THE AMERICAN POLITICAL SCIENCE REVIEW

GABRIE L A . AL MOND, Presitlenl Ssanford Universily

ROBERT A . D AHL , Presitlenl Eisel Yale Universily

M AN N ING J . D A UER, Vice Presidenl Universily of Florida

W I LLIA M T . R . Fox, Vic• Presitlenl Columbia Universily

RUPERT EMERSON, Vice Presitlenl Harvard UnitJersily

JoH N H . KAUTS KY, Secrelery W asbir.giOtJ Umversi1y, Ss. Lot.is

M A X M. K A MPE LMAN, Treaiurer ana Cof>mel W aJhinglon., D. C.

EVRON M. K IRKPATRICK, Executive Director 1726 Maiiachuseus AvetJue, N.W. W aibitJglon, D. C. 20036

NORTH HAI.I.

THE UNIVERSITY OF WISCONSIN

M ADISON, WISCONSIN 53706

A USTIN RANNEY, M41UgitJg I!dilor

March 25, 1966

Professor Rexford Guy Tugwell Southern Illinois University Carbondale, Illinois 62903

Dear Professor Tugwell:

EDITORIAL BOARD AND ASSOCIATES

RoBERT E . L A NE, y,Je UniversU,

H A RV EY C . M AN SFI ELD, Columbia UniverSity

WARREN E . MILLER, The Universily of Michigan

WALTER F . M U RP HY, PrinceiOtJ Ur.iversily

J . ROLA ND PENNOCK , Swarlhmore College

JOHN E . T U R N ER, Univerrity of Mimusola

V ERN O N VAN D YKE, Ut~iv!Wsily of Iowa

MYRON W EINER.

MaJsaclmsem Jnslittae of Technology

JAMES W , PROT HRO, Book Review Bailor T he Ut~iver.<ily of N orth Carolina

L EO B . L.oTT. News mJd N oles Edilor 216 North Oval Drive Columbus, Ohio 43210

CoRINNE Si LVERMAN , N ew Y ork City

Please accept my apologies for our long delay in coming a decision on what to do with your manuscript on 11Hoover's Contribution to the New Deal. 11

I can only say that it poses a oumber of special problems for us, and I very much wanted the views of a particular reader. He, in turn, missed my requested deadline by six weeks, and so only now am I able to tell you what I have decidedo

For substantially the reasons given by the referee ( a copy of whose comments is enclosed ), I think you should submit your article to a more appropriate journal. It is, of course, a fascinating and well-written narrative with many useful insights in it; in short, well up to your very high standard of scholarly work. But it is also primarily a narrative and a reminiscence more than an analytical work bearing direct and obvious relation to current political science work in the theory and operation of the Presidency. Accordingly, it is more appropriate for an historical journal than for USo May I, therefore, suggest the JIMERICAN lUSTORICAL REVIEW or the MISSISSIPPI VALLEY HISTORICAL REVIEW, either of whom, I feel sure, would be glad to have it.

I appreciate your letting us have a look at it, I regret the delay in coming to a decision, and I regret that the nature of our clientele makes the article more appropriate for another journalo But I am sure you will have no difficulty in getting it published, and I look forward to seeing it in print.

Sincerely yours, \

Austin Ranney Sixty-second Annual Mee#ng-September 6-10, 1966- Statler Hilton Hotel, New York City

March 22, 1966

Professor Austin Ranney Managing Editor The American Political Science Review North Hall . The University of Wisconsin Madison, Wisconsi~ 53708

Dear Austin:

I have read twice and pondered at some length the fascinating manuscript you sent me, "Hoover's Contributions to the New Deal."

It is an extraordinary- piece with flashes of insight and with details of historical interpretation which make me feel that it certainly should be pub­lished.

The question, though, is whether the Review is the place for publication, and on this I am not nearly so certain. Indeed, I doubt that the piece in its present form will be favorably received by a lot of your readership or will be considered as appropriate by many of them in the context of the Review.

The difficulty is that in its present form the piece appears always about to raise a major question for political science and then shies away from that ques­tion into historical narrative and personal memoir -- so that a lot of readers will ask: "To what are these details addressed?" and "What is thei r relevance for stu­dents of politics?"

The question I think your readership will seek in this article -~ and not quite find -- is something like this: To what, as illustrated by this case, · is one administration the intel lectual and programmatic heir of its predecessor, and why? A subsidiary question might be: Why is it so difficult psychologically as well as politically for either side to admit the connection? Both questions are properly addressed to a singl e instance, but an extremely interesting instance, ren­dered the more so by the superficiality of the break to which historians like Arthur Schlesinger, Jr. attest so loudly.

But while the author suggests these questions, the piece does not really address them. Rather, it turns out to be an essay on certain aspects of Herbert Hoover's mental set and motivations both before and after the great division in his life, the 1932 election. This, too, could be enormously interesting and relevant matter for the Review if it were frontally addressed and fully explored, but it is not.

Thus I think that for readers the piece tends to fall between stools. As a transition study its focus is partial and incomplete. As a psychological study

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the same could be said.

I don't doubt that if you asked the author to revise it so as to make of it either the one thing or the other he could do so. If he had the time or the inclination I would certainly encourage him to do so. But I think he would be justified in saying that t he piece is quite interesting enough just as it stands and why should he bother. Frankly, I'd sympathize with him if he took that view. In which case I'd suggest that the place for this piece is an historical publication where the piece can be presented for what it is, a personal commentary which includes vignettes of significance on personalities and situations of great historical importance.

Perhaps I see your editorial problem too starkly. It may be that you should not hesitate to let the Review be the vehicle for such a commentary, but considering the snarly, somewhat critical and bemused state of the profession at this moment, it is my sense of the situation that you should ask the author either to revise substantially in one direction or the other or that you suggest to him one of the good historical outlets.

I hope these comments are of some help and I am exceedingly sorry they have been so long delayed, but at this moment I am short of nothing so much as reading time.

HOOVERIS CONTRIBUTIONS TO THE NEW DEAL

The events of the March crisis in 1932, and the sharp

difference in atmosphere between the last day of the Hoover

regime and the first days of the Roosevelt assumption, had

such a lasting effect on contemporaries that historians have

been led by their recorded excitements to exaggerate the

contrasts. Actually the events of the Hundred Days were

less revolutionary than they seemed at the time. Comparisons

of before and after are more suitab ly psychological than actual.

That the incoming President was able to allay the fears which

damped down men's energies and anesthetized their sense of

responsibility was remarkable. It did happen. But it was at

least as much because Hoover had become a symbol of decline

and futility as because of Roosevelt's ringing challenge to the

fates. Americans were asked to recall that they had once been

masters of their economy; and that they could be again.

They responded. The response, however, could only go so

far. Beyond that the physical, institutional or conceptual difficulties

which had existed before, again got in the way. Banks had had a hard

lesson in overextension; business men could not expand without

credit; and even if credit had been found, markets were

ultimately dependent on consumers. The sickness caused

2.

by mal-directicn of investment and by self- managed

prices - these together resulting in useless plant and

incapacitated consumers - could net be cured with exhort­

ations . The New Dealers were not the only cnes who knew

by 1933 that something had to be done . Hoover , Mills

and ethers cf the Pepublican group had learned scme 0f

the facts cf life the hard way . They had, hc~.;ever ,

learned them late . Their i nventiveness , also, had not

been of the first qual i tv . And , 1 hat t.;ras mc st fa tal , they

had felt t hemselves contained as 'vi th iron bands within

a conceptual pattern .

The Roosevelt approach has to be contrasted with

all this. When it is considered realistically , the

differences are se~ quite clearly to be ones cf degree

rather than of kind . The lessons had been learned -- so

far as they had been learned -- without the pressure of

responsibility. The depressicn Has not a Democratic one.

And among Democrats the conceptuali t_• was considerably

looser. Abcut the first of these -- the learning cf

the lessens -- the efforts to learn them were fairly

earnest. Members cf the brains trust were encouraged

by an unprecedented receptiveness. And the attempts cf

the Hcover-~1ills group tc shift respcnsibili ty prema­

turely were uniforml, rejected. As to the second - - the

inventiveness - - it is quite fair to say that the first

few Rcosevelt years were unique in governmental annals.

3.

Not all the inventions devised were used and not all that

were used turned out well. But there was never lack of

suggestions to choose among for a President who had his

politics to think of, and sc turned cautious til: many

junctures, but who had an essentially accepting and

adventurous mind. As to the third the conceptual

confines -- the New Dealers were a geed deal freer than

the Republicans; but also they were a geed deal less free

than historians were later inclined tc think. There was

less agreement and mere acrimon 7 than appeared on the

surface. And a good deal cf the confusion existed at

the center where policy was given its finish -- some of

it in the mind of the President himself.

There was nc confusion in Hoover's mind. There were

shadcwy borders where he \vas not wholly certain; but they

were narrmv and had a tendency to become more narrow.

Take, for instance, one of the important areas of operation 1

-- industrial direction. Here frc;n the '1emcirs is a state-

ment sc clear as to be positively frightening, because it

1 Vclume III, The CabineL and the Presidency, 167.

is frightening to find a statesman clear about something

i~~erently cloudy and in flux:

4 ,

Fixin~ the boundaries cf government a l relat i ons to business perplexed me daily ard in innumerable ways during m~· tPel ve years as Secretary of Commerce and President . Fundru~entally , this prcblem involved the destiny of the American scheme of life . Although business committed various abuses tha-c Here only marginal in an otherwise great pre>ductive system , t'"te mar,.,.inal urongs had to be cured if the system was to survive -- they t-:ere abuses of freed0m, Hhich gro 1

like a cancer . Also they were the propell­ing texts cf the Socialists , the Communists , a nd the expcnents of tre net•breec Fascists. This left-~ing cure fer all business evil was new offered under the lovely phrase "nati0nal planning ••• " It was a mixture cf government operation and government dictation of economic life into a free economy .

This identification cf "national planning" with

the totalitarianisms developed in Eurcpe had ahvays

characterized the Hcover views. The just- nuoted passage

from the femcirs t1as written in 1952 . It is no 'TIOre than

a restatement , he ·ever, of passages from the campaign

speeches of 1932, when he v1as en the defensive, and

of others in The Challenge to Liberty in 1935 . A deeply-

felt exposition of his attitude was the address at

Xadison Square r.arden en 31 October 1932, He was genuinely

convinced that "the American s:ystem 11 was at stake in the

campaign and this P~erican system was defined by t~e

conceptual boundaries he had erected:

We must go deeper than platitudes and emoticn~l appeals ••• if we will penetrate to the full significance of the chanpes v>hich our opponents are attemrtin~ to float upon the wave of distress and discontent , fro~ the difficulties we are passing throu~h . We can find what our 0ppcnents vould de after searching the record of their appeals to

1

5 •

discontent, group and sectional interest. We must search for them in the legislative acts which they sponsored and passed in the House of Representatives in the last session of Congress. We must look into measures for which they voted and which were defeated.

The Democrats had won control of the House in 1930 and lacked control of the Senate by only one vote.

We must inquire whether or not the Presidential and Vice Presidential candidates have dis­avowed these acts. If they have not, we must conclude that they form a portion and are a substantial indication of the profound changes proposed ••• And we must look further than this as to what revolutionary changes we have been proposed by the candidates themselves •••

I may say at once that the changes proposed from all these Democratic principles and allies (Senators Norris, Cutting, Wheeler, Huey Long, and the Brain Trust) are of the most profound and penetrating character. If they are brought about, this will not be the America which we have known in the past •••

With this foreboding preliminary, Hoover as

candidate -- who, it must be recalled, knew that his

position had degenerated beyond recovery -- set out

eight specifications of the revolution he anticipated:

1. A proposal of our opponents which would break down the American system is the expansion of Government expenditures by yielding to sec­tional and group raids on the Treasury •••

2. Another proposal of our opponents which would destroy the American system is that of inflation of the currency •••

3. In the last session the Congress, under the personal leadership of the Democratic Vice Presidential candidate, and their allies in the

6.

Senate , enac t ed a law tc extend the ~overnment intc the pers~na l banking business . !his I was compelled to veto, ~ut of fidelity tc the whole ~erican system of life and g~verrunent •• • •

4 . Another proposal cf cur opoonents which would \·;holly alter cu1~ /merican wav of life is to reduce the protecTive tariff to- a competitive tariff for revenue ••••

5 . Another proposal is that the r-overnment go into the ower business •• • vith all its additions to Federal bureaucracy, its t·rann ever state and l ocal gcvernment , its underminine of state and local responsibi lities and ini­tiative ••••

6 . Recently there was circulated through the unemployed in this country a letter frc:-1 the Democratic candidate in which he stated that he " '.;rculd support measures for the inauguration of self- liquidating _!:'Ublic POrks such as the utilization of water res ources , flood control , land reclamation , to provide employment for all surrlus labor at all times . 11

I especially emphasize that premise to promote "er.tployment for all surnlus labor at all times . " ••• I pretest against such frivolous prc~ises ••• But the noint I \' i sh to make here and now is the mental attitude and spirit cf the Democratic par ty tc attempt it . It is anot her mark cf the character of the new deal and the destructive changes ·•hich mean the 1:0tal abandonment of every princinl e en which t~is government and the American sys t em is founded ••••

7 . Pecently I called attention to the state­ment made b~ r.overncr Roosevelt : "After ·:arch 4 , 1929 , t]-le ~epublican partr Has in complete control of a ll branches of the governMent -­Executive, Senat e and House , and , I may add tc geed measure , in crder to make it complete , the Supreme Court as well •••• "

Is the Democratic candidate really proposing his concspticr of the relation of the Executive and the Supreme Court ? If that is his idea, he is prcpcsinr the most revolutionary new deal , the most stupendous breaking of ~recedent , the most destructive undermininP. of the very safeguard cf cur form cf gcvern~ent yet pro­posed t· a Presidential candidate .

1

8, In order that we may get at the philosophical background of the mind which pronounces t he necessity for profound change in our American system ••• ! call attention to an address delivered in San Francisco:

7 0

"Our last frontier had long since been reached, There is practically no more free land, The mere building of more industrial plants, the organization of more corporations is as likely to be as much a danger as a help. Our task now ••• is the sober, less dramatic business of administering the resources and plants already in hand ••• "

I challenge the whole idea that we have ended the advance of America ••• The destinies of this country should not be dominated by that spirit in action. It would be the end of the American system ••• ,1

The State Papers of Herbert Hoover, edited by William Starr Myers, New York, 1934, II -- 408 ff.

From such statements of the Republican candidates

-- and many others might be cited -- it can be understood

what his limitations had been in combating the depression.

It had plagued him from the first autumn of his administra-

tion; but he was still resisting its lesson. His accu-

sations were all sincere enough; but some of them were

so unreal as to mark his earnest sincerity as a limi-

tation. If to advocate inflation was to be an enemy of

"the American system," that system was indentified with

a creditor interest which wantes its debts paid in dollars

of enhanced purchasing power. The debtors did not think

themselves unAmerican in advocating cheap money. It

was nothing new to have protests arising in the agri-

cultural regions during hard times. Farmers did want easier

8.

money so that they could meet their debts; but the

fundamental trouble was not lm·7 but disparate prices.

In the long process of bargaining, the advantage ran

against the sell~rs of the raw products and in favor

of the buyers. Agricultural prices fell in relation

to other prices. What farmers required was parity.

But any attempt to reach it was conveniently defined as

unAmerican. How far this could go is illustrated by

Hoover's saying that Henry c. Wallace, his colleague in

Harding's cabinet, was "in truth a fascist, but did not

know it, when he proposed his price - and distribution -

fixing legislation in the McNary-Haugen bill."2 That

2 Memoirs: The Cabinet and the Presidency, II, 174.

Iowa Scot must have been amazed if such an intimation

ever reached him. He knew well enough that Hoover rep­

resented the business opposition to agricultural relief;

but that it arose from a belief that the mechanism he

proposed was Fascist he probably was not told.

The Hoover ideology became more and more definite

and he came more and more to accept his role as the

definer and defender of what was "American." This is very

poor equipment to meet a crisis with if the structure

happens not to be relevant to contemporary occurrences.

It can - - and, in Hoover's case, did - - come very quickly

9 •

to the conclusion that what is happening ought not to

happen; it mus~ therefore be rejected peremptorily

rather than understood.

It can be guessed that this pattern of thought

wa s shaped by his experience as a special kind of

enterprise. He had been almost spectacularly successful

as an engineer- promoter and as a business doctcr and

consultant in the production of ra\>J rna terial s. He

believed fanatically in "~;.hat he called "freedom." This

was tc be defined as the orthodox economist's concepti on

of laissez f aire . As with so Many others among the

ort~cx , this did r.ct extend to international trade. He

was a protectionist, illogically perhaps, but patrioti­

cally . The freedom of enterprise he believed in was

something always being threatened, abo~ays having tc be

reestablished, but worth all the effort involved in its

support. The anti - trust laws and other regulatory devices,

he believed in desperately, and, as President, supported

faithfully. 3eycnd regulation, however, the government

must not gc. Tc do so was to enter that forridden area

he variously defined as unAmerican, =ascist, or Socialist.

If, to set against this, it is inquired hew

Roosevelt ' s ideolcgy differed, it is most remarkable how

far the in uiry has to proceed to discover differences.

It is obvious that there was a common acceptance cf many

10.

principles and even a common feeling for what 1s and is

not allowable.

Roosevelt accepted business as a way of conduct­

ing economic affairs. He thought that there were good

and bad business men, and that there were gocd and bad

business practices. He also believed, therefore, in

regulation and in the enforcement of proper behavior.

As would turn out, however, very small disparities in

ideology could make very large differences in policy

and they would seem larger, beth in prospect and in

retrospect, to a man cf strict principle like Hoover,

than to ethers.

Roosevelt did not see llhy business should not

operate within a directional framework shaped in joint

counsels, the government participating and representing

the general interest. And he inherited, as Hoover did

not, unorthcde>x vieHs about the money question held by

successive Progressive leaders in the past. Hoover

thought, on those orounds alene, that LaFollette, for

instance, had been a "Sccialist. 11 He thouoht that also

about Norris, Cutting, and Wheeler; and his confusion

became so great that finally he could not distinguish

between Norris and Wheeler on the one hand and Elmer

Thomas on the other, merely because they had similar ideas

about cheapening money. The fact v,'as that the business

men themselves had always been divided on this issue.

11.

There was, as a matter of fact, in 1932 and running en

into the Roosevelt years, a well- articulated group, calling

itself The Committe for the Nation, passionately laboring

to bring about monetary reform . Inflation was conceived

by this curious company to be the alternative to all those

immoral courses - - ~ascism , Socialist , etc .-- identified

with it in Hoover's mind .

The c omplaint of these people about the Roose-

veltians was that they were not easily or unanimously

persuaded to accept The Ccmmittee's panacea and that even

when they did they refused to regard it as a cure- all, but

hung on to a belief that some social management might also

be necessary .

Hoover could not be said to speak for the entire

clientele of the Renublicans when he reached his final

doctrinaire apotheosis . Lessing ~osenwald , James Rand, and

General Wood (of Sears , Roebuck and Company) were certainly

not normal Democrats . They never had been before and never

would be again . Neither were Professor George ~arren of 1

Cornell and most of the other farm leaders. So H0over found

1 These were among the names prominently associated with The

Committee for the Nation.

it somewhat difficult to make his identification of easy- money

or currency management with Socialist, etc., stick . Never-

theless he went on trying .

12.

But there was a similar difficulty about a certain

degree of social management. The United States Chamber

of Commerce, whose President was Henry I. Barriman,

showed a bewildering heterodoxy. The lead in this matter

had been taken by Gerard Swope, then President of the

General Electric Company . The "Swope plan" came from

respectable enough sources; but it shocked Hccver, perhaps

mere violently because of its origin, and because presently 1

it was blessed by the Chamber of Commerce.

1 The Swcpe pamphlet was called "Stabilization of Industry;"

and it was very prominent in public discussion -- along ~vi th several ether "plans" -- in the later years of the depression.

The original address proposing Swope's plan was

made in September, 1931, and took Hoover by surprise.

His response was tc submit it to the Attorney General

with a note cf his ow~:

This plan provides for the mobilization cf each varietv of industry and business into trade asscciaLions, to be legalized by the ~overnment and authorized to "stabilize prices and control distributicn." There is no stabilization of prices without price fixing and control of distribution. This feature at once becomes the organization of gigantic trusts such as have never been dreamed of in the historv of the world. This is the creation of a series of complete monopolies ever the American people. It means the repeal cf the entire Sherman and Clayton Acts, and all ether restrictions on combinations and monopoly. In fact, if such a thing were ever dcne, it means the decay of

1

13.

American industry from the dav this scheme is bern, because one cannot stabilize prices withcut restricting production and protect­ing. obsolete plants and inferior managements. It is the most gigantic proposal of monopoly ever made in histcry.

Memoirs, III, The Great Depression, 334.

q It is perhaps not surprising that Attorney reneral Mittchell

replied that the plan was "wholly unconstitutional." It

can be imagined what would have happened if he had made

a different finding. \~hat occurred subsequently is

described in the Memoirs: 2

2 III, 334-5.

Late in December, 1931, the United States Chamber cf Commerce had taken a step which struck me at the time as a bit humorous, coming as it did From that citadel of economic freedom ••• The Chamber undertook a referendum of its members upon this scheme of "economic planning." The referendum was favorable to the project, many of the members having fretted greatly under the Anti-Trust laws. Upon receiving this favorable referendum, Henry Harriman, President of the Chamber, called upon me and urged that I recommend the plan to Congress. I informed him that i£ this plan were put into practice it would, through the creation cf monopolies, drive the country into the Fascism of which it was mcstly a pattern, or toward Socialism as the result of public exasperation.

This must have surprised t1r. Swope and Mr. Harriman,

who had arrived at their proposals after much experience

14.

and discussion. The depression had been their teacher,

not Mussolini. And to have Hoover discern that Italian

face locking over their shoulders may well have been

annoying.

There is a curious thing about this incident.

Mr. Swope recalls it differently from Hcover. In fact

he finds that in several places where his name was 1

mentioned "the incidents were incorrectly stated."

1 Swope to Tugwell, 18 March 1953, enclosing the memorandum

here referred to.

About this "plan" and Swope's concern with the

miseries of depression, there is a ?COd deal more to

be said, in an historical way, than is said in Hoover's

account, Earlier than this -- on 30 September 1930 --

Swope was communicating with Hccver. At least, on that

date he ~ent him a memorandum indicating some remedial

measures. The temper and responsibility felt in those

days by certain business men is very Y7ell illustrated

in these few pages, It advocated not cnly public works

but suggested a method of financinq . And this was in

1930: the incident of 1931 was a return to the attack.

There were a good many others besides Swope and

Harrlinan who felt that Hoover was annovingly immovable.

And part of the Roosevelt conclusion from conferences with

15.

business leaders as well as the subsequent election

may well have been that rigidity of ideas could very

well be fatal to a man with public responsibilities.

At any rate it has to be said that the Roosevelt ,

ideology was more flexible. But even with Roosevelt

there were limits.

16.

2 •

It was amply demonstrated in early campaign pro­

nouncementsthat even before nomination Roosevelt was

thinking in national terms about economic affairs.

When he thought of industries, or when he thought of

other social groups, for instance, it was evident that

he regarded them as parts of a whole,not as something

in themselves. Reading these Spring speeches, it is

easy to conclude that the Roosevelt philosophy was a

holistic one. It might have been suspected that he had

been reading General Smuts.1 It is certain, of course,

1 Holism and Evolution by Jan Christian Smuts, London, 1926,

that he had not. To the extent that he had become a

holist it was because he was forced to conclude that the

problems of the depression were general ones. It was a

time for that kind of thinking. The entire nation had

been overtaken by the same common disast~r. And the climbing

out would have to be a united effort. He saw very clearly

that all must recover together or none could recover at all,

Whether a holistic view of the nation brought him

to think of planning for it and of shaping policies

for its benefit, or whether the hard thinking he had

been doing about recovery had br~ught him to holism,

he had certainly arrived at an organic ccnception of

industrial society. It is impossible to think of plan­

n1ng fer an crp,anisL conceived in ato~istic terms.

This was the source of Hoover's failure . He refused,

even when combatting depress ion by one device after

another, tc allow the orP,anic notion to take charge of

his mind . This made it imoossible fer him to do or

approve certain activities even though they had remedial

prom1ses. Roosevelt had no such difficulty once he had

discovered that no state could do much, and certainly no

city, only the nation.

The overtone of the Roosevelt address at Oglethorpe

University in !1ay, made organic assumptions. This was

one of the earliest in the campaign for nomination. In

it he spoke to the students before him of the uncertain­

ties they faced as they began their adult careers and

said that the fears they must have were unnecessary ones

if social management was improved. As to the depression,

he ran ever a number of theories concerning it, paying

his respects to the do-nothing or deflation attitude

-- Hoover's. Then coming tc the ideas of those whc felt

that recovery was to be reached by monetary manipulation,

:lB.

he said that there were too many who were occupied with

it to the exclusion of other important phases, He said:

Of these other ohases, that which seems most important to me in the long run is the problem of controlling by adequate planning the creation and distribution cf those pr~ducts which our vast economic machine is capable of yielding •••• In the field of industry and business many of these whose primary solicitude is confined to the welfare of what they call capital have failed tc read the lessons of the past few years and have been moved less by calm analysis of the needs of the Naticn as a whole than by a blind determination to ore­serve their own special stakes in the economic order •• T.It is well within the inventive capacity of man , who has built up this great social and economic machine capable cf satisfy­ing the wants of all, to insure that all who are willing and able to .work receive from it at least the necessities of life .

But the last paragraphs announced a really novel approach.

Its suggestions were so frightening that they echoed

through the press not only during this campaign but on

into three others:

1

The country needs, and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it; if it fails, admit it franklt and try another . But above all, try something.

The Oglethorpe speech ~ay be found in Public Papers, I, 639ff.

This last ~ay seem inconsistent with the planning

he had spoken of just before. Actually it was not.

Planning does not preclude experiment. The essence of

planning is that looking forward is done in the interest

19 I

cf the whole organism-- in this case the nation -- and

that arrangements are worked out for its welfare. These

arrangements may be various. They may be tentatively

entered on and prcvisionally pursued. There may be

alternatives to be turned to if experience should make

that seem desirable.

It was made clear that the planning spoken of was

net to be understood as the making of a fixed, · lue-

printed and budgeted strait-jacket for the economy.

The blue-prints and budgets involved were to be thought

of as precision instruments available to the experimenter.

They would assist but net hamper. And the exper~~entaticn

\vas not to be thought of as comparable to physical ex-

perimentation. There can be, in a laboratory, controlled

conditions, and controlled comparisons. In a society

there can be nothing sc precise and satisfactory. But a

that does not mean that there cannot be/tr ing and

measurement of results, or that something unsatisfactory

cannot be abandoned for something else.

A considerable furor would be aroused by the

suggestion of experiment in social and economic affairs,

This was to use people as "guinea pigs," it was said,

thus establishing the false analog , of the laboratory

in people's minds. But even as President, Roosevelt

would net rely on any specific undertaking. He would

always judge what it was proposed to do by its reasonable-

ness. It might be worth ~rying; but if it did not give

20·.

good results there would always be alternatives. People

seemed to accept this with at least as much confidence

as they had Hoover's uncompromising cleavage to principle.

A typical example of the Roosevelt approach was

the message to the Congress accompanying the Agricultural

Adjustment Act. Its third paragraph read thus:

1

Deep~ study and the joint counsel of many points of view have produced a measure which offers promise of good results . I tell you frankly that it is a new and untrod path, but I tell you with equal frankness tAat our unprecedented condition calls for new means to rescue agriculture. If a fair administrative trial of it is made and it does not produce the hoped-for results, I shall be the first to acknowledge it and advise you.1

Public Papers, II, 74.

Congressmen were as attached to laissez faire as Hoover.

The pronouncementsof his campaign were more congenial

to their ears than the departures of Roosevelt, slight

though these were. And from the very first the un­

easiness they felt foreshadowed coalition with like­

minded Republicans.

The attitude of his Democratic colleagues made

it expedient for the President to accept, so far as

he could, the unassailably orthodox instruments devised

by Hoover. These might be extended and expanded. The

innovations during the Hundred Days, the only period

21.

when the Roosevelt prestige was really effective -- for

the sordid reason that he absolutely refused to enter

on the distribution of patronage until the Special

Session was over - - were few of them startling. A relief

bill Hoover would not have approved was passed. The

Federal responsibility Hoover had spent three years

fighting against was by implication accepted. And the

public works provided for would not necessarily be self­

liquidating. But these were thought,even by most

Republicans, after all the arguing, to be reduced to

quibbling differences. The American system was not

actually threatened by the spending involved.

The monetary measures were radical in the sense

that potential inflation was a threat to creditors; but

here again, after all the arguing, it could be seen that

no change in the enterprise system was implied. It was,

indeed, strongly argued by otherwise reactionary legis­

lators, that only inflation could save the. system of free

enterprise. Further than this there was no threat

unless it might be the projected Tennessee Valley Authority.

And an examination of even Hoover's views revealed the

admission that power production (but not distribution)

was an allowable Federal function.

Only in two instances were there serious departures.

And, curiously enough, both of these came from, or were

sponsored by, business men. Not all favored them; but

all of any group never agrees in a democracy. The

business men who favored the provision for "marketing

agreements" in the Agricultural Adjustment Act and the

"codes" in the National Industrial Recovery Act were,

however, some of the most prominent and powerful in the

land. As has been noted they included the membership

of the United States Chamber of Commerce - - to Hoover's

consternation.

Hoover was right about this; it was beyond com­

promise. And it is the support or rejection of these

devices that shows the difference between the Roosevelt

and Hoover approaches. And here there is the curious

fact that the trade-associations which were the operat­

ing heart of both the marketing agreement and the code

procedures had been nurtured in Hoover's own Department

of Commerce - - and while he had been Secretary.

23.

3.

The trade association was not an exclusively

American device. It could be said, however, to be a

typically capitalist one. It is not novel to suggest

that it is part of the nature of competition that

those who exist under its compulsions are driven to

find ways of escaping its consequences. Business men

do not easily tolerate the pressures of conflict. They

create insecurity, anq insecurity threatens profits

and positions. If, any day, a competitor may discover

ways to cut costs , may adopt novel methods, or come out

with cheaper substitutes, there are risks involved that

ought to be minimized. It would be a betrayal of stock­

holders not to do so. Such policies can very easily

be masked under a quite legitimate heading: escape from

unfair competition. Since the abuses of the industrial

system first began to be brought under control this has

been a category of regulation. The state first had to

set minimum standards for competitors. In this way long

hours for women, the labor of children, unsafe and

unsanitary working conditions, and other similar abuses

24.

had been attacked. And progress had been made. There

were always some ethical manufacturers who saw that

these regulations were a protection for themselves as

well as for society.

But government regulation was always a dangerous

device. It reduced certain risks of competition but

not others. In fact, the greatest risk of all was not

touched by it. This might generally be defined as

progress -- meaning the way in which the most enterprising

firms found it possible to cut costs, to enhance quality,

or to improve services. These ensured their own markets

but endangered those of their competitors. It was to

reduce this kind of threat that the trade-association

was formed. This was, of course, not acknowledged. It

was, indeed, one of the most elaborately camouflaged

developments of industrial history. The face competitive

cooperation turned to society was an entirely innocent

one. I t was not to limit progress but to enhance it

that the interchange of information was organized and

common policies adopted. This was the claim and it was

elaborately and expensively maintained.

The Anti- trust laws, in effect in the United States

from the eighteen-nineties, forbade monopolies -- that

is,conspiracies to regulate prices. They could not pre­

vent businesses from growing big, but they could often

prevent the absorption of competitors and, specifically,

25.

they had the power to prohibit the "restraining of trade."

This very elaborate, costly and clumsy policy of regu-

lation was persisted in determinedly and from time to

time strengthened. There were those who thought, after

several decades, that it was not a success and that

other methods of industrial organization might be better.

But there was a very powerful sentiment attaching to

regulation never really challenged with any seriousness

until the New Deal offered an alternative. This, of

course, was the NRA.

As Raymond Moley has pointed out, the policy of

"concentration and control" was a minority view but 1

it was neither new nor novel. Those individuals who

1 In After Seven Years; the phrase is taken from the

title of C.R. VanHise's famous volume.

joined to make NRA possible were divergent in other

ways, perhaps, but they were alike in regarding them­

selves as realists. They thought the Anti-trust acts

had failed and that a change was long overdue. They

proposed to recognize that there were technical reasons

for concentration; and they felt that public policy

ought to be so arranged that large scale organization

could go on to its natural apotheosis. Their idea was

that control had been exercised at the wrong level. It

had sought to prevent the development of large scale

26.

industries. If combinations, consolidations or associ-

ations were recognized, then it would be possible to

secure the public interest in reduced costs and prices,

and progre~ could be encouraged rather than suppressed.

The framework on which NRA would be built was the

trade association which was already a pervasive device.

Every industry had on~and most of them centered in

Washington. A considerable part of their activities had

been ones not regarded as overly respectable. Their

r epresentatives were the lobbyists who swarmed over

Capit~ Hill and maint~ined intL~ate, sometimes sinister,

relations throughout the executive departments. They

also served as information exchanges,also, and were

well enough known to be the medium through which price

controls were implemented.

Under the old approach, trade associations, like

the business they represented, were divided into three

moral categories. Hoover, as Secretary of Commerce had

put the governmental problem succinctly thus:

1

The problem ••• could be divided into three parts: first, competition which could be abridged without violation of law; second, competition which could be destructive; and third, recurrent abuses of the moral code by evil men.l

Memoirs, II , 168 .

27.

He had been in a difficult position. He be­

lieved implicity in the system of free enterprise and

competition. He had no question about the anti-trust

policy: "With marginal lapses in individual conduct,

the Anti-Trust Acts had preserved fairly well competition

and thus the restless pillow of progress."1

1 Op. cit., 168

But early in his term as Secretary of Commerce he found

a device "which could be made an instrumentality for

all these three categories of action against the marginal

faults." It existed throughout the working world. It

was sometimes called a "trade association," sometimes a

"chamber of commerce," sometimes a "union" or an "associ­

ation," sometimes a "cooperative." All had headquarters,

paid staffs and frequent meetings.

To recognize and to try to utilize this ubiqui­

tous device was a novel idea. The general impression

was that it was sinister, against the public interest.

This is certainly what was believed by the Department of

Justice. In fact in 1922, when Hoover resolved to

rescue them, the Department was engaged in a determined

attempt to stretch the anti-trust acts "to prohi:Oit

what should be a constructive cooperation ••• and it looked

as though this perversion of justice would become the

28.

law of the land."1

1 Op., cit., 169

Economists in the Department of Commerce under

Julius Klein made "an exhaustive study of a host of these

business associations." It was concluded that they

"could be made instrumental wholly for national benefit

if they were given constructive things to do." With

this in mind Hoover "submitted an informal memorandum

to the Department of Justice and ~he Federal Trade Com•

mission." Not long afterward the Supreme Court decided

against the Department of Justice and left Hoover free

to make what he could of the associations. 2

2 Full discussion and the text of the memorandum will be

found in the Report of the Secretary of Commerce for 1924.

There followed a government-sponsored development

of cooperation among businesses; and it lasted through-

out the succeeding decade. By 1933, the spread and

influence of these associations was enormous. There was

a temporary attenuation traceable to the depression; but

this was because all activity slowed and congealed. 3

3 The Supreme Court case referred to here -- and by Hoover

in the Memoirs - - was Maple Flooring Manufacturers' Association v. United States, 268 US 563 (1925). This Association had a statistical service reporting costs

and a freight rate booklet; also it distributed sum­maries of sales, prices, and inventories. Regular meetings were held; but, on advice of counsel, future prices were not discussed.

29.

The court held that these activities did not lead to concerted action on prices or production. They might lead indirectly to price stabilization or to regulation or production "through better understanding of economic laws and a more general ability to conform to them" but this was within the law.

And the court might have been quoting Hoover when it said that the emphasis now was on the desirability of dissemenating information, which "tends to stabilize trade and industry, to produce fairer price levels, and to

avoid the waste which inevitably attends the unintel­ligent conduct of economic enterprise."

There was a really vigorous effort involved in

this campaign. Hoover was committed as Secretary of Com­

merce, and later as President, to the guidance of these

associations into ways that were "moral". This he intended

to do without legal interference, by emphasizing "con­

structive" possibilities and by urging avoidance of the

others. Considering the origin and intent of these

organizations, this was a task a less devoted man might

well have thought impossible.

He believed that he had succeeded. And the emer-

gence of the association system into the NRA code author­

ities seemed to him a perversion. But to others it seemed

a natural - almost inevitable - evolution. How it was

done at first, Hoover says, was to enlist:

••• The different trade associations in creations of codes of business practice and ethics that would eliminate abuses and make for higher standards ••• After agreement with each association on a "code" we submitted it

1

30.

to the Department of Justice and the Federal Trade Commission; and, to establish confidence in the "code," the Trade Commission pro­mulgated it as a standard of fair practice. No force was attempted or implied. They were solely voluntary.1

Op. cit. , 1 7 3

But he would not agree that the sequence, emerg­

ing in NRA, was a valid one:

The New Deal subsequently declared that the NRA was merely an expansion of my ideas. That is, they made this assertion after the NRA went sour. The fact of the matter is that they were the exact contrary. We were seeking to eliminate combinations in restraint of trade . There was no relation between these ideas except a common use of the word "code'" The New Deal set up committees of trade associations to fix prices and to limit production in each trade. It gave sanction to wholesale violations of the Anti- Trust laws. This was a long step away from free competition and into sheer economic fascism with all its implications.2

2 Op. cit. , 173 .

This disclaimer cannot be allowed. There was a much more

intimate relationship between his trade association

program and the NRA than Hoover admits. One of the

supporting stems of its authorship rose directly out of

the system; and the most active of those who operated

its mechanisms were the same individuals who had created

the associations in their respective industries.

31.

There is truth in the stricture that prices were

fixed and that production was limited in the course of

NRA operations. His finger here is fixed on a very

sore spot. For there is no doubt that, under General

Johnson's lax administration, the trade association offices

seized the opportunities offered by the legalized codes.

They did insert price fixing and production- lLmiting

clauses. And these were, moreover,approved by President

Roosevelt. But this perversion did not come about without

a hot fight within the administration; and the reasons for

it were not so simple as an outsider might think.

There were those who knew that a vast and catas-

trophic mistake was being made. The story of some of

the protest may be read in the TranscriEts of the National

Recovery Board. So fierce was the dissention that the

President caused the Board to be dissolved. He judged

that what was being conceded in the bargaining process

then going on was worth the compromises made on price

fixing. The abolition of child labor, and the firm

establishment of collective bargaining.seemed to him

precious gains. And he was not perhaps convinced that an

institution for conjuncture could be made permanent in

any case. If he had refused price fixing and production­

limiting clauses in favor of a mixed Board - Government

and Business with power over these matters - he migh t

have outrun acceptance, especially by the Progressives,

The point of importance here is that the complex

32.

decisions carried out in 1933-34 are wholly inexplicable

except they are set against the background of trade

association structure built by Secretary Hoover. And

a necessary note to this observation must be that if

Hoover as Secretary and President did not know that the

trade associations were, by various and often ingenious

means, fixing prices and arranging production quotas, he

must have been the only individual in the United States

who was thus ignorant. One of the reasons it was impossible

in New Deal days to turn these practices into a series

of conjunctural decisions with government participation,

was that they were so rooted in tradition that the implied

limitation was fought alike by business and by those most

suspicious of business. 1

1 It ought to be noted that the increase of trade association

activity to a really formidable momentum had begun during the first World War. The government at that time had given the associations positive assistance in the effort to reduce competition and enlarge production. It is estimated that there were something like 2000 of them. Fainsod and Gordon (in Government and the American Economy, New York, 1948, 528, Revised editio~descrl.bed what followed: "The move­ment was strongly encouraged by the Department of Commerce during the early nineteen-twenties, and later by the FTC as well. It soon encountered legal difficulties, however, which dampened the enthusiasm of many business men. A slow but perceptible decline set in until 1933. In that year, suddenly converted into quasi-public agencies for the ad­ministration of NRA, trade associations became almost a sine oua non for every American industry. The number shot up in~the high thousands •••• "

The idea of government-business association had an

interesting mutual lodgment in both the Roosevelt and Hoover

33.

minds. In 1922 Franklin D. Roosevelt was made president of

a Construction Council which proceeded to produce a

"code" -- a full decade before the NRA was conceived.

This was part of the Hoover system, a carefully non-

governmental, yet recognized part. The two even had a

correspondence about it.

In the files of the library at Hyde Park there is

a letter from Roosevelt to C.F. Abbott, Executive Director

of the American Institute of Steel Construction, who

had asked him to speak at an annual convention. (Other

speakers were to be Hoover, Senator Moses of New Hampshire,

and Channing Cox, ex-Governor of Massachusetts.) It reads

in part:

I very much regret that it is impossible for me to attend ••• but must send this message instead.

After three years' association with the American Construction Council, which was organized by Secretary Hoover and myself, I am more and more convinced of the need for cooperation in the whole construction industry ••••

The association of the two names may have repre-

sented a somewhat exaggerated emphasis by the one on his

acceptance by the other. Probably a hundred other as-

sociations were organized by others and Secretary Hoover.

But that Hoover participated there is no doubt. And in

the same letter cautious but inclusive definition is made

of the objectives sought by the association:

34.

The American Construction Council seeks to bring together ••• component parts of a great whole at its meetings held twice every year, and to bring about cooperation toward ends which will serve the industry as a whole •••

In the files for June, 1923, there are also two

interesting and relevant documents - - one on the 12th

and one on the 20th. The first is a transcript of

the meeting of the Council at which Roosevelt was made

President, the second is a letter from Hoover to Roose-

velt.

An excerpt from the transcript:

Mr. Cranford: ••• I cannot help but repeat a little expe­rience that I was one of a party to. As I said before, we went on a trip around the United States last fall in the interests of construction. Mr. Garber, Mr. W. 0. Winston and myself visited some 23 cities west of the Mississippi River, and on our return had luncheon here in Washington wi th Herbert Hoover. In the course of our talk with him we told him that it was our judgment that

the prices of materials in construction and of labor had not gone down in relation to the high peak prices of 1919 as much as other commodities and that the general opinion of the industry was that those prices were artificially maintained; that in labor rates the peak of 1919 had not been cut down in any of our bigger cities to any consider­able extent; and that we were fearful that with the return of more normal conditions and reasonable activity in construction we would have again a return of the boom of 1919.

Mr. Hoover states that that coincided exactly with his own opinion and he went on to say that he believed the con­struction material problem in the United States was one of our greatest national problems and one that was affect­ing nearly our entire citizenship, either directly or indirectly. He further states that if this problem was not handled by the industry and corrective measures were not instituted and made effective, that we were going to see the greatest flood of restrictive legislation that this country has ever seen. He went a little further than that and stated that we were either drifting toward social­ism in the United States or we had to control our industrial problems within business, that he had no hope that govern­mental regulation was going to be effective •••• 1

35.

1 Excerpt from discussion at initial meeting of American

Construction Council -- Hotel Washington, 20 June 1922 -- at which Roosevelt was elected President. Hyde Park Library, Group 14, papers relating the American Con­struction Council.

Also another excerpt from a meeting of the Board

of Governors a year later - - in May, 1923 -- has an

interest:

MR. ROOSEVELT: Gentlemen, as many of you were here last year when the American ~onstruction Council was first talked about, and afterwards at the first organization meeting, and others of you know about what took place at that time and the thought that we all had in mind, that there was a real need for some central body which could represent all the industries in construction work -- capital, labor and the general public - - as broad an organization as we could possibly get -~ I think most of you are acquainted with the aims and objects of the Council.

The American Construction Council was organized, but, frankly, it has not done one darned thing from that time to this except collect dues from some 115 different organ­izations, I think.

Now, the question is, first of all, whether the Construction Council is worth while going on with or not? The Officers have received no pay, -- do not expect to receive any, but they do not want to remain officers in name only. Since the meeting last spring, just before the summer, a situation has developed in the building industry generally affecting construction throughout the United States, from the raw materials down to the finished building. We fore­saw that last year, I think, all of us were here, -- that there were going to be peaks and valleys in construction work, and one of the principal objects of the formation of the Construction Council was to prevent peaks and valleys. Well, we surely have hit a peak, and we have not prevented it •••

Now, frankly, we have struck a situation in this country, and we are right in the middle of it, today. I will put it this way -- in the form of two questions:

3 6.

Can the Construction Council or should the Construction Council at this time function in some way, either to ameliorate and better the present situation, or to prevent a recurrence of the present situation in the future?

If that is answered in the affirmative, that we should take action, then we come to the second. question, as to what kind of action we should take.

About two weeks ago I appointed a small committee to make recommendations to this meeting. They have reported here today, and I purpose, first of all to read their report aloud ••••

Now, there ~s no reason why the Construction Council should not speak eventually with such authority that the daily papers of the United States would carry our reports of conditions in the construction industry in exactly the same way that today they carry the prices of stocks and bonds, of cattle and of wheat.

I do not believe, quite frankly, that the Department of Commerce will accept the beau jest -- the beautiful gesture which we make in this resolution in asking them to go ahead and do this work. I do not think they have the money, and I do not think that our very good friend, Mr. Hoover, wants to go in too much for that kind of official reporting. He believes, as most of us do, that it is primarily a function of private organizations . We have put in that suggestion, however, because, after all, it is our government, we want their cooperation, and we make the gesture, if you would like to call it that, of saying, "Mr. Secretary of Commerce, here is what we believe should be done; will you and your Department undertake it for the good of the United States?" And when he says, "Thank you very much, I would like to undertake it, but circumst ances prevent," then we have the field open to do it ourselves, and we are assured of the very hearty cooperation of the Government itself in the gathering of the statistics and in the actual work of distributing th~~ to the general public •••• 1

Excerpt from discussion at meeting of Board of Governors of the American Construction Council held in home of Roosevelt, 49 East 65 Street, New York, 16 May 1923. (Hyde Park Library, Group 14, papers relating to American Construction Council.)

37.

Some of the leading cases during and after the period when Roosevelt was interested in the Construction Council, besides the Maple flooring case mentioned above, were:

Federal Trade Commission vs. Pacific States Paper Trade Association, 273 u.s. 52 (1927)

U.S. vs. Trenton Potteries Company, 273 U.S. 392 (1927) Live Poultry Dealers. Protective Association v. u.s.,

4F (2nd) 840, 842 (1924) National Association of Window Glass Manufacturers v.u.s.,

263 u.s. 403 (1923) Binderup v. Pathe Exchange, 263 u.s. 291 (1923) American Column and Lumber Company v. U.S., 257 U.S. 377

(1921) u.s. v. American Linseed Oil Company, 262 u.s. 371 (1923) Cement Manufacturers Association v. u.s., 268 u.s. 588

(1925)

DEPARTMENT OF COMMERCE Office of the Secretary

Washington

Franklin D. Roosevelt, Vice. Pres. Fidelity and Deposit Company of Maryland 120 Broadway New York City

My dear Roosevelt:

June 12, 1923

I am in somewhat of a quandary about your telegram of June 7th . I had hoped that the Construction Council would be solely originated from the industries without pressure from the Administration. Otherwise it will soon take on the same opposition that all Gove~nment touches to this problem immediately accrue.

The vast sentiment of the business community against Government interference tends to destroy even a voluntary effort if it is thought to be carried on at Government inspira t ion.

Yours faithfully,

Herbert Hoover

38.

4.

It is my conclusion, from some study and consider-

ation, that no American President has been so genuinely

moved by the miseries of mankind as Herbert Hoover. It

was this which led him to abandom business in 1914 and

undertake successive tasks of relief and rehabili ta.ti6n

and to become Food Administrator in Wilson's administration

instead of partner in the vast Guggenheim enterprises.

When he became Secretary of Commerce in 1921, his first

thought -- and probably the reason for his acceptance -­

was that the Secretaryship was a stretegic headquarters

for o~ganizing a grand attack on the problems of recon­

struction and national development. His intention was

to end once for all the poverty, ill-health, starvation

and slum-living so prevalent but so anachronistic in

America. The solution of these problems, he must have

felt, awaited a leader of energy, of administrative com­

petence and of dedication. He was such a man. 1

1 There is a

in the 1928 eight years

II,

significant note of pride in the speech he made campaign summing up the progress of the previous (speech of 11 August 1928, quote in Memoirs,

183-4). This speech was often used against

39.

him in the 1932 campaign because of the contrast between its optimism and the actual miseries of contemporary folk. But he never retracted. The depression came from Europe; the prosperity was American -- under Re­publican management. In one passage he spoke of poverty with genuine emotion:

One of the oldest and perhaps the noblest of human aspirations has been the abolition of poverty. By poverty I mean the grinding by

undernourishment, cold, ignorance, and fear of old age by those who have the will to work. We in America today are nearer to the final triumph over poverty than ever before in the history of any land. We have not yet reached the goal, but, given a chan9e to go forward with policies of the last eight years, we shall soon with the help of God be in sight of the day when poverty will be banished from this nation •••••

Before going on to some account of the bold attack

it is necessary to note that in the end it failed. The

reason for this failure and for the discrediting and

retirement of this great man is, I venture to suggest,

that he was governed by principles which fatally limited

his decision making. This limitation was something as

deep in his nature as his perception of the need for govern-

mental effort and his urge to organize it. He believed

that government could do much, but that it must not do

too much. And the definition of what would be too much

kept him from succeeding. A good deal of care is necessary

in stating this. It would be easy to exaggerate his fear

of going too far. In fact, within the limits he set

for himself, he was at once careful, experimental, bold

40.

and aggressive. The tragedy of failure is immensely

enlarged by the promise of accomplishment.

A perceptive watcher, if there had been such,

could have forese~n what would happen. And certainly

it is not too difficult to spot the early lightening of

the chains that bound him. They are spoken of sometimes

in concealing language -- that is, what would turn out

to be constrictions were described as unexceptionable

virtues. Nevertheless their real meaning, with the

afterlight of experience, can be seen. For instance, when

Hoover spoke first, as Secretary of Commerce, to his

Departmental advisory committee, it was in these terms:

1

The great economic difficulties that we inherit from the war ••• emphasize the necessity of better governmental machinery to assist in their solutions. Their final remedy must rest on the initiative of our own people but the rate of recovery can be expedited by greater cooperation in the community and with the community by the government.!

Memoirs, II, 41.

This is to be understood, in view of later occur-

rences, not as a positive approach to reconstruction, but

as an affirmation that the final remedy rested in private

initiative. This, of course, fell kindly on the ears

of the businessmen who heard it. To them it had a comfort-

able connotation. This admirable new administrator was

going to de something; but it was not something they need

41.

have any concern about. It might have frightened a social

psychologist or an abnormal psychologist who, listening

to it, knew that it was individual and local initiatives

clashing, creating confusion, and final'ly ending in

paralysis, which was the basic trouble in America. But

such opservations are made only in retrospect . There

were none to make them in 1921.

Yet the conception Hoover had of the post-war

problem was clear and correct:

1

We have many idle men walking the streets, and at the same time we are short more than a million homes; our railways are far below their need in equipment; our power plants, wat erways, and highways are all far behind our national needs in normal commerce. To apply this idle labor to our capital equipment is one of the first problems of th~ country.1

2£• cit . 42.

Another man, in another place or time, or, perhaps,

another man in the United States in 1921 - - though this

begins to seem unreal - - might have asked: how can these

idle men be put to the task of creating these necessary

national products? What Hoover was asking was this:

how can business men be persuaded to use these idle men

for doing these things? And that was quite a different

question. The differences involved showed up starkly

by 1932. No one thought of them in 1922.

They did not even emerge from the exhaustive studies

of background and behavior that Hoover would at once, with

'+2.

admirable efficiency, proceed to organize. When they

had been made the self-kno,wledge of capitalist society

would be much more complete. But the vital choices for

a President --Hdover would become President in 1929

would be no clearer. This was, of course, because

those choices did not emerge from fact, but from much

more mysterious sources. Others would use the facts to

move on into the disputed territory Hoover could not invade.

The first series of studies was the result of the

depression (if it could .be called that) of 1921. The

President's Conference on Unemployment reported in 1921;

and two committee studies followed in 1923 and 192'+, the

one accompanied by a fact-finding monograph from/National

Bureau of Economic Research. More important was the

survey of Recent Economic Changes begun in January 1928

and completed in February 1929. The Committee whose report

this was had been directed "to make a critical appraisal

of the factors of stability and instability in the

American economy as a whole, suggesting rather than

developing recommendations."1

1 Recent Economic Changes, New York, 1929, "Foreword."

It was issued at a fortunate time. Together with

all that had gone before, it added immensely to the self-

knowledge of Americans. And it is relevant to point out

three words in the terms of reference: "as a tvhole."

43.

The nation was taking stock of itself in conscious

fashion to see what could be done to stop the upward

and downward swings of industrial activity, now recog-

nized as cyclical. It is not possible to say to what

extent Hoover, who was Chairman of this Committee in

the beginning, and the others, realized the implications

of the phrase "as a whole."

From all that happened afterward it is perhaps

justifiable to say that as Secretary and as President,

Hoover, recognized the nation as a political entity but .,

not, in any genuine sense, as an economic one. When

depression struck, his philosophy would be defined under

stress. Something was happening, then, to the entire

economy; and there were actions that government could

tace for the entire economy. But government was not

completely responsible or representative. There were

remedies it might not resort to even in emergency. This

was because industries, for instance, were, in a sense,

co-sovereign. The government did not contain them. It

recognized them; it could even, within limits, regulate

them. It could not, however, supervise them, nor could

it require common action among them, nor even supply

initiatives. It could only persuade; perhaps even urge;

but that was all. Industries did not exist for national

purposes, and they could not be required to perform services

foreign to their private objectives. It would be more

44.

accurate to say that, in Hoover's view, the government

existed to perform services for industry -- including

the guarding, if possible, of its "stability."

This was a sort of public health concept. The

population ought to be guarded from epidemics; industries

ought to be guarded from insecurity. So foreign trade

should be promoted, wastes should be avoided, standard-

izations should be suggested and market information

circulated. Because government guarded people's health

it might impose regulations clearly needed to avert

threatened d ngers. So with industry. Stabilization

was good for all industries. Certain actions threatening

it might be restricted;but this~opped a good way short

of a requirement to undertake -- or even to modify --

a production schedule. If modification seemed desirable

the government's limits were defined by the word "sug-

gestion." So in the Committee's terms of reference, if

one key phrase was "as a whole," the other was, "sug­

gesting rather than developing recommendations." Industry

was to stabilize itself by recognizing and acting on

common knowledge.

It is not intended to imply that the body of

philosphy as wel l as fact which came into existence I

during the decade preceding the depression was something

the New Deal owed to Hoover. It ~muld be inaccurate to

imply, even, that the body of fact was wholly owed to him.

45.

The organization of the National Bureau of Economic

Research in 1920, a most important event in this con­

nection, was really an extension of an eminent scholar's

person. Weslev c. ~itchell was becoming the foremost

authority on business cycles, and the ~ational Bureau's

studies would be the most important source of knowledge

about them. But the ~ational Bureau was a fact-finding

organization. It was interested in behavior ·-- presumably

because knowledge of behavior was necessary to the attain­

ing of stability. But this last was purely presumption.

Its efforts were" "pure," as hardly any previous efforts

in social science ever had been.

Mitchell himself was not in this sense pure. He

had definite ethical notions; but not as a research

worker. Exploration wculd have shown that he did not

share Hoover's public health conception of the economy;

but it was not his philosoph that was wanted. His National

Bureau of Economic Research made or supervised the central

researches of the decade, including those published in

Recent Economic Changes. But the philosophy governing

the use made of these was not to be found in the reports.

It existed in t~e Hoover mind. The debt of the New Deal

to Hoover was for his enlargement of knowledge, for his

encouragement to scholars, for his organization of research.

Without Hoover, there could have been a New Deal but not

so informed a one. It is no doubt a horrid suggestion,

46.

to Hoover's way of thinking, but the members of the

brains trust got most of their material from the Hoover

committees or from the work done under their auspices.

Their education had taken place in the Hoover decade.

They o~ed Mitchell an enormous philosophical debt that

Hoover would have rejected -- did reject -- for himself.

If ethers came to different conclusions about

what must be done in crisis, and if tPe knowledge on

which it acted came from the same source as Hoover's,

how is the difference to be accounted for? In the first

place it ought to be said that the differences in conclusion

were much narrower than the exaggerations of political

exposition later seemed to imply. Where Hoover stopped

was only a little way -- not a long wa -- short of where

Roosevelt woul d stop. The Roosevelt terminal point might

not be the one he would have chosen. He might actually

have been a good deal more of a collectivist than the

New Deal program seems to indicate. About that there is

likely to be long argument, since his real redilections

are so masked by public attitude. This is not true of

Hoover. We knew how far Hoover would go, because he

was pressed to go much further than he did and was stopped

by something inside himself. The opposite was true of

his successor. Roosevelt went as far as he could persuade

supporting opinion to tolerate.

47.

The increase of American self- knowledge during

the Hoover decade is not to be measured only by the

Reports . ~o qne can say how much of a stimulus he was.

But at the least his influence was consideratle, a l though

it might not always be traceable. Seeing what he wanted,

many f u nds sup orted, and many scholars were encouraged

to explore extensively, the health of the economy, The

ramification of Hoover's influence can be understood

merely by glancing at the "acknowledgements" in Recent

Economic Changes.1

1 They o ccupy mere than four pages. They include foundations,

univers ities , all sorts of associations, government de art­ments , and many individuals.

There was a change later on. The anti- intellectu-

alism studied b_ Professor Hofstadter and e ther s was

already visible in 1932, It centered very largely in the

brains trust, And Hoover made the same exaggerated

estimate of its influence as many others -- for the same

reason . Intel lectuals were distrusted~ and anyone convicted

of associating with them could be put on the defensive.

This was to become a kind of stock piece with conserv­

atives , 2 They graduall came closer and closer to identify-

ing intellectuals with subversion.

2 From this generalization Senator obert A. Taft has to

be given honorable exemption.

48.

Thev were dangerous to "tl)e American way ." By 1952,

thinking at all was pictured as leading directlv to

communism. In Hoover's time "liberalism," "collectivism,"

and " lanned economy" were assumed bv h im ta be fear-

arousing words. Even in his later years, he was still

. . 1 . '1... • 1 ident1fy1ng the Nev Dea w1 tl ' commun1sm.

1 It is my belief, from internal evidence, that Hoover

borrowed a good deal -- ideas if not actually words -­from ~ark Sullivan and David Lawrence, two of the New Deal 's most vocal critics. For instance in his Stumbling Into Sociatism ( Tew York, 1935, pp. 19ff), David Lawrence ~ a tabular device to show hew close the Socialist Party Platform's demands correlated with "New Deal Ful­fillments." Almost the same language, and certainly the same illustration appears in the Memoirs (III, 389): "Students who wish to arrive at the sub-currents around Roosevelt would do well to examine the platform of the Socialist Party of 193-2 and observe the uncanny fulfill­ment of its recommendations by Roosevelt's first admin­istration."

Lawrence, Sullivan and Frank Kent (of the Baltimore Sun) might, I should think, be called the Hoover brains trust. They suppliea, at least, the rationale of Hooverism and did it persistently day by day over the years. Cf. Frank Kent's Without Gloves and David Lawrence's Beyond the ~ Deal. But the1r most e~fective contributions were the da1ly thrusts at New Dealers 1n commentary on contemporary events. Some, but by no means all, of these were gathered into books,

People had been fooled in 1932, he would say in

his Memoirs; but it was not permanent. He looked on at

his successor's "inconsistency of ideological policies

and confusions in administration" and finally made an

analysis:

1

49.

No student will understand the vagaries and interplay of forces in the Roosevelt administration without first exploring the widely different character of the groups around him . He had been supported by the Democratic combination which had its origin in the Bryan campaign of 1 B96. Bryan had brought together old-line conservative Democrats (mostly Southern), Northern radicals, and corrupt city machines . The binding tie of these groups over thirty years was one central theme - - to get into office. But, in addition, Roosevelt had the support of a frustrated suffering people who did not have the patience to fight through the inevitable economic penalties of a great war. This discontented group found a large leadership in the Intellectuals with a capital I, who had embraced some form or part s of collec­tivism •••

Among the intellectuals who interpreted liberalism as a sort of collectivism were such representative minds as Madam Frances Perkins, Dean Acheson, Henry Morgenthau, Jr., Harold Ickes, Francis Biddle, Hugh Johnson, Frank Murphy, Henry A. Wallace, and Felix Frankfurter.

In their reinforcement in the march on Washington came a host of dangerous men and women. Congressional committees later exposed several hundreds of them as fellow travellers or members of communist-front organizations.!

Memoirs, III, 352-3.

It will be noticed that the juxtaposition of

"liberal," "intellectual," "collectivist," and finally

"communist" is here used without apology or further

explanation. It will also be noticed by anyone who

knows anything of New Deal history that the names from

Perkins to Frankfurter are a list of those whom Hoover

so.

disliked, and that they have little else in common. No

more diverse philosophies could be assembled in one group

without a great deal of care. Did Hoover know this

when he made his list? I think not; for the one label

all these persons might conceivably wear is "intellectual."

And to Hoover's mind -- and to minds like his every-

where -- the other labels may quite reliably be supposed

to fit.

This is not by any means an isolated instance. My

own name was omitted from this particular list. But

elsewhere I had my due. In one instance I was linked

with several quite dissimilar contemp0raries:

1

All through the 1932 campaign, something was in the air far more sinister than even the miasmic climate of depression or a political campaign. I was convinced that Roosevelt and some members of his Brain Trust were proposing t o introduce parts of the collectivism of Europe into the United States under their oft-repeated phrase "planned economy ••• "

Their purposes were stated in various disguises of new meanings, hidden in old and well understood words and in terms of glorious objectives. They involved the pouring of a mixture of socialism and fascism into the American System.

The first evidence of these collectivist ideas appeared in the character and beliefs of Roosevelt's advisers and speech-writers -­Tugwell, Frankfurter, Wallace, Senators Norris of Nebraska, Thomas of Oklahoma, and others -­whose long-standing declarations for years had been of the collectivist type.1

Memoirs, III, 329. Notice Hoover says some members of the Brain Trust. This is to exempt Moley who is listed

51.

as a moderate old-line Democrat. It is clear that Hoover regarded Moley's later apostasy as evidence of good sense and moral sensitivity. His After Seven Years is quoted with approval something like a dozen times in the Memoirs, and he is spoken of as "an honest and convinc1ng wr1t er of speeches. " They evidently had some mutually congratulatory correspondence as well. He quotes one letter in which Mo l ey said: "I feel when you asked him on February 18th to cooperate in the banking situation that he either did not realize how serious the situation was or that he preferred to have conditions deteriorate and gain for himself the entire credit for the rescue operation ••• " This, and some of Moley's other statements about what happened in 1933, and why, represent a view of those events a good deal changed from the view he had at the time. In the case of the banking situation Ray knew as well as the others that no desire to discredit Hoover governed refusal to cooperate. It was a legitimate desire not to be com­mitted to discredited policies; and Ray himself was involved in the refusal.

Hoover seems to have allowed himself to be convinced about this largely on the evidence of a report to him of James H. Rand -- afterward backer of The Committee for the Nation, instigator of the Wirt incident and general inflationist busybody. I had lunch with Rand shortly before inauguration -- we both came from the same up-state county. He tried to pump me about likely Roosevelt policies. I put him off with generalities. Nevertheless ~ediatelv after I left he called the President and reported that I had said we were fully aware of the bank situation and that it would undoubtedly collapse in a few days, which would place the responsibility in Hoover's lap. And that was what we wanted.

There is a short version of this in the Memoirs (III , 214-15). There is a longer one in Newton and Myers' The Hoover Administration, Op. c·i t. 356. In this one -- a letter to Rand, repeating the telephone ccnversation -- in a final paragraph, he really let him­self go. "When I consider this statement of Professor Tugwell's in connection with the recommendations we have made to the i ncoming administration, I can say emphatically that he breathes with infamous politics devoid of every atom of patriotism. Mr. Tugwell would project millions of people into hideous losses for a Roman holidav."

His anger was uselessly vented on me, I neither told Rand anything about the future nor gave him my own views. Dozens of Rands suddenly discovered after the

52.

election of 1932 that I was a very nice fellow. He pretended to be a hot Roosevelt supporter. His immediate reporting to Hoover imaginary facts but ones congenial to h~ar, was quite typical of the moral attitude so thoroughly discredited during the depres­sion years. I of course reported the Rand attempt to pump me to my principal. What he said was that busybodies were at him continually too and that his ingenuity in getting rid of them was becoming exhausted.

Would anyone not wholly ignorant of intellectual

affiliations during those years have put Thomas of

Oklahoma and Frankfurter of Harvard in the same category?

Or Wallace and Senator Norris? Or myself and Frankfurter?

To do so is to invoke hopeless chaos. No two people in

all the Roosevelt entourage struggled more fiercely for

the President's mind than Frankfurter and I. I honored

my antagonist; but I never agreed with him about any issue

so far as I am aware, or with his lieutenants Corcoran

and Cohen, as Hoover might have learned from reading

Moley's After Seven Years. That he did not, leads to

the suspicion that he looked into that book for the confirm-

ation of his presuppositions but not for enlightenment.

Hoover left us -- the collectivists -- and me,

specifically, with this dark comment:

Students who wish to arrive at the sub­currents around Roosevelt would do well to examine the platform of the Socialist party •••• A student should also examine the many para­llels of argument in Roosevelt's speeches of January 3, 1936, and June 27, 1936, with the program of the Communist International, September 1, 1928 •••••••

53.

If it seems incongruous to credit Hoover with

originating the studies and speculations on which the

New Deal programs was founded, it is nevertheless true.

Members of the Brains Trust were grounded in Recent

Economic Changes and in its cousinly Recent Social

Changes1 and had gone to school to Mitchell, Ogburn and

1 Printed each year from 1928 through the relevant period

as suppl ements to The American Journal of Sociology. They were edited by W. F. Ogburn and written by unexcep­tionable contemporary authorities.

others of Hoover's experts. Indeed Mitchell and Ogburn

were themselves elders in the New Deal "apparatus."

\

I 54.

s.

No operating agency of the New Deal was more

active, and perhaps none was more important, than the

Reconstruction Finance Corporation. In its 1932 form

it was Hoover's project; it represents, therefore,

another of his contributions to the Roosevelt program.

For, under the new President's guidance, instead of

being scrapped as a Republican device, it was enlarged

and extended. The original Act was, as matter of fact,

amended on numerous occas~ons, the first of them only

five days after the Roosevelt inauguration.1

1 This was the amendment authorizing the RFC to invest

in the preferred stocks cr capital notes of commercial banks and trust companies. It was passed in a matter of hours on the day o·f the assembling and organizing of the new Congress. The Bank Conservation Act was passed on the same day. This, in effect, permitted the Comptroller of ·the Currency to appoint receivers for closed banks.

It was not until 1934 (in June) that the RFC was

authorized to make loans to business and industry. This

was the step beyond loans to banks which Hoover, in his

time, had recommended but which had not been authorized by

\

55.

the Congress. This recommendation seems to have been

a clear violation of his principle of not supporting

business directly and so usurping the function of the

commercial banks. It was this very point that he was

afterward so certain marked the New Deal as "socialistic."

His request was not allowed by the lame duck Congress;

but this was more for political than for ideological

reasons, it was necessary and his asking for it now

seems more creditable than his condemnation of the

Congress for later action on his earlier advice.

In the summer of 1932 another Hoover measure had

a better reception. The Emergency Relief and Construction

Act. was passed. This authorized the RFC to distribute

up to $300,000~000 for relief purposes to the states

and territories. After that, loans to business could

hardly seem revolutionary, yet nothing was done to

authorize them at that session.

Of this Act, Jesse Jones remarked (in Fifth Billion Dollars, New York, 1951): "That was the opening wedge for the siphon through which,later on, the New Deal poured billions in grants, gifts, and doles •• ,"

The decision to accept responsibility for relief

on behalf of the Federal government was really a much

more significant departure than loans to business would

have been. These at least had the precedent of the \~ar

Finance Corporation set up for expansion purposes in 1917.

56.

Hoover was reluctant to accept the necessity for any of

the RFC rescue operations. His first idea had been

that the bankers should save themselves, and the

businesses for which they were responsible, by cooper­

ative action. In October of 1931 he had called a group

of them to the White House and persuaded them to form

the National Credit Corporation with assets of $500,000,000

made available by the stronger banks; but this sufficed

for no more than a few weeks. Loans on frozen securities

exhausted the sum available almost before operations had

begun. In December, he was recommending to the Congress

that it create the RFC. Federal funds simply had to

be resorted to.

When, in February, 1932, the RFC began operations

the situation had become terrifying. Repeated selling

waves had depressed stock and bond prices so far that

banks, insurance companies and other institutions, which

held them as collateral, could no longer be regarded as

solvent. Also foreign holdings had been dumped on American

exchanges ; and as fast as they were sold they were converted

into gold for export. Because the United States was

on the gold standard, when export reached fifteen percent

of the total reserve, disaster seemed to impend, and

everyone who could began to hoard currency. As a result

of these drains, the combined reserves of the Federal

Reserve member banks dropped to within fifty millions of

57.

the legal minimum. During the last half of 1931 bank

deposits had fallen twelve percent (six billions) and

hoarding was accelerating daily.

By midsummer of 1932 the situation was somewhat

improved. RFC was pouring funds into

1

distressed banks, insurance companies, mor tgage loan companies, building and loan associations, railroads, and the pockets of a million farmers - - some of whom had got out shotguns to prevent foreclosure sales.

For the first time since the 1929 crash, new and resumed deposits began to exceed in the weekly reports the sum of the deposits tied up by bank suspensions.1

Jones, op. cit. 16.

on This was the evidence Hoover relied / for his belief then,

and his later argument, that his policies had stopped

the recession in July. Jones describes what happened

subsequently.

In the autumn farm prices and securities started to slip downward again, New bank troubles broke out, like fires,in many spots. We took to employing fire­house similies in discussing our work in the RFC. Like a fire department we were on call all around the clock ••••

By 25 August 1932 we had approved loans aggregat­ing $1,331,740,000 to 5,520 financial institutions. Of these, 4,865 were banks and trust companies. We had helped reorganize or liquidate 386 other banks which either had sunk or seemed about to go under ••••

It was not, however, until the nation-wide collapse of 1933 made drastic measures necessary that Congress became convinced that a new, sound foundation should be put under America's credit structure.

58.

This was when the RFC was authorized to buy the

banks' preferred stocks and so to become part-owners.

Hoover had a controversy with the Congress about this

in which he came off second best. 1 Several changes

1 It has to be recalled that after 1930 the House had a

Democratic majority and that Hoover was forced to bargain with the Democratic leaders from then on for all his measures, something he was understandably bitter about in his Memoirs.

were made in the original bill. 2 They had later to be

restored, but mostly that was not done until Hoover had

left office. Nevertheless the RFC either as it was

2 In the Memoirs, III, 107, Hoover says of this: "The

security and ether conditions for loans made were unnecessarily stringent. The securities required took no account of the fact that values were depressed below their true worth. (In the crisis in Detroit later on, this contributed to disaster). The authority to make loans to industry for improvement of plants -- one of my strongest and most urgent points -- was eliminated. Certain types of loans to stimulate exports of agri­cultural commodities and to set up a series of agri­cultural banks to make loans for production purposes, were deleted. Loans to enable closed banks to distribute the cash value of their assets were also deleted. Loans to public bodies which could have been used for repro­ductive public works were excluded. However, I deter­mined to make the best of it and try to get it amended later."

in being at Roosevelt's inauguration, or as Hoover had

recommended it to be, was almost entirely his invention.

Nothing of any importance, nothing novel, was added at

\ 59.

any time during the depression.1

1 A variety of subsidiaries or new divisions were added

from time to time but they are not to be rated as new inventions or ideas. They were merely devices to carry out functions Hoover had said must be carried out.

It ought to be noted that Hoover was quite aware

of weaknesses in the banking system. He spoke of them

at the time: and in his Memoirs2 at least one paragraph

shows an understanding beyond that of most of his

2 Op. cit. III, 5.

contemporaPies and certainly beyond that of those who were

at the time in charge of fiscal policy. He noted the "wave

of optimism," resulting from technical progress, "which

the Federal Reserve Board transformed into the stock-

exchange Mississippi Bubble. 11 This is a direct accusation.

And it does have to be remembered that the Reserve Board

was autonomous and that Hoover's cautionary advice was

rejected. But also in this same paragraph he said that

there 11was a need for readjustment of commodity prices

within groups." And this comes very close to a realistic

explanation of what was happening. For the inability

of some to buy the products of ot hers did, in the opinion

of many later analysts, caused the original paralysis.

Of course, the reasons for the disparity and the remedies

for it are net obvious from stating it. But that Hoover

60.

recognized disparity at all is surprising; no such

comprehension was translated into action. Perhaps it

could not have been.This very weakness was seized on

by myself and others who were Roosevelt assistants,

and used in the early attack on Hoover's position.1

1 Cf., for instance, the passages of Roosevelt's acceptance

speech emphasizing the inability of consumers to buy because monopolized prices had not fallen along ~-~i th costs, and the disparities among groups -- especially agriculture and industry. It might be noted, also, that this was another holistic speech; "Never," the candidate said, "have the interests of all the people been so united in a single economic problem." Public Papers, I, 650ff.

A psychologist would see at once the reason for

this vulnerability of Hoover. The actions logically

called for did not conform to his conceptual system or

to the policy commitments of his party. In all fairness

it ought to be noted that although Roosevelt's under­

stand~ng of the basic trouble was more forthrightly

expressed, he, no more than Hoover, could proceed to

the indicated remedies. They involved the control of

prices, or, at least, the setting up of an agency for

conjuncture which would insist on being guided by general

as against individual interests. This was the expected

function of NRA; but it broke down at once when its

implications were seen and administration had to be planned.

Roosevelt could be a holist, and could convict

Hoover of not being one, so long as he maintained the role

61.

of critic. But holism was no more congenial to Democrats

than to Republicans when special interests began

their attacks an• when laisses faire believers

ineicate• their cold and implacable opposition. He

gradually gave up; and the New Deal in the end would

have a residue of institutions conservatives might

not like but would not reject after their public accept-

ance. Roosevelt, during the campaign, used all of his

talents for ridicule on Hoover's attributions of

responsibility for the depression to "shocks from

abroad." He was, said Roosevelt, trying to escape

responsibility. The depression had originated right

here at home. But this left Roosevelt in his turn

vulnerable. Hoover could afterward say that the depres-

sion had never been worsted by the Democrats. He would

not say that this was because they had not dared do

what he had not dared do either; but he could cite the

fact of failure. And it was fact. Prosperity would

only return with the gross inflation of war.

In lesser matters having to do with finance - apart

from "tampering with the currency," Hocver saw that reforms

were needed. And about dealing in securities, object

of the New Deal!s most ardent reformism, Hoover can

very well be said to have passed on a real contribution.

He was not able to do much about holding companies,

62.

mixing investment with commercial banking .and so on,

but he said a great deal, much of it very pointedly.

I believe he had intimations that the association of

all the doubtful practices and characters of the

depression years with his Administration might well

ruin him politically, as in fact it did.

In one chapter of the Memoirsl Hoover tells how

he laboured "to stop the orgy of speculation." It is

1 Volume III, Chapter 2

a sad account; and anyone- reading it must share his

frustration. There are crowded into a few pages the

disappointments of a statesman who presided over a

holocaust he could not control and who even felt forced

allay the fears he knew to be justified. This chapter

is followed by another devoted to the banking system.

No more severe criticism came out of all the subsequent

New Deal investigations. His recommendations -- not

acted on -- could be taken as recommendations for the

reforms of the next few years.

But Hoover, like Roosevel~much overrated bank­

ing weaknesses as a cause of depression, and banking

reform as a remedy. The record is in his public papers;

Roosevelt's was written into law in succeeding years.

What was done had to be done; it was necessary reform

I I 63.

of obvious abuses; but it was not central to recovery

because it had not been central to collapse -- that is,

economic collapse.

There are hints of this in a succeeding chapter

. 1 of the Memo 1.r s •

1 The one titled "Federal Government Responsibilities and

Functions in Economic Crises, " I II, Chapter 4.

It is curious that in this reminiscent account

he does not mention the vast body of knowledge by then

available about business cycles, and, specifically,

what to do in time of depression. It leads to wonder

whether all the studies made under his sponsorship

(some of them for Committees of which he was chairman)

had actual ly become part of his working knowledge. His

was an administrative intelligence. It is certain that

he understood the utility -- and the limitations -- of

works programs to relieve unemployment. But this was

only one of the remedies available to be tried. None

was, of course, more than a suggestion; there had not

been a chance to make trials between 1921 and 1929.

The researchers knew well enough that this was a boom

period and that a bust period would follow. But it is

quite apparent that Hoover had not dwelt on the possibility

that his Presidency might have as its most important

64.

problem the meeting of such a crisis. So, very possibly,

he had not studied the voluminous information he had

caused to be gathered.

The RFC was an improvisation, but a brilliant

one; all kinds of responsibilites of a rescue sort

could be assigned to it trom the bolstering up of in­

solvent banks to the making of loans for public works.

Actually it loaned a billion and a half dollars in

1931-32 for "reproductive" public works -- those that

would return the funds loaned. But the effect was very

slow. It did Hoover no good in a political way, either,

because there were those in the Congress, led by Senators

Wagner and LaFollette who wanted much larger sums used,

and argued that the "reproductive" limitation was

responsible for continued ineffectiveness. For two

years Hoover was consequently on the defensive. This

tended to obscure the fact that actually RFC did support

loans to building associations, Federal Farm Loan

Banks, the Intermediate Credit Banks, insurance companies,

and railways; that it made loans to encourage agri­

cultural exports; and that it created Agricultural

Production Banks to fill a gap between the existing

agricultural credit institutions. Actually, the Roosevelt

reform of the agricultural credit system was little more

than the necessary consolidation into one overall agency

\

65.

of already-existing agencies, most of them created by

the Hoover administration.

It ought to be said, also, that Hoover used the

RFC to begin Federal relief work. In May he recommended

that $300,000,000 be made available to the states. It

was, however, not to be administered directly but

through the committee system which had been handling

the distribution of voluntary funds. This, also, had

been a matter of controversy, in which Hoover had the

best of the argument, perhaps, but lost unknowingly in

the public regard. Actually he had included Senators

Robinson and Glass and Congressman Crisp in a conference

in March 1932 on his proposal to initiate Federal relief.

They had agreed to the continuation of the Committee

system. But the suffering was by then so great, and

all the measures, by the time they were brought to bear,

so inadequate, that they might almost as well not have

been undertaken at all, so far as the political effect

went. Hoover was in charge; he was therefore responsible;

and he could not escape.

If he was somewhat plaintive about this in the

ensuing campaign, and still was in his Memoirs, there

is some reason for it. As he says, other Presidents

"steadfastly had maintained that the Federal government

was apart from such erruptions; they had always been

left to blow themselves cut. Presidents Van Buren, Grant,

\

66.

Cleveland, and Theodore Roosevelt had all remained aloof."1

Hoover not only did not stand aloof, he did his consider­

able best .

1 Memoirs, III, 29.

It could hardly be expected perhaps that the Democrats

should give him credit, but that the electorate, for whom

he labored, and for whom he had stretched his principles,

should not give him credit, still would seem ungrateful

even after twenty years. And even then he had not come

around to the theory of depression on which his opponents

based themselves -- a theory garnered by them from the

studies under Hoover's auspices. Senator Wagner stated

it rather clearly in the speech defending the National

Industrial Recovery Bill. 2 Referring to Title II, having

to do with public works, he spoke of such a measure as

2 Congressional Record, 7 June 1933.

"the only sound method of spreading purchasing power,

admitted by everyone to be the vital need of today."

He exaggerated. There were many who did not think this

a vital need. It was an intellectual tour-de-force;

and it seemed to most business men -- as to Hoover -­

dangerous nonsense. But anyway Senator Wagner went on:

67.

Proposals for grants or loans to private industry do not meet this need. They assume that the difficulty we face is primarily a failure of credit facilities. But, except in brief periods of panic, there are ample credit facilities to satisfy reasonable business prospects as a whole. The real trouble is that business has no prospects when consumer demand is dried up ••••••

Of course, as a supplement to the RFC's powers

Hoover had sponsored the Federal Employment Stabili-

zation Act in 1931, and, in 1932, had approved another

emergency relief and construction measure; but, as

Senator Wagner said, the requirement that no project

shall be eligible for a loan unless it was self-liquidat-

ing as well as "the unimaginative, inflexible policy of

the RFC ••• circumvented the true purpose of those acts,

and ••• accentuated the business catastrophe."1

1 This was in the same speech cited above.

Hoover initiated the public works program. There

is reason to believe that it was for different reasons

than those of his Congressional critics. He wanted to

start business going by making loans; they wanted to

start it by providing customers;and that was to be done

by providing employment. But at any rate when Harold

Ickes became Administrator of Public Wor~s, he took over

an incumbent (Col. D. H. Sawyer) who already had a small

going concern and a shelf of projects for processing.

\

68.

When Senator Wagner spoke of "the unimaginative

and inflexible policy of RFC," it was with refe~ence

to an attitude toward public works. What he meant

was that the Board seemed to be making only recover­

able loans. The New Deal would take away from RFC

the primary responsibility for publ ic works; but that

agency would by no means be permanently divorced from

them . It would indeed be responsible for more, far

more, in the long run, than the Public Works Adminis­

tration itself.

Not a little of this subsequent history is involved

with a public personality wh~ developed during Hoover's

time. Jesse Jones was to become almost indistinguish­

able from RFC during the next decade. To be sure,he

had not been Hoover's choice. The nomination had been

forced on him by the Democrats of the 72nd Congress

who had to be conciliated -- especially Garner and

Robinson. However Hoover regarded the Jones appointment,

it was very convenient for his successor.

There is no reason to believe that President

Roosevelt had any illusions about Jesse Jones, or

would have been very much surprised if he had lived

to read the record of his outrageous disloyalty in

Fifty Billion Dollars. There were others about the

Administration who did not share the President's views,

\

69.

who accepted great honors at his hands, and who came

very near to despising him as a leader; but none of

them could match Jones in this respect. When he came

to write his memoir this was evidently a matter of

pride.

The President kept Jones and the others of his

sort about him, and in responsible positions, for the

same reason that Lincoln kept Seward and Chase. This

pair regarded Lincoln much as Hull and Jones did Roose-

velt; but he was to use them for his purposes; and no

one else, in either case, woul d have done so well.

As to Jones, his utility is obvious. He was

one of theSouthernreactionaries who was hand-in-glove

with the controlling fraction in the Congress. So far

as RFC was needed for recovery -- in the various jobs

of under-pinning credit institutions and assisting

businesses of all kinds -- Jones would be able to get

all he asked from the Congress and do things no one else

would have been trusted to do. A New Dealer in his

position would have been continually under investigation

and hampered to the extent of helplessness. This un-·

natural partnership was to persist for a long time. About

it Jones was to say:

Soon after I became chairman, Congress began looking to me f or the RFC's operations; and I am glad to say that the President did also ••• The president thought we in the RFC could do anything I wanted done, and, as time went on and Congress kept increasing our authority, we nearly could, Whenever we needed

1

additional legislation to meet new situations I would take it up with Mr. Roosevelt, or he did with me, and invariably he would tell me to get the bill inacted. I always did.1

70.

Op. cit . 262-3. Cf. also the rest of this chapter and many other passages in others of similar import.

But what Jones thought of his President is indicated

in a simile : "In poker the President preferred wild

cards and innovations to the kind of straight five-card

draw poker most Texans were raised on." This had the

same flavor of disparagement as Seward's distate for

Lincoln ' s humor. Nevertheless~for Hoover's appointment

of Mr. Jones and for his convenient presence in an agency

indispensable to recoverv as well as for the creation

of that agency itself, Roosevelt owed something to his

predeces sor .

71.

6 .

The continuity in foreign affairs from the

Hoover administration to that of Roosevelt is as

notable as that in domestic ones. True, Roosevelt

made a sharp break with the past in devaluating and

preventing the export of gold, in gradually adopting

a different t ariff policy, and in refusing to accept

the conclusions of the London Economic Conference

prepared by Hoover ' s appointees. But he adopted and

reinforced the Stimson doctrine concerning Japanese

expansion, he kept Norman Davis at work on disarmament,

and he accepted the policy of friendship with the

Latin American countries initiated by Hoover on an

inauguration voyage in 1929.

There is a note cf unmistakable pride in Hoover's

remark1 that "Roosevelt made no reference to foreign

policy" in the campaign of 1932, "except so far as tariff

1 In the Memoirs, III , 236,

and private loans to foreigners related to it." He goes

on to say that he, however, "presented our accomplishments

72.

and policies in these fields at length." He certainly

did. It was part of the subject matter of no less than

eight addresses; and one of them was almost wholly

devoted to it. The inference is that his opposition

could find no fault with what had been done. Any

professional politician could have told Hoover that

this was not necessarily so; failure to discuss this

range of topics could well have been merely the follow­

ing of a democratic maxim that electorates are mo~e

concerned about what lies close to them than what seems

far away. There have been very few campaigns in

American History (or British, either for that matter)

which have turned importantly on issues of foreign

policy. This has been true even when the conduct of

foreign affairs during the coming years were likely to

be crucial in people's lives.

1932 was a year when voters had plenty of troubles

at home without looking abroad for any; and they were

not impressed by Hoover's attempt to lay the blame for

their ills on "shocks from abroad." It was one of his

strategic mistakes. Still it can be understood, for

actually that part of his record was impressive. He

was busily engaged, throughout his term, in cleaning

up the mess left by those who had arranged the financing

of the war. His policy with respect to this was probably

73.

right, even if it is was impolitic. But it was weakened

by the undoubted fact that the forgiveness for the

governmental debts would make much more possible the

payment of private ones. This could be and was made

to seem a sacrifice of taxpayers for bond-holders. He

was also pressing for disarmament and with prospect of

a success which he did not seem to realize; at any rate

he sacrificed it to put pressure on the Japanese, who

in the end made it futile.

Hoover was a man of peace -- a Quaker. But he

was experienced in a contentious world; and there is

no doubt that he had a very active sense of indignation

about foreigners' immoralities. His attitude toward

Soviet Russia, for instance, was a simple but dangerous

one. They were a wicked people and he would not recognize

them. He would not, as he said, "invite them into the

house." His attitude toward Europe was almost as simple

and almost the same. Abroad, "rival imperialisms continued

as smouldering fires;" Europeans were "infested with

age-old hates and fears." And he had "no desire to see

the United Stat~s involved."

He did not regard himself as an isolationist.

Isolationists seldom do; and, as a matter of fact, para­

doxical as it may seem, they seldom are. They are apt

to be interferers whenever their ire is aroused. Hoover

defined this as taking "larger responsibilities in world

affairs. 11 But it was not so systematic as he would have

\

\ 74.

the record read. His pacifism ah1ays came uppermost

in crises, considering what had gone on previously.

This was most notably true in the case of Japanese

aggression in Manchuria. About the handling of that

incident, Hoover says, he found out that his "able

Secretary (Stimson) was at times more of a warrior than

a diplomat." When the Japanese army, in the autumn of

1931, seized various cities along the South Manchuria

.Railway, Hoover was as indignant as Stimson. It was

"rank aggression;" it was a "gross violation" of the

John Hay agreement; it was an "impudent violation" of

the Kellogg-Briand pact. He agreed with Stimson that

a protest should be made. But he would not agree -- and

never did agree -- to economic or any other sanctions.

And his decision probably did not turn on the practical

consideration that the British would not go along. In

a memorandum dictated afterward he spoke of the Nine

Power Treaty and the Kellogg-Briand Pact as "solely moral

instruments." He condemned Japanese actions, but he

said, "These acts do not imperil the freedom of the

American people,the economic or moral future of our

people, I do not propose ever to sacrifice Ameri_can life

for anything short of this. n1

1 These quotations are from Chapter 48 of Vol. II. of

the Memoirs.

The furthest reach of the Hoover policy concerning

75.

the Japanese was the "non-recognition doctrine" later

identified with Stimson's name. In the spring, when

the League Assembly met, Stimson's proposal was

adopted as League policy; and in that fall an arms

embargo was laid. Subsequently the Japanese withdrew

from the league. And there the matter stood in February

1933 when President-elect Roosevelt began to have talks

with Stimson. The Secretary found in Roosevelt a man

much more to his liking than Hoover; he accepted whole

the Stimson doctrine and indicated that when the occasion

arose he would not hesitate to apply sanctions. Roose­

velt knew quite well what this implied. Hoover is

justified in saying about him that he "ceased any effort

to organize the world for restraint on Japan."

Stimson was too solidly identified as a Republican

to be eligible for the first place in the Roosevelt

cabinet. But his policy was bequeathed to Hull. And

the President's gratitude was made plain when the logical

consequences developed. Stimson was made Secretary of

War in 1940; and it was a fitting appointment. Consider­

ing all this in later years -- his consent to the

doctrine, then his withdrawal from sanctions, followed

by Roosevelt's acceptance of both doctrine and sanctions

and the war which followed, old statesman Hoover reflected

thus:

76.

Having seen the wreckage to civilizations by World War I, I believed that the long-view contribution to preserving peace would be for America to stand on moral forces alone in support of law between nations. It was not isolationism. It was a belief that somewhere, somehow, there must be an abiding place for law and a santuary for civilization.

When he came to summarize the foreign policies

of his administration, he saw no need to apologize.

He thought he had done very well. There was no recog­

nition that he had any responsibility for World War II

and perhaps there is some implication that if he had

continued in power it might not have happened. It is

an impressive summary; and of the remarks to be made

about it one must be that the policy of Roosevelt was

in more important respects a continuation than a reversal.

During his four years, he said:

We travelled a long distance into wider collaboration with other nations through (a) the reorganization of our relations with the Western Hemisphere; (b) the advancement of pacific methods of settling controversies by direct treaties; (c) the doctrine of non­recognition; (d) collaboration with the League of Nations in all non-force fields; (e) elimination of frictions on international debts; (g) the stand-still agreement, which contributed to the sustaining of democratic government in Germany for some time; (h) actively pushing revision of the World War debts; (i) a World Economic Conference to stabilize currencies and lower trade barriers; (j) striv­ing to reduce world armies and aggressive weapons; (k) developing international cooper­ation to restrain the military aggression of Japan for China; and (1) urging our membership in the World Court on the Senate.

77.

Not only was foreign policy not discussed by

Roosevelt in the campaign, it was very little discussed

for years afterward. Recovery was the center of

interest, together with such reforms as were actually

undertaken. But foreign policy developed. It had to.

The debts had to be disposed of; Hitler came to power;

the absurd refusal to acknowledge Russian existence on

had to end; Japan encroached further/China; and world

trade had, if possible, to be revived. In most of these

the shape of the developme.nt illustrated the essential

continuity of foreign relations far better than it

illustrated departures of a novel sort, particularly any

that could be called New Dealish or radical.

There did ensue a controversy within the adminis­

tration about economic foreign relations, and this

ended in an indeterminate sort of compromise represented

by the Trade Agreements Act. The argument involved in

this at some points approached the unseemly -- as when

Goerge Peek was set up as Foreign Trade advisor and

attached to a Department of State otherwise firmly

established in a policy abhorrent to him . The question

was whether there should be initiated a system of

bilateral bargains or whether the most-favored nation

principle should prevail. Both these approaches were a

sharp turn away from the protectionism so ardently

defended by Hoover. And this has to be put down as one

78.

sharp departure from Republican policy. It was proba-

ble, however, that protectionism was dying among

Republicans as well as Democrats.1 The maturing

industries understood that foreign markets could be held

1 Hoover throughout his later life, would remain under­

standably sour about his successor 1about the New Deal, and about all the Democratic polic1es. He was quick to find flaws and inconsistencies; but often he could make his point quite justly. One of his contentions was that "the greatest tariff boost in all history came from Roosevelt's devaluation ••• The whole operation made a mockery of all the Roosevelt reduction-of-tariff promises." (Memoirs; I II, 405.) He thought that if Roosevelt should "meet Senator Smoot in the next world, his first act should be an apology"--­the reference here being to the often-denounced Smoot-Hawley tariff.

What has to be said about this is that the pre­liminary blocking off of the American economy so that recovery measures could be undertaken without inter­ference was different from high tariffs for the protec­tion of particular industries. The modifications which followed through the trade agreements policy resulted, in the course of years, in a much more reasonable structure. But Hoover is right enough in saying that Roosevelt was inconsistent.

in the long run only by accepting imports. The old

tradition was a persistent one; it could not be pronounced

dead for a long time to come; but it seemed doubtful

whether even the Republicans would revive it when they

came to power again. And, of course, the Democrats,

faced with responsibility, did not adopt the free trade

their tradition called for. There was too great a

contrast between the standards of living at home and

abroad; and cheap competition was too great a threat.

So there was compromise; this was another of those

issues so hotly disputed once, but now so narrowed

as almost to be invisible.

79.

Hoover's continuing influence was very marked,

however, in most other foreign matters. It has to

be recalled that his four years as President and

Roosevelt ' s first four years were ones of strange

calm. The pest-war readjustments had been madly unwise.

Twelve small nations had been carved out of three old

empires on the principle of national self-determination.

Only one of them was demonstrating viability--Czechos­

lovakia-- and this at the expense of its neighbors.

The violations of economic criteria-- agricultural areas

being separated from complementary industrial ones -­

led to outrageous resorts. Tariffs, quotas, currency

controls and many other devices were invented in a

hopeless struggle for viabil ity. The people cf Eastern

Europe fell further and further into poverty and despair.

At the same time armies and armaments were increased.

In far-off Asia the overturn of the whole colonial

system was preparing. Russia was gathering strength

through spartan devotion to production; and hoped to

be a power in world affairs within a decade. Hitler was

getting ready for his challenge too; as yet he scarcely

commanded a headline in America; but statesmen were

aware of the threat.

80.

From all this Americans were separated by pre­

occupation with their own affairs. And, when contact

was made with any of it, the contact was sporadic

and pass ing. Bankers arranged foreign loans with

complete irresponsibility, especially in Germany and

South America. No one paid much attention. There

were war- debts to be paid. It was political suicide

to suggest that payment was physically impossible, and

so no policy - - except temporizing - - could be shaped

respecting them.

The League of Nations was, practically speaking,

ignored; and as a result it came to be more and more

used as a vehicle of Anglo-French imperial policy.

Hoover and Stimson, then Roosevelt and Hull,

could neglect foreign relations, or at least regard

them with detachment. They were not yet demanding;

minds did not have to be made up immediately and a

program formulated. There were exceptional moments,

a s when Hoover had to decide on a debt moratorium, and

as when Roosevelt, from a retreat on a cruiser, decided

all at once that the conferees at London would have

to be put in their places. But mostly there was time.

Hoover never had to deal with Hitler as Roose­

velt uneasily suspected from the first that he would

have to; and Hoover avoided the issue presented by

Japanese aggression which Roosevelt knew from the first

81.

moment how he would handle when the time came. These

were on Roosevelt's mind; but not for immediate action.

And at any time they offered pol itical dangers. People

did not want to hear about them . The most difficult

ordeal of Roosevelt's life wa s the building of solid

opposition to German and J~panese aggression . But he

first followed Hoover's lead in trying for disarmament .

And it can hardly be said that Hoover ought to have

stopped the Japanese and contained Hitler when it is

so clear that the political support for anything of the

sort could not possibly have been found, and when even

his successor felt at first - - and for some time - - that

the Hoover course was sufficient.

It is true that Hoover had been warned about

Hitler. In May of 1931 the American Amba ssador to

Germany, Frederick M. Sackett,came to Washington on • •

an urgent mission. Herr Bruning, the German chancellor,

had _given him urgent warning of impending economic

collapse; and also "had set forth the danger from the

communist and Nazi elements, as well as the old military

groups, now rallying to Hitler, all bent en destroying

the representative government." But the economic

crisis got the attention.

Roosevelt and Hitler began their careers as Chiefs

of State together. Roosevelt was inaugurated in 1933;

Hitler became Chancellor in the same year, They were

82.

to live as Chiefs of State until 1945. Those twelve

years began, however, in the period of Bruning and

Hoover. When these two passed from the scene the

elements of the subsequent drama were already fixed.

That both Roosevelt and Hitler knew this I feel certain.

In fact Roosevelt expressed the gravest forebodings

about Hitler to me on the day Hitler became Chancellor.

"It is a bad day for the "70rld," he said. "That mad

man will have to be checked." Of this sense of impending

disaster Hoover was innocent. 1

1 It is of some significance, I think, that there is no

index reference to Hitler in the Roosevelt Public Papers until the volume for 1938. No public oppos1t1on -- no reference at all -- during the first five years of their dual careers.

It is interesting, and it might be profitable,

to speculate about the course of affairs if Hoover had

net been defeated in 1932. I have an idea that his

practical advisers might have persuaded him to devalue.

Probably, however, he would have come to the international

arrangement which Roosevelt rejected at the London

Conference. But his course vis-a-vis the Japanese and

Hitler must, I think, have been different. He would

not have exerted leadership, as Roosevelt did, to

consolidate opposition to Hitler. Consequently we

should not have been so soon rearmed. But in any case

he would not have gone beyond 1936. By then his disarmament

\ \

83.

efforts would have collapsed, the League should have

become even more impotent, and Hitler and the Japanese

not far, probably, from the situation and posture they

did reach.

It might be more profitable to speculate about

what Hoover could have done to have stopped the develop-

ment of the crisis inherited by Roosevelt. If the war

beginning in 1939 is thought of as resulting from the

preceding economic troubles, then Hoover could not have

changed the course of events very much unless he could

have met the depression and stopped it at once. But

any such miracle is impossible to conceive. The ground-

work for it would have had to be laid back in the early

twenties . Moreover not only a series of actions would

have been involved but a foundation for even these in

a kind of thinking repugnant to Hoover's mind.

Hitler fed on misery, no doubt; and Germany's

misery was partly a product of the Treaty of Versailles.

For that the responsibility was Wilson's, so far as

there was an American responsibility at all. It was

not Hoover's anymore -- or notso much, perhaps, as

Roosevelt's. And to expect that Hoover might have

reversed the drift into degeneracy following on the war

settlements is asking altogether too much. On the other

hand he made nothing much better. Even disarmament was

not of much use, other affairs being as they were.

8'+.

What Hoover said afterward of Roosevelt's follow-up

on disarmament was this:

Mr. Roosevelt, soon after entering into office, ignoring both the origin of the proposals I had made and the League as the organizing body, made a direct proposal to all heads of stat,es embody-ing my formula for abolition in offensive land arms, i.e . , tanks, bombers, and large mobile guns. The nations apparently ignored the proposal, and I. was informed that they considered the League should not be so sidetracked, In any event American pressure was discontinued, and all American interes t was allowed to die.

This is unjust. It ignores, for one thing, the

fact that Roosevelt kept Norman Davis, Hoover's agent

in the negotiations, on the disarmament job. It ignores,

also, something Hoover understood but Roosevelt also \

saw from the first: that it was naive and utopian to

think disarmament was possible in a contentious and

miserable world; it was first necessary to reduce

miseries and insecurities. A re-reading of the joint

statement of 3 May 1933 issued by Roosevelt and Foreign

Minister Jung of Italy at the conclusion of their

conversations, is a reminder of Roosevelt's realism. In

that statement economic and military disarmament were

linked, and the hope was expressed that simultaneous

and similar measures for recovery might create a favor-

able situation for consultation. If, following that,

the transcript of the press conference of 10 May 1933

is read, it becomes quite clear what the Roosevelt

85.

hopes really were. 1

1 Both thes e reference are to be found in Public Papers,

158-9 and 169 ff.

His aim was to abolish the weapons of offence,

no less, and so to strengthen defens e. By doing this,

aggression '~ould become impossible, eventually, and

even at once a nation would be secure against sudden

attack. All those who were familiars of the White House

in those days were made aware of these hopes. Things

went that way . When he had something working in his

mind, not yet thought through, but giving promise, he

would often talk with those around him very freely about

it, hoping for ideas or suggestions, even fugitive or

partial ones, to be put together with what he already 2 had.

2 It has often been remarked, sometimes with a kind of

malicious resentment, by people who went to see him for some purpose, that he began to talk first, as his prestige al lowed him to do. Often the visitor was lucky if what was on his mind was ever arrived at. Macintyre in my time, Watson in later years, would begin a restless opening of doors and suggestive interruptions to remind the President of passing time, before he had stopped talking. This could be amazingly annoying, evidently, to an administrator intent on his own business, wanting ans,~ers or directions, and perhaps impatient with others' affairs, even the President's. And then there were those who had to go to him, but who harbored for him an intense, in certain instances an almost patho­logical, dislike. All degrees and varieties of this annoyance have shown up since in various Memoirs. Nearly all the authors at least refer to it.

86.

In my case, as in Harry Hopkins', it was different. It was understood that we could be talked to. The Presi­dent knew that we never repeated anything he said, except to each other, and so he was very open. But also it was understood that whatever business we might have was strictly secondary to what he might want to talk about. In both our cases, it was not unusual to make two, or even three or more, attempts to get to the matter for which we needed direction. In our cases this seemed less distracting, perhaps, because we could always come back, even later in the same day if it seemed to us important. I was amazed and somewhat offended on a number of occasions when colleagues in the administration senior to me, relieved their feelings on this matter with some abandon in my hearing. I always tried to temper, to explain, and sometimes I think I succeeded. But I never really understood how anyone could conceive that the President's rights in this matter were not paramount. The making of great policy hung on the President's deliber­ations. Surely it was his prerogative to search about him for leading. Even, if he wanted to, in what seemed to me unlikely minds.

A good deal of this, as in the case of disarmament,

was sheer thinking out loud. It was obvious that he

hoped, by going over and over the same ground, to get

past the familiar~nd reach the unknown and difficult

problems, penetrating a little further, and a little

further, until progress was substantial. On no less

-- probably much more -- than a dozen occasions, during

the first year of his Administration, he talked to me

about one or another phase of this subject. And I know

that he talked to some others because they told me he

had done so, frequently expressing impatience. For noth~ng;

I must say, seemed less important during those first

New Deal months than military disarmament. Wars were

87.

in the past; we had to recover; that was our business;

our minds ought to be kept on it .

It would be difficult tp think of a person less

likely to be really helpful in such a matter than I .

That he did talk to me about it shows, I think, how

concerned he was, and how anxious to find devices and

formulas on which agreement might be had.

I may not here follow this example to its con­

clusion . Disarmament presently gave way to preparations

for war. But that there was a moment when Roosevelt

had hopes of pushing the matter much beyond the Hoover

accomplishments, I must testify. Also that he tried

again and again, in what he believed to be the most

promising ways, to turn the nations toward consultation

and practical disarmament. It was ungenerous of his

predecessor to suggest that this was not so.

The point has been made that when Hoover surveyed

the assemblage of his and his colleagues' successors,

it was with a grim kind of revulsion, partly moral and

partly statistical. He regarded the New Deal as a

reversal of his central intentions. He considered that

he had worked for a strong individualist America; and he

regarded the Federal government as a means to that end.

He watched the development of the Roosevelt program

with a rising choler. He wrote about it two decades

later as though he were choking down a righteous anger.

88.

It is quite certain that he would regard it

as shocking to suggest an intimate connection between

his regime and that of his successor. Yet it is true,

in almost every instance, that if policies are traced

back carefully they either originated with him or

were passed on from even further back, often improved

and awaiting use when they had been processed by his

officials.

To make this point once again, let me cite the

case of agriculture. The Agricultural Adjustment Actl

is often referred to as having "embodied sweeping

Signed on 12 May 1933.

innovations in the government's relations to the nation's

agriculture."2

2 Cf., for instance, Nourse, Davis, and Black, Three Years

of the Agricultural Adjustment Administration, Brook1ngs Inst1tute, Washington, D.C., 1937.

Yet in the same passage something of the sort said by

Messrs. Nourse, Davis and Black, who made the just-

quoted remark, is usually added: the experimentation

was guided by "a somewhat new philosophy as to the sort

of economic and social adjustment which should be sought."

And it is more true that the philosophy was only somewhat

89.

new than that the innovations were sweeping.

The ideas embodied in the New Deal legislation

were a compilation of ones that had matured under

Hoover's aegis. It was all very well for him to speak

of them as "Fascist" and "unAmerican." They had been

growing, spreading, being added to,for a long time.

And they had had a significant part of their develop­

ment while he occupied the Presidency; they were put

forward by Republicans; and they were advocated by

members of his own Farm Board. Those who have been led

to think that production control -- which is what

"adjustment" meant in the circumstances of 1933 -- was

a wicked New Deal invention, and who cite in support

the plowing up of cotton and the killing of little pigs,

ought to look into the operations and recommendations

of Hoover's ·Federal Farm Board. They are likely to be

surprised.

According to report, Hoover wrote the vetoes

for the McNary Haugen Acts of 1927 and 1928; there was

a succession of these bills during the Republican

'twenties, coming to climax then; and Hoover, as Presi­

dential candidate, thought it expedient to repudiate

them. He, rather than the Secretary of Agriculture,

Henry c. Wallace, was entrusted with the determination

of farm policy. The bills involved dumping abroad, and

90.

getting rid, in this way, of enough of the surplus so

that domestic prices would rise to a "fair exchange

value" -- that is, to what we later called "parity."

There was also another variety of this kind of thing,

sponsored by the National Grange (most reactionary of

farm organizations) called the "export debenture plan."

The general idea of most of the schemes then afoot was

that there were receptive markets abroad Haiting to

absorb American products in any quantity even if perhaps

at sacrifice prices. This was the weakness of the scheme.

There were many reasons why Europeans did not regard

American dumping with complacency -- the most powerful

being that European farmers a l so had political power

and were not likely to allow themselves to be ruined

by artificially cheapened American products.

During the 'twenties some other measures of farm

relief were taken - - credit facilities were improved,

and cooperatives were encouraged, for instance. But

most notably there began in the Department of Agriculture

that "outlook and intentions" work which developed just

as directly into the production controls of AAA as the

trade associations did into NRA. And this goes a long

way to discredit Hoover's pose as an effective oppo~

nent of "price and distribution control." The central

intention of encouragement for cooperatives and of the

outlook and intentions work was control of supply.

91.

The difference between the outlook and intentions

work and that undertaken later on by AAA was that

between a lamb and a ram. The earlier measures were

"voluntary," the later ones "compulsory." They were,

however, compulsory only on small minorities, and so

could hardly be said to be undemocratic. The large

majority had always consented with enthusiasm. Both

these attempts were addressed to the agricultural vice

of those days -- overpr oduction of certain staple

products, notably cotton, wheat, and corn. So long as

there was overproduction prices_ would be low and farmers

would be at a disadvantage.

Dr. Stillman and his colleagues, beginning in

1923, when the situation had been critical because of

gross expansion during World War I, had undertaken to

estimate crop outlooks. From this information it was

easy to move to the next step -- advice to farmers that

they ought to plant ten or fifteen percent, or whatever

it might be, less than they had intended. The trouble

was that m~ny chiselers took advantage of their

neighbors' good faith and increased rather than decreased

their plantings. So the voluntary system was a failure.

A series of circumstances, however, improved the

price situation by 1925, and from then until 1929, when

the general depression struck, agriculture was somewhat

92.

less badly off than it had been when the McNary-Haugen

Act was passed in 1929. This was Hoover's substitute

for "more radical" schemes for farm relief. Under it

the Federal Farm Board was constituted and began

operations. The problem for the Farm Board was the

same problem experts had recognized as central for

many years-to control supply and so price. Hoover had

taken a high moral stand about the kinds of control

offered by the McNary-Haugen Acts, but his Farm Board

was equiped with a "revolving fund" of five hundred

million dollars to enable producers to exercise control

of supplies through cooperatives, and by selling in

both domestic and foreign markets, to maintain prices

at profitable levels.

It was not very long before this Board of conserv-

ative business men discovered that if they got prices

up production would increase and drive them down again.

It was logical to try to prevent this by controlling

production. In the first of its annual reports the

Board said that:

measures for prevention of surpluses, through control of excessive production, are absolutely essential •••• Adjustments of production to market requirements are indispensable, in agriculture as in industry, to the solution of surplus problems.

and in its third report (that of December 1932) it said that it hoped:

that contracts between cooperatives and growers which specify a given acreage or volume of production will eventually be declared legal ••••

93.

There is no way of looking at Hoover's Farm

Board except as a bridge from the voluntary outlook

and intentions repcrts of the 'twenties to the

production controls of the 'thirties; and this con­

clusion is fortified by knowledge of actual operations.

It is true that Hoover took pains to limit the Republican

platform declaration of 1932-that any plan would be

supported "which will help to balance produ-ction

against demand ••• ", by declaring, in a speech, "there

is no relief to the farmer by extending government

bureaucracy to control his production ••• " Messrs.

Nourse, Davis, and Black, who were quoted above, remark

about this, however, that it had become obvious,

"particularly during the last year of the Hoover Admin­

istration, that more aggressive measures, even including

production control, were coming to be favored more

and more generally by farm leaders, government officials,

and members of Congress." Those government officials

were Hoover's people.

If Hoover had been reelected in 1932, it might

have been difficult to get around his campaign appeal

to "liberty" --- which contradicted what his Farm Board

had been doing -- but some sort of production control

would have been begun. It might very well have been

called an "adjustment administration," too, as that of

Roosevelt was called. Those were words by then in common

\ \

94.

use. They were descriptive of what must be done. They

were neither Democratic nor New Deal words. They were,

in fact, Republican ones; nearly all the farm leaders

were Republican.

The point of this illustration is again that of

continuity. It is, I suppose, likely to be granted

that I can have no interest in exaggerating the influ-

ence of Hoover on the events of his time or in minimiz-

ing that of Roosevelt in his time. When, therefore, I

say upon reflection that the roles of both have been

magnified beyond reason, it may be accepted that it is

said out of respect for history. Intensive examinations

by others will, I think conclude, as mine has done,

that there was at work -- at least in this period -- a

momentum in economic and cultural evolution which neither

the hangings back of Hoover nor the pushing forward

of Roosevelt affected as much as has generally been said.

If the spring of 1933 seems a time of endings

and beginnings, of dramatic change, it is not so much

because strange and unanticipated events happened, as

because overdue ones rather suddenly found the opposition

to their happening weakened so that they could spring

into embodiment.

As to the point of the present study -- Hoover's

contribution to what we call the New Deal, it is quite

plain that a l l through his public activity and especially

95.

throughout his Presidency, regardless of anything he

saidt there was steady preparation for, even progress

toward. the posture assumed by events in 1933. The

Hundred Days was the breaking of a dam rather than the

conjuring out of nowhere of a river.

Mr. Hoover would never admit this. Whenever I

think of his simmering sourness in retirement I am

reminded of the editorial comment in The Cleveland Plain

Dealer on the day after his speech to the Republican

convention in 1936:

If some world power were ready within a few hours to bombard half a dozen American cities, if Communists in arms were encircling Washington and proposing on the morrow to sack and destroy the capital, if the British army were on the point of crossing the lake to thrust a spearhead into the heart of the Republic -- such a speech as Herbert Hoover delivered to the convention would be completely justified. By no less absurd hypothesis can some parts of it be excused.