Sumner’s phrase serves as the title for Amity Shlaes’ The Forgotten Man: A New History of the Great Depression (New York: HarperCollinsPublishers, c. 2007). For too long, she argues, fans of Franklin Delano Roosevelt have forged the story of the Depression to portray him in heroic terms. But in truth he effectively prolonged it. Following a decade of genuine prosperity (the 1920s) the stock market crashed in 1929. Yet this event in itself “did not cause the Depression. It was a necessary correction of a too-high stock market, but not a necessary disaster” (p. 5). What caused the Great Depression was the loss of faith in the free market and consequent government intervention—begun by Herbert Hoover and continued by FDR—that acerbated and deepened the nation’s economic woes. (In the last presidential debate, incidentally, Barack Obama declared we were in the midst of the greatest economic crisis since the Great Depression, and John McCain replied that Obama’s economic proposals would, like Herbert Hoover’s, exacerbate it. Though Obama probably exaggerated the gravity of the crisis, McCain was surely right in identifying Obama’s announced economic agenda as a rerun of Hoover’s.)
To set the stage, Shlaes portrays the positive aspects of the “Roaring ‘20s.” Presiding over the prosperity of the nation was President Calvin Coolidge, a “country lawyer” committed to limited government and individual liberty. Aiding Coolidge was his Secretary of the Treasury, Andrew Mellon, whose tax policies “reduced the national debt from $24 billion to $16 billion” (p. 37). Unemployment dropped to “5 percent in the year he was elected. From there it dropped to 3.2 percent in 1925 and then into the twos and ones” (p. 39). On the other hand, his Secretary of Commerce, Herbert Hoover—the “Great Engineer”—envisioned and agitated for a more activist government. Of Hoover, Coolidge quipped: “’that man has offered me unsolicited advice for six years, all of it bad’” (p. 38).
Despite the nation’s prosperity, discontent flourished in “progressive” circles. Illustrative of this was a 1927 USSR-bound “junket” of intellectuals, including: Rexford Guy Tugwell, a Columbia University economist who would significantly shape the New Deal; Paul Douglass, a University of Chicago labor scholar; and Stuart Chase, an economist deeply influenced by Henry George and his “single tax” proposals, who wrote a book entitled A New Deal in 1932. Joining them were labor union officials, ACLU lawyers, and noted socialists. They called themselves an “unofficial American trade union delegation” and endeavored to cultivate friendly ties with Joseph Stalin and his Communist regime. They were not, of course, Stalinists themselves. But as idealistic “progressives”—or, in some instances, “radicals”—they longed for a more egalitarian world, a society favoring workers rather than dollars. Thus, Tugwell lamented: “’Life in the 1920s was often frustrating for those of my political persuasion—political progressives or radicals’” who were “’all but regarded as social misfits’” (p. 61).
When the market crashed in October 1929, these “misfits” were poised to make radical changes in the country. Though hardly himself a radical, the recently elected President, Herbert Hoover, shared their conviction that dramatic governmental action was needed to rectify the economic downturn. He had written a book entitled American Individualism, but it was hardly a defense of what earlier generations had understood by that term. Indeed he “disdained laissez-faire economics” and refused to make a fetish of private property (p. 34). Within a month he poured $423 million into a “public buildings program” designed to “boost the economy” (p. 91). He then urged Congress to provide national programs for all sorts of folks. Former President Coolidge later protested “these socialistic notions of government” (p. 94), but within a year (Shlaes argues) Hoover managed to seriously damage the economy “on three fronts: by intervening in business, by signing into law a destructive tariff, and by assailing the stock market” (p. 92).
The 1930 protectionist Smoot-Hawley Tariff, passed despite the opposition of one thousand of the nation’s premier economists, proved especially disastrous, shutting down international trade at precisely the moment it was most needed. Playing the populist, blaming Wall Street for the nation’s woes proved popular—especially as FDR picked up on the litany—but did little more than provide an outlet for anger.
When Roosevelt won the 1932 election, he reminded the nation that, as the Harvard historian Frederick Jackson Turner had declared, the endless opportunity of the western frontier had ended and it was now “time for the ‘princes of property,’ the wealthy, to share their resources. Growth would not provide for the poor; only redistribution could” (p. 135). So he brought to Washington D.C. a corps of “reformers,” his Brain Trust of elite university professors committed to economic experiment and change. The currency was instantly inflated by discarding the gold standard—“an act of social redistribution” whereby $200 billion was transferred from creditors to debtors. Within two years of his election, income tax rates for the wealthy soared to 75 per cent, quickly quenching most all entrepreneurial activity. He launched a host of federal agencies—the “alphabet soup (quipped Huey Long) of CCC, WPA, NRA, AAA, WPA, et al.—designed to provide employment and infuse cash into the system.
Naturally these populist endeavors placated the populace. FDR enjoyed great popularity as a spokesman for the people, a leader who was getting great things done. He appealed to the masses with soaring, utopian rhetoric, declaring: “’We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world’” (p. 299). Unfortunately he, like Hoover, abjectly failed to deal effectively with the depression. Massive governmental intervention paralyzed the economy, doing nothing to restore it to health. His fireside chats persuaded the folks that he cared for them, but his economic policies insured their prolonged suffering. “Where the New Deal was faltering economically, it was gaining politically. Roosevelt’s radio voice was succeeding” (p. 210). His popularity fueled his love of power and prodded him to propose “packing” the Supreme Court with justices more amenable to his agenda—a rash act that ignited his opponents and stalled some of his momentum.
Joining the opposition was New York’s venerable Al Smith, who’d run as the Democratic presidential nominee in the 1928 election. Addressing a large crowd in the nation’s capital, “Smith argued fiercely against Roosevelt’s ‘arraignment of class against class’; of the brain trust he said ‘the young Brain Trusters caught the socialists in swimming and ran away with their clothes.’ Most outrageous of all to Smith was the rise of professors, the way Roosevelt had ignored others—himself, especially included—and constructed such a revolution with the brain trusters” (p. 265). The brain trusters themselves, such as Raymond Tugwell, began departing FDR’s administration following his re-election in 1936. Their ideas had been tried and found wanting. Unemployment endured. Stocks had not regained their value. By 1938, it was becoming apparent, even to Democrats, that government intervention had sucked the life out of the private sector.
The economy recovered, quite simply, when the nation was plunged into WWII. “Roosevelt hadn’t known what to do with the extra people in 1938, but now he did: he could make them soldiers” (p. 381).
Gerard Reed is a retired professor of history and philosophy, most recently Point Loma Nazarene University in San Diego. He is the author of three books--The Liberating Law; C.S. Lewis and the Bright Shadow of Holiness; C.S. Lewis Explores Vice & Virtue--as well as a variety of articles and book reviews.