A Commonwealth of Hope: The New Deal Response to Crisis

A Commonwealth of Hope

THE AMERICAN MOMENT

Stanley I. Kutler, Series Editor

A Commonwealth of Hope

The New Deal Response to Crisis

ALAN LAWSON

© 2006 The Johns Hopkins University Press

All rights reserved. Published 2006

Printed in the United States of America on acid-free paper

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Library of Congress Cataloging-in-Publication Data

Lawson, R. Alan, 1934–

A commonwealth of hope : the New Deal response to crisis /

Alan Lawson.

p. cm. — (The American moment)

Includes bibliographical references and index.

ISBN 0-8018-8406-3 (hardcover : alk. paper) — ISBN 0-8018-8407-1

(pbk. : alk. paper)

1. New Deal, 1933–1939. 2. United States—Economic policy—

1933–1945. 3. United States—Economic conditions—1918–1945.

4. United States—Social conditions—1933–1945. I. Title. II. Series.

E806.L365 2006

973.917—dc22        2005029020

A catalog record for this book is available from the British Library.

For Mary Beth

Who gives life to hope

Contents

Series Editor’s Foreword

Preface

Introduction

1 Prelude: The Fall of the American System

2 The Shaping of Franklin Roosevelt

3 Landslide

4 The Struggle for Financial Stability

5 The Recovery of Industry

6 Saving the Farms

7 Launching the Welfare State

8 Revival of the Spirit

9 Renewing the New Deal Lease

10 The Judicial Revolution

11 The Rendezvous with Destiny

12 The Common Man at the End of the Decade

13 The International Climax

Epilogue: Another Cycle?

Essay on Sources

Index

Series Editor’s Foreword

Today’s memories of Franklin Roosevelt and the New Deal belong to a dwindling remnant of Americans. Their children and descendants, indirect heirs of the governmental efforts at the time, now, amid unprecedented material comfort, view the past through a prism of mixed images and ambivalence.

The very term welfare state is charged language, reflecting concern about higher taxes, cheats, irresponsibility, illegal immigrants, and troublesome minorities. Those under thirty or forty, confident of their immortality, seem readily amenable to proposals to drastically alter present-day guarantees of the Social Security system. But those same cynics certainly insist that banks belong to the Federal Deposit Insurance Corporation, and they would be dismayed at the sizeable monetary losses their ancestors suffered resulting from bankers’ culpability. Ambivalence indeed.

As the Great Depression hardened and deepened by the time of FDR’s inaugural in 1933, one of every three American workers was unemployed; manufacturing and foreign trade had plummeted; personal debt soared while savings were lost in the multitude of bank failures. Only Abraham Lincoln assumed powers under such dire conditions.

Roosevelt offered a clarion call to action—a New Deal—and the American people responded. They heartily welcomed an activist government, one that would eventually be an employer of last resort. This was no moment for blind religious faith; this was not the time for diversionary cultural issues; it was the idea and role of government, not fear, that inspired people and forged another historical link in the American character.

Alan Lawson’s A Commonwealth of Hope thoughtfully provides a broad, extended historical context for the new political, social, and economic developments of the 1930s. The crisis of the American capitalistic system was no momentary event—stock market crash, unemployment, and depression—but rather reflected deep-seated, longstanding malfunctions of the economic order. Further, Lawson demonstrates that the Franklin D. Roosevelt administration’s response to the crisis was not mere improvisation but had roots in earlier notions of a progressive, cooperative commonwealth—ones that provided a wide array of reform measures to better peoples’ lives and ameliorate the ravages and excesses of industrialization. The vision included reform and regulation of large, vital, and unbridled national business practices. All this served as a foundation for government’s activist, interventionist, and compassionate role that emerged in the 1930s, dovetailing with the nation’s keen desire for economic recovery and security.

Seventy years later, President George W. Bush, unlike his Republican predecessors who followed the New Deal, has systematically sought its virtual repeal, favoring an unbridled, unregulated free market economy and the reinstitution of trickle-down economic policies. Following his re-election, Bush dedicated his political capital to the transformation of the Social Security system. But the burden of the Iraq war eroded much of his capital and prevented the fulfillment of his fondest hopes. Ironically, that would have been his contribution to revolutionary policies to advance liberty—in other words, his New Deal in new garb.

The New Deal doubtless established a fresh framework and vastly more important role for government. Can anyone doubt that if the United States again found itself so devastated by comparable economic disaster, the government would assume enormous responsibility for providing relief and mitigating its effects? And once again, the American people would resume their familiar historical role of distrusting government, yet when convenient demanding vigorous governmental efforts to mitigate such a disaster.

Stanley I. Kutler

Madison, Wisconsin

University of Wisconsin

Preface

This book takes its title from the tremendous ferment that took place during the last years of the nineteenth and the first years of the twentieth centuries—the time when the leaders of the New Deal were forming their ideas and forging their careers. Commonwealth was the official designation of several colonies from their beginning, including the most important crucibles of American republican polity, Massachusetts Bay and Virginia. In the late nineteenth century it became a favored term to describe the ideal American society by those with a hopeful vision of America’s governing prospects. These men of good hope, as Daniel Aaron’s portrait of the leading reformers of the late nineteenth century called them, took that view because they saw great possibility in the way the nation’s activities and institutions were consolidating into ever larger interdependent units. Industries, agriculture, the professions, social organizations, and, in a more laggard way, politics gained power and wealth as they expanded within webs of interconnection. Utopians witnessing the transformation dreamed of a perfected society of shared abundance and harmony, while the more moderately sanguine praised cooperation as the way to replace poverty with shared abundance, if not to perfect human nature itself.

Against that hopeful vision of commonwealth an array of strivers took the tradition of American individualism as a warrant to seek their own fortunes with little regard for others except as competitors. From the scramble for advantage amid America’s growth into the world’s most productive industrial and agricultural nation emerged a cluster of transcendently rich entrepreneurs, trailed by a new class of large landowners and industrialists who formed an American aristocracy of wealth. Although they shaped vast interdependent enterprises that expressed the consolidating tendency of the time, these plutocratic leaders fostered a myth of self-reliance to cover their uneasiness over the necessity of relying on an increasingly complex network of brains, muscle, professional expertise, and government support. For them the prospect of a commonwealth of shared abundance was far from reassuring—indeed, it was decidedly ominous, a threat to their power and possessions.

And, so, the lines were drawn—Wealth against Commonwealth, as the title of Henry Demarest Lloyd’s key reform tract put it in 1894. Fifteen years earlier, Lloyd’s predecessor, Henry George, also spoke to the unhappy polarity in American life in the title of his influential call for the redistribution of wealth and opportunity, Progress and Poverty (1879).

The phrase that best captured the optimistic ideal was coined by the Danish immigrant and Marxist Laurence Gronlund in his utopian novel, The Cooperative Commonwealth (1884). His utopia would rely on the new technological advances that were dazzling so many observers at the time. Within that clocklike society, individuals would be utterly subordinated to the overall design. America’s most famous labor leader, Eugene Debs, adopted Gronlund’s cooperative commonwealth theme as the key to building an American Socialist party, but Gronlund’s regimented version of a cooperative commonwealth had limited appeal to most of his reformist contemporaries. Edward Bellamy’s utopian novel, Looking Backward (1889)—which Gronlund graciously acknowledged was the superior and vastly more popular book—also touted technology as the key to generating wealth and improving surroundings, but the novel stressed the personal freedom it would provide rather than the interdependency underpinning that freedom. In turn, America’s leading philosopher, John Dewey, who admired Bellamy’s shrewd analysis of how a system of wealth for the few and misery for the rest could be converted into a communal order of shared prosperity, took the lead in arguing the necessity of social interaction to guide that evolution intelligently and shape the individuals within it.

These critiques developed within the drama of large-scale confrontations. Seeking a fair return on their labors, farmers pressed the cooperative commonwealth principle forward in the form of alliances that eventually produced the Populist Party in 1892. Although Populist fervor failed to gain much political power, the party’s 1892 presidential campaign platform, which declared that the conditions which surround us best justify our co-operation, set a standard for future reform by advocating a commonwealth that would promote the welfare of farmers and workers through federal ownership of the railroads, establishment of a uniform national currency, enforcement of an eight-hour workday, and reservation of public land for homestead settlers.

Neither Populists nor utopians were able to overcome the resistance of business and financial forces to create a new cooperative order. Nor could they remove the barriers between workers and farmers, between ethnic groups, between social classes, and between races. Yet the logic of a consolidating society pressed an irresistible case for interdependency of some sort. The leaders of the American Federation of Labor, for example, kept its membership independent of government and focused on immediate workplace issues. Yet the AFL also became a shining example of the cooperative ethos of the time in creating the largest and most successful union by drawing independent craft unions into alliance. So, too, did the burgeoning social welfare organizations adopt the ethos. Middle-class idealists who flocked to settlement houses in slum areas at the turn of the century accepted a duty to share their lives directly with the poor and disadvantaged. Study centers such as the National Bureau of Economic Research, the Municipal League, and the Brookings Institution were formed in the belief that experts could accomplish more within a group setting than on their own. The Civil Service Reform League sought a similarly ramified influence by drawing reformers together within a cooperative structure dedicated to virtuous and rational governance. Even fiercely competitive corporate leaders saw merit in forming trusts and pools that tried to convert individual advantage into mutual advantage.

In light of the consolidating trend, a wave of conceptual thinkers, often within the rapidly growing universities and professional associations that were key indicators of the trend, explored ways of making society more rationally cooperative. Sometimes these heralds of a newly enlightened age rhapsodized about the project’s prospects. Charles Horton Cooley, a leader in the new field of sociology, in Social Organization and Human Nature and the Social Order (1902) envisioned that our democracy might be a work of art, joyous whole, rich in form and color, free but chastened, tumultuously harmonious, unfolding strange beauty year by year. Other progressive thinkers agreed, if less ecstatically, that there were strong grounds for optimism. Simon Nelson Patten at the University of Pennsylvania insisted that the new technical prowess and modes of production meant that the economists’ dismal idea that scarcity was the general rule could be overcome through intelligent planning by universal abundance. In search of evidence to prove this providential case, a coalition of civic leaders and university professors created the National Bureau of Economic Research. Under the leadership of statistician Wesley Clair Mitchell, the Bureau compiled economic data relating to business and government on the conviction that they would prove useful for progressive reform. The principle of cooperation between university experts and government was most fully advanced at the University of Wisconsin, which was just down the street from the state capitol building. Charles Van Hise, president of the university, made an influential appeal in his major work Concentration and Control (1912) to replace much of the competitive distance between business corporations with cooperation, which would be regulated by government commissions in order to protect the public from unfair monopoly practices. Within Van Hise’s university, fellow economist John Commons commanded an army of university researchers in the project of supplying state government with precisely the pertinent information needed for such control, aimed especially at creating social insurance that would protect workers against disability and unemployment and provide them with decent pensions when their work was done.

On the edge of professorial thought, Thorstein Veblen—university trained but estranged from the establishment because of his scandalous disregard for polite conventions—made the most sensational impression. The entire business-centered society, Veblen insisted in mockingly incisive terms, was a fraud, its opulence and pretensions of virtue merely a wasteful cover for the barbarian aggression that really undergirded the competitive capitalist system. Veblen was a cynic; yet he also shared the cooperative ideal and so argued for a transformed society in which the engineers who devise modes of production and the workers who carry them out would determine policy for a society of shared abundance.

Widespread advocacy of a cooperative commonwealth ideal inspired a range of specific reform initiatives, centering on the hardships inflicted by industrialization. Decent working conditions, abolition of child labor, unemployment and disability insurance, food and drug standards, access to public schooling, and regulation of public utilities were in the forefront. The term, progressive, first used to describe the cooperative reformers of 1890s London, came to be the most common label that such advocates of cooperation in the United States applied to themselves. When Herbert Croly, the leading apostle of progressive reform on a national scale, wrote his influential book The Promise of American Life (1909), the promise he had in mind was of a nation shaped into a true commonwealth by cooperative design.

It was within this atmosphere of hopeful thought and action that most New Dealers came of age. When it was their turn to run the country in the 1930s, they repeatedly drew upon the concepts of interdependency to devise remedies for the woes of average Americans. Rather than simply react to the crisis of the Depression by inventing strategies on the spot, New Dealers mobilized the progressive ideas they had imbibed in their youth and had hailed in World War I for their value in preparing the nation—only to see them selfishly and irresponsibly cast aside during the 1920s. In the depth of the Depression of the 1930s, these latter-day progressives allowed themselves to hope that the crisis would give them the chance to revive cooperative commonwealth formulations in order to realize the promise of American life. The laws and policies that resulted—and the various storms weathered along the way—is the story told here.

My intellectual and personal debts are greater than my ability to acknowledge them all. From the outset several of my students found illuminating items that helped steer me in the right direction. These researchers and shrewd interpreters include Joe Cugini, Michael Dungar, Marc Ferrara, George Harding, Jeff Malanson, Judy Maas, Joe Mitchell, Carol Obertubessing, Jennifer Pish, Bill Scaring, Peter Spellman, and Brad Thompson. Several generous colleagues have subsequently read drafts and offered critical suggestions that frequently saved me from myself, while lending encouragement to continue. I am glad for this chance to express gratitude to Alexander Bloom, John P. Diggins, Lancelot Farrar, John Heineman, James Kloppenberg, Krister Knapp, and John Saltmarsh. I wish to express my deep gratitude to the readers for the Johns Hopkins University Press, Patrick Reagan and Robert Zieger, for their crucially insightful commentaries.

My admiring thanks go also to the Boston College librarians, especially Michelle Baildon, Adeane Bregman, and Robert Bruns for their expert guidance in using the many data collections that have been brought together in the library system.

Similarly invaluable assistance and good will have been forthcoming from the staffs at the Columbia University Oral History Collection, the Library of Congress Manuscript Collection, and the Franklin D. Roosevelt Library.

At the Johns Hopkins University Press, Henry Tom and Stanley Kutler have shown admirable forbearance through my various detours and uncertainties; toward the end Claire McCabe, Martin Schneider, and Carol Zimmerman steered the work across the finish line surehandedly.

My family did the rest, maintaining a balance of support, healthy diversions, and accomplishments that set just the right examples. Thanks beyond measure, then, are due to Mary Beth, Nell, and Richard. I hope they find this book some small recompense.

A Commonwealth of Hope

Introduction

The New Deal stands as the most comprehensive moment of national reform in American history, the culmination of the American progressive tradition. For its inspiration the New Deal looked back to the struggle at the outset of the republic against attempts to establish a moneyed aristocracy, to the antislavery crusade, to the extension of civil rights during the Reconstruction period that followed the Civil War, and finally to campaigns of Progressives and Populists championing the welfare of farmers, workers, and other victims of the Industrial Revolution at the turn of the twentieth century, when most New Dealers were coming into social awareness. Hence, in creating the New Deal mystique President Franklin Roosevelt was able to identify with progressive heroes of both major parties—Republicans Abraham Lincoln and Theodore Roosevelt and Democrats Thomas Jefferson, Andrew Jackson, and Woodrow Wilson.

Yet, despite the practical and symbolic lessons the New Deal drew from the history of prior reform, it was fated to be distinctive. Because it took shape within a unique moment of crisis, it tested in new ways the basic proposition that America could somehow reconcile individual liberty with communal order—that free enterprise and welfare state could coexist, that local traditions could be respected while federal limits on discriminatory practices were imposed, and that free expression could be left unhindered by state-sponsored cultural and artistic programs.

What mainly determined the uniqueness of the moment was the unusual tenacity of the economic crisis of the 1930s. The baffling and catastrophic new reality made Americans more receptive to change. Since 1819 America had suffered boom and bust cycles approximately every twenty years. In each instance national institutions held the line against rising discontent and clamor for drastic changes in the system. After a brief period of pain, prosperity returned under the auspices of conservative business as usual policies. By spending less as revenues declined to keep the budget balanced, Presidents Monroe, Van Buren, Buchanan, Grant, Cleveland, and Taft all helped establish the principle that austerity was called for while the private economy readjusted itself to create a new prosperity. Progressive reforms were left to flush times, when the nation could afford to ameliorate social ills and lift up the poor and afflicted without deficits or high taxes.

In the wake of the Crash of 1929, the pattern broke down. Even with Herbert Hoover, the Great Engineer and a proven genius at organizing disaster relief, in the White House and his fellow Republicans firmly in control of Congress, the economy did not rally. Angry and disillusioned, the public in the election of 1932 for the first time responded to economic crisis by choosing a liberal reformer to be president. The New Deal to come truly had to be new. Since the captains of industry and titans of finance had failed to rescue the government by the usual means and public patience with them had worn exceedingly thin, the government for once had to do more than merely preach austerity. And that meant breaking traditional barriers against government intervention into the economy. For those long-frustrated advocates of social planning and reform, the situation seemed to provide an unprecedented opportunity. If they could settle on the right agenda, they might just be able to integrate the two traditionally competing American ideals of civic responsibility and individual liberty.

In that spirit, the New Deal Brains Trust that coordinated Roosevelt’s presidential campaign turned to national planning concepts that had been brewing throughout the era of progressive reform. Plans to relieve farmers of their surpluses, to end unemployment, to revive business profitability, to provide social insurance, to govern labor union formation—merely the most prominent examples—quickly surfaced. It was from the sum of these plans that a new deal would emerge.

The will of the New Deal to take action against the Depression depended greatly upon the optimistic character of its leader, Franklin Roosevelt, and his ability to inspire support from a hard-pressed electorate. Roosevelt’s confidence stemmed from a remarkably simple and persistent set of core beliefs that provided a framework within which the diverse policies and maneuvers of the New Deal could be contained. From his privileged and morally serious upbringing, Roosevelt absorbed the lesson that he would be a leader in the service of Christian charity and democratic ideals. When Roosevelt achieved the pinnacle of that expectation as president of the United States, it was easy for him to explain his philosophy to newsmen: I am a Christian and a democrat; that’s all. As far as he could see, those values accommodated all benevolent aims and needed no ideology or dogma. To critics who complained of inconsistency in that broad embrace, Roosevelt, had he thought of it, might have echoed the poet of democracy, Walt Whitman: Do I contradict myself? Very well, then, I contradict myself. I contain multitudes.

Sure that he could fit all American experience to his ideals, Roosevelt set himself to champion both the individual and big government—the latter to serve the former. Unlike those who have seen America as a fundamentally divided society—by class, race, ethnicity, gender, or some other alienating measure—Roosevelt assumed common ground. The human condition, he believed, favored cooperation and an empathetic government intent on careful planning to protect the right of each to share with all. Accordingly, Roosevelt could also assume that protection of individuals and local communities sometimes required the active intervention of the federal government.

Roosevelt’s optimistic vision of a cooperative commonwealth drew support from those hurt by the depression, even as it was hindered by uncertainty about the causes and lessons of the crisis. How could the historic American faith in progress have been so confounded? Had the glittering prosperity of the 1920s been only a momentary extravagance? Or had some sinister forces—whether within or without—sabotaged the nation’s soundly based progress? Whichever explanation puzzled Americans chose, they had a difficult time deciding how to respond to the crisis. Was this the moment to write off the old American individualist dream as a mirage and seek to build anew along more radical, collectivist lines—as in, say, Russia after its revolution of 1917 or Italy after Mussolini’s triumphal march on Rome in 1922? Or was the opposite conclusion closer to the mark—that the economy had collapsed because too many Americans went on a binge in the Roaring Twenties, meaning that stricter individual discipline was needed to bring the nation back to the old straight and narrow? For those inclined toward the former view, it was time to build a new consciousness leading to a planned and cooperative society. For proponents of the rueful latter view, salvation seemed to depend on rediscovering the basic values that had gotten lost in the careless Twenties.

Disagreement over the lesson of the Depression was reflected in the division of opinion about economic remedies. New Dealers and their reformist allies took up a concept called underconsumptionism, which concluded that the widening gap between rich and poor had caused the economy to collapse once too few people were able to buy what the wealthy produced or occupy the buildings they financed. In that view, taxing and regulatory powers seemed necessary for a redistribution of wealth that would strike a just balance between supply and demand and ensure a decent standard of living for all citizens. Conservatives, opposed to interference with the free market on principle, argued that unwise governmental policy was responsible for the economic slump. Had foreign state banks and the Federal Reserve System made enough money and credit available, the private economy would have righted itself.

As for the millions of ordinary victims of the Depression, they wavered between support of bold action and a yearning for security. The ordeal left on them what Caroline Bird calls an invisible scar, making them forever anxious about new signs of trouble. Rejecting a drastic overhaul of the system, each segment of society clung to the hard-won New Deal benefits that affected it directly, such as the right to organize unions under federal auspices, farm subsidies, and the old age and dependency benefits of the Social Security system.

The modest aspirations of the common man were praised by New Dealers but disappointed more radical reformers. One of them, critic John Chamberlain, fashioned his shrewd limited racket theory of government as a kind of surrender of his socialist hopes to the New Deal reality. Thoroughgoing reform went against the American grain, Chamberlain argued in his bestseller Farewell to Reform (1932). What the public wanted was just enough security to feel free to carry on private undertakings. Thus, as soon as the fearsome aspects of any major problem confronting society—war, depression, or other—are alleviated, reform enthusiasm gives way to business as usual. No permanent, full-fledged welfare state could possibly emerge from such a national mindset. Only partial cures for social ills could be expected within the American political system, which operates as a broker state where special interests make deals and trade favors with politicians and bureaucrats.

Soon after the New Deal ended and Chamberlain himself had grown conservative, the concepts of self-limiting reform and a broker state came to seem prophetic. After being buffeted by new trials of hot and cold war against totalitarian powers, in 1946 Americans voted Republican and shrank from any extension of big government while different segments of society sought public support for their own special concerns. The legacy of the New Deal froze within an ambiguous frame of reference. Relief and gratitude that the Depression was finally overcome, together with determination that the nation would not be vulnerable to another crash, maintained the New Deal’s hold on public sympathy and installed Roosevelt as the president most admired, after Lincoln. At the same time reaction grew against the New Deal as a form of socialism creeping along the road to serfdom. When Republicans regained control of Congress in 1947, they hastened to pass a constitutional amendment limiting presidents to two terms, so that no future Roosevelt could establish such a charismatic hold over the electorate. It was a sign of the unheroic times that the majority, who had after all been rescued by the New Deal, accepted this repudiation of their own experience without complaint.

Revulsion against further expansion of the scope and power of the New Deal regime reflected concern that America had become an administrative state with an imperial president. But could there have been a New Deal otherwise? By the late 1960s, accelerating discontent with the postwar system as a devil’s bargain whereby the majority secured soulless affluence by oppressing the minority at home and carrying out imperialist raids abroad led critics to look upon the New Deal as a missed opportunity to enact a welfare state comprehensive and systematic enough to create a good society. From that perspective Roosevelt was put down not as an imperial president but as a patrician with limited vision. His New Deal was lamented as a brand of cautious opportunism that failed to realize the full seriousness of race and class issues or to appreciate the potential of either Keynesian or Marxist economics to achieve prosperity and social justice.

Doubt about the lasting impact of the New Deal has also been cast in terms of ethics and morals. When critics speak of the fall of the New Deal order, they include defects in will and character that have tended to thwart reformist intent. They gloomily point out that regressive taxes and excessive entitlements have undermined Social Security; that biased legal maneuvering and the stacking of the National Labor Relations Board with opponents of organized labor have led to the decline of union bargaining rights; that lavish subsidies have enabled agricultural barons to bankrupt the family farms the subsidies were intended to help; that the civil rights gains have roused conservatives to desert the Democratic Party and create Republican majorities in the South hostile to the project of remedying past racial injustices; and that regulatory agencies have become training grounds for experts in the pay of private business to promote deregulation. Capping the case for decline and fall is the public disillusionment described in E. J. Dionne’s Why Americans Hate Politics and that backlash described in Kevin Phillips’s history of the American rich, Wealth and Democracy, as an elite of wealth in the 1980s and beyond acted to reinstate the yawning gulf between rich and poor that had characterized the glittering 1920s. Feeling themselves excluded and exploited by a privileged political establishment beholden to special-interest money, the very common people the New Deal was pledged to redeem have increasingly withdrawn from the process except to protect local and personal interests and, occasionally, to egg on maverick candidates who talk of shaking up the national system and sending a message to Washington that never seems to arrive.

And yet, the New Deal has remained at the vital center. All national administrations since the New Deal have, as William Leuchtenburg put it, operated in the shadow of FDR. They have at least paid lip service to the ideal of protecting the common man, and their policies have been framed in the light of judicially endorsed federal authority over the economy and the recognition of civil liberties as preferred freedoms. Social Security, regulation of the stock market, federal guarantees of labor’s right to bargain collectively, farm subsidies, public housing, regional power development, conservation, and policies to advance racial equality have remained the prime legacies of New Deal reform.

This book approaches the centrality of the New Deal by focusing on where the impetus and the plans for the New Deal originated, how Roosevelt and those closest to him sought to fashion a cooperative commonwealth, and what happened when the impulse for collective unity was thwarted. First I describe the impact of the Great Depression on the prevailing system and trace the fortunes of the major social sectors and elements of the New Deal as the drive to create a cohesive plan for reconstruction unfolded and then was blocked. In later chapters, I continue the story of those main sectors during the last half of the 1930s and into World War II, as new and more partisan approaches to reform were tried. The New Deal, this sequence indicates, did not move from innovation to plan, as one might expect from an experimental approach, but from plan to innovation, as circumstances demanded.

The question raised at the start of the New Deal has remained at the center of efforts to evaluate it: Did the New Deal represent the true American way or was it an aberration—a stopgap to meet an unusual crisis that would last only until the old order was able to reassert itself? Historians have always been divided on this question. For every one who describes the New Deal as mere anomaly or holding action, another has hailed the New Deal as a genuine expression of the nation’s original democratic ideals.

This account argues the latter case of the New Deal as a special opportunity for reformers who sought to build in the American grain and who were therefore prophetic in warning of the turmoil and loss of faith that would result if New Deal aspirations were not met. Elements of the New Deal welfare state and the powerful presidency have remained in force, and Roosevelt’s reputation as a great president seems secure. Yet in recent years the struggle over whether to advance or reverse the New Deal has tilted toward those who want to limit government in the interests of a corporate and financial elite of the sort Roosevelt called economic royalists. Considering all the uncertainty and backtracking of their ideological heirs, New Dealers could do no better than echo the plaint of Frank and Jesse James’s mother that I done the best I could with what I had. Which, in the case of New Deal, was considerable. For better or worse, the New Deal’s mobilization of the progressive legacy made it the political colossus that looms over every national effort to guide social policy and conscience.

CHAPTER ONE

Prelude The Fall of the American System

The collapse of the stock market in 1929 and the economic paralysis that followed confronted Americans with an unprecedented reversal of their expectations of endless progress. As the Great Depression deepened, astonishment that an era of high prosperity (with the assurance of more to come) could suddenly vanish gave way to fear and anger. Grim, bewildered faces stare out from the photographic record of the time; veterans of the Depression ever afterward brooded about the stifled air of foreboding that smothered the nation. A deadly quiet settled on the city streets, so different from the previous decade, when a jazzy clamor announced America’s ascendancy to an affluence never before approached. The shutdown of factories, which left U.S. Steel operating at about 19 percent capacity and its fulltime employees pared from 224,980 in 1929 to exactly none in 1933, was one of the main contributors to the quiet. It was further extended by the demise of most of the companies that had created the great automobile boom of the 1920s—including the most elegant among them, like Cord and Duesenberg. The rail industry faded also. After having produced an average of 600 locomotives a year during the 1920s, the American Locomotive Company turned out only one in 1932. Once I built a railroad, lamented one of the popular songs of the year, Now it’s done. Brother, can you spare a dime. The phonograph industry that spun such laments was out of dimes itself, dropping from a fifty million dollar volume in 1929 to only $250,000 in 1932, thus adding to the stillness.

As national income declined from $87.4 billion in 1929 to a scant $41.7 billion in 1932, displaced persons appeared in the quiet streets, wandering over the countryside in search of work, standing in long breadlines before somber churches, or huddled disconsolately in doorways—human junk, as one bitter writer put it. Less visible were the scavengers who haunted alleys behind restaurants or picked over garbage dumps in search of edible scraps. One observer who witnessed such scenes of desolation was especially struck by the elderly woman, formerly of means, who always took off her glasses so that she wouldn’t see the maggots crawling over what she was eating.

The specter of starvation was never far. In New York City four hospitals reported ninety-five deaths from hunger in 1931. But mostly the problem was chronic, enervating malnutrition. The Children’s Bureau determined that one of five schoolchildren was not getting enough to eat. A poignant vignette summed up the situation for one investigator, who remembered a little boy proudly displaying his pet rabbit at school, while his older sister whispered out of earshot: He thinks we’re not going to eat it; but we are.

The worst hardships naturally befell the jobless and their families, estimated by Fortune magazine to include thirty-four million persons. But those still at work felt a severe pinch, too. The average weekly wage in 1932 was only $16.21; below that, some paychecks dwindled to the vanishing point. A Chicago investigation revealed that the majority of working women in the city received less than 25¢ an hour. That was a sharp comedown; but elsewhere things were worse. In the lumber industry hourly rates fell to 10¢, in general contracting to 7½¢ and in the sawmills all the way down to a nickel. In all, wage payments dwindled from $50 billion in 1929 to only $30 billion in 1932. A sure sign of the loss of confidence in American prospects was a drop in the birth rate for the first time in American history. The attitude of those who had come from other nations to seek opportunity in America showed a similarly dismal reversal. Between 1931 and 1936, 240,000 more aliens left the United States than were admitted.

To address this catastrophe, the nation was equipped with the worst welfare system in the western world, a patchwork of voluntary institutions and pinch-penny state and local agencies. For a family of four without any income, the best the city of Philadelphia could do was provide $5.50 per week. And that was comparatively munificent. New York City, where the greatest number of welfare cases gathered, could give only $2.39 per week to such a family. In Mississippi the figure was $1.50; Detroit, devastated when the bottom fell out of the auto industry, allotted 60¢ and went bankrupt anyway. As the indigent tide thus mounted, hospitals began limiting admission to those who had prepaid, while state agencies required utter destitution before granting aid and even then were forced to limit help to families with children. In a desperate act of fear, ten states withdrew suffrage from those on relief rolls, alarmed at the prospect of whom the downtrodden might elect. The grim realities knocked playwright and storyteller William Saroyan from his famous high trapeze of optimism long enough for him to state plausibly that "hardly anybody is interested in anything much. Hardly anybody is at all."

The term Depression, coined to avert the hysteria that might ensue if the customary word to characterize economic collapse—panic—were used, neatly captured the trauma of the era. Undoubtedly the shock was deepened by a 180-degree disjunction between the hard times and what the nation had thought was in store for it. President Calvin Coolidge, who with saturnine smugness had presided over the prosperity of the mid-1920s, closed out his last full year in office with this message to his legislative colleagues: "No Congress of the United States ever