Are we reliving the 1930s? Many commentators, not all of them hysterical, would have us believe so. The catastrophe of the COVID-19 epidemic has brought the global economy to a standstill, and the scramble for vital drugs and medical supplies has shown us the limits of international cooperation, not to mention the glaring vulnerabilities of de-industrialized nations reliant on China – the very country that originated this epidemic, and downplayed its significance – for masks and pharmaceutical supplies. Nationalist sentiment is once again on the rise, and long-standing racial tensions, not only in America but across the Western world, have resulted in riots, vandalism and looting on a scale unseen since the 1960s. In the United States, the unemployment rate peaked at nearly 15% in April, a level unseen since, yes, the 1930s, when unemployment rarely dipped below 15%, peaking in 1933 at almost 25%. And as our domestic troubles grow, an emerging economic and military power, ruled by a dictatorial authority with sinister global designs, has been imprisoning and experimenting on a vulnerable religious minority within its own territory.
Knowing how the story of the 1930s ended, I wished to reexamine its beginnings, the better to understand the calamities that resulted, and that ambition led me to Amity Shlaes’ The Forgotten Man, a “new” history of the Great Depression. Shlaes is a columnist by trade, with a special focus on economics and politics, though she has also taught courses at both New York University and The King’s College. Understandably, then, The Forgotten Man is not a general history of the Great Depression, but an economic history, an examination (and ultimately an indictment) of Franklin Roosevelt’s New Deal. “The story of the mid-1930s,” she tells us,” is the story of a heroic economy struggling to recuperate but failing to do so because of perverse federal policy.” Here an interjection is in order: I am not an economist, or even conversant in enough basic economic theory to evaluate the quality of her arguments, though I know the New Deal was beloved by Americans both at its conception and in subsequent decades, and this book’s timing – it first appeared in 2007, immediately before the Great Recession and subsequent, New Deal-inspired Recovery and Reinvestment Act of 2009, which spent nearly a trillion dollars – reignited debate about Keynesian economics and the merits of deficit spending. We get some sense of the thrust of her argument before we encounter a word of her own, as the book opens with two quotations, the first from a famous radio address given by Franklin Roosevelt in April of 1932:
These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power, for plans like those of 1917 that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.
That phrase “forgotten man” had resonance in the American public imagination, though by the 1930s only a few astute journalists could trace its provenance to William Graham Sumner, a Yale professor and social scientist, and the second of Shlaes’ quoted men:
As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X, or in the better case, what A, B, and C shall do for X … What I want to do is to look up C. I want to show you what manner of man he is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of … He works, he votes, generally he prays – but he always pays …
It’s rather good, I think you’ll acknowledge, and might be expected to have some resonance today, when the phrase “silent majority” has been used to conjure up exactly this sort of over-taxed, under-employed everyman upon whose sweat and sacrifice government largesse depends.
It also gets at the crux of Shlaes’ criticism of the New Deal, which she contends hampered economic recovery by bullying the private sector, instituting minimum wage laws when businesses could least afford them, for example, or presuming to set the standards for “fair competition” (as opposed to “destructive competition”), in a dizzying variety of industries. The National Recovery Administration agency, established in 1933, was one of the first and least popular organizations charged with carrying out these changes; it was dissolved in 1935, after an unfavourable Supreme Court decision (Schechter Poultry Corp. v. United States) gave the American public a glimpse into how petty and fickle this bureaucracy looked in practice:
In the period of a year, 10,000 pages of law had been created, a figure that one had to compare with the mere 2,735 pages that constituted federal statute law. In twelve months, the NRA had generated more paper than the entire legislative output of the federal government since 1789.
One of the “violations” the NRA charged the Schechters (small-time Jewish slaughterhouse owners – hardly a powerful, bullying corporation) with was “straight killing,” which in practice meant allowing their customers to decide which of the chickens they wished to slaughter, rather than following the “fair practice” standard of having the slaughterer grabbed the nearest chicken at hand. Justice Sutherland, presiding over the case, provoked the courtroom to laughter when he asked a reasonable question: “Well, suppose, however, that all the chickens have gone over to one end of the coop?” In the wake of the Schechter verdict, more than 500 similar NRA code violations were dropped, and the NRA itself dissolved. Justice Louis Brandeis wished to pass on a message to Roosevelt, via his aides: “This is the end of this business of centralization, and I want you to go back and tell the president that we’re not going to let this government centralize everything.”
Another of Roosevelt’s projects that draws Shlaes’ scrutiny is the Tennessee Valley Authority, a federally-owned corporation – then and now the largest regional planning agency of the US government – conceived to bring electricity, flood control and economic development to the Tennessee Valley region – even to create wholly new communities sustained by the project’s output and upkeep. It was, in its scale and ambition, immensely impressive. Here, for example, is Schlaes describing the construction of one of the many dams planned and built by the TVA:
The TVA management hired thousands of people. By the middle of 1934, there would be more than 9,000 employees at TVA. As locals watched, workmen erected seven more bunkhouses, a cafeteria that would serve 3,000 meals daily, a theater facility, a library, even Norris’s own post office. In the area around the valley, men from the CCC planted 3 million trees and laid 2.5 million square yards of brush to keep the soil in place. TVA workers in Norris received a wage above those in the area, and they could eat all they liked for twenty-five cents in the Norris cafeteria.
What could there be to complain about? Well, in the run-up to the Depression, the electricity businesses were one of the few bright hopes: America, particularly rural America, was not yet fully powered, and the prospects of bringing the entire country electricity buoyed the energy sector. The TVA, backed by the might of the federal government, with the power to enact eminent domain laws to seize the land it required or grant subsidies to rural communities who bought government-supplied power, became overnight a major competitor in the sector, and frightened investors in private energy companies. The TVA became a magnet for criticism – Ronald Reagan was famously fired from a television job sponsored by General Electric for referring to it as example of “big government” gone wrong, and to this day is a source of conflict between left and right in America.
Schlaes tells her “new history” of the Great Depression from the perspectives of various people, some of whom were central to government policy at the time, and others who were clearly not. William Griffith Wilson, the founder of Alcoholics Anonymous, is one of these minor figures, as is Father Divine, a black preacher (or perhaps a cult leader – opinions vary) and minor Harlem celebrity who unsuccessfully agitated for anti-lynching legislation. The point of these minor figures, we are to understand, is that they exemplified an American spirit of individualism and private enterprise. Part of Shlaes’ project, you see, is to underscore how strong that drive was in America in the New Deal era, and how that vital energy, when properly tapped, can become an engine for growth. Margaret Mitchell’s surprise bestseller Gone With The Wind and Dale Carnegie’s still-popular How to Win Friends and Influence People are likewise trotted out in defence of America’s can-do spirit and plucky resolve. Even speaking as someone sympathetic to this line of thought, I found these inclusions less persuasive and more distracting.
There is a final obstacle – and rather a towering one – to Shlaes’ thesis about Roosevelt forgetting to consider America’s “forgotten man,” and that is his astonishing four presidential election victories. If Roosevelt forgot the average American, it would seem that the average American did not forget him. One argument Shlaes advances to make sense of his popularity is that the Great Depression and the anemic recovery actually helped him at the ballot box. “The country was entering its seventh year of depression,” she writes at one point.
The sense of futility was stronger than it had been in the early 1930s. Roosevelt’s talk had had an aspect of self-fulfilling prophecy: because the first New Deal had not succeeded, many in the country believed that the United States was actually becoming the society of social class that Roosevelt now described in his speeches. And they responded accordingly.
In other words, bad economic policy might nonetheless make for good campaign policy. Later on, Shlaes will contend that the outbreak of World War II likewise aided Roosevelt, as the American public would be understandably reluctant to unseat a sitting president before a major global conflict.
As a work of narrative history, The Forgotten Man is compelling and instructive. I learned a good deal more about the American experience of the 1930s, and the pervasive sense of hopelessness under which the country laboured for years. But judged on the merits of its central claim – a claim Shlaes prefers to dance around in the book proper, or disguise behind implication – I find myself unpersuaded, if nonetheless intrigued. In an especially scathing review in The New Republic, journalist Jonathan Chait excuses the slow recovery by emphasizing how dire was Roosevelt’s situation upon taking office. He “inherited unemployment that was over 20 percent! Sure, the level to which it fell was high by absolute standards, but it is certainly pertinent that he cut that level by more than half.” Here, I’m sure, will forever be the point of contention: how can anyone run the counter-factual, holding constant all of the many variables, to determine how the economy might have recovered absent those interventions? And if this line of questioning sounds familiar, consider that a similar scenario played out between 2007 and 2016, occasioning all of the same arguments and counter-arguments.