By Kevin C. Murphy, Copyright 2013. All Rights Reserved.
New Deal Coming
Progressives and the Origins of the New Deal
I. A Taste of Things to Come
- Franklin Roosevelt, 19361
"Almost every legal and political argument of the great court fight in 1937 was anticipated back in 1923 and 1924."
- Clarke Chambers, Seedtime of Reform, 19632
Even in the unfavorable climate of the twenties, some progressives pushed forward against considerable headwinds in an effort to keep the fires of reform burning. Although expressed by progressives, many ideas that would become central to the later New Deal were ignored by policymakers amid Harding Normalcy and Coolidge Prosperity. Nonetheless, in the Children's Bureau, in Al Smith's Albany, in the Tennessee Valley, and in front of the Supreme Court, reformers sowed and nurtured reforms that would only reach flower in the decade to come.
The wheels were coming off. "Unemployment in many industries is at hand," the Survey grimly reported in December. "Factories are working on part time. Some are closed…The working forces of many establishments are being demobilized or kept on part time." By the following June, TNR declared matter-of-factly that the "nation is suffering from unemployment and depression" and urged the administration to do something, anything, to remedy the situation -- That is, unless it wanted to prove that 'the business theory of government' is a delusion." The Nation emphatically agreed. "It is high time for public action," it argued that September. "Workers deprived of work have few resources; the more fortunate will pile up debt at neighborhood stores, the less fortunate will water the soup and mend old garments with still older patches. In critical years, the children's growth will be stunted; in the heart-breaking struggle not only their parents' happiness but their self-respect will go. Some of the unemployed will become unemployable. And society will pay a price no expert accountant can ever reckon."3
Nonetheless, the months that followed would be, in the president's words, "the winter of the greatest unemployment in the history of our country." "Distress prevailed in every city," recalled Herbert Hoover, "soup lines had been formed." The Crisis," Secretary of the Treasury Andrew Mellon reminisced later, "was one of the most severe this country has ever experienced."4
This depression, as Mellon deemed it, was the "Crisis of 1921."
As discussed in Chapter Nine, the eventual administration response to the severe depression of 1921-1922, in which somewhere between 3.5 and six million Americans found themselves out of work, was Herbert Hoover's conference on unemployment. Here, the Secretary's pattern of relying first and foremost on the power of voluntary and cooperative public-private association to solve national problems was established. Before the conference was held, Hoover told an aide that, more than just working to provide short-term relief, the conference would "tackle the fundamentals of unemployment." But the low-impact, associational model of response sat fine with his boss. "It is fair to say to you that you are not asked to solve the long controverted problems of the social system," Warren Harding had told the gathered at the unemployment conference. "We have builded the America of today on the fundamentals of economic, industrial, and political life which made us what we are, and the temple requires no remaking now…I would have little enthusiasm for any proposed relief which seeks either palliation or tonic from the public treasury."5
But even as Harding limited the scope of the unemployment inquiry, there were other remedies being urged in the progressive press. "Unemployment is a risk of industry, as measurable and as recurrent as fire losses or work accidents," argued William Chenery in The Survey of October 1921. "The most important device which society has developed for protection against risk is insurance. Hazards of the sea which used to be termed 'acts of God' are now covered by insurance. Promoters of sporting events assure their investments…Almost every human risk is provided for by means of insurance." Why not take a page from England and other nations, Chenery asked, and have the conference set up a system of unemployment insurance for America? Taking the idea off the table, he argued, "was like telling a group of citizens who had come together to devise means of dealing with fire losses that they must not consider insurance."6
As Chenery's invocation of Great Britain suggests, The Survey was not treading new ground here. Ten years earlier, Great Britain had established a system of national unemployment and health insurance with the National Insurance Act of 1911, which Italy and Norway had copied. Nations such as Switzerland, Belgium, and Denmark had unemployment insurance experiments dating to even earlier, while Germany's ad hoc social insurance system had roots dating back to Bismarck. The week before Chenery's piece, noted Wisconsin economist and La Follette advisor John Commons had laid out the history and potential future of unemployment insurance in America for Survey readers. Explaining the features of the unemployment insurance bill recently introduced in Wisconsin, Commons advocated the creation of a "mutual insurance company…created, operated, and managed solely by the employers," which they could pay into and pay out as they decided, as supervised by a state insurance board. "In other words," Commons explained, "the system proposed is exactly like that of the workman's accident compensation law of this state…It is a capitalistic scheme. It avoids the socialistic scheme, in that the state does not go into the insurance business…It induces the business man to make a profit or avoid a loss by efficient labor management. It places the compensation so low that the workman has no expectation of more than enough to pay his rent."7
Commons' emphasis on a private sector solution here was not just an anticipation of Hoover's associationalism. Along with Louis Brandeis, eminent economists like Wisconsin's Richard Ely, and one of his students, John B. Andrews -- who eventually became the moving force behind the organization -- Commons had founded the American Association of Labor Legislation in 1909 to bring economists' insights to bear on the social problems of the day. In practice, this often meant taking up the social insurance standard gaining adherents overseas and applying it to the United States. In 1915, the AALL had proposed a compulsory health insurance system in 1915, not unlike Great Britain's, that eventually went down to defeat in New York State in 1919 -- a year in which comparisons to other nations' good works were out of fashion. (The following year, the American Medical Association stated its public opposition to any form of national or state-run health insurance system going forward.) Scarred but smarter, Commons -- urged on by organizations like Margaret Dreier Robins' Women's Trade Union League and Florence Kelley's National Consumer League -- took up the unemployment question instead, with an eye to the tenor of the times and a renewed understanding of the importance of public relations.8
Along with unemployment insurance, progressive observers also strongly endorsed the idea of public works spending to accelerate growth and put people back to work in 1921. "Cities and states and the nation itself," Chenery argued, "ought to undertake with all possible expedition needed public improvements. No other measure for counteracting the effects of the economic depression is so inviting and none is more valid." "I suggested sometime ago -- and there seems to be some hope that it will be carried out," Senator Borah wrote a constituent in November 1921, "that the government start work upon a number of our irrigation projects with a view of giving employment to the unemployed." When pitching this plan to Hoover two months earlier, Borah underscored that "it gives work to large number of unemployed" while providing "acreage for the making of homes for increasing the production in this country." In short, Borah argued, it would be one "of the most practical and desirable things we could do."9
In January 1922, The Survey published an article, "Public Works for the Unemployed," in which -- relying on conclusions drawn at the International Conference on Unemployment a decade earlier -- it further laid out its vision of how a sound public works program would be constructed. Relief works, it argued in typically progressive fashion, had to be useful and "of such nature as permanently to increase the wealth of the community" -- such as drainage and irrigation, parks and forests, highways, reservoirs, and sanitation -- or it would be "a source of degeneration to the workers." ("It is not in human nature for a man to put forth his full strength in work which he knows has been artificially created.") Public works should also be well-planned -- and not just a response to crisis -- and workers should both be fairly compensated and well-chosen, preferably with the aid of local aid societies. (It would not do "to supply odd jobs to large numbers of casual laborers, many of whom may have drifted in from out of town, while at the same time, good steady workers with families are undergoing a forced process of degeneration into the casual class.")10
Like unemployment insurance, however, the calls for a systematic federal public works program would diminish as the Crisis of 1921, and subsequent strike wave of 1922, faded into Coolidge Prosperity. The insurance bill Commons had advocated didn't even manage to pass in the nation's laboratory of Wisconsin until 1932. A bill to establish a Senate committee to look into the question of public works, meanwhile, was introduced by Senator Joseph Frelinghuysen of New Jersey and reported favorably out of committee in February 1923 -- but that is as far as it went. The congressional term ended the following month, with no action taken. Another public works bill put forward by William Kenyon and Congressman F.N. Zihlman of Maryland, which The Nation argued, "at least promised a beginning of better things," was also stillborn.11
In 1926, with Coolidge prosperity in full flower, Isaac M. Rubinow -- the theorist whose 1913 book Social Insurance had helped bring the subject to progressive attention -- argued it was perhaps time to raise the question again. Social insurance, Rubinow argued in The Survey, was "a system of insurance established by law, and with the assistance of governmental powers, to protect the working masses against the common vicissitudes of life which ordinarily lead to loss of income and consequent misery and distress." The fact that the United States had not yet forged such a system, he conceded, was proof to many "that America, of all countries, does not need it; that the phenomenal prosperity of this, the richest country in the world, has made unnecessary a type of legislation which impoverished Europe is forced to depend upon." But this view, Rubinow argued, was naïve, and did not take into account the obvious income inequalities and disparities of wealth that persisted despite the general prosperity. "One cannot sweep away the ocean of human misery with a charitable broom," he warned.12
What was needed, Rubinow argued, was "a Social Insurance Revival." "If the somewhat naïve optimism of benevolent and continuous social progress which was so rampant a decade ago received its setback in 1917," he argued, "it is just as unwise to assume…that as a result of the World War must come a complete breakdown of western civilization. It seems to me that in 1926 we are again ready to plan on lines of social progress not very much different from those we believed in ten years ago." In the twenties, at least, that revival for the most part did not occur. Organizations like the AALL, WTUL, and the National Conference of Social Work worked hard to draw attention to continued poverty in the midst of Coolidge prosperity, and The Survey's Paul Kellogg argued in 1929 that "no nation is economically healthy and solvent which does not set a fair bottom level below which it shall not let the hazards and vicissitudes of modern organized production press down on the individual and the family." But, for the most part, these pleas fell on deaf ears. As one reformer put it, remembering the decade, "Utopia needed no social insurance."13
While public works, social insurance and related ideas like old-age insurance languished, historian Clarke Chambers noted in his 1963 study of the New Deal's roots, other avenues of reform instead moved to the fore. "Labor preferred restriction on immigration as a way to protect wage standards and reduce unemployment," write Chambers, "business fancied higher tariffs, trade associational activity, and tax cuts to shake loose investment capital; agriculture turned to various schemes, most notably the proposals known as McNary-Haugenism, to uplift the farm segment of the economy."14
And yet, not all the programs and reforms that would form Franklin Roosevelt's New Deal in the decade to come were completely foreign to the 1920's. (Indeed, as more than one later reformer noted, the New Deal owed a considerable debt to the La Follette-Wheeler platform of 1924, just as earlier Progressive Era reforms had echoed Governor La Follette's achievements in Wisconsin.) Some of the later New Deal reforms lay quiescent, but on others reformers struggled mightily to gain ground, unknowingly paving the way for future gains in a less prosperous era. One of the most important of these was the very notion of a federal welfare state itself.
Return to the Table of Contents.
2. Chambers, 75.
3. "Unemployment," The Survey, December 4th, 1920, 353. "Depression: A Way Out," The New Republic, June 1st, 1921 (Vol. 27, No. 339), 8-9. "At Least We Get Something to Eat," The Nation, September 7th, 1921 (Vol. 113, No. 2931), 254.
4. "Unemployment Ended," The Survey, June 15th, 1922, 387. Zieger, 96. Cannadine, 278.
5. William Chenery, "Unemployment at Washington," The Survey, October 8th, 1921, 42-43. Zieger, 89. Chambers, 171. Udo Sautter, Three Cheers for the Unemployed: Government and Unemployment Before the New Deal (New York: Cambridge University Press, 1991), 142.
7. Rodgers, 222-224, 251-254. John R. Commons, "Unemployment: Compensation and Prevention," The Survey, October 1st, 1921, 5-9.
8. Ibid. Chambers, 171-175. J. Dennis Chasse, "The American Association for Labor Legislation and the Institutionalist Tradition in National Health Insurance," Journal of Economic Issues, December 1994 (Vol. 28, No. 4), 1063-1090. Social Security Online - History (http://www.ssa.gov/history/1900.html).
9. William Chenery, "Unemployment at Washington," 42-43. Borah to W.W. Crist, November 9, 1921. WJB, Box 98: Misc. Borah to Hoover, September 1, 1921. WJB, Box 104: Unemployment Problem. "I assume that the Government will, in taking care of the unemployed, seek to find them work rather than to engage in the demoralizing program of feeding them without work," Borah also told Hoover. "The only sane and wholesome and decent way to treat an American citizen when he is in want of food is to find him labor and work so that he may pay for his food and not accept it at the hand of charity." Ibid.
10. "Public Works for the Unemployed," The Survey, January 14th, 1922.
11. Chambers, 175. Father John A. Ryan to Borah, February 8th, 1923. WJB Box 130: Committee - Frelinghuysen Bill. The Conductor and Brakeman, February 1923 (Vol. 40), 423. "Editorial Paragraphs," The Nation, July 19th, 1922 (Vol. 115, No. 2976), 56. Chambers, 172.
12. I.M. Rubinow, "Needed: A Social Insurance Revival," The Survey, May 15th, 1926, 233-234.
13. Chambers, 159-160, 179-180.
14. Chambers, 172.
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