In 1883 Yale professor William Graham Sumner published an essay titled "The Forgotten Man." Sumner was the most prominent American advocate of social Darwinism, and his article reflected the conviction that economic inequality was a natural, inevitable and benign result of the competition for survival. Sumner thought that any attempt to ameliorate the lives of "the poor" and "the weak" would limit the impersonal, harsh but ultimately improving force of natural selection. Even worse, the social cost of passing laws to improve working conditions or crafting government policies to help the indigent would always be borne by the "forgotten man"--the industrious, decent and apolitical American whose freedom would be hemmed in by government regulations and whose salary would be taxed for social services.
In April 1932 a speechwriter for Franklin Delano Roosevelt placed Sumner's phrase (likely without remembering its origins) in the middle of a radio address given by the governor of New York as he campaigned for the presidency against Herbert Hoover. The Depression, which had begun with the precipitous stock market crash of October 1929, still held the nation in its grip. Unemployment for the country as a whole was more than 20 percent; in cities like Detroit, close to one-third of the labor force lacked work. Those Americans lucky enough to still have jobs saw their wages fall and their hours cut back. More than 25,000 businesses failed each year in the early 1930s. In his speech, Roosevelt focused on the "Main Street" of farmers and homeowners and miners and factory workers, promising to help "the forgotten man at the bottom of the economic pyramid." Hoover, he argued, was providing "temporary relief from the top down," whereas he would give "permanent relief from the bottom up."
Amity Shlaes's history of the Great Depression borrows its title from Sumner's essay as much as from Roosevelt's speech. Published last spring, seventy-five years after Roosevelt's election, The Forgotten Man is nothing less than an attempt to reclaim the history of the 1930s for the free market. Shlaes, a syndicated columnist for Bloomberg News and formerly a columnist at the Financial Times, insists that the New Deal actually prolonged the economic misery of the '30s--unemployment never fell under 13 percent during the decade, and after declining from its peak in the early '30s, it actually rose again during the decade's final years. The grand initiatives of the New Deal--the National Recovery Administration, the Tennessee Valley Authority (TVA) and the Wagner Act--all created a climate of economic uncertainty, discouraging businesses from investing. The deepest problem of the decade, she writes, was "the intervention, the lack of faith in the marketplace. Government management of the late 1920s and 1930s hurt the economy." Meddling reformers dared to tamper with the market, and the "forgotten men" paid the price: "From 1929 to 1940, from Hoover to Roosevelt, government intervention helped make the Depression Great."
The Forgotten Man is a narrative history woven around the exploits of a group of characters Shlaes deems the "people whom the New Deal forgot and hurt." She chronicles the travails of Wendell Willkie, president of the utilities company Commonwealth and Southern, as he fought the TVA, which competed with his company in the South. (Willkie ultimately challenged Roosevelt for the presidency in 1940, a thankless mission if there ever was one.) She tells the story of Andrew Mellon, the steel magnate and former Treasury Secretary who donated the paintings that became the National Gallery in an effort to demonstrate that private accumulations of wealth were in fact in the public interest: "The only reason his art collection was so great was that he was supremely wealthy," Shlaes says. She explains the struggle of the Schechters, the humble kosher butchers whose Supreme Court case (Schechter Poultry Corp v. the U.S.) toppled the National Recovery Administration, the early New Deal attempt to relax antitrust laws and permit companies to collaborate in setting wages and prices in the hope of stabilizing the economy. Father Divine, the religious leader who preached the gospel of self-improvement, makes an appearance, as does Bill Wilson, the stock analyst who founded Alcoholics Anonymous. None of these are exactly obscure figures. But Shlaes believes they represented an alternative response to the Depression--one grounded in individual initiative and the support of local voluntary groups (AA being an example of the latter) rather than state projects like the TVA and the Works Progress Administration. Most histories of the era, she contends, glorify the grand government initiatives of the decade, eschewing the quieter stories of these private efforts to cope with the Depression.
Central to Shlaes's case is the provocative argument that the American economy was basically sound during the 1920s. The meteoric rise of the stock market was not the sign of a speculative bubble but instead a reflection of underlying strengths. If only the feds had had the sense to leave well enough alone, the recession that followed the crash of 1929 would have been shorter and far less severe. She begins her story with a comparison between Calvin Coolidge and Herbert Hoover. Coolidge, in her view, was a New England country lawyer, while Hoover was an educated mining engineer, a man of the world. (Shlaes boils down their character differences to the fact that Coolidge fished with worms, Hoover with artificial flies.) In the 1920s, Coolidge left the economy alone, believing that "the work of life lay in holding back and shutting out." The result was unemployment below 5 percent and rapid economic growth.
Then the "priggish" Hoover, whom Shlaes sees as temperamentally inclined toward government intervention, took office. After the stock market decline, Hoover was fond of calling White House meetings with businessmen to urge their restraint in cutting wages and firing workers, a tactic that many historians have criticized as an example of Hoover's inability to confront the Depression. Shlaes presents it as evidence that Hoover pursued heavy-handed intervention: "To force business to go on spending when it did not want to was to hurt business." There was, of course, little force involved--but Shlaes would have preferred Coolidge's silent retreat. Hoover did initiate some of the programs that Roosevelt developed further, like the Reconstruction Finance Corporation, which helped shore up failing banks. But Shlaes implies that if only Hoover had pursued a policy of prudent restraint the crisis might have blown over quickly, a "bad quarter of an hour," in Mellon's phrase. To believe that the American economy in 1930 was undone by Hoover's tentative steps toward intervention fails to account for the real economic problems the country faced: the sharply unequal distribution of income, the weak consumer market, the crazy speculative schemes and rampant borrowing that financed the stock market boom, the fragility of the banking system and the agricultural crisis shaking the Midwest.
If the economy would have recovered soon enough if only left alone, then the call for federal economic intervention makes the New Dealers look ridiculous. Shlaes presents the New Dealers as a group of well-meaning ideologues, drawn to social experimentation, almost gleeful at the chance to use the Depression as a lab to test their theories. In her introduction, she differentiates herself from other conservative scholars by saying that she rejects the idea that Communists infiltrated the New Deal. Yet she can't restrain herself from introducing her leading liberal characters (including Rexford Tugwell, who would be an adviser to Roosevelt throughout the decade) by describing a trip they made to Moscow in 1927 to learn what they could about a managed economy. During the 1920s, these progressives were despondent, unable to enjoy the country's new prosperity; as Tugwell put it, "We were...all but regarded as social misfits." When they found themselves in power, they had no idea what to do, and Shlaes describes the result as a comedy of errors--everything the Brain Trust did only undermined its broader goal of ending the Depression.
Shlaes is, of course, correct that the New Deal failed to restore economic health. She is also right that the Roosevelt Administration was far from consistent or coherent in its attempts to cope with the Depression, although she does not really address (as historians like Alan Brinkley have) the changes in the New Deal over the decade. Roosevelt and his advisers relinquished the ideas about the destructive force of capitalist competition that the ill-fated National Recovery Administration was meant to tame and took up a Keynesian program of managing consumer demand to ensure economic health. Shlaes's arguments about the reluctance of businessmen to invest during the Depression years actually echo those of Roosevelt during the recession of 1937--the President and some of his advisers blamed a "capital strike" for the rising unemployment of the late 1930s. (Others argued that the attempt to balance the government budget that year was responsible, a thesis Shlaes does not mention.)
But in the end there is little historical evidence for her larger claim that the New Deal made the Depression worse and that without it, the crisis would simply have passed. After all, the catastrophe of the 1930s was halted not by private industry but by the massive public spending generated to fight World War II--an outlay of government resources far greater than anything Roosevelt had initially imagined. The fall in unemployment during the buildup to the war seemed proof of the central principles of Keynesianism: the private economy cannot always spend its way out of a depression; sometimes public spending is needed to stimulate growth. The experience of the war seemed to validate the New Deal, not disprove it. If anything, it suggested that Roosevelt should have gone further--that the New Deal was compromised by his timidity, not his radicalism. Does Shlaes seriously think that the Depression would have melted away if only Calvin Coolidge had been President? Was Alcoholics Anonymous really an alternative to the New Deal?
And if the New Deal was such a failure, why did it produce one of the most enduring political realignments of the century? In particular, how did Roosevelt win the loyalty of millions of voters, many of whom had never voted before? Shlaes dismisses FDR's electoral success by arguing that he was a master of cynical politicking. She suggests that he won re-election in 1936 (taking every state in the nation except Maine and Vermont) because he invented a "new kind of interest-group politics." Roosevelt "made groups where only individual citizens or isolated cranks had stood before," gave those groups financial benefits and won votes for it. Social Security and the Wagner Act, in her mind, were little more than crass bids to win working-class support in the 1936 election. But she does not really reckon with the obvious counterargument: that Roosevelt's electoral success reflected support for the New Deal in a larger ideological and political sense--that people gave their endorsement to the broad project of providing working-class people with minimal economic security during downturns that no policy-maker fully understood how to control. For the New Deal was not only about stimulating the economy; it was also an attempt to alleviate the sufferings of the poor, the aged and the unemployed, a goal that many New Dealers saw as distinct from restoring economic growth. They wanted to rescue capitalism (Roosevelt often seemed surprised by how much hostility businessmen expressed toward his program), but they also wanted to change the way that it worked.
In the end, the Depression itself cannot help but intrude on Shlaes's optimism about the free market. Now and then, a few characters besides Mellon and the Schechters and Father Divine appear in her account, like the young couple from New York City who retreated to a Catskills cabin in 1931 to starve to death because they were too ashamed to beg, and the 13-year-old boy who hanged himself in Brooklyn in 1937 after watching the gas in his family's home get shut off, a story Shlaes uses to begin her book. The economic breakdown of the 1930s made faith in the benevolence of business almost impossible during the decade. Shlaes may interpret these stories as demonstrating the failures of the New Deal, but at the time people saw them as evidence of the limits of the market.
For Shlaes, the New Deal was a scheme hatched by well-meaning reformers to carry out their good intentions and grand schemes, paying for their "big projects" with the tax money of the common man. But during the 1930s, millions of forgotten men became involved in politics themselves. The entire New Deal project, as Shlaes presents it, was carried out from above, by the President and the gang of intellectuals and dreamers gathered around him. But American society was shaken during the decade by political explosions: the birth of the Congress of Industrial Organizations, the eviction protests and hunger marches and sit-down strikes, the growth of the Communist Party and other radical groups. Economic depression does not always lead to political mobilization--but in the 1930s, it did. (Reading The Forgotten Man, you'd never know that the vibrant and tragicomic world of radical idealism, delusion and commitment memorably chronicled by writers like Edmund Wilson and Alfred Kazin ever existed.) The law professors and economists and the generation of old Progressives who worked with Roosevelt to craft New Deal legislation did so under pressure from people who in ordinary times might have stayed away from politics but who found themselves during the Great Depression facing economic circumstances that their local and community institutions could not ameliorate, that their old faiths in self-reliance could not contain. Because Shlaes interprets the New Deal as little more than the experiment of a jaded political class, she cannot really look at the popular protest of the decade, let alone assess the ways it shaped legislation.
Throughout the 1940s and '50s, conservatives openly criticized the New Deal. Today, it is unusual for an author like Shlaes to devote much attention to the decade of the Depression. The New Deal is more often invoked by liberal writers, who describe the political economy of the 1950s and '60s--which the New Deal helped to create--as an example of the kind of mixed economy that might produce a more egalitarian society today. Frequently it is remembered uncritically as a kind of political pastoral, an image quite different from the one people on the left and even liberals held during the years that followed the end of World War II. Then, many liberal writers criticized the postwar order. John Kenneth Galbraith excoriated the self-absorbed mass consumption of the "affluent society," in which the public sector was devoted primarily to stockpiling weaponry for the fight against Communism. Michael Harrington reminded a complacent nation of the continued reality of poverty. New Left scholars pointed out the ways that corporations were able to seize hold of liberal institutions, while the civil rights movement made clear how little the New Deal had done to confront racism. It is only in recent years, as the minimal protections of liberalism have been rolled back, that the New Deal has started to enjoy such uncritical acclaim. But its contemporary enthusiasts--see Robert Kuttner's recent The Squandering of America for one interesting example of the genre--actually have something in common with Shlaes, as surprising as that may seem. To treat the New Deal primarily as a legislative toolkit or as a set of policy initiatives means abandoning the very culture of outrage that matters most about the 1930s. To paraphrase historian Lizabeth Cohen, it means making the very people who truly made the New Deal once more into forgotten men.