Fear Itself (34 page)

7
Radical Moment

S
IX MONTHS AFTER
Franklin Roosevelt’s inauguration, and only two months after Chicago and New York had feted Italo Balbo with euphoric pageants, nearly two million persons, standing seven to fourteen deep, watched more than a quarter of a million New Yorkers parade up Fifth Avenue, from Washington Square to Seventy-second Street. They gathered to salute not a hero or a sports team, but a law, the National Industrial Recovery Act (NIRA). Enthusiasm had been growing for days. Participation had to be limited by quota. President Roosevelt wired the organizers to affirm that “such evidence of support is highly gratifying and supplies real inspiration to those of us in Washington who are working to establish the NRA and bring this country back to better times.”
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As ticker tape fell steadily from the sky on September 13, 1933, just a few days after Labor Day, Eleanor Roosevelt was joined on the grandstand in front of the grand marble façade of the New York Public Library, just south of Forty-second Street, by Gen. Hugh Johnson, the administrator of the National Recovery Administration; New York’s governor, Herbert Lehman; the state’s former governor Alfred E. Smith; Secretary of Labor Frances Perkins; New York senator Robert Wagner; and secretary to the president Louis Howe, who had lost thirty-two pounds while campaigning tirelessly for Roosevelt during the presidential election, and who effectively served as the president’s chief of staff. Starting in the early afternoon, the parade they witnessed lasted many hours longer than planned, nearly to midnight. Led by Elise and Doris Ford of Brooklyn, models for the artist Howard Chandler Christy,
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dressed as “Miss Liberty” and “Miss NRA,” the event was organized into seventy-seven trade and industry divisions—including law firms, taxi garages, florists, furriers, barbers, banks, and laundries—many of whose members dressed in costume (“the restaurant section with fifty Chinese girls in native costumes, the warehouse men and coal men in the garb of miners”). Flags, banners, and celebratory bunting draped almost every Fifth Avenue building. An immense ninety-by-seventy-five-foot Blue Eagle, the NRA’s ubiquitous symbol, hung from the B. Altman department store, later converted into the building of the City University of New York Graduate Center, just north of Thirty-fourth Street. Two hundred bands, imported from near and far, gleefully serenaded the marchers. Trumping Balbo, forty-three army and navy planes and thirty civilian ones flew overhead in a series of dramatic tactical maneuvers, “a demonstration from the air . . . without equal in the city.” F
ERVOR
S
WEEPS
T
HRONGS,
the
New York Times
headlined, T
HE
G
REAT
O
UTPOURING TO
S
HOW
F
AITH IN
NRA R
ECALLS
A
RMISTICE
. N
IGHT
S
CENE IS
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RILLIANT
. N
OTABLES AND
H
UMBLE FROM
A
LL
O
CCUPATIONS
M
ARCH
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NDER
A
VENUE
’
S
G
OLDEN
L
IGHTS
.
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A cooler
Wall Street Journal
described “the celebration” as “one of the greatest in the nation’s history.”
⁴

Convened by the White House, this colorful event seemed to confirm widespread popular support for what FDR had called “the most important and far-reaching legislation ever enacted by the American Congress.”
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It was the most visible culmination of a self-conscious campaign to mobilize the public. Broadcasting to the country on July 24, Roosevelt had once again likened the effort to confront economic misery to the challenges of large-scale warfare.
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“In war, in the gloom of night attack,” he had told the American people, “soldiers wear a bright badge on their shoulders to be sure that comrades do not fire on comrades. On that principle, those who cooperate in this program must know each other at a glance.”
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With the slogan “We Do Our Part,” the Blue Eagle served as that badge of recognition.

By the time of the parade, there had been a “national surge around the Blue Eagle.”
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The new law, with its wide scope and a sharp bite, the president reported, represented “a connected and logical whole” program for American capitalism based on “a rounded leadership” for the economy “by the federal government.”
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Though initially skeptical, he had become increasingly enthusiastic about the planning aspects of this program.
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A key member of his “Brains Trust,” Rexford Tugwell, explained how this unparalleled initiative authorized “the national government to assume the leadership of private enterprise.”
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Facing deep insecurity and the loss of profit, many business leaders welcomed what Nelson Gaskill, president of the Lead Pencil Association, called “an economic sovereignty the like of which the world has never seen,” a system that replaces “old theories of fierce competition” with “regulated competition or a systematized democracy.” Likewise, Henry Harriman, president of the U.S. Chamber of Commerce, welcomed the “philosophy of planned national economy.”
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These measures, the
New York Times
rightly argued, were undertaken to create a scale of economic regulation and oversight “entirely new in the United States.”
¹³

Stating that “a national emergency productive of widespread unemployment and disorganization of industry . . . is hereby declared to exist,” the statute sought to curb chaotic market competition by releasing firms from antitrust requirements, and it looked for means to jump-start the economy by raising wages to put more money in the hands of consumers. The centerpiece of these efforts was a massive voluntary endeavor, underpinned by public authority, that harnessed the capacities not of individual companies but of the country’s trade associations, such as the Drug Institute of America, the National Coal Association, the American Textile Machinery Association, and the National Automobile Chamber. Working in tandem with labor unions, these organizations were instructed to create “codes of fair practices” that would establish production targets and set wages and prices. These negotiated agreements were to be reviewed, sector by sector, by an Industrial Advisory Board, a Labor Advisory Board, and a Consumers’ Advisory Board before being sent by NRA staff to the president for confirmation.
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He was granted the authority to impose standards and rules should such agreements not be reached voluntarily.
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The statute singled out the collapsing oil industry for particularly robust public oversight at a time of rampant overproduction, cutthroat competition, and poor working conditions. Oil prices had plummeted, with a barrel of East Texas crude costing just four cents, “less than a bottle of the newly legal 3.2 percent beer.” Reflecting concerns that oil companies would be unable to find ways to cooperate with one another, the law regulated oil pipelines, established prices for the transportation of petroleum products, and authorized the president to seize pipeline companies should they not comply with these directives.
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Further, this ambitious law guaranteed workers the right to form and join unions. Section 7(a) stated that “employees shall have the right to organize and bargain collectively through representatives of their own choosing,” and thus banned “yellow-dog” contracts that forbade union membership. John L. Lewis, the president of the United Mine Workers, assessed these labor provisions as the most striking American advancement for human rights since the Emancipation Proclamation, and, in characteristically more tempered prose by William Green, the president of the American Federation of Labor (AFL), as having “brought [a] complete and almost instantaneous change in the union situation,”
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including the chance to shape how industry would be governed by offering “representatives of wage-earners . . . a voice in every stage of code-making.”
¹⁸

Further, in a concession to the insistence of key members of Congress that vied with the president’s fiscal conservatism, the act launched a $3.3 billion public works program to build roads and bridges, make river and harbor improvements, control floodwaters, and construct other infrastructure projects. To make these ventures happen, income tax rates were increased, corporate dividends were no longer exempt from such taxation, and a limit was placed on the deduction of capital losses. Congress also approved the use of eminent domain. With such compulsory purchase orders, the federal government could appropriate the land, buildings, and materials the law’s economic-stimulus projects required without obtaining the consent of their owners. Additionally, the bill authorized the federal government to sell or lease any property built or acquired by the NRA.

An unamended version passed the House on May 26. The Senate approved an amended bill on June 9. A conference report reconciling these versions was endorsed by the House the very next day, and approved by the Senate just two days later. On June 16, the president affixed his signature, thus initiating a potentially renewable two-year period in which he was enjoined to carry out the purposes of the law.

No one could gainsay that the NRA was off to a quick start. Just five weeks after FDR had signed the act into law, his July fireside speech celebrated the Cotton Textile Code for its swift elimination of child labor—“an old evil” that “no employer acting alone was able to wipe out”—and reported on how he had sent a model “blanket code” to every employer in the country, calling for an immediate minimum wage of thirty cents an hour, a factory workweek of thirty-five hours, and the full abolition of child labor. By the beginning of September, fully 690 draft codes had been submitted to the NRA, including rules for the steel, automobile, and lumber industries where their drafting had proved contentious.
¹⁹

Nothing like this comprehensive restructuring of market capitalism by a national state ever had been tried before in a constitutional democracy, even in countries governed by social democratic parties. Nor did the NRA simply reproduce what the dictatorships were doing. Above all, it combined tools of planning and corporatism borrowed from those regimes with American Progressive ideas about the regulation of business and the rights of labor. In preserving many features of the independence of these organizations, this vast scheme sought to create a more vibrant and less unequal capitalism in a manner that would be consistent with democratic values. While the new Nazi government, for example, had begun to renew German industrial power by stepping up orders by the state for goods, notably including weapons, in order to reactivate unused productive capacity, at the same time dissolving trade unions and mandating that wages and prices not rise above depression levels, the NRA sought to refloat capitalism and sustain a balanced private economy by finding a steering role for the national state that maintained democratic sensibilities, private powers, and constitutional procedures.
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Indeed, this Recovery Act initiated the most radical economic policy moment in American history. It did not stand alone. Marking the New Deal’s first year, the
New York Times
named as many as forty “Alphabet New Deal Agencies,” ranging from the AAA (Agricultural Adjustment Administration) to the USES (United States Employment Service), that Congress had created.
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And that initial year was followed by a further torrent of lawmaking.

In all, by passing new rules for banking and investing, by convening new large-scale programs to build infrastructure and advance conservation, by providing public employment, and by comprehensively enlarging labor rights and creating America’s first fully modern program of social insurance, the administrators of the New Deal forcefully rejected what the new president, at his inaugural, had called “an outworn tradition” of political economy that thought markets to be self-correcting. The economic collapse had vastly reduced the appeal, even the legitimacy, of these older ideas and had marginalized, at least for the moment, those scholars and policy advocates who resisted a robust economic role for the nation’s government. In one of many tens of such articles to appear in popular and academic outlets, Rexford Tugwell argued that new types of federal intervention had become necessary because the very idea of an independent and free market was no longer compelling. “The jig is up. The cat is out of the bag. There is no invisible hand. There never was. If the depression has not taught us that, we are incapable of education.” Washington, he announced, was “recapturing the vision of a government equipped to fight and overcome the forces of economic disintegration. A strong government with an executive amply empowered by legislative delegation,” he thus concluded, “is the one way out of our dilemma, and forward to the realization of our vast social and economic possibilities.”
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