas and to help move tens of thousands of poor blacks out of the area, most to big cities such as Chicago, New York, Atlanta, and Pittsburgh. He ordered the U.S. military to dynamite and then rebuild more than twenty bridges or dams. He took over dozens of local hospitals and schools in Arkansas, Mississippi, and Louisiana, turning them into makeshift camps and local headquarters for the distribution of food, medical supplies, and blankets.
The Great Mississippi Flood of 1927 turned out to be a watershed for progressive idealism. Hoover demonstrated the efficiency of centralized, federalized power in the face of an emergency. The federal government had granted itself total authority over public, private, and military resources to respond to a crisis. All authority was vested in one man—with state rights, private-property rights, and personal liberty subordinate to him.
The quietest revolution in the history of the world, the Great Mississippi Flood was a propaganda tool for Hoover to increase his national media profile a year before he would run for the presidency in 1928.
Hoover swept the election over Democrat Al Smith with nearly sixty percent of the popular vote and forty states. Three states that didn’t vote for Hoover were three states that experienced firsthand what it looked and felt like when one man could wield total power over everything: Arkansas, Mississippi, and Louisiana.
And experiment he would, thanks to lots of help from Ivy League professors. As one FDR critic wrote of his “Brain Trust,” “Here was the Great Brain itself surrounded by all these bulging foreheads handling easily the tough problems that had baffled the feeble intellects of bankers, magnates, and politicos. Now in a new sense the real age of reason had come. It was the Age of the Professors.”
Their progressive policies would simply be a means to the most important end for the opportunist FDR: power.
FDR TAKES OFFICE
* * *
The economy was bottoming out as FDR took office. Banks were failing. Unemployment had risen to a peak of more than twenty-eight percent. The Dow Jones Industrial Average was still hovering at the lowest it would ever get during the Great Depression. International trade had collapsed from the Smoot-Hawley-induced tariff war.
In the brief but devastating recession of 1920–21, government shrank, and the economy healed on its own. Now, with another crisis at hand, FDR had an opportunity to translate Wilson’s theory into practice. Roosevelt declared during his 1932 Commonwealth address that America had hit the end of economic progress and that the job of government now was to “equitably” redistribute its fruits. “The day of enlightened administration [of resources] has come,” Roosevelt said. In the Industrial Age, the corporation had replaced the tyrannical role of repressive central government. The state was to create an “economic declaration of rights, an economic constitutional order,” to tame business.
FDR used his first hundred days in office to seize power from “tyrannical” business in the name of getting the economy working, largely by executive order. The result was an alphabet soup of agencies designed to regulate and intervene in every aspect of American life.
Under the National Recovery Administration (NRA), Roosevelt created cartels controlled by big business in almost every industry, overseen by the federal government. These cooperatives fixed wages and controlled prices, production, quantities, qualities, and distribution methods under seven hundred competition-killing industrial codes. In its first year alone, the NRA released 2,998 administrative orders approving or modifying existing codes, along with 6,000 press releases, some of which served as legislation.
Understanding the value of propaganda, the administration promoted the NRA with a massive public-relations campaign. Trucks circled the streets blaring pro-NRA messages through megaphones. Businesses that complied with the NRA were adorned with “Blue Eagles” in their windows to reward their solidarity with the government. “In war in the gloom of night attack . . . soldiers wear a bright badge to be sure that comrades do not fire on comrades,” FDR said. “Those who cooperate in this program must know each other at a glance. That bright badge is the Blue Eagle.”
The NRA also strengthened labor unions with substantial collective-bargaining powers and compulsory membership, which caused prices to rise. Workers began to strike—there would be more than two thousand strikes during FDR’s first term—and economic activity stagnated.
While all of this new regulation was awful, something more insidious occurred at the human level. Jack Magid, a tailor from New Jersey, was fined and jailed for the offense of pressing a suit for thirty-five cents, five cents less than the Tailors’ Code commanded. Labor leader Sidney Hillman, who was responsible for the garment industry’s codes, hired enforcement police. Within minutes, this force could take over a factory, interrogate its employees, and commandeer its books. Night work was made a crime, and these code-enforcement squads went on patrol looking for anyone who dared so much as sew pants after dark.
African-Americans were particularly hard hit by the NRA’s labor codes. The newly empowered unions negotiated artificially high minimum wages that implicitly (and intentionally) discriminated against lower-skilled black laborers. It is estimated that five hundred thousand black workers lost their jobs as a result of NRA minimum wage laws alone.
Small businesses suffered acutely. In the case of Schechter v. United States, the Schechters, Jewish immigrants whose name is derived from the Yiddish word for “butcher,” lived up to their name by operating a chain of Brooklyn slaughterhouses. Their lives were turned upside down when they were convicted of violating the FDR-authorized Live Poultry Code. Among other things, the Schechters had sold an “unfit” chicken—an egg was lodged inside it—and they allegedly sought to undercut competitors with their pricing.
The Schechters were fined $7,425, a substantial sum now but astronomical for the time. They were also sentenced to between one and three months in jail. They took their case to the Supreme Court, challenged the code, and won—a stunning blow that put the brakes on FDR’s progressive runaway train.
The legislation that created the NRA was struck down by the Court (1) as a violation of the Commerce Clause of the Constitution (the code regulated commerce solely within the state of New York, not interstate commerce), and (2) on separation-of-powers grounds (the president could not legislate from the Oval Office).
For the unemployed, FDR’s government became the default employer. Economist John Maynard Keynes later wrote that a nation could decrease unemployment and increase income by burying jars of money and having the public dig them up. Roosevelt anticipated him, funding a series of “stimulus projects” and relief programs purportedly to spur the economy. The government was essentially paying one group to dig holes and another group to fill them in.
The dirty secret was that putting billions of dollars in Roosevelt’s hands politicized the spending. FDR doled out funds from the Works Progress Administration (WPA) specifically to states believed to be critical to the 1936 presidential election. In contested Pennsylvania, he increased WPA expenditures more than three thousand percent, the largest increase in any state in the nation. Patronage and politics made the government’s make-work projects, which were paid for by tax increases and debt, twice as bad.
&n
bsp; The Agricultural Adjustment Act (AAA) represented one of the cruelest and most unusual punishments of Roosevelt’s “liberal” agenda. It was designed to decrease the agricultural supply to prop prices up. Arch-progressive Secretary of Agriculture Henry Wallace literally paid farmers to destroy produce while Americans starved.
As FDR critic John T. Flynn wrote:
We had men burning oats when we were importing oats from abroad on a huge scale, killing pigs while increasing our imports of lard, cutting corn production and importing 30 million bushels of corn from abroad . . . [and] while Wallace was paying out hundreds of millions to kill millions of hogs, burn oats, plow under cotton, the Department of Agriculture issued a bulletin telling the nation that the great problem of our time was our failure to produce enough food to provide the people with a mere subsistence diet.
But while “restoring purchasing power” to farmers sounded noble, it was like trying to defy gravity. Prices are determined by supply and demand. Government was fighting markets that needed to adjust if a real recovery was ever to come about.
The NRA also propped up prices by letting unions require industries to pay above-market minimum wages. As another critic of the New Deal put it, “The theory here, embraced by FDR and his New Dealers . . . was that the depression was caused by falling wages, and if wages could be forced up, the depression would be cured.” The flaw, of course, is that wages cannot be “forced up”; that’s defying laws of nature. Nature always wins in the end. Always.
Compounding these problems was FDR’s undermining of property and contractual rights. One of his earliest acts was to end banking in gold, expropriating privately owned gold and ordering the abolition of all contractual clauses calling for payment in it. The federal government itself reneged on these obligations.