By Kevin C. Murphy, Copyright 2013. All Rights Reserved.
Chapter Eleven: New Deal Coming
Progressives and the Origins of the New Deal
V. The Rivers Give, The Rivers Take
The Muscle Shoals complex, resting at the navigation head of the Tennessee River, had originally been developed using federal funds during the World War. The National Defense Act of 1916 called for the creation of domestic nitrate plants in case America had to join the conflict, and in September 1917, Woodrow Wilson chose Muscle Shoals as the site for such a factory, along with the necessary power plant to keep it running. (Nitrates are used in the production of both explosives and fertilizer. Previously, America had relied on Chile for these nitrates.) By the time of the Armistice, the government had invested $106 million into the site. Two nitrate plants had been built, and work had begun on what would later be known as the Wilson Dam, which when completed in1925 would be the largest concrete dam in the world. In 1921, however, new Secretary of War John Weeks announced that, with the war over and with President Harding desiring to reduce government expenditures as much as possible, the unfinished Muscle Shoals site was now up for sale to any private interest who would grant a fair return.2
Henry Ford saw a golden opportunity. In July 1921, he made an offer for the Muscle Shoals complex -- $5 million for the two nitrate plants and a 100-year lease on the power plant -- paying 4% interest on the $17 million the government had already sunk into it, plus $66,476 to amortize the cost of the plants after a century had passed. The deal also stipulated that the government would complete the dam and power plant fifteen miles upriver, and that Ford would produce 40,000 tons of nitrogen a year, which would be sold at an eight percent profit. "Let me have this and I will make it a wonderful development," Ford said, "something that will open the eyes of the world."3
While other offers were also submitted, including a competing one by the Alabama Power Company, it was Ford's that struck the national imagination. Local farmers, hoping to procure cheap fertilizer and, more importantly, to see Ford unleash the same magic in Alabama he had brought to Detroit, looked forward to seeing the Great Man develop the project. "A river that is rolling its way to the sea without working is to Mr. Ford a river in disorder," said Paul Kellogg in The Survey, quoting another writer, "and he longs to put it in order by making it work." "Henry Ford, with Thomas A. Edison, will inaugurate -- for the common folk of America -- the Hydro-Electric-Chemical Age," another writer gushed. "At Muscle Shoals we will witness the culmination of centuries of patient research into the mysteries of Nature."4
Other observers weren't so sure. While not necessarily averse to the offer at first, Gifford Pinchot saw through Ford's gambit right away, noting that "for the water-power itself Mr. Ford would pay nothing" and that the offer was "seven parts waterpower to one part fertilizer." (He would later call it "one of the most outrageous pieces of piracy against the property of the people" he had seen in his career.) William Borah also had "not been impressed" by Ford's offer since "there were no guarantees behind it…Ford doesn't really agree to do anything. He seems to feel that his reputation for doing things is sufficient." And granted oversight of the deal once it ended up before the Agriculture and Forestry Committee, George Norris -- despite considerable pressure to just sign off on it -- instead initiated several months of hearings into the question, during which he began to believe that more could be made from the Muscle Shoals site as well.5
"I came to the conclusion gradually," he wrote after the fact, "that the possibilities were infinitely greater than had been first contemplated." While nitrates were important for explosives in war and fertilizer in peace, "there were other goals much to be desired…I had come to the conclusion that many of the streams in the United States, flowing from the mountains through the meadows to the sea, presented the opportunity to produce great amounts of electricity for the homes and factories of the nation…It has seemed always to me that the development and conservation of such resources ought to be under public control, public operation, and public ownership."6
In April 1922, Norris' committee rejected all private offers for the site except Ford's unanimously and rejected Ford's offer by a vote of 7-9. That same month, as a counter to Ford's offer, Norris put forward a bill suggesting that a public corporation own and operate Muscle Shoals on behalf of the government, and not just for nitrates, but as a flood control site and source of power. At the time, Norris was introducing the bill mainly just to establish a baseline to better evaluate the Ford proposal. But by June 1922 -- while not casting any aspersions toward the Great Man himself -- the Senator had become quite convinced that the Ford deal was bunk. Even just considering the costs to date, Ford was offering to pay $5 million upfront for a site that taxpayers had already invested $106 million in, and "I am against any corporation or any man getting for a mere bagatelle what cost the taxpayers of the United States $106,000,000." More to the point, the government was about to cede over 4600 acres of prime real estate to Ford for the sole intent of making fertilizer, when it was clear the site -- as Ford well knew -- could be better used as a source of hydroelectric power. The deal on the table even had the government paying the bulk of the costs of maintaining the dams for the century that Ford and his heirs grew even wealthier from the power that could be produced at Muscle-Shoals.7
Norris's almost single-handed blocking of the deal enraged both Ford and many of the Alabama farmers who had wanted to see his Miracle City on the Tennessee River, as well as powerful lobbies like the American Farm Bureau Federation. "I was burned in effigy in some communities because of my fight against his offer," Norris recalled in his memoirs. "Threats against my life, to which I paid no attention, were quite common." In February 1923, even the Nebraska State House turned against their Senator -- It passed a resolution urging its members to support the offer and requesting Ford visit their state for the purposes of hydroelectric development. (Norris's angry response: "I am unwilling to give away the birthright of millions of unborn citizens for the enrichment of private corporations at the expense of the taxpayers of America.") But by 1924, with the rapacity of the private interests involved in the Teapot Dome affair becoming ever clearer, Norris' fight for public ownership of Muscle Shoals began to gain adherents among his Senate colleagues, members of the conservation community, and the League of Women Voters, who in 1922 almost passed a resolution supporting Ford's offer, but by 1925 -- thanks in good part to the hard work of reformer Mabel Costigan -- had firmly swung into Norris' camp. Newton Baker, the Secretary of War who had presided over the initial construction at Muscle Shoals, now declared that "no project to take that power out of the hands of the Government would interest me."8
Henry Ford, meanwhile, likely took up his offer with Calvin Coolidge in a private White House meeting in late 1923. That December, after Ford had renounced a third party bid and openly endorsed Coolidge, the president called on Congress to close the deal on Muscle Shoals. In March, the House moved to action on Coolidge's request, passing a bill out of the Military Affairs Committee that mirrored Henry Ford's request exactly. "Ford wrote this bill," Fiorello La Guardia exclaimed in the five-day floor debate on Muscle Shoals, "and you cannot get away from that." The Muscle Shoals property, he argued, could follow one of two precedents -- that of Niagara Falls or that of the Panama Canal. "The Niagara power was grabbed by greedy, selfish corporations, assisted by favored legislation, and this gift of nature, this great water power is turned into dividends for these companies, and the people must pay excessive rates for power, current, and light. The Panama Canal, on the other hand, stands as a monument to government operation."9
While Norris had mostly refrained from casting aspersions at Ford directly, La Guardia felt no such compunction. This was a man, he argued, who with "hatred in his heart…based on his ignorance of history, literature and religion," continually conducted "a nefarious warfare against the Jews not only of America but of the whole world." If the House passed this bill, it would be "bowing to money…and if you pass this bill you should replace that flag on the wall of this house with a great big dollar sign…Why, gentlemen, this proposition makes the Teapot Dome look like petty larceny." Unperturbed, the House passed the Ford offer 227-142.10
But the bill still had to get through the Senate, and there George Norris bottled it up in the Agriculture and Forestry Committee, while continuing to drum up support against the deal. "The Senate of the United States," reported TNR in April 1924, "is now considering a bill which many intelligent people believe will, if made a law, ultimately create a national scandal beside which the affair of the naval oil leases will seem a very teapot tempest indeed." The month prior, The Survey ran a special issue on "Giant Power" which further drew progressive attention to the importance of energy, the question of public versus private ownership, and case of Muscle Shoals. "The forces for good and evil latent in Giant Power," wrote Robert Bruere, introducing the issue, "surpass those ushered in when Watts' engine harnessed coal to the looms of England." "From the power field perhaps more than any other quarter," wrote Gifford Pinchot, "we can expect in the near future the most substantial aid in raising the standard of living, in eliminating the physical drudgery of life, and in winning the age-long struggle against poverty." Al Smith, in his contribution, argued for "state development, under state ownership and state control" of public power, with -- Niagara Falls being in New York -- the emphasis on state, although "we will be far from selfish. In fact, we will be ready to link…up as a unit to any possible national power development; provided, of course, as it would be natural for us to seek that the interests of the state of New York and her people in the ownership of this water power be thoroughly safeguarded."11
Meanwhile, by inquiring into a possible Coolidge-Ford quid pro quo and other matters, Norris and his committee (who now favored his position) were able to stall the deal through the 1924 election season, although not before Oscar Underwood of Alabama got a resolution passed calling for solution as soon as the next Congress convened. Henry Ford was sick of waiting. Disgruntled by the treatment he and his offer received, Ford rescinded it in October 1924. Coolidge, for one, was embarrassed by the way the Great Man had been treated. "If anything were needed to demonstrate the almost utter incapacity of the national government to deal with an industrial and commercial property," he fumed in his 1925 State of the Union, "it has been provided by this experience."12
While Ford had left the stage, the fate of Muscle Shoals was still very much up in the air. As soon as Congress returned after the election in December, Senator Underwood of Alabama put forward a new bill authorizing Coolidge to lease the nitrate plants to a private corporation -- most likely the Alabama Power Company -- for the sole purpose of creating nitrates, which would translate into cheap fertilizer for farmers. Norris's plan of multi-purpose development and public ownership of Muscle Shoals, said Underwood, was "a good bill if what you want is only hydro-electric power" and woolly-headed bureaucrats running the operation into the ground. His plan, however, gave "all the property at Muscle Shoals to the national defense and to the production of fertilizer." Norris emphatically disagreed. If the Underwood bill passed, he argued, "it will ultimately be recognized as a rape upon the Treasury of the United States, a gold brick to the American farmer, and the giving of a concession of untold value to some corporation…a concession so great that it will make Teapot Dome look like a pin head. Doheny and Sinclair will soon realize they were only pikers when they spent hundreds of thousands of dollars for the corrupting of private officials and the hiring of ex-public officials when a greater property is going to be conveyed to some private interest through the legislative channel without the expenditure of a dollar."13
There was a better way forward, the Nebraska Senator averred. "We are not legislating for today, Senators; we are setting up a milepost in the history, not only of our country, but of civilization. We are going to say by our action on this bill…whether it shall be a marker for human progress, more happiness, and greater democracy, or whether we are going to relegate ourselves and our prosperity to the control of combinations and trusts." Echoing Norris on the House side, La Guardia declared in January 1925 that "the quicker we decide to take God's gift to the people of America and operate it for the enjoyment of all the people instead of for the profit of private corporations, the better it will be for the people of this country." "Muscle Shoals is a water-power project first, and incidentally a nitrogen plant," La Guardia emphasized in March. "There is no use fooling ourselves, and there is no use continuing to fool the farmer."14
From January to March 1925, the end of the Congressional term, the fate of Muscle Shoals would depend on the outcome of a parliamentary chess match between Senators Norris and Underwood. First, the two combatants kept overwriting the pertinent legislation with their respective plans for Muscle Shoals via the amendment process. (Much of the Senate was agnostic as to the ultimate fate of Muscle Shoals, only that someone, somehow, develop the property and put the issue to rest.) After several back and forth substitutions, Underwood won this initial round, getting his revised amendment to Norris's amendment approved by the Senate. When Underwood's plan passed the Senate 50-30, Norris presumed he had been beaten. As per the norm, the bill then went to conference with the House of Representatives. Since Underwood was in the Democratic minority, he did not serve as a Senate conferee -- and Norris, who had been chosen to head the Senate side delegation, provided he supported the Senate's position -- asked for a unanimous consent request not to serve, which was granted. (Underwood thought this was a gallant move on his opponent's part.)15
But then things hit a snag. On the House side, the only Muscle Shoals bill that had passed was the one from March 1923, supporting Henry Ford's no longer extant offer. The Underwood bill, meanwhile, had never been approved by Norris' committee -- only by the entire Senate as an amendment. And so, when the conference report came back to the Senate in February, Norris noticed there were relatively insignificant issues in the bill -- on the construction of navigation locks, for example -- which had never been addressed in either the House or the Senate versions of the legislation and had been thus included in the conference. This, Norris argued, meant the conferees had not just conferred on the two standing bills, but actively legislated - which was against the rules of Congress. He complained this was out of order and Senate leadership, disliking the possible precedent involved and fearing Norris's threat to derail anything the Coolidge administration put forward, agreed. After a 45-41 vote sustaining the Chair's dismissal, the bill got sent back to conference. The conferees returned a new version of the report that solved the problem on February 26th, but a week later, the Senate adjourned without action on Muscle Shoals - thus killing the Underwood measure in that Congress. By the hair of a whisker, and only through Norris's strict reliance on Senate rules, the site remained in public hands.16
In March 1925, sick of the machinations attending the issue thus far, Calvin Coolidge authorized a board of inquiry to look into what to do with Muscle Shoals, thus preempting an attempt by Senator Underwood to try his bill again in the next session. When that board effectively punted -- as one member summed up its findings to Herbert Hoover, "lease it if you can, and if you can't lease, then run it" -- Coolidge then urged Congress in January 1926 to create a joint committee to look into finding a lessee for the property, a plan that was shepherded through the Senate by Senator Thomas Heflin of Alabama. This new joint committee entertained various offers for the complex, with senators on the committee supporting the bids of power companies and House members preferring the offer of the American Cyanamid Company, a nitrates manufacturer.17
All the while, Norris and La Guardia continued to rail in their respective Houses for public ownership of Muscle Shoals. "You cannot find any corporation in business for love, for philanthropy, or for patriotism," La Guardia insisted. "The lessee will want to make money and they will make it on the farmers and the consumers." Norris, meanwhile, had chemists testify before his committee that using cyanamide to make fertilizer, a process which required water power, was now outdated - Nitrates could be made from synthetic ammonia more cheaply and easily. Norris thus continued to urge that hydroelectric power, flood control and navigation be the determining factors in Muscle Shoals' fate.18
And so the battle wended on until the spring of 1928, when another government ownership resolution put forward by Norris and La Guardia came to a vote. "The Government owns Muscle Shoals now," Norris proclaimed, "it operates it now, and the question is, Shall we turn it over to private monopoly or shall we keep it for all the people?'" As before, many Senators cared less about how power was generated at the site and more that power was generated there at all, so by continually being a thorn in the side of any private concern attempting to take over the plant, Norris had made public ownership the most likely game in town. In March 1928, he and La Guardia's resolution passed the Senate and House. Two months later, after conference, the resolution passed by 43-37 and 211-147 respectively. Tiring of the whole matter and desiring not to make an election year issue of Muscle Shoals, Coolidge chose to pocket-veto the resolution. But, thanks primarily to George Norris, a precedent had been set, even during the business-friendly Coolidge era, for public ownership and development of Muscle Shoals and the Tennessee Valley. The fight would continue into the next two presidential administrations.19
"I know you are sufficient unto yourself, and that you require from those who care for you neither expressions of unstinted admiration, nor protestations of affection," Hiram Johnson wrote Norris after the dust had settled, "but, my dear George, I cannot tell you how your courageous and patriotic stand increased my respect and added to my love for you." In fact, because Norris had waged his lonely fight for public development for so long, Hiram Johnson -- with House co-sponsor and California colleague Philip Swing -- were more easily able to gather support for their own legislation, calling for a dam on the Colorado River for flood control, irrigation, and power purposes.20
Contemporaneously with Norris's fight for Muscle-Shoals, Johnson and Swing, from 1922 to 1928, pushed for a Boulder Dam which could rein in the Colorado and bring irrigated water and cheap power to the West. Their fellow Californian, Herbert Hoover, had helped pave the way in 1922 by acting as Chair of the Colorado River Commission. Then Hoover, combining his love of engineering with his fondness for voluntary associations, orchestrated an agreement among the seven states involved -- California, Nevada, Wyoming, Colorado, Utah, New Mexico and Arizona -- although the latter state later balked at the deal. "Mr. Hoover talks like a man about interstate treaties," William Hard told Survey readers in 1924. "He talks like a boy about making a dam in the Colorado River." But Hoover's fondness for the Boulder Dam project should not be construed as an endorsement of public power -- in this case, the generated power would be sold to private companies. "[T]he distribution of the power by the government was pure Socialism," Hoover argued. "Such exponents of these doctrines as Senator Norris, La Follette, and Borah, together with Gifford Pinchot and John Dewey," he argued, "no doubt hoped for the growth of Socialism inch by inch." When Norris' Muscle Shoals bill passed Congress again in 1931, then-President Hoover vetoed it, declaring he was "firmly opposed to the Government entering into any business the major purpose of which is competition with our citizens."21
In any case, after Johnson tweaked the Boulder Dam bill to give Arizona and Nevada more access to power and proceeds from power sales, the House and Senate passed Johnson's legislation in December 1928, and Coolidge -- who actually supported this particular project -- signed it into law before the New Year. Speaking on the Boulder Dam in 1927, Fiorello La Guardia said it would be "a monument to the civilization of this era…the Boulder Dam project will demonstrate how cheaply power can be generated and once we demonstrate how nature may be harnessed and power generated at a low cost, it will break the control of the Power Trust and it will bring relief to the entire country." After passage, Norris called it "at once one of the most important, humane, and justifiable pieces of legislation that had been put on the statute books for many years."22
Johnson's push for the Boulder Dam had been stymied for years by two forces, the first being private power interests. "It is the opposition of Insull, and those similarly minded, that is most dangerous in the Boulder Dam Project," Johnson wrote Ickes in the summer of 1927. "I fear it will be sufficient in the next session to prevent accomplishment. Of course, if we had the wholehearted advocacy of the administration, we could whip this great power trust." The other problem for Boulder Dam advocates for much of the decade were southern Democrats in Congress, who were unclear why they should sign off on expensive federal investments that availed their own region very little. But moods toward federal flood control efforts changed drastically in 1927, after many months of unseasonable rainfalls coalesced into the worst flood in American history.23
By April 1927, the Mississippi River would be moving three million cubic feet of water a second -- three times more than the devastating flood of 1993 -- and smashing through levees right and left. By the time the Great Mississippi Flood of 1927 had run its course, 27,000 square miles had been submerged - an area equivalent to the size of New England - causing anywhere from 246 to over a 1000 deaths, up to a billion dollars in damages, and leaving close to a million people homeless. Such an unprecedented disaster merited an unprecedented response. In seven states -- Kansas, Tennessee, Missouri, Illinois, Mississippi, Arkansas, and Louisiana -- the Red Cross ran as many as 154 tent cities, temporarily housing close to 326,000 people, and offering food and clothing to another 312,000 more. And overseeing it all was the Great Engineer.24
On April 22nd, 1927, Coolidge appointed Hoover the head of a special committee to oversee flood response efforts and then, having delegated the problem, fell back into his usual state of repose. Hoover, meanwhile, took on the cause with relish, seeing in the flood not only the type of grand relief and humanitarian effort he had been heading since the days of the War, but an amazing opportunity for both an engineer and a presidential candidate. For almost all of the next three months, Hoover -- with his publicity bureau in tow -- would guide the massive relief and reconstruction effort from the flood zone itself, drawing press reports that ranged from complementary to adoring. ("In the course of the next few weeks many representatives of magazines, newspapers, and feature syndicates will be in the flood area," Hoover and Red Cross vice chairman James Fieser informed Red Cross personnel. "Give these writers every possible consideration.")25
"I am speaking to you from the temporary headquarters which we have established for the national fight against the most dangerous flood our country has ever known," Hoover told America at the end of April, in his first-ever national radio address. "Everything humanly possible is being done by men of magnificent courage and skill." This fight, Hoover informed the nation, was a "great battle which the engineers are directing. They have already held important levees against the water enemy" -- the implication being, of course, that the Great Engineer was now the nation's general in this fight. Most of the battles over the next few months, however, went to the water enemy, leaving Hoover more often than not directing evacuation efforts -- which he did quite capably. In late May, he told the president that "[a]ll population that could be flooded is already covered." Then came the June rise, which flooded many areas all over again.26
Even when the water had its way, however, the press remained impressed by Hoover's "organizing and directing genius," in the words of the Boise Idaho Statesman. In the words of the Oakland Tribune, Hoover was "the ablest and most efficient American in public life…In personal fitness for the presidency, there is no other American, even remotely, in Mr. Hoover's class." From the field, the Commerce Secretary received summaries of this reporting two to three times a week from his staff, and saw it was good. If Coolidge chose not to run for office again, Hoover told an old Stanford friend, "I shall be the nominee, probably. It is nearly inevitable."27
True to form, once the immediate crisis had passed, Hoover ran the flood relief and reconstruction efforts as another exercise in voluntary association, this time on almost a national scale. "I made ninety-one local committees to look after the Mississippi flood," he later recalled. "You say, 'A couple of thousand people are coming. They've got to have accommodations. Huts, watermains, sewers. Streets. Dining halls. Meals. Doctors. Everything'…So you go away and they simply go ahead and do it. Of all those ninety-one committee there was just one that fell down." To help secure access to credit for all the many affected farmers, Hoover worked to establish "reconstruction corporations" -- private non-profit organizations backed by credit from businesses and elites in each state. When some states, such as Arkansas and Mississippi failed to reach their expected quota of donations, Hoover had Coolidge sign a letter requesting "the business interests of America under the leadership of the Chamber of Commerce of the United States…to secure to these loan corporations subscriptions of capital." He also urged the nation's civic organizations and fraternal orders to raise money as well. As a result, ultimately Hoover was able to raise about $13 million in credit.28
But, as in instances prior -- and in a few soon to come -- these voluntary efforts fell short of addressing the real scale of the calamity. That $13 million Hoover raised translated to less than $20 per victim of the flood, and in Mississippi less than five percent of the amount of loans Hoover had predicted were ever made. "With due deference to Mr. Hoover," said Franklin Roosevelt in New York, "I cannot believe that he really means that is adequate to meet more than the demands for the next few weeks." Coolidge, meanwhile, refused to call Congress back into session to ask for a flood appropriation, incurring the wrath of several newspapers in flood-drenched areas. Suddenly, Silent Cal's laconic leadership approach and tight fist over the federal government's purse strings were less appetizing attributes than they had been in years past. "Either [Coolidge] has the coldest heart in America or the dullest imagination," complained the Paducah News-Democrat to its Kentucky readers, "and we are about ready to believe he has both." Not among the naysayers was the New York Times, who respected Coolidge's stubbornness in this matter: "Fortunately, there are still some things that can be done without the wisdom of Congress and the all-fathering Federal Government."29
But there were some things that couldn't. After the waters had passed through, it was clear to all that the previous Mississippi flood control system - or what remained of it after a losing battle against the tides - had been insufficient to stop calamity. So in March 1928, after deliberating on the best way forward - President Coolidge and the Senate soon agreed it was the cheapest plan, put forward by Major-General Edgar Jadwin of the Army Corps of Engineers -- Congress very quickly passed the Mississippi Flood Control Act of 1928. Introduced by Senator Wesley Jones of Washington and Congressman Frank Reid of Illinois, this measure appropriated the unprecedented sum of $325 million over ten years in federal funds -- "the greatest expenditure the government has undertaken except in the World War," noted the New York Times -- to construct a new flood control system for the river.30
Speaking as the Chair of the Committee on Flood Control, Congressman Reid argued that his committee thought "the construction of flood-control works dependent upon local contribution will result in the failure of the whole, and another disaster such as that which appalled the nation last year might happen." The Senate agreed, and passed the bill unanimously. "There can be no doubt that the problem is here and that it is a national problem," Borah had said while the flood waters raged, "and that the government should proceed in the most intelligent, effective, and speedy way possible to deal with it...The cost will be tremendous," Borah conceded, but it had to be done.31
When the Act came before Congress, Borah told constituents balking at the cost that "we should go about it something as we did in the building of the Panama Canal -- strip it of politics, dedicate it to public principles, and finish the job whatever it may cost." "The national government itself must do this work and do it without faltering in the manner of expense," Borah told another, "that is, whatever is absolutely essential to be expended should be expended." The American Bankers Association agreed. "It is the profound conviction" of that organization, "representing 20,000 American banks, that the control of the Mississippi River is a national problem, should be solved by the nation, and that, cost no matter what it may be, should be borne exclusively by the nation." Coolidge was less resigned to the idea of such a massive appropriation -- Indeed, he thought it "the most radical and dangerous bill that has had the countenance of the Congress since I have been president." But, after pressure from all sides, he signed his name to the legislation without ceremony on May 15th, 1928.32
The Flood Control Act, said its House sponsor, "changes the policy of the federal government which has existed for 150 years…It is the greatest piece of legislation ever enacted by Congress." Writing of the 1928 Act in Rising Tide, his history of the Great Flood, historian John Barry notes that "the law set a precedent of direct, comprehensive, and vastly expanded federal involvement in local affairs. In the broadest sense, this precedent reflected a major shift in what Americans considered the proper role and obligation of the national government, a shift that both presaged and prepared the way for greater changes that would soon come."33
If Coolidge, Borah, and the other longtime defenders of low government spending were dismayed by the massive outlays included in the Flood Control Act, they could have taken solace in a short book that came out the same year -- The Road to Plenty, by William Trufant Foster and Waddill Catchings, two old Harvard friends who were now the president of Reed College and a financier for Goldman-Sachs respectively. While Congress had ventured onto the political path that would dictate the coming decade, Foster and Catchings -- although few noticed at the time -- had concisely summed up the fundamental economic argument that would come into vogue.34
In a number of books throughout the 1920's, including 1923's Money, 1925's Profits, and 1927's Business Without a Buyer, Foster and Catchings had delighted in being gadflies to the economics profession at large, poking holes in the conventional wisdom and offering cash prizes to anyone who could prove their alternative theories were wrong. ("Once more," began a review of Business Without a Buyer, "Messrs. Foster and Catchings are at their trick of placing a tack in the chair of that dignified old party, the Dismal Science, and are getting huge enjoyment out of the consternation thus caused to him and his followers.") In The Road to Plenty, composed as a layperson-friendly Socratic dialogue among several plain-spoken strangers on a train, Foster and Catchings argued that traditional economists had worried too much about problems of production and too little about consumption and purchasing power, even though experience had shown that increasing the former did not necessarily have any effect in the latter. Believing that if you "[l]ook after production, and consumption will take care of itself," Foster and Catchings wrote, economists had neglected the complicated "problem of getting products into consumers' hands at the rate at which such products could be produced."35
To remedy this problem of purchasing power, government's primary economic responsibility was to "put more money into consumers' hands when business is falling off, and less money when inflation is under way." This was also in part because of a problem they deemed the "Paradox of Thrift." When times were tight, individuals and businesses both worked harder to save money -- but more money saved meant less money working in the economy and thus less economic activity. Saving -- an individual good -- became an detrimental to the overall functioning of the economy. Thus, "when business begins to look rotten," Foster and Catchings prescribed "more public spending" through investments and public works. If that meant an increase to the national debt, so be it -- "[I]t means scarcely more than that that people of the United States collectively owe themselves more money." Meanwhile, the economy would grow, families would have money to spend, and "the greatest waste of all…the waste of idle plants and idle workers" would be bypassed.36
In the midst of Coolidge prosperity, Foster and Catching's argument in The Road to Plenty attracted mostly just academic interest. "Too good to be true -- You can't get something for nothing," Franklin Roosevelt wrote in the margins of his copy. Within a few years, however, like so many other of the reforms advocated or attempted by progressives in the Twenties, their prescient arguments about under-consumption, purchasing power, and counter-cyclical government spending would gain more adherents.37
Return to the Table of Contents.
2. Lowitt, 197-199, 203.
3. Ibid, 197, 200-202.
4. Ibid. Paul Kellogg, "The Play of a Big Man with a Little River," The Survey, March 1st, 1924, 637.
5. Lowitt, 202, 215. Borah to E.H. Dewey, August 18th, 1922. WJB: Muscle Shoals.
6. Norris, 248-249.
7. Lowitt, 207-209.
8. Lowitt, 209-210, 212. Norris, 256. Lemons, The Woman Citizen, 131-133.
9. Lowitt, 210-211. Zinn, La Guardia in Congress, 124-125.
10. Zinn, La Guardia in Congress, 124-125. Sobel, 243.
11. Lowitt, 212-214. "Muscle Shoals: A Scandal in the Making?" The New Republic, April 23rd, 1924 (Vol. 38, No. 490), 220-221. Robert W. Bruere, "Pandora's Box," The Survey, March 1st, 1924 (Vol. 51, No. 11), 557. Gifford Pinchot, "Giant Power," The Survey, March 1st, 1924 (Vol. 51, No. 11), 561-562. Alfred E. Smith, "The Stake of the Public," The Survey, March 1st, 1924 (Vol. 51, No. 11), 574-576.
12. Lowitt, 212-214. Zinn, La Guardia in Congress, 126. Sobel, 243.
13. Lowitt, 244-250.
14. Zinn, La Guardia in Congress, 126-127.
15. Lowitt, 253-257.
16. Lowitt, 255-258. The congressional rule about no new inclusions in conference is usually one honored in the breach.
17. Ibid, 330-342.
18. Ibid. Zinn, La Guardia in Congress, 128-130. Norris, 261-262.
19. Lowitt, 340-347. Zinn, La Guardia in Congress, 130-134.
20. Lowitt, 351-352.
21. "The Drama of the Colorado," The New Republic, April 1st, 1925 (Vol. 42, No. 529), 147-149. William Hard, "Giant Negotiations for Giant Power," The Survey, March 1st, 1924, 577-580. Hoover, 174, 303-305. In that same interview with William Hard, Hoover made light of his public persona as the apostle of efficiency in a response to a member of the National Women's Scenery Conservation League, who thought a dam threatened a waterfall under their protection. "Some waterfalls," Hoover replied, "are in the wrong place, where few people can see them. Moreover, in many waterfalls the same effect could be secured by a smaller expenditure of water. Waterfalls could be constructed with a view to their better public availability as scenery, and the sheet of water used to produce the scenic effect could be much thinner. We could save water and we could also have waterfalls in better locations if we handled the subject of waterfalls with the aid of human intelligence added to the resources of nature. Scenically as well as industrially we can be better off through the civilizing of our rivers." Ibid.
22. Lowitt, 264-267, 351-352. "The Drama of the Colorado," The New Republic, 147-149. Zinn, La Guardia in Congress, 132. In the notebook he kept while watching Senate debates in his role as Vice-President, Charles Dawes wrote that "[w]hen Boulder Dam is built, there should be on it somewhere a tablet to Senator Hiram Johnson, without whose untiring and able leadership it would have failed. I have never seen a man more faithful and effective in a hard fight than Johnson has been in this one." Timmons, 254.
23. Lowitt, 352-353. Johnson to Ickes, June 18, 1927. HLI Box 33: Hiram Johnson. Barry, Rising Tide, 16-17.
24. Barry, Rising Tide, 16-17, 285-286.
25. Barry, Rising Tide, 262, 273.
26. Ibid, 280-285.
27. Ibid, 287-289.
28. Ibid, 366-370.
29. Ibid, 372-374, 377.
30. Barry, Rising Tide, 404-406. Martin Reuss, Designing the Bayous: The Control of Water in the Atchafalaya Basin, 1880-1995 (Alexandria: US Army Corps of Engineers, 1998), 113-121.
31. Ibid. William Borah, "For the Press," May 5th, 1927. WJB Box 256: 1927-28: Mississippi Flood Control.
32. Ibid. Borah to Milton Clark, March 26th, 1928. WJB Box 256: 1927-28: Mississippi Flood Control. Borah to Walter Parker, December 12th, 1927. WJB Box 256: 1927-28: Mississippi Flood Control. Greenberg, 134-135.
33. Barry, Rising Tide, 406-407.
34. Schlesinger, Crisis of the Old Order, 135-136.
35. Ibid. Edward S. Cowdrick, "The Dilemma of Thrift," The Saturday Review, July 9th, 1927, 959. William Trufant Foster and Waddell Catchings, The Road to Plenty (Boston: Houghton Mifflin, 1928), 152.
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