Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt (67 page)

This was why Roosevelt wanted the power to cut the pensions unilaterally. The president’s budget bill was a power grab, but it was a power grab with a purpose and a justification. Roosevelt couldn’t expect Congress to stand up to the vets; it hadn’t stood up to them in the past. The individual members were too exposed politically. “If you don’t support this bill, your successor will,” lobbyists for the American Legion, the primary veterans’ group, told lawmakers whenever a pension measure came up; and experience proved them right. The president was better able to withstand the pressure, primarily because narrow, single issues rarely determine presidential contests. Roosevelt was willing to take the punishment for cutting pensions.

First, though, he had to get the authority he wanted. The American Legion issued a call to political arms against the president. “Wire your congressmen and senators immediately opposing Congress abdicating its constitutional responsibility by granting to the President authority to repeal or amend existing veterans’ laws without approval of Congress,” the Legion urged its members. Many thousands responded, prompting their representatives in Congress to denounce the budget bill as unconstitutional and unfair. Gardner Withrow, a Progressive from Wisconsin, reminded his colleagues in the House that spending was the prerogative of the legislature; if Congress gave the president the authority he wanted, the House and Senate might as well “shut the doors of the chambers and go home.” John Rankin, the Mississippi Democrat who headed the House committee on veterans’ affairs, complained that the government, through the Reconstruction Finance Corporation, found money to coddle capitalists “who ought to be in the penitentiary today” the least it could do was look after the vets. “This is not the time, nor is it just, to make the veteran bear the bulk of this depression burden,” Rankin said. Wright Patman, the author of the 1932 bill to pay the bonus early, thought the president was hauling water for the rich. “The Morgans, Millses, and Mitchells are those who will benefit by such legislation,” the Texas Democrat declared.

But the dissenters were a minority. Most members were sufficiently traditional in their economic thinking to believe the budget ought to be balanced and sufficiently fearful of the vets and the postal clerks to be glad for Roosevelt to assume responsibility for cutting their pensions and pay. “It will be exercised in a spirit of justice to all, of sympathy to those who are in need, and of maintaining inviolate the basic welfare of the United States,” the president promised. Large majorities in both houses—266 to 138 in the House, 62 to 13 in the Senate—took him at his word.

R
OOSEVELT’S BUDGET
victory positioned him, for the moment at least, to the fiscal right of Hoover. Roosevelt would do what Hoover had been unwilling or unable to do. The capitalists could only applaud, if tentatively.

Yet Roosevelt’s style was nothing like that of the capitalist-friendly administrations that had gone before. The style of Coolidge and Hoover was institutional and stand-offish; the style of Roosevelt was intensely personal. Roosevelt didn’t ask Congress to cut the budget; he asked Congress to let
him
cut the budget. He spoke to the American people directly, asking them to trust
him.
He identified himself with the people when he said, in his Fireside Chat on the banking crisis, “It is your problem no less than it is mine.” And he proposed a partnership with the people when he promised, “Together we cannot fail.”

Americans responded to the Roosevelt style. As the banks reopened during the week after he spoke, millions of Americans took their money out from under those mattresses and returned it to their banks. Anxious others who had been prevented from withdrawing their deposits only by the bank holiday decided to leave their money where it was. As much as a billion dollars returned to the banks by the end of March, out of a circulation of around $7.5 billion. Gold, too, began flowing back into the banks and the Treasury—more than 600 million dollars in gold coin and gold certificates by month’s end—as holders rebalanced their portfolios between the security of gold and the convenience of other forms of money.

The praise for Roosevelt’s handling of the crisis was overwhelming. The
Philadelphia Inquirer
cheered Roosevelt’s “courageous” action. The
Atlanta Constitution
admired the president’s “bold and straight-from-the-shoulder” approach. The
Cleveland Plain Dealer
declared, “Mr. Roosevelt leads, as he was elected to lead. Congress responds. The country responds. The nation and the world applaud.” The
Portland Oregonian
saw the president’s plan as providing an “impetus toward permanent recovery.” The
Wall Street Journal
asserted, “Last week marked an end to three years of a nation’s drifting from bad to worse, an end to helpless acceptance of a malign fate…. For an explanation of the incredible change which has come over the face of things here in the United States in a single week we must look to the fact that the new Administration in Washington has superbly risen to the occasion.” William Randolph Hearst, who had opposed Roosevelt earlier and would oppose him again, for now joined the chorus. “I guess at your next election we will make it unanimous,” the press lord said.

Roosevelt might have taken time to savor the praise had the banks and the budget been the sum of the nation’s woes. But stanching the hemorrhage of money merely made the less acute symptoms more obvious. The new currency the Federal Reserve had printed and begun to distribute proved largely unnecessary; the bank recovery left most of it languishing in the vaults—where it did nothing to ease the downward pressure on prices that was the most painful aspect of the depression for such price-sensitive groups as farmers. For this reason, among those relatively few observers and pundits who withheld their praise following Roosevelt’s bank rescue, the principal complaint was that it left deflation unaddressed. “If this currency results in raising prices out of their present abnormally low stage,” the
San Francisco Chronicle
remarked, before events rendered the new notes superfluous, “that will be most welcome. A price increase is the prime factor to lift us out of depression.”

Deflation was an economywide problem, but because of their chronic indebtedness it hit farmers the hardest. Roosevelt had long commiserated with farmers, and even before the success of the bank rescue was assured, he turned to the farm question. There were two ways of dealing with low prices. One was to expand the money supply. This strategy was what the Populists and silver Democrats led by William Jennings Bryan had advocated in the 1890s with their call for remonetizing silver. They lost their fight in the election of 1896, and the country had officially embraced the gold standard—after decades of observing a de facto version—in 1900. Some silver-state Westerners still agitated for silver, but the first step in any systematic expansion of the money supply would be the abandonment of the gold standard.

The second way to raise prices for farm products was to curtail the supply. This approach posed problems of its own. There were millions of American farmers, and most prided themselves on their independence of mind; to get them to cooperate in reducing production would be exceedingly difficult. It would be all the more difficult on account of the fact that as much as cooperation might benefit the cooperators, it would benefit non-cooperators even more. The non-cooperators—the farmers who did
not
curtail production while others did—would profit from the higher prices without losing from reduced volume. Economics called such non-cooperators “free riders,” and they would ride a poorly designed program all the way to the bank.

The effects of the low farm prices were heart-rending. Hundreds of thousands of farmers couldn’t make their mortgage payments; scores of thousands lost their homes along with their sources of livelihood. Tens of thousands took to the roads, hoping for something better somewhere else. Farm tenants—renters—lacked security entirely. Lucky farmers who held on to their farms and lived in those regions that still practiced mixed agriculture could feed themselves from the garden plot and the orchard, but across vast swaths of the Midwest and California, where industrial monoculture had set in decades before, farm babies and children went hungry amid mountains of unsold wheat and unharvested corn.

Often the foreclosed farmers watched in helpless silence as their fields and homes fell under the auctioneer’s hammer, but sometimes they protested, on occasion violently. They and their friends would come armed to the auctions, intimidating potential purchasers. Others refused to be evicted, clutching the common-law principle that a man’s home is his castle and defying the bank’s agent, the tax man, or the new owner to storm it. When they gathered at crossroads stores and in Grange halls they spoke ominously of taking matters into their own hands. Those who recalled their history lessons cited Daniel Shays and the Whiskey Rebels of the eighteenth century.

Roosevelt heard of the helplessness and the militancy both. “Pathetic letters are coming in from the farm women,” Henry Wallace reported. “I suppose that the most terrible cases of heart sickness and fear in the United States today are those of a tenant farm family where the rent cannot be paid, where eviction is imminent, and where there is not enough machinery and equipment to make it possible for the family to go on another farm. The situation of these people is even more desperate than that of the unemployed in the cities.” John Simpson, the president of the Farmers’ Union, wrote Roosevelt not long before the inauguration to explain that the countryside was about to explode. “My candid opinion,” Simpson told the president-elect, “is that unless you call a special session of Congress, after the fourth of March, and start a revolution in government affairs, there will be one started in the country. It is just a question whether or not you get one started first.”

Whether what Roosevelt had in mind for the farm economy was a revolution or not was a matter of semantics. But the centerpiece of his farm program was a dramatic departure from the unbridled competition among farmers that had fostered the uncontrollable overproduction that currently impoverished them all. Roosevelt intended to impose planning on the farm sector. The essential problem was too many fields and too many farmers; the solution was to reduce the number of both. Taking marginal fields out of production would be the first step; taking marginal farmers out of the business would follow.

But neither step would come easily. As chaotic as the farm sector was economically, it was almost as anarchic politically. Not all wheat farmers thought alike, and they certainly didn’t think like cotton farmers or hog raisers or dairymen or apple growers. Farm owners often opposed what benefited farm tenants; farm processors found themselves at odds with farm producers. Each group had its spokesmen, some more persuasive and better connected than others.

Had Roosevelt known agriculture well, he might have imposed a design of his own on farm reform. But though he had long considered himself a friend of the farmer, and even postured as a farmer himself on political occasions, he recognized the limits of his expertise. Besides, for him to take a strong position would prematurely alienate those groups that didn’t get what they wanted. Alienation for some would happen inevitably, but the longer it could be delayed, the better the chance of passing a farm bill. Clifford Gregory, the editor of the Chicago-based
Prairie Farmer,
the oldest and arguably most important organ of the farmers, recalled a meeting with then-candidate Roosevelt, who explained the approach he would take. “I am going to call farmers’ leaders together,” Roosevelt said, “lock them in a room, and tell them not to come out until they have agreed on a plan.”

Roosevelt tapped Henry Morgenthau and Rex Tugwell as his liaisons with the farm leaders, who gathered in Washington several weeks after the election. Tugwell described the first steps toward building a consensus: “Things were complicated by each of the farm leaders having a program of his own. This was true also of many agricultural representatives in Congress…. They had to make speeches defending their own position, to read their own proposals (many of which were already in bill form, already introduced), but Morgenthau and I sat tight and listened. The general result after two days of this was that they agreed unanimously (though some of them merely came in for political reasons and could hardly be counted on).”

What they agreed on was what became the Agricultural Adjustment Act, albeit with considerably more difficulty than Tugwell anticipated. By the time of Roosevelt’s inauguration, planting season had begun in the South, and any measure that aimed to curtail production was almost too late already. Roosevelt reconvened the farm leaders for a one-day session on March 10; they confirmed the essence of their earlier agreement and recommended measures that became the basis for the bill he sent to Congress a few days later. Its essence was “domestic allotment,” a scheme for reducing the farm surpluses by paying farmers not to produce oversupplied commodities. To those outside the farm sector the concept seemed bizarrely counterintuitive, but to farmers themselves it made sense. They were to cut production, thereby reducing the crops they would have for sale. Perhaps market prices would rise to offset the reduced volume, but perhaps not. They ought to be paid for taking the risk. The logical alternative to paying farmers not to produce was to
compel
them not to produce. Besides being unconstitutional this was politically impossible. Roosevelt’s farm bill would create an agriculture administration, which would do the same kind of culling of agriculture that Roosevelt’s bank examiners were doing for banking. The farm administration would determine how much of each commodity America’s farmers should produce, and it would establish payment schedules to meet those targets.