How to Think About the 1930s.
Amity Shlaes makes the case against FDR.
BY ALONZO L. HAMBY
Tuesday, June 12, 2007 12:01 a.m. EDT
It is hard these days for anyone--of any political persuasion--to imagine an America with an industrial work force 20% unemployed, the savings of much of the middle class wiped out by thousands of bank failures, and a large farm population (1 in 5 Americans) impoverished and radicalized by collapsing commodity prices. The crisis that Franklin Roosevelt inherited in the presidential election of 1932 would, over the next eight years, grow even worse, recover partially, then relapse, never returning to the prosperity levels of 1929. Nevertheless, Roosevelt's dismal performance would not prevent him from becoming the most popular sitting president in American history.
Scholars writing from a liberal Democratic perspective have depicted Roosevelt as an inspirational leader who gave hope to a beaten-down nation, provided economic assistance to downtrodden masses, waged a heroic battle against the forces of reactionary capitalism and, above all, instituted many salutary reforms. Skeptics, ranging ideologically from centrists to free-market conservatives (e.g., Gene Smiley, Jim Powell, Richard Vedder and Lowell Gallaway) have not simply questioned Roosevelt's achievement but argued that his policies prolonged the mass misery of the 1930s. Amity Shlaes, a former Wall Street Journal editorial board member and fellow at the Council on Foreign Relations, joins this group with "The Forgotten Man," a well-written and stimulating account of the 1930s and its often dubious orthodoxies.
The title is intentionally ironic. Roosevelt used the term to describe the poor and dispossessed, whom he made the object of his New Deal. Ms. Shlaes reminds us that the phrase was coined by William Graham Sumner about a half-century earlier to describe the ordinary, self-reliant, middle-class citizen who worked hard, saved his money, paid his taxes and met the needs of his family. It was this person, she believes, who was forgotten throughout the Roosevelt presidency.
Ms. Shlaes does not dwell on the causes of the Depression or offer an explicit policy prescription for how America might better have recovered from it. Suffice it to say that her model president is not Herbert Hoover--who made too many activist missteps--but Calvin Coolidge, an exemplar of purposeful passivity. The suggestion is that a policy of benign neglect might have achieved recovery well before World War II. She offers a catalog of activist mistakes--high tariffs (Hoover), clumsy monetary policy (Hoover and Roosevelt), counterproductive tax increases (Hoover and Roosevelt), efforts at government management of the economy (Hoover and Roosevelt) and poisonous attacks on wealth and big business (Roosevelt)--that made things worse rather than better.
In Ms. Shlaes's account, Roosevelt's policies, by and large, do more damage than Hoover's. Whereas Hoover had a free-market lobe on one side of his brain, Roosevelt was all state action--most egregiously in his all-controlling National Recovery Administration of 1933-35, which tied the American economy in knots and was widely unpopular. Ms. Shlaes gives Roosevelt credit for the reciprocal trade program--a policy that at least gestured toward free trade--but he backed it reluctantly and implemented it lackadaisically. It did little for either American or world recovery. Hoover's justly reviled Smoot-Hawley act of 1930--raising tariffs just when they needed to be lowered--remained the basic trade law of the land. In Roosevelt's defense, one must note that protectionism was, at the time, a multinational disease of pandemic proportions.
Ms. Shlaes tells a complex story by describing various emblematic figures of the Depression years, beginning with the political pilgrims (to use Paul Hollander's term) who visited the Soviet Union in search of an alternative to Coolidge capitalism. Most pointedly, she gives us examples of genuine forgotten men: Bill Wilson, the founder of Alcoholics Anonymous; Father Divine, the black religious leader whom she sees as an advocate of self-help; and the Schechter brothers, owners of a kosher chicken slaughtering company prosecuted for breaking NRA regulations. The Schechters, whom she convincingly portrays as legitimate small enterprisers doing their business in a traditional way, are truly poignant figures, badly treated by a bullying government.
Ms. Shlaes is especially good at profiling principled conflicts--for instance, between Raymond Moley and Rexford Tugwell over whether state management of the economy should involve consensual public-private relationships or move toward government-managed collectivism. Similarly, David Lilienthal and Arthur Morgan--both administrators of the Tennessee Valley Authority--argued over whether the TVA should concentrate on government-provided electricity or build a cooperative commonwealth. (By and large, Lilienthal prevailed. The TVA became primarily a purveyor of socialized electricity and a threat to private utilities, but not the communal utopia envisioned by Morgan.) Ms. Shlaes also draws a sympathetic portrait of Andrew Mellon, the former Treasury secretary, as an intelligent economist who understood the limits of government intervention and a philanthropic benefactor who, despite an unjust and failed legal persecution for "tax evasion," gave the U.S. the National Gallery of Art.
Her biggest hero, though, is Wendell Willkie, the brilliant and charming Indiana-born lawyer who, as head of Commonwealth & Southern Corp., became famous as the spokesman for the electrical utility companies, fighting on behalf of his shareholders against the taxpayer-financed incursions of the TVA. Willkie, a registered Democrat of moderately liberal inclinations, would become the Republican nominee for president in 1940. Defeated in both struggles, he nevertheless reinvigorated a GOP that had degenerated into shrillness and (with war on the horizon) head-in-the-sand isolationism.
One question that Ms. Shlaes never quite answers is just what Roosevelt should have done to beat the Depression beyond practicing a Coolidge-like passivity. She acknowledges the reality of the widespread misery photographed by the likes of Roy Stryker and Dorothea Lange, even if the documentation of it, in her view, bordered at times on propaganda. Roosevelt, responding to dire conditions, offered a multitude of relief programs that benefited millions of people caught in circumstances beyond their control. Such efforts compensated for his failure as an economist and kept him in power. American conservatives, wedded to the values of Sumner, had very little to offer.
It is not surprising that the young Ronald Reagan voted for Roosevelt four times. As a conservative in later life, Reagan never apologized for it, pledged to preserve the New Deal "safety net," pursued large-scale deficit spending and found none of these methods incompatible with free-market principles. Ms. Shlaes rightly reminds us of the harmful effect of Rooseveltian activism and class-warfare rhetoric, but they filled a political vacuum. In many respects, it is Roosevelt's world we live in today.
Mr. Hamby, distinguished professor of history at Ohio University, is the author most recently of "For the Survival of Democracy: Franklin Roosevelt and the World Crisis of the 1930s." You can buy "The Forgotten Man" from the OpinionJournal bookstore.
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