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The Roosevelt Revolution

ISSUE:  Autumn 1933

On Wednesday, March 15, the stock ticker of the New York Curb Exchange closed the first glorious session of resumed trading with the joyful vale: “goodnite. . . . happy days are here again. . . .” The banks were saved; the markets had reopened after the longest suspension of peacetime history, and an immense, a universal wave of nervous relief showered its applause, like spray, upon the White House. The nation had been preserved. It was true that unemployment was at its probable peak and business at its nadir, that wheat was selling at fifty cents and cotton at six, that stocks had barely regained the dead levels of January and February and that the abrupt excision from the national economy of some six billion dollars of purchasing power (deposited in the banks which did not reopen) suggested the possibility, at least, of a fresh plunge into deflation. It did not matter. Happy days were here again; and the voice of even partisan opposition was stilled before a new President occupying a pinnacle of prestige and popularity seldom witnessed in our history.

When Congress rose just three months later, the security markets were rising to levels unknown for two years. The price of wheat had doubled. Mr. Schwab had formally buried the depression in the presence of a grateful nation. The New York Board of Trade, “using every index by which business is measured,” was completing a nation-wide survey that was soon to indicate “substantial progress generally throughout the country” and to lead its president to declare that “the four months of March, April, May and June witnessed economic changes of colossal proportions.” Yet curiously enough the happy days seemed almost to have vanished in the process. Men who had guided the nation through the preceding dozen years were expressing the gravest alarms and making the severest of comments upon the reckless and unpredictable politician in the White House. Senator Fess was confiding to his son the “disgust,” tempered only by some measure of philosophical “resignation,” with which he regarded the “moral perfidy” of the Administration under which these results had come about. Nor were such sentiments purely partisan. The Baltimore Sun, the leading Democratic newspaper of the country, was acid in its criticism of the President; while the New York Times was damning his course with that peculiar variety of faint praise of which this great organ of Democratic independence alone is capable. Even Mr. Al Smith, who on the last day of February had been proclaiming a crisis “like war” and declaring that “we must cut out red tape, get busy and do something,” was surveying the fruits of such action (from the editorial chair of the New Outlook) with a scarcely concealed dismay. So far from the nation’s having been saved, there were moments when one might suppose it to be standing upon the very brink of the abyss.


This is, in brief, the history of the great “hundred days”; and it presents a difficult problem of analysis to any who would comment upon their significance. Obviously it is a problem which centers about the bold, charming, adroit, but still slightly baffling personality of President Roosevelt. That he is an incomparable politician, more skillful in the difficult art than the most eminent of its professionals, can hardly now be doubted. He possesses a wonderfully effective command of words, and a Presidential radio address has become a new terror for Capitol Hill. He has shown himself capable of using men with a Wilsonian disregard for their personal feelings, coupled, however, with a magnetism that retains their enthusiastic loyalties. He has proved to be rash without obstinacy; he can frighten his closest advisers by the recklessness with which he overrides their warnings, or dismay his most devoted followers by the agility with which he retreats from some tactically dangerous position which they had supposed essential to his policy. The combination is a source of immense strength in practical statesmanship; is it also a sign of weakness? Whether or not Mr. Roosevelt is actually that genius of politico-economic statecraft for which his own program would seem to call remains a question.

Some who have been close to the President believe that every move in the stirring drama of recent months was fully planned in advance, that every effect was the uncanny result of calculated management. Others reject this almost superhuman explanation and find it easier to interpret the exciting history as a masterpiece of improvisation. They discover the President’s course to be full of apparent inconsistencies; they see him as an unreliable though so far inspired opportunist, and they express a natural fear of an extemporaneous statesmanship which may leave the extem-poriser suddenly at a loss for his next movement. A review of the actual course of events suggests that the truth, as usual, lies somewhere between. Mr. Roosevelt entered the Presidency committed, as he had so often said, to “action, and action now.” That in itself was a fact so novel in the history of the American Presidency as to make it difficult to adjust the mind to all its implications. Parties had been writing programs and candidates announcing them for a century, but rarely had any been so reckless as to entertain the idea of definitely mobilizing all the immense powers of government and society to achieve concrete social results. They might promise prosperity; but the thought of exploring every available means of producing it seldom occurred to them. We are familiar, of course, with proposals like those of the Socialists for establishing new systems, but a philosophy which, rejecting any specific scheme or system, seeks merely to apply every resource of existing institutions toward generally desired ends is a strange and disquieting phenomenon. President Roosevelt was elected mainly upon his simple promise of “action.” Much of the pain and alarm now manifest results from the extraordinary fact that he is keeping the promise.

A considerable measure of opportunism is obviously an unavoidable consequence of the philosophy. Mr. Roosevelt has made it quite clear, however, that he is working to certain broad principles. The depression presented an immediate and basic issue. Was the proper policy merely to shore up existing institutions and wait for the deflation to run its “natural” course? “Even before I was inaugurated,” as he said in his May Seventh address, “I came to the conclusion that such a policy was too much to ask the American people

to bear.” His first principle therefore called for a deliberate effort to reverse the trend by a conscious use of governmental

power. His second was its natural corollary; it called for a similar effort to prevent a repetition of the collapse by establishing governmental controls over the factors which ap-

peared to have produced it. That both would necessitate a degree of governmental “planning” and regulation quite beyond anything previously known here was fully understood by Mr. Roosevelt and cheerfully accepted. A year ago, when the Democratic farm bill was being discussed at Warm Springs, and when many felt that so stupendous an effort at the planning of agriculture must end with the planning of nearly everything else, the objection was met by reports that Mr. Roosevelt was well aware of the fact and that the farm bill was only a beginning.

That the total effect would be a conscious and highly integrated economic nationalism was less clearly explained by the candidate; but that this result also was foreseen and welcomed (as much, perhaps, for reasons of practical politics as for those of abstract logic) was indicated by the ringing declaration in the Inaugural Address:

I favor as a practical policy the putting of first things first. I shall spare no effort to restore world trade by international economic readjustment, but the emergency at home cannot wait on that accomplishment.

In his campaign, Mr. Roosevelt evidently believed that the controls of planning and regulation would suffice without resort to the powerful but traditionally dangerous instrument of currency manipulation. His purpose, like that of the inflationists, was to float the national economy off the rocks while it was still whole, without waiting for a returning tide to pick it up in fragments, but he thought of his regulatory machinery as an alternative to monetary inflation. As a sound money man he bound himself to drastic economy and a balanced budget, and committed himself, perhaps too conclusively, to the gold standard. On the day of his inauguration, with the nation’s banking system in ruins about him, he still pledged himself to maintain an “adequate but sound currency.” The word “adequate” suggested to the astute that Mr. Roosevelt was already having his doubts, but the phrase confirmed his original intention.


With these purposes and these predispositions Mr. Roosevelt entered the Presidency on the fourth of March. His was a mood of fundamental orthodoxy, tempered — as so rarely happens—with imagination, and with a brash self-confidence. He had definite ideas of what he would do and what it would involve; but above all he believed in positive governmental action, of whatever character, to achieve those general ends which the nation professed to desire. The “hundred days” have not seen the cold development of a prearranged plan; rather, they have witnessed the emergence of these purposes and predispositions under the sharp etching of events. President Roosevelt is an artist in politics who, like other artists, understands the general effect he intends to achieve but cannot foresee the details of execution, which the progress of the work itself imposes; in a sense he is an improviser, but it is improvisation on a perfectly definite theme.

He took office, of course, confronted by an unparalleled opportunity. The amazing good luck which had followed him throughout his career—removing him from politics during the lean years of his party, to return him at the precise moment when the last stages of depression not only insured victory to the Democrats but gave them a good chance of profiting by an ultimate revival — presented him, on the steps of the White House, with an even more spectacular gift. It closed every bank in the country on the night of March 3-4. Never had the nation been delivered so completely into the hands of a new President; never had it been so desperately and unheroically clamorous for salvation. Mr. Roosevelt moved to “action.” The emergency banking bill passed both Houses and was signed on March 9, seven and one-half hours after Congress had convened. The economy bill—putting into the President’s hands a formidable authority over pensions, jobs, and salaries, the very raw material of Congressional prerogative — was signed after a struggle on March 16. The massive citadel of pensions, he-hind which the deficit had been so long and impregnably intrenched, had fallen, and a balanced budget became a possibility. The beer bill was thrown in, by a masterful touch, on the thirteenth and also passed on the sixteenth; it served the double purpose of providing a fillip to the national state of mind and a more material one to the budget. With these first swift moves the President had established the orthodox foundation which he felt he needed for his larger program, at the same time achieving that dominance over Congress and the country which would enable him to bring such a program to enactment.

The emergency had been met, by means at which even the dourest opposition could not cavil. Mr. Woodin and Mr. Douglas were the new heroes; and on the afternoon of March 16 a rather lonely figure was observed quietly leaving New York on the long road to California. It was Mr. Herbert Hoover, who had lingered for a fortnight close to the scene of action in case his services should be desired. They were not needed.

Already, however, the second of the four stages which can be distinguished in Mr. Roosevelt’s exploitation of his opportunity was under way. As Mr. Hoover was boarding his train in New York, the farm relief bill was being introduced in Washington. The President had decided to go on while his power and prestige remained; the period of emergency defence gave way to the period of bold measures of attack. The decision was perhaps inevitable. Aside from the fact that there would never be a better chance, the farm relief bill itself constituted one of the politically most important of his promises. His power rested upon the continued support of the normally Republican mass of rural voters. More than that, conditions among the farming population were reaching a point of real danger; the “strike” movement was spreading and within a month the stolid yeomanry of Iowa would be threatening to hang a judge. And the farm bill, which in essence provided that the government (exactly as though it were the management of the United States Steel Corporation) should tax every consumer to pay the producer for limiting his output, was admittedly the beginning of the whole plan of control.

It was tossed into Congress with the honest, if unparalleled, confession that it was an experiment; experimental or not, however, it was followed next day by announcement of the definite decision to push forward a corollary program of general relief — to include “co-ordination” in relief of the railroads, supplementary fiscal legislation to relieve investors and depositors, and something (it was hoped that it would not call for any new taxation) in relief of industrial unemployment. As another aspect of this “relief” phase, the Administration was at the same time initiating its adventure into economic foreign policy, in the hope of reviving general world trade. The President was an economic nationalist, but “nationalism” and “isolation” are by no means the same thing. It is, indeed, the readiness with which nationalists customarily seek to use the power and influence of their country abroad that has mainly got them into trouble. Like other leaders before him, the President appeared to believe that the development of a centralized and conscious economic nationalism at home would only make it easier to promote economic peace (and achieve our economic ends) in the foreign field. The idea itself is quite logical; it is the practical execution which usually raises the difficulties. At this time, however, when foreign statesmen were being invited to Washington and when Mr. Davis was being dispatched to further disarmament and the economic conference in Europe, the difficulties were all ahead.


At home the second, or “relief,” stage lasted from the middle of March until the seventh of April. As the program advanced, it inevitably enlarged; Mr. Woodin, even Mr. Douglas, began to recede imperceptibly into the background and the “brain trust” began to emerge as the true captains of the new dispensation. As they did so, and as the scope of their intentions became more apparent, the applause became more tepid, Republicans more hopeful, and Congress less amenable. The bank bill had taken seven hours and the economy bill seven days for passage; the farm bill was not finally enacted until more than seven weeks after its introduction. In the meanwhile, discussion made it clearer that the farm bill machinery could not work alone without drastic efforts to float off the other sections of our economy at the same time. Measures for extending Federal credit for refinancing farm mortgages up to two billion dollars, and a similar amount for home mortgages, were being advanced. Unemployment relief was progressing from such lesser projects as the reforestation corps and the Muscle Shoals scheme to plans for a five hundred million dollar direct grant-in-aid to the states or even to a vast program of “public works.” Unfortunately it was becoming evident that these things could not be done without spending money, and the inviting expedient of dividing the budget into an “ordinary” or balanced section and an “extraordinary” or borrowed one was already being mooted, to the alarm of the conservative.

An even more serious issue of policy, however, was beginning to appear. Would “relief” be enough? By the first week of April it was observed that about four billion dollars of purchasing power was still locked in the closed banks, that another billion a year was being taken out of the national economy in the effort to balance the budget, and that the three-quarters of a billion for relief expenditure would be inadequate to offset this deflation, either in pure theory or in the minds of the outright inflationists, whose political strength was obviously growing. On April 7, beer was back, amid rejoicings and enthusiasm; Michigan had already been the first to ratify the repeal amendment and there was a fresh sense of optimism on the air. That afternoon reporters at the White House learned that the Administration had finally resolved upon a conscious program of “reflation” to bring about a general rise of price levels.

“Relief” had given way to “reflation”; the second phase was over and the third about to begin. It lasted less than two weeks. Still resolved to maintain the “sound” foundation of his policy, the President apparently hoped that a public works program would be a sufficient lever. The basic decision had been taken, however, and events were to dictate the method by which it would have to be applied. From April 7 onward prices did not rise materially, but the demand for currency inflation did. The indices clung to the levels which they had barely managed to regain after the bank collapse; on the other hand, so eminent a counsellor as Mr. Walter Lippmann was advising (on April 11) that the way to avoid a ruinous prolongation of depression was “to remain definitely off the gold standard for the time being, to use the freedom from the necessity of making [international] gold payments to expand credit at home and to let the dollar be revalued in the outer world in relation to other currencies.” This, said Mr. Lippmann, would have an inflationary effect, but it was no more than the British had done in 1931 and would, he thought, be no more dangerous,

On April 13 there was a little object lesson. A sagging tendency in the dollar had produced a buoyant effect not only on stocks but on commodities, which had been abruptly snuffed out when the Treasury licensed an export of gold For the week ending April 15 business (according to one index) again touched the all-time low reached at the end of the bank holiday. There was evidence that the banks had been reopened too quickly and that another run was impending which might close them for good. On April 19 Mr. Lipp-mann’s advice was suddenly taken. The United States (with the front-page blessing, it is to be remembered, of Mr. J. P. Morgan) abandoned the gold standard; and on April 20 President Roosevelt asked Congress for power to use the direct mechanisms of currency inflation or dollar devaluation in order to control the American price level. That he did so partly in order to prevent Congress from using them was obvious; Republican Congressional leaders, however, happily announced that the President was “violating the most elementary principles of sound monetary, credit, and financial policies,” and the honeymoon was over. Many sections of conservative opinion, after hesitating for weeks, now discovered that the parting of the ways had come; while the President cheerfully entered upon the fourth phase of his brilliant demonstration.

The question as to whether what followed is or is not “inflation” seems highly academic, particularly since no one has yet succeeded in defining “inflation.” The President had deliberately resorted to the monetary mechanism in order to raise the price level, and whether the resultant movement is a “controlled” and beneficent or an unsound and “unhealthy” phenomenon would seem to depend entirely upon the prejudices of the individual economist. The layman, who is no economist, may suspect that there is in reality no difference between these two types of rising prices except as may be determined by the outcome, which no one can foresee. The curious thing is that those who had applauded the President up to this point should have criticised him for the decision. It may be true that he was not actually “forced” off gold; but he was forced to choose between the gold standard and the policy of raising the price level, which had in turn become essential to the whole policy of “action.” He could have maintained the gold standard only at the cost of abandoning everything else and sitting tight until the depression had solved itself. Possibly it would have done so; but neither as a politician nor as a statesman was Mr. Roosevelt likely to follow such a course. The decision was inevitable from his original rejection of the idea that the country would “naturally” float itself off the rocks, and from his determination deliberately to do the floating. The gold standard pledge stood in his way; but since a “controlled inflation” was, under the capitalist system, the only way of doing this even with the standard maintained, and since he still expected to control the inflation and hoped to use only the threat of the printing press, the result would in either case be the same. It was enough, for a statesman of Mr. Roosevelt’s boldness and originality, to save him from the charge of inconsistency —or to permit him to disregard it.


The dollar had been cut loose from the exchanges of the world, and on April 20 there was a “buyers’ panic” on the stock market and a greater volume of trading than on any day since May 5, 1930. Commodity as well as stock prices had been given the kick which was to send them up in a magnificent curve through all the next three months. But that only made more urgent the necessity for a balanced program of advance on every other front. Like his critics, the President appreciated the danger that such a movement, started by currency manipulation, might lead only to speculative boom and collapse; unlike them, his solution was not to beat a hasty retreat to gold but to go forward in a conscious attempt to shove out the new values as purchasing power in the hands of the consumer. The public works idea was shaped into the measure for spending up to three billion and three hundred million dollars, with a Federal bond issue to provide the money; while behind that a still more daring project was being matured.

It grew out of the experience with the farm bill. The original theory of that bill had been that by raising agrarian purchasing power industry would automatically be provided with a new market for its own revival. Since the money for the farmers, however, was to be obtained simply by transferring purchasing power from other consumers, this involved a logical fallacy which became more apparent as the bill progressed. But if the farm bill emphasized the difficulties of partial planning, it likewise suggested the solution. As the self-confident members of the brain trust had been wrestling, in perfecting the bill, with such farm processing industries as the packers, the milk distributors, and the textile factories, they had been discovering what an enormous bribe to all industry they possessed in the power to suspend the antitrust laws. It was a method of control the full possibilities of which seem only slowly to have dawned upon the President and his advisers. In Mr. Roosevelt’s inaugural address the most he had suggested was “national planning for and supervision of” the transportation industries alone; he was evidently thinking that his ventures into national planning would be only those which could be effected through such established mechanisms of mandatory regulation as the Interstate Commerce Commission system provided. Now, however, the golden prospect dawned of securing “voluntary” planning by the entire industrial organization of the United States, simply by the offer of freedom from the antitrust law restrictions. The mass enforcement of shorter hours and higher wages, some measure of control over plant development, prices, and production—all had suddenly come within range of the immediately possible.

A fortnight after the abandonment of gold, the National Industrial Recovery Act was first clearly delineated by the President in his speech to the United States Chamber of Commerce; and on May 7, in a Sunday night radio address to the nation, the President for the first time presented in fully rounded form the whole recovery program to which his Administration had become committed.

Then was announced the “definite objective of raising commodity prices to such an extent that those who have borrowed money will, on the average, be able to repay that money in the same kind of dollar which they borrowed.” Then was announced the “partnership between government and farming and industry and transportation” which was simultaneously to raise farm prices and industrial purchasing power and employment through the elimination of “unfair” competition. The great scheme of recovery and control had been finally perfected and rationalized; its various parts had even, to some extent, been co-ordinated. Basically it remained, as the President had intended it to be when he took office, an attempt to apply from a strictly orthodox foundation of private capitalism every possible form of governmental action for the promotion of recovery. But what it had really become was an elaborately developed mechanism for the redistribution of wealth and purchasing power — through money controls, through organization, through taxation and regulation—not simply from urban consumers to agrarian producers but from any one to another of the several great classes making up the total economy. If one accepts the postulate that the fundamental cause of depression is an imbalance between these classes, one can only admire the logic of the result. As a theoretical structure it had a magnificent proportion and a daring sweep, seldom if ever equalled by anything in American history. There remained only the problem of translating it into practice.


The address of May 7 also reiterated the purpose of this new, self-conscious economic nationalism to explore the foreign field. “I want to emphasize to you,” said Mr. Roosevelt, “that the domestic situation is deeply tied in with the conditions in all the other nations of the world,” and he announced the fourfold objective of obtaining disarmament and peace, a reduction of trade barriers, a “stabilization of currencies in order that trade can make contracts ahead,” and a general re-establishment of friendly relations. But it was in this department, unhappily, that the New Deal was to meet its first and most obvious reverses. One can see now that the foreign program, like the foreign programs of other nationalisms, was in reality nothing more than a demand that foreign powers should do what we required for our own benefit. Even the President seems not fully to have appreciated the difficulties involved in carrying such a policy into effect.

The first difficulty was a domestic one. If a highly integrated nationalism is really, as the President appeared to believe, a suitable instrument for achieving harmony and success abroad, that is only because of its greater flexibility in negotiation and manoeuver. The trouble is that the process of upbuilding such a nationalism inevitably raises domestic forces which make manceuver or concession impossible. The President had begun with the idea that Congress would bestow upon him power to modify tariffs, to adjust the war debts, and to wield the embargo as a “sanction” of peace among nations. It was on these three points—the first two in particular—that Congress made its first successful resistance to the imperious leadership of the President. On the day before the May Seventh address, a group of Democratic House leaders had issued a public reminder that the Ragon amendment (forbidding debt reduction) still stood; and it was early apparent that to get these authorizations would require a long and damaging fight, and one on ground which the nationalistic President was in no position to defend. The purpose was quietly abandoned. In this, one reads the political astuteness of President Roosevelt, but one also reads the inevitable collapse of his economic foreign policy.

The effects were not immediately apparent. It is true that by the middle of May Administration sources were admitting to the discovery that too much should not, after all, be expected of the World Economic Conference; but on May 16 the President was sending his dramatic message on disarmament to the fifty-four powers of the world and was towering for a moment as a great figure upon the international stage. Had he not saved Europe from Chancellor Hitler and an extreme case of her own nerves? It is possible that he had, indeed, done this much, but the weeks which followed were to show that he had not solved the central enigma of international co-operation. The only form of co-operation which he was able to offer was still the ancient variety in which everyone else does the co-operating. It was to prove no more successful in Mr. Roosevelt’s hands than in those of all other Presidents and Chancellors.

The old, incorrigible entanglements of foreign policy were lying in wait at London; at home the full program was being pushed through to final enactment. The national recovery bill was introduced on May 17, and two days later the name of General Hugh Johnson first appeared in the headlines. It was of more than personal significance. General Johnson was at once detected as a “Baruch man”; already the day of the brain trust had begun to pass, as that of Mr. Woodin had passed before, and the problems of theoretical planning were giving way to those of practical execution. In the meanwhile, Mr. Morgan went before the Senate banking investigation on May 23, and acres of verbatim testimony recalled the nation to its glorious, if immoral, past in the days of the Great Bull Market. Behind the furore, Congress was cleaning up such odds and ends as the railroad and securities bill and the bank deposit guarantee. Then May ran out, and in the first week of June the legislators opened their great rebellion over veterans’ pensions. It is not too much to say that the whole edifice of the New Deal was threatened, for the blow (treacherously supported, incidentally, by some leading Republican exponents of “sound” practice) was directed at that foundation of orthodox governmental finance upon which it had all been erected. The revolt was not stemmed without difficulty and without dangerous compromise, but it was stemmed at last, and on June 16, Congress rose. The London Conference held the field.

In that affair it is difficult to see any significance except that it brought clearly into focus the nature of the forces already set to work. Fundamentally, the conference failed because no participant—neither the European nations nor ourselves—had anything to offer. The American delegation, however, appeared in a particularly bad light, because this fairly obvious situation had apparently not been understood or prepared for by Mr. Roosevelt and his advisers. The result was a series of tactical blunders which reached its climax when our representatives allowed a proposal for temporary exchange stabilization (which they should have been glad to accept) to be so manoeuvered that it amounted to practical abandonment of the “off-gold” policy, which they could not accept under any circumstances. The President endeavored to save the situation by an asperity which fell flat, and to cover the blunder by a retreat into a frank policy of “isolation” and the astonishing suggestion of a managed currency. Thus, through bad handling, we were inadvertently committed to an extreme of nationalistic intransigeance probably going farther than the President himself had intended. We were also left embarrassingly at the mercy of exchange speculation; but though these results might have been avoided, the broad outcome would doubtless have been the same under the most astute diplomacy.

The markets soared under the deliberate policy of keeping the dollar depreciated; the “Baruch men” moved into their new offices and began their struggle with the appalling complexities of industrial control, while the business executives of the nation poured by the trainload into Washington, a new light in their eyes and a new enthusiasm for the President on their lips. The more skeptical financial community was left in the meanwhile to stress the countless psychological and administrative difficulties in the general scheme of planning, or to argue the nice question of whether the recovery was “genuine” or simply the result of a meretricious “inflation” and so the prelude to complete catastrophe. And then toward the end of June the nation discovered itself in the grip of an actual business boom, and it almost began to seem as though inflation were the more likely possibility. As stock, commodity, and even wholesale prices began to pyramid, the doctors who had been summoned to pump life into a corpse faced the sudden danger that they would be left behind by a fast-running patient. Wheat prices had already gone so high as to make it difficult to get the farmers to accept the farm bill machinery, but had yet given no indication of a permanence which would make the machinery unnecessary. The codes which were to shorten hours and raise wages in step with the rise in prices were lagging, and the whole mechanism of control threatened to fall far behind the activity which had been conjured up. Yielding to the advice of his recovery administration, the President turned to the bold and dramatic expedient of a “voluntary” mass application of the recovery act in order to meet the situation. Just as he did so, the vertical drop of the markets in the third week of July introduced a final, abrupt doubt as to what the situation might really be.

Once launched, however, the NRA drive could not be halted; it was already a question, moreover, whether some of the most important permanent codes could ever he negotiated and enforced without the additional pressure of a great emotional popular movement. Though suspension of the anti-trust laws might supply the basic machinery for industrial reorganization, the difficulties of applying it immediately appeared and multiplied. At once the Administration was involved in the ancient and dangerous controversy over union organization; at once old recalcitrances and old ambitions reappeared. The only quick and practicable method of hewing a way through such dense tangles was that which the Wilson Administration had found in wartime. Its successor now summoned all the powers of mass emotion and mass advertising to its aid; the “blue hawk” suddenly spread his wings (and his ill-concealed talons) over the land, and what is perhaps the most decisive, as it is the greatest and most dramatic, battle of the Roosevelt strategy was joined. Its issue, at the time of writing, is still in doubt.


It is a fortunate excuse for refraining from prophecies which the present writer has no wish to attempt. It is possible to see what has happened; I do not believe it is possible for anyone to predict what will be the result. Where so much of ignorance and of prejudice colors the whole of our economic thinking, even to attain a balanced view of the process that has so far unrolled before our eyes is extraordinarily difficult. In general, the President’s claim (in his July Twenty-fourth address) that his measures “have not been just a collection of haphazard schemes, but rather the orderly component parts of a connected and logical whole” seems justified in the sense that each step has developed logically out of the originally declared purpose as crystallized by events. The inconsistencies appear to be those of superficial method rather than of fundamental policy, and despite such reversals as that on currency stabilization, the Administration has been truer to itself, perhaps, than any we have known for many years.

Its critics, consequently, are in a peculiarly weak position. As yet they have been able only to point to the costs, the practical difficulties, and the possible dangers which it is only too easy to discern in nearly every one of the Administration’s measures. But these were obvious from the first, and the great source of the President’s power is the fact that he alone in our recent history has been bold enough to accept them. General Johnson’s terse dictum that “you can’t make an omelette without breaking eggs” is enough to turn any attempt at attack in detail, and opposition to be logical must fall back upon the thesis that the whole effort is unnecessary, that the whole policy of “action” is a mistake. Thus we have already seen the development of the hypothesis that the depression really ended in the summer of 1931, and that a “natural” recovery had begun, which, if left to itself, would have restored the nation and the world without further intervention from government. Here criticism achieves a dia-lectically consistent position; its weakness is that the hypothesis is alike unproved and unprovable. It may provide the materials for another barren controversy, like that which still goes on over the question of whether the Wilson Administration’s policies would have ruined the country if the World War had not intervened, but it can have little other importance. Those who raise it are in effect saying that the President, after shoring up the banks (under the distinguished guidance, of course, of the expiring Republicans) should have done nothing. But that in turn is to say that he and his party should have dropped all the promises and proposals upon which they had been returned to power. It is difficult to see how, within the confines of the capitalist system, they could have “acted” in any other way than they have done; and if the end in fact proves to be catastrophe, the fault, one is inclined to think, will lie less upon the debonair shoulders of Mr. Roosevelt than upon a populace which deliberately returned King Stork.

But it is not easy to believe that the end will be catastrophe. The President has accepted risks. There is a possibility that inflation will blaze up to an explosion, like that which wrecked Germany after the war. There is a greater possibility (for the whole situation of the United States is totally different from that which ended in the German dis-aster) of the controls becoming unmanageable, of the farm act being destroyed by corruption, or of industrial recovery ending in a bureaucratic breakdown. Yet it must be remembered that in the actual devices which the President has employed there is really nothing very remarkable. Most of them are already commonplaces in other capitalistic economies. Concentrated economic nationalism is certainly no novelty. A “partnership” between government and industry cannot seem strange to the French, the Germans, or even the British. We are not the first nation to experiment with monetary manipulation, nor likely to be the last. The powers which the President has secured over the budget, the banks, the civil service, public works expenditure, are hardly as great as those which European executives have long exercised, while the experiments in crop controls, in industrial organization, in the “rationalization” of production and the limiting of competition could seem startling only here, in the last great citadel of nineteenth-century laissez-faire.

If there is any aspect of the Roosevelt revolution which is actually revolutionary, it must be found in the general theory under which these devices have been developed and applied. The controls, unlike those which European capitalism had gradually evolved, have been created in what seems to be a conscious purpose actually to control—in the interests, not of any particular class, but of the whole people. The instruments have not merely been brought into existence; they are being used to achieve general social objectives with a boldness of which other governments, which have long possessed them, appear to be incapable. The breadth of this concept carries with it, of course, the greater danger that it will fail. The aim of deliberately balancing and keeping in balance all the infinite and ill-understood forces—prices and wages, debt and speculation, agriculture and industry, labor and capital—which make up a modern economy is so vast and so staggeringly novel that one can hardly believe that it will be successfully accomplished. Yet even a large measure of failure need not (especially with so adroit a politician as Mr. Roosevelt in command) spell disaster. For the body politic and economic is an organism of amazing toughness. It may simply shake off the whole scheme of farm and recovery and public works and banking administrations as un-suited to it; it may enfold and preserve the dead bones of these institutions long after the life has gone out of them (much as the plutocratic organism enfolded and preserved the dead bones of public utility regulation); or conceivably it may even find them useful and the whole experiment may succeed.


A great deal, of course, remains to be done, and the doing of it is exposed to all the accumulating risks of politics, envy, and the general limitations of humankind. The “hundred days” for the most part produced only the measures which seemed most necessary in restarting a broken-down economy; the permanent controls—complete banking legislation, regulation of security markets, “rationalization” of the transportation system—which are requisite if the machine is to be kept in balanced operation thereafter, have been left for the regular session. But as the crisis recedes (assuming that it does recede), the organization of discontent and recalcitrance will become easier, just when the technical problem is becoming more difficult. Again and again, as the New Deal has unfolded in recent weeks, one has been forced back to the parallel with the last great Democratic Administration, which came to power under conditions, and in a mood, so similar. President Wilson was confronted by an intense war psychosis. He accepted the popular demand, rationalized it, led the nation into war with a studied purpose to achieve the great ends of universal peace which the war enthusiasts professed to desire—and was destroyed. President Roosevelt accepted an intense popular demand for “action”; he has rationalized it, and led the nation into action with an equally studied purpose to achieve the great ends of economic stability and prosperity which the nation believed that it desired. But does it?

Mr. Wilson found it easy enough to declare war in 1917; to hold the nation to the high purposes for which war had been declared he discovered to be impossible. Mr. Roosevelt found it relatively easy to carry the nation into action amidst the banking crisis of 1933; the second half of his program presents a problem of even greater difficulty than did the second half of Mr. Wilson’s, and it is not clear that he will be any better able to solve it. If he fails, he may possess the personal address to admit it in time and to keep his party and the country on a reasonably even keel whatever the future may bring. He may escape the fate of his predecessor, but that he will fail in some measure is quite possible; it is even a probable deduction from the long lesson of human history, in which plans have so seldom eventuated in the results intended, in which effects have so consistently escaped the hands of those who most bravely seek to mold them.

Of one thing the observer may feel reasonably sure. Despite the time limits and the “emergency” tags which they carry, there is nothing temporary about President Roosevelt’s measures. What he is achieving is a complete reorganization of the American politico-economic structure upon a new (even though it prove constitutional) plan. The first meeting of his new administrative heads with the traditional Cabinet may well spell the end of that Cabinet as we know it; it almost certainly spells the beginning of a far more compact, more authoritarian, and more modern governmental system than anything which has gone before in the changing history of our peculiar constitution. Short of the whole experiment being written off as a flat failure (like Mr. Wilson’s League) it is difficult to see how the new institutions can be other than permanent. Which will be the outcome? That must depend upon whether President Roosevelt is the expression of those fundamental forces which move society onward toward its appointed ends or is only a gallant theoretician straying up an impossible by-path. Is he one of those accidental leaders who serve only to disturb the course of history, or is he one of the figures who are recognized, in retrospect, as the appointed instruments of evolution? It is only in retrospect that such a question can be answered; and that is the final reason why prediction is impossible.


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