The Great Depression

Amity Shlaes’ brilliant and highly readable book surely must be the best analysis of the Great Depression ever. With the precision of an economist, a historian’s sense of the enduring and a journalist’s ear for language, she deftly parries the claims of FDR fans and defenders. She details Herbert Hoover’s complicity in his successor’s flawed perception of one of America’s darkest hours. The Bloomberg columnist’s “The Forgotten Man” will stand the test of time.

But before I address her analysis, a word about my perspective as a Depression Kid in a family of five boys living in York, Pa. I was 10 when the 1929 stock market crash hit. My father didn’t think of himself as a “forgotten man.”

During the Depression years he ran the machine shop at the York Corporation, where he earned $40 a week and was known as the Bible-reading foreman. We had no car or telephone, but we did have books, lots of them.

Our parents said we had a Christian duty to help the “poor and downtrodden.” We gave 10 percent to our church, Mother canned peaches from our back yard for poor members and Dad oversaw the church poor fund. He sent occasional checks to the Near East Foundation for the “starving Armenians,” and we twice invited a summer “fresh air” boy from Brooklyn to stay with us.

In York, a loaf of bread cost 10 cents, sugar 5 cents a pound, a Woolworth’s necktie 10 cents and a toothbrush 5 cents.

In 1937 the average annual salary for public school teachers was $1,367, unemployment reached 14.3 percent, inflation was 1.5 percent and the Dow Jones high was $190. (I wrote this sentence just as the Dow reached $14,000 for the first time!)

Yet according to the “standard history,” Ms. Shlaes writes in her bracing introduction, “the 1920s were a period of false growth and low morals… . The crash was the honest acknowledgment of the breakdown of capitalism — and the cause of the Depression. A dangerous inflation caused by speculating margin traders brought down the nation.”

President Herbert Hoover “made matters worse” by his “rugged individualism” and President Roosevelt saved the day and staved off European-style revolution. “Without the New Deal, we would all have been lost.”

The Depression had multiple causes, in Ms. Shlaes’ view, but the deepest one was “the lack of faith in the marketplace … From 1929 to 1940, from Hoover to Roosevelt, government intervention helped make the Depression Great.”

In 1932, she continues, FDR first used the “forgotten man” image, the man at the bottom of the economic pyramid — the old, the poor, the sick and the unemployed. From the outset, he perused “interest group politics” — “labor, senior citizens, farmers, union workers” — and created the modern entitlement system that both parties practice today, pitting Americans against one another.

By defining the “forgotten man” as the specific groups FDR sought to help, Ms. Shlaes says, he was “in effect forgetting the rest — creating a new forgotten man. The country was splitting into those who were Roosevelt’s favorites and everyone else.”

For FDR, experimentation was essential. In his second inaugural address he sought “unimagined power” and “instinctively targeted monetary controls, utilities, and taxation” because they were central to the public sector.

He made scapegoats of businessmen. FDR’s Agricultural Adjustment Administration ordained that successful farmers had to “kill off their piglets in a time of hunger” because destroying the pigs would drive up prices for farmers. This made no sense to millions of Americans, including me.

FDR became increasingly critical of the Supreme Court for overturning several of his unconstitutional recovery efforts, and in 1937 he sought to correct their stubbornness by a plan that would have allowed him to appoint an additional justice for everyone 70-plus who refused to quit. This would have enabled him to appoint more compliant men. The Senate forthrightly nixed this unconstitutional Supreme Court packing scheme.

The author writes “The argument that democracy would have failed in the United States without the New Deal stood for seven decades,” but even if it were true it is not right to obscure the negative consequences of FDR’s and Hoover’s ill-conceived behavior.

Noting that the 1920s produced “true economic gains,” she faults Hoover and FDR for the same basic economic follies. And quotes Calvin Coolidge on Hoover’s flaws: “That man has offered me unsolicited advice for six years, all of it bad.”

With no coherenet political philosophy and his celebrated wit and charm, FDR was opportunistic and given to slogans, cliches, demagoguery. “We have nothing to fear but fear itself.” He believed that “constitutional niceties blocked progress,” and his “remedies were often inspired by socialist or fascist models abroad” though few New Dealers were socialists or communists.

He was heavily dependent on his “brain trust,” a coterie of bright lawyers, several of whom were favorably influenced by Mussolini’s fascism and Stalin’s Marxism. In 1929, some 2,500 American intellectuals visited the Soviet Union to see if any of its social achievements might be applicable to America.

Among them was Rexford Tugwell, who had a six-hour chat with Joseph Stalin (foreshadowing in a bizarre way Hubert Humphrey’s eight-hour marathon with Khrushchev in the Kremlin in 1959).

Later Tugwell joined FDR’s brain trust, but neither he nor other FDR advisers who had seen merit in some of Stalin’s or Mussolini’s social accomplishments had much influence on the New Deal. The NRA (National Recovery Administration), whose ubiquitous symbol was the blue spread eagle, an ostentatious effort at central planning, was inspired in part by Mussolini’s fascist model.

Ms. Shlaes notes that the NRA bureaucracy “generated more paper than the entire legislative output of the federal government since 1789.”

As it turned out, she concludes, the New Deal’s policy of helping the poor and soaking the rich became the precursor of the “entitlement challenge that bedevils both parties today.”

With respect to the underclass, it may may seem odd that Ms. Shlaes regards Father Divine, a black Depression cult leader, a positive symbol of self-help, along with Booker T. Washington, who urged blacks to improve themselves in the years after slavery.

By preaching personal responsibility and property ownership, the charismatic Divine established himself as a major Depression figure along with better-known men such as Huey Long and Father Coughlin.

All three spoke up for the little guy, had political aspirations and sought FDR’s ear. Ms. Shlaes says that Divine’s belief in “a future of plenty” was in direct conflict with FDR, who assumed “a future of scarcity.”

Divine, with his thousands of followers, attempted to be a race-blind leader, but he became increasingly interested in civil rights.

After establishing his headquarters at 20 W. 15th St. he became so famous that a letter addressed simply “God, Harlem, USA” would reach him.

As the Depression eased, Divine’s empire shrank, but his New York “heavens” (low-cost housing) and his Father Divine restaurants persisted into the mid-1940s.

It was then that I ran into him. Occasionally when in New York, I would stop by one of his restaurants for a 25-cent lunch. There was always a fully set table reserved for Divine.

One Sunday evening I took a half-dozen fellow Yale Divinity School students to his chief heaven in Harlem to observe an opulent Love Feast over which he presided. The huge table was set with no fewer than 50 different dishes, each of which Divine blessed as one of his followers brought it to his table. Above him was a large neon sign, “God’s Holy Communion Table,” and behind him a large interracial choir. Brother John Lamb, a white man, announced our presence.

Shortly thereafter, in Divine’s daily paper, I had a lively exchange of letters with him, several criticizing the American Red Cross for segregating blood by race, with which he heartedly agreed.

Divine was a cult figure and occasionally in trouble with the law, but Ms. Shlaes insists he was a symbol of private initiative and self-help that FDR failed to comprehend. “The Forgotten Man,” rich in analysis and anecdote, tells a story that needed to be told. Its basic findings are a convincing corrective to the mythologies that have clouded and distorted the origin and impact of the Great Depression and of Franklin D. Roosevelt, who misunderstood it and used it to advance his political objectives.

Ernest W. Lefever, a Washington writer, is founder of the Ethics and Public Policy Center.