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- [00:00]
Lecturer (likely a Hillsdale College professor)
Foreign.
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Jeremiah Regan
Welcome to the Hillsdale College Online Courses Podcast. I'm Jeremiah Regan.
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Juan Davalos
And I'm Juan Davalos. We're back with the Great American Story, A Land of Hope. On to lecture 18. The New Deal.
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Jeremiah Regan
In FDR, who was the architect of the New Deal, we see the progressive philosophy improved and modified. We Whereas TR and Woodrow Wilson openly attacked the principles of the Founding, FDR adopted the language of the Founding, even using the language of the Declaration of Independence, with some important changes. To advocate for his new position, he recounted the Social Compact from the Declaration of Independence, which says that all men are created equal, they are endowed with inalienable rights by their Creator, and that they institute government to secure these rights. FDR uses very similar language, except he says the relationship is such that people agree to give government power and government agrees to give people certain rights.
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Juan Davalos
It's interesting that you start with that point because as you can probably tell from my accent and my name, I did not grow up in the States. I became a citizen a few years ago. However, the view of people that are not as informed on American history, myself included in that, used to be that, of course, FDR was a great precedent. It's fantastic. That's the very superficial knowledge of who FDR was. But then once you start studying him and what he actually said, then you discover what you're saying. He's using this language, but he's really continuing that rejection of the principles of the Founding and the essence of American political thought, which is that rights come from God. We have this new idea especially taking shape strongly during the FDR era, that no rights actually come from government, and
- [01:58]
Jeremiah Regan
those rights were under assault. There was a real crisis occurring during FDR's presidency, the great Depression. Property was decimated, American lives were at risk, liberties were imperiled because people didn't have the income to support the. The things they wanted to do, much less the things that they needed, such as homes and automobiles and food on the table. And so to protect rights, FDR said, we need panels of experts who can rule objectively and make sure that we can maximize the efficiency of our economy. We need to stop the problem of overproduction. We need to make sure we're making the right things in the right amounts and getting them to people the right way. We need to make sure we're regulating the use of energy and the electromagnetic spectrum so that we can broadcast. And to fix these problems, these violations of rights, we need massive new government. Government is the right giver, after all. And so we need more government to Give us more and better protected rights. That was his idea.
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Juan Davalos
And that's when we start seeing all of this Alphabet soup, Alphabet soup agencies sprawling in the government and the government bureaucracy growing. And this quasi legislative, quasi executive agencies that are independent from Congress and independent from the executive. And that the President is unable to remove the head of these agencies unless there's particular cause for them. All of these constitutional problems start arising and at first the Supreme Court was striking down a lot of FDR provisions until he threatened to pack the court, which is a thread that we've seen come up again recently in American politics. And then the court decided to start acquiescing to what FDR wanted to do.
- [03:44]
Jeremiah Regan
We appreciate you listening to the podcast and learning with us. If you'd like to support us so we can continue to provide this free world class education to all who wish to learn, please go to Hillsdale Edu course and find the Donate button. You can make a tax deductible donation to support the work of Hillsdale College at Hillsdale Eduardo course and by clicking the Donate button.
- [04:06]
Juan Davalos
Now let's turn back to the Great American story. A Land of Hope Lecture 18 the New Deal.
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Lecturer (likely a Hillsdale College professor)
Hello and welcome back. This lecture is about the New Deal. What if Coolidge had been president at the time of the great stock market crash in 1929? What would have happened then? What would have been the policies implemented? How well would he have been able to cope with this collapse of the economy? We, of course, will never know for sure, but he probably would have sought to do as little as possible by way of governmental action. He would have allowed Andrew Mellon's philosophy of allowing the system to work itself out, to cut government spending and let the system repair itself as necessary, allowing wages and prices to fall as necessary and businesses to close or downsize until they reached a point of equilibrium and a new footing to rise again? In any event, we'll never know, because such methods were never tried. Herbert Hoover, who came into the presidency after Coolidge, had an entirely different philosophy. He was a Republican. He had served in both Coolidge's and Harding's administrations as the Secretary of Commerce. But he was at heart in many respects a progressive who believed in activist government and in some ways had been all along at cross purposes with his own bosses. He had an energetically activist base so that he was not likely to sit around and let the system wring itself out and find its way back to health. He was very comfortable, like the progressives, with the idea that government should play an active role, even though Hoover Is often seen as a do nothing president by people who don't know a great deal about the history of the period. In fact, he did a great deal, A great deal more than his republican colleagues would have done. Once the downward spiral of the economy got going, it seemed unstoppable and its effects ramified out in every direction. Automobile output, remember automobile industry is the sort of keystone industry of the whole industrial economy at this time. Automobile output fell from 4.5 million units in 1929 to 1.1 million million units in 1932. A calamitous drop. Ford laid off 75,000 workers. There were similar effects on all the auto related industries that depended on the auto industry for their livelihood. More than 1300 banks closed in the year 1930. 3700 more in 31 and 32. The banking industry was unhealthy and. And that affected investment capital and productivity in one stroke. Unemployment rose to 13 million by the end of 1932, which was one in four workers approximately. And many more were underemployed in part time jobs. How far things had fallen and how fast. When Hoover became president and at the height of Coolidge prosperity, he effused in a speech accepting the nomination for president, he said, we shall soon, with the help of God be in sight of the day when poverty will be banished from this nation. Too bad about that. Nothing in his experience prepared him for the awful spectacle that was now before him and over which he had the responsibility of acting and solving the problem. What could he do? Hoover was inclined to think that the principal problem with the economy ultimately was a lack of confidence. A lack of confidence among consumers, among bankers, among investors, among depositors. And he tried to formulate a response to that in institutional terms that would help to restore confidence. Unfortunately, one of his earliest actions was among his most destructive. His signing of the Hawley smoot tariff of 1930, which raised tariffs on imported goods in a way that actually didn't help the American economy very much and was very damaging to countries, particularly Germany, that were dependent on American imports of their goods to restore their economy. Germany had gigantic reparations payments to make under the terms of the Treaty of Versailles. The Holly Smoot tariff that Hoover had allowed to be imposed made that very difficult. He sought to use something called the Reconstruction Finance Corporation to prop up the economy by investing in, in really in loans to banks, railroads, life insurance companies, building and loans, farm mortgage companies, Companies that were part of the financial infrastructure of the country. The logic behind this is that these well placed institutions that were central to commerce. Once they were restored to health, the health generated there would ripple out into other industries, areas of the economy. The trouble with this was, even if it would work, the optics of it, as we would say today, were very bad. It seemed deaf and blind to the sufferings and needs of the great mass of Americans. This ultimately was Hoover's problem. He thought that eventually the problems of those individuals in need who were on the edge of starvation, in many cases, would be best dealt with not by direct aid. He was supposed to the idea that the federal government should make direct relief payments to individuals, but indirectly by restoring the institutional structure, the infrastructure by which the economy operated. As I say, this came across to many Americans as both blind, callous and his standing with the country sank steadily. As the 1932 election approached, he found himself opposing Franklin Roosevelt, the governor of New York, a distant relative, distant cousin of Theodore Roosevelt. Although a democrat when Theodore Roosevelt was, for most of his life, a republican, but he was from the same kind of patrician background, very well born, went to Harvard, was a product of the elite, Groton school, Columbia law School, and like his distant cousin, he wanted to get into the rough and tumble of politics. He also had problems with health, like his cousin, and suffered and dealt with the challenge of a polio that he had contracted in the early 1920s, so that he was essentially a cripple during the bulk of his political career. The heart of his political career, Unlike Theodore Roosevelt, Franklin Roosevelt, or FDR as we came to call him, was not known for his intellectual gifts. This is actually reflected in the structure of the new deal program that he ended up constructing, which was, whatever else you may say for it, a bit of a hodgepodge. Here's what his closest advisor, Raymond Moley, said about fdr. His knowledge of political and constitutional history and theory is distinctly limited. During all the time I was associated with him, I never knew him to read a serious book or to show any appreciation of the basic philosophical distinctions in the history of American political thought. And whether or not that was true, there's a lot of other testimony to support it. Something that Franklin Roosevelt had that was absolutely necessary to the situation was a sunny and optimistic disposition. He was somebody who was unshakable in his upbeat, confident approach to the future. And this, this was inspirational. This was contagious. This was just what the country needed. His campaign song, happy days are here again, was maybe a little bit of a projection of a future that had not yet arrived, but was a kind of token of that optimism. Even supreme court justice Oliver Wendell Holmes had grudging praise for Roosevelt when he called him a man with a second class intellectual but a first class temperament. That first class temperament would take him a long way. Early on, he used language that suggested change in a nonspecific way. The idea of a New Deal, which was a sort of homey image. It's never clear whether Roosevelt meant to talk about a deal in the sense of a business deal or a deal in the sense of a reshuffle of a deck of cards, but it implied there would be changes. They would be significant, but they would stop short of being a cultural revolution. In some ways, the language of New Deal struck just the right balance for the temperament of the American people who didn't want a French Revolution, they didn't want a communist revolution, but they wanted changes that would restore the elements that they thought were at the core of American life. Roosevelt said he would embark on a program of what he called bold, persistent experimentation. It's common sense. Take a method and try it. If it fails, admit it frankly and try another. But above all, try something. This is exactly what Hoover seemed unwilling to do. There were certain lines he decided in advance he was never going to cross. Roosevelt didn't say that. He made it clear he did not feel bound by the limitations on federal power that Hoover had observed. He was willing to incur deficits, deficit spending in order to deal with emergency situations in the economy. He even used the P word, planning, national planning, as a possible objective of his administration. He floated a lot of possibilities. In the end, Roosevelt won a resounding victory, winning 57 to 40 in the popular vote and solidly in the Electoral College.
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Scott Bertram
Hey there, it's Scott Bertram, host of the Radio Free Hillsdiggle Hour. On this week's program, we welcome back Heather MacDonald from the Manhattan Institute, contributing editor at City Journal. Her book When Race Trumps Merit is now out in a new paperback version with a new preface by Heather McDonald. We'll talk about that and efforts by the Trump administration to curb DEI programs in this, his second term. Plus, Richard Samuelson from Hillsdale in D.C. he's back too, as we walk up to America 250 this week, discussing Thomas Paine's common sense and Abigail Adams and her request of John to remember the ladies. All that this week on the Radio Free Hillsdale Hour. Find it at Podcast hillsdale. Edu or wherever you get your audio.
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Lecturer (likely a Hillsdale College professor)
Meanwhile, the Depression deepened. And in the period between the November election and the March inauguration, five months that passed, the Depression sounded its debts. There was a wave of bank failures. The economy really seemed to come to the edge of the abyss. By March 4th, Inauguration Day, 4/5 of the banks in the country were closed. The New York stock exchange was closed. Industrial Production was at 56% of its 1929 level. Thirteen million wage earners, unemployed farmers in ever more desperate straits. Roosevelt was under a lot of pressure. He needed to deliver an inaugural address that would honestly confront the nation's problems, not try to gloss them over, but give confidence that he also had the willingness and the wherewithal to address them. He succeeded brilliantly. It was a magnificent address. It had some troubling notes in it. He attacked bankers and the wealthy and said, use language, biblical language. The money changers have fled from their high seats in the temple of our civilization. We may now restore the temple to the ancient truths. This was a bit much, although probably, demagogically speaking, effective. But the speech was full otherwise of the sunny optimism for which Roosevelt was justly famous. He made it clear he would not hesitate to use executive power to address what he called the national emergency. And he said, and this is language that progressives had pioneered and that Roosevelt had brought to a high level of perfection.
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Franklin D. Roosevelt (reading or quoting his speech)
I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the congress may build out of its extreme experience and wisdom, I shall seek within my constitutional authority to bring to speedy adoption. But in the event that the congress shall fail to take one of these two courses, in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the congress for the one remaining instrument to meet the crisis, broad executive power to wage a war against the emergency as great as the power that would be given to me if we were in fact invaded by a foreign foe.
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Lecturer (likely a Hillsdale College professor)
This is language that draws upon Ultimately, a 1910 essay by the American philosopher William James called the moral equivalent of war, which was very influential with progressives. And James had arg that what's needed in a liberal society in which everyone goes their own way and does their own thing, and the solidarity of the body politic operating in unison is lacking. How do you produce that? Well, war produces that when the country is under siege, dealing with an external emergency, people pull together. So how can you find the moral equivalent of that? That is a way in peace time, under normal circumstances, to produce the solidarity and cohesion and pulling togetherness that war produces. So the moral equivalent of war is A theme that Roosevelt sounds again and again, and the notion that the country was in the throes of an emergency that was as grave as an invasion would be. He threw himself into a whirlwind of activity right from the very beginning of his administration. In fact, he established a pattern. The hundred days of his administration between March 9 and June 16, he introduced legislation, executive orders, action, one action after another. There was virtually no opposition to his programs. But what was his program overall to look like that was less clear. Raymond Moley, whom I quoted earlier, had assembled a brains trust of top experts in various fields to advise Roosevelt about public policy. Again, another progressive ideal. Go to the experts. Use the advice of the disinterested scholars and experts. But the problem was they didn't agree. Sometimes they had completely conflicting ideas. Some wanted stricter enforcement of antitrust laws. Some wanted to waive such laws and make possible greater concentration in the economy and collaboration between the private sector and government. Others wanted to see massive wealth transfers from the rich to the poor through expanded social welfare programs. All kinds of ideas. Roosevelt characteristically listened to all of them, did not really choose one over the other, but instead went with a kind of hodgepodge that combined a lot of these different conflicting tendencies and not in a particularly orderly way. Some of this, of course, was for political reasons, because their constituencies to be satisfied. But here are a few outstanding features of the Roosevelt program. First of all, he addressed the weakness of the banking system, the ultimate infrastructure in a capitalist economy. This was teetering on the brink of collapse. Remember, four out of five banks closed on inauguration day. Roosevelt asked Congress to declare a bank holiday. He established the Federal Deposit insurance for bank depositors and a number of other measures and explained them to the public in a masterful way through something he invented, the radio fireside chats, in which Roosevelt, who had a wonderfully grandfatherly voice, would in a very patient, kind, gentle way explain to the American public what he was doing and why he was doing. Would take a lot more time and space for me to detail all that was done in the first hundred days. I actually don't detail it as fully in the book, but the book will tell you more. But a second prong of his attack on the problem of depression was to deal with relief, that is the displaced and distressed individuals who had lost their livelihood and even their homes because of the economic emergency. He created a wide variety of agencies, the Civilian Conservation Corps, the Civil Works Administration, the Works Progress Administration and many, many others. A set of abbreviations that formed an Alphabet soup in the Federal District of Washington D.C. all of these were aimed at providing work, providing employment, meaningful employment for those who were no longer able to access the job market. There were some wonderful things that came of all of these, but they didn't really solve the problem of unemployment or underemployment in the economy. Some of the jobs were make work jobs that actually there were elements of popular culture in which those things were mocked. Louis Armstrong, the great jazz trumpeter and the Mills Brothers, a singing group at the time, did a song called the WPA which had mocking lyrics. Now don't be a fool. Working hard is passe. You'll stand from five to six hours a day. Sit down and joke while you smoke. It's okay. The WPA and so on. There was enough skepticism out there about the efficacy of these agencies that people realized the programs were not solving the problem. They were not reducing unemployment in significant ways. In fact, the unemployment rate never dropped below 10% during the new Deal years. Maybe the program should have been bigger. That's what some historians argue. Maybe the programs were doomed to fail because they weren't integrally related to the operation of the economy, as other historians will argue. But in any event, they didn't make much of a dent in the structural problems. Other efforts failed because either they were ill conceived or they were declared unconstitutional, constitutional by the Supreme Court, or both. I'll talk about the National Industrial Recovery act, the nira which was an effort to regulate the economy by controlling on a voluntary basis wages and prices, establishing production quotas and codes and goals and otherwise in a cooperative, non coercive way to orchestrate the economy in a way that recalled the War Industries Board of the First World War. And in fact the man who was General Hugh Johnson, who was the director of the nra, the National Recovery Administration that ran things under the NIRA had worked in the wib. So he knew the score, he knew how to do these things. It was an appeal to patriotism. They had blue eagle emblems in the windows of businesses that cooperated with the program. Their slogan was we do our part. And it didn't work. It was simply overwhelmed by the sheer number, the sheer quantity, the sheer complexity of all the decisions that would have to be made to direct economy in a command way, top down. Roosevelt had great confidence that this was going to be a game changer. He said this is the most important attempt of its kind in history, as in the great crisis of the World War. Note the WIB reference. It puts a whole people to the simple but vital test. Must we Go on in many groping, disorganized, separate units to defeat, or shall we move as one great team to victory. The appeal to solidarity, to the moral equivalent of war. But as I say, the NRA was a failure, and eventually the Supreme Court declared it unconstitutional. There are other efforts to bring back agriculture that were not terribly successful, but less of a complete failure and also ran up against problems with the courts. But notwithstanding all of this, the substantive failure or lack of notable success of Roosevelt's program, they were successful in one sense. They lifted the nation's spirits. They made people feel that the government cared about them and was determined to address their problems. So, for a time being, Roosevelt got the benefit of the doubt. But by 1934, approaching congressional elections, Roosevelt began to feel a lot of criticism, especially from his left and also from his right, from people on the right who felt that, including Hoover himself, who felt that this was the greatest power grab in American history. And there were Democrats who shared this view. John W. Davis, who had been the 1924 Democratic presidential candidate, Al Smith, the 1928 Democratic presidential candidate, were also critical. So Roosevelt was moving the window, so to speak, quite a bit, even with these relatively mild and ineffectual measures. But the challenge from the right was nothing compared to the challenge from the left. There were a whole little platoon of challengers who not only sought to criticize Roosevelt and make alternative suggestions, but to displace him. Senator Huey Long of Louisiana, probably the most fearsome of them, but a number of others. Roosevelt realized he had to be responsive if he wanted to win reelection in 1936. He had to be responsive to these plaints. From the left. His response was a second New Deal, a second hundred days with another, less extensive blizzard of legislation featuring as its centerpiece the Social Security act, the creation of the Social Security administration, which he called the cornerstone of the New Deal. And it was a direct response to his critics on the left. It would be an old age pension for workers reaching the age of 65 who would draw on this modest payment. Roosevelt insisted it would not be enough to live on. It wasn't really a pension. It was old age insurance, but it would be available to them for the rest of their lives. And there are other features of the Social Security act that detailed in the book that I won't go into. This was a very significant event, whatever you think of Social Security, and there's a lot of dissatisfaction with it in our time, but it was a significant step, maybe a momentous step, because it finally stepped across the barrier that Hoover had said the red line, so to speak, that Hoover had said he would never cross. And that is to put the federal government in a direct and ongoing relationship with every individual person in the United States. Hoover still held the federalist idea that that sort of aid should be mediated by state and local governments. The Social Security act changed that forever. Roosevelt went on to win a resounding reelection in 1936, the largest margin hitherto in American history, 60.8% of the popular vote. So it was a great victory and an example of the adage that pride goeth before a fall. Because Roosevelt began his second term believing he could do anything, and having been thwarted again and again by the Supreme Court, which kept declaring his legislation unconstitutional and was on the verge of considering the Social Security act, who knew what would come of that? Roosevelt acted and proposed what's become known as the court packing scheme, that is to increase the number of justices as a way of organizing the judiciary, but in fact putting in place a majority of justices that would be accountable to him and to his program. This was rejected resoundingly by the public and seen as an example of abusive and outrageous executive overreach on Roosevelt's part. And there was worse to come. A sharp recession hit the country in 1937, caused almost certainly by Roosevelt's own policies. It was called the Roosevelt recession, and he got the blame for was in some ways deeper than the recessionary forces of the early 30s. It undid a lot of the growth that had occurred in the early part of his administration, the latter part of Hoover's. So by 1937, the country was becoming impatient and even disenchanted with Roosevelt's domestic program. The elections of November 1938 would be a debacle for Roosevelt. The Democrats did manage to hold on to their majorities, but these were not pro New Deal majorities. Roosevelt's standing in his own party was not as strong as it had been even two years before. There were conservative forces in the Democratic party and a coalition, a conservative coalition of Republicans and anti New Deal Democrats really held the balance of power and were in command in the House. As the journalist Arthur Kroc said, the New Deal has been halted. And for the most part, he turned out to be right. Just two years after his epochal 1936 victory, the biggest electoral margin hitherto in American history, Roosevelt was now faced with opposition on a scale he had never encountered before. How quickly his fortunes had turned. After November 1938, there would be no more hundred days. There would be no more explosions of legislative activity. The New Deal had made changes in the landscape of American life. It had eased the lot of those who were most affected by the economic calamity, but it has not solved the problems, the underlying problems of the economy. It had not returned the country to full employment and to a robust economic growth. That, it turned out, would not be done by a moral equivalent of war. It would be done by war itself. Thank you
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Juan Davalos
thank you for listening to this episode of the Hillsdale College Online Courses Podcast. If you want to continue learning, please visit hillsdale.edu course. There you will find over 40 free online courses, including Ancient Christianity, the Genesis Story, classic children's Literature, and many more. The courses include additional readings, study guides, fully produced videos, and you can chat with your fellow students on a dedicated forum. Upon completing a course, you will also get a certificate. All our courses are free because we believe that what you'll learn will enrich your life and that a virtuous citizen is the best defense for liberty. So pursue the education necessary for freedom and happiness at Hillsdale. Edu Course today. That's Hillsdale. Edu Course. Thanks for listening.