Forgotten Man, The (51 page)

My first debt is to Sarah Chalfant and Andrew Wylie, the two agents who have stood by this book for over half a decade. I also owe Tim Duggan of HarperCollins, who understood the initial idea better than anyone and waited in good faith and encouraged even when all there was of the book were a few mismatched chapters. Tim’s ear improved immensely the quality of the product.

I owe much to the people who have employed me as a columnist while I worked on the book. At the
Financial Times,
John Gapper, Chrystia Freeland, James Montgomery, John Lloyd, and the late Peter Martin were especially supportive. So was Robert Thomson, now of the
Times
of London. Elizabeth Tucker of Marketplace Radio was always an ally. At Bloomberg, my column’s new home, Matt Winkler, Tom Keene, Jim Greiff, and Matt Goldenberg overlooked the gaps in column output. John Wasik of Bloomberg has been an especial friend. Douglas Holtz-Eakin and Walter Russell Mead, colleagues at the Council on Foreign Relations, cheered me on. Ira Stoll of the
New York Sun
did as well. My thanks to Steve Chapman, Bruce Dold, and Marcia Lythcott of the
Chicago Tribune
.

Five years of Great Depression work required enormous research.
I am lucky to have had funding for that work. Thank you to Ingrid Gregg, President of the Earhart Foundation, who, in the spirit of Amelia herself, took this risk—and thanks to David Kennedy before her as well. The Annette and Ian Cumming Foundation provided me with funds for numerous costly tomes. I appreciate too the support of the American Enterprise Institute, which made me a visiting fellow and part of its National Research Initiative in 2002 and 2003. Kim Dennis was there from the beginning and Henry Olsen at the end. Any author is lucky to have the counsel of AEI’s Chris DeMuth, who both advised and gave the chance to present the Schechter theme early on in a Bradley lecture, as well as to deliver, later, yet a second Bradley lecture on the Forgotten Man himself. Additional and crucial support has come from the Alice and Thomas Tisch Foundation. The author appreciates the fact that the foundation was enthusiastic early, when this project seemed improbable. The Manhattan Institute has been supportive: thank you, Roger Hertog, Mabel Weil, Larry Mone, and David Desrosiers for your friendship and patience.

At the American Academy in Berlin, Gary Smith hosted me as J. P. Morgan fellow in economic and financial journalism; this provided needed international perspective.

Ron Chernow was a wise adviser. The work of state think tanks, especially the Mackinac Center and its scholars, Larry Reed and Burt Folsom, inspired this project. Diana Furchtgott-Roth of the Hudson Institute has always lovingly goaded the project forward: “what is the pub date?”

Several researchers, principally Menachem Butler and Johanna Conterio, mined documents and checked, as did Seth Johnson and Charles Siegel. Anna Williams found the photos and taught me all about illustrations in the process. Andrew Relkin provided Web support. Ellen Phillips checked chicken facts and advised on Jewish law. The Lilly Library at Indiana University graciously hunted documents. Thank you to Eileen Giuliani at the Stepping Stones Foundation, who hosted me and my daughter for a visit. Virginia Lewick at the Franklin D. Roosevelt Library and Museum helped out a number of times; the library generally was friendly, a tribute to Roosevelt’s spirit.

I owe an enormous debt to Gene Smiley, professor emeritus at Marquette University, and Jeffrey A. Miron of Harvard, both of whom read this book in its entirety. Smiley’s
Rethinking the Great Depression
is the ideal thinking man’s text. Arthur Levitt also took the time to read this—and told me that as a child he himself went to visit Father Divine. Thank you, Arthur. I owe a debt too to Paul Johnson, who has advised me on all my books, including this one, and another to George Will, who has served as a mentor for many years now. To read Harry Evans’s wonderful
They Made America
was to get a lesson in how to profile an innovator; his
American Century
likewise inspired me. I could therefore not believe my good luck when Harry also proved willing to look over the manuscript—thank you. Mark Helprin gave up the most valuable commodity of all, time, to review this project—and to offer some much-needed pointers on style.

People who also read all or parts of the text include Marian McKenna, Wendell Willkie II, Chris DeMuth, Anne Applebaum, and Robert Asahina. Bob Asahina especially understands this story, having studied the Forgotten Man in his own time in his illuminating book,
Just Americans. Just Americans
shows how both Hoover’s refugee centers and the New Deal tradition of resettlement made it easier for the nation to stumble into the tragic error of interning Japanese Americans. Joe Thorndike, the tax historian at Tax Notes, helped me out at every stage (Thorndike’s virtual tax museum, at www.taxhistory.org makes for fascinating browsing.) Dan Yergin boosted morale, as did Steve Forbes, who shared his library though he disagrees with the gold thesis. Steve’s colleague and my friend Tim Ferguson was always in the background. Glen Asner of the Schechter family, a historian himself, gave me feedback about the family culture. Thank you to Estelle Freilich, a Schechter daughter, for permission to reprint the poem by Joe Schechter’s wife. Marian McKenna in Calgary also helped me out with the Schechters. Her book
Franklin Roosevelt and the Great Constitutional War
is the gold standard work on the court packing. From Capitol Hill, Ike Brannon and Donald Marron contributed ideas and encouragement. Tunku Varadarajan, Amy Finnerty, John Lipsky,
David Malpass, and Adele Malpass were always helpful and interested. Fred and Susan Shriver heard more about this project than they ever hoped to. The late Robert Bartley walked me through a number of these chapters by e-mail and telephone. Allan Meltzer, author of the authoritative
History of the Federal Reserve
, talked over some of the book. Alan Baker of the
Ellsworth American
of Maine advised as well.

All errors are mine.

Every book has a friend. This book’s was Elizabeth Bailey, who understands the importance of long projects.

Books are hard on everyone, but hardest of all on the author’s family. My father and mother, closer to the period than I, encouraged me. So did Marylea and Rolf Meyersohn, and my cousins, Elizabeth Meyersohn, John Meyersohn, Julie Hartenstein, and Maggy Siegel. My grandmother Ruth Brill Shlaes Reis sent along her summary, which accurately represented many Americans’: “Everything was all right in those years, but only if you had a job.” Beatrice Barran deserves special thanks. My siblings Noah Shlaes, Jane Shlaes Dowd, and Bruce DeGrazia let me know that they would accept no other outcome than a finished book. But the biggest thank-yous go to our children, Eli, Theo, Flora, and Helen, and my husband Seth—the man never forgotten.

New York, 2006

Introduction

Across the East River…a utilities executive named Wendell Willkie…
Willkie has numerous biographers. For details of his business side, Joseph Barnes’s
Willkie
(New York: Simon & Schuster, 1952) is indispensable. Other sources are Ellsworth Barnard’s
Wendell Willkie: Fighter for Freedom
(Marquette, Mich.: Northern Michigan University Press, 1966), and
Wendell Willkie
by Mary Earhart Dillon (New York: Lippincott, 1952). Oren Root’s
Persons and Persuasions
(New York: W. W. Norton, 1974) gives a feel for the 1940 campaign.
Dark Horse
(
Dark Horse: A Biography of Wendell Willkie:
Garden City, N.Y.: Doubleday, 1984) by Steve Neal is excellent. So is Charles Peters’s
Five Days in Philadelphia: The Amazing “We Want Willkie!” Convention of 1940 and How It Freed FDR to Save the Western World
(New York: PublicAffairs, 2005).
This Is Wendell Willkie,
edited and with an introduction by Stanley Walker (New York: Dodd, Mead, 1940) contains many primary Willkie documents.

1

The Beneficent Hand

Average unemployment: 3.3 percent
During the 1920s and the Depression, Washington did not keep the sort of systematic unemployment data that it collects today. Europeans found this fact disconcerting. “No trustworthy statistics of unemployment exist and, strangely enough, little effort is being made to collect them,” the editors of the London
Economist
grumbled. But the reason came out of two realities of American life from the period: the country was still heavily agricultural, and farmwork was harder to quantify than industrial work. Until the mid-1930s, state governments, taken together with cities, were still a larger presence than Washington, and were still the most logical ones to do the counting. There was another consideration, reasonable in hindsight: creating a statistic gives people something to politicize.

Still, there were some national numbers to talk about. The Labor Department collected figures, as did the Census Bureau, the Commerce Department, state governments, Paul Douglas, and William Green at the American Federation of Labor—as well as several newspapers, including the
New York Times
and the
New York Sun.
Usually unemployment was reckoned in numbers rather than percentages.

By the 1940s the Bureau of Labor Statistics was constructing firmer data, much of the work being led by scholar Stanley Lebergott. Later Lebergott became the leading authority in the field, and it is his updated figures that are used at the headings of the early chapters, as well as in the final chapter. They come from table A-3 on page 512 of his
Manpower in Economic Growth
(New York: McGraw-Hill, 1964). Lebergott documented that unemployment more than doubled from 1920 to 1921, reaching 11.7 percent on average in 1921, above the level for 1930. For the 1930s, I have gone with month-by-month figures calculated by Richard K. Vedder and Lowell E. Gallaway, in
Out of Work: Unemployment and Government in Twentieth Century America
(San Francisco: Independent Institute; New York: Holmes & Meier, 1993). These authors
use Lebergott and government numbers as their basis. Economists on the right such as Michael Darby, Harry Scherman Fellow at the National Bureau of Economic Research, argued later that Lebergott and the BLS both overestimated the number of unemployed by counting as unemployed people who actually had full-or part-time work in make-work programs such as the WPA. But I have gone with the traditional numbers. The material on black employment is especially important. Looking back over pre-Depression Censuses, Vedder and Gallaway found little difference between blacks’ unemployment rates and whites’. Even discounting for the very real possibility that the black unemployed were undercounted, the gap between the two groups was nowhere near as dramatic as it would be in the modern period, after World War II.

Dow Jones Industrial Average: 155
Data on the stock market in this book come from Dow Jones indexes. The numbers used are the beginning of the month or year in question. Readers can search for the DJIA themselves at djindexes.com. John Prestbo of that company has also authored a useful book on the history of the Dow,
The Market’s Measure: An Illustrated History of America Told through the Dow Jones Industrial Average
(New York: Dow Jones, 1999). Prestbo’s insight about the volatility of the Dow in the 1930s helps to explain the economic costs of political uncertainty.

Floods change the course of history
Much of the flood material is covered in John Barry’s outstanding
Rising Tide: The Great Mississippi Flood of 1927 and How It Changed America
(New York: Touchstone/ Simon & Schuster, 1997), which gives a useful, albeit hostile, portrait of Hoover.
Time
magazine and the
New York Times
also covered the flood action extensively. The more general biographical material comes from Hoover’s own abundant work, other sources, and the authoritative multivolume biography of Herbert Hoover by George Nash. Hoover’s own memoirs (New York: Macmillan, 1952) tell us about his fishing habits.

The idea of philosophical continuity from Coolidge to Hoover
On Coolidge, the best resource is Robert Sobel’s outstanding biography of the thirtieth president,
Coolidge: An American Enigma
(Chicago:
Regnery, 1998). Much of the detail on Coolidge is drawn from this book, including Coolidge’s nickname for Hoover, “Wonder Boy.” Coolidge also wrote an autobiography that sheds light on his views about presidential restraint. When it comes to Mellon, his own
Taxation: The People’s Business
(New York: Macmillan, 1924) is clear on Mellon economics, as are his son Paul’s memoirs,
Reflections in a Silver Spoon
(New York: William Morrow, 1992).
Time
magazine covered Mellon thoroughly in the 1920s.

By 1908, Hoover had outgrown Bewick Moreing
Hoover’s attitude toward Russia comes out clearly in his memoirs and in George Nash; Lewis Feuer also details them in his article “American Travelers to the Soviet Union, 1917–1932,”
American Quarterly
14, no. 2 (Summer 1962): 119–49. Robert Thomsen’s biography
Bill W.
(Center City, Minn.: Hazelden Press, 1975), provides detail on this stage of Wilson’s life.

The paramount symbol of such immigrant independence
Details on the Bank of United States, including its status, can be found in Allan Meltzer’s
History of the Federal Reserve,
vol. 1 (Chicago: University of Chicago, 2002).

Blacks too were part of this story
Father Divine’s story is delightfully and meticulously told by Robert Weisbrot in
Father Divine: The Utopian Evangelist of the Depression Era Who Became an American Legend
(Boston: Beacon Books, 1983).

2

The Junket

One late July day
The passenger list of the
President Roosevelt
was published in the
New York Times,
as was the news of the
Duilio.
Material on the founding of the Consumers Union can be found in Richard Vangermeersch’s short biography of Chase,
The Life and Writings of Stuart Chase
(New York: Elsevier, 2005).

The story of this trip to Russia was told by a number of the travelers, both upon their return, to newspapers, and later in articles and books. Two reports were published by those on the trip—a short
report by the American Trade Union Delegation, titled
Russia After Ten Years,
and a longer report by the technical advisers, the group that included Paul Douglas and Rex Tugwell. This second book, by Melinda Alexander et al.,
Soviet Russia in the Second Decade
(New York: John Day, 1928), contains Tugwell’s long essay on agriculture and four essays by Paul Douglas. Douglas, Brophy, Maurer, Tugwell, and others would revisit the trip in their memoirs.

So the travelers carefully gave themselves a label
In regard to Communist involvement in the planning of the trip, Sylvia R. Margulies reports in her
Pilgrimage to Russia
(Madison: University of Wisconsin, 1968) that the Comintern was involved from the beginning, asking the American Communist Party to create a delegation of labor leaders. Even at the time, the American Federation of Labor was suspicious; its executive council wrote that it seriously doubted “the good-faith of such a self-constituted commission.” There is no evidence that Paul Douglas, Rex Tugwell, or many of the other travelers were aware of the extent of Communist involvement. On the American fascination with Soviet Russia generally, David C. Engerman’s
Modernization from the Other Shore
(Cambridge, Mass.: Harvard University Press, 2003) is enlightening. In regard to trips and intellectual pilgrims, three books stand out: Peter G. Filene’s
Americans and the Soviet Experiment
(Cambridge, Mass.: Harvard University Press, 1967); Paul Hollander’s
Political Pilgrims: Travels of Western Intellectuals to the Soviet Union, China and Cuba
(New York: HarperCollins, 1983); and Margulies,
Pilgrimage to Russia.
Two articles proved crucial in the decision to place emphasis on the summer 1927 junket: Feuer, “American Travelers,” and Silas B. Axtell, “Russia and Her Foreign Relations,”
Annals of the American Academy of Political and Social Science
138 (July 1928): 85–92. Feuer is especially good on Stuart Chase and on W. E. B. DuBois’s trip. Axtell became disillusioned during the 1927 trip and suspicious of the objectivity of some of his fellow junketeers. Of the descriptions of the Soviet Union, none speaks so much to us as Emma Goldman’s
My Disillusionment in Russia
(1925; repr., Gloucester, Mass.: Peter Smith, 1974).

Roosevelt had taken History 10-B
The material on Roosevelt’s undergraduate curriculum comes from his collected letters as edited by Elliott Roosevelt. On the evolving American policy toward utilities, Preston J. Hubbard’s
Origins of the TVA
(New York: Norton Library, 1961) is especially useful.
his feeling for Harvard Law School
Frankfurter’s statement about the quasi-religious feel of Harvard comes from Harlan B. Phillips,
Felix Frankfurter Reminisces
(New York: Reynal, 1960).

There was another element to Frankfurter’s personality
Feuer, “American Travelers,” analyzes this stage in Frankfurter’s work.

Frankfurter had a virtual monopoly
The detail about the clerk who did not come from Frankfurter comes out of Dennis J. Hutchison and David J. Garrow, eds.,
The Forgotten Memoir of John Knox
(Chicago: University of Chicago Press, 2002).

“You learn no law in Public U”
Joseph Lash cites the poem in
From the Diaries of Felix Frankfurter.

“victims of ‘American capitalism’”
Both Peggy Lamson and Robert C. Cotrell,
Roger Nash Baldwin and the American Civil Liberties Union
(New York: Columbia University Press, 2000) provide material on Roger Baldwin’s Soviet stay. The story of the posting of the news of Sacco and Vanzetti in Russia comes from Lamson,
Roger Baldwin
(Boston: Houghton Mifflin, 1976).

“the ‘Three Musketeers’ in Moscow in 1927”
The letter is at Hyde Park in the presidential archives.

“there is a bit more to eat”
Tugwell’s analysis of Soviet agriculture can be found in Alexander et al.,
Soviet Russia in the Second Decade.

“We had been good the day before”
Tugwell recalls this and other details in
To the Lesser Heights of Morningside: A Memoir
(Philadelphia: University of Pennsylvania Press, 1982).

3

The Accident

“Closing Rally Vigorous”
The literature on the 1929 crash is vast. John Kenneth Galbraith’s clear and short
The Great Crash: 1929
(Boston: Houghton Mifflin, 1988) argues that the market crashed because of a speculative bubble and was rescued by government action. Frederick Lewis Allen,
Only Yesterday
(New York: Harper, 1931), gives a good feel for the mood at the time. Economists have long differed on the causes of the crash and downturn. Milton Friedman and Anna Schwartz argued famously in the early 1960s that deflation caused the Great Depression; Allan Meltzer has more recently, in his
History of the Federal Reserve,
supported that thesis with newer sources. A less technical version of the deflation argument can be found in Lester V. Chandler’s underappreciated
America’s Greatest Depression, 1929–1941
(New York: Harper and Row, 1970). Chandler’s book includes some astounding charts on unemployment, including the fact that by January 1934, six in ten of all unemployed Massachusetts males had been unemployed for more than a year. In 1940, 15 percent of unemployed males had been out of a job two years. All these authors are to some extent building on Irving Fisher, who helped develop modern monetarism.