The New Deal: A Modern History

This is an important book for young people who know nothing about the Great Depression. I have strong memories of that terrible period. The Republican Party has been determined to destroy the Social Security, SEC, extensive infrastructure investments, unemployment insurance, rural electrification, FHA, Fed Reserve Board and more created by Roosevelt and his his team and party. They are trying more today than ever. ---BBB

The New Deal: A Modern History
by Michael Hiltzik

Book Description

Franklin Roosevelt’s New Deal began as a program of short-term emergency relief measures and evolved into a truly transformative concept of the federal government’s role in Americans’ lives. More than an economic recovery plan, it was a reordering of the political system that continues to define America to this day.

With The New Deal: A Modern History, Pulitzer Prize–winning writer Michael Hiltzik offers fresh insights into this inflection point in the American experience. Here is an intimate look at the alchemy that allowed FDR to mold his multifaceted and contentious inner circle into a formidable political team. The New Deal: A Modern History shows how Roosevelt, through the force of his personality, commanded the loyalty of the rock-ribbed fiscal conservative Lewis Douglas and the radical agrarian Rexford Tugwell alike; of Harold Ickes and Harry Hopkins, one a curmudgeonly miser, the other a spendthrift idealist; of Henry Morgenthau, gentleman farmer of upstate New York; and of Frances Perkins, a prim social activist with her roots in Brahmin New England. Yet the same character traits that made him so supple and self-confident a leader would sow the seeds of the New Deal’s end, with a shocking surge of Rooseveltian misjudgments.

Understanding the New Deal may be more important today than at any time in the last eight decades. Conceived in response to a devastating financial crisis very similar to America’s most recent downturn—born of excessive speculation, indifferent regulation of banks and investment houses, and disproportionate corporate influence over the White House and Congress—the New Deal remade the country’s economic and political environment in six years of intensive experimentation. FDR had no effective model for fighting the worst economic downturn in his generation’s experience; but the New Deal has provided a model for subsequent presidents who faced challenging economic conditions, right up to the present. Hiltzik tells the story of how the New Deal was made, demonstrating that its precepts did not spring fully conceived from the mind of FDR—before or after he took office. From first to last the New Deal was a work in progress, a patchwork of often contradictory ideas. Far from reflecting solely progressive principles, the New Deal also accommodated such conservative goals as a balanced budget and the suspension of antitrust enforcement. Some programs that became part of the New Deal were borrowed from the Republican administration of Herbert Hoover; indeed, some of its most successful elements were enacted over FDR’s opposition.

In this bold reevaluation of a decisive moment in American history, Michael Hiltzik dispels decades of accumulated myths and misconceptions about the New Deal to capture with clarity and immediacy its origins, its legacy, and its genius.

About the Author

Michael Hiltzik is a Pulitzer Prize-winning journalist and author who has covered business, technology, and public policy for the Los Angeles Times for twenty years. In that time he has served as a financial and political writer, an investigative reporter, and as a foreign correspondent in Africa and Russia. He currently serves as the Times business columnist. His other books include The Plot Against Social Security (2005), Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age (1999), and A Death in Kenya (1995). Mr. Hiltzik received the 1999 Pulitzer Prize for articles exposing corruption in the entertainment industry. Among his other awards for excellence in reporting are the 2004 Gerald Loeb Award for outstanding business commentary and the Silver Gavel from the American Bar Association for outstanding legal reporting. A graduate of Colgate University, Mr. Hiltzik received a master of science degree in journalism from the Graduate School of Journalism at Columbia University in 1974. He lives in Southern California with his wife and two children.

Exerpt: “ACTION NOW”

FRANKLIN ROOSEVELT BEGAN Inauguration Day at a 10 A.M. religious service with his family, his cabinet appointees, secretaries, aides, and a few close friends. The location was St. John’s Episcopal Church, across Lafayette Park from the White House, chosen because it had no steps to complicate the wheelchair-bound President-elect’s entry from the street. Inside, the Reverend Endicott Peabody, rector of Groton, FDR’s old school, read from the Protestant Book of Common Prayer and beseeched the Almighty to favor and bless “Thy servant, Franklin, chosen to be President of the United States.”

The official party dispersed as soon as the service ended, Roosevelt to the White House for the start of the ritual procession toward the 1 P.M. oath-taking in front of the U.S. Capitol. The wisest among the other attendees had hired cars for the day and promptly drove off. Frances Perkins, the new secretary of labor, found herself standing forlorn on the sidewalk with her daughter, Susanna, and a couple she recognized as Mr. and Mrs. Henry A. Wallace. They introduced themselves to each other, joined forces to hail a passing cab, and tried to figure out how to reach the Capitol entrance reserved for dignitaries.

The members of the new administration drew what encouragement or counsel they could from the faces of the crowds lining the ceremonial routes and assembling before the Capitol. Tugwell remarked on the public’s apparent determination to squeeze just a little enjoyment from the festive inaugural parade, “squads and squadrons of marching clubs, fraternal drill teams, silk-hatted and frock-coated Tammany braves, military detachments and uniformed bands,” all in such contrast to “the morning’s solemnity.” Perhaps FDR’s decision to proceed with the celebration despite the hard times was the right move after all.

Perkins, who had finally reached her spot on the platform by elbowing her way through the crowds behind Wallace in shoes soaking wet from tramping across the sodden Capitol lawn, could not help being moved by “the terror-stricken look on the faces of the people,” many of whom were hearing for the first time the bleak rumors that the last of the banks had closed that morning. “An enormous crowd had come for the inauguration, but they looked frightened, worried, depressed. It was not the kind of gay Democrats that you saw later on. They were just worried to death.”

Roosevelt made his way from the White House to the Capitol seated next to Herbert Hoover in an open car. Along the teeming processional route he tried to make conversation with the grim visage to his right, but could elicit no more than the occasional grunt. As he related the tale later to his secretary Grace Tully, he finally decided that the cheering of the throng warranted a more suitable acknowledgment than Hoover’s dour scowl. “So I began to wave my own response with my top hat and I kept waving it until I got to the inauguration stand and was sworn in.”

After taking the oath of office from Chief Justice Charles Evans Hughes, Roosevelt prepared to deliver his inaugural speech. Hoover did not wait to hear it; at the completion of the oath-taking, the ex-president ceremoniously shook his successor’s hand, left the platform, and, trailed by two or three of his cabinet members, continued walking until he reached his car and settled in, at which point it promptly drove off.

“President Hoover, Mr. Chief Justice, my friends,” the new president began, then uttered a phrase he had scribbled at the top of his draft just before coming out from the Capitol building to the inaugural stand: “This is a day of national consecration.” The addition was so belated that the phrase did not make it into the official text of the speech.

He continued: “First of all let me assert my firm belief that the only thing we have to fear is fear itself . . . nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

Roosevelt’s flawless delivery, his pausing for dramatic effect before the words “fear itself,” invested the phrase with his own confidence and assurance. His critics would later assert that in doing so, Roosevelt was himself taking Hoover’s approach to the Depression, reassuring the people that the worst would be over in due course. Yet that is to ignore the context. Hoover’s repeated reassurances served a policy of complacency and limited federal action, even inaction; Roosevelt’s words heralded “action, and action now,” a pledge of direct government employment of the jobless and the construction of projects to exploit national resources, of “definite efforts” to raise the value of farm products, of the prevention of home and farm foreclosures, of the broadening and coordination of relief.

The rest of the speech was a model of concise presidential oratory, not quite 1,900 words requiring not quite twenty minutes to deliver. The text outlined the principles of the coming administration and some of its legislative goals, albeit shrouding them in inspirational flourishes and, here and there, veiled censuring of the departing leadership.

In the most assertive (and to many listeners unnerving) moment of the speech, the new president vowed, if “the national emergency is still critical,” to not shrink from asking Congress “for the one remaining instrument to meet the crisis . . . broad executive power to wage a war against the emergency as great as the power that would be given to me if we were in fact invaded by a foreign foe.” Roosevelt’s admirers and detractors alike would long debate whether those words were a promise or a threat, and in either case whether or when he might deliver on them.

Those rhetorical bookends, the release from fear at the speech’s opening and the promise of unstinting effort in its peroration, often obscure other elements of the inaugural address that proclaimed a new era in American politics and policy.

One was the recognition that the economic crisis was the creation of men—“the unscrupulous money changers”—not an artifact of nature. “The rulers of the exchange of mankind’s goods,” Roosevelt stated, “have failed through their own stubbornness and their own incompetence, have admitted their failures and abdicated. . . . The money changers have fled their high seats in the temple of our civilization.”

This insight underpinned Roosevelt’s conception of government power as a force to be utilized aggressively. The new administration would not wait passively for recovery, as had the tribunes of “false leadership, [who] have resorted to exhortations, pleading tearfully for restored conditions.” The New Deal would act, not plead.

Among the other concepts introduced in the inaugural address were two that would animate the social elements of the New Deal: shared responsibility and the nobility of work. More than any other details of the speech, these reflected the influence of Adolf Berle, who was the most penetrating critic within the Brain Trust of Hoover’s infatuation with “individualism” and resistance to regulation, which Hoover had said would lead to industrial “regimentation.”

To Berle, Hoover’s outlook merely rationalized exploitation of the many by the few, with the tacit acquiescence of government. “Whatever the economic system does permit,” he had written Roosevelt during the campaign, “it is not individualism.” Warming to the theme he and Means had developed in The Modern Corporation and Private Property, he added:

When nearly seventy per cent of American industry is concentrated in the hands of six hundred corporations; when more than half of the population of the industrial east live or starve, depending on what this group does . . . the individual man or woman has, in cold statistics, less than no chance at all. The President’s stricture on “regimentation” . . . is merely ironic; there is regimentation in work, in savings, and even in unemployment and starvation. . . . What Mr. Hoover means by individualism is letting economic units do about what they please.

Berle proposed substituting a “far truer individualism” in which the government acts as a “regulating and unifying agency,” so that “individual men and women could survive, have homes, educate their children, and so forth.” These points were transformed in the inaugural address into an affirmation of “social values more noble than mere monetary profit.”

“The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits,” Roosevelt continued. “These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and our fellow men.”

There could be no more direct break with the “individualism” of Herbert Hoover than through these words.

Roosevelt did nod toward traditional conservative values—for example, in his admonition to state and local officials that they must “act forthwith” on the public’s demand for drastic reductions in government costs. He repeated his campaign promise to maintain “an adequate but sound currency,” words that might have comforted anti-inflationary conservatives, had not Roosevelt always steadfastly “refused to be drawn into any precise definition of what this meant.”

A persistent myth is that Roosevelt wrote the inaugural address in a burst of inspiration over a single evening. Blame for this fabrication belongs to the President himself. A note he signed and attached to a longhand draft now residing at the FDR Library in Hyde Park, ...

Review By T. Carlsen

This review is from: The New Deal: A Modern History (Hardcover)
"The New Deal: A Modern History" by Pulitzer Prize-winning journalist Michael Hiltzik is an excellent, complete, thorough, fair and balanced history of the New Deal. The writing is easy to read and at times gripping. Having read many books on the World War II and Great Depression era, I think this history is the modern benchmark book on the Great Depression and New Deal. The book is strong at describing the Great Depression economic crisis that put millions of workers out of work and then the energetic and multifaceted response by the New Dealers in Franklin Roosevelt's administration, making history as they went along.

The book centers on leaders like Frances Perkins, Harry Hopkins and Harold Ickes. All the New Deal initiatives are described. Roosevelt's response was pragmatic, sometimes experimental, sometimes borrowing from Republicans and sometimes from Democrats, and occasionally contradictory. Hiltzik shows that some of the New Deal policies were created in a hectic way by the Roosevelt administration in response to the crisis and political winds in America at the time, but the landmark long-term reforms were enacted more thoughtfully. Enduring legacies of the New Deal include Social Security, SEC, extensive infrastructure investments, unemployment insurance, rural electrification, FHA, Fed Reserve Board and more. Hiltzik also tells the history of the mistakes FDR made. This is a fair and thorough history.

FDR reassured Americans through his fireside chats, and the American people reelected FDR by massive landslides. Ronald Reagan idolized FDR. FDR was not an ideological socialist that some would have you believe today. FDR told the American people that they had to be careful not to give out dole and diminish hard work and the work ethic, and so he emphasized putting people to work. He was leery of government wasting money and, in one of his first actions, slashed the Federal budget. Hiltzik says that FDR did not fully embrace deficit stimulus spending until the approach of World War II because FDR was conservative about budgets and wanted only work projects that made business sense. The New Deal did put 3 million people to work building infrastructure projects. This book honestly explains how the policies came about, which was experimenting and trying to lift the stricken nation out of three years of Depression under Hoover. FDR's first reelection was the largest electoral landslide of the 20th Century (as a percentage of total electoral votes) and the largest landslide ever except for George Washington and James Monroe. The American people approved of Roosevelt.

Hiltzik, a business news correspondent, explains the economics of the Great Depression in a way that is easy to understand and laudibly cites the economic statistics for the years of the New Deal. GDP growth was impressively strong year after year in FDR's first term until mid-1937; the stock market skyrocketed each year (over 300% higher over that time); unemployment improved but unemployment came down only slowly. These economic statistics are important to learn the honest story of the New Deal. In contrast, recent biased attacks by others omit these important annual statistics and tell a misleading story. Why would these misleading critics not cite the GDP stats for each year of the Roosevelt administration? Because the stats during each of these years would refute their distorted stories of the New Deal what they say happened over these years. (Check the numbers yourself for the stats in each year of FDR's term, year after year: the stock market, GDP, personal income after taxes, etc.) The New Deal did not fully end the Great Depression until the massive spending of WWII, but the New Deal did help ease the suffering with extensive work programs (employing 3 million people). The New Deal stopped the downward spiral and brought about a mild recovery upward for several years, followed by a sharp "Roosevelt Recession" in his second term, followed by the massive WWII spending that fully ended the Depression. The New Deal also permanently transformed the long-term American economy for decades and the relationship of government to the people.

Those wanting to read a more general biography of FDR and the New Deal and less of the detailed "sausage making" history of the New Deal should consider the award-winning and outstanding biography FDR by Jean Edward Smith. Another good book on the New Deal is the award-winning Franklin D. Roosevelt and the New Deal by William Leuchtenburg.

The author says the New Deal essentially came to an end in FDR's second term, which is the position taken by leading New Deal historians. The Fair Labor Standard Act was the last of the New Deal. However, Conrad Black in his Roosevelt biography, called "a masterpiece" by the Economist, argues differently -- that there were four phases to the New Deal that included two smaller parts occurring later. FDR's entire presidency to 1945 was an extension of the New Deal, according to Black. (FDR's landmark GI Bill should be considered an extension of the New Deal philosophy.)

I would have liked if this book included even more about the enduring contributions of the New Deal in the years and decades that followed the New Deal years, such as the long-term stability created by the SEC, Glass-Steagall Act, FHA inventing insured 30 year mortgages for the broad middle class (home ownership skyrocketed in the post-war boom era from mostly a renter society in America), rural electrification, the massive infrastructure investments, with Eisenhower's interstate highway system an extension of that, GI Bill, etc. The New Deal changed the economic order forever, although with some temporary upheavals, affecting us today. America and the middle class were profoundly better in the decades after the New Deal than the decades before.

Also, FDR's administration made more New Deal-like progressive advancements during the years of WWII, 1941-1945. For example, Hiltzik's book accurately shows that the New Deal left out African Americans, because Southern Democrats held important leadership roles in Congress and FDR needed to keep his coalition together for enduring Democrat electoral success (that lasted almost 50 years). FDR was a master at judging the political winds and knowing how far he could push progressive advances. But Roosevelt policies changed dramatically during World War II when women and minorities were included like never before in American history (partly because of Eleanor Roosevelt's stubborn insistence). These Roosevelt policies in WWII were groundbreaking and created momentum for the Civil Rights movement later and the Brown decision by the Supreme Court (decided with several FDR appointees on the Bench). Read Conrad Black's biography of Franklin Roosevelt or Doris Kearns Goodwin's award-winning No Ordinary Time: Franklin and Eleanor Roosevelt: The Home Front in World War II for coverage of FDR's presidency during World War II. Also, A New Deal for the World: America's Vision for Human Rights covers the impact of FDR's post-war vision. The world changed after the war because of FDR (including the decline of colonialism).

Also, the foolish repeal in 1999 of the landmark New Deal Glass-Steagall Act partly led to the financial collapse in 2007-2008. The Glass-Steagall Act placed firewalls in the financial system. We should have headed FDR's pragmatic advice and kept that commonsense safeguard in place for financial stability.

This is an authoritative, fair and balanced history of the New Deal. Recommended!

Kirkus Reviews called this "A sweeping, lively survey of the Roosevelt administration's efforts to restart the American economy nearly 80 years ago. With panache and skill, Pulitzer Prize-winning Los Angeles Times journalist Hiltzik (Colossus: Hoover Dam and the Making of the American Century, 2010, etc.) chronicles the rise and decline of the New Deal, from the desperate improvisation of the Hundred Days through the more carefully considered passage of such landmark legislation as the Securities Exchange Act and the Social Security Act... The New Deal was a huge enterprise driven by a large cast of characters who held widely differing views on how to cure the nation's ills... While FDR was "the glue holding these disparate pieces together," he does not appear here as the heroic figure of political legend. Hiltzik presents him instead in more humanized form, sympathetically but with many faults clearly on display... The author suggests that it was FDR's ebullient confidence more than his economic competence that sustained the nation through this devastating period. Though he disagrees with the revisionist school of historians who argue that the New Deal prolonged the Depression, Hiltzik writes with no obvious agenda in mind."