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.