Worldmaking (27 page)

The Wall Street crash did not directly cause the Great Depression. This also required a clumsy government response, which was not long in coming. The Fordney-McCumber Tariff of 1922 had imposed significant levies on imports. This was a politically popular course of action, as the purpose of tariffs—if not the outcome—is to protect jobs at home, a lesson heeded by Republicans and Democrats in 1928 when both parties promised support for even higher tariffs. The Hawley-Smoot Tariff of 1930 followed the logic of its 1922 predecessor in extremis: tariffs were increased to 40 percent, their highest level in American history. It was, in the words of the historian David Kennedy, “an economic and a political catastrophe.” One thousand economists signed a petition urging Hoover to veto this narrow and self-defeating bill, which invited the rest of the world to engage in similarly protectionist practice. The influential J. P. Morgan partner Thomas Lamont, a close adviser to the president, recalled, “I almost went down on my knees to beg Herbert Hoover to veto the asinine Hawley-Smoot Tariff. That Act intensified nationalism all over the world.”
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Indeed, the French believed the tariff was akin to a declaration of war and vowed to retaliate in kind. But Hoover signed the bill in June 1930, leading Walter Lippmann, previously a Hoover supporter, to lambast the president for accepting “a wretched and mischievous product of stupidity and greed.”
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Hopeful that America, a land of plenty, was better placed than anywhere else to subsist through its own efforts and resources, Hawley-Smoot's supporters consigned the rest of the world economy to a dismal fate and scarcely served their homeland any better. The United States was not nearly as self-sufficient as protectionists believed its resources suggested. Over the course of 1930, the gross national product fell by 24 percent and unemployment increased from 8.9 to 11.9 percent. This rate more than doubled over the next two years.

In the final two months of 1930, six hundred banks were forced to close, leaving their depositors empty-handed. Thanks partly to President Andrew Jackson's assault on Alexander Hamilton's system of centralized, federally regulated banking, many of America's banks, according to Carter Glass, the cofounder of the Federal Reserve, were “pawn shops” managed by “little grocery corner-men calling themselves bankers—and all they know is how to shave a note.”
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And while a liquidity crisis afflicting the small banks of the provincial hinterland was one thing, the contagion soon spread to bigger, more esteemed enterprises. New York City's Bank of United States collapsed on December 11, 1930—the largest commercial bank failure in American history. Panic spread across the nation's banks and their depositors, clogging the arteries of credit. Viable banks recalled loans as quickly as depositors could close their accounts. As loans became harder to acquire, small and medium-size businesses went to the wall and millions of workers were made redundant. As export markets collapsed, U.S. unemployment rose to 25 percent by the beginning of 1933, the Depression's trough. Perhaps for the first time, an atmosphere of despondency descended upon a nation known for its optimism. At a micro level, this theme was captured in the suicide note written by a mechanic in Houston: “The depression has got me licked. There is no work to be had. I can't accept charity and I am too proud to appeal to my kin or friends, and I am too honest to steal. So I see no other course. A land flowing with milk and honey and a first-class mechanic can't make an honest living. I would rather take my chances with a just God than with unjust humanity.”
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As the historian Anthony J. Badger writes, “So many people in Memphis jumped off the Hanrahan Bridge into the Mississippi that the telephone numbers of local clergymen willing to counsel would-be suicides were listed in the press. The efficacy of this assistance was substantially lessened by the newspaper headline ‘Memphis Preacher Jumps Off.'”
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The Depression was a low point in American self-esteem, memorialized in works of affecting social realism such as John Steinbeck's
The Grapes of Wrath
.

President Herbert Hoover continues to receive a hard rap for his mishandling of the Great Depression's early years—some of which is warranted and some of which is not. His critics often forget that Hoover was remarkably talented, a victim of circumstance as well as of his orthodox belief that small government worked best, even during a crisis of that magnitude. The Stanford University scholar Thomas Sowell is surely correct to observe, “Had he never become president, Herbert Hoover could have gone down in history as one of the greatest humanitarians of the century.”
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In the aftermath of the First World War, Hoover formed a philanthropic organization, seeded in the first instance by his own personal fortune, to alleviate starvation on the European continent. He was successful—not to say uncommonly proactive and brave—in spearheading this endeavor. John Maynard Keynes observed that Hoover was “the only man who emerged from the ordeal of Paris with an enhanced reputation.”
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This led some Democrats to approach Hoover about standing for president in 1920, with Franklin Roosevelt as his running mate. Hoover demurred, feeling more at home in the Republican Party, and instead performed distinguished service, during an admittedly economically buoyant decade, as secretary of commerce to Harding and Coolidge.

Hoover's belief in the superiority of well-meaning voluntarism to government-provided safety nets—and his aversion to running budget deficits—shaped his passivity in the face of irresistible economic forces that served to destroy his reputation. His name remains something of an epithet today. Throughout the 1980s, whenever the Democratic Speaker of the House Tip O'Neill wanted to dismiss President Reagan as a doctrinaire conservative of deceptive affability, he would describe him as “Hoover with a smile.”
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Hoover consistently appears on the periodic attempts to rank the presidents as faring better only than Andrew Johnson, James Buchanan, and Franklin Pierce. This does a disservice to Hoover. Beard certainly didn't view Hoover's response to this grave economic crisis as especially misdirected in the context of the times. Indeed, in 1931 he applauded not just his tariff policy but also the manner in which the president refused to bow to the Navy League's demands to increase defense spending in what was claimed as a more dangerous world—support that earned Beard an appreciative phone call at home from the president.
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Much as the cataclysmic events of the First World War guided Woodrow Wilson's attempt to begin the practice of international relations anew, so the Great Depression—shattering in different ways—informed Charles Beard's efforts to formulate a similarly bold vision for America's foreign policy. Wilson and Beard were both political science Ph.D.s responding to calamity with a radical theory, although each had a starkly different point of departure. Whereas Wilson believed the United States had to assume a leadership role to change the world, Beard believed that the nation had to retreat from the world and change itself.

So Beard supported Hawley-Smoot because a 40 percent import tariff was almost guaranteed to compel self-reliance. Beard further envisioned the creation of a barter system in which nations would trade only in essential items not provided by domestic enterprise, removing wasteful competition that leads to needless conflict. He urged tighter controls governing the extension of loans so as to prevent “irresponsible governments” from securing American credit, and sought a substantial contraction in diplomatic activity. Beard believed it was high time the government rejected the rationale that the U.S. military should be strong enough “to protect any American citizen who wants to make ten per cent on the bonds of Weissnichtwo or sell cornflakes, shoehorns and collar buttons to the … world willy nilly.”
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To manage this statist edifice, predicated on much wishful thinking, Beard called for Congress to establish what he named a “National Economic Council,” charged with coordinating all the nation's economic requirements in the realms of finance, production, and distribution.
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The name he gave to this strategy of foreign-policy retrenchment and domestic statism was “continental Americanism,” elaborating more fully on themes developed in the 1920s. The only problem was that President Hoover steadfastly refused to heed Beard's advice, or anything even approaching the activism he counseled. It took the election of Franklin Delano Roosevelt in 1932 to raise Beard's hopes that his views might find a more receptive audience. Indeed, Beard hoped that he would serve as a freelance tutor of sorts to the new president.

Franklin Roosevelt's public persona is indelibly carved in historical memory: his broad, optimistic smile, half-glasses, finely tailored suits, ever-present cigarette holder, and projection of utter confidence in his and his nation's destiny. Yet for a man on first-name terms with virtually everyone he encountered, his inner self was safely guarded—FDR was a Fabergé egg in his dazzling, unpenetrable exterior. Born in 1882 in upstate New York to a wealthy patrician family, Roosevelt was educated at Groton and Harvard before embarking on a political career: an occupation often deemed beneath a man of his class. Unlike Wilson, FDR was not an intellectual—he assimilated rather than created useful knowledge. After meeting Roosevelt in 1934, John Maynard Keynes recorded surprise that the president was not more “literate, economically speaking.”
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While Roosevelt brought to domestic and foreign policy no original insights of his own devising, he was adept at delegating the task of policy and strategy innovation to others, and he had a wonderful knack—with some notable exceptions, like the Supreme Court–packing plan—of identifying the ideas and policies that would effect positive, enduring change
and
pass muster in Congress and the nation at large. His political skills were abundant. He drew important cautionary lessons from his service as assistant secretary of the Navy in the Wilson administration, recognizing that the White House and public opinion had to be closely aligned for major policy innovations to take root. And it was a fortunate and marvelous thing that Roosevelt was so amply gifted in political matters. For his presidency coincided with the worst economic downturn, and most dangerous war, in American history. His unflappability and charisma—as displayed in his masterly radio Fireside Chats—were indispensable in those perilous circumstances.

FDR was clear in his admiration for Alfred Thayer Mahan, remarking that “as a young man I had the pleasure of knowing Admiral Mahan and I have an almost complete collection of his books and articles.”
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His mother observed that her son “loved history in any form and used to pore over Admiral Mahan's ‘History of Sea Power' until he had practically memorized the whole book.”
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Roosevelt believed in the indispensability of a powerful navy, and during the first year of his presidency, in the most challenging economic circumstances, he catalyzed a naval renaissance, allocating a massive $238 billion in June 1933 to improve the fleet and prioritize the development of high-pressure and high-temperature steam propulsion—a farsighted funding decision that allowed the U.S. Navy to launch ships that were up to 25 percent more efficient than those of its peers.
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But FDR's views on Woodrow Wilson were more qualified in their admiration. In 1928, Roosevelt chided Republicans in
Foreign Affairs
for positively aiding “the charge that in a time when great constructive aid was needed in the task of solving the grave problems facing the whole earth, we have contributed little or nothing.”
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Throughout the 1920s, Roosevelt recorded strong opposition to America's continued reluctance to become a full member of the League of Nations.

Political expediency trumped fidelity to Wilson's league during the nomination tussle in 1932, however, when FDR disavowed his previous support for league membership and the Democratic Party later dropped references to Wilson's cherished project, eradicating nearly all mention of this pathbreaking two-term president. Repudiating Woodrow Wilson was cruel but perhaps vindicated in the nature of the campaign and its outcome: Roosevelt crushed Hoover on Election Day. FDR took 57.4 percent of the popular vote and left the incumbent president with just 59 electoral college votes from the states of the Northeast, whose long-standing affinity for the GOP would not survive the coming age of Roosevelt. Of course, the overwhelming manner of the Democratic Party's victory might also suggest that dismissing Wilson's legacy was unneccesary.

Charles Beard welcomed Roosevelt's election for the president's keen attention to the Depression. Both men shared a common optimism about America's future and its capacity for evolution and improvability. Throughout his thirteen years as president, FDR led a step change in the purpose and reach of the federal government, implementing some of the statist policies Beard had advocated and whose implementation he celebrated. What was not to like in a presidency devoted to job creation, social security, large-scale public works programs, the promotion of labor union rights, and federal subsidy of the arts? Of course, the president rejected Beard's counsel in refusing to centralize economic planning in a single source that would have brought the nation closer in affinity to the corporatism of fascist Italy than the ameliorative, paternalist state capitalism in, say, France or even Great Britain. But Beard forgave him that, recognizing that a change of that magnitude was out of reach for the present time—even for so gifted a politician as Roosevelt.

What worried Beard was the president's affinity for the Navy. In this regard, and in this alone, he much preferred Hoover, who shared his aversion to Mahanian naval theory. FDR's support for naval expansion seemed to portend an outward-facing foreign policy. And Beard worried that this foolish emphasis might result in the president proving susceptible to “a grand diversion—a diversion that might not be unwelcome, should the domestic recovery program fall far short of its aims”—a remarkably farsighted observation for Beard to have registered in 1933.
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At this juncture, Beard blamed some of Roosevelt's hawkish advisers rather than the man himself. He identified a split in the administration between Jeffersonians who favored political and economic self-sufficiency, such as the president and Secretary of Agriculture Henry Wallace, and dangerous Wilsonian internationalists like Secretary of State Cordell Hull, who believed that the United States must promote order, spread democratic values, and continue to facilitate greater economic interdependence. Hoping to tilt the administration in a continentalist direction, Beard embarked on the task of convincing Roosevelt of his indispensability as an adviser.