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"The Hundred Days: Franklin D.
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James Edward Sargent

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ABSTRACT

THE HUNDRED DAYS: FRANKLIN D. ROOSEVELT

AND THE EARLY NEW DEAL, 1933

BY

James Edward Sargent

The Hundred Days of 1933 established Franklin D.
Roosevelt as America's national leader, and it resulted in
the basic legislative program of the early New Deal. During
this period, Roosevelt evolved as a dynamic leader, a process
culminated in domestic affairs with his success in the con-
gressional struggles of June, and in foreign affairs with
his "bombshell" message to the World Economic Conference in
July.

Roosevelt's personal involvement in the making of
major decisions and policies was an instrumental facet of
his leadership. But there was no single pattern for this
involvement, which changed daily in response to the kaleide-
scope of crises created by the depression, demands by organ-
ized interest groups, congressional pressures, recommenda-
tions from close advisers, and his own policy interests.
Casual, intuitive, responsive, sometimes disinterested or
haphazard, an activist rather than a thinker, but always

inspiring, Roosevelt the policy maker graSped only incom-

pletely some fundamental matters, like fiscal, monetary,

and foreign economic policy. In fiscal affairs, for example,
he proved conservative, although innovating the dual budget
concept.

Yet some configurations emerge in his development
as a presidential leader. First, Roosevelt relied heavily
upon trusted policy advisers, particularly Raymond Moley,
Lewis W. Douglas, Rexford G. Tugwell, Henry Morgenthau, Jr.,
and James P. Warburg. Second, "action, and action now," as
FDR declared in his inaugural, was his theme for early 1933.
He always aimed at enacting a viable, comprehensive New Deal,
which he saw as being anchored by the Agricultural Adjustment
Act, the Economy Act, and, belatedly, the Industrial Recovery
Act. Third, the domestic program, which in retrospect evi-
denced more continuity than change, met the emergency and thus
took precedence over foreign affairs. This basic policy
decision, reaffirmed during the interregnum and in March,
necessarily relegated foreign policy to a secondary priority.
And it led to unprofitable results in the drive for inter-
national recovery and at the London Conference.

The Hundred Days therefore resolved the basic ques-
tions of leadership and of a domestic program. But these
were only the beginnings, the foundation upon which Roosevelt
would have to build the concert of all interests which he
sought in order to achieve national recovery, the major goal

of the early New Deal.

THE HUNDRED DAYS: FRANKLIN D. ROOSEVELP
AND THE EARLY NEW DEAL, 1933

By

James Edward Sargent

A THESIS
Submitted to
Michigan State University

in partial fulfillment of the requirenente
for the degree of

DOCTOR OF PHILOSOPHY

Department of History
1972

© Cepyright by

James Edward Sargent

1972

ACKNOWLEDGMENTS

I am indebted to several persons for suggestions,
assistance, and reading the manuscript, but particularly to
Madison Kuhn, Warren I. Cohen, and Donald N. Lammers.

I also acknowledge the debt owed to the many fine
staffs at several libraries and archives which I visited,
namely the Franklin D. Roosevelt Library, the Hoover Institu-
tion on War, Revolution, and Peace, the Library of Congress,
and the National Archives, as well as the libraries at the
following colleges and universities: Antioch, Arizona,
Clemson, Columbia, Cornell, Missouri, Oklahoma, Princeton,
Virginia, and Yale.

The imprint of my wife Janice has scarcely escaped
a single page, from the beginning of research to the final
proofreading. She helped make the entire experience
possible.

I dedicate this study to my mother, who knew Franklin
Roosevelt because he always came to talk with her over the
radio, and to my father, who appreciates what I have done but

‘wonders what attracted me to "that man."

TABLE OF CONTENTS

Chapter

I.
II.
III.

IV.

VI.
VII.
VIII.
IX.

NOTES

PROLOGUE: JUNE 16, 1933 .

ROOSEVELT AND MOLEY . . . . . . . .

THE PRESIDENT—ELECT'S MEN . .

A NATION INSPIRED . . . . . . . . . . .
FORMULATION OF THE DOMESTIC PROGRAM . . .

TOWARD INTERNATIONAL AND INDUSTRIAL RECOVERY .

STRUGGLE FOR THE EARLY NEW DEAL . . . .
'THE LONDON CONFERENCE . . . . .
THE HMNDRED DAYS . . . . . . .

COMMENTS ON SOURCES . . . . . . . . .

Page

20

66
116
180
252
314
373
442
460

505

CHAPTER I
PROLOGUE: JUNE 16, 1933

Washington, D.C., hummed with excitement as the
mid-June morning grew sticky, the temperature soaring near
100°. Very early that same morning, shortly after 1:00 a.m.,
Congress had finally adjourned. Later that morning the
President would sign the final bills into law. There would
be a New Deal for Americans. It was Franklin D. Roosevelt's
finest hour as President.

Following the spectacular but mixed performance of
the first session of the 73rd Congress, the end had come as
a relief. Congress had very nearly gone on too long for
Roosevelt. Adjournment came too late for him to attend his
son's graduation at Groton School in Massachusetts. While
2223 magazine observed that the end came "at least before

Congress got completely out of control," the New Republic

 

pooh-poohed this notion. "Not only did the revolt last week
boil down to very little," proclaimed its editors, "but when
we survey the results of the Special session as a whole, we
see that no legislation in modern history ever yielded more
completely to the wishes of the head of a state than did the

Seventy-third Congress."1

2
The country had witnessed a dramatic and, for
peacetime, unprecedented procession of legislation enacted
since March 9, the beginning of what soon came to be known

2 0f the laws passed prior to June 16,

as the Hundred Days.
some were experimental, some practical, some routine. But
most were recovery, relief, or reform-oriented. The banking
crisis of early 1933 had been dexterously subdued in March.
Promising programs were forthcoming from legislation for
civilian conservation to re-employ (the current phrase)
275,000, for farm relief by agricultural adjustment, for farm
and small home mortgage refinancing up to $2 billion each,
and Tennessee Valley rehabilitation beginning at Muscle
Shoals.

Some legislation promised to yield less popular
results, but was nevertheless every bit as important to the
administration for present and future purposes. The backbone
of these were economy measures to slash $1 billion from the
federal budget, including over $400 million from veterans'
compensation. Also included were truth-in-securities
legislation; the Thomas amendment (title III of the farm
bill) providing discretionary presidential power to use
several methods for monetary inflation; the abandonment of
the gold standard; and the abrogation of the gold clause in
public and private contracts, legalizing the gold embargo of
March.

Because of their lower priority, other urgent needs

had not yet been met by legislation. These included the

3

simplification of municipal bankruptcy procedures, coal
industry consolidation, decisive executive reorganization
of sprawling departments like Commerce, reciprocal tariff
reform, and ratification of the St. Lawrence Waterway Treaty.
.And some of the more promising programs, like federal relief
grants to States and the Agricultural Adjustment Administra-
tion, had been weakened by compromises which affected either
a minimum appropriation of funds or an unwieldy administrative
setup.3 But trained observers and laymen alike could over-
look such legislative intricacies because of the splendid
presidential perfbrmance which had captured center stage.

Unable to stand without the help of cumbersome ten-
pound steel braces and the balance supplied by an aide's arm,
Roosevelt had successfully created the image of a healthy and
vigorous leader, a man in perpetual motion. His professional
virtuoso perfbrmance during the Hundred Days included three
plain-spoken, persuasive radio talks, five major speeches,
endless conferences with congressional, public, business and
other leaders, and twice-a-week press conferences, all of
which had served to keep him continually before the public.
Where President Herbert HOover had finally symbolized govern-
mental inaction, Franklin Roosevelt already epitomized
positive federal government action. He had revived the art
of stunning presidential leadership, moribund since the
first term of the awe-inspiring Woodrow Wilson. Even though

the Hundred Days was ending as a mixed success, many shared

4
the euphoria with gigs, which declared that the President
"was the master of Congress until the end."4

June 16 was no ordinary day for Roosevelt, but much
of it followed a loose pattern well established since March 4.
His daily routine varied, but not greatly. Usually he would
sleep late, breakfasting in bed around eight to eight-fifteen.
He loved eggs, especially scrambled eggs. During and
fellowing this meal, he would be buried under at least six

morning newspapers, paying most attention to the editorial

pages. They generally included the New York Times, New York

 

Herald Tribune, Baltimore Sun, Chicago Tribune, Washington

 

 

 

Post, and Washington Times-Herald, and after dinner he looked

 

at five evening papers as well. Often he scanned them
selectively, for he was more of a skimmer than a speed reader.
Soon it was time to begin his daily round of visitors. These
visits and appointments were most important because he gained
the bulk of his information in the give-and-take of conversa-
tion. In addition to face-to-face talk, he was estimated to
have spent as much as a quarter of his day on the telephone,
for both of which there are precious few records. He used
the telephone for reasons of efficiency and convenience on
the one hand and, on the other, because he loved to talk.5
Around 8:30 Dr. Ross T. McIntire, the White House
physician, would arrive. He would forego a thermometer or
stethoscope and simply converse with his patient, amidst
breakfast and the papers. As McIntire recounted it, he would

watch for "the President's color, the tone of his voice, the

5

tilt of his chin, and the way he tackled his orange juice,
cereal, and eggs." Satisfied, the physician left, returning
around 5:30 for another check.6

Between nine and nine-thirty each morning Roosevelt
would confer with advisers like Raymond Moley and Lewis W.
Douglas. Moley, officially an Assistant Secretary of State,
was in fact the President's most trusted all-around policy
adviser, notably on foreign affairs and the World Economic
Conference. Budget Director Douglas advised the President on
fiscal policies, spending and appropriations, and particularly
on economy in government. These two advisers, more influen-
tial on policies than any others during the Hundred Days,
would generally split their half hour in the Roosevelt bed-
room. On June 16 Moley reiterated rumors of a possible
currency stabilization plan that might be proposed that day
from London. Douglas directed his attentions to executive
reorganization of certain departments and bureaus, along with
various civil service regulations. In this way Roosevelt
daily informed himself on general domestic, fiscal, monetary
and foreign policy. Despite their infrequency to this
privileged access, or perhaps because of it, advisers as
varied in viewpoint as economist Rexford G. Tugwell, Assistant
Secretary of Agriculture, and attorney Dean G. Acheson, Under
Secretary of the Treasury, disliked these conferences. The
President's manner made them feel uneasy. Both felt admitted

to the inner circle, but not as equals. Yet such was FDR's

6
morning custom. And it was a convenient, informal, and
necessary way for a crippled leader to see close advisers.7

For the half hour or so after 9:30, the President
would meet with his secretaries to plan his day, discussing
possible appointments, other business, and political matters.
Of this group, the most influential was Louis McHenry Howe.
A wizened little man over sixty, shrewd yet vulnerable,
outwardly pessimistic yet inwardly capable of dreams for a
better future, he had befriended and served his chief since
1912 as political manager, head letter writer, secretary,
alter ego, and now all around troubleshooter. Fiercely
jealous of his standing with Roosevelt, Howe's political
influence on his boss is difficult to analyze. Yet it
existed; and he often worked in subtle ways, like asking
visitors whom Roosevelt trusted to paraphrase and relay Howe
suggestions. Hewe's office was across the hall from the
President's.

Marguerite ("Missy") LeHand was stationed in a
cubicle next to the President. In theory Roosevelt's
personal secretary, in reality she was both more and less.
Charming and socially gracious, she was an attractive
unmarried woman of thirty-seven with prematurely graying
hair, large blue eyes, and intelligent features. She took
little dictation, which was left mostly to Grace Tully, an
expert stenographer. Instead Missy managed the presidential
office, handled his personal correspondence, did his personal

shopping, hounded him into taking his cold medicines, provided

7

an ear for advisers who had difficulty getting messages to
him, arranged much of his off-duty social activities like
poker and movies, and generally acted as White House hostess
when Eleanor was out of town.

With Roosevelt since the unsuccessful 1920 campaign,
Hewe, Missy, Steve Early and Marvin McIntyre were charter
members of the "Cuff Links Gang"--so called because they
were members of the inner circle who had received cuff links
inscribed "FDR" for their efforts in that campaign. A
Virginian born in 1889 and who had worked with all the major
news services by the 1930's, Early was the efficient, hard-
driving, hot-tempered press secretary. Observers usually
credited him with persuading his boss to abolish the "White
Heuse spokesman" and to initiate a new deal for the working
press. McIntyre, also a Southerner, was the genial, happy-
go-lucky, easily accessible appointments secretary. As his
memos to FDR show, however, when the chips were down, he
often displayed a native political shrewdness and usually
managed to send away less important callers--for whom there
'was no available time-~smiling rather than pouting.8

Having been so prepared, sometime between ten and
ten-thirty Roosevelt would begin his daily round of fifteen—
minute appointments (in theory, because he often talked
longer himself) and official business. His callers ranged
from bank presidents to congressmen to local delegations
lobbying for a home town issue. He would see all in the same

amiable, pleasant, informal way. Cabinet members, official

 

 

 

 

 

 
 

 

8

and unofficial advisers, old friends, seekers of patronage
and political favors--the list was endless. And in a matter
of moments, FDR could turn smoothly from considering public
policy to drawing lots for the Davis Cup tennis team! The
business he handled in a given day might range from tele-
phoning Tugwell to have him and Agriculture Secretary
Henry A. Wallace talk with farm groups demanding compulsory
use of grain in automobile gasoline to advising Democratic
leaders on Capitol Hill that certain power lobbyists were in
town working to defeat the Muscle Shoals bill. These appoint-
ments often lasted until one o'clock when Roosevelt would
have lunch, usually at his desk and usually with personal
friends, like Henry Morgenthau on Mondays.9

The President Spent afternoons in a variety of ways.
Most often he dictated official and personal correspondence.
'While a good deal of this was concerned with important matters
of state or politics, his personal interests occasionally
shone through. In April and May, for example, he tinkered
fer weeks and sent many memos on the question of giving 19
instead of 17—gun salutes to governors and Supreme Court

10 Cabinet meetings convened on Tuesdays and

Justices.
Fridays, beginning around two o'clock and often lasting

two hours. If the published Secret Diary of progressive

 

Interior Secretary Harold L. Ickes is any indication, how-
ever, little of the business of policy and decision-making
occurred at these round-table discussions. Press conferences,

those infernal, talkative, sometimes informative, and even

9

entertaining affairs, met regularly (with one exception) on
wednesday mornings and Friday afternoons, the latter fol-
lowing Cabinet sessions. They averaged 12-15 minutes in
length, but could run to a half hour. While a close analysis
of these conferences suggests many of the comments were mis-
leading, depending upon the political sensitivity of the issue
under explanation, Roosevelt's remarks more often proved a
genuine indicator of what he thought and, more importantly,
what he knew about a given topic. His rambling commentary
traversed every current subject that came to inquisitive
correspondents' minds--from the details of CCC camps to how
a certain columnist's "leaks" had hurt his plans for disarma-
ment. Late in the afternoon (after June 2, when the spacious
pool was completed in the basement of the West Wing) he would
take a dip, sometimes accompanied by Missy LeHand, before
dining with family and friends, or before a formal state
dinner, between six-thirty and 8:00.11

When the Roosevelt family dined and what they ate
was as informal as their entire life style amidst formal
washington society. Mrs. Henrietta Nesbitt, housekeeper
throughout FDR's tenure of office, recorded that her first
full day's menu for twelve people was the most representative

of all those years. It included:12

10

LUNCH
Tomato Juice Cocktail
(Just lemon and salt, Mrs. Roosevelt said)
Stuffed Eggs
Cold Cuts
Salad--Hot Corn Bread
Stewed Fruit—-Cake
Coffee
DINNER
Clear Soup
Broiled Lamb Chops
Green Peas--Baked Potatoes
Fruit
Coffee
(Sanka for the President and Mrs. R)

The President's evenings proved as crowded and varied
as his afternoons. During the Hundred Days, all day long as
‘well as after dinner, he dominated a constant swirl of White
Heuse conferences. Leaders of both parties from the House and
Senate, Cabinet members, and presidential advisers would con-
fer over a range of topics, particularly on current legisla-
tion and, in foreign affairs, the London Conference. Even
so, Roosevelt managed to squeeze in time for recreation and
relaxation, including his stamp hobby, informal card-playing
get-togethers, and movies. James Warburg, an unofficial
monetary adviser, arrived upstairs in the oval study at ten
o'clock one night in May with a group to discuss foreign
policies. FDR obliged these busy officials to sit down and
enjoy (or at least watch), as Warburg put it, "a deep sea

blood and thunder story movie" which lasted until eleven.

Eleanor remembered how her husband delighted in seeing movies

11

two or three times a week, especially of the lighter Walt
Disney variety, because it helped take his mind off affairs
of state.13

Perhaps symbolic of the presidential performance
during the Hundred Days and the essential humanity of both
Roosevelt and the NeW’Deal was one of his earliest orders
upon moving into the White Heuse. His eldest son James
recalled that the order went to everyone from top secretaries
down to telephone operators. If persons in distress tele—
phoned to appeal for help, the President directed that they
be spoken to by someone, regardless of the circumstances.
"If a farmer in Iowa was about to have his mortgage fore-
closed," James reported, "if a homeowner in one of the big
cities was about to lose his home, and they felt desperate
enough about it to phone the White House, Father wanted help
given them if a way possibly could be found; he was keenly
cognizant of the suffering he had seen on his campaign

trips."14

By the end of the Hundred Days, this thoughtful
policy was well established along with other White House
routine. But as the hands on the District of Columbia clocks
crept toward high noon on June 16, several major bills still
awaited the signature of the remarkable patrician whose
leadership had inspired a despairing nation.

Promptly at 11:45 in his cool Oval Office, with
senators, congressmen, aides, and the press all looking on,

Roosevelt beamed his now famous smile and signed the Glass—

Steagall permanent banking reform measure. The bill's

12
sponsors had fought it through against all odds and even
against the President, until the eleventh hour.

"More history is being made today," Roosevelt
proudly proclaimed, as he squiggled his signature with two
pens, "than in any one day of our national life." "During
all time," chimed in Senator Thomas ("Blind Tom") Gore of
Oklahoma, from beside the presidential desk.15

"You old warrior!" quipped Roosevelt to Carter Glass,
Senate sponsor of the bill, in a little sideshow evidently
meant fer the electorate back home. "If it had not been for
the veterans, Congress would have adjourned last Saturday
and you would not have had your pet measure on the statute
books." It had more lives than a cat, he went on, concealing
and hoping to bury his recently defeated opposition to it.
'The bill had been killed "fourteen times in this session"
only to pass at the end, thanks to a presidential miscalcu-
lation elsewhere. He then ceremoniously presented the two
fountain pens to Glass of Virginia, celebrated as the father
of the Federal Reserve system, and to Henry B. Steagall of
Alabama, an administration stalwart in the House.

More senators and representatives filed in to get
the prized pictures of themselves with the President. The
lighthearted banter and the ceremonies continued. Roosevelt
signed the National Industrial Recovery bill next. It sought
federal supervision of industrial self-regulation, coupled
with a compromise program on paper of $3.3 billion in public

works. Last was the Railroad Coordination measure, which

 
 
 

 

 

l3

admitted the intractability of group interests concerning the
railroad problem and opted for cooperation as an ameliora-
tive. Then he concluded the ceremonies. During the next
hour he intermittently talked patronage with members of
Congress.16 During luncheon and for almost an hour afterward,
he spoke privately with William E. Dodd, liberal professor
of American history at the University of Chicago who was
newly appointed ambassador to Germany. Their talk ranged
over Germany's threat to default on its foreign obligations,
its Jewish problem, and its need for trade concessions.17

Shortly before the regular Friday afternoon Cabinet
meeting, Roosevelt privately signed the remaining, less
glamourous bills: the Independent Offices appropriations,
containing the controversial veterans' allotment compromise;
the Deficiency bill, with funding for NRA and public works;
and taxation laws, continuing and beginning a variety of
revenue proposals. In many ways, especially when compared
to the four Hoover years, it was a red-letter day for
legislation.

Industrial Recovery, for example, had received a
ringing presidential endorsement at the signing, and again
in a longer press release. Roosevelt's optimistic statement
declared that the twin efforts of public works and "industrial
re-employment" would greatly reduce unemployment before
'winter, the crisis for literally millions of Americans out of
'work. "It is the most important single attempt of its kind

in history," he went on. "As in the great crisis of the war,

 

 

1.

 

 

14
it puts the whole people to the simple but vital test:——'Mg§£
we go on in many gropigg, disorganized, separate units to
defeat or shall we move as one great team to victory?'"
Not everyone shared the Washington mood of optimism
and anticlimax. Perhaps many reflected, with the New York
Times: "Not the laws themselves but their administration and

the effect will be the ultimate test."18

But June 16 was not
a day for presidential pessimism. A key decision had to be
inade on the joint administration of NRA and public works.
Very possibly it could decide the success or failure of
industrial recovery.

The crush of other business and the signing cere-
monies had delayed the regular two o'clock Friday Cabinet
meeting. The ensuing discussion was briefer but fuller than
usual, centering on Roosevelt's question of how to administer
the joint recovery program. Conversations and opinions moved
around the oblong table, beginning with the Secretary of
State. The Cabinet quickly opted for separate administration,
or at least nobody proposed a better idea.

"I think I agree with you," the President finally
remarked, abruptly ending the discussion. Separate adminis-
tration seemed by default to be the decision. Meanwhile
Roosevelt's personal choice for the post, General Hugh S.
Johnson, who believed that both programs could succeed only
if jointly and aggressively administered, waited outside to
be fermally announced as £22 administrator. "Is there any

way we can select the administrator of public works at once?"

15
FDR continued, seeking suggestions. Silence reverberated.
Secretary of Labor Frances Perkins, the first woman ever
to serve in a Cabinet position, recalled her choice of the
Secretary of Interior. "Honest Harold" Ickes had the adminis-
trative talent, she thought to herself, as well as a good
"social point of view" and the ideal department to handle
public works.

Finally Miss Perkins suggested Ickes, to the latter's
feigned amazement and to Roosevelt's evident pleasure. He
liked the suggestion, FDR explained, because he was against
"so many independent agencies." Secretly pleased, Ickes
mumbled his acceptance. "All right, you are elected." A
committee would handle public works, declared the President;
Ickes would be chairman.

A thorny problem of administration had been
politically solved to Roosevelt's satisfaction. Ickes would
be a tough, efficient, prudent, economical administrator.
.Hugh Johnson could run the NRA, thus placating the pro-
business and Baruch elements, although the latter already
had their candidate, George N. Peek, as administrator of the
agricultural recovery program. FDR asked Johnson in to hear
the news. He grew "purpler and purpler" as the President
dictated the necessary executive orders setting in motion
the public works program, authorizing $400 million for high-
way construction and another $238 million for naval construc-

tion, long a presidential favorite. The meeting adjourned,

16

and Roosevelt quickly sent Frances Perkins to sooth the
ruffled feelings of a bitterly disappointed Johnson.19

And so did Roosevelt casually divide against itself
a prime administration recovery program. It seemed a most
appropriate culmination to his sometimes bizarre decision-
making processes as they had developed during the Hundred
Days. In fact this had not been one of the oft-acclaimed
"snap" decisions, at least not completely. Ickes had urged
separate NRA and public works administration on the President
ever since May 16, the day before he submitted the legisla—
tion to Congress.20

Hurrying from the Cabinet meeting, the affable
Roosevelt met the press at 4:15 for his Friday afternoon
conference. After some good-natured joking about the
preparations for his and the accompanying correSpondents'
yachting vacation, they got down to business. In fifteen
minutes he covered questions relating to the immediate
administration of NRA and public works. Turning to inquiries
about rumors from the Economic Conference which had
officially opened four days earlier, he did his best to deny
that any stabilization plan had been proposed, which was the
thrust of most of the questions. After this last public
appearance of his official day, he concluded the afternoon's
dictation. But before six o'clock one telegram and part of
another arrived from the delegation in London. Immediately
he summoned a Special meeting of his available monetary

advisers: Moley, Acheson, and the ailing William H. Woodin,

17
Secretary of the Treasury. Between six and seven o'clock
they discussed recent developments and prepared a tentative
reply to the delegation's queries. This reply could not be
completed, however, as two of the telegram's three parts had
not yet arrived from State Department decoders. Shortly
after 7:00 FDR closed up his office, went for a swim, and
dined with his family and staff. Thereafter he discussed
with his staff final plans to operate the White House during
his proposed two-week vacation. Just after eight-thirty,
smiling but tired, he boarded his special train for Massa-
chusetts. For him the Hundred Days was over.21

Roosevelt had lived it to the hilt, as he would soon

begin his cruise in a 41-foot, open yacht, Amberjack II.
22

 

'Tugwell confided to his diary:
The truth is that F.D. really loves the appurtenances
of the job. He savors completely the romance and
significance of each experience. He works hard and
honestly though, and I am glad he does get such a
big kick out of it. The White House has been made
liveable again, too, and he seems quite as much at
home there now as he did in Albany. His health is
good. He seems not to worry--and he knows people will
not always love him as they happen to at this moment--
which prepares him for the inevitable.

Although exaggerated by official statements, a New

Deal had been legislated. Roosevelt had delivered on his

inaugural pledge of "action, and action now." Domestic

priorities had come first throughout the Hundred Days.

'That had been the overriding necessity, economically and

politically. But the Hundred Days had also seen the World

Economic Conference launched. For all practical purposes,

FDR appeared as its major Sponsor, breaking the proverbial

18
bottle of champagne over the conference's bow with a round
of diplomatic visits and negotiations in Washington during
April and May. Currency stabilization and other hopes had
been sown by the Americans. June 16 therefore marked the end
of domestic affairs for the Hundred Days; but the related and
crowning peak in foreign affairs was just building momentum.
Soon the President would be forced to act on the WEC's pro—
posals, but he would view it from the domestic policy context
that he had thus far developed.

All of these events had distant origins. But for
FDR, as for Moley, Douglas, Tugwell, and other key presiden-
tial advisers, the crux had come in November 1932 when New
York's Governor Roosevelt had been elected 32nd President of
the United States during the nadir of the country's worst
depression ever. The preparations and planning for the
presidency and a new deal began shortly thereafter and on
March 4, 1933, presidential power flowed to Roosevelt. Key
policy advisers were often at his right hand. Their personal
relationships were a central force in the developments of the
early New'Deal.

Such relationships between Roosevelt and his close
advisers explain much about the long interregnum of 1932-33
and the Hundred Days. Above all, in the making of policies,
decisions, and presidential leadership, those relationships
help illustrate the major theme of the era: FDR's growth
into the presidency as he formulated domestic and foreign

policy programs. An examination of these relationships

l9
affords a better understanding of Franklin D. Roosevelt and

the early New Deal.

CHAPTER II

ROOSEVELT AND MOLEY

On election eve, 1932, a fire blazed in the red brick
fireplace of the high ceilinged, walnut panelled library in
the old home of the Springwood estate in Hyde Park, New York.
Winter filled the air along the Hudson River, the scene of so
many fond childhood memories of the big home's master. The
1932 presidential campaign was ending that night. A radio
played in the background. Before the fireplace Franklin
Delano Roosevelt, the Democratic nominee, talked calmly and
goodnaturedly with Raymond Moley, the Columbia professor who
had done yeoman work on the coordination of materials, the
organization of ideas and the writing of speeches during the
campaign.

They sat alone and talked quietly, Moley recalled, of
the campaign and the gathering economic storm clouds, the
falling prices, the growing unemployment. Moley silently
reflected on the rewards of his service to the governor of
NeW'York. "I had worked those long hard months," he mused,
"to justify to myself the expenditure of a lifetime's effort
toilearn, to earn the right to learn more, to see how the
«sommon good might be served through a better understanding
(of political forces." But now the lesson was over, the job

20

21
well done, and soon he would return to the teaching and other
academic activities that he enjoyed so much.

About that time the voice of a woman orator came
over the Republican radio hour. She appealed to women to
support the Republican party and their programs.

Roosevelt sat up, listening. He had not made a
speech especially to women, he remarked to his chief Brains
'Truster. Perhaps they should arrange to do so. Moley
cautioned against it. All of his years of teaching girls and
‘women, he explained in his slow, careful drawl, had taught
him that they did not like to be approached and treated as a
sex apart. Women wanted to be treated like everyone else.

'The candidate listened in silence. More remarks were
exchanged. Roosevelt agreed, at length, that the professor
was probably right. After all, he had done the teaching, he
had the experience there. They resumed their earlier rambling
conversation. The Republican appeal to women went unanswered.
It did not matter. The election was already won.1

The incident has a larger significance. It illus-
trates one of the most important personal relationships that
enabled Roosevelt to win the Democratic nomination for
president, to conduct an issue-oriented campaign, to win the
election, to prepare further for the presidency, and then to
become the political croupier of the New Deal. The relation-
ship had roots as far back as 1928 and it endured in a changed
fOrm through 1936. The background of Raymond Moley and this

intimate and loyal relationship, therefore, is a key to

22
understanding both Roosevelt by 1933 and the complex and
stimulating Hundred Days, the most crucial part of the early

NeW'Deal.

II
Born in northern Ohio one year after Grover Cleveland
'was first inaugurated, Moley was raised in an Irish Catholic
family which reverberated to Democratic politics. His first
political hero was William Jennings Bryan, during the 1896
"cross of gold" crusade. But shortly he shifted allegiance
to Cleveland's famous reform mayor Tom Johnson. In the mean-

while, Henry George's Progress and Poverty captivated him.

 

.Always thriving on Democratic reform politics and an avid
reader, the young man searched for more. Seeing education as
the gateway, he put himself through Baldwin-Wallace College.
.Afterwards he won a teaching position in Olmsted Falls, then
a rural adjunct of western Cleveland. Soon he worked his way
up to superintendent over three teachers and pursued his twin
passions of teaching and politics. The village twice elected
him clerk, and then mayor in 1911. Moving upward, he began
teaching at Cleveland's West High School in 1912 and moved on
to Western Reserve University in 1916. There he taught three
years, having rejected in 1917 a chance to run for the Ohio
legislature. It was an important decision. For along with
learning, teaching and writing became his main ambitions.
Elected office he permanently cast aside.

The Democrat WOOdfOW'WilSOH excited the rising

teacher as much as did Republican Progressivism. Moley

23
decided to fellow to some extent the professorial path
toward politics. Already he espoused Charles Van Hise's

Concentration and Control, a work advocating the acceptance

 

and regulation of bigness as an alternative to trustbusting,
which would later flourish in his attitudes toward business.
But the young teacher needed more preparation. His quest
for learning had led him east to Columbia during summers,
and eventually to a Ph.D. in 1918 under Charles A. Beard
and others. With this degree in political science, he
continued only one more year at Western Reserve, resigning
in 1919 to become director of the Cleveland Foundation.
There he specialized in criminological research, which helped
in the movement fer the reform of Cleveland's system of
criminal justice. This led to a professorship at Columbia
in 1923. Here he continued to develop his orderly techniques
of research and organization, as well as to polish his
writing skills. For over five years, along with his teaching,
he conducted various statewide researches and published
studies of State court, prosecution, and police systems.
Louis wae met Moley in 1928 as a result of the
latter's growing reputation for work in criminal justice.
Impressed, Hewe introduced the professor to his chief, then
running for governor of New York. This resulted in Moley
\morking for four years on Roosevelt's Commission on the
Administration of Justice, as a part-time adjunct to his
teaching. All of this work made him quite available by the

eariy part of 1932 to direct what would later become known as

 

 

.,

24

the Brains Trust. Although this peculiar institution would
have little to do with the later formulation of policy
guidelines, it nevertheless went a long way toward providing
Governor Roosevelt with new ideas, political and economic,
as well as the research and the drafting of his campaign
Speeches. As Moley later put it, "The opportunity to join
in FDR's campaign was what any professor in my field would
have given his right arm for."2

By late 1932 Moley had made a name for himself by his
forte for researching and organizing, his talent for clari-
fying and simplifying complex and sometimes dull issues, and
his knack for putting those into cogent and vivid language.
Throughout the Brains Trust period and the presidential
campaign, he performed these services for the Democratic
hopeful. Moley possessed strong views, personality, drives,
loyalty, talents. Slightly stocky, just under six feet tall,
with a long face, jutting nose, and shrewd smile, his appear-
ance seemed like a "canny but benevolent hawk." Adept and
lucid in his prose, intelligent in his thinking, efficient
in securing results, he always quested after more learning.
A mature professor of forty-six, he insisted upon precision,
clarity, and organization over anything less; and he had a
shrewd eye for choosing the right man to help with the right
job. While usually affable in manner, it was also true that
Moley's temperament made him difficult to work with, at times

irascible, and generally not a team player. Or as one

25
observer later put it, he had a quick temper and a "phenome-
nal absence of tact."

But these were by no means his dominant character—
istics. Often witty, at times dry and humorless, sometimes
secretive about his tasks, usually zealous in protecting his
prerogatives and ideas, continually puffing a cigarette or
clenching a pipe between his teeth, Moley's dark brown eyes
and acute senses had accumulated much learning by the time
Roosevelt was elected president.3 And he had proven himself
both loyal and useful in many ways to FDR. As a result,
their personal relationship seemed to be based on an implicit
trust. That was why Roosevelt and Moley sat alone at Hyde

Park on November 7, 1932.

III

Roosevelt had made a long and, in some ways, diligent
preparation for the presidency. Born and raised a patrician
landowner along the Hudson River of Republican upstate New
York, schooled as a gentleman at Groton School and then
Harvard, where he graduated in 1904, he learned enough law
at Columbia to pass the bar exams, but he did not linger to
graduate. Although stimulated by personal contacts in his
municipal court work for the Wall Street firm of Carter,
Ledyard, and Milburn, he nevertheless saw no future in that
area and corporate law bored him. In 1910 he entered the
Democratic party and won election to the New York State
Senate, where he was joined in 1911 by his thereafter life-

long companion and political mentor, Louis Howe.

26

After 1912 and the victory by Wilson and the
Democrats, Roosevelt embarked upon a successful national
political career. He served as Assistant Secretary of the
Navy during the Wilson presidencies, made a colorful and
vigorous bid for the vice presidency under Ohio progressive
James M. Cox in 1920, and defeated polio in the 19205 to the
extent that he could re—enter politics with an increased
social awareness and a steely determination to succeed.
Elected governor of New York for the first of two terms in
1928, he found Alfred E. Smith's incumbency a difficult
performance to follow; but follow it he did, with mixed
success. A man of many facets, but one who carefully kept
his own counsel, FDR increasingly compartmentalized his
personal life, his thinking, and the different parts of his
political career during his advance to the top of what
Benjamin Disraeli once shrewdly termed the greasy pole.

One deep—seated characteristic of Roosevelt's politi-
cal personality was later described by long-time acquaintance
Irnfis B. Wehle. FDR had an almost feminine sense of intuition
thiCh helped him to make judgments but without a methodical
consideration of the matters of decision. Those who would
argue a case logically, point-by-point, would bore him. He
instinctively avoided sustained attention and mental efforts,

Particularly in the fields of economic, fiscal and monetary
INILiCY- "There intuition is at a discount," Wehle believed,
"becaUSe understanding causes or visualizing results calls

for mastery of complex facts and arduous abstract thinking

1:

 

27
unaided by human-nature consideration." Whether or not that
‘was a correct evaluation on the limitations of intuition,
the latter trait formed an important part of the Roosevelt
makeup.

All of Roosevelt's political success, however, was
not without its drawbacks. His oldest son James found
his father admittedly a lonely man on election night, 1932.
"I'm just afraid," the new President-elect confided while
being tucked into bed following his greatest victory, "that
I may not have the strength to do the job." The governor
realized that he was about to embark on an ambition of
several years, an almost unbelievable challenge under the
devastating depression conditions in America. He would need
unprecedented help on all sides.

The quality of Roosevelt's achievements as governor
had disappointed many people, whose frustration was perhaps
reflected and articulated best by the influential columnist
waiter Lippmann. He had failed to lead vigorously and forth-
rightly, Lippmann contended, and he lacked strong political
convictions and a sound grasp of public affairs. Those
alleged weaknesses had inspired the journalist's caricature
of FDR in January 1932 as "a pleasant man, who, without any
important qualifications for the office, would very much like
to be President." Then supporting conservative Newton Baker,
Lippmann had been right--in early 1932. He pointed out what
Roosevelt had to face himself: the need for expert advisers

who, incidentally, were not associated with the Democracy's

28

Old Guard. But as historian Frank Freidel and others have
emphasized, one of FDR's great assets was his capacity for
growth, the capacity to develop and meet new challenges and
responsibilities.4

Roosevelt would grow into the new situation and cir-
cumstances. Thus had the Brains Trust arisen. But, as he
talked with Moley at Hyde Park, the campaign was over, the
presidency won, and the Brains Trust would dissolve. He
‘would need personal and policy advisers besides those like
Howe and Samuel Rosenman, who had a limited grasp of national
affairs and high policy. More than ever he would need people
whom he could trust, who were completely loyal, generalists
who either knew foreign and domestic policy or who could
learn about these areas. Above all, he needed someone who
could write well, to express his leadership and ideas in a
polished manner. Readily available, and perhaps the only man
to fit most of those needs, was Moley. Some instances from
the long interregnum illustrate how the relationship con-
tinued to grow and develop, amidst indications of trust and

loyalty, as well as centrifugal forces.

IV
There were at least two basic differences between the
Roosevelt and HOover campaigns. The most obvious related
to the depression's causes. Herbert Hoover envisaged the
depression as worldwide in origin, development, and to
some extent, solution. Roosevelt viewed it as a domestic

calamity. Since he had politically defused the tariff and

29

the League of Nations issues, he was free to move toward some
form of economic nationalism. The second major difference
was the governor's general, if imprecise, theme of social
and economic planning with its implication of heavy federal
spending, although this deviated from his pledge of govern-
ment economy and a balanced regular budget. Hoover had
stressed the latter; but he and the Republicans were silent
on planning and its implications. When Rexford Tugwell
gloomily predicted the worst economic difficulties ever, his
chief responded with a characteristically ingenuous burst of
self-confidence, illustrative of his passion for present-
mindedness. "Yes, I know it," FDR conceded, "but there is
nothing to do but meet every day's trouble, as they come.
What terrible decisions we'll have to make! and sometimes
we'll be wrong!" By 1932 such confidence was his way of life.
But one point was clear: domestic recovery would get first
priority.5

The telephone jangled in Moley's Claremont Avenue
apartment early Sunday morning, November 13. Roosevelt's
vibrant voice came over the line. Hoover had telegraphed
concerning the pressing problems of the World War I inter-
governmental debts. He asked that FDR come to Washington to
discuss this issue. Would not Moley come to Albany to help
formulate an answer? Moley would, and did. It would prove
a fateful involvement, one he had no means of fathoming at
the moment. He thought his service had finished with the

election. Time and events would soon change that.

30
The European war debts were an exceedingly complex
issue, a political and emotional as well as an economic
dilemma, or at least that was Roosevelt's interpretation.6
In essence the Hoover Administration, backed by a considerable
segment of informed opinion in the northeast, was willing to

bargain. They desired either cancellation, or a large reduc—

tion of the debts, for a quid pro quo elsewhere. Perhaps

 

Congress, with FDR's assistance, would revive the old Dawes
Debt Commission. This was igternationalism, the international
wall Street banking approach, as opposed to the Rooseveltian
campaign stance for igtggnationalism, or economic nationalism,
as it was also termed--meaning domestic priorities first.

After Roosevelt and Moley discussed it, they sent a
noncommital reply. But FDR made one concession: he would
stop in Washington for discussions on his way to Warm Springs
for a vacation.

Moley returned to New York City. As planned, during
the early part of the week, with help from Adolf A. Berle,
Jr., and others, he drafted a series of questions on 3x5
cards for his chief to use in the forthcoming Hoover confer-
ence. One purpose of the questions was to gain information.
For example, why did the debtor nations not use normal diplo—
matic channels to handle debts? Why have a renewed debt
commission? What were the facts? The second purpose was more
subtle: to prepare an inexperienced and, particularly on

these issues, thus far little informed President—elect to

31
handle the conference with the experienced, intelligent,
opinionated Hoover.7

When Moley returned to Albany on the following
Thursday, Roosevelt, to his surprise, asked him to come along
to the Hecver conference. Moley had no inkling that he would
be asked to go. As Tugwell noticed, FDR acted so quickly
that he announced it to the press even before asking. "Moley
knew nothing about it until he arrived in Albany about ten
o'clock."8 This sudden turn of events would eventually lead
Moley to cast his die with the new administration, although
he ostensibly delayed his final decision until February.

And the debts issue would cloud Roosevelt's domestic policy
preparations throughout the interregnum.

The Red Room of the White Heuse provided the setting
for the November 22 Hoover—Roosevelt talks. Ogden Mills, the
experienced Secretary of the Treasury, seconded the President.
Moley aided and abetted the President-elect. The four men
seated themselves and exchanged a few pleasantries. The
atmosphere remained somber. Dislike and distrust were evident.
The President, somewhat shyly at first, launched into an
hour-long monologue. He declared four principles: the debts
were honest business transactions; each country was a unit,
each debt an individual transaction; debts and reparations
svere not related; and the United States must take into account
‘the proven inability of some debtor nations to pay. Cancel-
laiion or default, HOover stressed, would shake the American

economy. The United States should extend some hope of

32
revision or reexamination, he went on, or face "grave reper-
cussions" from Europe.

Roosevelt avoided a direct answer and proceeded into
the questions from the note cards. Informative answers were
given. The President then spoke on the need for a reconsti-
tuted debt commission. Roosevelt demurred, turning to the
still silent professor. What did "Ray" think? Moley took up
the case. Improvising, he asked that the new administration
accept Hoover's four principles, plus a fifth. He threw
in the idea of continuous negotiation for revision through
diplomatic channels. Roosevelt and Moley had never spoken of
this. But the President—elect "took it up at once." It got
him out of a dilemma; it deferred real action until after
March 4. It would eventually become the policy followed
throughout the Hundred Days.

Accounts of the meeting differ; but two points are
clear. Roosevelt's basic position on debts remained the
same. He rejected the debt commission proposal in a state-
ment issued from the train to Warm Springs. And Moley was
catapulted back into the Rooseveltian circle; he had become
Roosevelt's voice in foreign economic policy.9

Roosevelt needed expert advice. Sitting in the deep
red carpeted, red draped room, candidly discussing major
issues with the President and his Secretary of the Treasury,
Moley would recollect, impressed him with the gravity of the
situation and the governor's need of assistance. Tugwell had

the same feelings and fears. It pleased him that Moley had

33

participated in this conference. "The difficulty will be,"
Tugwell confided to his diary, that Roosevelt "will not
always be careful to have continuing advice. He is apt to
take it from me at one time, from some senator or congress-
man who happens to turn up at an opportune moment." Tugwell's
was a prescient commentary.10

The conference in fact illustrates more about
Roosevelt's lack of any well-thought out views on foreign
economic policy than anything else. One reason that Moley,
also an amateur in that field, had done much of the talking
was because the President-elect knew even less. Of course,
FDR also wished to avoid any appearance of commitment to the

discredited HOover regime. Events drew the governor and the

professor together.

V

November in the hills at Warm Springs, Georgia, was
pleasant; the daytime resembled late summer in New York.
Moley arrived to confer further, bringing some memoranda on
legislative ideas. Roosevelt soon brought up a new topic in
his casual, almost diffident manner. He was formulating plans
for his White Heuse secretariat, he explained. Louis Howe
would get his desire, to be a "man of mystery"; Steve Early
would handle press relations; Marvin McIntyre would take care
of appointments. But since Howe disliked the potential
competition from the post of Administrative Assistant to

the President, Roosevelt would abolish it. Although that

34
position would not be available, Moley must be in the new
Administration.

Moley recalled being surprised, and perhaps he was
flattered; but his first reaction was unfavorable. Speaking
against it, he carefully emphasized his desire to remain a
free agent, his repeated campaign request to hold no office,
his lack of propensity to work in harness with others, his
desire to go on learning in his chosen professions of teaching
and writing. But Roosevelt appealed to his pride with an
unprecedented expression of personal confidence. He could be
Assistant Secretary of State, with official status but with-
out statutory duties. Thus he could continue to work in his
own way, "giving me confidential assistance." The title
would grant the authority needed to deal with important '
people. Everything else would be the same. "I don't have
to tell you," Moley remembered Roosevelt's saying, "that I've
found it easier to work with you than I have with anyone
else." And the problems of selecting a Cabinet and preparing
a legislative program loomed large. Although tempted by and
perhaps proud of this expression of trust and confidence,
Moley reluctantly declined. Both men agreed to defer a final

11 Their personal relationship, however, was

decision.
deepened that day.

Roosevelt may have been the man with the best politi-
cal and administrative experiences upon being elected Presi-

dent; but he was not the best prepared intellectually for

that office. So he turned almost naturally to men like

35
Moley who had been trusted and loyal subordinates during the

campaign.

VI

As the lame-duck 72nd Congress met on December 5,
time pressed upon Roosevelt and Moley to prepare the new
administration's lines. Authorized to do so, Moley began
handing out and coordinating assignments for the preparation
of legislation. Adolf Berle, one of the major Brains Trusters
from the beginning, H. Parker Willis, drafter of the 1913
Federal Reserve Act, and others began farm mortgage measures.
Will Woodin, soft-spoken and talented head of American Car
and Foundry, ICC Commissioner Joseph B. Eastman, and others
drafted bills to expedite bankruptcy proceedings, especially
for railroads. Henry Wallace, editor of a leading Midwestern
farm journal, Tugwell, and others went to Washington to
represent Roosevelt on farm relief. Henry Morgenthau, Jr.,
and William I. Myers also entered the overlapping efforts on
farm relief and credit. Old Progressive Samuel Untermeyer
and Charles Taussig, sometime Brains Truster and business
executive, worked on securities reform. FDR himself had
asked sound money advocate and former Wilsonian congressman
Swagar Sherley, Senator James F. Byrnes of South Carolina,
and Representative Lewis W. Douglas of Arizona to work on
governmental economy and reorganization. Others became
involved and Roosevelt's lines of organization began to

blur.12

36

No one person could possibly hold all the reins well.
None could even hold them all except Roosevelt. It would
become his administrative method, although it was not planned
that way. The consequences were unforeseen and sometimes
unfortunate. But the President-elect was growing into the
presidency, adapting to the changing circumstances and the
much broader needs of national government.

Later in December, Roosevelt again began probing
foreign economic policy. This time the catalysts were
Nerman S. Davis, a Wilsonian diplomat and currently the
American representative to the Geneva Disarmament Conference,
and Secretary of State Henry S. Stimson. Harvard law pro—
fessor Felix Frankfurter acted as liaison with the President-
elect. A complicated series of events around Christmas led
to Davis temporarily gaining FDR's ear, and to the prospect
of a Roosevelt-Stimson meeting to settle foreign policy
differences between the incoming and the outgoing adminis-
tration. Continuity was the goal of Davis and Stimson.
Moley returned from his Christmas vacation in Ohio to an
unpleasant surprise. He and Tugwell were chagrined and
fearful over the apparent sympathy of their chief to the
internationalist Wall Street viewpoint in foreign policy.

The Stimson-Davis position, in essence, favored
reduction of the war debts. This reduction, they thought,
would stimulate price recovery, assure Anglo-American
cooperation against Japan in Manchuria, and effect gains in

disarmament at Geneva. At length Roosevelt agreed through

37

Frankfurter to invite Stimson to Hyde Park. January 9 was
set as the date and they would confer alone.13

Upon learning of Frankfurter's liaison with the
‘Hooverites, Moley displayed his temperamental side. Pri-
vately he "heartily" cursed Frankfurter to Tugwell. What
about Frankfurter as Assistant Secretary of State, Tugwell
asked? "My God, never!" came the heated reply. Tugwell
afterwards noted some perceptive comments on his colleague.
"Moley certainly has prejudices as well as dislikes," he
'wrote in his diary. "Yet he has intuitions too and some-
times is a lot nearer right than other people with better
brains." Roosevelt would favor someone who had good
political intuitions. Tugwell further observed that Moley
also "has terrible fits of temper, though I have only had one
fight with him in all of our association." In addition to
these personal observations, Tugwell recorded Moley's sug-
gestion that he (Tugwell) ought to be Assistant Secretary
of Commerce. And Tugwell believed that his colleague would
become "either Undersecretary of State or Administrative

14 By the end of 1932, then,

Assistant to the President."
insiders knew about both Moley's close relationship to
Roosevelt as well as his prospects of receiving an adminis-
'trative post.

The proposed Roosevelt-Stimson meeting evidently
Persuaded Moley of the need for a careful personal record.

-Not having the time himself and perhaps feeling the need for

secrecy, he began dictating or telephoning the day's events

38
to Celeste Jedel, his trusted assistant, who began keeping a
diary for him. An attractive twenty-two year old brunette

from Barnard, she had been one of his honor students before

15

coming to work as his personal secretary. The flavor of

.Moley's increasing involvements on behalf of the President-

elect and his policy preparations can be savored from this

early diary entry:16

At six-thirty R.M. went to see the Governor at 65th
Street. They spoke of the Claudel matter (France and
the debts); of Owen Young and the article about him in
the Nation; of the Virgin Islands, Porto Rico and Cuba;
of Untermyer Z§i27 and his stock exchange regulation
ideas (also bank affiliates) and Pujo Committee recom-
mendations; of the railroad receivership problem
(. . . Berle is now at work on a receivership law in
connection with his work for Baruch on the Coolidge
Committee); of the domestic allotment plan and the course
of the bill in Congress; of the beer bill; of the budget
and the Jimmy Byrnes' (Senator) resolution relative to
the presidential powers of reorganization of departments
and bureaus; then of John Dickinson as a possibility in
the State Department--high up.

The Roosevelt-Stimson parley occurred at Hyde Park
on the blustery winter day of January 9. An amiable encounter,
perhaps eased because both men shared a New York aristocratic
background, their conversation seemed to contain at least
appearances, and possibly more, of agreements. Secretary
Stimson afterwards noted in his diary that FDR had an
"hereditary interest" in the Far East and that the Hoover-
Stimson policy of nonrecognition was acceptable. The dis—
armament policies of the Hoover Administration were also
acceptable. But Roosevelt evidently did not grasp the full
implications of the preparations in London for the World

Economic Conference. In particular, the Secretary had

39
stressed the "psychological importance" of removing the debts
barrier from the path of the Conference and the monetary
stabilization was the first step toward domestic economic
recovery. Stimson believed Roosevelt accepted these key
internationalist positions.

For his part, the President-elect objected to the
idea of his appointing commissioners to begin negotiations
‘with the British and the French on the debts, disarmament,
and the Economic Conference. If this were done, he feared
two results. First, any appointees might be misinterpreted
as Cabinet selections. And second, from his campaign
experiences, he believed he could get an unpopular debt
settlement through Congress better on his own than in col-
laboration with the discredited Republicans. But the areas
of apparent agreement superseded these lesser matters.

Six days later Roosevelt and Stimson conversed again,
this time by long distance telephone. There now seemed to
be more agreement. On this occasion Roosevelt showed markedly
less inclination than previously to keep war debts and other
economic matters separate in any preliminary discussions
held before March 4. The governor, Stimson recorded in his
diary, had even used New York banker Russell Leffingwell's
illustration that the debts and the Conference were inter-
connected, "that you couldn't tell which was the hen and
which was the egg." FDR further agreed to meet Hoover again,
later that same week. This time Stimson would also attend,

along with Mills and Moley. The Hoover administration

 

 

 

4O

17 Roosevelt

prepared to affirm and publicize the agreements.
seemed headed away from his earlier commitments to domestic
recovery first.

In the meantime, just prior to the second Hoover
conference and the rush of Cabinet recruiting, Moley spent a
revealing day with Roosevelt. The events of the noon hour
are illustrative of their confidential relationship. Elliott
Roosevelt, FDR's second eldest son, joined them for lunch.
Elliott described an offer he just received from the governor
of a Mexican province to do some publicity work for a highway
the province was constructing. Should he take it?

With the father silently looking on in approval,
Moley launched into a no-nonsense lecture on business ethics
to the son. "Yes, take it," Moley advised. "But," he
warned, "make it public for what you are employed, by whgm and
for how much salary. Above all things be careful you don't
do anything anyone could criticize-~take no commissions, and
do everything openly above board, etc." As James Roosevelt's
memoir suggests, "Pa" had difficulty in dealing directly and
personally with his sons. In this case, he sat back and
allowed Moley to say what he himself could not, but which
evidently needed to be said. Indeed, Moley was more than a

"packhorse" in Roosevelt's great affairs.18

VII
January 20 proved to be the turning point for Moley.

It was the date of the second Hoover-Roosevelt confrontation

41
in the snow-covered, bleak nation's capital. Secretaries
Mills and Stimson backed the President. Moley seconded the
governor who, it developed, was again reluctant to engage in
a verbal tussle and needed all the support he could get.
NOrman Davis, casually invited by Roosevelt at the last
minute, sided with his ideological counterparts in the Hoover
administration.

At issue for Roosevelt and an impending New Deal was
intranationalism, rather than internationalism, as an
immediate approach to recovery from the depression. Stimson
recorded that FDR's attitudes on the issues were "wobbly."
Following an opening foray on the Far East situation, Hoover
moved quickly into a ponderous but well-informed statement
on the war debts. These he succinctly linked to the broader
issues of international economic recovery and cooperation.

IHis arguments included the idea of a qpid pro quo in return

 

for debt reduction. In lone opposition, Moley waged a last-
ditch verbal battle for about an hour against the inter-
nationalist position. Discussion was long, heated, and
sometimes circuitous. For the most part, however, FDR
remained silent. Moley argued "for having debts and economic
questions separately considered, albeit perhaps concurrently."
As he privately confided afterward, "The point was to avoid
the appearance of backing up any commitment, most possibly
unofficial--previously made, or still to be made--by the
Hoover outfit."19 Perhaps unsure of the implications of these

issues, but with trust and reliance on his chief adviser,

42

Roosevelt finally supported Moley. "Moley saved the day
there," Tugwell noted in his diary, insisting on separate
meetings there against Davis and Stimson and even against
F.D.R."20

Since the conference ended with only partial agree-
ment, Roosevelt and Hoover concurred in having their aides
produce a statement for the press, which Stimson and Moley
adjourned to prepare. Over in the State Department, this
time with the fluent Tugwell as an ally, Moley stood forth
against the Secretary--again for separate negotiations, for
domestic priorities first. With Herbert Feis and Harvey
Bundy as onlookers, Stimson, reluctantly but gentlemanly,
finally conceded to a compromise statement. But he continued
to grumble that FDR had shifted positions on debts and the
economic matters; and likely he was right. Nevertheless, this
announced policy statement counted, not whatever Stimson had
gotten earlier from talking with the President-elect.21

Even as Roosevelt left the meeting and entrained for
warm Springs for a last vacation and more conferences, Moley
had become inspired by economic intranationalism. Also
.frustrated over a lack of public credentials from his chief,
he now visualized a post in the new administration both as a
tchance to help translate intranationalistic policies into
action and as another meaningful learning experience. So he
arranged to go to Warm Springs himself.

Before his departure on January 30, Moley had a long

'talk:with Tugwell about their futures. When he told his

43
colleague that he planned to "suggest that we have places
in the new administration," Tugwell demurred about one for
himself. Afterwards he reflected their mutual grievances
‘when he recorded:22
I advised Moley not to go any further in his present
anomalous role. He has much work, many responsi-
bilities, and no authority. F.D.R. is certainly not
treating him--or me, for that matter--fairly in
requiring so much of us without clear delegation. The
Economic Conference will be a matter of great conse-
quences and I am expected to enlist and brief experts
who must be somewhat reluctant to go on without at
least some credentials.
Moley had already been thinking about this problem. On
January 19 he had jotted in his black pocket notebook, evi-
dently referring to his teaching: "Raise Columbia question--
‘when I have a title it will end." "When Raymond told me all
this," ran Miss Jedel's comment after the January 20 White
House confrontation, "he was tired and sore at heart. I
think he deeply felt the difficulty into which the Governor
had put him by carelessly inviting Norman Davis."23 Both
Moley and Tugwell learned more about Roosevelt's casual
methods and habits as they continued to evolve. Both
correctly concerned themselves about the line of authority
between them and their chief.

Upon arriving at the Georgia resort, contact with
the President-elect buoyed up Moley's spirit and enthusiasm.
It provided a break from his hectic activities in New York
and Washington. It also resulted in clarification of his

authority under his chief. For three soothing days Moley

basked in the sun, relaxing and lounging. On the morning of

44
their first full day together, Roosevelt reassured Moley of
his status as key adviser. "Never mind all this talk about
the State Department," he flatly stated. "As to debts, you
and I will handle that."24 Again he explained that he wanted
him as Assistant Secretary of State.

The next morning beside the outdoor pool, while
Roosevelt exercised, the two talked again about the proposed
position. Moley repeated his concerns, emphasizing that he
would need the "good will" of the Secretary, that there was
the possibility of adverse newspaper publicity, that his
present position was "anomalous"--being "wholly dep.ZEndent7
on F.D.'s confidence," and (perhaps facetiously) suggested

the "Philippines as alternative." Writing rapidly in his

notebook, he recorded the essence of FDR's remarkszzs

No you would be 8,000 miles away--Cordell can't
express himself well--You would be a help to me--
You can work with me-—'shoot over to Europe' or &
etc. 'You and Cordell can handle debts'-7Zinterpo—
lation by me to effect that I must handle matters
affecting policies-:7
Yes--agreement
éThen I must be fully in his conficencg7

es-~
éT may make mistakes but I am 1000% loya£7

es I know it--
And remember we went through the first campaign .
then didn't have a mistake—-

I want to go over the inaugural speech--and have you
take notes on it--

 

Later that same day, Roosevelt dictated a surprisingly
omnibus statement of his adviser's duties in the new adminis-
tration. These would include handling "the foreign debts,
the world economic conference, supervision of the economic

adviser's office, and such additional duties as the President

45

may direct in the general field of foreign and domestic
government."26

This authorization is important for several reasons.
Perhaps it reveals more about Roosevelt's attitudes toward
foreign affairs and the presidency than it does about the
Roosevelt-Moley relationship. First, such authorization
suggested that Moley would in fact be acting as secretary of
State--even though being theoretically subordinate to the
head of the State Department; and that the President-elect
trusted him with almost limitless areas of policy. Second,
it indicated that Roosevelt wanted a close personal adviser
on vast policy areas; and by February that adviser was Moley.
Third, the statement's very comprehensiveness also suggested
that FDR intended to be his own secretary of State, albeit
through Moley. Although the professor probably did not per-
ceive the last of these points, he was loyal and willing. It
remained to be seen whether a single adviser could manage
such a broad scope of duties. In the meantime, however, in
addition to being protagonist for economic nationalism and
the supervisor of assignments for legislative preparations,

Moley labored as liaison in other Rooseveltian affairs.

VIII
Cabinet selections also concerned the President-elect
throughout the interregnum. The political problems involved
were multiple: campaign supporters needed succor; old

‘Wilsonians wanted representation; Roosevelt supporters before

 

 

 

 

46
Chicago had to be preferred in order to build his own party;
progressive Republicans must be encouraged; and policy
alternatives could not be shut off. At different times,
Roosevelt sensed all of these cross currents, and more. Yet
there was no consistent pattern to the selections. It would
later become apparent that no appointee would outshine him,
but no one knew that before the Hundred Days.

Negotiations for at least two of the posts illustrate
Moley's central involvement, his relationship with Roosevelt,
and certain policy options. On January 11 the two men held
one of their first long talks over Cabinet personnel. FDR's
preferences included his final choices for six of the ten
departments, the remainder being Treasury, Commerce, Interior,
and Navy.27 Carter Glass for the Treasury and Cordell Hull
for State headed his list. About to leave for a cruise with
his millionaire friend Vincent Astor on the latter's yacht

Nourmahal, he left these important confidential dealings

 

primarily with Moley.

Between the two conferences with Hoover, Roosevelt
had veered toward an internationalist approach on recovery.
Carter Glass, known as a pillar in the Senate for the Demo-
cratic party, the old Wilsonians, and the sound money segment
of the financial community, was the obvious-~almost the
dictated-~first choice for the Treasury. Moreover, FDR at
first agreed with this consensus. The Virginia Senator's

health, however, was not strong; and neither was his wife's.

 

., ‘
...--s

,a... o

a... ,

 

 

o
a

 

 

 

_o s-
O

47

More important, he was skeptical about some of the
President-elect's policy intentions.

In a lengthy talk with Moley on January 27, Glass
laid down some conditions. First, he desired a free hand
in selecting subordinates, including Russell Leffingwell as
under Secretary. Leffingwell was both an old friend and a
J3 P. Morgan partner. This condition, however, would soon
be dropped. Second, Glass said he was "extremely worried
as to what the Governor's policy would be as to inflation."
The venerable Virginian had spoken to Roosevelt twice, on
January 19 and 20, without receiving a satisfactory answer
to that question. Moley jotted down Glass' views and phoned
them to his chief the next day.28

Roosevelt was disgruntled, an unusual mood, upon
hearing these views. "Make it perfectly clear," came the
firm reply from Georgia, "that we simply cannot tie up with
'23'" Wall Street. "So far as inflation goes, you can say
that we are not going to throw ideas out the window simply
because they are labelled inflation. If the old boy
doesn't want to go along, I wouldn't press it." Glass would
eventually refuse late in February, stating publicly that he
thought his "usefulness" would be greater in the Senate.
Privately he worried over his and his wife's health as well
as inflation.29

Apparently the principle of sound money concerned

.Moley less than it did the Senator. "I am not against infla-

tion," he jokingly parodied the Glass views, "but just you

48
bring me any specific measure providing for inflation and
see if I can't punch it full of holes." Senator James Byrnes,
already reputed to be Roosevelt's "man" in the Senate, hoped
Glass would accept. If FDR contemplated inflation, the canny
South Carolinian cautioned Moley, it would be better to have
Glass in the Treasury. Otherwise, he would be a "roaring

30 In any event, Glass was

lion" on the floor of the Senate.
stalling and evidently had no desire for the secretaryship.
At length Roosevelt and Moley resorted to a ruse to get his
refusal. After talking it over on January 19, Moley tele-
phoned Glass and intimated that Swager Sherley—-whom Glass
suggested, if he personally declined-~would be favorably
considered. When FDR telephoned Glass shortly afterwards,
the Senator finally declined. "Now call Will," the President-
elect remarked to Moley, upon hanging up the phone, "--and
bring him here at 11 tonight." WOodin accepted on the
following day.31
Why did Roosevelt choose Woodin over Glass? Both
political and policy issues were involved. Woodin, who
proved to be a sound money man but also reaponsive to the
President's will, had no public reputation and public fiscal
views to defend. Glass did. Partly at issue with the
fTreasury post was whether to appoint someone whose reputation
might seem to close off policy options. In other words, a
fiscal decision became intertwined with a political one.

FDR was now aware of the paramount political significance

of the inflation issue and the domestic-recovery-first

49

priority, despite the fact that only days earlier at the
White House discussions he had seemed ready to commit himself
to opposite views. Probably he favored inflation all along.
Perhaps, as in his maneuvering with the Stimson conversations
and at the January 20 conference, his inclinations toward an
internationalist position reflected more of either his muddled
thinking on foreign economic policy or his non-committal ten-
dencies than either Moley or Tugwell realized. "Roosevelt is
mulling over the budget [Directorship7 matter--," Moley's
diary recorded on February 20, "but he is still violently
opposed to any direct statement on sound money."32

Secretary of State represented another key post.
Cordell Hull, long an advocate of "fwee twade," as he would
pronounce it in his Tennessee lisp, was evidently a Roosevelt
choice fer State as early as 1928. Doubtless this resulted
in part from FDR's inclination before 1932 toward inter-
nationalist views on issues like commerce and trade. He
spoke of Hull in glowing terms to Moley during the second
'week of January, stressing the Senator's dignity and high-
mindedness. He also noted that this appointment would please
the "old-line party leaders." Probably this was a major
consideration. Neither Roosevelt nor Moley mentioned that
Hull's ingrained internationalism might conflict with the

33 Probably the lack of

current intranationalist ideas.
discussion of the Senator's free trade and reciprocal tariff
ideas suggests more about the President-elect's own pre-l933

policy leanings than it does about an apparent policy

 
 
 
 
 
 
 
 

50
conflict. And although Wilsonians Newton Baker and Owen D.
Young were also briefly mentioned, Hull was both Roosevelt's
and Howe's first choice from the outset.34

Roosevelt offered the secretaryship to Hull sometime
on January 19 or 20. Two days later over the telephone
from Warm Springs, FDR directed Moley to negotiate with the
"gentleman from Tennessee" and to keep him informed on foreign
affairs. Shortly thereafter, when the press began to specu-
late on this appointment, Senators Glass, Claude Swanson,
Thomas J. Walsh, Key Pittman, and Byrnes all came indi-
vidually to see Moley to object. Not only was Hull limited
in his knowledge of foreign affairs, but it was an "open
secret," one remarked, that tariffs were the "one string to
his bow." Chagrined and concerned, on January 31 the
professor phoned these pessimistic reports to his chief. He
conveyed the senators' objections: that Hull would better
fit into the Treasury because of his knowledge of taxation;
that he could not handle men well; that his tariff views
differed from Roosevelt's, at least as Moley knew them during
the interregnum; and finally, that Hull knew little about
foreign affairs. Silence ensued.

"Well," came the terse reply, "I will be glad to have
some fine idealism in the State Department." Roosevelt's
"dutch" was up. In a sense it was as simple and character-
istic as the final machiavelian maneuver with Glass. Hull

35

accepted two days later. In fact FDR probably got exactly

‘what he wanted in State, although it never occurred to Moley

51
at the time. Roosevelt never desired a strong secretary of
State or of the Treasury. The omnibus statement of Moley's
duties (including debts, a Treasury matter) leaves little
doubt on that score. FDR had chosen Hull, however, long
before he dictated the statement of duties to Moley, even
though the depression had altered the economic circumstances
since he first made the choice. In other words, the
President-elect's commitment to economic nationalism was of
necessity for the short-run. Over the long haul he probably
inclined toward Hull's views.

Henry Stimson, known as a strong secretary, noted in
his diary near the end of February that Hull's appointment
did not project "a very vigorous administration from within
the Department." That he termed "lamentable" because it
apparently bore out rumors that Roosevelt would act as his
own secretary. In fact Louis Wehle had warned Hull in
January of a similar situation unless he could secure control
over major State Department appointments.36 Events of the
Hundred Days would confirm Stimson's fears. FDR would be
his own secretary of State in more direct ways than Stimson,
Emil, or Moley would imagine. He would act privately and
directly through Moley. The remark about "idealism" was
a straw in the wind. His concepts of the presidency were

developing; but not all would prove laudable.

52

IX

The March inauguration drew nearer to Roosevelt. By
early February, the address he would deliver on March 4 still
needed to be written. He therefore turned to the only person
who would do for this highly confidential assignment. As
proven by many well—received campaign speeches, the professor
could handle the task. FDR had commented on Moley's
drafting the inaugural address at their cheerful poolside
talk on February 3. This Speech collaboration also indicates
Roosevelt's confidence in and need for Moley as a policy
adviser and aide.

Back in September amidst the exhilaration of the
campaign, on the eve of the Commonwealth Club speech in San
Francisco, Roosevelt first discussed his ideas for the
inaugural with Moley. In a long and animated conversation,
he rambled over such ideas as the emergency situation that
might confront the country in March. There would be the
need for cooperation-~which Moley labelled "discipline," the
need for strong presidential powers, and others. Both men
retired finally, after 2:00 a.m.; but some of the main themes
had been outlined. Other discussions would follow, sporadi-
cally and unrecorded.37

On the evening of February 3, Moley accompanied
.Roosevelt on the latter's special train from Warm Springs to
.Jacksonville, Florida, where he was to embark on a cruise

‘With Vincent Astor. The only other companion with them was

53

Edward J. Flynn, the sophisticated "boss" of the Bronx and
probably FDR's closest political strategist. Flynn reflected
later that he sat with the two in the President-elect's
drawing room. "Here he dictated [To Moley7 the suggestions
of what he wanted in his first inaugural address. The notes
were then turned over to Moley for elaboration and editing."38

As the three freely discussed each point, Moley
jotted notes. The next morning, in his notebook, he turned
these into over eleven pages of ideas. These ranged from the
"World is sick" through a "self supporting nation." In New
York City on the weekend of February 12-13, Moley began the
work. Helped only by his two personal assistants, Celeste
Jedel and Annette Pomeranz, he drafted two eight—page out-
lines. Then he drafted third and fourth outlines, containing
sequences of ideas from the earlier work. He included such
phrases as "a moral failure," "Under dictatorship if neces-
sary," and "Tribute to people."

Outside Moley's cluttered office, it was the long
‘winter of despair for most Americans--politically, economi-
cally, socially, morally. Across the stricken land the
depression deepened. President Hoover contemplated calling
on Roosevelt fer cooperation, with the purpose of having
him renounce in advance the "new deal." While a busy Moley
drafted, scrapped, and redrafted, FDR relaxed somewhere in
the Caribbean on the Astor yacht, preparing to go to Miami
for an appearance which would result in a missed assassination

attempt. On February 14 Michigan Governor William Comstock

54

would declare an eight-day bank holiday, freezing $1.5
billion in deposits and precipitating a national banking
crisis. As conditions worsened, some Roosevelt advisers
contemplated what part, if any, they would play. Tugwell
reflected on the elusiveness of integrity should he join the
new administration. Berle wavered in his refusal to take a
post. Roosevelt and his advisers considered plans as the
nation waited.39

The blackening depression affected the drafting of
the inaugural. "The inaugural speech is going to the left,"
Moley included in his diary. "The new Intra—Nationalism is
going to be in the speech."40 The two Hoover conferences
and the economic debacle had swung Roosevelt behind Moley's
economic nationalism. This was a critical decision. It
would affect the course of domestic and foreign policy during
the Hundred Days. Moley turned out a second draft the
following week, amidst launching the experts' group on the
Economic Conference preliminaries and rounding out the
appointments for the Cabinet. During the last weekend of
February, he finished still another revised draft. Finally,
on Sunday night, February 26, he took the two-hour train ride
to Hyde Park, carefully protecting the manuscript in his
brief case. There in the silent house late Sunday night and
early Monday, he finished the drafting to his satisfaction.

On Monday evening Missy LeHand and stenographer

.Margaret Donnelly dined with Roosevelt and Moley, engaging in

55
light conversation, avoiding the ominous topic of the
depression. At nine o'clock the two men adjourned to the
spacious library before a blazing fire, to work over the
inaugural. The scene was softly reminiscent of their
election eve get-together.

Roosevelt sat in one of his two high-backed leather
chairs, carefully reading the draft. Moley silently looked
on. Finally FDR spoke. He thought it best, he explained
offhandedly, if the text appeared in his own familiar long-
hand. Otherwise, Louis Howe might "have a fit." Moley dug
into his briefcase, produced a yellow legal pad, and on it
Roosevelt began writing, in his characteristically bold,
slanting strokes. Together for almost four hours they con-
versed over every sentence, adding a change here, another
there, with Moley numbering the written pages in the upper
right-hand corner as they were finished. Pausing occasionally
after a sentence, the President-elect would read it aloud,
noting his satisfaction. According to Moley, the basic text
remained unchanged.

Diversions occurred, and the task proceeded until
after 1:00 a.m. Around eleven o'clock, Moley etched the
scene unforgettably in his notebook as well as his memory:

Before the fire in the library at Hyde Park. Alone

w. 1th7 F.D.R. He is writing inaugural on a card-

ta le. On the table letter from Lamont with direful
warning re banks. Will WOOdin calls. Cordell Hull
calls. Silence. I am lying on couch. Glasses--whiskey
fer us. More writing. Talk re postal savings, bank

to care for the people's money. 'How do you spell
fereclosure?'

56
AA week-~yes five days--this man will be Pres. of
the U.S. Talk of Franklin (he was shallow) Jefferson
best. T.R. range of his knowledge, F.D.R. artistic
qualities, etc. Talk w. Taussig. Two
Moley paused, and added: "A strong man F.D.R.-—." Finally,
when his chief had finished, Moley dropped his draft into
the dying fire, remarking, "This is your speech now."

Some changes in the text were made, evidently the
next day. Moley described some of the rewriting and the
ideas to his assistant. "The indictment of the bankers is
F.D.'s idea (which came to him Sunday in church). But the
good neighbor is R.M.'S." On the crucial issue of domestic
recovery, "The part on intranationalism (though the passage
is not so labelled) was dictated to Annette-~as was the part
on dictatorial power." That morning Howe dictated a new
draft, changing only "about 50 words," all of which Roosevelt
promised Moley he would change back to the original.

Howe made one momentous change. One sentence con-
tained what became a major theme of the speech and of
Roosevelt's career. It was the stunning, often-quoted line,
"the only thing we have to fear is fear itself. . . ." Where
Howe got the idea is difficult to say. As one of Eleanor
Roosevelt's biographers noted, however, it is plausible that
Howe paraphrased it from an article she had published in Decem-
‘ber. ”The worst thing that has come to us from the depression
is fear," Eleanor had commented. "Fear of an uncertain

.future, fear of not being able to meet our problems, fear of

rust being equipped to cope with life as we live it today." In

57
any event, wherever the President-elect's alter ego derived
the "fear itself" phrase, it perfectly suited the times.
Thus FDR shrewdly spotted a good phrase and also saw it,
as he had with his 1932 acceptance speech, as a chance to
encourage or reward Howe's efforts.42
Roosevelt therefore prepared the soon famous first
inaugural with the completed draft from his chief policy
adviser and with the garnish of a stunning phrase from his
trusted friend and political adviser. But he hardly wrote
it himself, alone and unaided, as he implied in the following
disingenuous memo, dated March 25, 1933:43
This is the original manuscript of the Inaugural
Address as written at Hyde Park on Monday, February
27th, 1933. I started in about 9:00 P.M. and ended
at 1:30 A.M. A number of minor changes were made in
subsequent drafts but the final draft is substantially
the same as this original.
X
By the end of February Roosevelt and Moley stood on
the virtual eve of the presidency, an imminent but undefined
challenge in perhaps America's bleakest times since the Great
War. What was the nature of their relationship? Why was it
so important? What kind of economic views was Moley prepared
to espouse?
Even at this point the relationship was probably in
reality more Moley-Roosevelt than Roosevelt-Moley. Practical
jpolitics, if nothing else, demanded this. From FDR's angle,

Zhe appreciated Moley largely because the latter was a tried

and tested policy adviser who could be depended upon to give

58

realistic advice, to handle a wide range of supervisory and
liaison tasks, and (in Moley's words) to be "1000% loyal."
In addition Moley possessed the polished writing skills, again
indicated by his work on the inaugural, that Roosevelt sorely
needed. This collaboration in writing was perhaps the major
adhesive of the relationship-~one which would continue to
hold them together, after a fashion, until 1936. Roosevelt
trusted Moley's advice on matters so diverse as lecturing
his own son on business ethics to battling for the domestic—
first campaign policy against the Hoover administration. In
other words, he needed Moley. This is clear from the tasks
delegated, from Roosevelt's reassurances of his continuing
status in November and February, and the omnibus statement
of duties. Certainly there were other advisers; but none
occupied so important a position by February.

Was the relationship based on mutual trust and con-
fidence? This is more difficult to answer, but perhaps
less important. How far Roosevelt the politician-leader
trusted or could trust Moley, or anyone, is questionable.
The fact is that he kept his own counsel on most important
personal, political, and policy matters; and his friends,
insofar as he had any, were only those who had been loyal
and dedicated for years. "The price was total dedication,"
indicated one writer, "--not to the Democratic Party, or to
liberal ideals or New Deal goals, but to Roosevelt personally,
right or wrong, zigging and zagging, even when his own means

were unsavory and his ends most unclear."44 After March 1933,

 

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59
his loyalty had to be to himself because he embodied the
institution of the presidency. Whether Moley's loyalty could
be that total, to a man or an institution over principles,
remained to be seen.

From Moley's perspective, on the other hand, many
reasons drew him to Roosevelt. First and foremost, he wel—
comed the opportunity for a Columbia professor of Public Law
to help turn policy into legislation. For a teacher,
researcher, and writer, this presented a once-in-a-lifetime
learning experience. Second, in the depths of the depres-
sion, FDR seemed to be the one hope for realizing needed
policy changes. And he espoused many of the policies which
Moley could believe in and sincerely articulate. Third,
unless publicly repudiated, which seemed but a slim possi-
bility, the professor stood to considerably enhance his own
reputation, far beyond that of teacher and scholar. Although
there is no contemporary evidence that he was attracted by
"a glimmering vision of power,"45 he had sufficient reasons
to forge ahead. And actually, after the first and especially
after the second Hoover-Roosevelt conferences, he found
little time for reflection upon the foreseeable future or
the Opportunity to withdraw.

Being both loyal and cautious, however, Moley
EXperienced some understandable concerns. Throughout the
interregnum he (as did Tugwell) evidenced occasional concern
that his private understanding with Roosevelt might not be

understood or appreciated by others. The first such instance

60
came in November, when he wanted to defer decision on the
Assistant Secretaryship. But events led him forward. The
second instance came after the January 20 conference (when
Norman Davis backed the opposition), and it led directly to
the statement of duties. The third occurred in late February
when rumors spread that he would be "planted" as Roosevelt's
"man" in the State Department (the gist of which was true);
so he went to the President-elect to get his duties published
as a rebuttal. He later recalled that FDR shrugged it all
off, remarking: "Yes, Louis's been telling me about it. I
really wish you wouldn't make the statement public." This
caused Moley some chagrin.46 He failed to realize that
publication of his duties would have left his chief in an
impossible political position. Neither Hull nor any other
prominent Democrat likely would have accepted State under
those conditions. And Hull had not yet committed himself.
But adverse publicity bothered Moley, who was simultaneously
loyal, sensitive, and vulnerable to criticism. Shortly
thereafter he wrote a friend that he would remain with the
government only "for a short time." But within a few days
another enticement appeared. The McNaught Syndicate, pub-

lishers of several newspapers and American Magazine, offered

 

him a contract to write either four short or one long article
per week explaining administration policies. This he confided
to Miss Jedel. "It may be the way out," she privately

observed, "--independence and freedom from publicity—-if

61

Raymond doesn't take office. He Spoke most seriously of

doing the Assistant Secretary of State for only a month."47

By February neither Roosevelt nor Moley had any real
reason to doubt the other's trust. Moley simply experienced
the same last minute concerns that most persons would have,
following his arduous experiences since November. In fact

his ally Felix Frankfurter advised him to raise these same

points:48

Your tasks at best will not be easy in the days and
months ahead, and you are, therefore, entitled to
have your status left in no equivocation and to have
it as clearly defined as the nature of your duties
will demand. Of course FDR is fine and flexible and
generous about all these matters, but others are
involved, and as time_passes men's feelings of good
sense and disinterestedness becomes frayed and
fatigued. That is a situation easy to guard against
at the outset and it is to the public interest that
it be guarded against, not the least to the interest
of the new President himself.

 

There is no implication from Frankfurter's advice of any real
reason for doubt--only that the same should be prevented.
Such concerns were reasonable, if prescient. Thus it is
both speculative and peripheral as to whether mutual trust
and confidence existed. Roosevelt needed Moley. Moley
proved willing to serve under his chief's conditions. Con-
sidering the circumstances, their relationship was as strong
as possible.

Last, what kind of economic advice was Moley prepared
to render? Was he liberal, moderate, or conservative? Most
of his writings appeared after he resigned from office in

August 1933. Hence these contain the plausibility of

62
enhancement derived from retrospect. Contemporary evidence
does not indicate that he had the same degree of prescience
about Roosevelt's intentions, purposes, and machiavellian

ways as he suggested in After Seven Years, published in 1939.

 

In 1968 reminiscences entitled The Brains Trust, Tugwell

 

asserted that Moley's involvement and actions surrounding
the conciliatory Boston speech at the end of the campaign
denoted the beginning of his long journey toward the "con-

a . 4
servative compromisers." 9

Other more contemporary writers
did not hold that vieWpoint. Writing in late 1933, for
example, correspondent Ernest K. Lindley, already a favorably-
inclined biographer of Roosevelt, described Moley as a hard-
hearted realist and "a modern Jacksonian liberal, a sturdy
nationalist and a man who never forgot the public interest."
‘Writing in 1934, journalist J. P. Carter (the "Unofficial
Observer") found that Moley's main contribution thus far to
the NeW'Deal was a "very sturdy and self-respecting nation-
alism." Both of these appraisals came before his public
break with FDR in 1937 and his subsequent entry into the
Republican party. But even after those changes, old
Progressive George Creel wrote that Moley, "a professor
without the hint of a cloister and its narrowness, was as
authentic a liberal as I ever saw."50
Moley's interregnum activities and contemporaries'
observations suggest several points. Realism and practicality

formed his basic criteria for any policy. Second, although

only incidentally discussed by the time of his Brains Trust

63
service, he had accepted the ideas (which he traced back to
1912) that bigness in economic life was inevitable and that
the problem was how to place it under some form of control.
This concept (soon embodied in NRA) he would define more
specifically as events in 1933 required; thus, coupled with
a lack of contemporary evidence, it is tenuous to go beyond

51 Third and more prominent, economic

a general outline.
nationalism had developed into one of his major vieWpoints.
His advocacy of "intranationalism," articulated and advocated

by the New Republic in June 1933, reflected a compromise

 

between the internationalist aim of attaining free trade as
nearly as possible (viz. Cordell Hull) and the nationalist
aim of building an "unscalable" tariff wall around internal
commerce (viz. George Peek). What Moley and others argued
during the interregnum was that much benefit could be derived
if different nations could be induced to act in harmony, or
coordinate, their internal, nationalistic policies.52 Part
of this belief could be seen in his battles to keep war debts
separate from other issues at the London Conference. He
viewed these as business obligations which should not be
bartered away under the illusion that doing so would help
promote international cooperation and recovery (which Hoover
and Stimson maintained in January). His contemporary view
of intranationalism, as applied to domestic policy, is best
defined in a statement which he drafted into the inaugural

address:53

64

Through this program of action [Elready proposed7
we address ourselves to put our own national house in
order and making income balance outgo. Our inter-
national trade relations, though vastly important,
are in point of time and necessity secondary to the
establishment of a sound—national economy. I favor
a practical policy of putting first things first.

I shall spare no effort to restore world trade by
international economic readjustment, but the emergency
at home cannot wait on that accomplishment.

 

 

Fourth, some of his recommendations on needed reforms, as
with the example above, can be seen in other passages of the
inaugural speech, a topic discussed at length later.

These and other of Moley's economic views suggest
that by 1933 standards he was a middle-of—the-road liberal.
In other words, he was a moderate who would lean more toward
business than government, more toward cooperation than
compulsion. Those views embodied the type of advice he could
be expected to render. The degree to which Roosevelt would
act upon such advice suggests how far the President himself
inclined in those directions. In the long run, due to cir-
cumstances and the combination of his principles, experiences,
and temperament, Moley's ultimate dedication would be to
principles and conservatism over men and his earlier inclina-
tions toward the left.54 Yet that would not begin to become
evident until July 1933.

On the eve of the inauguration, then, Roosevelt and
Moley comprised an important team in many ways. Between them
existed an indefinable, implicit bond which included need,
confidence, and loyalty. But neither knew, nor had the time

to evaluate, the depth of those characteristics within tTHB

”a

4....

 

 

65
other. On Thursday, March 2, Moley boarded the train for
washington with the Roosevelt entourage. There they would
confront a multiplicity of imperative problems, all of which
would be deferred temporarily in order to meet a national
banking crisis.

All the while, moreover, other important policy
advisers had been forming a Roosevelt team. While Moley
remained the most important and most influential, the
President-elect inSpired other men who exercised differing
degrees of influence upon him within their respective areas

of interest and ability.

CHAPTER III

THE PRESIDENT-ELECT'S MEN

The Interregnum of Despair depicts the futile attempts

 

of Herbert Hoover's Congresses to legislate without forceful
presidential leadership, particularly during 1932-33.1 During
the last lame-duck interregnum, however, Franklin Roosevelt
presided over policy preparations for his own presidency.
In conferences with Democratic congressional leaders during
November in Washington and December at Warm Springs, he
outlined his major legislative goals. These included the
domestic allotment plan, mortgage relief for farmers, revamping
of bankruptcy proceedings, balancing the federal budget,
repeal of the Eighteenth Amendment, and legalization of beer.
Some of these had limited success, some would only come to
fruition in the months and the year ahead.2
In addition to Raymond Moley, several other advisers
helped with preparations. The more influential and important
of these included economist Rexford G. Tugwell, agriculturist
Henry Morgenthau, Jr., lawyer Adolf A. Berle, Jr., Representa—
tive Lewis W. Douglas, and banker James P. Warburg. The
relationships of these men to Roosevelt and their handling of
top priority policy matters illuminate much about his legis-

lative goals, policy preparations, and his means toward these

66

67
ends. Considering their influence and range of duties, the
debonair Tugwell would rank first, all of whom were less

influential at that time with the President-elect than Moley.

II

am sick of a nation's stenches,

am sick of propertied czars

have dreamed my great dream of their passing,
have gathered my tools and my charts;

My plans are fashioned and practical;

I shall roll up my sleeves-~make America over!

HHl—IH

Unearthed and used by conservative critics in 1933
against the collectivistic views of "Rex the Red," this
hopeful stanza concluded a long reflective poem composed by
Rexford Tugwell in 1915, when he was a twenty-three year old
college senior already concerned with remedying social ills.
Born and raised in the small town of Sinclairville in south-
western NeW’York, young Rex went to high school in Buffalo
where his middle-income family had moved to settle on a fruit
farm and to open a cannery. There he observed farming, but
never worked at it. After high school, the studious young man
‘went on for all three degrees at the University of Pennsyl-
vania, completing the Ph.D. at its Wharton School of Finance
and Economics. He taught there and at the University of
‘Washington befbre accepting an appointment in economics at
Columbia University in 1920. Educated as an economist, he
never believed in or practiced orthodox economics. His forte
was the concept of institutional economics. This meant, for
example, that reform of a nation's economy had to be achieved

by integrated, coherent planning, rather than by piecemeal

68

efforts. The economy must be treated as an organic whole,
a "concert of interests." One altered collectively the
economic environment to improve human life, Tugwell believed,
since human nature itself could not be radically changed.3

Slightly over six feet tall, athletic-looking, with
iron-grey hair and an artistic, compassionate face, the
handsome Tugwell served as a Brains Truster in 1932 who con-
versed at length with Roosevelt over economic and political
problems and prepared numerous memoranda for Speeches. On
friendly terms with him prior to the campaign, Tugwell
recalled that many of his more forward-looking ideas were not
used in speeches by the Democratic candidate. FDR had deter-
mined instead to win the presidency as relatively free from
political commitments as possible.4

From memories of their collaboration during the
spring, Tugwell has left an indelible impression of Roosevelt
as a professional actor. As his sometime teacher recollected,
FDR was not really a handsome man when seen up close. His
upper torso muscles were overdeveloped, his teeth irregular,
his hair receding, discolorations hung under the steel-blue
eyes, the chin jutted without projecting forcefulness, and
his middle-age paunch grew. Roosevelt showed "more deteriora-
tion" than usual for a man of fifty. But all this mattered
little. He "displayed determination if not youth," Tugwell
remembered; "he spread optimism rather than gloom; he handled
his cigarette holder as a mandarin might have used a fan; he

smiled often, and his smile broke into boisterousness at the

69

slightest excuse; he moved a good deal when he was behind a
desk or table, and it was easy to forget his legs." Thus the
Brains Truster concluded that cheerfulness and optimiSm were
his "adopted image."5

Tugwell's relationship with and influence upon
Roosevelt by late 1932 is difficult to assess fully. Tugwell
stood for, among other concepts, a balanced relationship
between production, costs, prices, and purchasing power. He
also wanted ggflation, an increase in the value of the dollar,
to counteract the geflationary conditions in depression-ridden
America. Bernard Sternsher, his biographer, concluded that
his functions were those of errand carrier, liaison with Pro-
gressives and others, idea man, and publicist. Indeed, by
this time Tugwell seemed personally close and intellectually
stimulating to FDR. That may account for many of his trouble-
shooting assignments during the interregnum. Yet their
relationship was more intellectual than personal.6

It is important to note that few of Roosevelt's close
advisers and Brains Trusters were willing to accept government
posts in the new administration. Samuel I. Rosenman, Adolf
Berle, Edward J. Flynn, Felix Frankfurter, General Hugh S.
Johnson, Frank Walker, and others refused federal appointments,
at least in the beginning. Forced to rely on few people and
to put his confidence in even fewer, FDR found Tugwell

7 Some of the latter's inter-

available, willing, and able.
regnum activities on behalf of the President-elect show the

extent of their relationship and certain policy preparations.

70

Farm relief, probably the best known of Tugwell's
assignments, overlapped into the more limited prerogatives
of Henry Morgenthau, and is thus examined primarily with the
latter. Conflicts that arose, however, led Tugwell to criti-
cize privately the governor's clumsy handling of the farm
bill and his lack of precise thought in the area of agricul-
tural policy. One incident may suffice. On the train to
Washington bound for the January 20 White House conference,
he showed Roosevelt a copy of a letter he had just written to
Morgenthau suggesting several amendments to the farm bill.
Tugwell stressed that all of FDR's advisers ought to agree
beforehand on amendments so as to avoid "the same lack of
coordination evident in the handling of the emergency farm
credit bills." Commenting afterwards in his diary, Tugwell
observed:8

FDR has been wakin u gradually to the far~reaching
character of tHis Legislation and asking some
questions which Show that he has never seriously
considered the proposed machinery, at least in
detail. He had made some real blunders in discussions
with legislators and has left many things indeter-
minate in his discussions with them until they have
begun to quote him on opposite sides of important
issues. In this particular one he has been for
operation [Sf crop reductiog7 only on cotton and
wheat, for operation on cotton, wheat, hogs and
tobacco, etc. He has been for Senator Smith's plan
and against it. All of this for two reasons: he

has from the first had the idea of following the lead
of the farm leaders and not taking too positive a
line of his own, and, because of this he has never
got down to rigorous study of the bill in its various
forms and has not much judgment of a positive sort.

 

 

Aside from his teaching at Columbia and his work

with agriculture, Tugwell also participated in foreign

71

economic policy preparations. In mid-November he had taken
H. Parker Willis and Yale economics professor James Harvey
Rogers to Albany to see the new President—elect to discuss
Senator Carter Glass' banking reform bill. During this two-
hour talk Roosevelt privately invited Tugwell to stay on
until the evening when "Ray" Moley would arrive from New York
City. When Willis and Rogers left, FDR and Tugwell discussed
at length the current economic situation and the need for
"fundamental relief." Earlier that day Roosevelt had
announced to the press that Moley would accompany him to the
Hoover conference on November 22. This development pleased
Tugwell because it now seemed that the President—elect would
continue using "academic advice," even though he could now
command advice from all quarters.

That evening Roosevelt explained, though imprecisely,

his view that the war debts problem was as much political as

 

economic, since he believed that Congress and the country
strongly opposed cancellation of the debts. Cancellation or
reduction was therefore politically impossible. Tugwell would
soon be swayed by this argument, as would Moley. The governor
continued to imply his vague feeling that debts, disarmament,
stabilization of currencies, control of worldwide commodity
production, and tariffs should not be handled in one general
discussion to prepare for the World Economic Conference. He
later explained that he believed this because some economic
problems could quickly become political, notably when public

and congressional opinion became inflamed over them.9 This

72

policy of separate discussion of international economic
matters and the intergovernmental debts, which FDR had mulled
over, would be adopted ultimately on Moley's initiative.
Tugwell did not attend the first Hoover-Roosevelt White House
conference; but events pulled him, along with Moley, into
foreign economic policy.10

Foreign economic matters also drew Tugwell into other
Roosevelt policy activities. Soon he confided to his diary
that the lame-duck session of Congress would be futile in
terms of legislation, that "we shall have to have a special
session for some of the rest of it--farm relief, banking
reform, a measure regulating stock selling, government reor-
ganization, etc." Perhaps reflecting the views of FDR, Tug—
well's mention of a special session would recur in January.11

On January 16 Roosevelt and Tugwell had their first
real disagreement over policy. Upstairs in the old white
stone 65th Street house, with Moley quietly looking on, the
articulate Tugwell tried hard to refute FDR's day-old support
of Secretary of State Henry Stimson on "the non-recognition
of Manchukuo." An early war with Japan, Tugwell argued over
and over, would most likely result. Moley watched in careful
silence, trying to detect whether the President-elect really
had committed himself to Stimson's policy. His colleague's
monologue flowed on, interrupted only by an occasional remark
from the cheerful Roosevelt. He seemed "very pleased" with

Stimson's cooperation, Tugwell unhappily observed afterward,

and also expressed a "strong personal sympathy for China." He

73

naively—-Tugwell believed--"admitted the possibility of war
and said flatly that it might be better to have it now than
later." This dismayed the two professors. And the long
talk on Japan and China had diverted their attention from
agriculture, Tugwell's original purpose.12

Perhaps not only agriculture suffered that night.
The long and pointed discussion may have weakened Tugwell's
relationship with Roosevelt. Tugwell had been characteristi-
cally blunt. FDR disliked criticism, especially when his own
ideas were not well developed--which was true in general of
his foreign policy views at that time. Moley had observed it
all; but he did not argue with his chief. Instead, he let
his "more fluent and excitable" colleague do the talking.
The incident passed without either adviser thinking about its
possible effects on Tugwell's relationship with Roosevelt.13

On the train back to New York after the January 20
Hoover-Roosevelt meeting, where intranationalism became the
Roosevelt policy, Tugwell and Moley decided to begin "pre-
liminary arrangements" for the London Economic Conference.
Moley preferred to deal with Bernard M. Baruch and other
prominent Democrats. On the other hand, Tugwell wanted to
keep all negotiations and planning among "experts." After
talking it over, they decided to put the matter up to their
chief. From New York, Moley telephoned Roosevelt at his Warm
Springs resort for general instructions. Thinking it over

quickly, FDR said they could have a "free hand" to continue

with the preliminary arrangements. He further directed them

74

"to keep this matter to a very few well qualified experts,
letting the State Department work independently but cooperating
‘with them and leaving [Normap7‘Davis out of it entirely."

Roosevelt preferred experts too. Having been so
instructed, Tugwell immediately telephoned two long-time
associates, Walter W. Stewart, a brilliant economist who had
served as economic adviser to the Bank of England and later
to the Federal Reserve Board, and E. M. Patterson, a liberal
professor of economics at the University of Pennsylvania.
Having just met and been impressed by banker James Warburg,
Moley soon recruited him. The group would begin full-scale
meetings in February. These different choices in a sense
reflected their different perspectives: Tugwell was more
liberal and left-oriented with an inherent bias against
business, while Moley, although more collectivist-oriented in
early 1933 than he later professed, inclined toward moderate,
practical, and business-minded advisers. Thus each perceived
"experts" from a different context.14

A few days later an unfortunate incident temporarily
shook Tugwell's relationship with the President-elect. On

January 26, the New York World-Telegram published a recent

 

interview in which, continually using the word "we," Tugwell
gave what the reporter interpreted as an authoritative fore-
cast of the New Deal. There would be $5 billion for public
works, he was reported as saying, along with direct federal
relief and an expansion of the Reconstruction Finance Corpora-

tion lending activities. Sound money and a balanced budget

75

were promised, but there were also damaging reports of
administrative intentions to redistribute purchasing power

and not to save the banks.15

Moley called Roosevelt in
Georgia about this turn of affairs and they discussed it.
According to Moley's diary entry, FDR was "considerably upset
by the incident and asked if Rex had been drunk. He doesn't
want him to come down to Warm Springs." Tugwell, Moley later
said, "feels very bad about the whole thing."16
Long and discursive policy conversations between
Tugwell and the President-elect would dwindle thereafter. As
one who always kept, or concealed, his own counsel on important
political affairs, Roosevelt proved quite sensitive about this
unauthorized disclosure. How far could he trust the flam—
boyant, sometimes arrogant Tugwell? Did his adviser realize
the politically dangerous effect of such publicity? Like the
depression in America, the cordial relationship between the
two men reached its nadir.17
Other liaison involvements kept Tugwell busy during
February. The Economic Conference experts' group met a few
times; but it made little progress. The busy President-elect
primarily caused this situation by declining to provide guide-
lines as to the shifting personnel of the group, procedures
to be followed in the forthcoming discussions with the
British, and his intentions concerning the gold standard.18
Tugwell also sporadically inquired further into legislation

regarding the gold standard. In January Roosevelt had asked

him to check on the 1917 Trading with the Enemy Act, which

76
Tugwell mentioned on occasion in his diary. But FDR's purpose
'was not to prevent or handle a banking crisis, as it would
later appear. Rather, he intended to use the act for manage—
ment of domestic currency by embargoing gold exports. Near
the end of February when Tugwell finally obtained solid
information on the act from the Treasury, he found the Hoover
administration contemplated using it as an emergency measure.

"I was satisfied that if we had to go off gold," he wrote in

 

his diary, "here was the means, but it needed a lawyer's
explanation." Subsequently, upon instructions from Hyde Park,
he got Senator Key Pittman to investigate further.19
In addition to such liaison tasks, the decision of
whether or not to join the new administration confronted
Tugwell. Moley informed him on February 10 that Henry A.
Wallace, the articulate and knowledgeable publisher of the

Iowa farm journal Wallace's Farmer, like his father and

 

grandfather before him, would become secretary of.Agriculture.
Well-known in wheat and corn country as a progressive Republi—
can, he held definite beliefs in the values of social justice
and high agricultural prices. This appointment, Tugwell
privately rejoiced, is "one hope come true!" Roosevelt also
sent word through Moley that Charles Taussig, a molasses
manufacturer and sometime contributor of tariff material to
the Brains Trust, could have an appointment on the Federal
Tariff Commission; that Adolf Berle could serve on the Federal
Trade Commission; and that Tugwell could serve as Assistant

Secretary of Commerce. The first two had declined, so Tugwell

77
was offered his pick of the three posts. "Professor into
national responsibility," he mused to himself, "is too great
a change to be taken lightly." He would have to think it
over.20
In the meantime, on February 17 Tugwell received
authorization from the President-elect to go ahead with his
arrangements for the meeting of the Economic Conference
experts' group on Monday. Financier—speculator Bernard Baruch
would become the new chairman.21 Roosevelt looked upon this
famous Democrat as a political necessity. The Baruch money,
he would explain, was always a key element, a delicate
intangible in the "relations" of Baruch with many prominent
Democrats. One never knew who was "in" or dependent upon
Baruch. Tugwell observed that Roosevelt played a shrewd
political game with the old Wilsonian:22
So much Baruch money has been spread around--as
campaign contributions and otherwise-~that it never
does to criticize him publicly. But FDR is well
aware of it and cautions us about it. The attempt
to have him as chairman of the group is really, he
says, a way of keeping him out of the cabinet.
A similar maneuver in June would keep Baruch away from the
London Conference, with unexpected repercussions.
The next noon, Saturday the 18th, Tugwell brought
Henry Wallace to see Roosevelt. After they had spoken for
some time on the "general situation," Tugwell left the room
briefly. Upon his return, both the President-elect and the

newly appointed Secretary urged him to become Assistant

Secretary of Agriculture. He could help, FDR smoothly

78
explained, with departmental administration and reorganiza-
tion. Tugwell protested, but not strongly, because he
admired Wallace considerably. Yet he argued that he could
better serve outside the administration, thinking, advising,
and performing confidential tasks. That line of reasoning
hardly registered.

"Yes," Roosevelt quickly agreed, "but Wallace wants
you now and it seems a good thing to me." Tugwell's opposi-
tion quickly melted. Soon the three agreed that he could
begin the dirty work of reorganization. I could do "H.A.'s
surgery," he later observed, and then go elsewhere. Wallace
could blame any bad publicity on Tugwell's reputed status
“nth the President. Tugwell viewed it as good political
cover. "I rather bewilderedly woke up on the way home," the
new appointee put in his diary, "to realize how casually
F.D.R. marshalled me into service."23 That reflection is
misleading, however, because only three days earlier he had
decided to take the Commerce post that had been offered
through Moley, a post the latter had been encouraging Tugwell
to take since December.24

This appointment was a turning point in the Roosevelt-
Tugwell relationship. During the Hundred Days the latter
would become actively involved in agricultural adjustment
legislation, administration and reorganization of the depart-
ment, and formulation of a new food and drug bill. Yet while
his interregnum activities as liaison and adviser reveal

details on certain of Roosevelt's own beliefs about topics

79

like farm relief, war debts, lack of an early interest in
Economic Conference experts' conversations, and a gold embargo,
such activities also indicate that Tugwell was not so influ-
ential with FDR as was Moley. The appointments offered before
Agriculture--Commerce or either the Federal Trade or Tariff
Commissions-~carried no roving policy commission, as did
Moley's. Tugwell's influence with Roosevelt evidently
declined. His biographer commented that his "greatest con-
tribution as an idea man was the intellectual curiosity he
helped to arouse in the Democratic candidate in l932."25

Tugwell nevertheless had been and would be an
important New Deal figure. Perhaps this would be more on a
symbolic level than as an influential presidential adviser.
In the long run his views on an institutionalized economy
worked to the benefit of the forgotten man and the forgotten
interests. He backed the small farmer and sharecropper as
against large farmers and landowners, the unemployed against
what he considered business indifference, the consumer against
dishonest advertisers and food processors. Or as one writer
described him, by 1933 standards Tugwell was the sort of
"radical intellectual" who had traditionally operated outside
the political mainstream.26 Now he seemed to have the ear of
the Democratic Roosevelt as had reformers in the early 1900's
with the Republican Roosevelt.

But even by February this was more symbol than
reality. All the wire services had carried nationally his

interview with the World-Telegram (which he maintained

 

8O

misconstrued his views27).

It had surprised and upset
Roosevelt. As a direct consequence, on his own initiative
Tugwell arranged to have an "indefinite postponement" in pub-

lication of his forthcoming book, The Industrial Discipline

 

and the Governmental Arts. "This may be overcautious," he

 

noted, "but the last chapter deals with the relations between
government and business and I don't want anyone to think that
I am trying to force Roosevelt's hand or to get any additional
prestige by association with him."28 FDR needed Tugwell and
his articulate liberal ideas, but not at a time or in a
position when adverse publicity might affect a New Deal not
yet legislated. The political risk was simply too great.
Roosevelt therefore acquiesced in Wallace's idea of
having Tugwell as Assistant Secretary. FDR knew full well
that department tasks like reorganization would be time-
consuming, politically hazardous (this he mentioned in their
conversation), and a restraint upon Tugwell's activities as a
policy adviser. The Roosevelt-Tugwell relationship and the
latter's activities as a publicist would become more important
as something of an intellectual magnet to help pull the New
Deal a little left of center. But during the Hundred Days,
others would have closer access and more influence with the

new President.

III
"To Henry," Franklin Roosevelt once wrote across a

photo of himself and his long time friend, "from one of two

81
of a kind." That inscription captured part of the essence of
FDR's personal relationship with his Dutchess County neighbor,
Henry Morgenthau, Jr., in that both had a similar sense of
adventure and fun; both were prone to look for simple and
direct methods to solve complex problems; and both delighted
at practical jokes, especially at each other's expense.

Nine years younger than Roosevelt, Morgenthau was the
son of multimillionaire investor, speculator, and diplomat,
Henry Morgenthau, Sr. Raised in a New York Jewish family,
never an intellectual as a boy or an adult, young Henry grew
up loving outdoor sports and activities. Schooled at Exeter
Academy, he made two brief tries at Cornell. Searching for
a career independent of his father, he left Cornell finally
in 1913 to buy a 1,400 acre dairy and apple farm near East
Fishkill, a few miles below Hyde Park, where he set out to
become a practical farmer. He first met FDR in 1915 at a
political luncheon. Turning down his friendly neighbor's
encouragement to run as sheriff, Morgenthau nevertheless cul-
tivated the friendship for the rest of the two men's lives.

Building this relationship during the years after
1915, a task eased by similar patrician backgrounds,
Morgenthau was frequently on hand to advance Roosevelt's
personal interests and his political career. During the polio
years of his neighbor, "Henry the Morgue," as FDR happily
nicknamed his sometimes dour companion, spent endless hours
at Parcheesi, listening quietly to Rooseveltian ideas

and grievances. Purchasing in 1922 the farm magazine

82

American Agriculturist (one of two in New York), Morgenthau

 

used it to support the rural philosophy of FDR, to back
Governor Alfred E. Smith, and to build a personal reputation
as an agriculturist. First as chairman of Governor Roose-
velt's Agriculture Advisory Commission and then as Conserva-
tion Commissioner during the second term, Morgenthau continued
to develop broad areas of policy agreement with his friend and
chief. These included soil conservation, reforestation, and
later, farm credit--but not crop reduction, which he opposed
as impractical.29

By 1932 Morgenthau's relationship with Roosevelt
included more than the apparent bonds of friendship, loyalty,
and dedication. Above all, Morgenthau wanted to become
secretary of Agriculture. Toward this end he had worked in
the campaign to win farm support for the Democratic candidate.
His long face usually unsmiling, his dark hairline prematurely
receded, in manner at once brusque, diffident, shrewd, and
suSpicious, the blunt businesslike publisher had sterling
qualities. But these qualities often remained unseen by
Roosevelt's other policy advisers.

Farm relief legislation was a fundamental political
and economic concern of the country as well as of the
President-elect. Democrats had won control of both the House
and Senate in the elections. Yet this control could not be
effectively exerted until the new 73rd Congress convened,
sometime after March 4. In the meantime, the lame-duck

session of the 72nd Congress, with 144 representatives and

83
14 senators no longer accountable for their actions, would
meet in December for last efforts at law making.30 Con-
current and planned to coincide with this congressional
session, a series of conferences of agricultural leaders,
representatives, and friends of the national farm organiza-
tions would meet in Washington. Roosevelt therefore decided
to dispatch personal emissaries like Morgenthau to work as
liaison with Congress and the conferences to help formulate
farm relief legislation.

Having worked closely with experts from Cornell
University since beginning to publish his magazine, and
particularly during Roosevelt's governorship, Morgenthau
returned to Ithaca after the 1932 elections to gather new
ideas for the forthcoming farm legislative efforts. There
he pleasantly renewed his connections with George F. Warren,
head of the Agricultural Economics Department, expert on
scientific agriculture, and prominent propounder of the novel
thesis that all commodities prices rose in direct proportion
to reduction of the gold value of the dollar. Morgenthau
also deepened his acquaintance with William I. Myers, a quiet
methodical man who was a professor of farm finance and very
knowledgeable in agricultural economics. It was primarily
Myers who convinced Morgenthau that the farm credit crisis
offered a problem both amenable to a practical businesslike
solution and one which could be handled without much compe—
tition from other experts. Already Myers had some fairly

well developed ideas for such a program, which he explained.

84

Morgenthau seized upon this issue for the reasons Myers gave
and one other. He would also use it as a vehicle to win
appointment as secretary of Agriculture.31

The President-elect, however, causually dispatched
more than just Morgenthau as liaison to the farm conferences.
Already handling other legislative plans, Moley received the
task of coordinating efforts on both farm relief and mortgage
legislation. He in turn asked Tugwell to go to the Washington
conferences, since the latter knew both the issues and leaders
like Henry Wallace and M. L. Wilson, popularizer of the
voluntary domestic allotment plan. Baruch wrote Roosevelt in
mid-December that some of "the [farm7 leaders have requested
to see me this week-end and I have agreed to see them but I
Shall continue to funnel through Morgenthau as you requested."
At first neither Morgenthau nor Moley knew of the other's
involvement, nor did Tugwell.32

Roosevelt conferred with his agriculture advisers
in Warm Springs at the end of November and in early December.
There Wallace first met him personally, under the most
informal of circumstances, as FDR sat shaving. After con-
ferring with him and then with Moley and Morgenthau, Wallace
later recounted that the professor was the "clearest thinker"
present, and that Morgenthau evidently wanted very much to
get the Agriculture secretaryship, for which Wallace already
had much support. After sending these advisers (except

Moley) to the capital, Roosevelt personally telephoned Marvin

Jones, a drawling, unobtrusive Texas congressman since 1917,

85
who represented especially the cotton interests and who now
served as chairman of the House Agriculture Committee. Jones
remembered his cordial request that he sit down with the
emissaries and work out "a farm bill as nearly as possible
along the lines of the speeches I made in the campaign, but I
want a practical farm bill." He immediately went to work,
though not knowing all the representatives he would have to
deal with.33

These beginning farm relief preparations indicate two
major points. First, later AAA and farm mortgage policies,
particularly the latter, were anticipated and outlined during
December and January. Second, it became the first major
instance of Roosevelt's overlapping assignments and casual
handling which blurred lines of authority, agitating some of
his close advisers. This latter point was not deliberate.

It just happened.

Over the weekend of December 3-4 the Roosevelt
advisers conferred with Jones in his House offices. Wallace,
Tugwell, Wilson, Morgenthau, and Myers all attended the first
informal meeting. Others like Mordecai Ezekiel, the soft-
spoken and trenchant economist of the Federal Farm Board,
attended later sessions. Jones had an emergency omnibus farm
bill ready to discuss. During these meetings, Wallace,
Tugwell, and Wilson argued articulately that the bill must be
based upon the voluntary domestic allotment concept. Crop

reduction achieved by government payments to farmers in

return for their agreement to reduce acreage planted offered

86

the only real solution, they maintained. On the other hand,
Morgenthau and Myers forcefully opposed. They rejoined that
production control was impractical and that administration
and enforcement of individual allotment contracts presented
"insuperable" problems. But even so, they would acquiesce
in it, reluctantly, strictly as an emergency measure. The
good-natured Jones, accepting the basic idea but trying to
balance between factions, vacillated and, as Wilson later
remarked, did not seem to have his course "marked out very
clearly before him." After clearing it by telephone with
FDR, the group agreed to postpone any action until after the
farm organizations met on December 12. They decided nothing
about the issue of farm credit.34

After this weekend of conferences Roosevelt summoned
several of these advisers to Albany to discuss farm relief.
Present on December 10 were Morgenthau, Myers, Tugwell,
Ezekiel, and David L. Wickens, a specialist on rural credit
in the Agriculture Department. At Morgenthau's request,
Myers outlined his program for farm credit, which included an
emergency measure to stop mortgage foreclosures, and a long-
range comprehensive credit program for both farmers and
farmers' cooperatives. "Okay, this sounds good; let's go
ahead," Roosevelt finally remarked. "The agreed strategy on
the farm bill," Tugwell would soon record, "has been to have
the farm leaders adopt it and promote it in Congress; and on
credit adjustment the effort was to have been similar." But

that did not happen on credit. After the discussions Roosevelt

87

delegated Morgenthau and Myers to handle credit measures—-
although he did not make that clear to the others. He also
personally asked Tugwell to see through the same issue, after
telling all the participants to work together.35

From the beginning, and for whatever reasons,
Roosevelt muddled his delegation of authority. An unhappy
personal rivalry between Morgenthau and Tugwell that lasted
for months developed as one result of the Washington and
Albany meetings. As one who knew both men, particularly the
former, Myers correctly concluded that the "friction arose
partly because of a basic difference of opinion in regard to
policies to solve problems and partly, because of rivalry as
representatives of the President-elect."36

In wintry Washington the scheduled farm organization
conferences began on December 12. Representatives of all the
major organizations attended, including well-known leaders
like Edward A. O'Neal, head of the dominant American Farm
Bureau Federation, Louis J. Taber, master of the older
National Grange, and John Simpson of the radical Farmers
Union. In the crowded main session on opening day, Morgenthau
spoke as the "personal, unofficial representative of Governor
Roosevelt." His suggestions, straight from Albany and plain-
spoken, included: the new administration would try to pass
a farm bill during the lame-duck session; no bill would be
introduced by Jones without the rapid and unanimous approval
of all organizations present; and Hoover's Federal Farm Board

must go, but all of its constructive features would be

88
retained. Morgenthau was blunt, but he was well received.
That afternoon Tugwell spoke at length, volunteering "a good
deal of information concerning what Governor Roosevelt thinks
about the problems under discussion." Obviously he was
competing with Morgenthau.

Morgenthau further developed Roosevelt's political
strategy on the farm bill to the Jones Committee. They
"should definitely accept the responsibility for its recom-
mendations," he tersely suggested, "and not consider the
proposed bill as an [FDR7 Administration measure." In this
way the House committee's hearings could be used to prepare
congressional guidelines and public opinion on AAA for the
73rd Congress. During the three-day conference one committee
drew up a report on farm credit; but its simultaneous com-
plexity and apparent political popularity resulted in no
agreement. In one detailed memorandum of the daily discus-
sions, Myers recorded the "strong feeling" that conferees
considered monetary legislation more fundamental than farm
relief. This issue would seethe and erupt during the Hundred
Days.37

The general conference produced broad agreement on
three issues. First, farmers' pre-l9l4 purchasing power
should be restored by raising farm prices, to be effected
partly through production control (which became AAA's title I).
Second, it unanimously endorsed easier and cheaper credit for
farmers, although means for this end were not spelled out

(later title II). Finally, the conference gained unanimous

89

approval for reducing the gold content of the dollar-—the
Warren thesis-~in order to raise farm prices to 1921-29
levels (later part of title III). Most conferees reasoned
that reflation would ease the debt burden by making money
cheaper.38

During the rest of December and early January, while
Morgenthau and Myers further developed their farm credit
program, Tugwell grew annoyed. In a diary entry about his
and his rival's growing publicity as "envoys" of Roosevelt,
Tugwell--revealing his arrogant side-~observed that Morgenthau
"should never be trusted to do anything alone. I like him in
many ways but he isn't long on brightness and he is so ter-
ribly ambitious now that it is almost pathetic." By January
he complained to Moley about the larger issues as well. "Rex
Tugwell came over and aired his grievances about Henry
Morgenthau--," ran one Moley diary entry, "and the informal
way in which F.D.R. conducts business-—i.e. he never knows
whether he, Tugwell, was to do a particular thing, or whether
Morgenthau was to do it, etc."39

This conflict over authority soon came to the
President~elect's attention, but without Morgenthau's knowl-
edge. Roosevelt summoned Tugwell, Moley, and Adolf Berle for
an evening session at his New York headquarters. He asked
Tugwell to explain the apparent problem. Tugwell recounted
his version of the conflict: Morgenthau had worked separately,

on the "excuse" that he had not been told to consult Tugwell;

and he himself had been afraid to mix in further for fear of

90

more confusion. Moley acknowledged this. Upon FDR's
request, the three advisers gave him their views on farm
credit needs, a subject upon which none of them possessed
expertise.

"After thinking it over," Tugwell put in his diary,
"F.D.R. asked Moley to act as sort of a chairman and draw
this thing together." There should be a postponement for a
week or two, Roosevelt concluded. Then we could all agree on
"emergency legislation, letting the permanent set-up go over
until the Special Session" (the first time he mentioned one
to them). He asked Moley to inform Morgenthau of the new
postponement strategy.40 But he chose not to speak to his
neighbor in person. Two days later on January 12, Moley's
long distance telephone conversation with Morgenthau began
‘with the facade of cordiality and rapidly grew into a heated
argument. Finally Morgenthau abruptly declared "that he would
not desist until he got orders straight from the horse's
mouth."41 When Tugwell saw him later that day in Washington,
they finally ironed out the situation. Morgenthau admitted
that he had had "something of a row" with Moley, but he
‘wanted no mix-ups. Tugwell retorted that he only wanted to
"get the policy right," that Morgenthau should be consulting
with FDR's other advisers, and that they had been instructed
to let Moley "take the lead." There was "political dynamite"
involved, he commented acidly, and the authority with
Roosevelt had to be kept straight. So far as Morgenthau knew,

the authority was straight; the others had butted into his

91
business. He had just talked to the governor personally, he
stated, and had been told to go ahead. "This amounted, of
course," Tugwell afterward noted, "to Moley's being super-
seded without his being told." That evening he telephoned
Moley in New York: "Since things had gone so far and F.D.R.
seemed to be so careless about it, we had better let is rest."

Anyway, there were a "thousand things" to do.42

Both pro—
fessors thereafter tacitly withdrew from that field of policy
formulation. Roosevelt had shifted again, apparently trying
to utilize and soothe everyone.

Tugwell and Moley's withdrawal proved fortunate
because no one else had a well developed program. On the
next day Morgenthau and Myers launched into an agenda of
meetings with congressmen. By the end of January congres—
sional committees had begun hearings and solicited testimony,
particularly from Myers. The major proposals of Morgenthau
and Myers, although later amended, included: establishment
of county conciliation commissions to adjust debt levels
where possible; establishment of an Emergency Agricultural
Refinance Corporation to handle mortgages; liquidation of
the Joint Stock Land Banks; improvement and reinforcement of
the Federal Land Banks in order to provide capital for loans;
provision for the Treasury to temporarily purchase FLB bonds;
and authorization for the FLB's to extend the time on loan
payments of worthy borrowers for the duration of the emer—
gency.43 In slightly different language, most of these

proposals would become title II of AAA in May. In January

92

and February, however, popular farm credit bills proliferated
in the 72nd Congress. Along with political forces beyond
Morgenthau's and Roosevelt's control, that accounted for the
lack of significant credit legislation before March 4--despite
voluminous testimony and substantial agreement that emergency
measures were imperative. In early February Morgenthau
returned from a journey to Warm Springs. He told Myers that
the President-elect, after carefully reading the bills sub-
mitted to him, had signified his familiarity and "general
agreement" with their program.44

While his chief's approval of their emergency
measures pleased Morgenthau, the legislative stalemate
dissatisfied Tugwell. Perhaps reflecting his chagrin over

the World-Telegram interview, he recorded:45

 

The Senate continues to dawdle about the Farm Bill,
seeming neither to like the House version nor know
what to do about it. Harriman and Ezekiel have been
urging me to come to Washington about it; but I have
resolved to give all my time and attentions to prepa-
rations for the coming economic conversations. They
say Morgenthau is not so persona grata with the farm
leaders as I am. All this trouble could have been
avoided if there had been a clear allocation of
responsibility for seeing it through. If F.D.R. would
make up his mind about the Secretaryship of Agricul-
tur$7 it might yet be straightened out. s things go,
various alternatives to the price parity allotment
scheme are being listened to from Morgenthau and Myers
and nothing is getting done. Provided no bill passes
during this session, it will have to be first in order
at the new session. I have told Moley all about it
and he left last night for Warm Springs.

 

As Tugwell indicated, Morgenthau's unenthusiastic position
on the domestic allotment concept did nothing to ease the

congressional delay.

93

But despite the enmity of other advisers, Morgenthau
developed a program which proved popular in Washington. That
counted to Roosevelt. Even though he spoke indignantly to
Tugwell near the end of February about Morgenthau's "campaign
for the Secretaryship," and mentioned that he thought the
Home Loan Board might be a good position for him, other
evidence indicates that FDR had already promised his neighbor
the chairmanship of the Federal Farm Board, perhaps as early
as January. And that post embodied a broad mandate in the
field of farm credit.46 What had happened? All along
Roosevelt probably told both Tugwell and Morgenthau what each
*wanted to hear. Temperamentally unable to resolve their
differences, he let them battle it out. Both advisers became
ruffled about each other's activities. But in the case of
Morgenthau, policy advisers like Moley and Tugwell confronted
a Rooseveltian characteristic which they could not defeat:
personal friendship. FDR and his Hyde Park neighbor had been
personal friends for almost two decades. He realized Morgen-
thau's dedication and loyalty. Both had been proven throughout
his governorship and even before.

The President-elect's developing policy methods, as
Tugwell and Moley now realized, were disorderly. Farm relief
and farm mortgages policies were the first instances of this.
It was due mostly to Roosevelt's peculiar temperament and
political background. It was partly because he was not yet
knowledgeable in many policy areas where he now needed trusted

advisers, partly because he found it personally difficult to

94
confront friends and loyal subordinates over apparent con-
flicts, partly because he was politically reluctant to close
off any policy options. Possibly other reasons existed,
unknown to his advisers. In any event, the handling of farm
relief and credit preparations characterized FDR's growth
into the presidency. If pitting advisers against each other
was accidental and disorderly, it nevertheless obtained
results. One result was that he would repeat the precedent.
Another was more pre-March 4 preparation on farm policy,
notably the mortgage and credit end, than on any other topic.
Thus legislative recommendations in those areas came soon
after his inauguration.

In terms of the Roosevelt—Morgenthau relationship by
February, friendship had withstood the rivalry from advisers
who were generally considered more important. While Morgen-
thau lacked Moley's skills and diverse areas of influence,
and was less a thinker and idea man than Tugwell, farm credit
had given the Hyde Parker an opening wedge of influence upon
policy. It was partly because of his friendship that FDR
assigned him the broad farm credit mandate, partly because he
had a program. Already Morgenthau had a reputation as an
efficient administrator. Usually he relied upon carefully
chosen subordinates like Myers for expertise. He took their
advice well, knew how to delegate authority, and never tried
to bluff. Seldom did party politics and patronage affect
him. Practical solutions were his aim. For these reasons,

through Morgenthau, Roosevelt kept himself better informed

95
on farm credit during the Hundred Days than in other areas
where he lacked a trusted friend and adviser.

As an adviser, while flexible at times, by 1933
standards Morgenthau was a conservative Democrat, politically,
economically, and fiscally. He often liked to attribute his
"lasting financial conservatism" to his postwar difficulties
in trying (successfully) to raise different breeds of apples.
His opposition to domestic allotment, like that of his friend
Myers, stemmed from sincere beliefs that it was administra-
tively unworkable, that any attempt to raise a few commodity
prices above general price levels would fail, and that even
if the concept proved successful it would not alleviate the
disastrous debt burden. Although generally a force from the
right, in the area of monetary policy Morgenthau leaned to
the left of center. He had long since been converted to the
Warren thesis that an increase in the price of gold would
lead to a general recovery.47 His friendship with Roosevelt
and their Monday luncheons during the Hundred Days would
therefore indirectly bring the novel ideas of Warren into the
White House long before other advisers knew of it. Even
though Morgenthau's influence as a policy adviser was limited
to a comparatively small arena, still he had advanced well on
the way toward his twin ambitions of having a national public

service career and being an adviser to his great friend.

IV
Adolf A. Berle, Jr., the third major member of

Roosevelt's Brains Trust, ranked behind Moley and Tugwell

96
in terms of contributions and later in terms of influence
upon policy. Sometimes represented as the man in the middle
during that group's early advocacy of some form of govern-
ment control over inevitable economic bigness, Berle's high
water came on September 23 in San Francisco, when the
Democratic candidate read the Commonwealth Club speech that
he, with some assistance from Tugwell, had drafted.

That address manifested the major strains of Berle's
legal training and other experiences. Those strains included
the Social Gospel, the new jurisprudence with Louis D.
Brandeis' emphasis on relating law to the environment, insti-
tutional economics similar to that of Tugwell's, and the
recent concepts of the so-called managerial revolution. On
this latter subject, as co-author with Gardiner Means in

later 1932 of his much publicized book The Modern Corporation

 

and Private Properpy, Berle espoused the idea that control

 

of giant corporations rested with management, that stock-
holder ownership was a facade. Therefore, ran the thesis,
men of power within the corporate world must take the
initiative in developing the new sense of social responsi-
bility called for by Roosevelt in San Francisco.48
Born in 1895 the son of a rising and wealthy Ohio
Congregational minister, at home young Adolf eagerly received
schooling from his father in rigorous educational and ethical
principles. Usually described as an "infant prodigy" due to

his remarkable academic advance through Harvard, Berle

entered at the age of fourteen, earned the B.A. three years

97

later, and had the Masters and the Ll.D. by the time he was
old enough to vote. Following Harvard, the young law
graduate held the envied position of clerk to Justice
Brandeis, during World War I he served with American intel—
ligence forces in the Caribbean, and in 1919 he traveled to
France as an expert with the American peace delegation at
Versailles. Returning to settle in New York City, Berle
developed into a highly successful corporation lawyer and an
active participant in city Republican politics. During the
1920's he also became a prolific publishing scholar, particu-
larly on topics concerning the relationship of the law to its
economic and social environment. Deeply affected after 1929
by the depression, he elaborated his thesis that corporate
management had too much economic power over private property.
His writings led to a part-time law appointment at Columbia
by the 1930's. He was therefore available in March 1932 when
Moley canvassed the faculty for expert advisers to serve
Roosevelt.49

A short and energetic man of slender build, Berle
was a brilliant lawyer, a thorough economic analyst, master
of a fluid writing style, as well as something of a moralist
and a doomsday prophet. Capable on occasion of diplomacy,
‘with his edgy manner and his impatience with those less
intellectual than himself, he would sometimes explode into
sarcasm and disgust. Like Tugwell, Berle was an independent
thinker at home in the realm of ideas. Both often gave the

appearance of diffidence, even arrogance. Sometimes alarmist

98

in his views, a Roosevelt adviser noted, Berle was a man
theoretically oriented toward liberalism who in fact had a
predilection for the opposite.50

As a Brains Truster, Berle was less influential with
Roosevelt than was either Moley or Tugwell. Berle partici—
pated in the Spring discussions in Albany, contributed
memoranda for speech drafts in the summer and fall, and saw
his best effort emerge at the Commonwealth Club. FDR liked
and respected Berle as an expert on railroads, corporate
finance, debt structure, and other areas. Yet there was no
real relationship, other than the cordial warmth and friend-
liness that the governor characteristically extended to all
his advisers and acquaintances. Tugwell remembered only one
specific comment by Roosevelt about Berle. Just prior to his
departure in May for Warm Springs, FDR remarked, "Berle could
work up something on debt and finance--you know, RFC, and
mortgage foreclosures, and the stock market. . . ." The
result-—although Roosevelt probably never saw it-—was a
38-page memorandum prepared by Berle and his law partner,
Louis Falkner, the result of long discussions held in early
1932 by a downtown group that Berle would term the "Koffee
Klatch." This prescient document analyzed how the federal
government's economic policy should encourage and insure the
economic safety of the individual amidst a heavily concen-
trated American society.

In describing this analysis, Berle later commented

that by the time he joined the Brains Trust, Roosevelt had

99

already decided that the federal government would be the
agency used to meet the depression. Everything in 1932 was
based on this assumption. He therefore believed his long
memorandum only reflected how the best independent thought
paralleled FDR's. Despite contemporary evidence to the
contrary, Berle also contended that the President-elect had
personally thought through beforehand all of the major
policies that he implemented after March 4, 1933.51

Upon his own initiative, Berle continued to contribute
analytical memoranda to Roosevelt throughout the interregnum.
Some of these went directly to Moley; and some of the ideas
filtered on in this manner. "It must be remembered that by
March 4 next," he warned Moley in a memorandum just after the
election, "we may have anything on our hands from a recovery

52 In

to a revolution. The chance is about even either way."
late November, he urged Moley to prevail upon FDR to use
Fiorello LaGuardia, who could be "important in the short
session," and David Lilienthal, "who had both good administra-
tive experience and many friends, among them Donald Richberg."
The primary matters of concern, Berle added, were a railroad
receivership bill, industrial stabilization, and a "25% cut

in all debts." A railroad measure occupied a good deal of

53 By the end of January,

his spare time during December.
Berle sent word that he had several matters well "in hand."

These included bankruptcy legislation, including the railway
reorganization act; farm mortgage relief; "railroad receiver-

ship and/or consolidations"; the bituminous coal situation;

100
and anti-trust laws. "I have made it plain to Moley," he went
on, perhaps hoping for the reverse effect, "that a federal
job is not one of my ambitions, unless it be the consulship
to San Marino (Raritonga?)." But Moley believed Berle
desired to join the new administration.54
When Roosevelt and Moley conferred at Warm Springs in
early February, appointments was one of their major topics.
Moley helped to sell the President-elect on Berle. "Berle not
only contributed more stuff to th§7 campaign," Moley jotted
in his notebook, "but he is doing more successful work now."
FDR preferred him on the Federal Trade Commission. A few
days later, Moley made the offer. Berle rejected the FTC
because he wanted to do more work on the railroad situation,
among others. "I know he wants to be counsel for the R.F.C.,"
Moley put in his diary. Tugwell observed a week later that
his colleague would probably soon overcome his reluctance:55
I saw Berle yesterday and he did not seem so determined
as he was formerly not to go to Washington. His reasons
for not going are that he has assembled a whole group
of his family around him in his law office and that they
are dependent on him for their productivity, but I
imagine this resistance may break down and March 4th
may see the whole group assembled in Washington in some
way or another.
Berle finally received the RFC appointment in mid-April, but
by then he would take it only on a part-time basis. As he
remembered it, he possessed the privileged access of tele—
phoning the White Heuse at any hour. But that was as close

as he would get to the President during the Hundred Days.56

101

Among the three former and best known Brains
Trusters, Berle's contributions and relationship with
Roosevelt during 1932-33 were later the most over-rated.
Tugwell remembered about the interregnum that FDR valued
himself, Moley, and Berle because they were "disinterested,
reasonably knowledgeable, and willing to assist without
talking about it. Actually Ray, with me helping, was again
most depended upon."57 The detailed diaries of Tugwell and
Moley between the election and inauguration contain but few
mentions of Berle. Forward-looking, clear and precise in
thought, and a potential source of ideas for the President
from practical liberals, Berle was a useful man to have in
some areas of policy. Possibly, as Tugwell hinted, there was
less need for Berle's skills. As will be evident in March,
certain incidents that revealed Berle's arrogance and sarcasm

made him persona non grata at the White House. Curiously

 

enough, and probably unfortunately, considering his qualifi-
cations and experience, he was not an influential adviser to

Roosevelt.

V
The Democratic candidate's October 19 pledge at
Pittsburgh for a 25% reduction of ordinary, non-emergency
government expenditures was made in full sincerity and
remained one of his basic beliefs well into the New Deal
years.58 That belief and pledge opened the door in the new

administration for a Budget Director with conservative fiscal

102
views. Lewis W. Douglas eventually received that post. His
influence with the new President in fiscal affairs would be
unrivalled during the Hundred Days.

Born in 1894 in the comparatively settled and cul-
tured mining town of Bisbee, Arizona, founded in 1880 by his
two grandfathers, young Lewis was raised amidst modest finan-
cial circumstances in an independent—minded family where firm
moral precepts guided the ways of life. Familiar with stories
of the pioneering days, his family's development of mines,
smelters, towns, and railroads in Arizona and Sonora, Mexico,
at an early age he insisted on working as a "mucker" in his
father's copper mine at Jerome. His vigorous frontier boyhood
complete with its part-time jobs, encounters with Indians,
mischievous pranks, and schooling was interrupted at age ten
when his parents sent him east for formal education, which
began at Hackley prep school in Tarrytown, New York. Con-
tinuing on after graduation to Amherst, sometimes having to
wait tables to earn Spending money, in 1916 he completed his

B.A., cum laude, in liberal arts and history. He included

 

some work in geology, chemistry, and the natural sciences,
since he then held the fuzzy aim of returning to Arizona as a
mining engineer. Enrolling at MIT for graduate study in the
basic geological and pyrometallurgical disciplines, he
volunteered at once in 1917 when the American Expeditionary
Force was formed. Commissioned as a second lieutenant, he

saw front-line combat in France and Belgium. There General

103

Pershing decorated him for conSpicuous bravery at the
Meuse-Argonne; but he suffered from being severely gassed.

Back in the United States in 1919, in order to regain
his full health before returning to Arizona to work, Douglas
taught American history for one year at Amherst and chemistry
for another at Hackley. Married in 1921, he then returned to
his native state to enter the mining business and politics.
Following two successful terms in the legislature, he won
election to Congress in 1926 as his State's only representa-
tive. Re-elected three times, his legislative rise in
'Washington stemmed primarily from his intense concentration
on and orderly analysis of his committee assignments on
matters affecting public lands, Indians, and reclamation, as
well as from his interests in broader matters like tariffs,
currencies, foreign policy, and the federal budget.

Soft-spoken but firm, with an exceedingly charming
personality, Congressman Douglas was the picture of vibrant
energy. Not a large man, his light brown hair would always be
parted down the middle as he bicycled daily to his Capitol
Hill office. His mind, most observers agreed, equalled the
best in the capital, bar none. Close to being a Manchester
liberal in economic views, he believed that the three pillars
of the 19th century world order had been free trade, a common
international currency, and the British fleet. By 1932 he
was convinced that economy in government offered one major
way to restore the first two pillars. Thus he introduced an

economy resolution which passed the House in the spring,

104

after a bill for the same purpose had been rejected by a
5-1 sentiment. The House then formed a five-member Economy
Committee with John McDuffie as chairman. Douglas soon
became the workhorse and guiding light of that committee.
After Speaking out for lowering veterans' benefits in a con-
stituency having over 20% vets, the forceful representative
overcame ex-soldier's heckling and hails of oranges and eggs
("But this was rather fun," he later commented) to win
re-election for a fourth term.59

During the 1932 campaign he first met Governor
Roosevelt at the Greenway Ranch near Williams, Arizona, where
they talked briefly about governmental economy and reorgani-
zation. Evidently impressed, FDR called Douglas to Hyde Park
just after mid-December. Coincident with this summons,
Secretary of State Stimson had asked him to see the President-
elect about intergovernmental debts. At that time Roosevelt,
Moley and Tugwell were drafting a further reply to President
Hoover on debts.6O

After arriving at Hyde Park, Douglas conferred with
the governor and stated his cancellationist views on debts.
That Sunday night all three made the hour and a half auto trip
from Hyde Park to Albany. Also impressed with Douglas,
Tugwell recorded that during the ride they talked "at length
and freely about the changes needed in Washington." Reorgani-
zation and economy were of particular interest to Roosevelt.

At length he asked the congressman to try to attach a clause

to the lame-duck appropriation bill giving the incoming

105

president power to reduce personnel, abolish functions, and
effect interdepartmental transfers. With this done, after
March 4 he could quickly carry out a much needed structural
reorganization, based upon the authority of the 72nd Congress.
Members could then dump the burden on him and call it a £33:
accompli. "A new President," he remarked, "can do this and
get away with it, if [The lame-duck7'Congress will come
through with the blanket permission." FDR also generally
agreed on the need for economy, Douglas recalled.61

Governmental reorganization and economy were major
items during the interregnum policy preparations. For
example, one reason Roosevelt backed farm credit changes was
because streamlining credit through reorganizations might
save millions. Early in January he put former Congressman
Swager Sherley and Senator James Byrnes on reorganization and
economy along with Douglas. Those three and others spent
much time formulating tentative plans during January and
February. Although Roosevelt wanted reorganizations and
consolidations carried out in several departments, some doubt
existed among his close advisers as to its constitutionality
and desirability. New York attorney Howard McBain told Moley
in early January that reorganization was unconstitutional,
"insofar as it would give a President power to abolish
functions." Tugwell contacted several persons at the
Brookings Institution to gather memoranda on reorganization.
He believed that very little savings, possibly none, would

result. "But with so much campaign talk about economy," he

106

confided to his diary, "there is apt to be a good deal of
slashing here and there." Douglas later believed there was
no hope of getting real savings from changes in governmental
organization. The President-elect nevertheless thought so.
He indicated this on January 10 when describing his plans to
"balance the budget" by effecting economies and by reducing
veterans' benefits to publisher William Randolph Hearst's
representative Edmond D. Coblentz. And Douglas worked on
the basis of those instructions. But due to the pressure of
other congressional business, an economy bill was not com-
pleted before March 4.62

Since November Roosevelt had preferred Sherley for
the Budget Directorship. Probably he preferred Sherley in
part because he also held conservative fiscal views. And
for political purposes, he would be a tie with the Wilsonian
Democrats. Moley privately opposed Sherley. He told Tugwell
in December that he believed the Directorship should be
upgraded, roughly analogous to Britain's Chancellor of the
Exchequer. Byrnes remembered recommending the Arizona
Congressman for the Budget Bureau because he was "one of
the ablest and most courageous men in Washington." Perhaps
dismayed over the final maneuvering to keep Carter Glass out
of the Treasury, in the end Sherley declined to accept any
federal appointment. In declining, he recommended Douglas.63

In the meantime Douglas had spoken to Roosevelt

several times by telephone, primarily concerning economy

legislation and the federal budget. Both men talked of

107

wanting to see revenues balance with expenditures. On
February 18, before the Detroit banking crisis grew ominously
and Spread to other mid—western cities, Douglas sent FDR a
memorandum detailing his fears that collapse of banking in
the Midwest could lead to "serious effects upon the credit
structure." A policy of "realism" for the Treasury and
the RFC would be to let the weak banks go, lest trying to
reinforce all the "weak spots" might lead to the worst
result-~"inflation of the currency." This memorandum, with
the recommendation of people like Byrnes and Sherley and
with Douglas' reputation as a man of absolute integrity and
staunch fiscal convictions, probably catalyzed the President-
elect's decision.64

Roosevelt telephoned Douglas on February 22 to offer
the Budget Directorship. Mrs. Douglas listened in on an
extension line. Economy in government, the President-elect
began, was one of his major concerns for the upcoming
administration. Expenditures had to be cut, veterans compen-
sation would have to be slashed heavily, and the federal
budget must be balanced. Douglas finally replied that he
could be more useful to the administration as a congressman
dealing with matters like international monetary and foreign
policies, that the Directorship would terminate his political
life, but that he would accept if Roosevelt deemed it the
correct decision. FDR said he did; and he further explained
that Douglas' position would carry Cabinet status. He

repeated that federal expenditures and revenues must somehow

 

1‘.

 

108
be made to match. They also talked of the economy bill which
Douglas was helping draft. That was fine, go ahead with it,
the President—elect said. The two men agreed in principle,
Douglas recalled, upon everything they discussed.

Satisfied with Roosevelt's advocacy of orderly
spending and economy in government, Douglas had reluctantly
accepted federal appointment. He feared then, he would say
later, and as his contemporary memorandum implied, that the
banking crisis in Michigan would spread and consequently
affect the entire national economic environment. Orderly
spending would remain a goal; but budget balancing soon might
be only for public consumption. While he had no particular
influence with FDR by the end of February, his new post as
"the fiscal agent" of the President would soon change that.65

By March Roosevelt had committed himself to some
orthodox fiscal policies. One of these would be the Economy
Act passed that month. Fully aware of Douglas' strict adher-
ence to principles, he nevertheless thrust him into a crucial
position in the early New Deal. Every law with an appro-
priation would have to be cleared by the Budget Director, as
would all departmental spending. Although it seems an
exaggeration when compared to his fiscal views then and
later, perhaps FDR wanted a sound money man in a position to
say "No" to all spending projects except his own. Even if
that were true, Douglas would soon override such considera-
tions and develop into a potent and influential force on the

right. The appointment marked the beginning of a fond

109

personal relationship between him and the President. Unknown
to either, it also became the source of a long conflict over

New Deal spending policies, much more important than similar

conflicts Morgenthau had over farm credit. For by July 1933,
Roosevelt would pragmatically shift some of his fiscal views

to meet pressing political and economic needs. Not being as

intellectually flexible, or expedient, the Budget Director

would steadfastly maintain his earlier views.

VI

Preparations for the 1933 World Economic Conference
were a prime issue in foreign policy planning between the
election and March 4. Roosevelt first gave Tugwell this
assignment in early January. On the train to New York after
the January 20 meeting with Hoover, Moley and Tugwell con-
cluded the time had arrived to begin work on an agenda for
the Economic Conference. By telephone from Warm Springs FDR
instructed them to use "experts." Tugwell immediately called
upon Stewart and Patterson. In addition, Moley wanted some-
one with practical experience in monetary matters, preferably
in banking.66

Moley already had in mind James Warburg, whom he had
met at the latter's invitation a few days earlier through
a mutual friend, James Roosevelt. Young Roosevelt brought
Moley to Warburg's New York City office of the Manhattan Bank
for a luncheon meeting. The professor pumped Warburg about

the banking picture, in terms of bank failures and gold

 

 

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110

hoarding. Having mistakenly thought his guest was an
economist, Warburg tried without luck to find out what the
"new crowd" would do on monetary policy, eSpecially on
banking and currency matters. Two impressions remained with
the witty young banker. First, the Roosevelt people were
thinking about some kind of "inflationary counteraction" to
the depression. Second, they were not going to do anything
about monetary policy until March 4. "In other words,"
Warburg later said, "they wanted it to get as bad as it was
going to get before he took office, so that he would come in
on the turn rather than in the continuing downward spiral."67

On January 23 Moley attended a well organized dinner-
discussion at the comfortable New York home of prominent
banker Paul Mazur, a partner of Lehman Brothers. Among
others attending were Ralph Robey, staunchly conservative

economist and financial editor of the New York Evening Post,

 

and Warburg. Mazur had sent each guest a list of questions
covering such varied subjects as war debts, the tariff,
Russian recognition, deflation, and the domestic allotment
plan. At this dinner the concept of an "Intra-National
economy" was first intensely investigated. The evening's
discussion left Moley even more impressed with Warburg.
Walking home afterwards, he asked him to join the WEC experts
group. Upon learning (incorrectly) that Roosevelt had per-
sonally selected the three experts, Warburg agreed to join.

Thereafter Moley temporarily receded from the preparations,

111

as Tugwell attempted to coordinate the group's meetings in
February.68

Son of a widely known international banker, the late
Paul M. Warburg, young "Jimmy," as Roosevelt would soon be
fond of calling him, was not a "stand-pat" banker. Born into
a wealthy New York Jewish family with many European connec-
tions, personable, articulate, with a rare sense of humor,
the thirty-six year old Warburg had already become a keen
businessman and well-known in his own right as an inter-
national banker. Aside from his post as president of the
International Manhattan Company, his other interests included
directorships in several corporations and being an officer of
the International Acceptance Bank. Unlike many bankers, how-
ever, he advocated a revised gold standard rather than the
pre-l929 version. He would reduce the gold content of the
dollar and even use silver as a supplemental coverage. But
he believed that other inflationary schemes were shot full of
inconsistencies and fallacies.69

Tugwell tried unsuccessfully to secure constructive
progress within the London Conference experts group during
early February. Charles Taussig and Aubrey Romaine, head of
Standard Statistics, were also brought in. The discussions,
however, snagged on the issue of inflation. Stewart and
Warburg insisted that they must know what Roosevelt would do
about the gold standard before they could proceed. Tugwell

soon complained to Moley: "They are willing to die for the

gold standard." When Warburg wrote Moley about the lack of

112
meaningful progress, he learned the group soon would be
personally introduced to the President-elect. Roosevelt had
summoned the meeting because he had changed his political
strategy. By mid-February he had decided to placate Bernard
Baruch's Cabinet aspirations by making him chairman of the
London Conference experts group. Baruch would be chairman;
Senators Robert M. LaFollette, Jr., Hiram Johnson, and
Bronson Cutting might name one member; Robert Bingham, the
Louisville publisher, would be added; and the experts would
remain.70 This first of several political maneuvers to gain
support from both Baruch Democrats and progressive Republi-
cans would be forgotten after March 4.

Smiling warmly, seated in his armless wheelchair, on
February 20 Roosevelt met that group and several others at
his 65th Street house. Although he wanted to ask what FDR
intended to do about the gold standard, Warburg had been told
in advance not to. It "would be embarrassing to him." In an
affable mood, the President—elect inquired about "Jimmy's"
family and exchanged a few amiable comments with him. Finally
he remarked, "Anyway, I want you to work with Ray Moley on
the banking and currency situations." Continuing around
the room with pleasantries, he finally introduced Baruch as
general chairman of the experts group. Afterwards he divided
the group into a "trade side" and a "monetary side," with
Warburg on the latter. But the group never did function.

Warburg later concluded that Baruch derailed them when he

 

 

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113

abdicated "to South Carolina to sulk because he was not given
a Cabinet position."71

So began James Warburg's personal and policy relation—
ship with Roosevelt. During the Hundred Days he would gain
both the President's and Moley's confidence on matters
relating to the forthcoming London Conference. Important not
only for his influence on policy, Warburg also kept a vividly
detailed, daily journal of 1933's hectic events. The conse-
quences of Warburg's involvement, if predictable by his
internationalist interests, would finally result in a clash
with Roosevelt's intranationalistic policies. The climax
would come in London with the famous "bombshell" message, but
under circumstances hardly discernible in February. In the
meantime, Warburg would be another force on the right, albeit
a more flexible one than Douglas.

Roosevelt's soon-to-be-official advisers examined
thus far cover a wide spectrum of policy areas. Moley would
handle foreign economic policy and whatever domestic policies
his chief would so designate. Tugwell would be concerned most
with agriculture, but he would also be involved with the food
and drug legislation and preparations for the Economic Confer-
ence. Morgenthau would handle farm credit. Berle would have
no definable status or assignment. Douglas would take charge
Of fiscal and governmental economy policies. And Warburg
WOUld be a key figure in WEC preliminaries. Yet their indi-
V-idual value to the President can scarcely be determined for

an}, precise period because, like a kaleidescope, his policy

 

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114
needs and ideas would continually change and regroup,
according to national and political needs, congressional
imperatives, and opportunities.

These and other advisers are important because
Roosevelt needed them at one time or another. Several
reasons account for this. First, he was a leader who gained
most of his information from oral (rather than written) con—
tacts. He therefore needed to communicate with people upon
whom he could implicitly rely. Also, as President he could
not possibly always be well informed upon the myriad of
issues facing him, a fact neither aided by his inclination to
make intuitive judgments, nor surprising due to the complexity
of the issues and to his having to learn about the presidency
itself. Furthermore, in the beginning and perhaps naturally
enough--given his temperament, his past experiences with the
Brains Trust and the campaign, and his desire to construct a
new party rather than to rebuild the Old Democracy-—he tended
to distrust less familiar subordinates, notably some Cabinet
members.

Aside from the usual methods of examining Franklin
Roosevelt as President, therefore, it is both useful and
necessary to consider his relationships with important
advisers as well as their particular involvements with policy.
Although his confusing methods and the lack of a formalized
sYStem of presidential assistants before 1939 make this a
difficult venture, it becomes a necessity because his own

“FDIJghts and actions were seldom significantly recorded in

115
anything he wrote.72 The major exception was, of course, his
public documents. Yet advisers like Moley usually drafted
these for him. But with such relationships and their poten-
tialities as background, Roosevelt's personal decisions,
policies, and leadership during the Hundred Days become more

understandable.

CHAPTER IV

A NATION INSPIRED

Franklin Roosevelt sat behind his large, cluttered
desk in the spacious Oval Office, writing rapidly on a
yellow, legal pad. Beside him lay a several-page draft of a
special congressional message on the agricultural adjustment
bill. He had decided that this omnibus measure required a
sufficiently general accompanying message. Now, to the
surprise of several of his advisers silently seated nearby,
he wrote his own. Agriculture Secretary Henry Wallace and
Assistant Secretary Rexford Tugwell looked on with mixed
surprise and pleasure. Also nearby sat Raymond Moley, who
usually drafted such documents, and M. L. Wilson, whose cam-
paign had publicized nationally the domestic allotment prin-
ciple, the heart of this farm bill. It was the afternoon of
March 16. As the cold winds crisscrossed the Potomac outside,
FDR knew that public confidence in the government was
reviving and that now Congress would continue rather than
recess or adjourn.

The President finished his writing and read it to
his advisers. Within an hour Congress received the message.
It was brief and brilliantly to the point. In addition to
bringing order to our banks and making federal expenditures

116

117

balance with income, Roosevelt deemed it important to take
"other and simultaneous steps" toward economic recovery
without waiting for a later session of Congress. In the
heart of his recommendation he declared that this step:

relates to agriculture and seeks to increase the

purchasing power of our farmers and the consumption

of articles manufactured in our industrial communities,

and at the same time to relieve the pressure of farm

mortgages and to increase the asset value of farm

loans made by our banking institutions.
Deep study and joint counsel had produced a bill with great
promise. Quite frankly, he went on, it was a new path to
travel; but the unprecedented condition of agriculture called
for new means to rescue it. If a fair administrative trial
failed to produce hoped-for results, he promised to so advise
the nation. But legislation was necessary now. Spring crops
would soon be planted. Another four to six weeks of waiting
would mean that price-raising efforts would not help this
year's crops.1

Immensely delighted with Roosevelt's own message,

Tugwell managed to get the original to frame for his office.
Shortly afterward he showed it to Wilson, remarking that
FDR "was the most remarkable man that he ever knew anything
about." "I believe our bill may be something of a new
charter for an oppressed people," Tugwell wrote the President
the following day. "Now if we can do as much for consumers
with a new Food and Drugs act I can return happily to academic

life!" Felix Frankfurter soon observed that the message gave

the country the "right temper" on a major question. Putting

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118

his finger squarely on the main point of presidential leader-
ship, he said: "The lesson in candor and in the necessary
experimental attitude towards problems the answers to which
nobody knows and which must be achieved by trial and error
may, in the long run, be even more important than the solution
of the Specific agricultural difficulties."2

Roosevelt knew Frankfurter was correct. Candor and
the right attitude had been two of his major weapons since
taking office. Already he had approved decisive action to
stem the worst banking crisis in the nation's history. As a
quick followup, he had recommended passage of a major law
to force economy in government, one of his most basic aims.
Then he had asked for legalization of beer. Now he recom-
mended far-reaching steps for the recovery of agriculture.

Behind these actions lay his belief that confidence
must be restored in America as a logical precedent to
recovery. Toward that end by the 16th of March he had
delivered his stunning inaugural address promising "action,
and action now," held three open and candid press conferences,
given two radio talks, and taken private steps to launch
further policies for relief, recovery, and reform. His
leadership during his first week and a half as President
therefore outlined the basic themes of that period. First,
the banking crisis with its national psychological ramifica-
tions had been met and mastered. Second, his intention from
the beginning to fashion a New Deal program before Congress

recessed or adjourned was now a decision. It had become

119

progressively evident from the legislation he recommended and
approved. In the congressional processes now, or being pre-
pared (economy and beer had already passed), were civilian
conservation, direct federal relief, securities reform, and
railroad regulation. His farm relief message completed and
publicized this decision. Third, these steps combined with
striking presidential leadership had turned the tide toward a
restored national confidence. The combination of these inter—

related themes by mid-March resulted in a nation inspired.

II

Roosevelt's handling of and solution to the 1933
banking crisis reached back partly to his twofold attitude
toward bankers. He was perfectly willing to follow the lead
of conservative bankers so long as he could. On the other
hand, when "politically necessary" he was prepared to cut
loose and chastise the same bankers for their conservatism.
It was a matter of timing more than anything else.3 In other
words, his public attitude toward bankers primarily repre-
sented a rhetorical political device. This dichotomy became
evident in his inaugural and the emergency banking legisla-
tion. Just after the Hundred Days, it would reappear in his
so-called bombshell message to the London Economic Conference.

While talking over the proposed legislative program
after mid—January, Roosevelt and Moley had mentioned the
general approach to departments and problems that would be

followed after March 4. "Great diflferencg7 now is emergency,"

120

Moley jotted in his notebook, "turn over to people now on
job-~the things they are now doing—-." They talked of getting
both Hoover holdovers and new people into the programs, of
using people with "vision," like Tugwell, and of conferring
'with bankers about bank reform legislation. FDR rambled
further over the possibilities, but nothing was definitely
settled. Because he knew of the Democratic party's shortage
of trained personnel, he also realized that in places the
early New Deal must rely upon experienced but Republican
incumbents who might not always be sympathetic to his goals.
In each department, therefore, he would need personal
advisers whose counsel he could trust implicitly.4

Tugwell listened with close attention on February 18
as the President-elect chatted about banking with Louis Howe
and Will Woodin, who would soon agree to become Secretary of
the Treasury. All of the big bankers wanted Roosevelt to do
something, Woodin worriedly reported. Smiling and noncom-
mittal, Roosevelt replied that he "could see no reason why he
should save these bankers; it was more important to save the
folks." They discussed various methods of providing currency
for business purposes should all the banks close. Remarking
that closing "now looks possible," Tugwell suggested using
the post offices and a liquidating corporation with power to
issue scrip. But he had no definite plan, and the suggestion
was ignored. Roosevelt is "calm and sane about it," he noted
in his diary. "All the bankers now want their deposits

guaranteed by the government, something they fought for years.

121

But he sees no reason, as he said repeatedly, for specially

 

protecting this interest as against all others."5 It had
become politically necessary for the President-elect to cut
loose from bankers.

As of late February, however, Roosevelt and his
advisers had no well formulated banking plan. On February 21,
amidst the final round of Cabinet appointments and the failure
of the London Conference experts' group, Moley and Woodin
conferred over the deepening banking crisis. Moley remarked
privately that it was "growing more serious every day."

Three days later Woodin again called him "about the banks and
the terrific gold withdrawals all over the country." They
spoke in general of two measures: an embargo on gold, and
some sort of a tax on gold hoarders. Beyond that, they had
few answers or ideas.6 At the end of the month FDR dispatched
Tugwell to Washington to check with Cordell Hull and with
Herbert Feis, who would remain as the State Department's
Economic Adviser (evidently at Frankfurter's recommendation),
on the intergovernmental debts as well as the 1917 provision
to control the domestic use of gold. After lunching together,
Feis offered to help with the wartime legislation through his
associate Daniel Bell, Assistant Secretary of the Treasury.
After much checking and rechecking at the Treasury, two calls
by Tugwell to Hyde Park resulted in Roosevelt instructing his
liaison to give the remaining task to Senator Key Pittman.
Pittman consulted lawyers from the Senate Legislative Bureau

for two days. On March 2 he hurriedly sent FDR a memorandum

122
recommending action on at least one of three points: set no
date for calling Congress into special session; study banking
reform immediately; or undertake the necessary steps to main-

tain the status quo on deposits, to supply scrip for "emer-

 

gency currency," and to provide government assurances on the
safety of redeposited money, once it was back into the banks.7
This advice, however, along with much telephoning and
checking by Moley, Woodin, and other advisers, formed the
meager basis for Roosevelt's skeletal preparations on banking
by the time he arrived in Washington late on March 2. While
at least one historian has made the assertion, there is no
contemporary evidence that FDR had "drafts of two presiden-
tial proclamations"--to declare a bank holiday and to call a
special session-~upon his arrival.8
But since January members of Hoover's administration
had labored over fundamental preparations to meet such a
crisis. Odgen Mills as Secretary of the Treasury, an able
conservative who was one of Roosevelt's Dutchess County
neighbors, had familiarized himself with much of what became
the banking act of March. As the brusque and efficient
general counsel of the Federal Reserve Board, Walter Wyatt
became the chief drafter and technician for the emergency
measures. Arthur A. Ballantine, once a member of Elihu Root's
law firm and who had come to the Treasury in 1930 and now
served as Under Secretary, and F. Gloyd Awalt, a professional

Treasury career man since 1919 and acting comptroller since

1932, rendered valuable assistance and supplied worthy ideas.g

9a

 

123

But the immediate problem by March was to stop the daily net
‘withdrawal of currency and gold from the banks and from the
United States itself. If these withdrawals continued, even
the strongest banks in the East and the Midwest would have to
close their doors, and the entire economic structure might
fall. As Tugwell had learned, the Treasury had a draft
proclamation, based on section 5 (b) of the 1917 Trading with
the Enemy Act, which would authorize the president to declare
a bank holiday and to embargo the export of gold.

But some doubted the validity of the wartime act. On
March 2 and 3, Hoover's financial advisers made various des-
perate efforts to persuade him to issue such a proclamation.
He refused, apparently for three reasons. First, he did not
believe closing the banking system was absolutely necessary.
Second, Attorney General William D. Mitchell cautiously
advised him not to act, unless Roosevelt would accept joint
responsibility. If Hoover thought the emergency "great
enough," Mitchell had first decided that the 1917 law con—
tained "sufficient color of authority" to issue the proclama-
tion. But before so advising the President on the night of
the 2nd, he learned that the President-elect had refused to
ask HOover to issue it. On the grounds that he possessed no
responsibility yet, Roosevelt would not take this crucial
initiative; but he also stated he would "interpose no

objection" if H60ver acted alone.10

Third, if he acted alone,
Hoover feared that the Democratic Congress would not validate

his action. If the banking system was to be saved before

124

March 4, the crisis demanded cooperation between the incoming
and outgoing administrations.11

Cooperation failed. The question is why. For both
Hoover and Roosevelt, part of the answer was political.
For several reasons the President was politically and ideo—
logically unwilling to act on his own initiative. Around
11:30 p.m. on the 3rd, Federal Reserve Board chairman Eugene
Meyer advised Hoover that the New York and Chicago Federal
Reserve Banks were urging him to declare a national banking
holiday for three days. Hoover adamantly refused, unless FDR
requested it. Meyer heatedly argued that the situation was
"desperate," that it was his duty and responsibility, that he
was fiddling While Rome burned. "I can keep on fiddling,"
came the petulant reply. "I have been fiddled at long enough
and I can do some fiddling myself."12 The entire FRB "felt
that Hoover was afraid to act on his own responsibility,"
caustic Republican board member Charles S. Hamlin commented
in his diary, "and that this fear was a final climax of his
unfertunate responsibility." Others in the administration
agreed, then and later.13

On the other hand, politically unwilling to assume
responsibility without power, surrounded by advisers who were
not well informed on the technical side of the issues, the
President-elect correctly refused to cooperate on banking.
Probably he believed that joint action would identify him

with the discredited Hoover regime. Just prior to this time,

according to Warburg's recollection, one adviser remarked:

125
"This is Hoover's party. We're not going to take any part
of it." Did Roosevelt keep his silence deliberately, waiting
for the system to crumble so that he could be the savior?
That is doubtful. He and his advisers had no plans, only an
increasing awareness of the totality of the disaster and a
readiness to use any and all ideas and available personnel.
They would become a political and economic necessity,
regardless of the new President's public attitudes toward
bankers and their handmaidens. "I just think it was an
unwillingness," Warburg again reflected, "to commit himself
to methods and means in a situation that was changing so

14

rapidly." Without the powers of the presidency, FDR knew

any assumption of responsibility would be hollow.

III
Saturday, March 4, dawned cold and overcast in
Washington, D. C. A chilly northwest wind sent shivers
through the gathering crowd. Would today be another repeti-
tion of the Old Order? Or would it be the beginning of a
NeW'Deal? Already confidence was returning to the capital,

commented New York Times columnist Arthur Krock. Two days

 

earlier confidence had descended from the Baltimore and Ohio

train from New York City in the figure of a smiling, buoyant

President-elect. So Washington knew; but the nation waited.15
Overhead one hundred planes roared by in formation

and the silver dirigible Akron slid across the gray sky.

Tens of thousands gathered along the parade route and near

126
the stark wooden inaugural platform in front of the Capitol.
The proudest of these, long since inspired by their old
"doctor," were the more than sixty "polio's" in the delega-
tion from Warm Springs. He was one of them. He had beaten
the disease. He could swing his hips and manipulate the
crippled legs well enough, with the help of a firm arm and
stout cane, to walk and even stand for a speech. To them a
picture of confidence and courage, today Franklin D. Roosevelt
would come to power.

Shortly after noon the ceremonies began to unfold.
Shivering without an overcoat, John Nance Garner of Texas was
sworn in as Vice-President by Chief Justice Charles Evans
Hughes. Then the Roosevelt family Bible arrived. A clerk
opened it to the 13th chapter, the 13th verse of First Corin-
thians. "And now abideth faith, hOpe, charity, these three,
but the greatest of these is charity." The old Dutch heirloom,
a symbol of Roosevelt's unchanging essence, was eventually
used at all six of his inaugurations. At the piercing sound
of a Marine bugle, he appeared on the arm of his eldest son
James. The Marine band struck up "Hail to the Chief" as he
slowly swung his steel-braced legs along the thirty-five yards
from the inner Capitol and up the maroon-carpeted rampway. A
few cheers arose followed by some applause, and the crowd
fell silent again. Intensely pale, repeating the oath of
office, FDR clamped an iron grip upon the rostrum. With
shoulders erect, he characteristically flung back his head

and solemnly began. "This is a day of national consecration."

127

One hundred seventy—eight American radio stations carried
his clear, resonant voice. England, Germany, Switzerland,
Holland, South Africa, Australia, New Zealand, and other
nations broadcast the address. But he Spoke first to Ameri-
cans. He spoke of confidence.

The time has come to tell the truth and to face up
to conditions in America, the new President declared. This
nation will endure, will revive, and will prosper. Then came
his theme. "So 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." Silent, the crowd
fixed eyes and ears upon the animated speaker. America's
common difficulties are material and ethical, he continued.
Industrial and farm goods are in abundance. But the exchange
of these goods had failed, primarily because of the indicted
practices of "unscrupulous money changers." Then he attacked
their leadership for resorting only to traditional ways, for
proposing to lend more money, for only exhorting that confi-
dence be restored. They knew only the rules of a generation
of self-seekers, they had no vision, and without vision the
people perish. "The money changers have fled from their high
seats in the temple of our civilization"—-and here the crowd
burst into applause, the first of Several to interrupt the

Speech, the Literagy Digest afterward commented.

 

Thus "ancient truths" must be restored, Roosevelt con-

tinued. We muSt apply noble social values and cast out the

128

false values of material wealth, the false use of political
office and position, the callous and selfish conduct of
banking and business. "Small wonder that confidence
languishes, for it thrives only on honesty, on honor, on the
sacredness of obligations, on faithful protection, on unselfish
performance; without them it cannot live." Again the crowd
interrupted with applause.

But restoration of confidence calls for more than

changes in ethics alone. "This Nation asks for action, and

 

action now." He outlined the program needed to supply this

 

action. People must be put to work, partly by direct govern-
ment recruiting to achieve projects which would "stimulate

and reorganize the use of our national resources." Hand in
hand with reemployment we must recognize the need for a
national population "redistribution," removing the overbalance
from urban centers and providing for better land use every-
where. This task can be helped by definite efforts to "raise
the values" of agricultural products, by preventing mortgage
foreclosure on "our small homes and farms," by insisting that
costs at all levels of government be "drastically reduced,"
by unifying relief activities. "It can be helped by the
national planning for and supervision of all forms of
transportation and of communications and other utilities
which have a definitely public character." Again he enjoined,
but we must "act and act quickly." Finally, we required
safeguards: a "strict supervision" of all banking, credits,

and investment with other people's money; and provision for

129
an "adequate but sound currency." These lines of attack he
promised to "presently urge" upon the Congress in special
session.

Having given his program and stated its immediacy, he
turned to general policies. The policy of intranationalism,
"a practical policy of putting first things first," must
logically precede efforts at international recovery. In
world affairs he dedicated America to the policy of the "good
neighbor." Then in the gravest terms of the speech, he
asserted his readiness to go beyond the normal balance of
executive and legislative authority in the event that Con—
gress failed to follow his emergency recommendations or to
act decisively on its own. If those orderly procedures
failed, he declared, "I shall not evade the clear course of
duty that will then confront me. I shall ask the 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." This assertion of leadership
inspired the loudest applause of the day.

He warned of the arduous days ahead. We must trust
the "future of essential democracy," and in that Spirit he
accepted the nation's leadership. In conclusion he asked
for God's blessing for all Americans and for himself.

For twenty stirring minutes Roosevelt had spoken.
Scattered applause arose from the now shuffling crowd.

Shaking hands with the Chief Justice and other dignitaries,

130

smiling and nodding, he Slowly made his way, again with his
son's help, toward the waiting limousine. To the hundreds of
thousands who saw him in person or watched the newsreels, it
was not apparent that the new leader of the crippled nation
was crippled himself.16

Listening from next to the semicircular stand,
Herbert Feis, his wife, and several friends were struck most
by the passage on emergency powers. He recalled (in contrast
to reporter's contemporary accounts) that the crowd largely
"remained grave and Silent. They did not break into his
speech with loud applause but seemed rather to want to think
it over before they expressed themselves." Leaders of both
political parties most often used the word "courage" to
describe the speech. For all the talk of leadership and
reading the "riot act" to Congress, said commentator Frederick
W. Wile, the President was a master psychologist with his
"'Chin's up, Americans, be of stout heart!’ message." The
Times wondered how Roosevelt expected Congress to grant him
the "broad emergency powers" if it would not pass the laws
he recommended. It correctly concluded that the declaration
was a Spur to action. Commenting on the national press

reaction, the Literary Digest found "wide acknowledgment of

 

its courage, its declaration of leadership, its willingness
to accept responsibility, its note of high moral indignation."

In general agreement with national acclaim, the New Republic

 

declared itself unsurprised because he had appeared to be "an

intelligent man and on the whole a progressive during the

131

campaign." The editors warned, however, that fundamental
evils, particularly the banking system, called for drastic
remedies. And the largest possible program of federal public
works offered the "best hope" for the immediate future.17

Judging from contemporary reactions, Roosevelt's
first major utterance after taking office successfully
embodied strong presidential leadership. Curiously enough,
however, not one of the newspapers or congressional leaders
discussing the address mentioned the "fear itself" phrase,
later considered so famous.18

With a wave to the now cheering crowd, the new Chief
Executive was whisked away in the black, flag-bedecked
limousine. After spending most of the afternoon reviewing
the inaugural parade, Silently watching Associate Justice
Benjamin Cardozo swear in the Cabinet all at once, Franklin
and Eleanor presided over their first White House tea.
Guests of honor along with some seventy Roosevelts were
many of the Warm Springs patients, the proudest of whom was
Fred Botts, FDR's first "patient" and now manager of the
polio rehabilitation center there. Amazed by the contrast
offered by his experience with the Hoovers, the chief of
the secret service recalled that all of the people and the
entire atmOSphere of the big home "oozed confidence."
Finally Roosevelt retired to his bedroom and chatted over
the events of the day with his friend Louis Howe. And Time

magazine euphemistically reported: "At 10:30 p.m. he stood

up, yawned, went peacefully to bed "19

132
IV

Sunday, March 5, was a long and hectic day. By far
the most pressing issue for the President and his advisers
was banking. It would almost solely preoccupy Secretary of
Treasury Will Woodin, Moley, and others through Wednesday.
The last of the State banking holidays had been declared when
the governors of New York and Illinois finally consented in
the early morning hours of the 4th. Now all banks in America
were closed until Monday. The Old Order had collapsed.

For days Woodin had conferred with Meyer and the
Federal Reserve Board about the growing crisis. With
Roosevelt's approval, he summoned a conference of prominent
bankers and Treasury and government officials to meet Sunday
morning in the FRB rooms of the old Treasury building. Those
present for the first frenzied day of continuing conferences
included new administration members like Woodin and Attorney
General Homer C. Cummings; outgoing Treasury officials like
Mills and holdovers like Awalt and Ballantine; "money
changers" like Melvin A. Traylor of Chicago's First National
Bank and George I. Davison of New York's Hanover Bank; FRB
members and staff like Adolf Miller and economist E. A.
Goldenweiser; congressional leaders like Senator Carter Glass
and Representative Henry B. Steagall, chairmen of their
respective Banking and Currency Committees; and Roosevelt
advisers like Moley and Berle (who took the only known set
of notes). In a major decision slowly accepted by two

o'clock that afternoon, the conference recommended using the

133
1917 act as a basis for presidential proclamation of a
national banking holiday.

Beyond that proposal, already confirmed to the Presi—
dent by Tugwell, Pittman, and the unfortunate events of early
March, new ideas scarcely existed. In their desperation and
excitement, conferees spoke in circles for days. At first
Woodin recommended a "blank check" for the President, which
FDR quickly vetoed. On Sunday Mills favored "clearing house
scrip," but opinion on its use was divided. Davison, George
L. Harrison of the New York Federal Reserve Bank, and others
wanted individual deposits guaranteed. But Woodin soon
revealed "that Franklin Roosevelt wanted no guarantee of
deposits," although he did not say why. Tension and a sense
of urgency were enormous. Yet changes appeared. "The fact
that a new administration was in power was very evident,"
Goldenweiser noted in his diary. "The lines of communication
were through new channels. Professor Moley and Professor
Berle were very much in evidence."20

The pressure of the meetings sooner and later wrought
its toll of human casualties. Traylor and Woodin, for
example, both died within a year, partly as a result. On the
verge of nervous exhaustion, Berle had oral altercations with
Woodin and Moley which may have resulted in his being persona

non grata at the White House for weeks. Warburg saw him a

 

week later and recorded in his journal: "Berle was in a
highly excited state, having apparently put his foot in it

with the new administration and being very anxious to get

134
back into the ranks of the good boys. (This goes back to
last week when he flew off the handle with Woodin.)"21

Moley left the bankers' conference after only a brief
stay Sunday morning because the President wanted him to
handle other matters, among them to draft a five-minute radio
speech. This radio talk, Roosevelt's first as President,
would be an appeal to all veterans to share in the Spirit of
"cooperation" during the national emergency. Perhaps sug-
gested by Lewis Douglas, at that moment helping to prepare
the final draft of the Economy bill which would drastically
cut former servicemens' pensions, the radio chat delivered
the opening blow against the powerful veterans' lobby. It
would be broadcast on the American Legion Hour that evening.
Another item of business was the Governors' Conference
scheduled for Monday. Roosevelt and Moley had worked on an
agenda during odd moments for several days. Later that
afternoon the professor drafted the President's "informal"
remarks to be delivered to that conference.22 Although the
governors had been invited a month earlier with the aim of
investigating how to effect better federal-State cooperation
on problems like relief, the banking crisis demanded a higher
priority from FDR.

Roosevelt's day began in worship with his family and
friends together with most of the Cabinet members and their
families at the stately old St. Thomas Church. In hopes of
keeping a diary (which only lasted two days), he dictated

Sunday's key events as he experienced them:23

135

Secretary of the Treasury in conference with Bankers
and Officials all morning. Two—thirty P.M. meeting in
Oval Room with all members of Cabinet. Vice-President
and Speaker Rainey, outlining banking situation. Unani-
mous approval for Special Session of Congress Thursday,
March 9th. Proclamation for this prepared and sent.
This was followed by conferences with Senator Glass,
Hiram Johnson, Joe Robinson, and Congressmen Steagall
and Byrns and Minority Leader Snell--all in accord.
Secretary Woodin reported the bankers' representatives
much at sea as to what to do.

Concluded that forty-eight different methods of
handling banking Situation impossible. Attorney General
Cummings reported favorably on power to act under 1917
law, giving President power to license, regulate, etc.,
export, hoarding, ear-marking of gold or currency.

Based on this opinion and on emergency, decided on
Proclamation declaring banking holiday from tonight
through Thursday, March ninth. Secretary of the
Treasury to regulate partial reserves of banking facili-
ties based on liquidity clearing house certificates and
trusteeing of new deposits. Attorney General, Secretary
of the Treasury, Moley and Counsel Wyatt of Federal
Reserve Board at work on Proclamation until 11 P.M.
Hurried supper before Franklin, Jr., and John returned
to school. Talked with Professor Warren in evening.
Talked with representatives of four Press Associations
explaining bank holiday Proclamation. Five minute
radio address for American Legion at 11:30 P.M. Visit
from Secretary of State. Bed.

Some of these points deserve elaboration and others
should be mentioned. At the informal meeting of the Cabinet,
the President introduced Howe and Moley as two of his closest
personal advisers. The holiday proclamation that Cummings
later reported "favorably" upon already had been endorsed by
the bankers' conference at two o'clock.24 Also, the obscure
entry about "banking facilities" suggests that by Sunday
night the administration still had few guidelines or workable
solutions for reopening the banks. In drafting the banking
proclamation, Wyatt modelled it after the blank drafts that

he had prepared days earlier for the FRB. He, Cummings, and

136
Moley were called in to see Roosevelt, who was pleased with
their efforts. Having not yet met the President personally,
Wyatt took this chance to congratulate him on his "wonderful
speech" which had "thrillleg7 him so much." "I'm pleased you
liked it," came the delighted reply. After FDR read the
proclamation aloud and asked for corrections, the general
counsel again spoke up. Stressing the solemnity of the
occasion and of the inaugural, and the fact that it was
Sunday, he suggested dating the proclamation Monday the 6th.
"I think you are right, Walter," Roosevelt quickly agreed.25
He dated the document March 6 and finally signed it around
11:00 p.m.

After they had been assembled on the briefest notice
following his urgent request, press secretary Steve Early
ushered four members of the major wire services into the
plush Red Room at nine-thirty to see the President. "Roose—
velt was in a good humor," noticed Raymond Clapper, United

Press correSpondent of the Washington News. Shaking hands

 

all around, smiling and remarking on each man's background,
FDR turned to the proclamation. He requested they call it

a "modified bank holiday" or a "partial holiday," but not a
"moratorium." That term was identified with Hoover. He also
asked them not to use the text until it was released by the
White House newsroom at 11:05 p.m. "A11 quiet, calm, con-
genial, pleasant," Clapper noted in his diary, "no atmosphere

of tension."26

137

After dealing with the newsmen, the President saw
George F. Warren of Cornell. The latter had waited over half
an hour to discuss his favorite themes, commodity prices and
devaluation of the dollar. Earlier at dinner with his friend
and associate Henry Morgenthau, Warren had explored Roose-
velt's attitude on the "money question" and the "price
question." Morgenthau assured him that FDR, after looking
over some of Warren's charts on the "gold curves," was in
"entire agreement" with them on prices. "Warren is abso-
lutely right," Morgenthau reported his chief as saying. From
their conversation that night, Warren concluded that the
President recognized "deflation cannot be gone through with."
Hull and Moley arrived at that point, the former coming to
sign the proclamation. Roosevelt produced it and read it
aloud, saying, as Warren recorded, "with a great deal of glee
that 'we are now off the gold standard.'" Appointments
secretary Marvin McIntyre appeared and said that newsmen
wanted to know if the proclamation meant that the United
States was off the gold standard. "'Tell them to ask a
banker,'" the President shot back, "and further indicated
that that was not a matter that he wished to make comments
on." Afterwards he expressed further interest in Warren's
revaluation and "index number" ideas. Satisfied with what he
learned, Warren departed around 11:00.27

Roosevelt's conversation with Warren, in the midst of
the banking crisis, offers more evidence of his interest in a

managed currency and controlled inflation. He had intimated

138

both ideas to Tugwell by mid-1932. Early in January he
assured William Randolf Hearst's emissary that, among other
New Deal intentions, "If the fall in the prices of commodi-
ties cannot be checked, we may be forced to an inflation of
the currency." And he added: "This may take the form of
using silver as a base, or decreasing the amount of gold in
the dollar. I have not decided how this inflation can be
best and most safely accomplished." DeSpite FDR's later
choice of Douglas for the Budget Bureau, he had related his
interest in the Trading with the Enemy Act--for purposes of
controlling the domestic gold supply--long before the banking
downturn. And Warburg learned in February that Roosevelt
would be embarrassed if the question of the gold standard
was raised. Thus the evidence shows that FDR inclined toward
some form of controlled inflation before becoming President.
And his first press conference on Wednesday, as did the
Warren conversation, seemed to confirm that point. But he
kept his own counsel. Evidently he did not yet consider the
timing politically correct.28

The long day finally ended for the President with his
11:30 radio speech. To American Legionnaires and to all
veterans, he called for more of the "great ideals of sacrifice
and service." The virtues of war, he stated, were essentially
the same as those of peace. "All life is a great battle
against the forces of nature, against the mistakes and human
limitations of man, against the forces of selfishness and

inertia, of laziness and fear." In conclusion, he therefore

139
appealed to them to join him in unity. The short Speech was
broadcast without an incident.29 He retired to bed knowing

he had struck the first blow for governmental economy.

V

On Monday morning banks in every city, town, and
hamlet in the nation remained closed. The Treasury Secretary
issued a statement informing banks of the absolutely essen-
tial functions that they could perform, such as meeting pay-
rolls, borrowing for food, and providing for emergency medical
expenses. Commodity prices in New York rose sharply. Most
people improvised to meet the crisis. Detroiters used
Canadian money. Cash was plentiful in San Pedro, California,
because Navy paymasters paid $500,000 to thirty thousand
sailors. Merchants everywhere offered credit. Even Macy's
in Manhattan, the largest department store in America, did
80% business. The subways had enough change; or, as one
New York Interborough booth man put it, "We're taking the
place of them banksters."3O

Roosevelt's day was again busy. Official Washington
mourned the death of Montana's Senator Thomas J. Walsh, who
had died two days before he would have been sworn in as
Attorney General. The President attended the 10:00 a.m.
funeral in the Senate chamber, and afterwards conferred with
congressional leaders. Before leaving, he submitted several
appointments for Senate confirmation, including those of

Moley as Assistant Secretary of State and Morgenthau as

140
chairman of the Federal Farm Board. The Senate confirmed
all these immediately, then adjourned sine die. Back in the
White HOuse East Room, he delivered his prepared remarks to
the Governors' Conference. His theme remained federal-State
cooperation. But first he explained government action con-
cerning the banks. He stressed his objectives to prevent
further withdrawal of gold from the United States and to
provide an additional "circulating medium." This "new cash,"
he continued, would be safe if the public could be persuaded
to keep it in the form of cash, or to deposit it in Federal
Reserve banks, or to buy Government bonds. But he could not
specify details about this "cash."

Turning to the Conference's original purpose, he
brought up five key proposals. Federal and State governments
needed new sources of taxation, but conflicts of authority
should be avoided. On relief his remarks provided nothing
new. The federal government would "prevent anybody from
starving," but the primary duty of relief must be carried by
"the locality, the city, county, town." Only if all those
failed would the federal government step in. And this relief
work must be coordinated. Meanwhile, local government should
be reorganized and consolidated. Finally, he stated that we
must come up with a "national policy" for farm and small home
mortgage foreclosures. At that very moment Morgenthau was
working to solve both problems.31

Roosevelt left the governors and carried on with his

first day of duties in the Executive Office. Lewis Douglas

141
rushed in that afternoon with a draft of the Economy bill.
After glancing over it, Roosevelt asked him to iron out the
details. Already the President was moving ahead on his New
Deal program. Douglas left immediately, and a delegation
of inflation-oriented farm leaders became the first pressure
group to meet their smiling President. Later, a weary Woodin
came to say that the bankers' conference remained on the
shoals of indecision and had no better ideas. Still no paper-
work awaited Roosevelt. Giving up in mock despair, he rang
all the buzzers on his desk to summon the entire secretariat.
This began his daily late afternoon cocktail break, which he

soon affectionately nicknamed the "Children's Hour."32

VI

Although Roosevelt convened his first formal Cabinet
meeting at two o'clock Tuesday afternoon, some participants
conflict as to the main topics discussed. Postmaster General
James A. Farley later remembered a long discussion of foreign
policy, particularly FDR's remarks on the danger of war with
Japan. Noting the day's events in his diary, Interior
Secretary Harold L. Ickes mentioned only that the "main topic
for discussion was again the acute banking and financial
Situation, after which each of the Cabinet officers was given
an opportunity to present any problem that had come up."33

Banking still held top priority. Although there is

no evidence that the Cabinet covered it, by Tuesday morning

Woodin and Roosevelt had made a crucial decision on banking.

142
In thinking through the currency problem overnight, reportedly
strumming his zither and humming lullabies all the while,
Woodin decided to let the Federal Reserve print currency
against the assets of the banks in its own system. This will
allay fear, he excitedly told Moley at breakfast. "It will
be money that looks like money." Moley quickly agreed.
Leaving breakfast, they hurried off to the White House and
were escorted into FDR's bedroom. Putting the papers aside,
Roosevelt listened and approved. A workable plan, the use of
confidence--these ideas confirmed his own preferences. Having
gone over it the preceding evening with Moley, WOOdin had
accepted in principle the outline which Ogden Mills had
conveyed to him by letter and memorandum Saturday. But this
was the first Roosevelt heard of it. Woodin and Moley soon
departed for the Treasury to begin formulating detailed

34 By Tuesday morning, there—

measures for the bank rescue.
fore, a major presidential decision had been taken and the
way prepared for banking legislation.

What was the origin of the Mills, or Treasury, plan?
On inauguration morning Mills asked several officials to come
to his office to discuss banking. All the banks were closed
and it was obvious that responsible officials had to devise
some means to reopen them. The outgoing Treasury Secretary
therefore acted. With him were Awalt, Ballantine, Golden-
weiser, James Douglas, the outgoing Under Secretary, and

Parker S. Gilbert, a partner in the J. P. Morgan Company. A

presidential proclamation extending the holiday was a necessity.

143
These men canvassed the situation for hours, suggesting
various ideas. That afternoon, while the colorful inaugural
parade proceeded, Mills dictated a letter to Woodin. With
it he enclosed a memorandum on a "tentative outline of a
possible line of approach to the solution of our banking
problem." Awalt had estimated that 2,200 of the over 5,900
national banks were solvent and could be reopened at once.
The gist of the "Mills plan," as observers soon described it,
was to close all banks by "a national proclamation"; and to
reopen them on a staggered basis according to the degree of
their solvency.35 Goldenweiser recorded in his diary the
plan as Mills devised it Saturday:36

The plan Mr. Mills worked out as a basis for discussion
at the conference on Sunday morning was to classify the
banks into A, B, and C banks--the C banks being doomed
to failure and not allowed to reopen at all--the A
banks being absolutely sound and being allowed to
reopen very promptly and to be supplied with all the
necessary currenc from one Government agency or
another--and the B banks to be handled individually,

to be reopened on such a basis of write-down as may be
required. Purchase of preferred stock or guaranty of
50 per cent of the deposits in these banks were alterna-
tives under the plan.

Later Goldenweiser conveyed this Treasury plan to
some FRB members and staff, in preparation for Sunday's
meetings. Thus some officials knew about the plan by Sunday,
when Wyatt dictated a "Skeleton Outline" of it. But solution
of the currency problem remained unspecific. On Saturday
Goldenweiser recorded Mills' view that currency could be
issued by "one Government agency or another." On Sunday

Wyatt recorded that emergency currency would be issued by

 

up.»

 

Cy

\

144
"clearing house associations and similar organizations."37
And Berle noted on Sunday that Mills advocated scrip. The
Mills memorandum has been lost. But available primary
evidence indicates that Awalt and others were incorrect when
they later claimed that on the 4th Mills specifically con—
veyed to Woodin the idea of Federal Reserve B335 Notes38 (as
opposed to the regular Federal Reserve NoteS)--the decision
which Woodin related to the President Tuesday morning.

Until late Monday various officials and advisers had
differing ideas; but all feared that while new currency was
a necessity, scrip would contribute to public panic. Real
money therefore contained an inestimable psychological value.
Although not yet part of the inner circle, Warburg devised
one good scheme: to issue U. S. Treasury certificates in
small denominations instead of scrip. But by the time he had
interested Moley, Woodin, and Lewis Douglas, it was too late.
According to a close friend of the Secretary, on Monday A
morning Roosevelt made the bizarre suggestion that the
federal government immediately redeem all its outstanding
bonds in paper money! All of those whom Woodin told about it,
including Mills and Ballantine, quickly squelched that idea
as too inflationary.39

By late Monday afternoon and evening, the Treasury
plan was simultaneously being considered and developed on
two fronts. Working hand in hand with Woodin, Mills called

various Treasury and FRB staffers into his office to develop

the plan in concrete form. They finally decided that roughly

145
5,000 banks were 100% solvent, and at Goldenweiser's

insistence, that "Federal reserve bank notes" be issued

 

against whatever collateral the solvent banks could provide.
This would end the need for scrip. After continuous consul-
tations, their plan was in "definite concrete outline" by

about 2:00 a.m.4O

On the other hand, having had two days to
canvass the outline of the Treasury plan, Woodin and Moley
discussed the Situation alone Monday night. AS the professor
recounted it, their main concern was the public reaction to
any banking plan. Psychology was the key. So they discussed
the Mills plan and the idea of having the President announce
the final program over the radio the following weekend. When
he finally left, Moley believed the only decision left for
Woodin was whether to proceed with scrip or with the Federal
Reserve currency.41 Whether Woodin knew of the later sug-
gestion is difficult to say; but during that night he decided

for it.42

Considering the fact that Woodin, Mills, holdover
Treasury officials, and the FRB staff worked so closely
together during those days, it seems plausible that the new
Secretary had ample opportunity to obtain the plan's final
element where he got the rest of it.

Woodin, Moley, Mills, and the others Spent most of
Tuesday afternoon and night at the Treasury developing the
plan. Roosevelt approved an updated version after dinner.
By then Ballantine and others had given him a written version.

Later Wyatt called upon congressional legislative draftsmen

and stayed up almost all night preparing a draft bill for

146
Wednesday morning. Congress would meet on Thursday and the

President insisted upon presenting it with a fait accompli.

 

By Wednesday, then, emergency banking legislation was well

on its way into final form.43

VII

Even as the bank rescue feverishly proceeded, the
President fully realized that economic stagnation in America
demanded action on many other fronts. National income, for
example, had declined to less than half of the 1929 levels.
Although statistics were not yet reliable, conservative
estimates of unemployment in March 1933 ranged between twelve
and fifteen million workers or more, perhaps a quarter of the
entire labor force. Probably another 40-50% of the country,
including many farmers and small town tradesmen, barely sub-
sisted on their own labors. Already the Budget Director was
advising Roosevelt that approximately sixteen million were
unemployed, and that for each unemployed three others
depended upon him for their livelihood. Wages were so low
in many areas that several governors endorsed minimum wage
legislation. Mortgage foreclosures threatened countless
thousands of farm and home owners. The catalogue of human
misery and frustration staggered even the most hardened of
imaginations.44

From the reviving nation's capital, Roosevelt again
commanded the public's attention. Beginning a few minutes

after ten Wednesday morning, he held his first presidential

147

news conference. Although he appeared unusually nervous
beforehand, his stenographer Grace Tully recalled that he was
in good spirits. When the White House doorman announced the
"gentlemen of the press," about 125 reporters crowded in to
find the genial President leaning back in his green uphol—
stered chair, puffing on a cigarette mounted in a long ivory
holder. After each correspondent filed by the walnut desk
and received a personal introduction, FDR plunged into his
unprepared remarks. He hoped these get-togethers would be
"merely enlarged editions of very delightful family confer-
ences I have been holding in Albany for the last four years."
Then he explained his ground rules. There would be no more
written questions, although some questions might not be
answered, and no direct quotations, unless the White HOuse
issued them in writing. But he would give "background
information" and "off the record" answers. Background could
be used by reporters on their own reSponSibility, but could
not be attributed to the White House. Off the record replies
would be for the reporter's use only and were not to be
mentioned to anyone. This would allow more accuracy to cor—
respondents who continually had to Sift facts from rumors.

"Now, as to news, I don't think there is any,"
Roosevelt quipped, and the questions flew at him. The
banking crisis captured the center of attention. Detailed
banking legislation? No, the situation changed too fast from
day to day; he would have to ask for "fairly broad powers."

What kind of scrip? Maybe none, he replied; by last night

148

it looked like scrip could be avoided. But everything
changed so fast, so he wanted to avoid discussing such
"details." This was his only hint about Woodin's decisions.

Will you take a "breathing spell" after the banking
emergency Situation is settled? Yes, he replied, explaining
cautiously that the "general thought" was to try and get
through "two or three emergency matters" as quickly as
possible-~he would be seeing congressional leaders about this
today--and then Congress should recess for a matter of "two
or three weeks to enable me to work out and draft more per-
manent legislation." But he gave no more details on his
ideas or intentions for such legislation. Would the holiday
be extended? Yes. Was the United States off the gold
standard? He equivocated, deftly referring them to "my

friend Robey's" column in yesterday's New York Eveninngost.

 

Reading the entire article to them, commenting as he went,
he let them draw their own conclusions. By economist Ralph
Robey's criteria, America was off the gold standard. FDR
favored a managed currency, correspondent Ernest K. Lindley
later concluded. The President's parrying of the gold
standard question by reading Robey's column made that obvious.
"We are definitely on the gold standard," Woodin had already
stated. "Gold merely cannot be obtained for several days."
But as indicated by Roosevelt to Tugwell, Hearst's emissary,
Warburg, Warren, and others, he considered the gold standard
suspended and was on his way toward a domestically managed

currency.

149
Roosevelt further equivocated on what he had labelled
in his inaugural an "adequate but sound" currency. Many of
his remarks evoked spontaneous laughter from reporters. He

finally said that a "managed currengy," off the record,

 

"ought to be part of the permanent system so we don't run
into this thing again." On the "guaranteeing" of bank
deposits, his long explanation, punctuated with hypothetical
examples, indicated that the administration opposed it as
both financially unsound and too expensive. This is off the
record, he emphasized, because "I don't want anybody to get
the idea in reading the stories that the average bank isn't
going to pay one hundred cents on the dollar, because the
average bank is going to pay." He hedged on government
reorganization, a big issue during the interregnum. It was
10:45, time to adjourn.45
One reporter later commented upon Roosevelt's unique

and careful use of his personality. Gardner Jackson, a

liberal newsman then with the Montreal Star who had won fame

 

covering the Sacco-Vanzetti case, described the President as
a "consummate actor." His personality was not spontaneous;
it was a political instrument, Jackson remembered. "As was
his habit in press conferences, as I subsequently found to be
a characteristic pattern . . . he never answered a question
without going to great pains to dodge the heads and shoulders
of those in front of the questioner and arrest the eyes of
the questioner before answering, as he did with me. He gave

me the most beguiling smile before he uttered a word." But

150

most of the correspondents liked this approach, and they
broke into Spontaneous applause at adjournment.46

Following a round of pictures and the hurried depar—
ture of newsmen, Roosevelt relaxed and chatted with Senator
James Byrnes, who had observed the repartee. What did you
think of it, he inquired, his hand trembling as he lit a
cigarette, his Shirt and forehead damp with perspiration.
Byrnes remembered replying that he believed the reporters
appreciated the new approach. But could the President con-
tinue to endure such pressure? Roosevelt remarked that
sooner or later no doubt "my foot will slip and I will make
a damaging 'off the cuff' remark." Then he added, in a
thoughtful mood, that he had enjoyed it and found it stimu-
lating. So engrossed in the proceedings that she failed to
finish taking shorthand notes, Miss Tully later concluded
that the reporters' reactions to FDR reflected that of the
country, "a relaxation of tension and a rebirth of confident
enthusiasm." And several newsmen commented that Theodore
Roosevelt was the last President who "talked so freely."47

Other legislation claimed Roosevelt's consideration
beginning Wednesday. The Economy measure had been completed
under the supervision of the Budget Director, assisted by
Dean Acheson, Swagar Sherley, General Frank T. Hines of the
Veteran's Administration, and others. By mid-afternoon
Douglas arrived at the White House with it. Because it was

one of the mandates he had given Douglas upon his appoint-

ment, the President only summarily approved it. Draft a

151

message that will sell economy to the Congress and take Ray
Moley with you, he further directed. Douglas found him in
an adjoining room completing the writing of Thursday's con—
gressional message on banking legislation. The two labored
the remainder of the day at the Budget Bureau, finishing that
evening in the Lincoln Study, adjoined by Howe's bedroom,
upstairs in the White House.48

Wednesday evening was one continuous round of private
conferences for Roosevelt. Just after dinner Tugwell and
Wallace appeared, both excited about the former's idea for
legislating farm relief soon. Off and on during January and
February, Tugwell had urged agricultural legislation as a top
priority item when the special session convened. FDR had
been interested, but noncommittal. Now both men argued for
using the same delegation of broad powers to the executive
for farm relief as used in banking. Roosevelt sensed the
demand fbr presidential leadership, apparent to most informed
observers, which had been lacking during the lame-duck
Congress. He rapidly agreed. Again he shrewdly insisted on
the same condition that Morgenthau had outlined for him in
December: he would back whatever plan the farm leaders
unanimously endorsed. This elated Tugwell and Wallace, and
they hurried back to the Agriculture Department, where the
latter immediately made the necessary telephone calls. All
of the major farm leaders were summoned to meet in Secretary

Wallace's offices on Friday, March 10.49

152

As Tugwell and Wallace departed, Marvin McIntyre
brought in progressive Senators Robert M. LaFollette, Jr., of
Wisconsin and Edward P. Costigan of Colorado. They had in
hand their brief and vaguely written proposal for federal
control of the banking system. But they found Roosevelt full
of details about the Mills plan, now virtually complete.
Realizing that he had already made his decision, the senators
soon left, without ever presenting their proposal. Such a
national system of banking had never been considered by
Roosevelt or any of his advisers. No articulate alternative
existed to the Mills plan. Or as one Roosevelt biographer
commented upon this interview: "The very money changers
whose flight from their high seats in the temple the President
had so grandiloquently proclaimed in his inaugural address,
were now swarming through the corridors of the Treasury."50
But more important, by Wednesday night farm relief had become
his third major foray into legislation, after banking and
economy.

Shortly after eight o'clock most of the major
Democratic Congressional leaders arrived to be briefed on
banking. On hand besides committee chairmen like Marvin Jones
of Agriculture were stern-appearing Vice-President Garner who
would help lead in the Senate, white-thatched Speaker of the
House Henry T. Rainey of Illinois, and the Democratic floor
leaders and whips. Roosevelt introduced himself cordially to
all, although Jones recalled the first-name basis seemed

forced for an initial meeting. "When I come across anything

153

one of you is interested in," the President encouraged,
"speak up; don't be hesitant about it. I want the benefit of
your counsel." So saying, he began a two-hour monologue on
banking plans. Neither Jones nor James Byrnes remembered
anything being said about a congressional recess. Reporters
noticed the departing Democrats were in good humor, but
tight-lipped about what their new chief had said.51

Woodin and his Treasury retinue arrived after mid-
night to find the President still going strong, ready to
approve their draft of the banking act. They discussed it in
detail. Amidst the explanation of the bill, Senator Glass
insisted that the law be changed to provide that no nonmember
State bank could be forced to enter the Federal Reserve with—
out the consent of the State involved. Ballantine supported
Glass, and Roosevelt agreed. With Wyatt scribbling rapidly,
they worked out the new technical wording in title II.
Thanking everyone, FDR finally dismissed the group just before
three o'clock in the morning. Outside the office, a grateful
Woodin happily exclaimed to Wyatt, "My boy, you have brains
there!," and gave the embarrassed general counsel an affec—

tionate hug.52

VIII
Thursday Roosevelt turned his thoughts toward
fashioning his New Deal. While Congress hurriedly met,
organized itself, and considered the Emergency Banking Act,

he preoccupied himself elsewhere. Realizing that his banking

154

bill would be enacted, sensing that his Economy bill and the
new movement for farm relief legislation would be even more
urgent now than either had been during the interregnum, he
had decided to keep Congress occupied with his idea for
reforestation and the revitalization of youth. 50 that
morning the White House requested six administration officials
to attend a four o'clock meeting with the President.

Once the special session was precipitated, did
Roosevelt intend to recess or adjourn the 73rd Congress
before it legislated a New Deal? He told reporters on March 8
that the present thought was for a two or three-week
"breathing spell" after Congress handled "two or three emer-
gency matters." ‘Banking and economy were obviously two of
these. That evening when he approved the Tugwell-Wallace
idea on farm relief, it became the third. Did he have other
policy intentions? And if so, when did he intend to act on
those? Aside from comments on inflation, in early January
FDR had also told Hearst's representative E. D. Coblentz that
he considered farm relief the first priority, followed by
unemployment and public works, although he believed Hearst's
program for $5 billion of public works "too large at present."
Conservation, reclamation, reforestation, and subsistence
farming should relieve unemployment. And he would "balance
the budget" by effecting governmental economies of at least
$130 million and by reducing veterans' benefits approximately
$400 million. Likewise, at the end of February Roosevelt had

assured journalist George Creel that he planned striking

155
changes for a new economic order. According to Creel's
autobiography, these were:

a blue-sky law; the right of workers to organize and
bargain collectively; a drive against monopoly; the
development of our natural resources; a far-flung
social security program; the protection of bank
deposits; a federal public works program to fill in the
valleys of unemployment; soil conservation; taxation
based on ability to pay and benefits received, etc.

While some of Creel's points sound more like 1935 legis-
lation than 1933, the President-elect at the same time
intimated to Felix Frankfurter his desire to secure early
"reorganization and extension of federal public utility
control." This was not legislated until 1935 either. The
point is that by March Roosevelt's thoughts ranged far and
wide over diverse policy ideas and intentions.53
A contemporary record further reveals Roosevelt's
ideas. A few days prior to March 5 at the latest, he
pencilled a list of thirteen points. He gave this list to
Moley who filed it with his Governors' Conference materials,
later remembering that it was intended for his private
guidance on the legislative program. FDR's memorandum

read:54

1. Mobilize the Governors - See Jefferson
2. Learned Societies - Economic Agriculture
Group - etc. Tie in either straight
or thro a reconstituted board of Exec. Information
3. F.F. [Felix Frankfurter7 does not like the Thacher
Bill to expedite R.R. feceiverships.
Eastman -
4. Utilities - See Lilienthal opinion
Maltbie - Bonbright - Lilienthal
Scattergood - Bernard Flexner - Seattle man
to come together & hammer out a Federal
Utility Control

156

5. Federal Courts - F.F. is working with Geol?gg7 Norris
See F.F.
6. Income Tax - Tightening - See Memo —
Personnel - F.F. will try to find people-
write him a letter.
7. "Hidden Talents" -5The good men are
overlooked - Economist, agric. etc. Start an
Interdepartmental committee.
Standing committee of the economists of all the

 

Departments.
8. Sydney Z§i£7 Hillman - Head of Amalgamated
Clothing Workers. - Wages — hours --

appoint Group (small) now to work out ways
& means to put an objective into effect
People: FF to suggest names -
9. R.F.C. Make it aggressive
10. Ray Stevens - Came back from Siam
I.C.C. or other Com.
ll. U.S.S.R. Commission - Newton Baker -
Tom Thacher - Solic. Gen'l - Knows all about
Russia - Good commissioner or investigator
12. Dept. of Labor - See memo - Scope, etc.
13. Radio talks -
Although sketchy evidence makes Frankfurter's influence hard
to determine, obviously Roosevelt would rely upon him for
personnel recommendations. And at different times during
the interregnum, he had discussed with Frankfurter such
policies as war debts, reorganization of the ICC, federal
public utility control, and assignments for those like
Joseph B. Eastman and Ray Stevens. While the memorandum
covered diverse topics from the use of "Hidden Talents" to a
Russian commission (and confirmed Creel on taxation), "Radio
talks" represented a key point. As governor, FDR had given
radio speeches as early as April 1929, and he wrote of his

intention to continue these as late as March 1932.55

He gave
his first as President on March 6. Thus he conceived this
idea long before anyone recommended the first so-called

fireside chat for March 12.

157

In addition to these intentions, Roosevelt implied an
early program in his inaugural, when he reiterated five cam—
paign pledges: land utilization, prevention of home and farm
mortgage foreclosures, drastic reduction of government costs,
unification of relief activities, and national planning and
supervision of all transportation, communications, and
utilities. He also called for needed "safeguards" like a
strict supervision of all banking and credit, an end to
speculation with other people's money, and an adequate but

sound currency. Thus he had many policy intentions upon his

 

inauguration. The question became one of immediacy.

 

What was being done about these proposals by the time
he told reporters about a "breathing Spell"? Morgenthau had
made detailed preparations on farm credit legislation during
the interregnum, and even now he was preparing an executive
order toward that end. Within days he received the task of
handling home mortgage legislation as well. Shortly after
March 4 the President delegated Secretary of Commerce Daniel
C. Roper to prepare a securities bill to help prevent specu—
lation, and another measure to regulate all forms of transpor-

tation, notably railroads.56

Thus FDR's actions on policy
spoke louder than his cautious words. He had decided the
New Deal could not wait.

By four o'clock Thursday afternoon, Congress had
organized itself and the Emergency Banking Act had already

passed the House. Congressional organization loomed important

to presidential leadership. Democrats had safe majorities in

158
both houses. In the House of Representatives there were
312 Democrats (150 of them new members), 5 Farmer-Laborites
(who often voted Democratic), and 117 Republicans--a clear
majority of 190 for the President. The Senate contained 59,
l, and 36, respectively--a majority of 22. On a party-line
vote, therefore, the administration was unbeatable. According
to one analyst of the 73rd Congress, two other forces aided
Roosevelt: the "pressure of the emergency," and his "solid
public support."' Yet there was more. On February 28 the
HOuse Republican caucus announced it would back the new
administration "in support of legislation to better condi-
tions." The new Speaker, Henry Rainey of Illinois, favored
a Democratic policy steering committee, which Garner had
blocked. Ostensibly the nineteen-man steering committee, in
Rainey's words, returned power from the Speaker to the party.
It should provide more cohesive backing for party policies
and the presidential program. Yet the Speaker and his sup-
porters overlooked two central points: nineteen pilots made
it difficult to steer from the stern; and there might be
contradictions between party policies and the presidential
program. Thus House Democrats had unwittingly organized
themselves in such a way as to make leadership from the top,
presidential leadership, the only viable method. The Senate
organized itself more tightly, with more control in the hands
of the leadership. Nevertheless, by Thursday afternoon,
these organizations, working majorities in both houses, and

signs of Republican cooperation gave the President every

159

reason to believe Congress would be receptive to his
program.57

The Hundred Days of the special session began at a
hectic clip that morning. Because Wyatt had drafted the act,
Senator Glass asked him to prepare an outline so the senator
could carefully explain it to his committee and to his col-
leagues that afternoon. As Wyatt summarized it and Glass
explained it, title I authorized all of the week's banking
actions and proclamations by the President, and it amended
the 1917 law to meet a possible future crisis. Title II
authorized the Comptroller of the Currency to appoint
"conservators" who would expedite the reopening or the
reorganization of banks. Title III authorized issuance of
preferred stock by national banks, to be sold to the RFC in
order to provide the funds necessary for reorganization. The
fourth and fifth titles, respectively, covered issuance of
Federal Reserve Bank Notes and appropriations for the act's
immediate operation. While the House limited debate to forty
minutes and by four o'clock had shouted the bill through
(only one copy was available) without a record vote, the
Senate deliberated until after seven.58

At four-fifteen in the Oval Office, Douglas,
Secretaries Wallace, Ickes, George Dern of War, along with
Interior Department's Solicitor and the Judge Advocate
General of the Army, drew up chairs to learn why Roosevelt

had so urgently summoned them. As soon as all were seated,

he launched into an animated, moving, and eloquent two-hour

160

disquisition on the need for an army of young men to repair
and conserve America's trees. Forests needed conservation;
youths needed a "break" under current hard times; floods and
fires were hazards to the forests. At least twelve million
men were unemployed, thousands of families were on relief,
and he personally disliked "the dole." He discoursed
eloquently; the others listened and pondered. Half a million
men could be put to work in the forests and along the rivers,
FDR went on. Maybe less, if funding was impossible; but it
had to be accomplished immediately. Was this saving of young
men and trees a good idea? Affirmative nods. Could the War
Department enroll the men, feed and clothe them, and build
the camps? Dern thought so. Was there a need for such labor
in the nation's forests and parks? Wallace and Ickes were
certain of it. Could the Judge Advocate General compose a
draft by tonight? Colonel Kyle Rucker paused only a moment:
"Yes, Mr. President." Noting it was 6:15 and time for
dinner, Roosevelt sent the six men off to work out his idea.
This would keep the Congress going, doubtless as he intended
all along, and start relief projects as well.59

Shortly after dinner Roosevelt received word that
the Banking Act had passed the Senate, 73-7. "I cannot too
strongly urge upon the Congress the clear necessity for
immediate action," his Special message that morning had read.
The wholehearted response and excitement in Congress, had,
however, caused his conclusion to be overlooked. "At an

early moment I shall request of the Congress two other

161
measures which I regard as of immediate urgency." One of
these was economy in government. Was the other farm relief?
He kept his own counsel. "With action taken thereon we can
proceed to the consideration of a rounded program of national

60 Now it appeared that civilian conservation

restoration."
would be another part of that program.

At nine o'clock the same six from the afternoon
meeting gathered around the Chief Executive's desk. Rucker's
bill was read over and discussed. If all went as envisioned,
it would employ 500,000 young men in the forests by summer.
The conversation was easy and informal. Roosevelt was
obviously pleased with his handiwork, as well as Rucker's.

He instructed them to carry on with the bill and with plans
to implement it. After more discussion, the men chatted and
smoked. At 10:30 the President was wheeled out to meet con-
gressional leaders to explain tomorrow's Economy bill.61

Roosevelt's motivation for sponsoring civilian con-
servation was at once multiple, longstanding, and improbable
of accurate definition. Of his love and concern for trees
and their conservation there is little doubt, particularly as
manifested during his long rehabilitation from polio at Warm
Springs. As many observers and contemporaries noted, he had
a genuine humanitarian concern for the economic underdog. As
governor, he had established a program involving 10,000 young
men in tree-planting which Morgenthau had recommended and

carried out. And he had mentioned the civilian conservation

concept during the presidential campaign. Eleanor Roosevelt

162

later maintained that Franklin had talked for years in
"desultory fashion" about the value of outdoor work for boys.
But by 1933 the idea had other sponsors. Feeding, clothing,
and caring for thousands of young people on army posts as a
relief measure had been proposed and publicized in January
and early February by Michigan's progressive Republican
Senator, James M. Couzens.62

DeSpite the background, however, in one sense timing
was Significant. The crisis mood of Congress and the country
in.March catalyzed Roosevelt's thinking toward civilian con-
servation. In addition, possibly it would serve to open the
doors to a New Deal legislative program. As usual, he had
not thought through or worked out in any detail even the best
of his ideas. "It was characteristic of him," Frances
Perkins later commented, "that he conceived the project,
boldly rushed it through, and happily left it to others to

worry about the details."63

IX

Promptly at 9:00 Friday morning, a smiling Lewis
Douglas arrived at the President's bedside for their daily
morning conference. He brought the final draft of the
economy message to learn if Roosevelt had any last minute
changes.

"Now, Lew," he remembered the President saying, "I
want authorization to Spend $200 million on the civilian

conservation corps." Apparently Roosevelt had decided to

163
move ahead even faster than he indicated in Thursday's
meeting.

"Mr. President, I cannot put that in," Douglas
protested, in his characteristically personable way. "You
cannot go to Congress and be seen to be driving in two
opposing directions at once." Your message states, the
Budget Director further recollected saying, that we need a
very drastic Economy Act to preserve the credit of the govern-
ment. So you cannot ask for relief appropriations in the
same message. "Congress will simply laugh and not do both."
A quizzical look on his face, Roosevelt's steel-blue eyes
fixed upon an intent Douglas.

"Lew," he finally said, "I think you are right."

They proceeded to go over the message, with the President
changing only a word or two. The CCC idea would be set aside
for a few days. Other business was still more imperative.64
In the meantime, drafters in the War and Interior Departments
worked as rapidly as possible. Roosevelt's course was becoming
clear. Once CCC was ready, there would be no time for a
"breathing spell."

The psychological impact of Friday's economy message
and bill, Moley later said, was electric. Roosevelt asked
for broad executive powers to reduce federal spending on "pen-
sions and other veterans' benefits" as well as on salaries of
"civil and military employees of the Government." In the
words of the Budget Director, FDR warned that "Too often in

recent history liberal governments have been wrecked on rocks

164
of loose fiscal policy. We must avoid that danger." But
the impact was less than electric upon the House.

Roosevelt's party rallied behind him with mixed
emotions. Word quickly came back from Joseph W. Byrns, the
Tennessee Democrat who was floor leader in the House, that
he would introduce the bill if Saturday's ten o'clock caucus
approved by a two-thirds vote, even though he had to "Swallow
a lot to do this for you." Saturday afternoon Douglas
telephoned that a "couple of errors" still existed in the
bill, but these should be corrected later lest administrative
amendments open the floodgates to compromise. In fact,
Mdthout FDR's aid, House leaders passed the bill late Saturday
by means of parliamentary maneuvering. That morning in the
Democratic caucus an unruly majority had backed a liberal
amendment to limit all cuts to 25%. A two-thirds majority
was necessary to bind the caucus, but it failed. Since there
was no other business yet, Byrns and the leaders cleverly
sent the bill to the floor for immediate action. There
Republican support strengthened the Democratic leadership's
hand. After limiting debate to two hours and ruling out
amendments, the leadership forced a vote. They won, 266-138,
because of Republican votes. Voting for economy were 197
Democrats, mostly conservatives, and 69 Republicans. Voting
against were 92 Democrats, including liberals like Gordon
Browning of Tennessee and Fred Vinson of Kentucky, 41 Repub-
licans, and all five Farmer-Laborites. Democrat Cliff

Woodrum of Virginia sounded a prophetic warning toward the

165

end of debate: "when the Congressional Record lies on the

 

desk of Mr. Roosevelt in the morning he will look over the
roll call and from that he will know whether or not the
members of his own party were willing to go along with him
in this great fight to save the country." A persuasive
appeal to new members especially, it turned the tide. All
indications were that the Senate, organized more tightly,
would follow suit next week.65

By the time he delivered his economy message on
March 10, Roosevelt's attentions typically were concentrating
on other matters. For example, he later recalled his decision
that day to explain the banking crisis on the radio Sunday
night, and he had to meet the Cabinet and the press in the
afternoon.

Although the 2:00 Cabinet meeting lasted two hours,
already it was becoming apparent that the President's real
advisers were elsewhere. A long discussion ensued about the
banking operations, by now old news to Roosevelt, and on the
international situation. On the latter, Ickes simply recorded
that members talked about "the attitude" the United States
should adopt toward being represented at the forthcoming
Geneva Disarmament Conference and had "some discussion of our
relations with Japan." But for the most part FDR still
focused little energies or attention on foreign affairs.66
During his press conferences throughout March, for example,
he carefully avoided commenting on them. His four o'clock

conference, like the Cabinet meeting, was confined largely

166
to banking. Although he did not announce his intentions to
broadcast, almost everything he explained about banking would
be repeated over the radio Sunday night. Nothing was asked
or explained about the Economy Act. The only comment about
other legislation: his next message was "not ready yet."
And he said nothing about a congressional recess. But judging
from the Iimgé account of his day, this fifteen minute session

produced another colorful and highly successful performance.67

X

George S. Peek and a few others arrived in Washington
Thursday night for the March 10 meeting of approximately
fifty representatives of farm organization, editors of farm
newspapers, and other friends of agriculture. Since the
December conferences had approved the gist of the domestic
allotment plan, production control was no longer an issue.
Indeed, many of the conferees had already discussed and in
principle agreed upon a broad grant of executive power to an
agricultural administrative agency, thanks to their reading
neWSpaper reports of the same idea as used in the Banking
Act. With the spur of the emergency, and under the direction
of Wallace and Tugwell, they formulated a report in the
surprising time of less than thirty-Six hours. This report
outlined much of the later law.68

Sober-faced and worn out, the farm conferees filed
into the President's office Saturday afternoon. Wallace and

Tugwell introduced each representative to Roosevelt, who

167

spoke for three or four minutes on the emergency needs of the
farmer, which now had only to be converted into legislation.
"He was all smiles and warmth, and yet he had a degree of
seriousness," recalled an impressed Wilson. "He had the
mixture just about right." When FDR finished, the report was
read aloud. He offered no suggestions. Wallace and O'Neal
each spoke briefly on the emergency situation. The organiza-
tion presidents, evidently also quite impressed, all pledged
their support. Thanking each man personally, the President
delegated to Wallace the bill-drafting process, and the
meeting quickly adjourned so the real work could begin.69

No time was wasted in completing the bill. Within
hours of the March 11 meeting, F. P. Lee, active as a legal
consultant and legislative draftsman during the 1920's, and
Mordecai Ezekiel, Wallace's assistant, began work. Using
the group report as a guideline, along with Ezekiel's recent
version of the Jones farm bill (passed during the interregnum),
the two men consulted Peek, Bernard Baruch, and Hugh Johnson,
as well as South Carolina Senator Ellison D. ("Cotton Ed")
Smith and Marvin Jones.7O Roosevelt and Wallace employed the
twice-used device of an omnibus measure with broad executive
power for its administration to solve the impasse between
drafters and consultants over methods. For example, Jones
declared that acreage rental agreements by themselves would
solve the emergency. Johnson, backed temporarily by Moley,
who also distrusted the entire domestic allotment plan, wanted

to have the bill emphasize Peek's ideas for leasing and for

168
marketing agreements with agricultural processors. Baruch
and Johnson opposed both the concept of a tax on farm
products at the point of processing and the discretionary
grant of power to the secretary of Agriculture. On March 15
and 16, Wallace took the issue to Roosevelt, who decided in
favor of the Secretary's multiple approach. But various
minor changes in language placated the Baruch faction, an
important point because only he and Peek seemed to possess
the necessary prestige to win processor support for the bill.
Tugwell noted in his diary that the final draft amounted "to
the suspension of the anti-trust acts for the food industries
with broad regulatory powers lodged in the Department of
Agriculture."71

On the afternoon of March 16, with Wallace, Tugwell,
Moley and others present, Roosevelt wrote his Special message
and submitted the farm bill to Congress. Thus agricultural
adjustment became the fourth major administration proposal
sent to Congress--the third having been legalization of beer,
recommended threedays earlier. By the 16th, therefore, the
President had proceeded well beyond the "two or three
emergency matters" he mentioned on March 8.

By Saturday, March 11, the bank rescue had succeeded
to the point of a public statement by the President. This
merely repeated what he had told reporters "off the record"
on Friday. But the White House also announced that he would
Speak over "national radio networks" at ten o'clock Sunday

evening. And the statement emphasized, as he had to reporters,

169
that people should not infer that banks opening later than
Monday were any less sound than those opening immediately.72
It was still very much a crisis of confidence.

The origins and development of this first major
Roosevelt radio broadcast are diverse and complicated.
Memories conflict. FDR had used the radio as governor, had
indicated, most likely by March 4, his private thought of
using the radio as President, and had broadcast a brief
economy appeal on March 5. Moley recalled discussing a
"man-to-man" presidential appeal with Woodin Monday night;
but it is not clear whether they recommended this Tuesday
when they secured approval of the Treasury plan. Later that
afternoon, however, Woodin, Ballantine, and banker George
Davison brought the President a written summary of this plan,
drafted by Ballantine (and later found in his papers by
Moley). Roosevelt's notations on its margin suggest that it
became the basis of Sunday's broadcast.73 He once recounted
that on Friday, evidently the day of decision, he asked
"three or four gentlemen connected with the government" to

74 Two of these turned out to

give him ideas for the speech.
be Ballantine and Charles Michelson, veteran "ghost" writer
of the Democratic National Committee. Here the participants
disagree. Writing in 1944, Michelson stated that he wrote
the version which he believed Roosevelt used. Shortly there-
after Ballantine denied this, telling how he took Michelson's

technically deficient work and redrafted it entirely.

Actually, a minor Treasury official, W. R. ("Bud") Stark,

170

75

assisted him. This speech went to the White House late on

Saturday. In After Seven Years, Moley wrote that his "sole

 

contribution was a hurried checking over" of the final speech
Sunday.76
Awalt also added his recollections. In the presence
of Woodin, Howe, and Adolf Miller, on Saturday night Awalt
listened to Roosevelt read the Speech. When asked for their
reactions, Woodin said great, Miller said excellent. But
when Awalt volunteered that the speech promised to open only
"sound" banks with no exceptions, Roosevelt tersely stated
that to "open only sound banks" was exactly his intention.
Awalt knew this was not 50.77 Evidently FDR rewrote the
Treasury's "scholarly, comprehensive draft" Sunday afternoon,
adding his own plain-spoken, folksy effect. Curiously enough,
it was one of the few major speeches since 1928 that neither

Moley nor Samuel I. Rosenman helped prepare.78

In any event,
two points are clear. The basic idea for the speech and the
final words both belonged to Roosevelt. And he understood
what the technicians did not: confidence was what counted.
The President went on the air as scheduled at ten
o'clock. But since the reading copy was lost, or taken,
minutes before airtime, he simply took a mimeographed press
copy, adjusted his pince-nez, and began. There in the
Diplomatic Reception Room several friends sat nearby and
watched him read, nodding his head, smiling. Wholly absorbed,

as if talking directly with his audience, he later wrote one

listener that while reading "I tried to picture a mason at

171

work on a new building, a girl behind a counter, a farmer in

his field." Appealing in his friendly, personable way, he

explained the banking situation in graphic and persuasive

terms. Banks invest money, he said, and currency is only a

small fraction of their deposits. What happened in February

and March was that the public's "undermined confidence"

caused such a rush for currency that even the "soundest

banks" failed. Therefore, he proclaimed a bank holiday;

Congress gave him authority for that holiday and a "program

of rehabilitation"; and the Treasury issued a series of

regulations for emergency operations. Reopened banks, he

implied, would be even better than before. They would begin

to reopen tomorrow in Federal Reserve cities. All those that

opened had already met the government's "common sense check-

ups." State and national banks would be licensed by the

Federal Reserve system. "I can assure you that it is safer

to keep your money in a reopened bank than under the mattress."

He needed their support. In conclusion, he reiterated his

theme, as stated in the inaugural:79

After all, there is an important element in the

readjustment of our financial system more important
than currency, more important than gold, and that is
the confidence of the people. Confidence and courage
are the essentials of success in carrying out our
plan. You people must have faith; you must not be
stampeded by rumors or guesses. Let us unite in
banishing fear. We have provided the machinery to

restore our financial system; it is up to you to
support and make it work.

 

 

Once the speech was successfully delivered and the

ever-present photographers departed, Rosenman, Howe, and two

172

or three others conversed amiably with the President in his
office. Around 11:30, without warning or preface, he sud—
denly announced: "I think it's about time the country did
something about beer." He pushed a button for a secretary
and asked for a copy of the Democratic platform. While the
others watched in silence, he perused it for some minutes.
Near midnight he dictated a short message for Congress on
the legalization of beer. It paraphrased the platform,
asking fOr immediate modification of the Volstead Act.
Apparently there was no discussion, no questions asked, no
information volunteered. "And then he went off to bed with
the subject off his mind," Rosenman explained in a speech two
'weeks later. Roosevelt sent this Special message to Capitol
Hill Monday morning.80

Why the President acted precisely when and how he did
on beer seems a difficult question. Evidently made without
consulting anyone, the decision related in one sense to the
Economy Act, which had already passed the House. The Literary
Digest postulated that "there is general agreement that it
was the budget—balancing possibilities of beer that counted
most." Estimates of new tax revenue ranged from $100-150
million. In addition, some contended or implied that
Roosevelt used beer as a stick, or carrot, to push economy
through the Senate. Indeed, on Monday afternoon the Senate,
after the beer message had been received, passed a test vote
on economy, 60-20. This did not happen, however, until

after the White House sent word through majority leader

173

Joseph Robinson of Arkansas that a 10% limit on the bill's
cuts was unacceptable. And the House, after Saturday's
bitter intraparty struggle, definitely pulled together behind
the 72-word beer message. But Roosevelt had decided to
recommend beer Sunday, before the Senate difficulties.81

There are other reasons for Roosevelt's decision.
Undoubtedly beer was a popular issue. The Democratic party
promised "to legalize beer at the earliest possible moment,"
Speaker Rainey told reporters on March 5. He hinted that
this might come as early as March 20, the third Monday of
the month, a day always set aside for the House to suspend
its rules and to act on important matters ahead of schedule.
FDR would have been familiar with Rainey's pledge; it was
the platform pledge and he had listed it as an administration
objective in November and December 1932. Also, he knew that
3.2 beer passed the House during the lame-duck session,
failing of enactment only because the Senate clung stubbornly
to its amendment for 3.05% alcoholic content. By early
1933 legalization of beer and repeal of Prohibition were;

82 Thus if revenue

nationally publicized and popular issues.
and the carrot-and-stick were two reasons, leadership was a
third. Roosevelt most likely led to keep from being led.

And though it seems improbable, Since Rosenman's speech did
not mention the context of the decision, there may have been
none. FDR was perfectly capable of deciding to act on beer

on the spur of the moment, not relating it to revenue,

economy, or leadership.

174

Given the context of the preceding week, however, a
likely and simpler answer emerges. Roosevelt intended to
keep Congress going; so he supplied them with legislation.
He needed time. AAA and CCC were not yet ready.

Staccato federal government action unrolled in eye-
opening fashion during Roosevelt's second week. Monday
witnessed the successful Senate test vote. On Tuesday the
House ignored lobbies like the once-powerful Anti-Saloon
League and voted for beer, 316-97. Urged on by conservative
leaders like Baruch, the Senate passed economy on Wednesday,
62-13; and on Thursday it legalized 3.2% beer and wine,
43-30. Fast action had beaten the powerful lobbies of the
prohibitionists and the veterans, although the latter would
reassert their unbroken power in June. In the meantime,
presumably solvent banks reopened in the twelve Federal
Reserve cities on Monday, in 250 other large cities on
Tuesday, and elsewhere across the nation in the days and
weeks that followed. Also on the first day of the week, the
Treasury offered an $800 million bond issue for sale (but at
the relatively high interest rates of 4 and 4%%) and it was
oversubscribed that same afternoon. Reopened banks, deposits
of money, a sell—out bond issue, strongly favorable votes in
Congress--all these and more indicated the receptive,
yearning, demanding, leadership-starved social context of
the times. Promptly adding more fuel to the engine of
government, the President sent his farm relief message to

Congress on Thursday.83

175
XI

National reaction to Roosevelt's broadcast and first
week and a half in office proved primarily favorable. With
his California Banks of America opening, and with deposits
exceeding withdrawals by over $1.2 million on Monday and
Tuesday, A. P. Giannini reported to the White House: "I
found everywhere high commendation of the President's Sunday
speech and of the constructive action taken by him." "Every-
body is amazed at the faith with which the populace accepts
the re-opening of the banks," commented Mrs. Eugene Meyer,
who usually mirrored the Republican opposition. "Nobody is
more surprised than the bankers themselves." A Kansas City
businessman wired the President to say that "banks reopened
here in amazingly quiet fashion." The "public hysteria" was
over, he added, and the "speech made a profound impression."
Indeed, faith in the new President expressed itself through
some 450,000 letters in the first week alone, over 500 times
Hoover's weekly average. "Every Washington observer reports
an electric change in the atmosphere of that city since

Mr. Roosevelt took office," reported the New Republic.

 

"Tension completely relaxed, papers turning to light news
again," Raymond Clapper recorded in his diary Friday, "little
bank news, nation-wide confidence, Happy Days atmosphere."84
During the first week and a half the bank rescue had
helped spur the return of nation—wide confidence. This in

effect turned the corner of the Hundred Days, giving Roose-

velt the prestige and support needed to carry through his

176

legislative program. Yet confidence had begun to return
much earlier, according to newspaper accounts and some
observers. It had been inspired by FDR's courageous and
casual shrugging off of the Zangara assassination attempt in
Miami during mid-February. After that incident, Ernest K.
Lindley later pointed out, the "nation seemed to realize
what it had only vaguely felt, that, whatever his weaknesses
and strengths, he was democracy's last hope."85

What had presidential leadership accomplished? The
inaugural oratory about the safeguards on banking, the
national holiday, the use of "money changers" and their
allies to restore the financial system, the Emergency Banking
Act, and particularly the radio broadcast-—all contributed
to the bank rescue. While it is true that the Treasury plan
and personnel likely would have been used by any Democratic
president, nevertheless Roosevelt's charisma and image
helped create an entirely new atmosphere. Saving the banks
was the first theme of this period.

The second theme was fashioning a legislative program.
Economy was popular in both parties, notably with Eastern
and conservative Democrats. Any President may well have
initiated such an act. But since Lewis Douglas had it all
but prepared by March 4, Roosevelt could proceed immediately.
Farm relief was also a necessity to any Democratic leader,
as attested to by the interregnum efforts on its behalf.
Again, FDR acted. He approved a farm leaders conference on

March 8 and submitted his message and bill on the 16th.

177

Civilian conservation reflected his own conceptions almost
entirely, if any New Deal idea ever did. But it was hardly
an "emergency matter." Although beer represented another
popular issue which any Democrat likely would have endorsed,
it was not an emergency item either. Instead, it would gain
time needed for other policy preparations. He had dealt
with all these policies by March 16, and more. Already
advisers and subordinates were drafting measures for farm
credit, government reorganization, securities reform, and
railroad and transportation regulation. And preparations
for direct federal relief were under way--a result of
Roosevelt's initiative on CCC—-by the time he pencilled his
farm message.86

Did Roosevelt intend to recess or adjourn Congress
after "two or three emergency matters"? In his fourth press
conference on March 17, he revealed his more recent public
view on continuing the special session. The original plan
of March 4 and 5, he remarked, was to have Congress deal with
only "four or five" emergency matters that could not wait
until January 1934. But along.about "three days ago" (pre-
sumably the day after his beer message), he had begun to
take up the question with representatives and senators of
whether to continue the session. Since they were already in
Washington, the "majority preference in Congress" favored
staying on and finishing the job by April or May, if the
administration could "anticipate" the needed legislation.

Then he gave examples of legislation he would "anticipate":

178

railroads, prevention of Speculation, banking, a larger
relief program, and "probably" public works.87 While he did
not say so, the "breathing spell" had been polite fiction, a
political cover in case needed legislation could not be pre—
pared as fast as he hoped. On March 16 his policy intentions
became a public decision. His involvement in formulating
legislation comprised the second theme of the period.

Roosevelt's program of "action, and action now"
coupled with vigorous presidential leadership became his
answer to restoring confidence, the third interrelated theme.
Growing rapidly into the presidency, establishing himself as
the national leader, building the broadest possible base of
public and political support, Franklin Roosevelt led. In
fact there was little alternative to such action amidst the
yearning and demanding social milieu of March 1933. The
result was a nation inSpired.

Yet if the public atmosphere was already one of
"Happy Days," it was misleading. Every class of people sup-
ported emergency banking, economy, and beer, cautioned the

New Republic. But now class interests would diverge because:

 

In his remaining legislation--with regard to farm
relief, banking reform, power, unemployment and the
railroads--Mr. Roosevelt will have to decide between
the interests of different groups and communities--
between big bankers and little ones, between all
bankers and their depositors; between farmers on the
one hand and packers, millers, and bakers on the other;
between investors and consumers, labor and management.

Perhaps many of those who cheered him for his first three

successes "will soon be sneering at the greatest President

179
since Hoover."88 While the nation was inSpired, the Hundred
Days had barely begun. The next formidable task would be
to fashion a domestic New Deal program and somehow create

what Tugwell would call a concert of interests.

CHAPTER V

FORMULATION OF THE DOMESTIC PROGRAM

President Roosevelt seemed in no mood to give
correspondents much information on recent domestic policy
developments. His 12th press conference on Friday after-
noon, April 14, portended a developing pattern. Reporters
ranged over every topic of current interest, except the
forthcoming visits of foreign dignitaries. But in most cases
the presidential response was carefully evasive. When one

reporter asked about Arthur Krock's New York Times column

 

speculating on administration plans for government reorgani-
zation, he replied blandly: "I don't know anything about
it." To another question, he remarked that ratification of
the St. Lawrence Seaway Treaty might be on his program, but
that it was "none of his business" since it would be handled
entirely on Capitol Hill. After some desultory responses

to questions over federal-State costs, he said that he and
Colonel Hugh Cooper only talked about the possibility of
"selling things to Russia," like machinery and various
materials. But even this was "off the record," and he denied
that they had talked about diplomatic recognition. Perhaps
he silently noted that Henry Morgenthau, who wanted to sell
the Farm Board's surplus wheat to the U.S.S.R., had checked

180

181
for him and learned that such sales did not constitute
recognition.1

The questioners shifted back to domestic policy. The
President would not answer "categorically" as to whether he
favored a Federal minimum wage law, although even nOW'COH-
gress was considering amendments to the Black thirty-hour-week
bill. As he explained it, "fair employers" who paid good
wages represented about "85% or 90% of industry." But the
remaining five to ten per cent could prevent a voluntary
agreement by simply not cooperating. If constitutional, he
would favor legislation along voluntary lines. Reporters
continued, perhaps in frustration over his vague responses,
to change the subject. Public works? "No, I haven't done a
thing on it." Would he forestall inflation of the currency
with a building program? He would not put it that way. How
would you put it? "I won't put it at all. (Laughter.)" He
refused to comment on Will Woodin and banking, Adolf Berle's
recent appointment as counsel to the RFC, government funding
operations, and the $500 million Wagner relief bill.

What did he know about current reports of the
"mobilization of private industry"? Only what he read in the
Timgg, came the casual reply. Did it put ideas into your
head? "Yes, it is fine; it is all right. (Laughter.)"
"Professor Moley probably has not reported yet," injected
one reporter. "It is his plan." Within two minutes the
session adjourned. Because of Roosevelt's evasiveness, press

conferences were becoming less and less informative.2

182

Industrial recovery suggests this trend. The Presi—
dent had avoided comment on it. "ROOSEVELT ADVISERS DRAFT
PLAN TO MOBILIZE INDUSTRY," declared the boldface headline
over Krock's column explaining purported administration
plans. The concept he elaborated proposed a 1917 War
Industries Board type agency to regulate business competi-
tion, hours of work, and minimum wages. Attached was a
massive public works program to counter deflationary policies
since March, now said to have curtailed $7 billion in pur-
chasing power. Krock portrayed Raymond Moley as "sold on
the idea." "If this is true, then its adoption is but one
step away, since there is no adviser in whom the President
reposes more confidence."3 In reality Roosevelt probably
refused comment because he had made but scanty beginnings on
industrial recovery.

The major theme since the middle of March was the
formulation and enactment of the President's domestic pro-
gram. Yet he had achieved only mixed success by mid—April.
While the Economy Act had passed on March 20 and the Civilian
Conservation Corps on the Blst, farm relief——now with farm
mortgage provisions as title II—-and securities legislation
crept along at a snail's pace in comparison. In fact Con-
gress had virtually stalemated the agricultural adjustment
bill because of the many demands to attach inflationary
schemes. But once having occupied Congress with beer and
then AAA, the major program of the Hundred Days, Roosevelt

acted on other fronts. He recommended creation of a

183
Tennessee Valley Authority and a Home Owners' Loan Corpora-
tion. Long-promised and widely speculated, railroad reform,
tariff reduction authority, and war debts funding legislation
all were presumably on the way. In foreign affairs, he
enlarged upon his "good neighbor" policy in an April 12
speech at Washington's Pan American Union. It was an
encouraging prelude to the arrival of representatives from
eleven nations to hold preliminary conversations on the World
Economic Conference, now set for June.

Spring scented the air in the nation's capital, the
pressure-packed days of.March had disappeared like yesterday's
storm, and a national and international New Deal seemed in
the offing. "The willows, so newly green," commented an
enthusiastic Georgia Lindsey Peek, "were as beautiful as the
cherries themselves, and many magnolias, white and pink,
added to the picture." Washington and the New Deal were

beginning to bloom.4

II

Foremost in Roosevelt's program of domestic legisla-
tion (preceded in time only by the Emergency Banking Act)
was the act "to maintain the credit of the United States
Government"-—popularly known as the Economy Act. As with
E. D. Coblentz in January, FDR spoke with "deep sincerity"
on the subject of governmental economies, concluded historian
Arthur M. Schlesinger, Jr., because his "fiscal notions were

wholly orthodox. He saw little difference so far as budgets

184
were concerned between a household or state government on
the one hand and the federal government on the other." The
President viewed economy in government as a backbone of the
early New Deal, surpassed in importance during the Hundred
Days only by AAA. Favorable comments on the value of economy
studded his public statements, congressional messages, and
private correspondence. For example, AAA'S processing tax,
a restrictive and regressive financial device, sought to
make that agency self-financing. It thereby at once
reflected his campaign promises for budget balancing, AAA's
close relationship to the Economy Act, and his general

fiscal conservatism.5

In this vein he approved the Budget
Director's March 18 CBS Institute of Public Affairs broadcast
entitled "Economy and Human Values." When his wartime chief
Josephus Daniels urged him to issue a public statement to
check State governments' campaigns to reduce the already
miserly incomes of teachers, Roosevelt cheerfully responded
that "In most parts of the country the past decade has seen
a very large increase in teacher's salaries, and even if all
teachers were cut 15% like government employees, they would
be getting relatively more than in 1914!"6
During luncheon on Monday, March 20, Roosevelt signed
the Economy Act and sent the pen to Lewis Douglas. The act's
major provisions repealed existing laws relating to benefits
for World War and Spanish-American War veterans and author-

ized the president to establish a new system within broad

limits; reduced Civil War pensions by a flat 10%; reduced

185

salaries of senators and respresentatives from $10,000 to
$8,500; and authorized the president to reduce all other
federal salaries up to 15%. Early estimates were that over
$500 million would be saved during the remainder of fiscal
1933 and for 1934, about three-fourths of which would come
from veterans' compensations. Four groups were entitled to
government pensions: all veterans with service—connected
disabilities; all veterans with Egg-service-connected disa-
bilities from all wars since the Civil War, if the disability
was permanent; widows and children of men who died from
service-connected injuries; widows and children of persons
who served in any war Since the Civil War, except the World
War. Maximum and minimum allowances under the act remained
at ranges of $6 to $275 per month in case of disability, and
$12 to $75 in case of death benefits. AS had been demanded
by reform groups for years, the act correctly struck hardest
at the Egg-service-connected disability allowances of World
War veterans. The administration expected that they would
lose approximately half of the $400 million added to their
category since the armistice. Douglas ardently contended
that these benefits were unethical.7

Reactions to Roosevelt's governmental economy
measures were mixed, but generally favorable. Surprisingly
enough, the so—called "veterans' lobby," which descended on
(or emerged from) Washington and vociferously opposed the
bill during its quick four-day congressional journey, repre-

sented less than a majority of former servicemen. The

186
American Veterans Association and several State posts of
the American Legion, prime supporter of the lobby, actually
backed economy, according to the Timgs. Although the

Literary Digest did not print a press sampling, several

 

influential journals backed the proposals. Perhaps repre-
senting moderate and conservative opinion in referring to
non-service-connected benefits, the Nation, while unconvinced
of the wisdom of delegating vast authority to the President,
concluded that the "best thing about the measure is its
assertion that an end has at last been made of the scandalous
draining of public funds into the pockets of persons who.

have no legitimate claim upon it." But the New Republic,

 

in a more balanced context, cheered the administration for
lopping off some of the $400 million increase, won by "hog-
trough principles," from allowances for diseases that were
never disabling. On the other hand, the journal reiterated
its concern over FDR's vacillation on public works.
"Eventually credit itself is based on buying power--and the
effort to maintain one while neglecting the other is like
mending a church steeple while a flood is licking the
foundations."8
Personally sensitive to restrained criticism that his
programs were thus far deflationary, Roosevelt officially
delegated the implementation of economy almost entirely to
the Budget Director. He continually referred reporters to
Douglas on any and all economy-related questions, like those

on the new veterans regulations and civil service changes.

187
On one occasion he conceded to the press that cutting
"nearly a billion dollars" off government payrolls meant an
equal loss in the flow of money; or in other words, "That
is deflationary." In early April when he wrote Colonel

Edward M. House, the old Wilsonian eminence grise, he praised

 

the Economy Act and described Douglas as the "greatest 'find'
of the administration." Then he added that too much "defla—
tion" had taken place. "It is simply inevitable that we must
inflate and though my banker friends may be horrified, I am
still seeking an inflation which will not wholly be based on
additional government debts." In the meantime, Douglas
drafted White House replies to complaints about the cuts from
activities like departmental research, prepared with General
Hines of the Veterans Administration the new regulations for
curtailed veterans' benefits effective July 1, worried about
Congress revolting and emasculating the economy program, and
generally, in his personable manner, absorbed all criticisms
from within and without the administration for fervently
carrying out FDR's program.9
Criticism gathered force by late April and May,
notably over whether married women supporting families should
be cut from civil service rolls and over veterans' reductions.
Still, on April 12 the President proudly announced that the
Budget Bureau's most recent estimates showed that over one
billion dollars would be saved in fiscal l934--a total of 31%

in slashes, 6% over his famous Pittsburgh pledge. Aside from

veterans' reductions, these estimated economies would prune

188
$80 million from the Army, $45 million from the Navy, $75
million each from the Post Office and federal salaries, and
another $100 million through departmental reorganization.
Even though he and Douglas would be forced to consider
amelioration for ex-soldiers' allowances by May 10, coincident
with the march to Washington of the second "bonus army," the
President remained determined to uphold his economy in govern-
ment programs. Indeed, the Economy Act became his crucial
lever for patronage applications. To whether the senator or
representative had backed Roosevelt before the convention,
the White House added a new query: "How did you vote on the

economy bill?"10

III

Having announced to the press on Friday, March 17,
that he intended to keep Congress in session until his pro-
gram was complete, Roosevelt spoke at length and privately
with Moley on Saturday about the remainder of the domestic
program. The professor recalled noting that the banking
crisis, his major assignment for the first two weeks, had
ebbed. Now he was thinking of returning full-time to academic
life at Columbia and Barnard where his classes were already
being scheduled for the fall semester. But as he had done
in November and February, FDR persuasively pointed out that
he still wanted and needed his counsel and assistance on
personnel, legislation, messages, and state papers. "Well,

don't forget you're enlisted for awhile more, anyhow," Moley

189
remembered him saying with infectious optimism. "At the rate
we've been going, a lot of things can happen to make you

11 Perhaps this expression of confidence

change your mind."

was all that Moley needed. In any event, he remained loyal.
Roosevelt then turned to the matter at hand, planning

the legislative program. Moley came prepared. He recalled

perusing several memoranda submitted by experts, advisers,

and other interested persons. He had selected as a basis of

discussion one prepared the previous November by Adolf Berle.

Having studied and been impressed by this comprehensive plan

for a domestic program, Moley began to outline it. But he

found that his chief already possessed similar ideas. After

some discussion, FDR dictated the items he believed deserved

top priority as of March 18. Labelling these "Several Musts,"

Moley jotted in his notebook "Three things to bring up

w41ithou£7 messages": an arms embargo, the World Court, and

the St. Lawrence Treaty. Then he listed the items they

decided to send to Congress accompanied by special messages:12

CivliliaE7'C.C.

Farm & Home Mortgage

"Bank Abuse" Bill w. Reforms

Bank [Erossed out

Stock Exclhange Bill

Regulation of Corporations

Make Simplify of Bankruptcy?

Railroad Bill(s)

Muscle Shoals Bill Norris
on or off gold?

'QOWQO‘UI-bOJNH

Above all, he later stated, the President stressed the

necessity of raising prices and providing for reemployment.13

190

This conversation reveals that Roosevelt's policy
intentions, steadily augmented since his inauguration, were
becoming his policy plans, even though some remained general.
He did not mention farm relief because he had recommended
AAA two days earlier; but he did emphasize price-raising, a
prime objective of the farm program. He did not mention the
Economy Act since at that point it had passed both houses.
Furthermore, he did not list the major foreign policy items
of intergovernmental debts and preparations for the London
Conference, probably because both men understood that Moley's
roving policy commission included these. The key point about
foreign policy came with the listing of items to be accom-
panied by messages. Measures like an arms embargo would
originate in the Congress, not in the White House, and
therefore would not require a message. In other words,
because of the economic crisis in America, domestic policy
must receive top priority. Foreign policy would be secondary,
particularly if a choice between the two arose. But these
priorities could hardly be surprising to either FDR or Moley.
This was the policy of intranationalism, or economic
nationalism--"a practical policy of putting first things
first," the President had declared on March 4--which they had
decided upon during the interregnum and subsequently had
written into the inaugural.

This March 18 conversation marked the end of the
emergency phase of the new administration. Although it was

in reality a transition, as is the case with all historical

191
"turning points," it nevertheless began in earnest
Roosevelt's leadership to inspire and to supervise the formu—

lation of his remaining domestic program.

IV

Roosevelt quite deliberately listed the Civilian
Conservation Corps as his top priority item by March 18.
Since outlining his ideas to the administration committee
of six on March 9 and asking the Budget Director on the 10th
to include a CCC appropriation request within the economy
message, he had concentrated primarily upon banking and the
radio broadcast, legalization of beer, and farm relief.
All the while officials of the Interior and War Departments
hurriedly drafted and redrafted measures to meet his CCC
guidelines. Labor Secretary Frances Perkins and liberal
New York Senator Robert Wagner, a confirmed advocate of
spending fOr both direct federal relief and massive public
works, supervised the drafting process. But several leaders
in the administration and in Congress wanted something done
immediately about relief and public works, as well as
reforestation. Having already proposed a relief measure to
spend some $500 million to reemploy 200,000 to 300,000,
Miss Perkins and Wagner led these forces. Others involved
were leftist Senators Robert LaFollette and Edward Costigan,
both of whom had sponsored legislation for federal relief
grants to States as early as January 1932, and Cabinet

members Henry Wallace, Harold Ickes, and George Dern.14

192

Thus far the President had delayed on relief. On
March 10 he indicated to reporters, and apparently also to
American Federation of Labor president William Green, that
he was not prepared to discuss public works. That same day
the Iimgs quoted "advisers" as explaining the CCC, which
Roosevelt considered more pressing at the moment. On the
11th he listened to the relief ideas of Wagner, LaFollette,
and Costigan. LaFollette afterwards told reporters that the
meeting reached no "definite conclusions." But he added that
they had discussed a $500 million appropriation for "internal
improvements" by unemployed who would live in government
camps, an expanded RFC which would lend to self-liquidating
projects, an acceleration of already authorized public
works, and more dams for the Tennessee Valley and other
river basins.15 So FDR appeared amenable to various relief
schemes by the weekend of March 10-11. He may have delayed
on relief for two reasons. First, the Economy bill only
passed the House late on Saturday the 10th. Second, CCC was
not yet fully formulated.

Since Moley had discussed relief with LaFollette and
Costigan a few days earlier, Miss Perkins spoke to him during
breakfast on March 14 about his acting as liaison with the
President. She detailed plans for relief grants-in-aid and
public works that she and the three senators had framed.

As he had told the others, Moley explained that Roosevelt
remained skeptical of public works because he doubted that

enough well-formulated projects existed to justify the

193

enormous expenditures involved. Undaunted, She told Moley
about the CCC idea (apparently news to him), criticizing
the dollar-a-day proposed wage because "when it is applied
to public works . . . it tends to bring down the price of
free labor to the same level." She wanted the President to
consider her group's relief ideas also. Moley promised to
take it up with him that very morning.16

Minutes later during their usual bedside conference,
Moley presented the Perkins-Wagner ideas. Instead of
answering directly, Roosevelt launched into an enthusiastic
monologue on what Moley remembered him labelling the Civilian
Reclamation Corps. "I think I'll go ahead with this --," he
finally added, "the way I did on beer." Fearing his chief's
impulsiveness, but not knowing how far CCC preparations had
proceeded, Moley persuaded him to send a memorandum and
message draft to the pertinent Cabinet members so as to
insure coordination. FDR readily agreed, probably seeing
possibilities of expanding the others' involvement in relief
as well as being impatient to move ahead with CCC. So he
dashed off the suggested memo to the Secretaries of War,
Interior, Agriculture, and Labor--coupled with Moley's quick
draft of a congressional message--requesting them to "coordi-
nate the plans" for the proposed CCC. "These plans include
the necessity of checking up on all kinds of suggestions that
are coming in relating to public works of various kinds." It

appeared that he had intertwined relief and public works.17

194

Early the next morning, Wednesday, Roosevelt received
the response of the Secretaries to his memo. Written by
Perkins and also signed by the others, the five-page document
was a concise and reasoned argument for three major relief
ideas. They strongly urged him to consider (in this order)
federal appropriations for grants-in-aid to States for pur-
poses of "direct relief work," a separate measure for a
"large practical, labor-saving program of public works . . . ,"
and a third bill for CCC. By the time Moley arrived, FDR had
decided to consider this three-part plan. So he asked him to
have the three senators, Miss Perkins, and Harry HOpkins,
chairman of the New York State Temporary Emergency Relief
Administration (established by Governor Roosevelt in Septem-
ber 1931), see the President sometime Thursday. Unknown to
Moley, the Labor Secretary had already gotten Hopkins in to
see Roosevelt about relief. Hopkins in fact had proposed
the grants-in-aid idea to her.18

Prevailed upon for relief projects by Cabinet members
and influential senators, Roosevelt also received similar
advice that week from a closer quarter. LaFollette had
breakfasted with the Budget Director the preceding weekend,
convincing him that local institutions for relief of the
unemployed had broken down everywhere. The Senator argued
that the problem was now so immense and urgent that only the
federal government could stem the tide. An opponent then and
later of public works, Douglas nevertheless appreciated the

intensity of the unemployment crisis. He recalled that he

195

finally agreed to recommend an appropriation of $500 million
for direct relief. So far as he was concerned, preserving
the federal credit and providing unemployment relief were
both necessities. Since the spending involved in direct
relief was far less and affected more people than Spending
for either work relief or public works, he reasoned that it
made more fiscal and humanitarian sense to provide the most
amount of relief at the lowest cost to the public, since the
consumer ultimately paid the cost of federal spending through
taxation. He also believed that the bulk of reemployment
depended upon private business recovery. This in turn depended
upon a strong federal credit. Therefore the unimpaired credit
of the U.S. government and orderly spending, based upon a
balanced budget if possible, were the nation's first priori-
ties--the reasoning behind the Economy Act--whi1e direct
relief and public works remained expensive and stopgap
measures toward recovery. So he recommended direct relief
during the following week at his regular morning sessions
with the President.19

Within these converging forces and his own readiness
to accept wide-ranging but relatively inexpensive relief
measures, Roosevelt's congressional message took shape during
odd moments before he sent it to Capitol Hill on March 21.
Redrafted by Moley and himself on the 20th, over half of
the final version dwelt upon and stressed CCC. First FDR
recommended "grants to States for relief work" and "a broad

public works labor-creating program." He reminded Congress

196
that last year's relief appropriations ran out in May, so he
requested creation of the office of "Federal Relief Adminis-
trator." But on public works, he simply said: "I am now
studying the many projects suggested and the financial
questions involved. I shall make recommendations to the
Congress presently." The remainder of the message described
the pressing need for a "civilian conservation corps," saying
that 250,000 men could be given "temporary employment" by
early summer on reforestation, soil erosion, flood control,
and related projects--ii he received authority to proceed
within two weeks. Injecting idealism with common sense, he
concluded:20

More important, however, than the material gains
will be the moral and spiritual value of such work. The
overwhelming majority of unemployed Americans, who are
now walking the streets and receiving public or private
relief, would infinitely prefer to work. We can take
that vast army of these unemployed out in healthful
surroundings. We can eliminate to some extent at least
the threat that enforced idleness brings to spiritual
and moral stability. It is not a panacea for all the
unemployment but it is an essential step in this
emergency. I ask its adoption.

Following through, Roosevelt issued a "CONFIDENTIAL"
memo which directed that all executive departments cease
obligating any unexpended funds until a "complete program"
of relief and public works was formulated. This directive
encompassed funds for both fiscal 1933 and 1934. Reflecting
his caution on public works, it served two purposes at once.
It held back funds for CCC, which he hoped would require very
little new spending. And it temporarily postponed action on

public works. He looked upon CCC as a "must"; but not public

197

works. Described by more than one adviser as the "neck of
the bottle," the Budget Director almost daily raised doubts
in FDR's mind about the value of heavy Spending for public
works. On this issue Moley continued to serve as liaison,
presenting Roosevelt with pro and con arguments. Yet he also
personally believed, with Douglas, perhaps for similar
reasons, in some form of relief spending.21

Moley later explained that Roosevelt avoided the
proposal of $5 billion in public works, which Rexford Tugwell
and others had urged upon him in 1932 and which the Wagner

forces and journals like the New Republic presently supported,

 

because he did not yet subscribe to the pump-priming theory
of public works as a stimulator of economic recovery. This
position is indicated by his evasive responses in almost
every press conference during March and the first half of
April. For example, on March 15 he parried a question about
his support for a "vast public works program" by saying:
"There is enough money in the R.F.C. on direct aid for munici-
palities to last until May, therefore it is a grave question
as to whether that is the kind of emergency that ought to
keep Congress here." Again, on March 29: "That will not
come up until after savings are taken up." And on April 14:
"No; I haven't done a thing on it."22

Yet Moley evidently overlooked an important point in
later describing himself only as a "go-between" in presenting
to the President different vieWpoints on such major issues.

Roosevelt probably interpreted his policy adviser's neutrality

198

on public works as a negative, albeit unspoken, recommenda—
tion. In other words, to FDR the fact that Moley did not
advocate them likely meant (as in fact it did) that he did
not particularly believe in their value. This would
reinforce, in effect, the Douglas position. While it is
impossible to generalize from one policy situation to
another, the negative influence of the Budget Director
coupled with the neutrality of Moley doubtless helped Roose-
velt rationalize until well into May his personal reluctance
to accept pump-primer spending. Despite his advocacy in
1932, the President therefore offered little leadership on
public works. But that was his decision, and it can not be
ascribed solely to the influence of key advisers.23

While postponing action on public works, the
President and Congress moved ahead rapidly on CCC and relief.
Immediately following the reading of the special message,
Senate majority leader Joseph Robinson introduced the
administration's CCC bill on behalf of himself and Wagner,
who had pointed out as early as 1931 the "large federal zones
which require reforestation." One week later Wagner, for
himself, LaFollette and Costigan, introduced legislation to
authorize a Federal Emergency Relief Administration. Wagner
had forged ahead of the administration. On March 19, two
days before Roosevelt acted, he introduced three relief bills.
The first would liberalize RFC loans; the second would estab-
lish a nationally-coordinated but State-operated system of

unemployment offices; and the third would encourage the

199

provision of unemployment insurance systems in the States.
From the perspective of congressional proponents of spending
for relief and recovery, therefore, FDR's recommendations
took only minimal steps forward.24

CCC remained the center of Roosevelt's attentions
until Congress enacted it on March 31, although the nation's
press and most senators and representatives concentrated more
on the struggle over AAA. The original CCC measure intro-
duced on March 21 authorized the President to recruit members
from among the unemployed and to enroll them for one year,
with no discharges permitted "except under such rules and
regulations as the President may direct." Other provisions
stipulated that pay could not exceed $30 monthly, that
enrollee's had to make an allotment to dependents, that age
was unlimited, and that married men could also be enlisted.

Vocal criticism from some labor spokesmen virtually
forced modifications. The AF of L's Green, usually cautious
and circumspect, quickly denounced many of CCC'S features,
particularly the section allowing the Army to operate the
camps. He termed it the opening wedge to "regimentation
of labor." A. F. Whitney, president of the Brotherhood of
Trainmen, also condemned the bill, notably its low wage rates.
These and other indictments led Roosevelt to summon on the
night of March 22 a White House conference of House and
Senate committee members who would conduct the hearings
scheduled for the 23rd and 24th. His detailed description

of CCC'S intentions helped to foster a mood of cooperation,

200
even though some like liberal House Democrat William P.
Connery of Massachusetts still opposed the $30 maximum wage.
The joint hearings proved favorable to the administration
position that it was a relief program and that it would not
impede further public works projects. But labor criticisms
caused important amendments. The President as usual involved
himself little in the legislative process, beyond approving
the new bill which emerged from committee sessions over the
weekend of March 25-26.

Massachusetts Senator David I. Walsh on Monday became
spokesman and congressional leader for the new version. He
explained that the original had contained two non-controversial
features: reforestation as relief, and unobligated funds for
financing. Therefore his committee had deleted the objec-
tionable sections, like restrictions on enrollments and
discharges and the wage rates. The new bill simply author—
ized the President "under such rules and regulations as he
may prescribe, and by utilizing such existing departments or
agencies as he may designate," to create and Operate CCC.
Because of the broader nature of this bill, Walsh's shrewd
leadership, and the greater significance attached by most to
the concurrent farm relief bill, it passed Congress in three
days with but few additional amendments. Perhaps the most
important of these was by Negro Congressman Oscar De Priest,
an Illinois Republican, who won adoption of his amendment to
prohibit "discrimination" due to race, color, or creed. The

Republican opposition, while vocal on provisions such as

201

delegating too much power to the President, was numerically
weak. They possessed no real chance of defeating a bill
advocated almost entirely by the administration and scarcely
at all by private interest groups like foresters or lumber-
men.25

On the last day of the month Roosevelt approved CCC,
and during the following week he took major strides to
organize it. Most of his actions on organization illustrate
his multiple and simultaneous concerns with CCC on one level
as a personal reforestation and conservation project, and on
another as both a relief and an economy in government measure.
It became the fourth major law enacted in March, even as he
continued to frame the remaining domestic program.26

'At a White House conference on April 3 Roosevelt
confirmed the functions, outlined to reporters five days
earlier, of each cooperating agency in CCC's Operation. He
pencilled a chart which illustrated these. Following guide—
lines prepared earlier by Douglas, FDR'S chart designated the
center of the organization as the director. For that post he
had already decided on Robert Fechner, a machinist and old-
line labor negotiator during the Wilson administration who by
1933 headed the International Association of Machinists and
served as an AP of L vice president. Under Fechner the
President designated assistants for activities like "enrol-
ment," "Welfare," and "for Outfitting and Conditioning Camp."

Underneath the chart he wrote that he wanted "personally to

check" on the location and scope of the camps and the work

202

to be done. Specifically he assigned the Labor Department
to select men; War to enroll, feed, clothe, house, condition,
and transport them to the camps; Agriculture and Interior to
select projects, supervise the work, and administer the camps.
These functions remained stable throughout CCC'S life, except
that it soon proved necessary to extend greatly the Army's
functions in order to get the project into complete operation
by early summer. He also authorized an advisory council,
consisting of one member from each cooperating department, to
assist the director. On selection policy it was decided to
limit initial enrollment to single men aged 18 to 25, and
primarily to those whose families were either on relief or
who would allot at least 70% of their $30 monthly check to
their dependents. The most unfortunate result of this
April 3 meeting, perhaps predictable from CCC'S origins, was
FDR's decision to personally supervise the entire operation.
His involvement in so many other policy matters would mean
delay in its organization and implementation.27

Effecting the April 3 decisions, the President
officially established CCC by executive order two days later.
Drafted by the Budget Director, Roosevelt only changed it—-
probably to increase its political appeal--by inserting the
term "Emergency Conservation WOrk" in place of "Reforestation
Activities." That economy was also a Roosevelt goal is sug-
gested by the assistance Douglas rendered in the planning and
Spending for CCC. And FDR privately indicated this goal the

same day. "This figure of 1.92 a day [per ma§7 not including

203

transportation or wages is absurdly high," he wrote on a War
Department request for $2,850,000 to enroll and condition the
first 25,000,"--it must be reduced." This comment also sug-
gests that Louis Howe, who was already soliciting work pro-
jects and who had approved the request, would have considerable
voice in minor CCC policy matters. But the President naturally
reserved major policy decisions for himself.28

Fechner implemented CCC'S organization, with some
direct assistance from Howe and occasional indirect aid from
the President, to the extent that by July 1 the full quota of
274,375 was enrolled and 1,300 camps were in full operation.
Yet he encountered a variety of obstacles which made those
goals seem all but impossible until late June. For example,
within a week of its establishment, Roosevelt was forced to
make sweeping changes in its organization in order to avoid
utter confusion in having Interior and Agriculture, via the
Forest Service, train and equip the men and administer the
camps without the facilities to do so. Acting upon Chief
Forester R. Y. Stuart's recommendation and Howe's urging, FDR
authorized enlarging the Army's functions from transporting
the men to camp to assuming, under Fechner's authority,
complete and permanent control of CCC. Special groups were
added to eligibility lists, notably Indians and local woodsmen
in April and unemployed veterans--discontented over the
Economy Act--in May. In a typical economy move, Douglas
objected to and successfully blocked the Forest Service's

proposals for a higher wage scale for technical service

204
supervisors, locally enlisted woodsmen, and foresters, until
the President finally decided in their favor on May 9.

But delay presented the most serious obstacle. It
resulted from interagency struggles between the Forestry
Service and the War Department over issues like areas of
responsibility, from Roosevelt's insistence upon personal
supervision of all the details when he lacked the time to do
so, and from Fechner's too stringent supervision of letting
contracts and insistence upon repeated conferences before
authorizing purchases. All these caused delay when compelling
urgency was the order of the times. After meetings with
Fechner on May 10, War Department spokesman Colonel Duncan K.
Major proposed on the 12th a radical plan to eliminate all
peacetime purchasing restrictions and to delegate "wide
authority" to his department so it could handle the 8,500
enrollees to be selected daily by the Labor Department.
After being approved unanimously by the advisory council,
H6we and Douglas secured FDR's quick approval and the plan
went into effect that afternoon. It broke the remaining
administrative bottlenecks. Fechner carried on successfully
and completely met the President's goals by the target date
on July 1.29

Only partially conceived by Roosevelt as a relief
measure, CCC nevertheless became one of the most notable and
popular relief and policy successes by the end of the Hundred
Days. And it precipitated administration support for direct

federal relief. Even as CCC and Senator Wagner's FERA moved

205
through the congressional processes with a minimum of
publicity, the President continually dealt with other needed

domestic policies.

V
By the middle of April Roosevelt had recommended
to Congress four more major pieces of legislation and had
intimated that others would soon be forthcoming. On March 29
he asked for a truth-in-securities law, on April 3 for farm
mortgage refinancing legislation, on April 10 for creation of
a Tennessee Valley Authority, and on April 13 for a home
mortgage refinancing measure. By the 19th he could summarize
the bills then in committee in a "CONFIDENTIAL MEMORANDUM
FOR THE VICE PRESIDENT." FDR said that in addition there
would probably be a "simple railroad bill" and a "bank bill."
And on public works:
There is also the problem of a public works bill

but it is my present thought that this can be tacked

on to one of the other bills in the form of a broad

appropriation, the details of which will be left to

the Administration.
Evidently he had become more amenable to public works,
although his memo does not suggest that he was prepared to
accept them on the scale proposed by Wagner's group.
"Finally," he concluded, "sometime later there will probably
be two important resolutionS--one on Tariffs and the other
on Debts." Thus he was still planning certain foreign
economic policies, although the items mentioned evidently

would not originate from the White House.30

206

The first of the major domestic policy recommendations
concerned securities reform. Roosevelt had listed in his
inaugural a "strict supervision" of all investments as a
needed safeguard to prevent recurring "evils of the old
order." This safeguard was also in the 1932 Democratic
platform and he repeated it in campaign speeches in Albany,
New York, and Columbus, Ohio. Often prone to relate a story
about one upstate New York village where 110 of the 125
families--all wage earnerS--had been ruined by the 1929
crash, his campaign had included pledges for legislation to
"inspire truth telling" in securities marketing, to regulate
holding companies which sold securities in interstate com-
merce, and to supervise the stock exchanges. To him securi-
ties regulation probably reflected as much a moral question
as one of rational economics or financial control. After the
election he delegated the task of drafting a securities bill
to the famous old Progressive Samuel Untermeyer. FDR made
this assignment because Untermeyer had a national reputation
from the Pujo Committee's investigation of Wall Street
during Wilson's administration and, therefore, because he
could serve as a tie to Wilsonian Democrats.31

Commerce Secretary Daniel Roper received the same
assignment shortly after March 4. In the meantime Untermeyer
had scarcely proceeded beyond a modified version of his 1914
proposal to regulate stock exchanges through the Post Office
Department's control of the mails. When two Commerce drafts-

men made little progress, Roper turned on March 13 for

207
assistance to Huston Thompson of Colorado, the fifty—eight
year old former chairman of the Federal Trade Commission.
A states-righter and a fervid believer in legislation as an
automatic regulator of the economy, Thompson studied the
Commerce draft and prepared his own bill for the President
by the end of the week. His version was essentially a dis-
closure statute, aiming to prevent the interstate sale of
securities not fully and completely registered with the FTC.
Registration was therefore the heart of his measure. But
Since he followed several conflicting precedents from the
19203, the result would prove more muddled than not.32
At four o'clock on Sunday afternoon, March 19, Moley
brought all interested parties to the White House for a
hearing before the President. Roosevelt wanted to ascertain
how soon he could have congressional action on either the
Untermeyer or the Thompson bill, or both. Present beside
Thompson, Untermeyer (who had disdained the Thompson bill
that morning), and Moley, were Roper, Attorney General Homer
Cummings, Charles Taussig, and others. To all appearances
the two bills conflicted, as did their authors. Although
Moley later characterized this meeting as a "frost,"
Thompson's diary recorded that FDR handled the evident
personal clash "cheerfully and successfully":
The President directed most of the conversation

to Mr. Untermeyer and myself. He had a draft of the

proposed bill before him and discussed it. He criti-

cized its length and detail, suggesting that we cut

down both. He suggested cutting out that part of the

bill permitting the [Federal Tradg7 Commission to
refuse directly the sale of foreign securities and

208

requested that we get around this feature. He dis-

tinguished clearly between our bill and Untermeyer's

and said there was no conflict, the latter covering

sales on stock exchanges.
After an hour of discussion, Roosevelt adjourned the meeting
and invited all present to tea with some of his family.
There Roper, Cummings, and Thompson privately agreed to keep
the two bills separate. Thompson also "had a talk on the
side with the President and he agreed to this." And FDR
requested that he have the revisions ready within two days.33

Roosevelt was anxious to move ahead without delay
on securities legislation, even if it meant having separate
bills for the interrelated functions of "truth telling" and
stock exchange regulation. Moley remembered pointing out to
his chief that the Thompson bill was unsatisfactory and that,
if they were going to be separated, stock exchange legisla—
tion ought to precede that for securities sales--even though
he also recognized the need to prevent Speculative excesses.
"F.D.R. replied that there'd be time for both."34
This conversation raises certain points about

Roosevelt's policy thinking and methods. On securities, for
example, he wanted to proceed as rapidly as possible and in
both (or all) directions at once. One reason for this is
because he wanted to keep Congress supplied with legislation.
On March 19, for example, predictions were that AAA would
pass quickly, and the CCC-relief proposal was the only other

one close to formulation. Also, as usual he chose not to

close off any policy options, a plausible assumption at that

209
point about securities. Furthermore, as he had done with
Morgenthau and farm credit and with farm relief, he pre-
ferred to allow conflicting advisers and subordinates to
settle policy disputes between themselves and to present him
with more clear-cut alternatives for decision. Certainly a
president had little time to get into the nuts and bolts of
every policy. In effect, then, the "winner" could go ahead.
If there was no winner, the President would have to decide.
For all of these reasons, he found that it expedited policy-
making to move ahead as rapidly as possible and to cross the
bridges of conflict only when the time was right. Ends were
more important than means. At least, FDR's actions suggest
those were his priorities during the Hundred Days.

While signing the Economy Act on March 20 and
requesting his relief package one day later, the President
continued to push forward on securities. Thompson had
drafted the necessary revisions overnight and Roosevelt had
accepted the new version on the 20th. On Wednesday the
29th, as soon as he knew the Senate would vote favorably on
CCC, FDR sent his sixth Special message. Written by Moley,35
it stressed the need for federal supervision of traffic in
"investment securities." Simply stated, the President asked
for truth-telling by adding the newer concept of "'let the
seller also beware'" to the traditional doctrine of

caveat emptor. "What we seek is a return to a clearer under-

 

standing of the ancient truth that those who manage banks,

corporations and other agencies handling or using other

210

people's money are trustees acting for others." Already in
committee hearings in both houses, Thompson's "blue-sky"
bill had not yet been subjected to the veritable storm of
criticism from bankers and investment houses which would
pour forth in April.36

The press conference seemed to be part of Roosevelt's
motive in sending the message Wednesday. Although observers
like Ernest K. Lindley believed it was sent to keep the
House busy while the Senate wrangled over the farm bill, it
was more than happy coincidence that so many policy news-
making occurrences, from messages to signings, fell on the
same days as his Wednesday and Friday press conferences.37

In this informative sesson on March 29, Roosevelt
elaborated his views and plans on securities and related
programs. He repeated the points made that morning in his
securities message, stressing that those who handle other
people's money do so in a "fiduciary capacity," that is, one
that depends upon public trust and confidence. That assump-
tion undergirded his entire four phase program, he went on.
This first phase related only to the issuance of new securi-
ties (although two days later he told reporters, as a "snap
judgment," that it related to both new and to "any advertised
sale of old issues"). The second would be the "regulation
or supervision" of the buying and selling of securities and
commodities. This would take "another week or ten days,"
evidently meaning the Untermeyer bill, although he did not

say so. "Then the third phase would relate to the fiduciary

 

 

211
position of directors and officers of corporations and
subsidiaries." Just what this meant in terms of legislation
is not clear; but he chose not to elaborate. The fourth
phase covered banking, such as the separation of investment
buying and selling from banking and of commercial from trust
banking, and the question of affiliates. These would become
the heart of reforms advocated by Senator Carter Glass and
others. "Well, we are working on all that and we are not
ready yet; it will take another ten days."38

As is evident in most of the press conferences
running from March through May, one of his prime purposes was
to keep expectations high about what parts of his New Deal
were just around the corner. In doing so, he of course
dominated the front pages himself. This too was no coinci-
dence.

In his eighth special message on April 10, the
President called for legislation to develop the Tennessee
Valley. The dam at Muscle Shoals, he declared, represented
but a fractional use of the valley's potential:

Such use, if envisioned in its entirety, transcends
mere power development; it enters the wide fields of
flood control, soil erosion, afforestation, elimination
from agricultural use of marginal lands, and distribu-
tion and diversification of industry. In short, this
power development of war days leads logically to
national planning for a complete river watershed
involving many States and the future lives and welfare
of millions. It touches and gives life to all forms

of human concerns.

He therefore requested that Congress create a Tennessee Valley

Authority corporation, having the "power" of government and

212

the "flexibility" of private enterprise, to carry these ideas
into operation. Although the message did not say so, he
also viewed the project as useful public works. Progressive
Senator George Norris of Nebraska remarked after it was read
in the Senate: "The Muscle Shoals message was the greatest
humanitarian document ever to come from the White House."39

Perhaps the sentimental enthusiasm of Norris could
be excused, since for more than a decade he had championed
virtually alone public develOpment of the valley for purposes
of cheap electric power and fertilizer production. The
battle was finally won with Roosevelt's election. In cam—
paign speeches, notably at Portland, Oregon, FDR had declared
the need for such projects to serve as "yardsticks" in deter-
mining electricity rates and for federal regulation of the
power industry as a whole. In late January he visited the
partially used Wilson Dam at Muscle Shoals, Alabama, with
Norris and others, allowing himself to be quoted as enlarging
upon the Senator's ideas. From Warm Springs in early
February Roosevelt enunciated to reporters virtually the same
program requested in his later TVA message, remarking that
it would become "the widest experiment ever conducted by a
government."40

Roosevelt's message and interest in TVA reveal more
than vision and idealism. As does his handling of other
policies, it illustrates his propensity to go in many
directions simultaneously. Norris later recalled dining

with the President shortly before TVA went to Capitol Hill.

213

They talked over its possibilities. "What are you going to
say when they ask you the political philosophy behind TV ,"
Norris laughed. "I'll tell them its neither fish nor fowl,"
FDR laughed in return, "but, whatever it is, it will taste
awfully good to the people of the Tennessee Valley."41

Indeed, Roosevelt manifested a continuing personal
interest in TVA--as he did with CCC--while delegating care-
fully chosen proponents to develop and legislate the concept.
Norris took the lead in the Senate and introduced the adminis-
tration bill. HOuse bills came from Democrats John J. McSwain
of South Carolina, chairman of the Military Affairs Committee,
John E. Rankin of Mississippi, and Lister Hill of Alabama.
Their measures differed in substance, however, Rankin's being
the Norris bill, McSwain's stressing power and Hill's
emphasizing nitrate development. As HOuse hearings opened,
FDR moved ahead with alacrity and privately named the first
of TVA's three proposed directors. Almost by chance Arthur
E. Morgan, a noted resource and conservation engineer, had
obtained an appointment to see the President through Ohio
Senator Robert Bulkley. Fifty—five, tall and rangy, a
social thinker inclined at times toward utopianism, Morgan
had served as president of Antioch College Since 1920. His
current errand did not concern TVA, which he had only read
about in the April 11 newspapers. Instead he sought federal
funds for the Muskingum Soil Conservancy District near

Yellow Springs, Ohio.42

214

Morgan saw the President alone on either April 11
or 12, the first time they ever communicated. Roosevelt
reSponded with an enthusiastic and animated one-hour
monologue on TVA. Evidently he said little about power
development, later to be the source of so much controversy
around Morgan. "The picture which he gave me of the
possible functions of TVA," Morgan later recorded, "was of
an undertaking to encourage the decentralization of industry
in that region, to help locate people on small farms, and to
develop social and economic resources of the region." FDR
then asked him to serve as chairman of the board, saying he

had read Morgan's Antioch Notes for years, that he liked

 

his "vision," and that there "is to be no politics in this."
Morgan agreed to these ideas, particularly that TVA'S
administration be non-political. The other two directors,
Roosevelt went on, would have to be "acceptable" to the
chairman; but he personally preferred a Southern agricul-
turist and someone acquainted with the power industry.43
After leaving this interview, other important points
occurred to Morgan. He quickly wrote the President for
approval to begin immediate and "confidential inquiry" about
the other directors, without committing the White House. And
he volunteered to help the congressional committees further
fashion an acceptable bill. To both requests Roosevelt
readily assented, the latter probably because House diver-

gences on TVA were already apparent and because the visits

of foreign delegations for the preliminary Washington talks

215

were imminent. Morgan therefore quietly began working to
unite his social visions with Roosevelt's goals for TVA.44

During April Roosevelt also managed to oversee the
formulation of a home mortgage bill. On April 13 he
delivered his ninth special message to Congress. Mentioned
in the inaugural, a natural corollary to farm credit, only
CCC preceded "Farm & Home Mortgage" as the "Must" legislation
discussed by himself and Moley on March 18. On April 7 he
mentioned to reporters for the third time his progress on
this program. As an urgent step to promote economic recovery,
his special message proposed legislation "to protect small
home owners from foreclosure and to relieve them of a portion
of the burden of excessive interest and principal payments
incurred during the period of higher values." Protecting
small home ownership would help guarantee social and economic
stability, he stated. The program proposed generally paral-
led that of the farm refinancing bill. And in the interests
of economy: "The terms are such as to impose the least
possible charge upon the National Treasury consistent with
the objects sought."45

The foreclosure crisis on urban homes, occurring at
the astonishing rate of over 1,000 daily by mid-1933, alerted
Roosevelt to the imperative need for action. Families, like
that of Albert and Ella Giese of Benton Harbor, Michigan,
wrote him that mortgage rates were as high as 7%; but rents
were halved, utilities and insurance remained the same as in

1929, and taxes had been reduced "very little." On March 29

216

Massachusetts Representative John W. McCormack, himself
greatly concerned with foreclosures in his Boston constitu-
ency, introduced legislation to remedy the situation. Saying
"I'm working on the problem," FDR referred him to members of
the Federal Home Loan Board. Howe arranged for board chair-
man William F. Stevenson and member T. D. Webb to work
through Henry Morgenthau, the President's major adviser on
credit. With Morgenthau coordinating the work and Senator
Robinson acting as congressional liaison, Stevenson, Webb,
and other board members completed a rough draft by April 5.
It sought to correct the basic failure of Hoover's Home Loan
Board, that of lending to banks and other agencies rather
than directly to the homeowner. They proposed creation of a
Home Owners' Loan Corporation to ameliorate the estimated
$20 billion in threatened mortgages--affecting perhaps 75%
of all American homes--by making fifteen year amortization
available to homeowners at 5% interest. In final form on
April 12, the bill would be amended by Senator Wagner to
provide the same three year moratorium on principal install-
ments which he wrote into the farm mortgage bill.46

By the middle of April Roosevelt had inspired the
formulation and had recommended the passage of most of his
domestic program. Since March 9 he had delivered nine
special messages calling for urgently needed reforms; and
already four were enacted. But by this time the congressional
tempo showed definite signs of slowing, even if the White

House did not. AAA rapidly became the focal point of the

217
slowdown. And even while FDR focused on the domestic pro-
gram, foreign policy initiatives also demanded his con-
sideration.
Yet there were lighter moments for Roosevelt. By

late March it was publicized that the New York Daily News,

 

soon joined by forty-three other New York newspapers and
several in the West and Midwest, had collected over $22,000
in a spontaneous campaign for the "Roosevelt Swimming Pool
Fund." To be financed by donations, much of which came in
nickels and dimes from school-age children, the 20x40 foot
pool would immediately be constructed in the basement of the
White House West Wing so that the President could take his
"much-needed exercise." And it was about that time, James
Roosevelt remembered, that his father consented to an
appointment for the Right Reverend James F. Freeman, the
distinguished Episcopal Bishop of Washington. Within minutes
Marvin McIntyre heard the buzzer, the Signal to Show the
visitor out, and he did. Returning to the Oval Office,
McIntyre found his indignant boss complaining that the bishop
was seeking to increase the "prestige" of his still-being-
constructed cathedral. How? By trying to get the President
to agree, if he died in office, to be buried there!

"If that man ever asks to see me again, don't let
him in!" exclaimed the Episcopalian and faithful Hyde Park

senior warden. "He's nothing but a body-snatcher!"47

218
VI

By April 15 Roosevelt had evolved some priorities,
methods, and goals in his handling of foreign policy, although
these could be changed if circumstances or personalities
dictated. On priorities, he intended to continue to subordi-
nate foreign policy, if and when a conflict occurred, to the
more urgently needed domestic program. He had accepted this
priority during the campaign and the interregnum, stated it
in his inaugural, definitely committed himself to it during
his conversation with Moley on March 18. At that point FDR
listed three items that he would support but not initiate;
namely, an arms embargo, the WOrld Court, and the St. Lawrence
Treaty.48

Roosevelt placed domestic priorities first for good
reasons. But other reasons also existed for sending no
foreign policy messages. The most likely one, as events
would demonstrate in May and June, was that battles over
foreign policy issues could mean costly defeat for the
administration's domestic programs. And he recognized the
significance of getting a comprehensive New Deal legislated
as soon as possible. This consideration had prompted him to
propose the legalization of beer, because he believed that,
once in the works, CCC and AAA would weld Congress to his
program that spring.

Roosevelt's methods of making foreign policy during
the Hundred Days were informal, improvised, even haphazard.

These characteristics proved anathema to a bureaucratic State

219
Department long tradition-bound to formalized procedures and
chain-of—command. The President had determined to be, for
all practical purposes, his own secretary of State. Having
little respect for or interest in formality, sustained and
logical thought processes, and departmental channels, he
operated both around and through the State Department and
Secretary Cordell Hull. FDR used Moley, in his official
capacity as Assistant Secretary of State, as his instrument
for dealing with major foreign policies.

Aside from Roosevelt's inclination toward formality
and unorthodox methods, however, there was another reason he
depended more on advisers like Moley than upon a thorough
knowledge of issues and policies. The workings of government
departments like State are complex. Alternatives for policy
decisions are usually sorted out and primarily made below
the presidential level. "Presidents are presented with a
relatively small range of choice," historian Ernest R. May
has pointed out, "and they have to make their decisions not
on the basis of a kind of courtroom analysis of the arguments
in favor of one course against another, but on the basis of
their relative trust of this man as opposed to that man, or

"49 If internal com-

this agency as opposed to that agency.
plexity blended in nicely with Roosevelt's tendencies for
casualness and sloppy methods, that was happy coincidence,
not reasoned forethought. Indeed, to suggest it was more than

coincidence is to make a virtue of a deficiency, which is

neither necessary nor flattering to FDR.

220

Roosevelt's methods perforce led to personal grief
for Hull and Moley, at least by June, although this was not
evident in early March. Moley's duties still left much of
importance for Hull, whose appointment was baSed more upon
his political support in Congress and the Democratic Party as
well as his long-time advocacy of lower tariffs than anything
else. The assignments Roosevelt had given Moley in February
included responsibility for "the foreign debts, the world
economic conference, supervision of the economic adviser's
office, and such additional duties as the President may
direct in the general field of foreign and domestic govern-
ment." If the professor had any doubts about his status with
Roosevelt or whether he should serve within State while not
being subordinate to the Secretary, he had overcome these by
March 18, if not before. Moley was loyal. If FDR had any
such qualms, he apparently never expressed them to anyone,
until three weeks after sending his July 2 "bombshell"
message to the World Economic Conference.50

By the end of March signs of demoralization had
appeared within State. These likely stemmed from Roosevelt's
indirect methods and from his use of Moley as a personal
adviser, and perhaps also from.Moley's use of volunteer
advisers like James Warburg and Charles Taussig. During his
first day in office, for example, the Assistant Secretary
held a press conference. According to Jay P. Moffat, head of
the division of Western European Affairs and State's expert

on disarmament, Moley "soundly berated the press for referring

221
to him as the President's 'Man Friday,’ and then proceeded
to say that he would not be able to receive them frequently
as had [his predecessor7 Mr. Rogers, because he would be
running back and forth to the White House." But Moley was
under no illusions as to his official and unofficial position.
"So far as I know at the moment," he wrote to one family
friend, "I shall be doing rather little work here in the
Department. My main function will be what it was during the
campaign, that is, to act more or less of a Sieve for ideas."
Yet he was not accepted by all of his colleagues on those
terms. On.March 24, for example, warburg briefly recorded
in his journal that he "had a very frank talk with Moley
about present internal difficulties in the State Department
and pointed out certain very obvious dangers which I see."51
At the same time the Department's Economic Adviser

Herbert Feis worried about Moley's, and therefore indirectly
Roosevelt's, methods. Later usually a fair-minded historian,
Feis in his 1966 memoir sharply criticized Moley, although
the same tone did not appear in his contemporary letters to
his confidante, Felix Frankfurter. Moley's mind and manner
seemed to "warp under the great power," Feis later wrote,
bitterly labelling him the "General Patton of the State
Department command with an epithet on his hip." In a memo
"hurriedly jotted down" near the end of March, Feis described
him as:

An interested mind, which only exposes itself in jumps.

A mind which does no systematic solutions or even
systematic procedures, but catches at ideas, or measures

222

how they fit into the combat of political forces and
ideas. He sometimes asks others to think through; he
does not do so himself. He is too blithe on important
matters, too disposed to pass over them with a jest.

Yet in this spirit he believes that can be kept in good
shape--seeing their importance less clearly because no
American political interest forces them on his attention.

 

 

Years later British financial and monetary expert Sir Freder—
ick Leith-Ross confirmed this point on Moley's political
sensitivity when he observed that the professor had "a shrewd
political instinct and struck me as being remarkably free of
prejudices and ready to appreciate arguments put to him but
almost completely lacking in detailed knowledge of the many
questions we discussed and interested only in the political
aspects of any proposal."52

In many ways a perceptive commentary, Feis' memo is
even more important because it precisely describes the
President's own outlook and methods in foreign policy during
the Hundred Days. Evidently written about Moley, it suggests
why Roosevelt valued his advice. Moley did n6t always
operate through departmental channels, procedures, or person-
nel. As FDR's personal adviser on policy, he did exactly
what the President wanted: to act as a "sieve for ideas,"
and to cut through red tape and advise on whatever matters
his chief designated. And the context of domestic "political
forces and ideas," as Roosevelt and Moley discussed on
March 18, was to them a crucial, perhaps ihg crucial, policy
priority. FDR's mind was anything but orderly and the
bureaucratic, point-by-point approach bored him. Indeed,

his could be termed the "sloppy mind" in action on American

223

foreign policy. Thus Moley's temperament and methods, if the
Feis description was accurate, fitted into his chief's
preferences and needs. Such a mind often obtained results;
and it was results, almost regardless of the improvised
means, that led to the success of later powerful presidential
assistants like Harry Hopkins. But Hopkins had a precedent.
And Moley set it. Until 1939 there was no institutionalized
system of presidential assistants. Also, in 1933 part of the
problem existed because Hull's mind was not quick, and he
clung to bureaucratic procedures. This irritated Roosevelt,
one adviser later commented. "If anyone irritated the
President that instantly irritated Moley, so it was almost
like an umbilical cord."53

Roosevelt's methods and his choice of Moley to employ
them helped create morale and procedural problems within
State. Even before March 4 several newspapermen had pre-
dicted to Moffat that Moley would "hang himself" within a few
months, and that already he had "earned the unreserved enmity
of the press, of Sumner Welles, of Norman Davis and, more

54 To this list Feis

important of all, of Colonel H0we."
later added the name of Under Secretary William Phillips.
Yet their "enmity" was biased. Doubtless they did not
appreciate his abilities. More to the point, they over-
appreciated his close relationship with FDR. On March 25

when Feis confided his worries over the professor's apparent

disregard of preparations for conferring with the British

224
ambassador, Moley's assistant reacted by privately com-
menting:55
He [Moley7 is rarely unprepared--it is only that he is
constitutionally opposed to orderly and institutionalized
preparation . . . . He goes about it in a way peculiar
to himself--listening here and there in an apparently
haphazard way--seeming most disinterested--and then
coming out with a clearly fixed point of view laid on an
amazing background that one would never dream he had.
Whether or not Moley's critics understood his moti-
vations and his duties, he appeared to be almost the acting
secretary of State. He thereby managed to keep himself
between Roosevelt and Hull. "The President wasn't inclined
to trust Hull or seek his advice," Warburg later observed,
"so that Hull felt that he was isolated and referred to the
President as, 'That man acwoss the stweet' and loathed Moley."
According to the later reminiscences of Warburg and Feis,
Moley's failure to inform Hull of his foreign policy dealings
for FDR increased the disorder and dissension. On the other
hand, the Secretary's desk diary recorded his appointments
with the Assistant Secretary on an average of thrice weekly.
These appointments suggest that if Hull received little
information from Moley, it was not because he lacked the
opportunity to do so. But Moley apparently realized the
situation. On April 14 his diary recorded: "The whole depar1;‘
ment is a place of intrigue--They hate Raymond--according to
him (Taussig)."56
Actually it was less Moley and more the President's

leadership which wounded subordinates in State. "In fact,"

Moffat recorded in his diary on April 17, "to such a degree

 

225
our foreign relations centralize with the President that no
one here really knows what is going on." And significantly,
in view of his earlier comments, Moffat recorded nothing
after March 7 that related either to Moley or to morale.
Such criticism by officials and observers suggest an early
pattern which was repeated over and over. Critics condemned
Roosevelt's advisers for what they disliked in the President.
Moley set the precedent, often ascribed to Tugwell, for
absorbing constructive and destructive criticism that could
not yet be transferred to the real object, because FDR was

simply too popular and appealing a figure in 1933.57

In any
event, it was within this milieu that Roosevelt urged forward
both Moley and the State Department in order to advance his
foreign policy goals.

While lending some attention to issues like disarma-
ment and the Geneva Conference, an arms embargo, and the
St. Lawrence Treaty, Roosevelt concentrated what limited time
he had available for foreign affairs upon the intergovern-
mental debts and the forthcoming London Conference. Near the
end of February the British Foreign Office had sent to
outgoing Secretary Stimson a long memorandum entitled "British
Policy on Economic Problems." Hull received it upon taking
office. The gist of it stated that debts constituted "an
insuperable barrier to economic and financial reconstruction
and that there is no prospect of the World Economic Conference

making progress if this barrier cannot be removed."58 The

British government attempted what the Hoover administration

226
had failed to achieve during the interregnum: to join the
debts issue--which FDR and Moley interpreted as bilateral
transactions and therefore not subjects for international
action--to the WEC. In effect, this matter provided a con-
flict between domestic and foreign policy priorities, between
intranationalism-—to use the contemporary phrase--and inter-
nationalism. On March 6 Moley happened upon Norman Davis in
the department, evidently at Hull's direction, drafting a
reply to the British. In reading it, Moley concluded that
Davis, for internationalist purposes, again sought to mingle
debts and the WEC. Testily taking over the task, he worked
on it occasionally during the next two weeks.

Roosevelt's only directive that he, Hull, and Moley
were "to be the works so far as debts are concerned" came on
March 20.59 Two days later Hull, Moley, and Feis finally
agreed upon a reply. But in order to achieve his and the
President's goals on the policy of separation, Moley inserted
an overly drastic statement separating debts and WEC issues.
He moderated these insertions after winning his point, but
doubtless it hurt the three men's personal relations. In
essence this reply established that any order of priority in
settling problems at the WEC was "undesirable," and that
debts discussions would remain entirely separate. Quickly
approved by FDR, the document was dispatched to Britain and
the stage set for tentative discussions of both sets of

issues with the British ambassador.60

227

In the meantime, convinced that Warburg was the only
available adviser with practical and well-thought-out ideas
concerning monetary and foreign exchange policies, Moley,
Woodin, and Taussig persuaded him to return to Washington
and present his views on monetary policy to the President.
Warburg believed that the administration should postpone any
decision on returning to the gold standard (suspended fol-
lowing the March 6 gold embargo), while eventually returning
to a revised one; that it should not create any codified
foreign exchange restrictions; that a "cheap dollar" was not
necessarily a sign of strength; and that the value of the
dollar should be studied intensively, but a "stabilization
fund" should be created at once. After an hour and a half
session on March 15 with the President, Hull, Feis, and
Taussig, during which Warburg articulated these ideas,
Roosevelt concluded that the stabilization fund idea "had
great merit and that he would like it pursued at once."61

Moley's work on debts and Warburg's arrival as a
monetary expert marked a widening policy focus. After his
March 15 performance, Warburg had to stave off maneuvers by
Moley and Woodin, backed by the President, to induce him to
accept appointment as Assistant Secretary of the Treasury.
A "trial balloon" to that effect even appeared in the Timgg
on the 17th. Finally convincing them that he could not
divest himself of his banking affiliations, his stocks (not
profitably, anyway), and his financial responsibility to his

mother, Warburg agreed to continue in an unofficial capacity

228

and to help develop monetary policy.62 In anticipation
of the coming conversations with the British, Warburg and
William C. Bullitt, a former Wilsonian who had diplomatic
experience after the World War and whom Moley continually
advocated for Special Assistant to the Secretary of State,
convinced Moley that they should prepare a tentative program
to answer all possible questions that the British might raise
on debts and the WEC.63

Foreign policy efforts during the last week in March
and in the first half of April continued to be carried on
with minimal attention from Roosevelt. "Except for occasional
consultations," Feis later wrote, "the President contented
himself with what he gathered from his conversations with
a few cronies, particularly Moley, Warburg, and Bullitt."
Beginning with the week of March 27, Moley initiated con-
versations with British and French embassy officials. He
discussed proposals like the possibility of using silver for
all or part of their June 15 debt installments. FDR approved
Moley's proposing this expansionary use of silver (which even
conservative Democrats like Baruch advocated) as well as
their earlier idea of continuing such talks through normal

64 A part of their motivation was, as

diplomatic channels.
usual, political. Moley maintained that the silver proposals
"cannot do much harm," and if they raised the price of silver
they might do some good. At least, it "will do something to

satisfy silver sentiment in this country. . . ." He delegated

Warburg to explain the benefits of these ideas to congressional

229

enthusiasts like Hatton W. Sumners of Texas, chairman of the
HOuse Judiciary Committee, and New York Congressman Andrew L.
Somers, chairman of the House Coinage Committee.65

While Moley coordinated such matters from above,
Warburg, Feis, and others implemented much of the technical
preparation from below. For example, during late March
Warburg occasionally worked on formulating an agenda for the
London Conference and also participated in unofficial talks
with the British and French experts. French indifference or
reluctance on the debts issue, however, caused much delay.
They insisted on some "new fact" about the June 15 payment
before they would be favorable to preliminary WEC discussions.
Thus did debts seem to stall the WEC preparations.66

At this point Norman Davis, who was in Europe on
disarmament negotiations, stepped into Moley's province and
thereby provoked confusion in State. He telegraphed Hull
from London on March 30 that he had told British Prime
Minister Ramsay MacDonald to put the debts "completely in the
background" for the time being and to concentrate on more
fundamental recovery issues, namely, the London Conference.
This irritated Moley. Gaining FDR's backing, he bluntly
confronted the Secretary. "Hull's feelings were apparently
ruffled," ran the Assistant Secretary's diary entry, "-—since
Raymond had pointed out to him in no uncertain terms on
Wednesday, during the discussion over the Davis incident,
that the President had specifically turned over to him the

work on debts and the World Economic Conference preparation."67

230

Roosevelt followed up this episode with a curt memo to Hull.
"Do please keep me in daily touch with what Davis is doing--
I hear several dispatches have come from him showing that
Davis is talking debts and economics. That is 293 his job!"
Four days later rumors from Europe forced FDR's denial to
reporters that the Davis mission had anything at all to do
with debts.68

By early April, confusion and ill will existed to
the point that Warburg and Bullitt "agreed that the present
situation in the State Department, except for Moley, could
be summarized as 'incompetence informed by ignorance' and
that we had a sweet job ahead of us no matter which way it
worked out." Others agreed. Feis confided to Frankfurter
that worse difficulties and confusion could hardly exist,
because Hull and Moley had neither adjusted their working
methods nor reached a clear understanding on hOW’WOrk should
be directed. "The Secretary's only way of trying to deal
with obstacles is to preach against them," lamented Feis.
And although everything could still change, "M. still seems
to move in a honeymoon of irresponsibility." Feis feared
that such circumstances would lead to the selection of a weak
delegation. Also, he seemed to resent Moley's use of non-
department personnel. Tugwell, who was in on some of the
WEC preliminaries, candidly recorded Moley's impressions.
"He says Hull has a mushy mind and that Phillips is a stuffed
shirt. His informal ways must scandalize the over-formal

State Department."69

231

Despite these circumstances the President's program
somehow made progress. On his own initiative but with
Moley's approval, Warburg had drafted and redrafted by
April 13 a six-point statement of American monetary and
economic policy. His major proposals were to establish lower
uniform gold reserve ratio's for central banks of the major
countries, to raise the price of silver by measures like
pegging its price at 50¢ an ounce as well as remonetization,
to remove "all artifical exchange restrictions," to secure
central bank cooperation in their respective monetary
policies, to maintain an "international gold standard in
some form [357 an essential to world recovery," and to raise
the general world price level by measures like clearing
international trade channels and synchronized programs on
international spending to stimulate employment. Three hours
were spent that evening reviewing this draft program in the
State Department. Warburg and Feis did most of the talking,
Hull the asking, with Moley, Bullitt, and Taussig also
participating. Hull expressed himself as "very well pleased"
with it, and he seemed to Warburg "delighted" to have someone
else do it. "He does not exactly convey the feeling of a
profound understanding of the subject," Warburg afterwards
recorded. They arranged for Feis and Taussig to draft a
tariff statement for the following evening's White House
Conference.7O

Roosevelt Spent much of Thursday evening, April 4,

going over the draft program with the State group. The most

232

detailed discussions, Warburg put in his journal, covered
questions of procedure and silver. During this session
Warburg tried to ascertain just what the President thought
about the gold standard. When asked whether he wanted
devaluation left open, as the gold standard clause presently
did, FDR replied it "was exactly what he wanted." They did
not discuss tariffs because Feis and Taussig had nothing
prepared. In conclusion Roosevelt outlined his tentative
"time schedule" for legislation, saying that TVA would be
submitted this week and banking the next. "After that there
would be the time to get tariff and debt authority from
Congress before Congress adjourns, presumably about the 25th
of April."71

Although the President called another White House
conference April 13 to review the program, little progress
had been made on tariff policy. Feis later observed only
that "we did manage in some way or other to formulate a
statement of policies before the foreign missions arrived."
By the 13th the policies were to effect a tariff truce during
the WEC, to propose at the WEC a horizontal cut of tariffs by
all countries, and to propose trade treaties between indi-
vidual countries providing for reciprocal reductions of trade
barriers. Indeed, this probably represents the detail to
which the tariff "experts" had been able to agree. According
to Warburg's journal, that night FDR "enthusiastically

approved" all three proposals.72

 

f]

34.

IC/)

1::

233

Yet this was but the tip of the tariff iceberg. Con-
flict over what the President would fully support on tariff
policy raged within State. Taussig evidently advocated
Moley's views on economic nationalism and the need for
achieving domestic recovery before lowering world tariff
barriers. On the other hand, Feis concerned himself with
the apparent contradiction between a nationalist AAA--which
would need protective tariffs on farm products--and Hull's
continual advocacy of lowering international tariff levels.
In addition, Taussig looked upon Feis as an ill-informed
bureaucrat. Feis resented the fact that Taussig was merely
a volunteer. "Taussig and Feis are apparently fighting like
cat and dog," Moley's diary recorded. "Feis keeps on being
irritable--and yowling that we are drifting, etc. etc." By
mid-April Moley confided to Howe the White House strategy:
to let "Cordell Hull talk one thing re tariffs while the army
marches in another direction. Louis loved the idea."73

The problem was that nobody, perhaps except Moley,
really knew where the President stood. Some of Moley's diary
entries indicate that by April FDR preferred to defer asking
Congress for tariff authority at least until the New Deal
could be enacted, when he could decide for himself the con-
gressional climate of opinion. But as Moley wrote in Aiigr

Seven Years: "It occurred to me that it might, after all, be

 

my leg that F. D. R. was pulling, and not Hull's." Perhaps
Roosevelt talked both sides of the issue, depending upon the

listener's inclinations. But lowering tariff barriers had

234

certainly been a cornerstone of Hull's political philosophy
for two decades. And on April 12, Speaking at Washington's
Pan American Union, the President emphasized the need for
peace in the Americas:74

It is of vital importance to every nation of this

continent that the American Governments, individually,

take, without further delay, such action as may be

possible to abolish all unnecessary and artificial

barriers and restrictions which now hamper the flow of

trade between the peoples of the American Republics.
No wonder Hull could believe that Roosevelt stood with his
cause. Perhaps he would have been less optimistic if he knew
that Moley drafted this carefully qualified speech.

On April 5 the White House had released news of
Ramsay MacDonald's imminent visit to America. Roosevelt's
letter of invitation, drafted in State, was made public on
the 6th. But as a dramatic twist, as well as a real surprise
to department officials and to Moley, the President decided
to invite the heads of other governments too, as Warburg put
it, "without anyone having a very clear idea of what he is
going to talk to them about."75
Why did Roosevelt invite the other nations? Perhaps

he intended to jolt his foreign policy apparatus into action.
William Phillips drily noted that "the system adopted of
putting the 'cart before the horse' seems a rather effective
one in forcing us to take immediate positions." FDR also
valued public opinion. He told Phillips that "the purpose is

largely to educate public opinion in the different countries

and to prepare the ground sufficiently to prevent disagreeable

235

surprises in the actual conference." Other nations trans-
lated this policy initiative in a more obvious way. "Mr.
Roosevelt thinks it is indispensable," the French Minister
of Foreign Affairs privately explained, "to give to world
public opinion the impression that the principal powers are
motivated by the desire to assure the success of the Economic
Conference." Probably all these reasons are accurate. In
any event, Secretary Hull announced on April 8 that invita—
tions also had been extended to Canada and Mexico, making a
total of eleven missions to arrive for the Washington talks
during later April and May.76

By mid-April, therefore, amidst a deteriorating
situation within the State Department, Roosevelt had encour-
aged major initiatives in foreign policy. The debts issue
was moving, albeit slowly. The arrival of foreign missions
promised to accelerate American preparations for the London
Conference. Even though Moley had recently chewed out Feis
for repeated complaints about the use of volunteers like
Warburg and Taussig, Feis could still report to Frankfurter
that "Meanwhile, Moley buckles down more and more to the task
of mastering the detail with which he must continuously deal
during the conferences of the next few months." Whatever
his personal feelings, Feis, and probably others as well,
realized Moley's importance. After the April 13 White House
conference decided upon the agenda, Feis went on, "Then it
will be Moley's job to see that the President consistently

follows the agreed—upon program."77

236

Apparently tariff policy had been settled, at least
in outline. From the Pan American speech and the following
night's decisions to carry on with the three-part tariff
proposal, it seemed the President had decided to move toward
lowering international tariff barriers, a direction con-
spicuously absent from his inaugural. In January he had told
E. D. Coblentz that he planned to use present high tariffs
as a "club" to "compel reciprocal agreements."78 Being
present-minded as he was, FDR likely wanted to keep all
policy options open, with reciprocal agreements as the long-
range goal. So far no major conflict had occurred between
domestic and foreign policy priorities. It remained to be
seen how far he could or would travel down the road toward
economic internationalism. But even as foreign policy forged
slowly ahead, a stalemate loomed on the domestic front

because Senate inflationists had stalled AAA.

VII
Farm relief legislation was the most heavily publi-

cized part of the Roosevelt program throughout the last half
of March and in April. At first it looked like enactment of
AAA might come rapidly. Senate majority leader Joe Robinson
told reporters the bill could be disposed of in two or three
days. And Key Pittman, president pro tem of the Senate,

thought the upper house might drastically alter the bill; but

79

still he predicted passage within a week. Such optimism on

March 16 and 1? probably encouraged the President to move

237
ahead on other parts of his program on the 18th with Moley,
as was his own intention anyway.

The original agricultural adjustment bill, however,
was far too complicated and significant for speedy passage.
Its objectives were to establish and maintain a balance
between the production and consumption of farm goods, and to
regulate and control the marketing of those goods so as to
raise the prices of agricultural commodities to the level
where they could be exchanged for the same amount of non-farm
goods as during 1910-1914. This latter concept soon became
known as the "parity price," or just "parity." General
recovery was its rationale. Agricultural prices had to be
forced up to restore the farmer's purchasing power, Only in
this way could they buy industrial or non-farm goods, which
would stimulate industrial recovery and urban reemployment,
which in turn would create demand for both industrial and
agricultural goods.

AAA sought to achieve parity primarily by methods of
production control and marketing agreements. At heart the
bill embodied the voluntary domestic allotment plan. As
originally drafted, it authorized the secretary of Agriculture
to enter into individual voluntary agreements with farmers
either to reduce acreage or to reduce the amount produced for
market, or both, of nine "basic commodities": wheat, cotton,
corn, hogs, rice, tobacco, milk and milk products, cattle,
and sheep (although the last two were later removed by amend-

ment). In return, only cooperating farmers would receive

238
benefit payments (the allotment). Also, the secretary was
broadly authorized to raise prices by entering into marketing
agreements with processors and others who handled farm
commodities in interstate or foreign commerce. While the
anti-trust laws would be suspended to allow such agreements,
their nature was not spelled out. This power was also
voluntary; but the secretary was authorized to issue licenses
to compel elimination of unfair trade practices. So theoreti-
cally it could be enforced.

In keeping with the Economy Act, AAA would be self-
financed by a tax levied on the first point of processing.
This tax was designed to be set, at the secretary's discre-
tion, so as to equal the difference between the existing
market price and the parity price. The bill also provided
for taxes to be levied on competing products, both domestic
and foreign (at which point internationalists feared it would
conflict with lowering tariffs), and on available stocks of
goods. But the tax was regressive because the burden would
most likely be passed on directly to the consumer.

Flexibility was AAA's most striking feature. Even
its termination was left to the secretary's discretion. The
secretary's broad grant of powers was capped by authorization,
with the president's approval, "to make such regulations with
the force and effect of law as may be necessary to carry out
the powers vested in him by this act." Wallace, Tugwell, and
other administration officials wanted broad powers for two

reasons. First, they hoped that omnibus authority would

 

239

prevent a Split among the bill's supporters. Second, they
recognized that the complexity of the farm crisis required
experimentation in order to discover workable solutions. In
one sense, AAA was neither new nor revolutionary. Its
central reliance on the domestic allotment plan drew heavily
on farm relief ideas advanced during the decade before 1933,
on McNary-Haugenism, and on Hoover's Federal Farm Board. But
perhaps in a more important sense it was revolutionary. The
extent of government intervention in the economy and AAA's
administrative flexibility represented, as FDR said in his
special message, a "new and untrod path" both for American
agriculture and the federal government.80

How well Roosevelt understood AAA's methods and
implications is not clear. On March 20 Moley observed him
discussing it and other bills during a White House confer-
ence of Democratic and Republican leaders. "Comment on
F.D.R.," Moley jotted in his notebook. "Achieves much
because he doesn't Emmy details--naive attitude enormously
helpful." To reporters the President was often indirect.
On March 15, the day before his message, he remarked that
the farm bill would retain some of the "features but not the
principles" of domestic allotment. And on March 21 he simply
told them that AAA "is too complicated a subject." But his
special message suggests that he comprehended the need for
action, and action now, as well as the value of experimen-

tation.81

240
If the President did not fully understand his compli-
cated farm program, neither did much of the news media, the
farmers, and many senators and representatives. Few news-
papers explained the bill in detail. Editorials reprinted in

the Times and the Literary Digest indicate there existed a

 

fair amount of opposition to AAA. But more papers favored it
than opposed it, at least to the point of allowing the "fair
administrative trial" requested by Roosevelt. Most farm
newspapers either supported the bill or remained silent,
although they frequently endorsed additional remedies like
currency inflation. Judging from their letters to Secretary
Wallace, farmers urgently wanted some form of government aid,
even though most were unclear about the means to achieve it.
But this also is not surprising. Devices like the parity
price and production control were relatively new. Even such
seasoned veterans of the 19203 farm battles like Senators
Burton K. Wheeler of Montana and George Norris were unfamiliar
with the newer ideas. The point is that few could deny the
need for gmmg program. In supporting production control for
hogs, Congressman Charles Truax of Ohio perhaps expressed the
preponderant view of agriculture's plight. "For 12 long years
this great basic industry has been sucking the hind teat of
this great country of ours."82
Congressional action spurted ahead in the House but
delay followed in the Senate. Since the House Democratic

leadership restricted debate and allowed no amendments from

the floor, on March 22 the heavily Democratic majority passed

241

AAA, 315-98. But it was different in the Senate, where
hearings began two days later. Processors, packers, and
other handlers of farm products furnished the strongest and
most organized opposition, directing their fire to the
processing tax and to production control. To blunt this
thrust, as early as March 12 Wallace, with Roosevelt's
approval, had asked George Peek to administer AAA. A former
businessman, well known as both a conservative and a veteran
leader of McNary-Haugenism, Peek counted among his backers
Bernard Baruch and Hugh Johnson, Baruch's lieutenant during
the War Industries Board days and a business partner with Peek
during the early 19203. Both responded to Peek's call.
Baruch arrived in the nation's capital on March 28, having
already begun to persuade and pressure processors who opposed
the bill.83

Other opponents and objections appeared both from
within and without the Senate. "Cotton Ed" Smith, chairman
of the Senate Agriculture Committee and notorious for his
single-minded determination to legislate his cotton option
plan, opposed the bill because he had been excluded from the
drafting (according to Peek) and because he insisted that it
include farm mortgage provisions (according to W. I. Myers).
Aside from other Senate opponents, John A. Simpson, leader of
the radical Farmer's Union which claimed to represent
thousands of small farmers, urged adoption of his appealing
and apparently practical cost-of—production scheme. While it

had an admirable goal, namely, adequate living standards for

242

farmers, Wallace testified that its means were rather
impractical: reliance on a two-price system, but without
production control. With hearings continuing four days, the
Smith committee's report delayed by controversy over issues
like cost-of—production and farm credit, and with the
prospect of unlimited debate on the Senate floor thereafter,
the focus shifted to amendments. The President had promised
farm credit provisions first in the inaugural and had
reiterated the promise in his special message on agriculture.
Conspicuously absent from AAA, farm credit had become a
legitimate reason for congressional delay.84
Throughout the Hundred Days Morgenthau continued to
act as Roosevelt's principal adviser on farm credit. As an
integral part of both his farm relief and governmental
economy preparations, in early March FDR delegated Morgenthau
to draft an executive order to consolidate all government
agencies lending money to farmers. "The idea he has in mind,"
Morgenthau stated in an interview on March 3, "is if a farmer
wants to get credit from the government he can get it without
having to travel a thousand miles." Credit therefore would
be cheaper and easier, he emphasized, and economies from
consolidation alone would amount to "several millions." This
executive order was the first step of the three-part program
that he and William Myers had devised during the interregnum.
A day or two before the inauguration, Morgenthau in turn
delegated the drafting assignment to Myers, Marvin Jones,

and Herman Oliphant, an expert in statistical and quantitative

243
aspects of law, soon to be general counsel of the forthcoming
farm credit agency. These three prepared the order within
two weeks and cleared it with Roosevelt's principal senatorial
liaison James Byrnes, who was well versed in the appropria-
tions acts with which the order had to comply.85
While it appeared that Roosevelt acted on farm credit

86 actually his executive

in order to end delay over AAA,
order had been prepared before he asked Congress for farm
relief legislation. Rather, the bottleneck occurred because
Morgenthau, Myers, and the others simply could not draft an
acceptable farm mortgage refinancing bill swiftly enough.
And the President, busy with CCC and other policies, did
little checking on the matter until it was forced on him
later in March. After drafting the order, Morgenthau and
Myers conferred with the various farm leaders who now had
credit proposals. At length they incorporated their program
into a draft bill which FDR approved at a White House confer-
ence on March 23. Several important congressional leaders
attended and agreed to this measure, including Senators
Robinson, Smith, Wagner, William G. McAdoo of California
(who was skeptical), and House floor leader Joseph Byrns,
Speaker Henry Rainey, and chairman Henry Steagall of the
Banking and Currency Committee.87
On Monday, March 27, following Simpson's testimony
of the 24th and 25th but before Morgenthau completed the farm

mortgage bill, Roosevelt acted on farm credit. Coupled

with a message of explanation, he created the Farm Credit

244

Administration by executive order. FCA would consolidate the
agricultural credit functions of the Farm Board, the Farm
Loan Board, the secretary of Agriculture, and the RFC; and it
abolished the stabilization operations of the Farm Board.
The net result, FDR stated, would be a better coordinated and
more uniform farm credit program. It would also mean govern-
mental economies of $2 million immediately, with more antici—
pated in the future. This reorganization would become
effective in sixty days, unless Congress legislated otherwise.
And he appointed Morgenthau to administer the new FCA. Pro—
nouncing him the "New 'Czar' of Farm Finance," the Literary
Digest found press reaction both to FCA and to Morgenthau's
appointment inspired "another wave of confidence."88

Roosevelt's executive order, coming amidst criticism
of AAA, finally gave him leverage with those who demanded
action on both farm mortgages and farm relief. Immediately
following the President's press conference on March 31,
Senator Smith, his committee, and Joe Robinson filed somberly
into the Oval Office. Smith and Senator Bulkley had
requested to see FDR alone about farm credit; but he shrewdly
responded by summoning the entire committee. Afterwards
unidentified senators told reporters that the President did
not "crack the whip," but that he did press for immediate
action on AAA--still in committee-—and particularly for the
so-called dictatorial provisions for Wallace. Robinson

remarked to correSpondents that probably the mortgage bill

245

would be combined with AAA; but since the former was still
incomplete, that would mean further delay.89

Farm mortgage legislation, as Robinson implied, held
one key to AAA's enactment. Smith had insisted upon such
provisions from the beginning, and he refused to allow his
committee to approve AAA until the President authorized
joining the two. But pressure on Roosevelt also came from
another direction. An old Wilsonian who had helped to swing
California for FDR at the 1932 convention, Senator McAdoo
introduced legislation for a "Super Farm Bank" to supplement
the existing organizations. This the President wanted to
avoid because, among other reasons, it eliminated the econo-
mies. McAdoo acted only after a White House conference at
which Roosevelt declined to approve his plan. Afterwards FDR
asked Myers to persuade McAdoo to back the administration
bill and have the super bank be a "division" of FCA. But the
try failed. Myers could get only as far as McAdoo's legis-
lative assistant.90

The national need for a farm credit program could
scarcely be exaggerated. By April some estimates found that
farm debts and mortgages totalled in excess of $12 billion.
These affected at least 40% of farmers. $8.5 billion fell
into the mortgage category, most of which had been acquired
in times when land values and farm prices were considerably
higher. While farm income had declined by half since the

parity period, indebtedness had dropped off only 7% and

mortgages had actually increased. The Morgenthau bill sought

246
to ease this crisis by authorizing FCA to issue up to $2
billion in Federal Land Bank bonds. FCA would use capital
thus acquired to refinance farmers' obligations on the basis
of a lowered principal, a maximum interest rate of 4%% (half
of average rates), and postponement of mortgage and debt

payments for up to fifteen years. Like the Kansas City Star,

 

most neWSpapers in rural areas favored the complicated
scheme as an immediate step to take the "sharp edge" off the
farm crisis. "Then the farmer will be in a position to get
by, pending a rise in prices which will come with business
recovery."91
During the March 31 conference with the Senate
Agriculture Committee, therefore, Roosevelt could promise
quick action on an emergency mortgage bill. He had already
created FCA. And he could also say that he had scheduled a
showdown meeting for the following day between the Morgenthau
and the McAdoo people. Present in his office on April 1 for
this supposedly "final" decision on farm credit were Lewis
Douglas, Morgenthau, Myers, McAdoo, Robinson, and several
congressional leaders. Myers recalled his own consternation
at this point because of McAdoo's reputed "political clout."
But doubtless FDR would have continued to follow Morgenthau's
advice on farm credit, in view of the latter's consistent
performance since December. In his genial manner the President
"decided" for the Morgenthau bill.92

This presidential maneuver turned a corner in AAA'S

enactment. Later that afternoon Smith announced that he had

247

in turn decided not to introduce his substitute farm bill.
On April 3 Roosevelt asked Congress for farm credit legisla-
tion. In keeping with his economy in government program, he
promised that the act would "not impose a heavy burden upon
the National Treasury." Two days later Smith's committee
reported an amended AAA out to the Senate floor.93

Roosevelt had no sooner cleared the first major
congressional obstacle to his farm program than he was con—
fronted with a second, even more popular than the first.
Campaigns for inflation and devaluation of the dollar rever-
berated across the political scene in April. The inflation-
oriented Committee for the Nation, led by businessmen like
James H. Rand, Jr., of Remington, Rand, and Lessing Rosenwald,
of Sears, Roebuck, arrived in Washington and conferred,
propagandized, and formulated proposals for devaluation,
specifically the Goldsborough bill. According to committee
spokesman George Warren's diary, the President confidentially
stated that some form of devaluation was acceptable.94
Congressional proponents of "doing something" for silver
increasingly pressured the White HOuse. Already an advocate
of accepting part of the war debts payments in silver, Moley
served as liaison with silver enthusiasts like Senators
Pittman and Wheeler and Representative Somers, all of whom
proposed silver purchase legislation.95

When the Smith committee reported out AAA on April 5,

it included both the emergency farm mortgage provisions as

title II and a unanimously adopted report, written by

248

inflationist Elmer Thomas of Oklahoma, which endorsed
currency inflation as the "only real farm relief." News-
papers speculated two days later that Roosevelt might seek
instead to reflate commodity values by a vast public works
program designed to revive business, using Wagner's one
billion dollar works bill as a foundation. "The President
is said to have told a number of inflationists," reported
the Timgg, "that there is to be no starting of the printing
presses to increase the circulating medium, that it was
resort to printing press money which led to the collapse in
Germany and in Russia."96

As usual, privately Roosevelt was flexible. He wrote
Colonel House on April 5 that inflation was "simply inevita-
ble." Two days later he explained to reporters that he
recognized deflation had gone too far since March 4. Thus
he favored "inflation," but by that he did not mean currency
inflation. As he had indicated to House, he seemed to mean
an expansion of the economy, although his responses on
questions concerning inflation were usually vague and guarded.
Somehow he hoped this expansion could be achieved without a
bond issue, without public works, and with as little new
Spending as possible. "We seem to have a policy of reducing
expenses in government services and of expanding them in
making work," Tugwell observed in his diary, "though the
latter policy has not yet become clear."97

To Roosevelt, however, a program of increased spending

did not necessarily conflict with his basic drive for economy

249

in government. The concept of an extraordinary budget for
emergency spending--"You cannot let people starve," he
emphasized to reporters in March while explaining the
two-budget concept, "but this starvation crisis is not an
annually recurring expense"--was neither new nor unorthodox.
During the depression it became common business practice.
Advisers as fiscally conservative as Baruch had commended
FDR for accepting it in 1932.98

In response to converging forces of inflation, Warburg
devised the "Bunny." This complicated scheme sought to
refinance the war debts by having debtor nations transfer
their obligation to the Bank of International Settlements.
The BIS would then shift these to the United States through
a sinking fund, interest spent on American bonds, and note
transfer. Warburg calculated this would make the debts issue
magically disappear—~hence the nickname "Bunny"--and would
provide new non-American revenue for public spending. Perhaps
it could settle the inflation wrangle as well. Warburg also
had concluded that the Budget Director verged on making
himself "politically impossible" because of his too staunch
opposition to all Spending programs--a position which Douglas
could only maintain, however, with presidential acquiescence,
if not outright support. So when Warburg explained the
"Bunny" to Douglas on the morning of April 14, the latter
desperately seized upon it to stave off the inflationists.

And Moley had changed his mind. "On second thought," Warburg

happily noted in his journal, "Moley is quite impressed with

250

the scheme and wants to have a quiet hour with the President
and me alone to go into it seriously."99

The quiet hour never arrived, because that April 14
the Senate began to consider inflationary amendments to AAA.
Lynn T. Frazier of South Dakota proposed refinancing farm
mortgages at only 1%% interest on an $8.5 billion federal
bond issue, with the government to print currency if the
bonds did not sell. Huey Long of Louisiana proposed that
the Treasury purchase Silver at going market prices and issue
silver certificates. And Burton Wheeler proposed to substi-
tute unlimited coinage of silver at 16-1 for Long's amendment.
Since April 11 the dollar had fluctuated widely on foreign
exchanges, apparently due to doubts in foreign capitals as
to whether the administration would defend the dollar further
by continuing to ship gold, thus staying on the international
gold standard.100

By mid-April it appeared that the Senate might lead
the President not only on the crucial issue of inflation but
also on industrial recovery, as Hugo L. Black's spread—the-
work bill had passed on April 6. "The thirty hour week was
the sort of thing the country wanted," commented Ernest K.
Lindley. "It was revolution boiling up from the bottom."101
If revolution was an exaggeration, revolt and emerging
Senate leadership were not. Again it was time for bold presi-

dential "action, and action now," before Congress took the

lead and fashioned the concert of interests from its own

251
perspective. Franklin Roosevelt had formulated much of his
domestic program. But he had neither led far enough toward

a comprehensive New Deal nor fully grown into the presidency.

CHAPTER VI

TOWARD INTERNATIONAL AND INDUSTRIAL RECOVERY

Tuesday, May 16, was a flurry of activity for
Franklin Roosevelt. His message to the heads of fifty—four
nations loomed largest on his schedule. To be released
around noon, it had been drafted over the weekend with the
help of Secretary of State Cordell Hull, Under Secretary
William Phillips, Special Assistant Bill Bullitt, disarmament
expert Jay Moffat, and Louis Howe. On Monday Raymond Moley,
just returned from a four-day weekend, redrafted it at his
colleagues' insistence to add what Moffat termed the "full
mellow notes" of a pipe organ. A White House conference
between Roosevelt, Huston Thompson, and a senator broke up
around noon. The President could not keep his mind "on
anything else," Thompson afterwards grumbled, once Moley and
Steve Early entered with a draft letter to Congress
explaining the message.1

Issued to the press within an hour, Roosevelt's
message discussed first the forthcoming World Economic
Conference and then emphasized the Disarmament Conference at

Geneva, which had all but stalemated over German rearmament.

The WEC must reach conclusions quickly, the President

252

253
declared. "The Conference must establish order in place
of the present chaos by a stabilization of currencies, by
freeing the flow of world trade, and by international action
to raise price levels. It must, in short, supplement indi-
vidual domestic programs for economic recovery, by wise and
considered international action."

Going on to his major topic, Roosevelt warned of

the danger of increasing armaments. While the "ultimate
objective" of the Disarmament Conference must be to eliminate
all offensive weapons, its "immediate objective" must be to
substantially reduce these. Therefore the Geneva discussions
should follow the "MacDonald plan" for these goals, agree
upon timing and procedure, and insist that existing armaments
not be increased above present treaty obligations. Dependent
upon fulfillment of these three conditions, he proposed a
fourth (which he had inserted over the objections of his
State Department advisers) to insure world peace during the
period of disarmament:

That all nations of the world should enter into a
solemn and definite pact of non-aggression; that they
should solemnly reaffirm the obligations they have
assumed to limit and reduce their armaments, and, pro-
vided these obligations are faithfully executed by all
the signatory powers, individually agree that they will
send no armed force of whatsoever nature across their
frontiers.

This message went to every ruler of state of any consequence,
from King Zog of Albania to King Alexander of Yugoslavia,

including President Kalinin of the Soviet Union.2

254

What was Roosevelt's purpose? At his 2lst press
conference that afternoon he proved exceedingly elusive.
Called Tuesday instead of the usual Wednesday morning
"because most of the news broke today," the President found
reporters full of questions about his message. He denied
that sending it to Moscow constituted diplomatic recognition
(although the State Department's solicitor disagreed),
explaining that he had addressed his appeal to all nations
attending the Economic Conference. Did it apply to Europe,
to Germany, to Asia? To the "whole world," he replied.
Responding to why he thought nations who violated the Kellogg
Pact would now obey a non-aggression treaty, he said: "Just
the general hope that nations will, more and more, respect
their treaties." About his "intention" he refused to comment.
At length he stated that he had been working on the concept
of the message since January, that he had only consulted
Hull, and that further "details" had not been worked out.
"In other words, these are principles. We have not gone any
further." Following some questions on domestic affairs, the
session ended without any concrete information--either on or
off the record-~about the disarmament appeal. Indeed, the
lack of meaningful information had characterized almost every
news conference since mid-April.3

Nevertheless, the American press generally treated
the message favorably. Editorializing hopefully, the

New York Times found Roosevelt's declaration to be "broader

 

in scope and more greatly daring in tone than even the words

255

which President Wilson used to address the world in the midst
of the Great War." The "implication" seemed clear enough.
NOW'America was prepared to enforce the Kellogg Pact.
"Otherwise," concluded the editors, "the President's address
to the world would be simply another exhortation without a
pledge of practical action." But aside from this telling
criticism, as Moffat recorded in his diary, the message got
"an exceptionally good press here."4

Yet apparently exhortation was part of Roosevelt's
purpose. He spoke more candidly of his intentions to some
advisers. Publicly announced on May 12, German Chancellor
Adolf Hitler had summoned the Reichstag into session for the
17th. Informed observers speculated that he would announce
a policy of rearmament because the Geneva Conference had
affirmed that some of his private troops were in fact illegal
additions to Germany's armed forces, limited by the Versailles

Treaty to 100,000.5

At their regular Monday luncheon, the
President told Henry Morgenthau that he had deliberately
issued the appeal before the Reichstag speech, hoping "to
influence him [Hitler7 in this manner."6 That evening FDR
told James Warburg that he was "practically asking the world
to fish or cut bait on the question of disarmament and
putting Germany and Japan on the spot."7
Would the President back up his message? There is
no evidence that he so intended. Doubtless reporters on

May 16 came away puzzled by his evasiveness. Later cynical

of such verbal attempts at international cooperation, Moley

256
labelled this a period when Hull's belief in Roosevelt's
enthusiasm for international cooperation underwent a "merci-
less pummeling."8 In effect, the 54-nation message epitomized,
as the iimE§_hinted, the diplomacy of exhortation.

Yet the section on the Economic Conference was a
fitting capstone to one major theme of mid-April through
mid-May. International recovery had been the subject of
preliminary talks in Washington between the United States
and missions from eleven major nations. Thus Roosevelt's
orations on stabilization of currencies, lowering trade
barriers, and raising world price levels all reflected his
optimistic public attitude toward these diplomatic conver-
sations--even at a time when such optimism already appeared
ill-warranted, both abroad and at home.

Roosevelt's activities on May 16 also reflected other
themes of this period. His special message on industrial
recovery lay ready to go to Congress on the 17th. He and
Moley first drafted it as they worked on the second major
radio talk, broadcast May 7.9 Even though industrial recovery
took a back seat to its international cousin, at least so far
as FDR was then concerned, the domestic legislative program
now stood virtually formulated. Throughout the program ran
his personal preoccupation with economy in government, whose
chief symbol was still Budget Director Lewis Douglas. But
economy had become more controversial. On the afternoon of
the 16th, Eleanor Roosevelt and H6we visited the camp of the

"bonus" army at Fort Hunt, Virginia. There the First Lady

257
waded through the mud and sang "There's A Long, Long Trail"

10 Discontent of the

with many of the disconsolate veterans.
veterans, and soon of their congressional supporters as well,
loomed as a latent threat on the New Deal horizon because
(due to the Economy Act) the White House had recently
announced severe cuts in pensions and benefits. The threat
would become real in June.

International and industrial recovery, coupled with
the prodding along of his domestic program, kept the diffuse
attentions of an overburdened but enthusiastic Roosevelt
through the middle of May. But hopes for an early adjourn-
ment of Congress might now be further delayed by the issue
of industrial recovery. In the meantime, however, Congress
had passed on May 12 acts for Federal Emergency Relief and
for Agricultural Adjustment, although controversy had delayed

the latter.

II

By mid-April the President's domestic program had
been stalled by inflation.11 Since the principal purpose of
the farm relief bill was to raise commodity prices, and since
inflation had long been regarded by farmers and their spokes-
men as the most effective means to achieve that objective,
AAA was the natural vehicle for various schemes to expand the
currency.12 Men like Senator Elmer Thomas, as he later

recalled, simply reasoned that high valued money caused

prices to be low, and vice versa. The problem confronting

258
Roosevelt was how to raise prices. Therefore, Thomas con-
cluded, "It was my plan to increase prices by making money
more plentiful."13 When Senator Burton Wheeler's 16-1 silver
amendment came up for a vote on Monday, April 17, a series
of administration maneuvers to ease it into the background
had already begun.

On Saturday Moley had learned about the Wheeler bill
from Senate Foreign Relations Committee chairman Key Pittman,
an important Democrat whose abiding preoccupation was silver.
Moley quickly informed Roosevelt. Over the weekend FDR,
Moley, and Pittman devised a resolution for the senator to
introduce after Wheeler's failed, which they assumed would
happen Monday. Pittman's provision would authorize the
President to receive the June 15 intergovernmental debt pay-
ments in silver at 50¢ per ounce (23¢ over current world
market prices), a proposal discussed within the administra-
tion since late March. Upon learning of this plan Monday,
however, Warburg convinced Pittman to shelve it, on the
grounds that it greatly prejudiced the U.S. debt trading
position and that his debt scheme, the "Bunny," would do the
job more effectively. In the midst of this conversation he
learned that Pittman had covertly arranged for Wheeler to
get "about twenty-five votes," some of whom were absolutely
opposed to the measure. Otherwise, Pittman confided, "he
will claim that he did not get a fair deal and will bring
the matter up again at every occasion, whereas, if he get a

decent vote, he will consider himself beaten and drop it."

259

For his part, Pittman liked Warburg's debt scheme and calcu—
lated that Congress would pass it.14 But the silver Senator
seriously misjudged the strength of inflationist sentiment
by April 17.

Later that day Wheeler's amendment was defeated,
44-33, in a vote controlled by the administration; but on the
surface it looked like a gain of 15 votes since an identical
measure had been voted down in January.15 Rather than being
satisfied, as Pittman had figured, this close vote merely
whetted Senate inflationist appetites. Early Tuesday morning
Senators Robert Bulkley and James Byrnes telephoned Moley
with the same alarmist message. Thomas had not only lumped
together in an omnibus amendment to AAA all three popular
inflationary ideas-~issuing greenbacks, remonitizing silver,
and cutting the gold content of the dollar——but he also
appeared to have the votes. "The peril was," Byrnes later
wrote, "that the general feeling of crisis would result in
legislative programs that were not merely bold and experi-
mental but downright reckless and unpredictable in their
effects." Moley therefore picked up Byrnes and they hurried
to the White House.

Around nine o'clock they met with Roosevelt. Both
Moley and Byrnes both later wrote that the President quickly
decided to accept a rewritten form of the Thomas amendment.
Byrnes further said that FDR asked him to bring Thomas to the
White House that afternoon to persuade him to accept revisions.

Neither Moley nor Byrnes made it clear whether the issue was

260
to accept discretionary inflation versus being forced to
accept a mandatory version, but the implication from both
accounts is that fear of the latter was a prime motive for
Roosevelt's decision.16 At that point FDR telephoned Will
Woodin and directed that "no more gold was to be shipped out

17 America had abandoned the gold standard.

of the country."
It is doubtful, however, that fear of uncontrolled
inflation motivated either Roosevelt or Moley that morning.
Moley breakfasted around eight—thirty with Warburg and
Bullitt, apparently after the two phone calls. According
to Warburg's journal, Moley said that Thomas would introduce
a measure that day "which would undoubtedly pass, authorizing
the President either to devalue the dollar or to turn loose
the printing presses, or to carry out any other form of
inflation." Both Moley and Bullitt indicated they considered
this "harmless," and they wanted Warburg to work out a com-
promise bill attaching the "Bunny" to it. Warburg further
recorded that he took the opposite view, that it would hamper
gold standard discussions with the foreign missions, and that
"by all means the resolution should be killed. Moley finally

agreed and went off to the White House."18

Warburg's journal
entries for the 18th and several days preceding it suggest
two points. First, the President and his closest advisers
regarded the debt scheme as equal in importance, if not more
so, to the inflation issue-~at least up to April 18. Second,

despite the alarmist messages from Byrnes and Bulkley, it is

unlikely that close advisers feared that inflation could pass

261
the Senate. On the contrary, the Wheeler vote had been

"controlled" by the administration, Moley recorded in his

 

diary. The professor had played a part in this himself,
advising "in a number of instances" opponents like Senator
Carl Hayden of Arizona to vote "yes" only if it appeared
Wheeler would get less than "30 votes."19

When Warburg saw Moley again at ten-thirty that
morning, he learned that not only was the President enthusi-
astic about the "Bunny," but he was talking about it to
everyone who came in, a good sign. Also, he learned that
Roosevelt had agreed to send for Thomas "and tell him not to
introduce the inflation resolution."20 While Warburg did not
learn all that had tranSpired, at that point there was no
suggestion that the White House was acting out of fear of
Senate action toward uncontrolled inflation.

Perhaps none of these advisers knew that Roosevelt
had long intended to depart from the gold standard and that
he was also receptive to inflation. He had indicated his
feelings about the gold standard to George Warren on the
night of March 5 and, indirectly, to reporters during the
first press conference three days later. As recently as
April 12 he had seen Warren, J. H. Rand, Jr., and other
leaders of the inflation-oriented Committee for the Nation.
During this conversation FDR expressed much interest in a
revision of the "gold clause" for public and private con-

tracts and in the Committee's proposals to revalue the dollar

262
downward. Also, he was "surprised and pleased to know that
Walter Lippman [Sig7 had endorsed inflation." Coupled with

21 there is

other earlier private statements and actions,
little doubt of the President's flexibility on both the gold
standard and inflation.

Tuesday afternoon Roosevelt dealt with both issues.
In Cabinet he simply announced his decision on gold. Harold
Ickes afterwards recorded that FDR linked his decision to
"the drive that has been made on the dollar in Amsterdam,
Paris, and London during the last few days." Evidently that
"drive" was common knowledge within the administration.
After this session the President saw Thomas and Byrnes. The
latter only remembered that FDR did an "excellent sales job,"
inducing Thomas to substitute an administration draft for his
own amendment. But that is only a partial account. Thomas
had written Roosevelt the preceding day, explaining the four
powers that he proposed "in your discretion." "The amendment
is intended to state principles only," the Senator empha-
sized, "and if it could be agreed to in the Senate then it
could be referred to Treasury experts to be put in better
Shape so that the conferees on the Hill could agree to the

principles worked out in detail as you might suggest." This

 

was no threat, implied or real. The tone of this letter

shows that Thomas was much concerned with getting presidential
approval, and that virtually any inflationary measure would
satisfy him. Doubtless he reiterated these points in the

conference. And he later recollected appealing to the

263
President to accept broad monetary powers also, because it
would allow him to "definitely agree to," if not dictate,
policies at the Economic Conference which would raise world
price levels. Thus each man saw for himself something in the

22 All of these maneuvers were kept secret

other's bargain.
because a White House conference was scheduled that evening
to complete the WEC agenda for the Washington talks.

Moley, Warburg, and Bullitt arrived in the decorous
Red Room around quarter to nine that evening; but a dis-
cussion of the WEC agenda never materialized. Evidently in
an amiable mood, Roosevelt abruptly remarked as a iii:
accompli that the United States had abandoned gold; that he
had decided to stop all gold export licenses. And he wanted
only to discuss the imrm of the Thomas amendment, which he
had accepted in substance a few hours earlier but which he
wanted carefully rewritten.23 He handed Moley a printed copy
on which he had written Moley, Pittman, Byrnes, Treasury.
"Here, Ray, you act as a clearing house and take care of
this." By then others in the discussion group had arrived,
including Hull, Pittman, Herbert Feis, Woodin, and Douglas.

"Congratulate me," Roosevelt remarked to Pittman as
he entered, "We are off the gold standard." Similar remarks
to others amazed advocates of sound money like Douglas and
Warburg. For awhile the President talked about the amendment,
explaining what was needed was "a consolidation of power in
his hands to inflate credit--not currency—~in order to push

up the price level.25 Unless something of this sort happened

264
immediately, Warburg afterwards recorded, FDR emphasized that
Congress "would take matters in its own hands and legislate

mandatory law instead of permissive." He never said anything

 

about whether such a law could pass over his veto; in fact,
he never indicated, nor had he all day, that he personally
opposed it.

After Roosevelt read the amendment's four provisions
(the fourth being authorization for a Dollar Stabilization
Board to fix purchasing power of the dollar at 1926 levels),
a raucous debate ensued on the merits, or demerits, of
inflation. Douglas and Warburg, who had protested alone
before the others arrived, carried the brunt of the attack.
They "fought like Tigers," as Moley put it, arguing that
uncontrolled inflation would surely result. FDR, Moley,
and Pittman took the position that at any time they could
reverse the machinery and control the inflation-~a view
Warburg could only later characterize as worthy of King
Canute. After the meeting finally broke up at eleven-thirty,
Douglas remarked, "This is the end of Western civilization,"
meaning that economic nationalism would inevitably lead to
world war. "All of the men there agree," Moley's diary
recorded, "that it was the most momentous day since the war.
We were letting the dollar fall--throwing out the sacred
gold standard idol."25

On the following morning the President devoted most
of his 13th press conference--the most informative of this

period--to a discussion of embargoing gold shipments,

265
inflation, and his objectives. At one point he likened
himself to a quarterback who wanted his team to score a
touchdown on commodity prices. But his wandering responses
to key questions indicate either that he had not thought
through all of the new policy implications, or that he still
preferred to avoid unequivocal public statements. Embargoing
gold, he explained, meant that the dollar would "take care
of itself" against foreign currencies by seeking its own
level, since it was no longer artificially pegged. He had
little doubt that this would raise commodity prices, perhaps
because he had been informed that morning of commodity gains
since yesterday. For example, he cited cotton as "up between
32 and 35 points." But he did not explain the price-raising
phenomenon beyond this characteristically random example.
Did he have in mind the steps to be taken? "Nothing else,"
came the reply. "I think on the general subject, it is
awfully difficult to particularize." More important, after
noting that an international gold standard would be a London
Conference objective, he remarked that a controlled or
managed currency must be joined with "the effort to get a
more controlled credit, because the two go hand in hand."
But he did not elaborate on controlled credit, nor had he
done so the previous evening. He did agree that public works
would fit this credit category (his first positive public
comment on works), but the amount Spent would be nowhere near
the rumored "5 or 6 billion." Beyond such statements he

could or would not go.26

266
More important than his public explanation of con-
trolled inflation was how his close advisers rewrote the
Thomas amendment. That day Moley went to the Senate where
he met with Pittman, Byrnes, and others. Between them they
worked out a measure providing that the President had dis-
cretionary authority to alter the gold content of the dollar
up to 50%, to accept up to $100 million in silver as payment
on war debts, and to delete the Dollar Stabilization Board.27
Warburg, Douglas, and a Treasury official rewrote section A,
providing that the President could negotiate with the Federal
Reserve to issue up to $3 million in greenbacks through open
market bonding operations. Accepted by Roosevelt that
afternoon, this provision meant that any new paper money
would be backed by government bonds. Wednesday evening in
Moley's suite at the Carlton, with much confusion and
shouting of instructions, Warburg finally took Douglas,
Pittman, and a stenographer into another room to complete the
redrafting process. Roosevelt accepted the final version on
Thursday and issued an executive order extending both the
March gold embargo and the Treasury's authorization to
license all foreign exchange transactions.28
Warburg's reflection on Roosevelt's acceptance of

the rewritten amendment is revealing:29

There was a certain amount of naughtiness in Roosevelt.

The temptation to really do something that would shock

all of us, or shock those of us who were shockable, was

tremendous. Having had that fun, he was perfectly

prepared to be more sensible about it. I wouldn't have

been surprised if he would have evolved some modifica-
tion himself if he'd known enough about the substance

267

to do it. It was shocking, but infinitely less

shocking than what we have today [I95i7 which is the

same kind of ignorance, but without the marvelous

intuitive sense of direction.

The Thomas amendment's effect on the country,
Ernest K. Lindley pointed out, was to experience the "regular
effects of currency inflation" without the President having
to use his discretionary powers. The dollar fell in value,
while prices of commodities, bonds, and stocks temporarily
rose for the next three months. A fear of higher prices
caused many with accumulated funds to invest in commodities
and finished products, rather than lose assets via inflation.
This pumped new purchasing power into farming and mining
regions. The entire process halted the long downward trend
of deflation. The nation experienced a false sense of
optimism and much speculative buying, both of which helped
remove Roosevelt's lever of £335 from Congress, especially
among inflationists and hard-line conservatives.3O
In the final analysis, why did Roosevelt decide

simultaneously to go off gold and to accept what he termed
controlled inflation? Were the two decisions linked?
Historian Herbert Feis, himself a minor participant in the
famous Tuesday night conference, later restated several
plausible reasons to leave gold. He concluded that inflation
was only one reason. Another was what the President described
as the drain of gold reserves by foreign speculators, which

could have put an unbearable strain on the banking system,

thereby severely limiting credit expansion. FDR soon

268

perpetuated such reasoning with one of his favorite "stories"
(according to Tugwell): that the Fritz Mannheimer group in
Amsterdam, having some $1.5 million with which to speculate,
had started a drive on the dollar and he simply decided not
to defend it. Also, as Feis pointed out and as the President
told correspondents and the White House conferees, going off
gold would create a rapid rise in commodity prices. This
rise should boost purchasing power and thus allow him to
avoid a mandatory congressional inflation. It might help
American exports, especially farm products. And it should
give the United States a better WEC bargaining position.
All of these are valid reasons. In addition, within the
political and economic context of April 1933, the idea of
leaving gold had "come of age."31

Even if Roosevelt had thought through all such rami-
fications, however, the perspective of April's events and
pressures offer a more likely answer. By accepting the
Thomas amendment he could help speed AAA through the Senate
where it had languished for three weeks, lately stalled by
inflationist sentiment. To FDR, accepting inflation and
dismissing gold were inextricably intertwined. Both led
toward raising prices and a depreciating dollar, two sides of
the same coin, as his press conference remarks on the 19th
indicated. Political timing had become a key intangible, as
it had with the legalization of beer. AAA therefore was the
crux of his overlapping decisions. That he and many of his

advisers put an "undue reliance" on the importance of

269
increasing farmer purchasing power, even at the expense of a
greater cost of living to consumers, was a central political
fact of 1933.32 This accounts for the paramount place of
AAA in the early New Deal and in Roosevelt's thinking; and
thus the logical consequence became his accepting both a
"controlled" inflation and the end of the gold standard. The
only reason that he invoked the specter of a mandatory infla-
tion was to "shock" his advisers and the press. It was
political overkill, the tactic of asking for two loaves when
only one--an important one-—is desired.

Considering that in early April Roosevelt's goal for
adjournment was by the 25th, the congressional aftermath
suggests that his victory on inflation did less to speed AAA
than he had hoped. The Senate delayed further, restoring
free coinage of silver and increasing the amount of silver
eligible for debt payments to $200 million. In this form
AAA finally passed the Senate on April 28 by a party vote of
64-20, but only after the failure of strenuous efforts to
attach a provision for the payment of the veterans' "bonus."
Upon going to conference in early May, AAA was expected to
pass in a few dayS-—once conferees had thrashed out the final
obstacle, cost-of—production.33

In the meantime, while gradually succeeding in his
maneuvers to break the Senate stalemate of his domestic
program, the President occupied himself more and more as

chief diplomat.

270
III

Following the President's own plan, the parade to
Washington of special delegations from eleven of the nations
attending the World Economic Conference began April 21.
Britain opened these preliminary conversations, followed by
France and Canada. Roosevelt devoted much personal interest
and attention to these three major nations. But in May,
returning more to his domestic program, with an eye to
industrial recovery, he involved himself less with the German
and Italian delegations. For the most part he left Moley,
Warburg, and the State Department team to deal with the
Argentines, Chinese, Mexicans, Brazilians, Japanese, and
Chileans. Lesser Department officials explained the issues
to resident diplomats from nations which did not send
missions. The American WEC program, formulated almost
entirely by Warburg in early April, looked to the "Bunny" to
solve the war debts imbroglio; and it stressed the need for
stabilization of currencies, freeing the flow of world trade,
raising the level of international prices (all summarized in
the May 16 message), and a truce on the raising of tariffs
before and during the London Conference.34

The most negative result of the crowded hours of
diplomatic and presidential exchanges was the sense of false
optimism about the Economic Conference which Roosevelt helped
foster, a feeling even he was beginning to doubt by mid—May.
He did not appreciate that in the near future he might be

called upon by the other nations to agree to proposals, like

271

the stabilization of currencies, which he exhorted. If there
was a conflict between intranational and international pri-
orities, he deferred decision, as he by now tended to do on
many foreign policy matters. In the meantime, might not
apparent conflicts work themselves out? Perhaps he believed
he could achieve both international and domestic economic
recovery without having to sacrifice either. In any event,
only he could make the final decision to support one or the
other. And the time for decision had not yet arrived.

British Prime Minister Ramsay MacDonald and his
diplomatic retinue arrived Friday the let. MacDonald began
private talks with Roosevelt that evening, while Moley
supervised negotiations between the American and British
experts. During the day Warburg had dictated a new aide
memoire summarizing in black and red the American agenda, the
black sections being ideas to advocate as "out-and-out sug—
gestions" and the red being those for which the United States
should "obtain a trade advantage." Not differing much from
earlier proposals, this document formed the basis for most

of FDR's conversations with the heads of delegations.
the lower echelons during late April and May, Moley loosely
supervised the experts' talks, Warburg handled fiscal and
monetary policy, Bullitt talked politics, and Feis canvassed
tariffs. Hull served as the titular head of the American
team and usually spoke briefly about lowering tariff barriers.

Mostly he continued to direct other Department work such as

disarmament, all the while resenting Moley's status, referring

272

on one occasion to the President as "that man acwoss the
stweet who never tells me anything."36

Optimistic and platitudinous official statements
flowed from the President and his visitors, usually at the
conclusion of each mission's stay. These professed the same
general objectives, with but vague means to attain them. For
example, after talks with the British there were no "defini-
tive agreements," but "our two Governments were looking with
a like purpose and a close similarity of method at the main
objectives of the Conference, and were impressed by the vital
necessity of assuring international agreements for their
realization in the interests of the peoples of all countries"
(April 26). And with the French: "The Government of the
United States and the French Government have been able
already to announce their full agreement in regard to the
necessity of a prompt meeting of this conference, the object
of which must be to bring about a rapid revival of world
activity and the raising of world prices by diminishing all
sorts of impediments to international commerce such as
tariffs, quotas and exchange restrictions, and by the
re-establishment of a normal financial and monetary situation"
(April 28). Such pronouncements flowed to the world through
June 3, when the Chilean visitors finally departed for home.37

Particularly in the beginning, headlines and stories
in the nation's press tended to exaggerate the importance of
these preliminary talks aiming toward international recovery.

"Exchange Agreements Near, Experts Tell White House," and

273
"Roosevelt and M'Donald Report A Clearer Understanding On
Debt" sampled but two of the headlines over Arthur Krock's
columns.38 At length the Timgm was provoked to editorialize
sarcastically on the "welcome advance toward definiteness"
in the declaration signed by Roosevelt and Italy's finance
minister Guido Jung. "We are in agreement," they reported
on May 6, "that a fixed measure of exchange values must be

re-established in the world and we believe this measure must

be gold."39

One decision of importance, however, did emanate from
the Washington talks. As indicated by statements with the
British and French, the WEC would convene in London on
June 12. This decision, Moley told Warburg, began in
Roosevelt's first private talk with MacDonald. While the
probable date then mentioned was June 15, within four days
it had been moved up to the 12th.40 MacDonald preferred the
earlier date because an amicable debt settlement seemed more
likely if the Conference was already going when the debts
fell due. While all along wanting to delay the WEC'S opening
until Congress adjourned, FDR and congressional leaders at
this time were speaking of adjournment by the end of May, or
June 10 at the latest.41 So the Americans accepted the
June 12 opening because it came long before anyone could know
that squabbles over industrial recovery and economy in
government would delay adjournment.

War debts continually formed a sub rosa part of the

talks. The Americans never considered anything beyond

274

Warburg's scheme. But after no progress had been made with
either the British or the French, Roosevelt instructed Moley
to ask British monetary expert Sir Frederick Leith-Ross to
remain after the delegation sailed. He also directed Moley
to have Lewis Douglas help out, but to inform no one else—-
including Hull and his staff. Unsure of the Warburg plan's
details, however, Moley also took its author along. The
three spent most of May 1 and 2 at the British embassy. While
Moley and Douglas maintained that neither the President nor
Congress would make any concessions on the amount of payment,
they let Warburg explain how Britain could pay $2.5 billion
via the "Bunny." Paying $500 million in gold and amortizing
the remainder in a bonded sinking fund over a fifty-year
period would suffice. Leith-Ross seemed pleased; but he
would have to report to London. When Warburg told all of
this to FDR the following afternoon, he was delighted and com—
mented that "if we could put over the 'bunny' we would have
taken the longest step ahead that we have taken so far."42

Nothing would be heard from the British until
May 18, and then it would be under circumstances less than
beneficial to the Hull—Moley relationship. In the meantime,
Douglas and Warburg dined together on May 3 and decided to
proceed on the assumption that the debt scheme would not
succeed. Whatever new money was needed for "public works
and relief," therefore, would have to be raised by new taxes.
For example, they canvassed the so—called breakfast table

levy: duties on sugar, coffee, cocoa, and salt, which they

275

estimated would raise $230 million annually. In this way
did the "Bunny" receive a lower priority with Roosevelt's
more orthodox fiscal advisers.43

Stabilization of the dollar was another key
initiative approved by the President which he would later
disavow. The French mission had in fact been preoccupied
with stabilization, "and nothing else," remarked Moley.44
On April 26 Warburg asked French financial adviser Charles
Rist if France would join in creating a three-power stabili-
zation fund, providing the United States pledged to join.
Rist replied that he would refer it to Paris. Afterwards,
Warburg, at his own suggestion, took Moley and Pittman to
the White House to put the issue squarely up to the President.
When his unofficial monetary adviser stated the case, Roose-
velt "quickly saw the point." He said that he was not
unwilling, with reservations, to suggest a discount of the
dollar of 15-25% from its former gold value. Warburg
explained that 15% was the most that should be risked, or
else the domestic program could be injured. "After full
discussion," he wrote in his journal, "we were authorized
to set discount at 15% as a hypothetical figure."45 This
proposal drew no response from the departing French. The
British, through Leith-Ross, professed that such a valuation
of the dollar was too low. It might drive more European
nations off gold, thereby hindering the WEC and British

interests in terms of balance-of—payments, debt settlements,

and tariff accords. But FDR seemed pleased both by the

276

negative responses and by the declining value of the American
dollar. As he remarked to Warburg on April 30, it delighted
him that "from having been on the spot we have not put the
French and British on the spot as regards exchange disorder."46

Publicly it appeared that early stabilization was one
of the President's WEC aims. In his May 6 statement with the
Italians he declared that gold must be re-established as the
"fixed measure of exchange values," and implied that stability
in international exchanges was American policy. In his
second major radio broadcast, he included "stabilization of
currencies" as one of the WEC's "four great objectives." And
in the May 16 world message, he again listed stabilization
of currencies as a London Conference goal.47

Yet there is evidence that Roosevelt privately held
other views, that he remained skeptical of stabilization and
of lower tariff barriers, at least for the time being.
Remarking confidentially on the French urge to stabilize,
Moley's diary noted that "Warburg is against the Administra-
tion policy on this—-though I think he will do all that is
humanly possible to forget his own views for the time being
and help along." After a conversation with Howe on April 17,
Moley's diary recorded that tariff policy continued to be one
of "letting Hull say one thing while the army moves in the
opposite direction." And, "of course Hull's policies are mm:
the President's re tariffs."48

Exhortations toward international economic recovery

were Roosevelt's policy, while his means toward that end

277
were vague and overlapping. That conditions in America might
change and make such hopeful pronouncements impossible, or
that public opinion and foreign governments might make more
of his oral diplomacy than did he or his closest advisers,
did not restrict him. His methods led to what Bullitt char-
acterized as a "lack of coordination" in the overall policy.
Bullitt told Moffat that "the President and the Secretary
were so engrossed in the details of the present-day negotia-
tions that he feared they were not looking at the broader
picture, more especially the picture as it would seem if the
Economic Conference should not prove a success." So the
delegations came, discussed, and departed while the cheerful
Roosevelt—~photographed in smiling poses with each mission's
1eader--presided benignly while trusted subordinates directed
the day-to-day negotiations. As Feis had complained of Moley
in March, FDR asked others to "think through"; but there is
little evidence that he did so himself.49 His was the

sloppy mind at work in foreign affairs.

IV
As the Washington talks continued, domestic legisla-
tion persistently demanded the President's energies. AAA
became particularly important, because by early May it was
in congressional conference and the administration of it drew
daily nearer. Henry Wallace firmly advocated AAA'S chief
feature, production control, as he had since 1932. He

believed that such emergency action offered the only pragmatic

278

means to raise farm prices and to eliminate the agricultural
surplus. On the other hand, George Peek, who had been
offered the post of AAA administrator by Wallace as early as
March 12 and by Roosevelt on April 5, opposed crop reduction.
Reflecting a combination of Jeffersonian agrarianism and
intense nationalism, Peek believed a better balance between
agriculture and industry meant more people employed in the
former and less in the latter. So believing, he continually
advocated that farmers be guaranteed the domestic market at
a price well above the world price and that overseas markets
be obtained by whatever means necessary. Full of what
Wallace termed the "old McNary-Haugen ideas," Peek hammered
away at his theme that crop reduction would be a mistake.50

Although Peek's appointment had political motives,
it is uncertain whether Roosevelt from the outset was fully
committed to the Wallace position on production control,
despite the President's support of it in his campaign and
during the drafting of AAA. Wallace and FDR agreed to Peek's
appointment for two reasons. First, they hoped to keep his
conservative friends in agriculture and the processing
industries behind the bill, thereby facilitating its passage.
Second, since he was a former businessman, they wanted to
assure business that AAA would be sympathetically adminis—
tered. But it cannot be definitely "assumed" that Roosevelt
overruled Peek's basic policy position on production control

before June.51 Instead, the President equivocated.

279

On Wallace's initiative, a White House meeting to
decide AAA policy issues was set for May 3. Two days earlier
Wallace had suggested to Henry Morgenthau that they ask the
President to call a meeting of "leading Democrats" interested
in agriculture. Puzzled by this vague statement, Morgenthau
learned upon further questioning that "he wants me to meet
with him and the President and see if we can agree upon a
policy of running his Farm Relief Administration."52 Present
at the meeting on the night of the 3rd were Wallace, Tugwell,
Morgenthau, Peek, several Cabinet members, and various
Agriculture Department officials. According to Peek's diary,
a "spirited debate" over policy ensued and afterwards Roose-
velt decided on "matters of organization." Wallace spoke--
supported at times by Tugwell and M. L. Wilson--for production
control funded by processing taxes. Peek disagreed, stressing
marketing agreements and possibly foreign trade. After an
hour of desultory discussion by the others (according to
Morgenthau's diary), Wallace appealed to FDR to have the
"party leaders" instruct him as to policy, since there was
obvious disagreement. Roosevelt demurred, instead calling on
Morgenthau for his views. But the latter refused, replying
that it was the "Department's business to form a plan and
administer the policy." This irritated the President, and a
fruitless discussion of a presidential radio appeal diverted
attention from the decision for or against production

control.53

280
After adjournment at eleven-thirty, both Wallace and

Peek failed in a further attempt to obtain a commitment from
the President. As soon as the meeting ended, both opponents
rushed to Roosevelt's desk with an organization chart. Peek
won the foot race, Wallace's assistant Paul Appleby later
reminisced, but neither won anything else.54

The President took the roll of cardboard and spread it

out on his desk--he loved organization charts. He

took his pen, checked over it, made a few marks in ways

that wouldn't be significant of anything, smiled, and

handed it back to Peek. He reached over and took the

one from Wallace, went through it the same way, handed

it back to Wallace, and smiled. It was a dead heat--

there was nothing decided in that.
"The general impression created," Morgenthau concluded in his
diary, "was that Peek's selection as Relief Administrator had
been forced on Wallace and he desired to get the President
and advisers either to approve his ideas and veto Peek's, or
to take responsibility for the latter."55

Although Roosevelt signed AAA on May 12, he delayed

decision on production control until near the end of the
Hundred Days, partly because it conflicted with the Washington
negotiations. On the day AAA was approved, Wallace and Peek
exchanged letters about their differences; but the Secretary
only conceded that they should both go to the President over
matters of policy conflict. On May 13, the White House
announced that Peek would administer AAA and that Wallace
had been instructed mm: to undertake any crop reduction or

levy any processing taxes without the President's consent.

Thus a major NeW'Deal program was delayed.56 This

281

announcement provoked Wallace to complain to FDR that Peek's
insistence on using him as an "umpire" would fundamentally
handicap AAA's administration and that he therefore needed a
"renewal" of oral presidential assurances that as Secretary
he would be AAA'S responsible agent.57 At that time the
President told Morgenthau, during their private luncheon,
that tariff truce negotiations had caused him to overrule
processing taxes and crop reduction. But by means of a
"funny look"--when Morgenthau said he approved the decision--
he indicated that he had not permanently cast out either
option.58

Although AAA caused a conflict between domestic and
international recovery priorities, another reason--aside from
production control--suggests that deferring the tax decision
was temporary. A major reason for the tax was to make AAA
self-financing, an aim stated during the campaign at Topeka
and elsewhere, which historian Van L. Perkins termed an
indicator of Roosevelt's "fiscal conservatism." Thus AAA's
tax and the Economy Act were closely related, a point con-
cerning the Hundred Days too often overlooked.59

Other less controversial domestic policies like
relief were more clear-cut. Roosevelt approved direct
federal relief and foreshadowed his politically shrewd policy
for the administration of new agencies on the same day that
he approved AAA. Also on May 12 he signed Senator Robert
Wagner's Federal Emergency Relief Act and appointed Harry

60

Hopkins its administrator. Citing Hopkins, CCC'S Fechner,

282
AAA'S Peek, and the rumored appointments of Hugh Johnson for
NRA and Joseph B. Eastman as Railroad Coordinator, Arthur
Krock's column soon pointed out that the President obviously
intended to appoint conservative, business-like, or "prac-
tical" men as administrators for agencies created by experi-

mental or controversial legislation.61

Krock's point was
perceptive. Clearly Roosevelt aimed at winning business
support during the Hundred Days, an aim apparent in his
appointment policy and even more evident in the drive for
industrial recovery.

FERA was virtually non-controversial because of the
precedent established during the Hoover administration and
because of the relatively small appropriation. In July 1932
Hoover had approved Wagner's compromise Emergency Relief and
Construction Act, appropriating $300 million for RFC relief
loans to States and authorizing $1.5 billion for self-
liquidating federal public works. Even though these funds
were almost exhausted when Wagner introduced FERA in late
March 1933 (a direct consequence of Roosevelt's CCC, although
relief was not a White House bill), it authorized only $500
million for relief grants to States. Perhaps Wagner feared
a substantial appropriation might arouse more criticism of
the "dole"; or perhaps he believed establishing the principle
of grants over the 1932 fiction of loans (none of which were
ever repaid) would suffice for early 1933. In any event,
$250 million could be given to States on the basis of one

dollar for every three appropriated and used for relief. The

283

remaining $250 million could be used by the FERA administrator
as direct grants when a governor could prove his State no
longer had the financial means for relief. The act therefore
merely approved the principle of grants—in-aid, leaving the
new administrator to figure out how to cope with the existing
national, State, and local framework for relief.62

Because Roosevelt set no specific guidelines for
HOpkins, federal relief policy differed little from 1932.
FDR knew Hopkins only sparingly during 1932-33 when the Iowa-
born social worker had administered New York's Temporary
Emergency Relief Administration. When recommending TERA in
1931, Roosevelt had emphasized the adjectives "temporary"
and "emergency" because he, like H60ver, believed that the
dole was wrong; but he believed that some useful public works
had become imperative. The relief system in America was by
1933 a hodgepodge network which reflected long-standing and
pervasive traditions that poor relief was a local and private
responsibility. Dire need after 1930 forced most States to
expand relief by supplementing private funds with a patch of
local funds, then with some State funds, and finally with
RFC "loans" by late 1932. While the 1932 Relief Act cen-
tralized relief initiative, the RFC could only suggest guide-

lines. Thus responsibility for relief was still not

 

centralized. FERA sought to centralize responsibility as
well as initiative; but it could only administer relief
through State and private agencies, not directly from Washing—

ton. FERA was therefore not a striking advance over the 1932

284

law either in principle or in funding.- As late as June 14
the President told governors and state relief administrators
at a White House conference that FERA meant federal coopera-
tion in financing emergency relief work. "It is essential
that the states and local units of government do their fair
share. They must not expect the federal government to
finance more than a reasonable proportion of the total."
"In other words," Hopkins' biographer Robert E. Sherwood
commented, "the fact of Federal relief must be disguised in
all possible ways."63

Hopkins began innovating three days later, after
Roosevelt had left on vacation. Speaking in Detroit before
the National Conference of Social Work, Hopkins called for
relief directly administered by the federal government rather
than through private agencies. He therefore enlarged upon
Roosevelt's basic idea, declared while governor, that the
state had an obligation to the "humblest citizen." Hopkins
now charged the federal government with this duty as the
citizen's right, not as charity and not through local
agencies. The President later supported Hopkins to the point
where he could enunciate the individual's right to work in
his 1944 Economic Bill of Rights speech. Still, by August
1933 HOpkins had only allotted $37 million in direct grants
and another $137 million on the matching basis. Shortly
thereafter he obtained FDR's approval for expanding the
discretionary basis for approving grants to States, thereby

breaking the bottleneck of the 3—1 matching formula.64

285

Federal relief policy in 1933 therefore arose from
the precedents set in the 1932 and 1933 relief acts, and from
a series of improvisations led by Hopkins, most of which
occurred after the Hundred Days. Perhaps had the President
taken as much personal interest in FERA as he did in CCC,
an amorphous policy sooner might have become the practical
and effective reality that it was by the end of the year.

Railroad legislation was quite another matter.
Unlike AAA and FERA, for examples, the problem was more com—
plex and therefore interested persons and groups came to less
fundamental agreement on solutions. Probably for those
reasons, Roosevelt took less personal interest and appeared
less willing to make a commitment. But railroad reform of
some sort was a definite necessity by 1933. That railroads
were a sick industry in a staggering economy was evidenced
by declines since 1929 of over 50% in revenues (although
balanced by similar cuts in expenses), 41% in jobs, 51% in
employees' compensation, and 71% in dividends--while during
the same period funded debt increased. But aside from the
vague belief in some form of voluntary consolidation into one
national railroad system, no essential agreement existed on
reform policy. During the interregnum Adolf Berle had worked
on railroad matters with Bernard Baruch, the Coolidge Com-
mittee, and other groups. Felix Frankfurter had served as
primary liaison with FDR. Other key persons included Joseph
Eastman and Charles D. Mahaffie, both on the ICC, Boston

banker and financier Frederick W. Prince, and Donald Richberg,

286

counsel for the Railway Labor Executive Association, the
principal union organization. Through Frankfurter's influ—
ence, Eastman and Mahaffie gained an interview with Roosevelt
on January 11 to discuss the immediate railroad problems.
Although Eastman explained their ideas for the voluntary'
transfer of railroad operations to the federal government and
the present financial crisis of the railroads, Moley and
Tugwell had already discussed with FDR other legislative
needs. The President-elect, opposed to federal control,
expressed little interest and would not commit himself on
railroads.65

Although Roosevelt had spoken publicly in favor of
railroad reorganization befbre March 4, his lack of direct
support for any plan contributed to the lack of progress.
In his 1932 Salt Lake City speech, he made several recommen—
dations for reorganization, which he suggested should
primarily benefit railroad security holders. In February
from Warm Springs he had announced plans for the regulation
of all forms of transportation, rumored to include railroads,
waterways, trucks, and air transport. Although congressional
action on railroads during the interregnum centered on New
York Congressman Fiorello LaGuardia, backed by Eastman and
Berle, and resulted in the vague plan for reorganization
incorporated in the March 3 Bankruptcy Act, it is doubtful
that the President-elect even kept in touch with these events.66

In his inaugural Roosevelt cited planning for "all

forms of transportation" as legislation which he would

287

presently recommend to Congress. Shortly thereafter he
delegated it to Commerce Secretary Daniel Roper. Roper
appointed a committee to receive suggestions, harmonize
conflicts of interests, develop an acceptable program, and
draft railroad legislation. Eastman headed the first com-
mittee which met throughout March, with Berle and sometimes
Moley attending. The committee discussed two major proposals.
First, the so-called Prince plan, supported by bankers,
called for voluntary consolidation of the nation's railroads
into seven regional systems. It would give the federal
government vast supervisory powers over consolidation,
inject new methods of handling traffic so as to eliminate
waste and needless competition, and generally protect the
investment of railroad bondholders. Second, the federal
"coordinator" plan was backed by the Association of Railway
Executives, the major group of railroad managers, represented
by leaders like C. R. Gray of the Union Pacific and F. E.
Williamson of the New York Central. It would authorize the
coordinator to effect voluntary consolidation by working
through regional coordinating committees. In his second
"Dear Caesar" letter to the President, Berle assured him that
the coordinator plan would be more politically feasible.67

At a time when economy, CCC, and AAA were being
formulated and legislated, and later amidst administration
drives for international and industrial recovery, Roosevelt
had little time to concentrate on the less urgent matter of

railroad reform, despite his continual assurances to reporters

288
that a "bill" would soon be prepared. On April 1 he finally
supervised a conference of all those interested in railroad
legislation, including Eastman, Prince, several railroad
presidents, and Secretaries Roper and Perkins. After hearing
Eastman's exposition on both plans, particularly that the
Prince plan would eventually cost the government up to $2
billion because of the need to guarantee the assets of
railroad companies to be liquidated during the consolidation,
the President backed the less expensive, voluntary coordinator
plan. Afterwards he appointed a second Roper committee to
write legislation as soon as possible. Roper, Will Woodin,
Eastman, Walter Splawn of the ICC, and Senator C. C. Dill of
Washington and Representative Sam Rayburn, chairmen of the
respective Interstate Commerce Committees, attempted to draft
the bill. But difficulties in reconciling interests led
Eastman to predict on April 15 that it would be "vigorously
Opposed" by railroad labor and shippers groups, although it
should be "well received" by the security holders and the
railroad companies. FDR had instructed the drafters to have
a bill by the 17th, but Roper advised him two days earlier
that some of the committee, notably Dill and Rayburn, now
doubted the "advisability" of any legislation at all.
Further committee conflict led to a measure which Eastman
characterized as "stopgap." Several drafts went to the
President, with the text finally released as a "trial balloon"

on April 28.68

289

Labor criticism, as it had with CCC, led the
President to modify the railroad bill. RLEA chairman George
Harrison personally told Roosevelt that his union was upset
because labor had not been protected. He got results.
Between the trial balloon version and FDR's special message
on May 4, the White House obtained deletion of the coordi-
nator's authority over ”owned or partly owned air lines, bus
lines, or trucks" among accessorial railroad services. The
message to Congress, drafted by the Roper committee and
rewritten by Moley, was delayed by the Washington diplomatic
talks. When finally sent, the President conceded that the
broad problem was to coordinate all agencies of transporta-
tion in order to maintain adequate service. But he was not
ready to support such a comprehensive program. He therefore
recommended only three emergency steps: repealing the
recapture provisions of the 1920 Transportation Act; placing
railway holding companies under ICC jurisdiction; and
creating "a Federal Coordinator of Transportation, who,

working with groups of railroads, will be able to encourage,

 

promote, or require action on the part of the carriers, in
order to avoid duplication of service, prevent waste, and

encourage financial reorganizations." In other words, the

 

coordinator would have authority, but little power. Roose-
velt's original aim of efficient reorganization of transpor-
tation was now merely a compromise scheme for economy in

government, pertaining only to railroads.69

290

But railway labor was not satisfied with the com-
promise, a fact evident when RLEA counsel Donald Richberg
testified before the Senate Interstate Commerce Committee on
May 10. He indicted the legislation as deflationary because
it would retard economic recovery, cut railroad services, and
abolish jobs for some 50,000 to 300,000 railroad employees.
RLEA pressure soon forced amendments to limit labor cutbacks.
Roosevelt suggested a 60,000 maximum cutback to Dill, but
Richberg's union insisted upon 50,000. In response to the
Senate committee's proposals, the White House sent word to
Dill that the President was "not familiar enough to pass on
language but would like him to talk with Donald Richberg and
Eastman and if they both agree on language [F037 thinks it
all right."70

Labor groups would continue to emasculate railroad
legislation, and the President would not resist. Concerning
a bill which he continually touted to reporters as important,
why did he refuse to take a strong stand? First, as usual
he showed no propensity to firmly support legislation upon
which the interested parties could not fundamentally agree.
Second, the prime criticism now came from labor. Despite
Roosevelt's pro—business orientation in 1933, he sought to
appeal to all elements of the economy and the population.
To intervene after Richberg had testified would seem anti-
labor, an image he was doubtless loath to incur. Third,
while transportation and railroad reform was imperative, it

directly affected only a small segment of the national

291
economy. Fundamentally, the bill was railway industry
legislation. It therefore aroused little popular interest.
For all these reasons, railroad was given a lower priority
on Roosevelt's domestic program. Even so, it is likely that
he would have given it more support had it been submitted by
mid-April, his original deadline. Even though it was closely
related to his drive for governmental economy, by May the
drives for international and industrial recovery had become

more paramount.

V

Even while Roosevelt acted as chief diplomat, he had
authorized several individuals to formulate legislation for
industrial recovery, the second major theme of this period.
Characterized by some as national planning, his involvement
reflects an ambivalence which suggests his views were more
limited than the term "planning" implies. The National
Industrial Recovery Act which resulted was a relatively
conservative and open-ended measure to stimulate business
recovery, a natural corollary to agricultural recovery. And
corresponding with his governmental economy drive, he wanted
more than just the increasingly popular public works. Thus
industrial recovery reflected his distrust of works as
relief as well as his fiscal conservatism.

A government partnership with industry formed the
basis of most business recovery plans. According to most

historians and writers, during 1932 the Brains Trust advocated

292
the general concept of a business-government partnership as
a means of furthering Roosevelt’s economic education.71
While the partnership idea can be unduly exaggerated within
the context of 1932, a strong demand existed by 1933 from
many interested groups--including business leaders, labor
spokesmen, social workers, and economic planners--for some
legislation to revive and coordinate private industry. The
partnership concept had come of age. But because of the
politically wise, if economically vulnerable, over-emphasis
on reviving farmers' purchasing power, the President neglected
business recovery during March and early April.

Hundreds of "plans" nevertheless were in circulation.
These ranged from concepts of industrialists like Gerard
Swope of General Electric and Henry I. Harriman of the U. S.
Chamber of Commerce for the voluntary organization of
industry through trade associations, benefits for labor, and
a national economic council, to schemes like destroying all
buildings over twenty years old or "Applying Birth Control
to Unemployment." But in essence by 1933 the major strains
of thought included some form of federal planning for a
controlled economy and for the "sick" industries, modifying
the antitrust laws to end "predatory" competition, spreading
the available work to counter technological unemployment,
and somehow increasing national purchasing power.72

Before mid-April the President never seriously

contemplated industrial recovery nor had the time to do so,

293

although he and Moley did express interest in banker
Fred I. Kent's plan to guarantee business profits. Instead,
early in March Roosevelt delegated the task to Moley. Him-
self busy with war debts, WEC preparations, and other matters,
Moley had little time to carefully consider industrial plans;
but he nevertheless continued to serve as his chief's "sieve"
for ideas. Typical of the plans that came to his office
with Roosevelt's "no comment" was one proposed by economist
Harold G. Moulton of the Brookings Institution and former
New York Congressman Meyer Jacobstein. A variation on Kent's
concepts, the planners appealed (unsuccessfully) to the White
House after Baruch had refused to endorse their ideas. But
Moley and some administration leaders realized the need for
industrial recovery. As early as March 9 the professor had
discussed the general subject with Hugh Johnson, who opposed
domestic allotment but argued forcefully that AAA must be
accompanied by a joint program of "quick" public works and
industrial reemployment. Henry Wallace and Rex Tugwell had
simultaneously, although separately, arrived at the same
Opinion.73

Hard-pressed with other assignments, Moley delegated
on March 24 to Warburg the examination of industrial plans.
Already a proponent of Kent's ideas, Warburg accepted the
task with the aim of pressing the President, through Moley,
into action. Interviewing everyone he could find who had a
plausible scheme, Warburg soon synthesized the best thought

into a memorandum for Moley. Everyone opposed the dole or

294

public works, he concluded, and all agreed that the most
critical problem of the times was restarting industry and
stimulating the natural sources of employment. But the
divergence came between those who accepted the Kent plan,
based upon the "loss guaranty principle," rather than govern-
ment loans to industry. Also, Warburg, Lewis Douglas,
economist Walter Stewart, and others believed in stimulating
"producers' goods" rather than indiscriminately stimulating
only consumers' goods, or both. He therefore recommended
that Moley persuade the President to call a conference of all
interested parties and then "lock the conferees" in a room
until they achieved fundamental agreement. Although written
on April 5, Warburg did not give this memorandum to Moley
until the morning of Friday the 7th.74

In the meantime, led by Hugo L. Black of Alabama
(whose suggestions had been overlooked by the President in
early March75), the Senate passed on April 16 his thirty-
hour-week bill by the bipartisan vote of 53-30, thereby
setting off a chain of events that provoked the administration
into action. Moley remembered speaking to Roosevelt on the
4th about industrial recovery. But at that point both had
incorrectly concluded that "thinking in business and govern-
ment circles had not yet crystallized sufficiently to justify
any further moves at the time." iIn fact leadership in this
area had come primarily from within Congress. Concerned
since 1931 about the negative effects which the antitrust

laws had on industrial competition, labor conditions, and

295

general economic stabilization, Senator Wagner was seriously
studying ideas like the Swope plan by November 1932. Wagner
had supported Black's first thirty-hour bill during the
lame-duck session and again on April 6. But by then his
thinking focused on the broader approach of the Kent and the
Moulton-Jacobstein plans.76 During an April 11 Cabinet
meeting Secretary Perkins reported that a "far-reaching" plan
to revive industry was being discussed in certain Washington
circles. Afterward, FDR authorized her and Roper to check
into it and also to frame a workable substitute for the Black
bill. That day he asked Moley to check directly into the
planning talk, mentioning specifically to see people connected
with the Brookings Institution and the Chamber of Commerce.
When Moley did this, it resulted in Krock's column on the
14th which correctly reported that the professor was "sold"
on the concept of self-regulation of industry through trade
association-type agreements. While the leadership for
planning was coming from Wagner, Moley's influence would soon
be used in the White House.77

To what degree the President sympathized with or
appreciated the sentiment for industrial planning by mid-
April is not clear. After the Cabinet session on the 11th,
Miss Perkins told reporters that she endorsed the ”principle
of a 30-hour week," with certain changes to make it more
workable. 0n the following day she testified before the
House Labor Committee that Roosevelt also supported the

Black bill, with the exceptions that restrictions on hours

296

were presently too inflexible and that he opposed the
embargo to prohibit all imports from countries not having
the thirty hour week. On the other hand, in her memoirs she
recalled that FDR's "mind was as innocent as a child's about
any such program as NRA" when she told him about it in
April.78 As late as April 13, Roosevelt had read the memo
of his Uncle Frederick Delano, a city planner, on "The
Industrial Crisis and the Cure." "The President says to show
this to Mr. Roper," ran Missy LeHand's reply, "with memoran-
dum saying he thinks his uncle is right but perhaps a little
ahead of his time." When reporters asked him about Krock's
NRA column and public works on the 14th, he laughed and
remarked: "I have not talked about it at all yet."79

Miss Perkins introduced her ill-fated substitute
into the House Labor Committee's hearings on April 17, the
same day that the Senate again voted for the Black bill,
52-31, this time on a motion not to recommit. Providing for
minimum wage levels and exemptions from the 30-hour week to
be determined by special federal industrial boards, the
Perkins measure was soon buried under a storm of business
protest. Ill-conceived, impractical, costly, federal
"dictatorship," aggravating to the unemployment crisis--
these were but some of the exaggerated charges hurled from
Wall Street and Main Street. Speaking for big business,
Henry Harriman said that constructive wages and hours
legislation should be based instead upon industrial self-

government. As the Nation had pointed out earlier, not only

297

did the average week for all workers stand at 32.6 hours as
of February 1, but spreading available work tended to
encourage employers to cut back further if profits declined,
and the real problem was how to raise purchasing power-~not
to lower it by shortening the work week.80

Three independent but overlapping groups were
laboring to formulate comprehensive industrial recovery
programs. At Moley's initiative, Warburg saw Senators Wagner
and Robert LaFollette on April 18 and convinced them that
public works alone would not achieve "industrial rehabilita-
tion." They both agreed to call in interested persons whom
Warburg had earlier interviewed, including Fred Kent,
industrial economist Malcolm Rorty, Harold Moulton, Virgil D.
Jordan of the National Industrial Conference Board, J. H.
Rand, trade association attorney David Podell, Congressman
Clyde Kelly of Pennsylvania, who had introduced the first
industrial recovery bill on March 9, and economist W. Jett
Lauck.81 Warburg turned over his accumulated materials to
Wagner, FDR gave the Senator the go-ahead four days later,
and Wagner issued invitations for conferences to begin in his
offices on the 25th. Lauck, Moulton, and Podell drafted the
Wagner group's plan. It authorized, under the supervision
of a federal board, a relaxation of anti-trust laws so that
"public interest" industries could draw up codes to stabilize
production, prices, and competitive practices. To benefit
labor, the codes would also regulate wages and hours on an

industry-by-industry basis, guarantee labor's right to

298

organize and to bargain collectively, and provide for a
federal public works program, including industrial loans.
Published in tentative form by the Times on April 29, it
contained most of the later NIRA. This plan, reported the
Times, had been submitted to Moley, who "endorsed the idea
behind it," and to Warburg, "who is active in plans con-
cerning economic recovery."82

Duplication of the Wagner group's work came from
executive branch drafters headed by Under Secretary of
Commerce John Dickinson, and including Tugwell, Miss Perkins,
Ickes (temporarily), and attorney Jerome Frank. On Warburg's
suggestion, Lewis Douglas acted as liaison between both
groups and the White House. The President "seems not to have
in view," Tugwell noted in his diary, "as large a conception
of public works as I should like to see but he has been very
wise so far--remarkab1y so for a person of his temperament."
By May the Dickinson and Wagner people were collaborating,
having been brought together by Secretaries Wallace and
Perkins, after the latter discovered both groups had more
similarities of viewpoint than differences.83

Further independent efforts came from Baruch and
General Hugh Johnson, both motivated by the administration's
policy of controlled inflation. Hearing it announced on
April 19, Johnson impulsively wanted to rush off to Washing-
ton to lead a campaign against inflation. But Baruch advised

him instead to write his ideas into speech form and test them

out privately. Johnson quickly did this, hammering home his

299

theme that inflation benefited at best only 20% of the
producers of "things," not the "whole people." The private
hearing before conservative economists and journalists ran
all day Saturday, March 22, and Johnson arrived in Washington
early next week. Deluged with the handling of the British
and French negotiations, Moley--knowing Johnson's views
coincided with his own--recruited the General on April 25,
gave him office space and his materials on industrial
recovery, and left him to dash off a two-page summary of
NIRA. Following the 1918 War Industries Board precedent,
Johnson's draft differed little from the Wagner group's
(which he did not know about at first)--except that he con-
tributed the idea of stricter federal licensing powers to be
used against industries which failed to comply with the codes.
Soon he brought in Richberg, to represent labor, and Tugwell,
to represent the administration. It was characteristic of
the early New Deal that none of these groups had any direct
representation from labor leaders.84

Within this milieu of bill-drafting, Roosevelt
finally exerted his personal prestige and persuasive appeal.
With liberal senators like Wagner, LaFollette, and Costigan

and journals like the New Republic declaring $5 billion in

 

public works a necessity, with Senate majority leader Joe
Robinson asserting that the Perkins-amended 30-hour bill was
"not now in the picture," and with the Cabinet split between
those who wanted industrial recovery coupled with tax-

supported public works and those who preferred only a

300

maximum of $2 billion in works, the various measures were
drafted and redrafted. A stalemate appeared imminent. In
reSponse to these forces, the President addressed on May 4
the conservative, white-tie, annual convention of the Chamber
of Commerce at spacious Washington Auditorium. By his own
request the speech was not broadcast, because he planned to
address the nation by radio that Sunday evening.85

Calling it a "friendly discussion" rather than an
address, Roosevelt's recovery goals received an enthusiastic
reception from the cream of the nation's business moguls.
Observing that the government had been seeking since April
to foster an international "cooperative spirit" for increasing
trade volume, creating employment, and raising commodity
prices, he presented businessmen with three requests. First,
to benefit labor, employers should increase their wage scales
in keeping with the evident increase in commodity prices.
Second, cooperation between and within industries to end
"unfair methods of competition, cut-throat prices and of
general chaos" would be aided by the government, which would
take action against recalcitrant minorities. Third, the
economy had to be viewed in terms of the whole, and industry
therefore must act together for a "well-rounded national
recovery." These cautious, pro-business sentiments received
a thunderous round of applause.86

Between this preview speech and Sunday evening,

Roosevelt and Moley carefully drafted the second major radio

address. Following an earlier draft by the Budget Director,

301
the broadcast would both report to the people what the
administration had accomplished and planned to accomplish,
and further endorse the concept of a business-government
partnership. During this work, Moley particularly remembered
one conversation. He and FDR discussed at length the dif-
ferences between what Moley later described as Theodore
Roosevelt's 1912 concept of government partnership and inter-
vention in business, as opposed to Woodrow Wilson's belief
that the antitrust laws must be used because in any such
partnership business would inevitably dominate. Did the
President fully realize, Moley finally asked, what a long
step away from laissez faire this speech would publicly take?

"If that philosophy hadn't proved to be bankrupt,"
Roosevelt finally affirmed, "Herbert Hoover would be sitting
here right now. I never felt surer of anything in my life
than I do of the soundness of this passage."87 Whether or
not he fully comprehended the ramifications of this economic
policy decision, FDR was prepared to forge ahead politically.
But he needed a consensus, such as had been obtained on AAA
and direct relief, before meaningful legislation could go to
Congress.

Millions of radio listeners tuned in that Sunday
night, May 7, to hear their President speak about achieve-
ments and recovery. Beginning with "My friends," in his
well-modulated, confident voice, Roosevelt reported that
deflation as a policy had been consciously abandoned and that

Congress had cooperated to meet the emergency, merely naming

302
the President as the "agency" to carry out its purposes.
All of the legislation passed or pending could "properly be
considered as part of a well-grounded plan." Briefly ranging
over the scope and value of CCC, TVA, mortgage relief, FERA,
and legalized beer, he said he would soon request public
works. Three major programs were forthcoming: farm relief,
"well-considered and conservative" measures to aid indus-
trial workers, and legislation to eliminate waste and dupli-
cation in railroad receiverships and operating deficits.
Explaining the general need for these, he stressed:
It is wholly wrong to call the measures that we have
taken Government control of farming, industry, and
transportation. It is rather a partnership between
Government and farming and industry and transportation,
not partnership in profits for the profits still go to

the citizens, but rather a partnership in planning, and
a partnership to see that the plans are carried out.

 

Citing the "cotton-goods industry" as an example, he said
the principle simply meant that the government ought to and
would have the right, after planning and surveying for
that industry, to prevent the recalcitrant 10% from paying
starvation wages, working long hours, and producing burden-
some surpluses--all of which presently ruined efforts by the
90% to agree upon better conditions. Mistakes might be made,
but he sought the highest possible "batting average."
Explaining the need to leave the gold standard, he
commented that reserves of gold and silver would only have
been sufficient to meet "one-twenty-fifth" of demands by
security and currency holders. Therefore the government

chose to treat all in the same equal way. It was no

303

exaggeration, he exaggerated to his listeners, that any
further drain on United States gold by foreign countries
would have so weakened the government and private credit as
to bring on ”actual panic conditions and the complete
stoppage of industry." In addition, the administration
definitely sought to raise commodity prices and to make the
dollar worth the same as when it was borrowed. Hence the
government has undertaken powers for an "enlargement of
credit"--the Thomas amendment--and these would be used "when,
as, and if it may be necessary to accomplish the purpose."

Finally, he emphasized, the domestic situation was
"inevitably and deeply tied” to world recovery. Prosperity

in America would not be permanent without world prosperity.

Accordingly,88

In the conferences which we have held and are holding
with the leaders of other Nations, we are seeking four
great objectives: first, a general reduction of arma-
ments and through this the removal ofifear of armed
invasion and armed attack, and, at the same time, a
reduction in armament costs, in order to help in the
balancing of Government budgets and the reduction of
taxation; second, a cutting down of trade barriers,

in order to restart the flow 6? exchange of crops and
goods between Nations; third, the setting up of a
stabilization of currencies, in order that trade can
make contracts ahead; fOurth, the reestablishment of
friendly relations and greater confidence between all
Nations.

 

 

 

In his characteristically personable manner, then,
Roosevelt encouraged and asked support of his drive for
industrial and international recovery. Both themes, com-

mented the Literary Digest, met with broad popular approval

 

in the nation's press. Already a large majority of the

304

Chamber of Commerce businessmen, speaking on May 5 and 6,
had declared themselves in favor of what FDR had termed the
administration's "well-considered and conservative" efforts
to revive business. Labelling it "No Hasty Inflation," the
Times praised the general tenor of what it characterized as
an almost flawless radio speech, emphasizing that the Presi-
dent, as "leader and fellowsworker," was assuring Americans
he would be most careful in using inflationary powers. Over
1,500 messages inundated the White House mailroom, causing
Steve Early to reply en masse with a press statement. Most
writers shared the sentiments of publisher and former
presidential candidate James M. Cox: "Your talk brings
understanding, and understanding guarantees courage and faith
and a return to better days." "The President has a genius for
clarification and although he said nothing new," the cautious
Jay Moffat wrote in his diary, "one could not repress a
thrill at the exposition and simplification of issues."89

Having made his successful public appeal, Roosevelt
turned to a decision between divergent drafts of industrial
recovery legislation. By May 9 Moley and Warburg learned
that the Wagner-Dickinson version combined $3.3 billion in
public works with provisions for industrial loans and the
plan for industrial self-government. Curiously enough, the
public works figure was both compromise and accident.
According to Harold Ickes, while perusing the final bill in
his crowded and noisy office, Wagner called out to his

assistant, Simon Rifkind: "Does the three billion for public

305

works include the three hundred million for New York?"
Rifkind replied that he £29 put it in. But above the din,
Wagner thought he heard: "Put it in." So he added the $300
million again, making the total $3.3 billion!90

In addition to this draft, Johnson's bill containing
the same codes, but with more stringent licensing provisions,
had the support of Moley, Douglas, and Richberg. While
Moley urged Wagner to unite with the others, Warburg urged
Douglas to work to "weld the two bills into one rather than
present two separate bills to the President for his choice."
Douglas promised to help.91

On Wednesday, May 10, during a large White House
conference of all the participants, Roosevelt considered the
issues and rendered a characteristic decision. Although he
had not favored more than $1.5 billion in public works during
any previous Cabinet discussion, he accepted Wagner's compro-
mise figure. Apparently the Senator and others convinced him
that anything less would be unpopular in Congress. For over
an hour FDR listened to the merits of the differing drafts.
Finally, on Douglas' suggestion, after most of the conferees
had departed, he appointed the Budget Director, Perkins,
Tugwell, Dickinson, Wagner, Johnson, and Richberg as a sub-
committee to secret themselves somewhere and weld the two
bills together.92 The President "leaned toward shorter and
quicker action," Tugwell afterwards observed, "but his

mandate was to go away and agree."93

306

The NRA locked-room decision again suggests FDR's
basic leadership strategy and tactic. First, he sought no
advice or representation from outside the major interest
groups who pressured for legislation. Since the groups
desiring NIRA were primarily business-oriented or from within
the administration, organized labor would be only indirectly
represented. And since most administration leaders who got
involved were business-oriented, as was Roosevelt himself,
NIRA naturally became a pro-business measure. Second, FDR
would not make a final decision between conflicting factions.
Rather, as with Morgenthau and farm credit during the inter-
regnum and with.Moley and the State Department during the
Hundred Days, he let subordinates battle it out. If this
resulted in a compromise law or a self-contradictory
economic policy, it nevertheless had presented the President
with more acceptable, political alternatives for decision.
Thus in the short run, he could secure rapid agreement on
a rather comprehensive New Deal program. In the long run,
however, it would mean a New Deal more compromised than it
otherwise could have been.

Within a few days, assorted wranglings, and the
addition of a presidential requirement, the final draft
emerged and Roosevelt sent it to Congress on May 17. The
NIRA that FDR approved departed from the Wagner draft in only
two particulars. First, at Johnson's insistence, the "codes
of fair competition" would be applied to all industries

engaged in interstate commerce, rather than Wagner's more

307

practical idea to codify only major industries like steel
and automobiles. Second, the drafters deleted the provision
for industrial loans. The final NIRA could therefore appeal
to all of its authors and supporters. Code authority would
satisfy business planners. Section 7a, with its promise of
minimum labor standards and collective bargaining, would be
attractive to labor and to social workers. Federal licensing
would look hopeful to enthusiasts of national economic
planning. And public works would mollify the spenders and
pump-primers.94

At this point Roosevelt added his own requirement.
Supported by business leaders like Henry Harriman and by most
congressional Democrats, the President mulled over an
accompanying tax program during the weekend of May 13-14.
Under the concept of the extraordinary budget, taxes had to
be provided in order to pay the interest and amortize a
sinking fund on the $3.3 billion. Douglas and Warburg had
already calculated that $220 million would be necessary,
figures which the Budget Director submitted along with his
tax recommendation. But instead of recommending specific
taxes, as he preferred, FDR acquiesced to urgings from
Capitol Hill veterans like Pat Harrison of Mississippi,
chairman of the Senate Finance Committee, and Robert L.
Doughton of North Carolina, chairman of the powerful House
Ways and Means Committee. Roosevelt agreed to leave the tax
item "wide open" in his special message, but he made known

his personal preferences for a "reemployment" manufacturers'

308

sales tax, increased gasoline taxes, income taxes applied to
stock dividends, and a "breakfast table" levy. Reporters
also learned that most conferees were more enthusiastic over
the public works and the sinking funds proposal than over
the industrial section of NIRA, an ominous portent.95

Roosevelt's May 17 special message appropriately
climaxed the drive to formulate industrial recovery legisla—
tion. First, he requested the machinery necessary for a
"great cooperative movement throughout all industry in order
to maintain wide reemployment, to shorten the working week,
to pay a decent wage for the shorter work week and to prevent
unfair competition and disastrous overproduction." Second,
he requested public works. Then fully half the message
dwelt on taxation, borrowing its theme from the Economy Act.
"In carrying out this program," he stated, "it is imperative
that the credit of the United States Government be protected
and preserved." Therefore "emergency expenditures" must be
counterbalanced by sufficient new revenue for interest and
amortization. Careful estimates showed that $220 million
would be needed. While making no suggestions at this time,
he would transmit his own recommendations, ran the firm hint,
if the House Ways and Means Committee had not acted by the
"coming week." These taxes would be reduced either when
increasing business revenues materialized, or when repeal of
the 18th Amendment was ratified. "The pre-Prohibition
revenue laws would then automatically go into effect and

yield enough wholly to eliminate these temporary reemployment

309

taxes." The President, therefore, had now partially linked
repeal and NIRA as economy in government measures, points
which contemporaries did not overlook during the Hundred
Days.96

Indeed, along with its counterpart AAA, the NIRA
was closely related both to the Economy Act and to the fiscal
conservatism of the President and his influential Budget
Director. For while Roosevelt would experiment in devising
agricultural and industrial recovery programs, he would not
experiment either with the administration of those programs,

as his appointment policy indicated, or with the credit of

the United States.

VI

Even while taking up the reins for industrial
recovery and entertaining the leaders of foreign countries
during the first half of May, the President was increasingly
perplexed by "political fission" in Europe. By mid-May,
while exhorting international economic recovery, he began to
reveal some pessimism on that score. Germany was the center
of the fission. The National Socialist Party on March 5 had
gained a majority in the Reichstag; on March 21 the Nazis had
emblazoned their symbol, the swastika, on the national flag
and on army uniforms; and shortly thereafter the Reichstag
had anointed Chancellor Hitler with virtually unlimited
powers, removing most if not all of the old constitutional

restraints. "It is the undisguised intention of the National

310

Socialist Party," reported the American consul-general in
Berlin, "to get absolute control of all forms of German
government, and of intellectual, professional, financial,
business, and cultural life."97

While the American press continued to carry sensa-
tional stories of Hitler's and the Nazis' dual rise to power,
Roosevelt had his own sources of information as well as his
own ideas for action. "To us, it seems also that Germany, a
nation which loves to be led," wrote 8. R. Fuller, Jr., a
Roosevelt acquaintance just back from a European trip, "is
again a marching nation; and so a danger." These sources
related that Germany was on the verge of rearming, a develop-
ment which could foredoom the international efforts at
economic recovery and disarmament. As early as May 7, the
same Sunday as his radio broadcast, FDR discussed with Felix
Frankfurter his idea of an appeal "through the heads of
state, to the peoples of Europe to save the Disarmament
Conference."98

Roosevelt's public statements and further actions
show that he daily grew more wary of the European situation.
On May 6 in a joint statement with Italy's Jung, they
declared: "We agree that political tranquility is essential

for economic stability; that economic disarmament can take

 

place only in a world in which military disarmament is

 

possible." When German representative Hjalmar Schact
threatened that his country was planning to cease all trans-

fers of payment on its foreign obligations, the President

311
and Hull gave him, alternately, the diplomatic cold shoulder
and a strong dressing down. Roosevelt and Schact on May 12
issued their joint statement, which reiterated the need
for "military disarmament." That day Hitler summoned the
dismissed Reichstag to reconvene on the 17th.99
During the weekend of May 13-14 Roosevelt's

100 but without the usual

54-nation message was drawn up,
assistance from Moley. He had departed for New York on the
Wednesday afternoon train to teach his Thursday classes at
Columbia. At this time he was considering possible plans
for an alternate profession, partly because of excessive,
albeit favorable, publicity. Such publicity simultaneously
left him vulnerable to criticism, while enhancing his pro-
fessional opportunities. On Friday and Saturday he saw

Mrs. Mary Rumsey as well as representatives of the McNaught

Syndicate, publishers of American Magazine. For some weeks

 

Mary Rumsey, her brother W. Averell Harriman, and Roosevelt's
millionaire friend Vincent Astor had been laying plans to

purchase the Washington Post, scheduled for auction in June.

 

They wanted Moley to be editor. He appeared interested. He
kept Roosevelt informed of these secret negotiations. And
it was this same weekend that the professor, having signed a
contract with McNaught in April, wrote "Looking Forward to
the Economic Conference."101
Roosevelt's disarmament appeal to the nations on

May 16 had reflected both a tone of optimism on the World

Economic Conference and one of warning on disarmament.

312

Privately, however, he was more pessimistic on the WEC.
That same morning he perused Moley's syndicated article, to
be released in June. In essence the article argued against
excessive optimism for the Conference, particularly for
lowering "barriers against trade." Instead Moley described
the WEC as something of a round table where nations could
exchange their best ideas for recovery. After approving his
article, Moley recollected the President remarking: "As a
matter of fact, this would be a grand Speech for Cordell to
make at the opening of the Conference."102

Roosevelt's leadership and his exhortations for
international and industrial recovery seemed moderately
successful by mid-May. NIRA would go to Congress on the
17th; but the legislation and its taxes were by no means
assured of early passage. To his closest advisers, FDR
seemed to be traveling conflicting paths on foreign policies.
To Hull he would lower trade barriers; to Moley he would not.
To Europe he offered hope for a "definite pact of non-
aggression"; to reporters he offered nothing so concrete.103
In talks with foreign delegations, the Americans offered
strong hopes for lower international trade barriers,
stabilization of currencies, and raising of world commodity
prices. The President reaffirmed these in his second major
radio broadcast and the message to the world. But the Moley
article would imply the opposite. If, as Roosevelt was

saying publicly, "economic disarmament" depended on "military

disarmament," then there was reason to check the unbridled

313

optimism evidenced by mid-May. Hence the Moley article.
Perhaps as Warburg afterwards liked to say, FDR has a little
of the "Machiavelli" in him when dealing with monetary and
other policies.104

By mid-May, however, it appeared there had been
too much economy in government. When the ragged vanguard of
the second "bonus army" appeared in Washington on May 10
to demand cash payment of the World War I insurance bonuses
and a reconsideration of the veterans' benefits so severely
slashed by the Economy Act, the White House issued a state-
ment saying that all cuts would be reviewed in order "to
effect more equitable levels of payment." On May 16 Eleanor
Roosevelt and Louis Howe visited the disgruntled bonus
marchers at their camp.105 The veterans' lobby had been

defeated in March; but now they had regrouped into a potent

political force. A completed New Deal was not yet in sight.

CHAPTER VII
STRUGGLE FOR THE EARLY NEW DEAL

"I have signed everything they put before me,”
remarked Franklin Roosevelt, as correspondents pressed into
his Oval Office at 4:15 on the afternoon of Friday, June 16.
The first session of the 73rd Congress had adjourned just
after one o'clock that morning--making an even 100 days since
it had convened on March 9. The soon-famous Hundred Days had
finished in terms of domestic legislation. But in foreign
policy, the Economic Conference, in session only four days,
would be the climax. This was indicated by questions during
the 30th press conference, almost half of which dwelt on
current issues in London.

After joking with reporter Fred Storm about the
$400-a-week boat he and other special correspondents had

hired to follow the presidential yacht Ambegjack II up the

 

New England coast, Roosevelt began by announcing new appoint-
ments. ICC commissioner Joseph Eastman would be Railroad
Administrator, and Hugh Johnson would be National Recovery
Administrator. FDR indicated, in a general way, that special
boards would supervise the separate administration of NRA I
and public works, a decision just made during the preceding
Cabinet meeting. The works board would canvass available

314

315
projects while he vacationed. But already he had authorized
$400 million and $238 million for immediate highway and naval
construction, respectively. Some desultory discussion ensued
about projects. But nobody inquired about the rest of the
remarkable domestic legislative program, the occasion of so
many congressional struggles during June.

Instead, questioners turned quickly to the London
Conference. Had he changed his June 7 position that the time
was not "ripe" for de facto stabilization of currencies?
Stabilization had been an issue throughout the Washington
negotiations during April and May. And the President had
endorsed stabilization-—without defining it--in his May 7
radio Speech and his May 16 disarmament appeal. Off the
record, he carefully explained that any agreement first had
to be approved both by the acting secretary of State and by
himself. Second, the American delegation had not communicated
to Washington in "any shape, manner or form." Therefore,
third, no agreement existed, tentative or otherwise. He
further stated that newspaper stories out of London to the
opposite effect were false.

In fact James Warburg, the President's unofficial
monetary adviser who was now serving in that capacity with
the delegation, had telegraphed him personally on June 13
explaining stabilization talks to date. But FDR, then
battling to get Congress adjourned, either lost or ignored

this message.1

316

"The reason I say this has to be strictly off the
record,” Roosevelt went on, "is because it looks to me a
little bit as if some of the nations in London are trying to
spread around the idea that we have entered into some kind of
agreement and then, if it does not go through, try to put the
blame for a failure to stabilize on us." A correspondent
asked if it were true, as one dispatch reported, that Raymond
Moley would be sent over to London to look after the "infla-
tion measure."

"No. Moley, from the very start, has been going over.
He is going over a week or the week after--" "He expects to
sail on the Mgnhattan," interrupted Steve Early. It would
leave on June 21. Roosevelt repeated this, adding, "I didn't
even know that. He will take a look-see and come back."
Warren Delano Robbins, the President's cousin who was State
Department protocol officer, would soon return. He was the
first presidential liaison with the delegation. Moley would
be the second; a third would follow.

Apparently satisfied about liaison plans, reporters
returned to stabilization, a subject upon which Roosevelt had
ordinarily been vague. "Oh, my Lord," he responded to a
reporter who wanted stabilization defined, "it would take me
two hours and then neither one of us would know." Finally
he conceded it would have to take the form of a "gentleman's
agreement" to hold steady the value of international curren-
cies. But everything depended upon what offer London made.

None, he reiterated, had yet been presented. Obviously he

317
wanted to say no more on that topic, or any other. He was
weary. Just four days earlier Henry Morgenthau, after trying
to put him in a good humor, observed in his diary: "He
looked very tired and his face was drawn with fatigue. I
have never seen him look more exhausted."2 Finally the con-
ference ended, after FDR jokingly fended off another question
on public works.3

Few of the major themes of late May and early June
had been discussed. Most important of these were Roosevelt's
struggles to complete the early NeW‘Deal by enacting NIRA and
the Independent Offices Appropriations Act, which contained
the controversial compromise on veterans' benefits; and by
enacting other domestic legislation, notably the fight to get
FDR to accept a practical deposit insurance plan in the Glass—
Steagall Banking Act. Also, another theme was that these
struggles led him to trim the foreign policy program to save
the domestic program, confirming the domestic-first priorities
begun in early March. Only the London Conference had been
scrutinized by reporters, and then primarily the issue of
stabilization--only one of the exhortations toward inter-
national recovery that Roosevelt had repeatedly pronounced
during May.

Earlier on June 16, however, the President had
privately alluded to these themes. Noting the "veterans
legislation row," which he said might force him to "veto" the
Offices bill, he boasted to Breckinridge Long, recently

appointed ambassador to Italy:4

318
Outside of this little kick-up, literally every single
measure which I have proposed has gone through with the
single exception of a small bill to allow me to appoint
a man from the mainland as Governor of Hawaii. That is
not a bad record, is it?
That statement grossly oversimplified his difficulties in

June.5

Yet perhaps it illustrates in part another facet of
the man. He had what William Phillips called an "escape
clause," allowing him to move into another world at the turn
of his mind. Early one June morning, amidst congressional
turmoil and the imminent London Conference, Phillips arrived
in the President's bedroom and found him busy with a card
file. "You can't guess what I'm doing," FDR remarked with a
whimsical smile. After the acting secretary of State ven—
tured a guess, he replied:6
No, these are letters which I have received since my
inauguration addressed to me as 'Your Majesty,’ 'Lord
Roosevelt,‘ or some other crazy title indicating royal
rank from all over the world. I'm going through them

to pick out the ones I think would amuse the king [of

England and send them to him. Don't you think it will
amuse im?

A man of many faces and abilities, of charm and of
power, of depth and of superficiality, Roosevelt the politi-
cian and the leader had just successfully completed the
domestic legislative backbone of the early New Deal. An
astonishing record in contrast to Herbert Hoover, whatever
compromises and deals FDR had made would be largely over-
looked, then and later, because a new leader had emerged. He
had 3 program, an aim motivating him from the first week in
March. It did not matter that key points of the program were

relatively conservative. The Hundred Days struggle had

319
finished and now a new one loomed in the stately conference

rooms of London's Kensington Museum.

II

Two key pieces of early New Deal legislation enacted
during the last half of May were the Tennessee Valley
Authority Act and the Truth-in-Securities Act. Certain
similarities between them are of interest. Both were contro-
versial, particularly to the affected interests of electric
power and investment banking, respectively. Both related
less to relief or recovery than to long range reform of the
economic structure, although Roosevelt himself often charac-
terized TVA in terms of relief. In both cases he had taken
an early interest in outlining policy, while leaving most of
the groundwork and congressional liaison to trusted subordi-
nates. With both laws this happened because certain domestic
legislation as well as WEC preparations by late May had become
higher priority--thus allowing the President little time to
concentrate on final enactment. He characteristically involved
himself more in the outline and sponsorship of the early New
Deal than in the details of enactment, a fact particularly
true of legislation passed in May and June.

TVA personally interested Roosevelt more than any
other legislation during early 1933 except CCC. By mid-April
he had authorized Arthur Morgan to search for the other
two members of TVA's board and to help the bill's managers,

Senator Norris and Representative John McSwain, draft

320
perfecting amendments. Congress incorporated all the fifty
amendments Morgan proposed into the final law, and at least
two proved substantial. These gave TVA authorization to
build and extend its own transmission lines so as to create
its own power system, thus making it independent of private
utilities; and authorization to allow dams to be constructed
by such private companies or citizens as the President might
choose, rather than by mandatory use of the Army Corps of
Engineers. Roosevelt himself made several novel but imprac-
tical minor suggestions, most of which the drafters rejected.
For example, he enthusiastically proposed a new process
for making ammonia from a "by-product of hydrogen through
processing carbon black," an idea former Attorney General
A. Mitchell Palmer had assured him would save 76% of the
present cost.

In the end, Roosevelt's backing ironed out congres-
sional confusion and disagreement over the final version.
When Norris began to fear that the "power interests" were
trying to emasculate TVA, the President summoned the Nebraska
Progressive and McSwain to the White House. Both conferees
came away saying that Roosevelt had backed Norris on the two
most controversial features, power (the Morgan amendment) and
fertilizer, the latter to be manufactured on an experimental
basis as opposed to the House demand for quantity production.
By May 12 both houses had accepted what Norris termed "the
best Muscle Shoals bill we have ever passed." On May 18 FDR

signed TVA, and warned innocent investors not to be entrapped

321

by "conscienceless land speculators" who hoped to reap quick
profits in the valley.7

The White House announced Morgan's appointment as TVA
chairman on the 19th, as he continued his private search for
directors. By May 30 he had interviewed dozens, finally
recommending Wisconsin attorney David E. Lilienthal, a
Specialist in public utilities who had been recommended by
Justice Louis D. Brandeis; and Harcourt A. Morgan, president
of the University of Tennessee, an expert on agriculture who
had been recommended by Henry Wallace's department. More
emphasis had been placed upon these men's sincerity of pur-
pose and commitment to the public interest than upon their
politics or their views on TVA, facts which would lead to
later difficulty.8

Lilienthal's appointment is suggestive of both
Roosevelt's conception of TVA as a relief measure and of the
legislation's origins. Close to Brandeis, Lilienthal spoke
with the Justice several times during January 1933. In those
and previous conversations, Brandeis continually articulated
his opposition to a democratic government which allowed the
obvious disparities flowing from great wealth and from power
derived from wealth. Use income and inheritance levies to
tax great wealth out of existence, he argued, and use the
revenue gained for a government program of social services
which would also create employment. Citing soil erosion and

the razor blade industry as examples, he further maintained

that the government must seek "public nature" enterprises for

322

investing such revenue, thus removing unnecessary duplication
of facilities. Lilienthal observed in June that Roosevelt's
TVA ideas, first fully articulated in February, by now
evidently had two purposes: to employ men rather than use
direct relief, and to enrich community life by a series of
programs. ”This sounds very much like Brandeis' ideas
applied to a particular area."9

While Morgan succeeded in organizing rapidly enough
so that the first TVA board meeting could be convened on
June 16, during the second week of June the President became
involved in settling James Farley's dispute with Morgan over
political patronage. Although then preoccupied with the
raucous Congress, this patronage disagreement (while failing
to satisfy Farley's insistence on making TVA's jobs political)
resulted in FDR's important suggestion to have a special
assistant pass on all personnel appointed. Morgan quickly
chose Floyd W. Reeves, whom he had read of as a University of
Chicago expert on personnel administration. All appointments
would be cleared only after investigation by Reeves. Thus
when the TVA board began sessions June 16, the President
could be satisfied that party politics would remain substan—
tially out of his major project for relief and community
development.10

Securities legislation provoked more public and
congressional conflict than did TVA. While first relying

upon Huston Thompson's draft legislation, circumstances soon

forced Roosevelt to rely heavily upon the advice of Moley,

323
Felix Frankfurter, and House Interstate Commerce Committee
chairman Sam Rayburn, as well as on the drafting team which
Frankfurter brought from Harvard, James M. Landis and
Benjamin V. Cohen. Introduced in the Senate during late
March, the Thompson bill soon met heavy criticism from
senators and representatives as well as from investment
bankers, who disliked federal regulation of any kind.
Thompson had drafted a disclosure statute. It sought to
prevent the interstate sale of fraudulent securities by
requiring a corporation's executive officers and directors
to furnish the Federal Trade Commission with a registration
statement which disclosed pertinent information relative to
the soundness and solvency of the corporation and its securi-
ties. In order to secure complete and accurate registration,
the bill authorized the FTC to revoke the registration of any
security which did not meet its standards; and buyers could
take civil recourse as well. But the measure had loopholes.
For example, the section on revocation was vague, the FTC'S
functions were too loosely specified, and Thompson himself
demonstrated a "shocking ignorance" of the measure's language

during his congressional testimony. Even the New Republic,

 

ordinarily a strong advocate of financial regulation,

labelled it "more pitiful than pitiless . . . loosely drawn

and entirely inadequate."11
In response to such controversy, on April 5 Rayburn

turned to Moley, whom he knew had been working as liaison on

securities since the election. Moley in turn summoned

324
Frankfurter to Washington. By April 10 Landis and Cohen,
with some assistance from Frankfurter's trouble-Shooter at
the RFC, Thomas ("Tommy") Corcoran, had their new draft
introduced into the House. Disingenuously described by the
Frankfurter team aS "perfecting amendments," the House bill
reflected the Brandeis attitude that modern business and
finance could only be effectively regulated through compre-
hensive yet flexible national administration, using the State
regulatory agencies for the actual task. While the Thompson
bill had focused narrowly on regulating corporations and
their directors, the Landis-Cohen draft decreased the total
of liabilities while increasing the responsibility for fraud
to include securities underwriters, distributors, and related
professions, as well as the directors. It also deleted the
FTC'S revoking provision, inserted a 30-day waiting period
between filing of registration and the date of securities
issue, and gave the FTC power to evaluate the registration
statement and put out a stop-order if necessary. Under
prodding from Frankfurter and liaison by Moley and Rayburn,
the subcommittee print was completed on the let. Introduced
formally by Rayburn on May 3, it readily passed by voice vote

12 "Rayburn did not know," Cohen told Landis,

two days later.
”whether the bill passed so easily because it is so damned
good or So damned incomprehensible." In the meantime, at
Warburg's insistence, Moley called W. Averell Harriman, John

Foster Dulles, and other prominent New York attorneys to

Washington to testify. While they deplored the broadened

325

liabilities and the waiting period, Rayburn's committee took
little heed before passing title I of the securities bill on
May 5.13

Confronted with two administration versions of the
same legislation, Roosevelt called a White House conference
to iron out the differences. Present with him were Louis
Howe, Moley, Thompson, and Cohen. Ostensibly the purpose of
this acrimonious session was to strengthen the Senate's
version of "reasonable," as Howe put it, so that a director's
responsibility for fraud would be more clearly stated. In
fact, FDR had decided to quietly shelve the Thompson measure,
as its author soon perceived. An irate Thompson soon insisted
that Moley explain how he had become involved, when the
President had originally given the assignment to him. Roose-
velt listened in silence. In response Moley contended that
he had stepped in only when outcries arose about the bill's
stringency; and that the administration considered Frankfurter
the country's number one lawyer. Thompson disagreed heatedly,
citing the President's original request, and asserted that
Moley had asked Rayburn--not vice versa--to let Frankfurter
intervene, and that everything done since had underhandedly
superseded him. Throughout this session Moley attempted to
placate Thompson, while FDR looked on in evident uneasiness.
They finally agreed to have Thompson get together with
Frankfurter; but this was never done. Roosevelt Simply did
not call on Thompson for any further advice or assistance on

. . 4
securities.1

326

Due to Roosevelt's apparent inability to personally
confront an unpleasant and conflicting Situation with
subordinates (deferred in Thompson's case Since March), a
congressional impasse on securities legislation loomed. This
presidential characteristic would cause further distress,
notably with the separation of NIRA from public works as well
as with the Economic Conference.

At this point, with two House bills and with the
President concentrating on the Washington talks and the move-
ment for industrial recovery, Senator Hiram Johnson further
complicated the securities situation. On May 8, while the
Senate considered the Thompson bill, he introduced an amend-
ment as title II. Passed that same day and sent to conference,
the Johnson amendment established a Corporation of Foreign
Security Holders. The Corporation, to have Six directors,
would disclose information upon foreign-issued securities, as
title I would do for domestic ones. In addition to acting as
the investor's fiscal agent in such transactions, the corpora-
tion would be empowered, among other functions, to negotiate
with foreign governments for resumption of payment on
defaulted issues. It touched a problem of some magnitude
with which Johnson had been contending since 1931. American
investments in foreign bonds and securities between 1920-1931
exceeded $10 billion at face value, but since 1929 partial or
complete defaults on interest and sinking-fund payments had
been the rule, the peak being 76% in Latin American obliga-

tions. Officially the State Department followed a policy of

327

non-intervention in American foreign investment. Unofficially,
the policy was more complex. Diplomats and bankers were
often intertwined, with the former generally helping the
latter make profits—~a Situation which Johnson naively con-
cluded meant conspiracy.15

With other more important irons in the fire, the
President now found himself confronted with two title I'S and
a senatorial departure for title II. It came at a most incon-
venient time, because he wanted Hiram Johnson--as a Progressive
Republican--to join the London delegation.16 So he was
ambivalent on the former Bull Mooser's proposal. Warburg and
Feis took the initiative against title II. They feared the
bond corporation would appear to be a quasi-official body,
which would lead to confusion over State Department preroga-
tives, and that personnel selection would be outside depart-
ment control. Both of these would encourage bond-holders to
hold the U. 8. government responsible for defaults. The two
saw Roosevelt during his talks with the German delegation.
He summarily agreed with their plea to write identical notes
to Duncan Fletcher, Senate leader of the securities conference
committee, and to its chairman, Rayburn, "asking them to kill
the amendment in conference."17

But in less than a week, at Howe's needling, Roosevelt
reversed himself on title II. Apparently because of his
maneuvers to win Johnson as a WEC delegate, he telephoned
Rayburn on May 15 and asked him to "do something" £95 the

Johnson amendment.18

328

Delay and circumstance then intervened. With Frank-
furter and Moley urging the President to request the conferees
to adopt the House securities bill, with the committee moving
Slowly through four draft revisions, and with Roosevelt now
centering his attentions on his disarmament appeal and not
being interested in bondholders legislation anyway, he did
not write the promised letters until May 20. Having switched
courses, FDR equivocated. He stated no preference for how
"bondholders' committee" personnel should be selected; but he

19 With these letters, he

wanted no overlapping authority.
tossed responsibility for a title II decision to the confer-
ence committee.

Rayburn handled both titles shrewdly. When the
committee voted 5-5 on whether to adopt the Senate (Thompson)
bill, he ruled the motion lost. With title I tentatively out
of the way, he hesitated to risk it on a battle over title II,
especially with Johnson on the committee. After seeing
Roosevelt's May 20 letter, and with Landis on an extension
line, Rayburn telephoned the White House to throw responsi-
bility for decision back onto the President. He explained
the situation. FDR paused, then casually remarked: "You do
what you think best, Sam." They hung up. Suddenly Landis
had a "bright idea." Hurriedly he drafted section 211:
title II would go into effect only when the President deter-
mined it was in the "public interest." Rayburn liked the

idea, and Johnson accepted it, apparently unaware of the

implications. On May 22 the House voted to accept the

329
conference report, on May 23 the Senate concurred, and on the
27th the President approved the bill.20
Roosevelt had delivered on securities legislation.

While the act had a ragged course, it supplemented, as he had

requested, the old doctrine of caveat emptor with the new one

 

of "let the seller also beware." American newspaper opinion
almost universally endorsed the act's purpose, while having
mixed feelings about its potential effectiveness. On title I
most of the business and financial community saw only what
has been described as an "immediate, terrifying defeat." But
to all such conservative criticisms, Roosevelt responded
positively. "May I be quite frank with you," he wrote the
dean of Harvard's Business School, "and tell you that the
difficulty is that all the objections to the Securities bill
are wholly general in character and no one so far has been
able to point out any Specific objection that would result in
Specific damage?" With the key help of those like Frankfurter,
Moley, and Rayburn, an effective truth-in—securities law, as
promised in the 1932 Democratic platform and in his inaugural
address, had been enacted.21

For Roosevelt, the need for securities regulation
probably represented a question of morality more than one of
economics or rational financial control. And title II,
rewritten to give him discretionary authority to invoke it,
probably offered the best way to avoid the unwarranted
expansion of government responsibility into areas best

reserved for private enterprise. For this was a period when

330
he was not only determined to reduce national expenditures
via the Economy Act, but he was also advocating cooperation
and "partnership” with business and finance via the NIRA.
The Securities Act, therefore, reflected many of his basic
attitudes in 1933. And it took a significant step toward

federal regulation of the stock and securities markets.22

III

Other legislation passed during May and June was less
controversial and of less reform Significance to the early
New Deal than either TVA or the Securities Act. These
included the joint resolution for the abrogation of the gold
payment clause in public and private contracts (Signed June 5),
the Home Owners' Loan Corporation (June 13), and acts for Farm
Credit and Railroad Coordination (both June 16). In all of
these the President took a part, and in some ways a decisive
one; but none were controversial enough to demand his primary
attention. Instead, personal advisers, Cabinet officials,
Democratic leaders in Congress, and other administration
subordinates followed each measure through to enactment.
While all of these raised varying amounts of expectation
and journalistic commentary at the time, none ranked in
importance-—either to Roosevelt or to the early New Deal--
with the legislative mainstays of the Hundred Days: AAA, the
Economy Act, and NIRA.

Repudiation of the gold payment clause in government

bonds was one idea Roosevelt had in mind on April 18 when he

331
abandoned the gold standard and accepted the Thomas amendment
to AAA. A few days earlier he had casually mentioned the
gold clause to George Warren and members of the inflationist
Committee for the Nation, propagandizing in Washington Since
early April for revaluation of the dollar. The President
remarked to them that "if one were called on to supply gold,
he might borrow from the Treasury for a few minutes, pay it
to the man who asked for it and a Secret Service man could
stop the man from taking it out of the Treasury." In this
roundabout fashion he suggested that he wanted to end the
domestic use of gold. Also, he was very interested in the
Committee's proposals to revalue the dollar by decreasing the
grains of gold, and he urged them to continue their work.23
Four days later FDR accepted the Thomas amendment, which in
part authorized the President to reduce the gold content of
the dollar up to 50%.

Although considering revaluation, Roosevelt only con-
fided this to a few trusted advisers. He delegated Frank-
furter to draft gold clause legislation Shortly after April 18,
and he brought the matter up with.Moley from time to time.24
It appears that he silently followed the arguments of Warren,
arguments that Morgenthau was continually illustrating with
price charts (given him by warren) at their Monday luncheons.
Warren maintained that prices could be raised by decreasing
the price of gold. The only way to avoid further deflation

and bankruptcy in America, he argued, was to decrease (or

revalue) the grains of gold contained in the dollar. In

332
other words, devalueing from the present 23.22 grains to
between 12-16 grains would result in commodity prices raising
proportionately—-and raising prices had been one of FDR's
prime objectives in abandoning the gold standard and in
accepting inflation.25
Roosevelt quietly resolved the matter in May when he

delegated the drafting of a joint resolution to Senator
Duncan Fletcher, chairman of the Banking and Currency Com-
mittee. Like the President, Fletcher believed that gold
Should be used only for industrial purposes domestically, and
only for adverse trade balances internationally. "AS soon as
I can get the authority to regulate gold," Roosevelt confided

26 With

to Morgenthau, "I can use it if and when necessary."
Frankfurter reminding Moley to keep checking on the legisla-
tive process, with Morgenthau privately pressuring the
President, with Warren publicly popularizing a reduction of
the dollar's gold content by one-third, and with influential
journals like the Nation arguing for "Devaluation--or Drift?,"
Fletcher and Congressman Henry Steagall introduced joint
resolutions on May 26. According to the Treasury Secretary's
statement, the gold resolution merely sought to clarify the
Thomas amendment's language. Legal tender, meaning any form
of money acceptable to the government, would now replace the
stipulation of the 1900 law which provided for gold as the
only medium of payment for all public and private contracts.27

Described by the President as Simply making a record

of what was already "the de facto situation," the resolution

333
passed the House and Senate with little debate and by party
votes on May 29 and June 3, respectively. To reporters
Roosevelt maintained that abrogating the gold clause had
nothing to do with inflation, that he remained "open to sug-
gestions" on whether war debts could now be paid in currency,
that the law did not relate to the London Conference, and
that it Simply told the "people that they cannot have gold in

28 On the other

their private possession in this country."
hand, the Timgg labelled it "repudiation." The editors
correctly pointed out that the administration had explicitly
declared in late April that the Thomas amendment and the gold
embargo were two separate points. But now "the two things
are mysteriously, not to say inexplicably, mixed together."
Thus Uncle Sam now found himself in the muddled position of
repudiating his obligations while denouncing European nations
for wanting to repudiate their war debts. In fact, abroga-
tion was partly motivated by the June 15 debts installments.
It allowed debtor nations to pay in either "paper dollars," as
Moley and Phillips told the British ambassador, or silver.29
Indeed, Roosevelt's gold clause maneuver logically
recognized a "de facto situation." That is, he de facto
believed in a managed currency and he gradually, if unevenly,
moved toward it—-when the political timing allowed. In May
and June he further opened the door toward monetary experi—
mentation. This is the primary Significance of the gold

clause abrogation. Such experimentation would begin in the

fall of 1933, led by unorthodox economists like George Warren

334
and James Harvey Rogers, after FDR had chastened his more
conservative fiscal and monetary advisers at the London
Conference.30
The home mortgage act was even less controversial
than gold clause legislation, largely because of its impera-
tive need by 1933. Formulated within the Federal HOme Loan
Bank Board before Roosevelt's April 13 message requested it,
board member T. D. Webb followed it through Congress. In the
House, John McCormack of Massachusetts took special interest
in this measure which would relieve the acute home mortgage

crisis in his Boston constituency.31

Senate hearings lasted
only two weeks in April, and by late May the House had heard
all the testimony and passed it with only four dissenting
votes. Although following the original administration out-
line, the House bill expanded the $10,000 per home mortgage
limit to meet criticisms that it offered too little relief.
Senators passed their bill June 5 after further liberalizing
it, including Robert Wagner's amendment for a three—year
moratorium on principal payments. Similar to a provision he
had also inserted in the Emergency Farm Mortgage Act, it
freed the debtor from foreclosure for three years.

For his part, Roosevelt assured congressmen and
others who inquired that he would handle threatened home
mortgages as he had with farm foreclosures. "The moment the

bill comes to me for signature," he told Representative Fred

A. Hartley, "I will make a public appeal to mortgagees not to

335

foreclose until the machinery can be put into operation. My
plea seems to be working well in regard to farms."32

By the time he had approved the bill on June 13, the
President had asked Louis Howe to explain how it worked in a
simple radio "interview." In a carefully scripted "question-
and-answer" session with NBC'S Walter Trumbull, HOwe detailed
the intricate bill in Simple, almost Rooseveltian language.
A homeowner with a defaulted or threatened mortgage on a home
worth not more than $20,000, mortgaged for not over 80%, and
containing no more than four families, could go to the new
Home Owners' Loan Corporation and receive 4% government bonds
for up to 80% of the home's value, as HOLC assessed it. Then
he either took the bonds to the mortgagee to trade for a new
15—year mortgage at 5% interest; or, if bonds were not
acceptable, he could get a cash loan from HOLC, not to exceed
40% of valuation, amortized for 15 years at 6%. Howe's broad-
cast proved a success. Funded at $200 million, Congress
directed the Home Loan Bank Board to create HOLC as a new
agency which was authorized to sell $2 billion of its own
bonds (later $4.75 billion). In this way a widely needed
relief measure passed through Congress with a minimum of
presidential leadership, expanding upon the 1932 basis of
federal home loan banks.33

Although not approved until June 16, Congress also
passed the Farm Credit Act and the Railroad Coordination Act

before the end of the session. FCA was the third part of the

plan to rationalize farm credit which Morgenthau and William

336

Myers had worked out during the interregnum. It would legis-
late the executive order of March 27, merely putting con-
gressional approval on the reorganization of all existing
credit facilities. Myers began drafting the bill after the
President had approved its general outline on May 2. Con-
sulting with various agricultural and credit experts, as well
as Democratic congressional veterans like Senate floor leader
Joe Robinson and Marvin Jones of the House Agricultural
Committee, Myers and others finally completed a special
committee print and sent it to the White House. On May 25
Roosevelt summoned Myers and Jones to probe them on the draft.
The bill would set up four levels of banks in twelve nation-
wide regions. In each region would be a Federal Land Bank
(first established in 1916) to carry on with financing farm
mortgages; a Federal Intermediate Credit Bank (begun in
1923) continuing to rediscount loans on crops held by
warehouses or cooperatives; and a Production Control Credit
Corporation, a new agency, to make loans for seed and for
relief from floods and other natural disasters. And a new
Central Bank for Co-operatives would finance farm cooperatives.
AS Farm Credit Administrator, Morgenthau would supervise this
unified system, with assistance from a deputy governor for
each level of bank (one of whom would soon be Myers).

Roosevelt's personal knowledge of FCA, which stemmed
from his relationship with Morgenthau, unaccountably surprised
Jones-~who knew the two men were close. At the meeting on

the 25th, the President insisted that interest rates be as

337

low as functionally possible. Jones later professed to be
astonished at the "complete knowledge he [FDR7 had about the
philosophy of the bill and its various provisions when it
had only been available twenty-four hours, and we hadn't
talked to him about it at all." But Morgenthau had. Roose-
velt's grasp of the FCA legislation suggests that when close
or personal advisers were involved, he was able to inform
himself more thoroughly and swiftly than otherwise.34

While Morgenthau quickly won the support of the
Democratic congressional leadership for "95%" of this
"administration bill," Budget Director Lewis Douglas was the
major obstacle. Senator James Byrnes, known already as the
President's "fixer," liked the measure and helped Morgenthau
persuade Douglas to endorse it. They achieved this aim at a
meeting on the night of May 25, during which Byrnes, Jones,
Myers, and others participated. "I consider this a big
victory," the FCA governor candidly noted in his diary, "as
Douglas has put me in a most uncomfortable position, as I
told the Democratic leaders in the Senate that I had the
approval of the President as to the general principles of
this bill, and if Douglas had killed it, it would have greatly
hurt my prestige." These maneuvers indicate that while
Morgenthau's influence with Roosevelt was growing, the Budget
Director was the administration's central figure in all
fiscal matters.35

With approval from the President and Douglas, with

Byrnes providing the leadership on Capitol Hill, with Myers

338

again supplying technical testimony to the proper committees,
the measure moved rapidly. It passed the House on May 31
with all amendments voted down by large majorities; and it
was held up in the Senate only because of congressional
resurgence about NIRA and veterans legislation. With the
President concentrating on higher priority matters, Morgen~
thau lobbied for his bill. After several talks with
Roosevelt and Douglas, he reluctantly accepted a Slight
compromise on FCA salaries. On June 9 Morgenthau again had
to hurriedly pursue Douglas because he had somehow omitted
the $42 million needed in the Independent Offices bill for
FCA'S implementation.36 Finally, after lobbying all day and
evening June 10 and 11 from the Vice President's Senate
office, with Byrnes stating he would not accept any "cut rate
salaries," Morgenthau and Myers were amazed to see their
handiwork pass by a clever parliamentary tactic. "About ten
o'clock there was a lull [in the adjournment wranglg7 and
Jimmy Byrnes moved that our bill be passed," Morgenthau
happily recorded. "In fifteen seconds it was done. It took
my breath away it happened so quickly."37

Due primarily to Morgenthau's persistence, FCA passed
its last legislative obstacle on June 11. Because of the
battle for adjournment, Roosevelt did not find time to Sign
it until June 16, and then it was not publicized at all. In
fact a lack of publicity of any kind attended FCA, chiefly
because it logically flowed from the March 27 executive order

and the Emergency Farm Mortgage Act of May 12. Morgenthau's

339
determined maneuvering with congressional leaders, and
Roosevelt's known friendship and backing proved instrumental
in carrying a thorny problem through to a practical legisla—
tive solution. But the urgent need for an efficient farm
credit organization still formed the movement's key component.
Farmers were demanding "action, and action now"; and their
President delivered.

The railroad bill was last, but not least (in terms
of advance expectations), of the relatively non-controversial
early New Deal measures. AS submitted to Congress by the
administration on May 4, the Emergency Railroad Transportation
Act was substantially rewritten within C. C. Dill's Senate
Interstate Commerce Committee. Originally intended as a
relief measure, a partnership in railroad self-regulation to
benefit carriers themselves, it sought to effect certain
economies and reorganizations that would allow the larger
railroads to retrench and prosper. But this approach favored
bondholders and worked to the detriment of other interested
parties, notably railway labor unions, shippers, short line
railroads and, indirectly, business in general. Congress
only spent two weeks for the bill's introduction, hearings,
debate, and conference, because the mood was to "do some-
thing." Of the hail of minor amendments added, the one
substantive change affected labor, albeit not significantly.
The Dill committee, bowing to contradictory pressures to make
the bill a relief measure for both carriers and labor, went

beyond Donald Richberg's proposals and added section 7b.

340

Economies by the coordinator could not reduce the number of
employees below the levels of May 1933, except for removals
due to death, retirement, or resignation. And these still
could not exceed 5% annually. With this amendment the bill
lost its purpose as either an effective economy in government
or a business—government partnership measure.38

By late May the President evidently had lost whatever
interest he once had in the measure, as did the press. The
bill so disappointed all concerned, even the carriers, that
it received very little newspaper coverage once amendments
were added. Roosevelt's remarks to reporters and his message
to Dill on May 13 indicate that he was not at all familiar

39 He did

with more than the broad principles of the bill.

not respond when the Senator assured him that, after his

committee added the labor amendments, "the railway organiza-

tions are heartily in favor of it." FDR continually referred

all railroad spokesmen to the Commerce Secretary. Only once

did he lend his personal prestige to secure enactment. On

May 27 Dill told the Senate he was authorized to announce

that the President opposed as "unworkable" Hugo Black's

amendment for a Six hour railroad day with eight hours of

pay. By June 8 the conferees had reach full agreement between

differing Senate and House versions, and the bill was ready

to go to the White HOuse.4O
AS finally passed, the Railroad Act characterized the

less successful Side of the early New Deal. Its major pro-

visions included creation of a federal coordinator who,

341

acting through regional coordinating committees in the East,
West, and South, would attempt to promote efficiency by
encouraging such economies by railroads as did not effect any
reduction of employment; a method to force financial reor—
ganization of railroads needing RFC loans; authorization for
study of transportation problems by the coordinator to form
a basis for possible future comprehensive reform; repeal of
the dormant recapture clause of the 1920 act (recapturing any
profits over a certain percentage) and of certain ICC rate-
making restrictions.

The preponderant view of newspaper editorials

reflected that of the Chicago Tribune: while the law might

 

"mark some advance it is probable that little good will come
of it." The conservative journal of the carriers, Railway
Agg, concluded that railroads would have to rely more on the
"increase in carloading" to help them meet fixed charges for
1933 than on any "economies to be effected in the near future
by coordination." Joseph Eastman himself, soon to be offi-
cially named Federal Coordinator, was unenthusiastic both
about the job and the value of the new law. In a letter of
rebuke to journalist Paul Y. Anderson, who had unduly
criticized the act in the Nation, Eastman stated that he
stood to gain nothing personally from the job except new
public experience, that all ultimate authority rested with
the ICC rather than with the coordinator, and that economy
was a false issue when no unemployment could result. Only

the Study provision did he commend.41

342

While great expectations of transportation and
railroad reform had been generated by Roosevelt's 1932 Salt
Lake City Speech and by administration efforts toward drafting
such measures since March, by June railroad coordination
proved a minor victory for the early New Deal. Its signifi-
cance lies not in its Short or long range impact on the
economy or on the railroads, because little of either resulted.
Rather it illustrates how little Roosevelt could or would do
in areas where interested parties could not come to funda-
mental agreement on conflicting issues. If there had been a
consensus in 1933 on the nature and Specifics of railroad
reform, or if determined and influential groups with national
political appeal had backed such reform (as was true with AAA
and NIRA), or if he had taken a strong personal interest (as
he did with CCC and TVA), it is likely that the President
would have strongly supported an effective railroad act.
Lacking the consensus and the public support, he chose to
concentrate his efforts where legislation could be achieved
with less potential for damaging his presidential leadership
or prestige. The vacuum of Roosevelt's leadership doomed

railroad reform to emasculation.

IV
During this period the President usually subordinated
foreign policy issues to his all—important theme of completing
passage of the domestic New Deal. Unfortunately, from the

point of view of both domestic and foreign policies, neither

343

could do without considerable involvement by Roosevelt.
Being human, he could not do everything at once. But being
human and also Roosevelt, he tried.

Selecting the London delegation had from time to time
during April and May preoccupied the President and Moley.
For the most part, however, Roosevelt delegated this diffi-
cult task to the professor, who seemed to have little taste
for it. Tentative choices changed from day to day throughout
May, according to Moley's notebook and Warburg's journal.
Only Cordell Hull remained a fixture. Moley's delegation
lists usually included Key Pittman, Since he was chairman of
the Senate Foreign Relations Committee; a Republican senator,
FDR's preference being Hiram Johnson; some Democrat from the
House; James M. Cox, FDR's 1920 presidential running mate, and
one or two others. Warburg, Bullitt, Feis, and others also
appeared, usually as economic "experts" to the delegation. An
advisory commission (later dropped as unnecessary) at first
included Democratic party backers like Bernard Baruch and
Joseph P. Kennedy. Whether or not Moley would go remained an
open question until mid-May. Neither Roosevelt nor Moley con-
sulted the Secretary of State on any of these choices.42

Politics and not economics dominated Roosevelt's
ideas for a delegation. He tried to avoid Woodrow Wilson's
mistakes of 1918, hence his desire for a Republican and at
least one member of each house. Aside from that, as evidenced
by the final choices, knowledge of economic or monetary policy

was not a prime criterion. At the last minute James M. Couzens

344

of Michigan became the Republican senator (no one else would
accept); Samuel D. McReynolds of Tennessee, chairman of the
House Foreign Affairs Committee, became the congressman; and
Ralph W. Morrison, a hitherto unknown Texas businessman who
was assumed to be a heavy campaign contributor, became a
sixth member, in addition to Hull, Pittman, and Cox.43 By
May 16 Moley finally decided not to join the delegation. He
had several reasons. First, too much domestic legislation
and the debts issue remained, and he believed the President
needed his help more than did the delegation. Second, as
suggested by his WEC article which Roosevelt approved, Moley
by then believed the Conference would be "no great Shakes
anyway." And he believed that if he came over later, as the
personal representative of the President, he would come "with
infinitely more prestige and will serve a much more useful
purpose."44 The first two calculations would prove correct;
not so the third.

Part of the problem was the unspoken rift between
Hull and Moley. To some extent this resulted from events.
Also, as Moley was well aware, it related to the President's
personal method of doing business "directly and privately"
through him. He knew that Hull was "extremely perturbed"
about this.45 For all practical purposes, on foreign economic
policy Moley served as acting secretary of State; and Hull
evidently feared he was after the Secretary's job. Publicity
played a part in this Situation. For example, 2123 magazine

featured Moley on the cover and in the lead story for its

345

May 8 issue, one week before Similarly featuring Hull.
Characterized as the President's "closest, most intimate
adviser," Moley's greatest achievement was teaching Roosevelt
how to get around the Constitution, by having Congress "dele-
gate its constitutional power to the President for a fixed
period and within certain broad limits." gigs concluded that
the administration had used this "Moley method" in the Economy
Act, AAA, and the Thomas amendment, and still expected to use
it on "War Debts and tariff rates."46

Such publicity came at a period of apparent economic
resurgence, when Roosevelt was beginning to receive some
criticism, when such criticism was directed at his purportedly
machiavellian "brain trust," and when Moley himself was
becoming a journalist and administration spokesman. On May 18
he spoke at a private gathering of key businessmen in Averell
Harriman's New York home, assuring them that there no longer
existed a "unified and cohesive" brain trust of professors

47

who reputedly maneuvered FDR toward radical policies. On

the following day editorials appeared in the New York Times
48

 

and the Journal of Commerce carrying this Moley thesis.

 

Two days later over CBS, he broadcast a slightly altered text
of his pessimistic article on the prospects of the Economic
Conference, a Speech which outraged the Secretary. In New
York City at the annual meeting of the Welfare Council on
May 24, Moley declared that the purpose of the New Deal was
an "architecturally more harmonious" national life, that all

of the practical measures so far proposed were to guarantee

346
that leaders in Washington would see to it that the citizen's
"general interest is not sacrificed to special interests."49

In the meantime, his associates secretly moved ahead with

plans to purchase the Washington Post and have him as editor,

 

although Roosevelt (whom Moley kept informed) and Vincent
Astor agreed not to have WOOdin for publisher because it
would "perhaps imply the control of our policy."50 That such
publicity on Moley's power and influence could be misinter-
preted by those within the administration is suggested by a

contemporary comment of the Wall Street Journal: "Wall

 

Street's annual issue of the Bawl Street Journal predicts that
Professor Moley will run again for President in 1936."51
Hull and the internationalists appeared to be losing
influence within the administration by late May. On May 18
he learned that he had been excluded from secret debt nego-
tiations with the British. On that Thursday, Ambassador Sir
Ronald Lindsay called at the State Department. Since Moley
was teaching in New York, he was referred to Hull. Bearing a
personal letter from Prime Minister MacDonald, Lindsay wanted
to know if the U. S. expected a formal reply on the "Bunny"
offer of early May. Hull, who had never heard of that
creature, was flabbergasted. Roosevelt resolved the immediate
issue by sending MacDonald an amiable letter, drafted by
Moley, restating the policy of keeping debts and the WEC
separate. But the British Cabinet was firmly resisting

paying the June 15 debt installment, and MacDonald's loss of

prestige within his own government during May further hurt

347
internationalist hopes within the Roosevelt administration.
"In these conditions, there is a strong current in Washington
to limit the results expected from the London Conference and
to develop on the other hand the United States economic
revival by internal measures," French financial expert
Emmanuel Monick reported to Paris. "Amidst the President's
advisers the 'internationalist group' (Bullitt, Warburg,
Cordell Hull) is losing ground whereas the 'nationalists'

(Moley supported by Baruch) are gaining."52

In such ways did
signs indicate that Hull's ideas were losing the President's
favor while Moley's were increasing in influence.

Amidst this Situation, a gyrating American dollar,
and domestic legislative matters, the President convened a
Friday night conference to give preliminary "instructions" to
his London delegation. Present to hear the final program for
the first time were Hull, Cox, McReynolds, Pittman, Moley,
Bullitt, Feis, Baruch, and Warburg-~who had drafted it.

53 He did not

Roosevelt read aloud the five resolutions.
explain; he merely read them. The first was to establish a
tariff truce for the duration of the Conference. The second
was to establish general principles of coordinated monetary
and fiscal policy to stimulate economic recovery and raise
world prices; to wit, governments and central banks should
make credit readily available to private enterprise, and
there should be a synchronized program of government Spending

to stimulate industry, employment, commerce. To this resolu-

tion he added his only suggestion of the evening: a clause

348

"endorsing the balancing of budgets." The third aimed to
remove international exchange restrictions. The fourth was
to lay the groundwork for an international monetary standard,
including such items as monetary stabilization as soon aS
practicable, a modified gold standard, and an agreement to
prevent the debasement of subsidiary coinages (Silver). Here
he later remarked that they should not forget HOwe'S idea for
an "international currency," the Specifics of which were
unclear to Warburg. And the fifth was to lay the foundations
for a gradual reduction and removal of trade barriers, like
tariffs, quotas, embargoes. FDR agreed to add another
resolution on controlling the production of certain commodi-
ties, notably wheat, which Tugwell would draft over the
weekend. He then said Tugwell would go to London around
mid-July; Moley would "sail the 15th of June and stay two
weeks, being relieved by Tugwell."

The meeting continued with little else being achieved.
Warburg recorded that Roosevelt Spent an entire hour reading
the draft instructions, and another half hour on the fOrm of
"the tariff bill to be submitted to Congress." Pittman
promised to have FeiS' tariff draft ready by Monday. Baruch
brought up the sticky question of the conflict with WEC aims
which soon would be caused by raising tariffs so as to make
AAA and NRA effective. This Roosevelt ignored. Instead, he
read MacDonald's debts letter; but this issue was also left
unclear. Warburg saw Roosevelt afterwards and received

compliments on his draft program--the President in fact

349

remarking his monetary adviser "seemed to have stolen his
language," although FDR had not even seen the program before
this conference. The group adjourned around 12:30, with
little done in the way of real discussion.54

On Monday morning, the same group plus Morrison again
sat down with the President for a final briefing. Again
Roosevelt read aloud Warburg's instructions, with two minor
changes, and then read Feis' memorandum on tariffs. Feis
noted the growing discrepancy between tariff protection as
needed for a successful domestic program and the resolution
calling for easing trade barriers, the same point Baruch had
raised on the 26th. After some desultory remarks, the Presi-
dent glossed over this point on the grounds that a discrepancy
did not necessarily exist-:if the administration of the
domestic measures was carried out "along the lines of reducing
rather than increasing trade barriers." But he did agree on
de facto stabilization before the Conference met. Warburg had
intended his draft as a bagis for a program. Since no one
else had bothered to prepare one, it became £23 program.55

And so did the President "instruct" his delegation.
In fact he conducted no meaningful discussion of the apparent
conflict between the imminent domestic and international
recovery programs. Efforts by Baruch and Feis to raise this
issue had been sidestepped. The delegates differed drasti-
cally as to economic views. Hull was obviously a low tariff

man; and the fifth resolution made him most hopeful of all.

Cox, as vice-chairman under Hull, was evidently a sentimental

350

choice, being the Democratic candidate in 1920 when FDR ran
for Vice President; but he earnestly believed in the aims of
WEC. Pittman was a man of some experience in congressional
foreign affairs, and a protectionist; but he, like Hull, had
only one string to his bow: "doing something" for Silver.
Couzens was also a high-tariff man, as well as an inflationist.
McReynolds was amiable and modest, fairly knowledgeable in
foreign affairs; but he would be out of his depth against the
likes of Britain's and France's finest. If Morrison, friend
of Garner and Howe, knew anything about economic or monetary
policies, he never let on either then or later. It was an
astonishingly weak delegation, a "motley group," Feis later
concluded. None had ever attended an international con-
ference.56

The delegation captured, however, the epitome of
Roosevelt's foreign policy. Perhaps it would serve his pur-
poses. At a time when he was privately pessimistic about the
Conference in general, such a diverse group under Hull's
declining influence would be ill-equipped to do anything
without his personal intervention. It is doubtful, however,
if FDR realized that point before the end of the Hundred
Days. Nevertheless, the delegation had been well-chosen for

political purposes. It would not repeat Wilson's Versailles

 

delegation. Surely any agreements could be gotten through
Congress, acceptable to Democrats and Republicans. That left
but one problem: first the agreements had to be negotiated.

As Tugwell had observed earlier that month, Roosevelt was

351
"improvising" policies toward the Economic Conference.57
Now he had improvised a delegation to negotiate improvised
policies. It was the Rooseveltian mind at work in foreign
affairs.

Two more points about the delegation are of interest.
Before leaving that day, Warburg saw the President alone and
arranged for a secret code through which he could report
personally.58 Also, one of the staff members of the delega-

tion was Moley's assistant, Celeste Jedel.59

By this means
Moley apparently intended to keep himself and Roosevelt
personally in touch with developments in London. On May 31

the delegation sailed aboard the Roosevelt. Behind they left

 

a hot, humid Washington full of presidential difficulties,
as Congress by then verged on open revolt against his

leadership.

V
The last month of the Hundred Days began auspiciously.
Nationwide Signs of economic recovery appeared as straws in
the wind. The Labor Department announced that for the month
ending April 15, building activity had leaped 21.2% over the
previous month. Seven large Massachusetts textile firms had
granted wage increases. And tire makers in Akron, Ohio, were
so besieged by demands that Sunday operations were planned.
Editorial comments from key cities in Nebraska, Iowa, and
Wisconsin indicated that farmer unrest was abating. While

such statistics were admittedly unreliable, Labor Secretary

352

Frances Perkins would soon advise Howe that the increase in
manufacturing reemployment from April 15 to May 15 was
243,000, a jump of 4.8% for May, while payrolls had increased
11.5%. Morgenthau's charts repeatedly told the President
that prices of commodities and gold were inching upward.
Recovery Signs were visible to all. But one result was that
the mood in Congress had become restive. Adjournment was
near. Many legislators had tired of the string of "adminis-
tration bills" from the White House, and that most political
patronage had so far been withheld.60

Roosevelt saw good signs on both domestic and foreign
fronts. By May 27 AAA, FERA, TVA, and the Truth-in-Securities
Act had all been approved, adding to earlier legislative
successes of the Economy Act, legalization of beer and CCC.
Also by late May the home mortgage, railroad, and gold clause
bills were in the congressional works, along with NIRA--the
capstone for recovery. Other legislation of lesser importance
was also pending in both domestic and foreign Spheres, and
the London Conference delegation would sail on May 31.
Roosevelt's May 16 world message, he confided to Morgenthau,
had "averted a war" in Europe, although American correspondents
in Berlin had reported that Herr Hitler's Reichstag speech
was a succinctly successful presentation of Germany's case
and her will for peace, making him "stronger than ever."61
"For the last month, with everything else going on," Tugwell
observed about FDR, "he has been his own foreign minister. I

am sure Hull doesn't know half of what goes on."62

353

But Washington would soon change, as the calm before
the storm. For beneath the surface seethed forces of revolt,
within Congress and without, forces already laying the
groundwork which would force Roosevelt to struggle to pre-
serve the early New Deal. These imminent contests of power
and will centered around three pieces of domestic legislation,
the first two of which the President supported: The Economy
Act, since March a legislative backbone of his public and
personal program, which had cut veterans' benefits drasti-
cally: NIRA, with its industrial self-government and
licensing features as well as taxes for public works; and
the Glass-Steagall Banking bill, a non-administration measure
for permanent reform which carried a controversial section to
guarantee individual deposits. The veterans' lobby, headed
by the American Legion and backed by many congressional
Republicans and Democrats, led opposition to the Economy Act.
Their attention now focused on the Independent Offices
appropriations bill, which furnished annual funding for all
executive branch agencies--including the Veteran's Adminis-
tration. Opposed to NIRA was a diverse coalition of
Republicans and conservative Democrats, representing small
business groups, antitrusters, and other elements who chiefly
disliked the income and sales tax features and the fact that
it was the epitome of the "White House" bills. Within the
administration, Roosevelt and Treasury Secretary Will Woodin,

who had strong reservations about some of the banking reforms

354
and particularly deposit insurance, at first opposed the
Glass-Steagall bill.

All three measures eventually succeeded, due to
different combinations of adroit leadership, compromise,
expediency, and circumstance; but the final victory did not
arrive until after 1:00 a.m. on June 16. And the maneuvers
to save the Rooseveltian domestic program left costly
casualties in foreign policies. Nationalism and isolationism
triumphed over internationalism and cooperation. For all
this the President deserves full responsibility, Since he
later claimed full credit.63

The President's closest advisers played crucial parts
in the struggle for the early New Deal. At Roosevelt's
bedside, in and out of his office, at the Budget Bureau, in
congressional committee rooms and offices, the suave Lewis
Douglas advised, testified, pressured, and persuaded in the
hour of crisis. The symbol of his chief's economy in govern-
ment endeavors, he probably reached the peak of his influence
with FDR during June. Moley primarily involved himself with
negotiating debt settlements with the European powers as well
as pushing for a Municipal Bankruptcy bill, both of which the
President supported.64 Morgenthau almost totally concentrated
on the Farm Credit bill; and Tugwell by then had plunged
deeply into AAA and a new food and drug bill. Howe took to
the telephone, the radio, and to congressional testimony to
help his boss. But Roosevelt himself furnished the indispensa—

ble leadership. His prestige and personality turned the tide.

355

The Glass-Steagall Banking Act furnished the back-
ground to these struggles. Senators Carter Glass and William
McAdoo had been formulating permanent banking reform since
early 1933. During the March banking crisis, most large
bankers demanded government deposit insurance, or "guaranty"--
a reform they had killed for years. Roosevelt shifted
positions on this issue, running from solemn opposition at
first to expedient compromise in the end. He and Woodin both
believed that to insure deposits in all banks, including weak
ones, would pull down solvent banks, possibly damaging the
entire system again. That it would instill confidence among
small depositors in all walks of life eluded the President.
On March 6 Woodin bluntly told Ogden Mills to inform the
panicky bankers' conference that "Franklin Roosevelt wanted

no guarantee of deposits."65

Nevertheless, within days at
least 25 Hbuse Democrats had petitioned their caucus for some
form of guaranty, while congressional and public sentiment
for it increased throughout March and April.66 McAdoo had
formulated the first deposit insurance bill by mid-March; but
by April Glass and Representative Henry Steagall, managers of
the Emergency Banking Act of March 9, were prepared to present
their bank reform bills. Containing different versions of a
Federal Deposit Insurance Corporation, which Glass would
accept only as a means to win support for his bill's other
reforms, these proposals lacked "administration" backing. So

they languished in hearings while New Deal measures got rush

priority. In the meanwhile, continued pressure from some

356

New York bankers seemed to economist Irving Fisher to be
making the President "wobbly" on deposit insurance.67

The Glass and Steagall bills had been prepared by
mid—April, although neither was introduced until May 10 nor
debated until later that month. Both sought to unify all
solvent national and State banks into a strong Federal
Reserve system. Aside from an FDIC, major provisions of both
measures included: required membership in the Federal
Reserve; one year for members to divorce their security
affiliates in order to continue in FDIC; no bank director or
official could be associated with securities-selling after
January 1, 1934; and national banks were put on a parity with
State banks in branch banking operations. But with the Presi-
dent alternately warm and cool toward FDIC, it evolved through
various compromise stages. In late April Roosevelt appointed
J. F. T. O'Connor, a shrewd Californian active in Western
Democratic politics and patronage, as Comptroller of the
Currency. This gave FDIC an advocate who had access to White
House circles. FDR interrupted his conversations with
Britain's MacDonald long enough to acquiesce in and advocate
a $10,000 limit on insurance, if Senate Banking and Currency
subcommittee members insisted on an FDIC. They did. Glass
cheerfully informed reporters, and the compromise process
began.

Under pressure from leading senators, at a White House
conference on May 10 with Glass, McAdoo, Robert Bulkley and

others, Roosevelt reluctantly agreed to a compromise schedule.

357

Beginning on July 1, 1934, FDIC would be capitalized at $450
to 500 million and would insure 100% of deposits to $10,000,
75% on $10,000 to $50,000, and 50% over $50,000. But he
refused to support immediate insurance, which would take
effect on July 1, 1933. Furthermore, a White HOuse statement
that day said he had not committed himself to banking legis-
lation this session--despite promises for it in the campaign,
the inaugural, and his securities message. When Republican
Arthur H. Vandenburg of Michigan, backed by RFC chairman
Jesse Jones, amended the Glass bill on May 19 for $2,500 of

immediate insurance, the gauntlet was down. Both houses
68

 

easily passed the now combined bill within a week.
The President stood firm in June against the Vanden-
burg amendment and other reform particulars. Moley promised
the departing Warburg he would help "kill the banking bill."
The staunch and wily Glass, at first against an immediate
guaranty, by June had switched just as firmly for it. A
chastened Steagall, proponent of immediate and complete
insurance since 1932, was now dismayed by Roosevelt's delay.
Sensational Senate hearings since May 20 with J. P. Morgan
and other wealthy investment bankers had disclosed the
absolute need for such basic legislation as the President was
seen to be delaying. The Morgan hearings, heavily publicized,
thus gave bank reformers an unexpected boost. In addition,
O'Connor worked as liaison between the White House, the

Treasury, the Federal Reserve Board, and Congress.

358

Roosevelt threatened a veto in private letters to
Glass and Steagall on June 2, and publicly on June 5.
"Frankly, I can devise no plan," he wrote the bill's managers,
"and, equally frankly, I must oppose the various plans that
have been suggested." His reasons were direct. If FDIC was
opened only to Federal Reserve member banks on July 1, 1933,
depositors would rush to put their money in these insured
banks; and the "result would be ruinous" for the 7700 non-
member banks now holding deposits of $12.5 billion. The
alternative was to insure all banks, "which is impossible
financially."69

Chiefly arranged by O'Connor, the White House finally
accepted a compromise over the time schedule for putting FDIC
into operation. But this move now proved unacceptable on
Capitol Hill. An impasse loomed by Friday, June 9, and
adjournment was scheduled for the following day. Proponents
of compromise needed time; but time had evidently run out.
Roosevelt, the master of the moment, had blocked long overdue
reforms.7O

Economy in government had already touched off the
primary congressional tempests with Roosevelt. Veterans had
been sacrificed well beyond administration-made promises
while the Economy Act was speeding to passage. Regulations
for cuts in their benefits and pensions, formulated under the
supervision of Douglas and General Frank Hines of the Veteran's

Administration, approximated $480 million instead of the pro-

posed $385 million. All "presumptives" would be removed from

359
VA rolls; and virtually everyone else would lose a quarter
to a third of his benefits. Because he handled preliminary
decisions for economy proposals, Douglas prepared for the
President answers to complaints about stringent cuts. And as
late as April 26 he assured FDR that the regulations issued
in early April were just.

When it became known, however, than an "army" of vets
was marching on Washington and would encamp there, as had
happened to Hoover in 1932, Hines (not Howe) advised the
President on May 6 that a "Specific employment opportunity"
should be made available for World War veterans. This he
believed would moderate their obvious "discontent and dis-
satisfaction" with the Economy Act. When Douglas concurred
two days later, FDR finally agreed to meet on May 10 with
Louis Johnson, national commander of the American Legion.
Afterward the President's executive order provided 25,000 CCC
jobs for vets. The marchers' pressure also helped to force
a White HOuse statement promising that cuts would be amelio-
rated. By this time, Democrat Robert Doughton of North
Carolina was leading the pressure-conscious congressmen who
had many former servicemen in their constituencies.71

Veterans and their spokesmen were demanding immediate
cash payment of the "bonus," mostly on grounds of hardship.
The adjusted compensation certificates (the "bonus"), issued
to World War vets, were long range endowment insurance
policies, payable in 25 years and with a loan value of 90%.

But many former soldiers needed cash, and cash now. Slowly

360

the "bonus marchers" began to break camp, to join the CCC or
accept government fare home, but only after the visit by
Eleanor Roosevelt and Howe to their Fort Hunt bivouac and
the meeting between a three-veteran delegation and an amiable
FDR. The Democratic caucus, meanwhile, sent word to Roosevelt
that even conservatives "consider the Situation serious." On
May 31 the Senate broke into open revolt. Reflecting the
sentiments of many of his colleagues, progressive Robert
LaFollette, Jr., angrily declared: "We were told very
frankly [in.March7 that they wished to take $400,000,000 out
of the hides of the veterans under the Economy Act. HOW that
could be done and not produce hardship, I cannot understand."72

But few saw the issue in terms of overall fiscal
policy, and those who did assumed the orthodox fiscal view.
Although the best argument for retaining (or increasing)
benefits was that such Spending would create more consumer
purchasing power, and thus aid general recovery, none of the
veterans' congressional advocates cited this point. And
Roosevelt and Douglas, attuned to conservative fiscal policy
and economy in government, likewise failed to perceive the
recovery argument in that context, although it paralleled
Spending for direct relief, CCC, AAA, and public works--all
of which were often justified by the recovery rationale.73

Review procedures on veterans regulations had been
started by Douglas, but too late to avoid a confrontation.

He stood firm in March and thereafter on the issue of "pre-

sumptives." These honorably discharged men had disabilities

361

presumed to have arisen from service origin, but which
appeared no sooner than one year after discharge. Douglas
believed Spending such pension monies was a gigantic squander
as well as ethically and morally incorrect, although he was
prepared to treat all definite service-connected disabilities
with fairness and prudence. But now congressional opinion
was aroused. Several senators, for example, loudly cited
many "hopelessly disabled veterans" whose benefits or pensions
were slashed 30%, charging that some lost 60-70%. Following
the lead of conservative Democrat Tom Connally of Texas, the
Senate on June 2 barely adopted an amendment to the $716
million Independent Offices bill limiting cuts in benefits to
25%. It would cost the administration at least $170 million
of its planned economies. The Vice President's curt "aye"
broke the 42—42 tie and passed Connally's amendment, thus
averting a vote on another amendment for a 15% limit. Presi-
dential leadership confronted its sharpest challenge of the
Hundred Days.74

Backed by his Budget Director, Roosevelt responded to
the challenge. "If service disability ZI§7 doubtful no injus-
tice would be done," he assured unhappy representatives and
senators who filed in and out of his Oval Office and back to
the Budget Bureau. Washington's early June heat registered
in the 90's and congressional tempers were as hot as the
thermometer. Douglas and others urged FDR to veto the Offices

bill; otherwise, the economy program would be lost. Or, as

an alternative, new taxes must be levied. The President

362

wavered, then accepted this plea. On June 4 he summoned
House leaders to his office, among them Rainey, Rayburn, and
Edward Pou, chairman of the Rules Committee. His policy
sought to be fair both to taxpayers and to veterans who had
non-service disabilities. Reasonable changes in the regula—
tions would be made to help those who were destitute. But if
the House also adopted the 25% amendment, Congress would have
to produce $170 million in new revenue.

"He told the Representatives," reporters learned
from glum conferees afterwards, "that he would insist on the

budget being balanced and that if necessary he would stay

 

here all summer to do it." That night on NBC radio Howe
broadcast an "interview," saying that every head of every
American family would have to "dig down" and pay $1.25 for
the veterans. In the long run, Howe stated, "any deficiency
in the budget has to be paid for by the people." Sensational
revolt stories filled the newspapers. Who would concede?
Roosevelt was holding the line on his economy program.75
The following week of June 5 to 10 was the crux of
the special session of the 73rd Congress. June 10 was the
President's target for adjournment. The London Conference
would officially begin on June 12. Rumors filled the news-
papers. A presidential veto appeared imminent, and Douglas
openly advocated it. But the Senate was holding out. On
Tuesday the White House issued five executive orders,

restoring $60 million in veterans cuts. Perhaps the President

would compromise. On Wednesday in his morning press

363
conference he explained in detail that the issue involved
a "great big principle." The 25% amendment, he stressed,
violated the spirit and the letter of the Democratic platform
and the Economy Act. The amendment took "care of people
who are ill because of their own misconduct;" it took care
of sailors and soldiers who came in after Armistice Day 1918,
up to July 1921, even those who went to Student Training
Camps (laughter); and the "old presumptive clause" covered
all those who got Sick up to 1924. He emphatically declared
it a matter of principle and not of finance.76

Yet the veterans issue and the banking bill were not
the end of Roosevelt's difficulties.

The National Industrial Recovery Act moved pre-
cariously within this same rebellious mood. Congressional
disagreement over taxes to amortize the $3.3 billion public
works had also created difficulties for the President. On
May 26 industrial recovery passed the House by the lopsided
vote of 323-76, but only after representatives voted down
the Roosevelt-endorsed regressive sales tax. The House also
divided itself over the administration—proposed 50% increase
in income taxes, which only passed by two votes on its first
test. The administration's defeat on the sales taxes and
its squeaky victory on income taxes were stunning, but
probably indicative of public reaction to the tax-exempt
bankers then testifying in the Morgan hearings. The tax
issue would have to be resolved in the Senate or in confer-

ence. Apparently a majority in Congress was in no mood to

364
tax the "forgotten man." By June 2 the Cabinet was having
"more discussion than usual" on patronage, recorded Harold
Ickes, again in response to the congressional resurgence
against presidential leadership.77

The most astonishing rebuke to Roosevelt erupted on
June 2 in Pat Harrison's Senate Finance Committee. Five
administration Democrats, including McAdoo and Connally,
joined the opposition and by close votes struck out NIRA'S
licensing provisions and its delegation to the President of
embargo powers on foreign goods. And a vote to delete the
entire industrial section, title I, lost by only 10 to 8--a
maneuver which would have left nothing but a public works
bill! Within three days these Democrats had been coaxed back
into the fold, thanks primarily to Harrison's compromise tax
plan and to the persuasive Budget Director, who sat in the
committee room, reported the Iimgg, "seeking by every means
possible to save the fundamentals of the Industry Recovery
Bill." Soon Douglas brought word to the White House that
"more conservative" congressmen were saying that only a
presidential radio broadcast, preferably from the House floor,
would now save the economy program.

Roosevelt remained "amenable and agreeable," Ickes
observed in his diary, but obviously he was deeply con-
cerned:78

He is becoming frankly nervous about Congress staying
on much longer. The situation on the Hill is really

dangerous, although so far he has kept Congress within
reasonable bounds. With the pension and other

365
controversial legislation still pending, he doesn't
know what might happen at any time.
VI
Within this context of controversy the President
shrewdly,and with little alternative, compromised. Through—
out the week of June 5-10, he conferred with congressional
leaders about a compromise for the Independent Offices bill,
Harrison's tax program for NIRA, and the Glass-Steagall bill.
As a result, he abandoned some long-anticipated efforts in
foreign policy, notably the State Department reciprocal
tariff bill. Hull lamented this decision from aboard the

Roosevelt on June 7. But otherwise, Roosevelt responded,

 

"bonus legislation, paper money inflation, etc., may be

79 Two days later he announced this decision at his

forced."
Friday afternoon press conference. Further discussing the
changing of tariffs legally, off the record, he stated that
the WEC could still act: there could be "general tariff
agreement," or individual bilateral conferences. Of course
this could take several months. Yes, the Senate had to

approve. Then he proceeded to blur the issue, implying that

he had only sought temporary "authority" anyhow, just until

 

Congress met in January. Therefore it did not matter
materially that the Hull bill was dropped.80
Surely the pressures of congressional revolt
accelerated Roosevelt's tariff decision. But there is doubt

that he was ever prepared to ask for tariff authority during

the Hundred Days. And the intranationalistic views of Moley

366

can scarcely be discounted. Congressional rebellion, there-
fore, probably became a perfectly acceptable and truthful
rationale, even a precipitant, for a policy decision which
FDR already favored. And tariffs were not the end of the
trimming.

Long a low priority item, Roosevelt also sacrificed
the St. Lawrence treaty during his push for adjournment
by Saturday. Frank Walsh, other New York Power Authority
officials, progressive senators, and several midwestern
governors had continued to lobby for the treaty's ratifica-
tion. The President, not wanting to risk any of his domestic
program over a battle with power opponents in the Senate,
allowed Pittman to handle it. But Pittman, who took little
interest in anything except silver, had delayed. Now he had
gone to London, and the Senate was in an uproar.81 By June 5
Roosevelt, rather optimistically, had drafted a St. Lawrence
special message. On the 8th he allowed LaFollette to release
a carefully worded presidential letter endorsing, but not
requesting, Senate ratification. Feverishly the Senator
lobbied for the needed votes. But by Friday he could command
only 60, including 13 Republicans and one Farmer-Laborite.
This fell two votes Short of the required two-thirds.
Reluctantly the President filed away his St. Lawrence
materials. His effort was too little and particularly too
late. The treaty would not be ratified until 1953.82

Even before the congressional revolt became public,

however, Roosevelt had deferred to senatorial prerogatives

367
on the issue of an arms embargo. So-called isolationist
sentiment was a key. AS amended in the Senate Foreign
Relations Committee by Hiram Johnson on May 24, the President

would have to apply the embargo impartially to all nations.

 

When Pittman told Roosevelt the following day that his com-
mittee would not accept the resolution in any other way, the
President acquiesced. Hull, not consulted on this decision,
was bitterly disappointed when he learned of his chief's
actions. It appears that Moley, then generally opposed to
internationalist solutions in foreign policies, had informed
Democratic senators that Roosevelt would not oppose the
Johnson amendment. In a press conference on May 29, the
Secretary of State expressed his unhappiness over the
rewritten embargo. After further maneuvers, the Senate
dropped the embargo until 1934.83

Foreign policy priorities, as Roosevelt and Moley had
discussed on March 18, would come second when any conflict
arose with domestic priorities. This policy, when combined
with the surly mood of Congress and FDR's personal disincli-
nation in the case of tariff authority, allow his compromises
and releasing of policy ballast during June to seem quite
logical. Such priorities also Spelled a foreboding omen for
the London Conference, despite presidential exhortations for
its success during April and May.

On June 10 adjournment was within Roosevelt's grasp.
The House had completed all work, including the NIRA con-

ference report and a Roosevelt-Douglas compromise on veterans.

368
In essence the White House plan would accept the Senate 25%
limit (promising a median of 18% on the average pension of
$44.16) on veterans with service-connected disabilities. An
elaborate scheme, among other particulars, had been devised
to allow "presumptives" to continue on VA rolls only until
they could satisfy a medical examiner that disabilities were
of service origin. This compromise cut $100 million from
the economy program. After eight o'clock that night, how-
ever, before a touchy Senate accepted the plan, the President
sent to the Hill some minor executive orders on reorganiza-
tion. An economy move drawn up by Douglas, $25 million would
be saved by certain consolidations and regroupings, such as
combining the Bureaus of Immigration and Naturalization

84 Floor leader Joe Robinson

within the Labor Department.
telephoned Senate approval to the White House; but then
reporters released the orders without having extra copies

for senators. Seizing this as a pretext, William E. Borah,
Hiram Johnson, and others refused to adjourn, probably
intending to disrupt presidential initiatives toward the WEC.
Steve Early told correspondent Raymond Clapper that Robinson
then, without consulting anyone, informed the Senate that if
there was no objection, he would persuade the President to
withdraw the orders. "This made White House sore and they
won't withdraw," Clapper put in his diary. "First bad muddle
of session."85

Flurries of White House conferences followed on

Sunday, Monday, and Tuesday. Douglas, Robinson, Harrison,

369
Speaker Rainey, floor leader Joseph Byrns, and the President
spoke by telephone and in person to rebellious senators and
representatives all that week. "ROOSEVELT THREATENS VETO
AND APPEAL TO NATION IF SENATE VOIDS ECONOMIES," headlined
the Timgs on Tuesday. Now congressmen supported a new pro-
posal, the Steiwer-Cutting amendment to the Offices bill. It
would Slash $135-l40 million from the Economy Act. It
specifically restored benefits for Spanish-American and World
War veterans; and the burden of proving a "presumptive"
disability would be on the government, not the veteran.

Up every night until the early hours, Roosevelt and
his lieutenants labored for a settlement on the Offices
measure as well as on the war debts. At "ease" in Wednesday's
press conference, the President dwelt almost entirely on
debts. Britain had made a token payment, and France had
defaulted, along with every other country except Finland.

These defaults provoked senatorial tempers again. In response,
James Farley released a flood of "grade B patronage," after
failing during the preceding week to gain the support of the
President and Arthur Morgan to restrict TVA appointments to
"deserving Democrats and Roosevelt Republicans."86

Given additional time, Roosevelt's FDIC compromise
on the Glass-Steagall bill proved acceptable to the conference
committee. As finally legislated, all solvent banks could
participate in a $450-500 million fund to be established
January 1, 1934 (instead of FDR's preferred July 1), to

insure 100% of deposits up to $2,500. Beginning July 1,

370
FDIC would insure 100% of deposits to $10,000, 75% to
$50,000, and 50% to $100,000. Federal Reserve member banks
automatically qualified; and all other banks had to join the

system by July 1936 to continue FDIC.87

This would prove to
be one of the most enduring of the Hundred Days' reforms,
although it had not originated as a New Deal measure and had
been only reluctantly accepted by a President who then held
conservative fiscal views.

In the end, Roosevelt won the battle with the Senate
over the veterans compromise only when his veto threat con-
vinced the House to vote down the Steiwer-Cutting proposal.
The turning point came when, following the Budget Director's
urging, FDR ordered radio transmitting facilities set up so
that he could broadcast a veto of the Offices bill from the
House chambers.88

The President triumphed almost completely on June 15.
Lured by patronage and chastened by the House's negative vote,
nine Senate Democrats returned to the administration on
Friday, voting 45-36 to accept Roosevelt's pension and bene-
fits compromise. "His control was only one whit less absolute
at the end," exulted the Iimgg, "than when he called the
Special session here on March 9 to deal with the banking
crisis." Congressmen celebrated. While waiting after mid-
night for the final Senate vote, House members "like boys on
the last day of school, sang, played jokes and improvised

vaudeville skits, to the delectation of crowds in the

galleries." The President's personal letter, read just

371

before adjounrment, effusively thanked the Congress for its
"whole-hearted cooperation" and teamwork,which proved "that
our form of government can rise to an emergency and can
carry through a broad program in record time."89

June 16 marked the end of the Hundred Days, and
Roosevelt had established an impressive overall record. With
the signing that day of NIRA, FCA, the Railroad Coordination
and the Glass-Steagall Acts, the President virtually com-
pleted the domestic legislative program. Only two bills that
he had backed had not been enacted. One would have simpli-

90 and the other would have allowed

fied bankruptcy procedures,
him to appoint a non-resident as governor of Hawaii.91 He
had preserved, although compromised, his important economy in
government program-~even though the benefits spending would
have helped recovery, and the veterans battle would resume

when Congress reconvened for its regular session.92

Congress
passed NIRA almost as FDR had submitted it on May 17, once

the tax issue had been settled. Harrison's tax compromise
would yield $227 million to finance public works, mostly by
taxes on corporation valuation, 5% on corporate dividends,

and a gasoline levy of l%¢ a gallon. By popular congressional
demand, the administration—backed regressive sales taxes and
personal income taxes had been deleted. All of these taxes
would be automatically cancelled by repeal of Prohibition

(consistently identified by FDR as an economy move), which

would furnish new federal revenue. Clearly neither Roosevelt

372
nor any of his close advisers grasped the potential of fiscal
policy or of decreased taxation as recovery devices.

Franklin Roosevelt departed that night on a special
train bound for his vacation rendezvous, knowing that a com-
prehensive New Deal had been launched. Most observers
overlooked the compromises, party struggles, and heated
tempers of June, as well as the only administration scandal
of the period-—which arose from the failure to use competitive
bidding for the purchase of costly CCC kits, thanks to a
blunder by Howe.93 These and other difficulties were set
aside as the nation prepared for an efficient administration
of the new laws in order that recovery could return. The
President had proved his mettle with Congress. He had
literally grown into the presidency, at least in domestic
affairs. He had wrapped up everything neatly--everything,
that is, except for the important efforts at international

recovery that had barely begun in London.

CHAPTER VIII

THE LONDON CONFERENCE

Cheerful and suntanned, Franklin Roosevelt returned
from vacation and resumed his daily schedule at the White
House on Wednesday, July 5. At first regular press conference
in almost three weeks, he quipped that his only "bad piece of
news" was that he had gained seven pounds. "However," he
added with a cryptic grin, "that will not be referred to
London."

After further amiable comments, and in response to
reporters' questions, Roosevelt offered some explanation of
developments at the ongoing World Economic Conference. He
denied issuing any new "instructions" to the American delega-
tion. At length he attempted to explain, or rationalize, the
American position on the stabilization of currencies issue--
theoretically the issue upon which the Conference was now
foundering, a direct result of his rejection of any agreement
on it in messages he sent on June 30 and July 2 (made public
on the 3rd). Some continental countries, he went on, were
very much concerned about the "current rate of exchange of
their currency in terms of other currency." This was less
important to the United States. Instead, America sought "a

373

374
stabilization that will be based on a more or less equivalent
level in each country for X amount of goods. I hope that
eventually each country in the world will have a currency
which will be stable within its own purchasing power."
Attaining that objective would allow all currencies to become
stable. But on the other hand, five or six countries of the
Sixty-six nations in London wanted the U. S. to enter an
agreement, not even on the agenda, "to set up some kind of a
fund, a Special fund, temporarily to control exchange
fluctuation." He feared such an agreement might "morally"
obligate the government to export gold.

In response to further questions about stabilization,
the prime issue of the day, Roosevelt said that his "perfectly
definite principle" aimed at a dollar ratio with a constant
purchasing power. Like NRA, he would use several methods to
achieve this principle. But on methods, he became elusive,
instead summarizing his position:

We are not ready to export gold. We are not ready to
make any kind of agreement by which we would morally
obligate ourselves to export gold at this time and we
are not ready to go along on the creation of some kind
of stabilization fund which might morally obligate us
to export gold.

Correspondents kept probing Roosevelt on his
explanation of stabilization. In reply to one he asserted
that the New York Federal Reserve Bank probably possessed no
authority to cooperate with other central banks to limit

exchange fluctuation--even though he had authorized negotia-

tions for that purpose before the WEC began. He doubted

375

whether there could ever be a uniform international monetary
unit--even though less than two weeks earlier he had
instructed Raymond Moley to work one out, the "dinar." He
denied knowing that the stable dollar he described resembled
Yale economist Irving Fisher's Commodity Index Dollar. He
said very little of interest on domestic questions, and the
session finally wandered to adjournment after he again com-
mented that he was "personally hopeful" that the WEC would
not collapse over the issue of stabilization.1

Deliberately or not, Roosevelt had been misleading
during this press conference. Neither stabilization nor a
"stabilization fund" had been proposed by Moley from London
on June 29. Yet in talking of domestic purchasing power and
a refusal to export gold, he had hinted at some of his motives
behind his July 2 "bombshell" message--appropriate1y named
because of its explosive effect on the WEC--which reaffirmed
domestic over foreign policy priorities. Unfortunately, he
had not chosen to be so explicit during the Hundred Days,2
when forthrightness might have had a positive effect.

The July 2 message provoked controversy over the
President's purposes. In a well-reasoned editorial on

July 4, the New York Times maintained that "the immediate

 

result was to make the air thicker than ever with doubts and
disillusionment." Concluding that Roosevelt's real motive
in rejecting agreement was to keep domestic prices rising,
the editors lamented the apparent "confusion" over his pur-

poses. But Irving Fisher was not confused. He wrote FDR on

376
the 5th to say that the message had made him the "happiest
of men." In a column for the Timgg two days later, Fisher
asserted that Roosevelt's critics had no real understanding
of monetary stability or else his message would not have been
a "bombshell." It was not necessarily inconsistent with
FDR's earlier exhortations for stabilization. All the while,
Fisher reasoned, the President "may have meant" stabilization
relative to commodities. And if he had been referring to
foreign currencies, he "may well have meant" only after those
had been stabilized relative to commodities.3 While Fisher's

interpretation was ex post facto, it illustrates the specu-

 

lation rampant, even among sympathetic observers, about the
purposes behind the already famous message.

Roosevelt's remarks to reporters on July 5 answered
few of the important questions about his intentions and pur-
poses concerning the Economic Conference, the Moley mission,
and the "bombshell" message.4 Since these intentions and
purposes directly relate to, and even culminate, developments
initiated during the Hundred Days, answers to those and
related questions are both necessary and revealing about his
handling of early New Deal foreign policy. The WEC confronted
him with crucial choices. One of these was an apparent
challenge to his domestic-first policy priority. WOuld he
take "action, and action now" on the kinds of international
recovery objectives which he had exhorted during April and
May? And would he have to fish or cut bait, one of his

favorite expressions, on whether to continue depending

377
primarily on Lewis Douglas, James Warburg, and Raymond Moley

for advice on monetary and fiscal policy?

II

Delegates from the 66 nations who formally convened
June 12 in London's stately South Kensington Geological
Museum represented the economic recovery hopes of some 1.8
billion people. Daily the streets outside the museum were
jammed with spectators, hanging on every statement, official
and unofficial, that emerged under the heavy newspaper
coverage, particularly from the loquacious American delega-
tion. Everything within the buildings was well organized,
on paper. The Monetary and Financial Commission had two
subcommissions and two subcommittees and, after a behind-the-
scenes struggle, James Cox became its chairman. The Economic
Commission had four subcommissions and seven subcommittees.
After opening speeches, the delegates prepared for serious
business. Among other economic items, France wanted some
form of dollar stabilization. Britain desired a tripartite
stabilization. Smaller countries wanted lower tariffs. And
Ramsay MacDonald, president of the WEC, championed his cause,
debt reductions, in his opening day speech. The American
delegation, however, had little to offer.

Secretary Hull was virtually empty-handed. He could
not talk temporary stabilization, even for the duration of
the Conference, because Roosevelt had delegated that to

Warburg, O. M. W. Sprague, Speaking for the Treasury, and

378
George L. Harrison, governor of the New York Federal Reserve
Bank. Hull could not talk permanent stabilization either.
FDR had forbidden that to all American delegates, even though

on June 7 aboard the Roosevelt Hull had authorized listing

 

the delegation's first objective as: "To bring about a per-
manent stabilization of currencies of the United States,
Great Britain, and other principal commercial countries on an
agreed ratio of value." Hull could make no reciprocal tariff
offers, because only days earlier the President had sacri-
ficed tariff legislation during the congressional revolt.
The Secretary realized his authority for bilateral agreements
was an empty gesture, because the Senate would most likely
reject them. War debts and reparations were also beyond his
authority, because Roosevelt had consistently kept those
separate from WEC preparations. An ill-chosen American
delegation with a despairing leader would make little progress
in London, and the press was soon full of such rumors.
Negotiations for "temporarily stabilized currencies"
had been proceeding for three days. Warburg, Sprague, and
Harrison were dealing with Montagu Norman, governor of the
Bank of England (to which Sprague had recently been an
adviser), and Clement Moret, governor of the Bank of France.5
For unknown reasons, Sprague failed to keep Washington
informed. On his own initiative, therefore, in the pre-
arranged secret code, Warburg telegraphed the President
personally on June 13, outlining the various points of view

and saying that "very probably we would be in a position to

379
cable a plan within a few days."6 He commented privately to
Celeste Jedel that the English and French had been extremely
vague, so the Americans were insisting upon their making "a
definite offer as to the tentative point of de facto stabili—
zation--also as to some sort of an agreement by central banks
during the Conference in the maintenance of the status quo."7

8 ignored

But Roosevelt, who received this cable the same day,
it in the Shuffle over adjournment. Two weeks later Warburg
told Moley it had probably "ended in Louis Howe's waste-
basket."9
Rumors began in Washington when, on June 15, the

London-based columns of the New York Times featured an article

 

on "Solution Nearer on Money Control." Roosevelt, Moley, and
Will Woodin, seeing currency stabilization as either a fact
or a distinct possibility, all observed the corresponding
sharp rise of the dollar on world exchanges and the sharp
decline of stocks and commodity prices on Wall Street. After
consultation that afternoon, the President instructed Moley
and Woodin to issue a denial of stabilization rumors in the
Secretary's name and to telegraph London asking for informa-
tion. "They fear, here," Moley's diary recorded, "that
because of the victory in getting Cox as chairman of the
Monetary Commission, they may have sold out."10 By June 16,
therefore, the reality of the WEC situation was that Britain,
France, and others wanted some form of de facto currency
stabilization; and the Conference, after finishing preliminary

activities, was now waiting to see what would develop.11

380
That night Sprague telegraphed in detail to Washington
the negotiators' plan for "limiting fluctuations of exchange"
for the duration of the Conference. The State Department
received this message in three sections, the first at

5:22 p.m.lz.

Warburg's entire cable endorsing the Sprague
recommendations arrived a half hour later. In the meantime,
the President had ended his Friday press conference at 4:30
and had virtually finished with his last day's work. His
remarks that afternoon on "stabilization" were very general,
and he had declined to define it beyond using the term
gentlemen's agreement. But he did categorically and truth-
fully deny that any proposal had been received from London.
He termed it "too uncertain" whether the U. S. would enter
some sort of agreement. "It depends entirely on what was put
up to us."13
Most of the questions had been inspired by London-
based news articles like that of Frederick T. Birchall of the
Timgg. "LONDON PARLEY DRAWS PLAN FOR STABILIZED CURRENCIES;
WOODIN DENIES AGREEMENT," read the bold face headline. The
proposal was still in "outline and somewhat vague," but
Birchall stated that one attached condition was that America
would suspend for three months AAA's authorization (the Thomas
amendment) to inflate by issuing paper money. Doubtless
Roosevelt had read such rumors, because each morning he
regularly skimmed at least five newspapers, including the

Times, and another five in the evening.14

381

Sprague's proposals had two main parts. First,
France would state her intention of remaining on the gold
standard; and the U. S. and Britain would agree to limit,
insofar as "feasible," fluctuations of their currencies for
the duration of the Conference while "ground-work for lasting
stability" was prepared.

The second section (in the third document) developed
the method to implement an agreement between the American
and British central banks to maintain the existing rates of
their currencies within a range of 3% fluctuation against the
French gold franc. The British assurance, Sprague stated,
meant that they would not use their "equalization fund" to
affect sterling rates. The American assurance only involved
not using "the Thomas amendment during the period of the
Conference, except in exceptional and unforeseen circumstances
arising out of our domestic situation." This meant that
Britain and America could be obligated to Ship up to $60
million in gold to maintain the present status quo, meaning a
"dollar-sterling middle rate of 4 dollars per pound." Various
reservations protected all governments from undue losses; and
an accompanying statement of "governmental monetary policy"
(the Warburg cable) would soon arrive. Sprague expressed
"entire sympathy" with this other statement and he said the
French were insisting on it as a condition of acceptance.

But this section on methods came too late for

Roosevelt to consider it that day.15

 

.‘I II. II It"! .
‘ .‘Illlll

.II I ll. 4' 1

382

Before the President had time to digest the first of
Sprague's documents, the supplementary telegram from Warburg
came. He assured Roosevelt that the American negotiators had
in no way promised the French anything except that Sprague's
"declaration" would be recommended to Washington, and that it
might be rejected. The French had accepted this. However,
Warburg went on, we have agreed to recommend the "following
statement: 'The Governments and banks of issue of the United
Kingdom and the United States have stated that the stabiliza-
tion of their currencies on a gold basis forms the ultimate
objective of their policy.'" This statement said no more
than either the Washington talks during April and May or
Hull's opening speech.16

Shortly after receiving these two communications,
Roosevelt summoned his available monetary advisers to the
White HOuse. Moley, WOodin, and Dean Acheson, a top-flight
lawyer who had been appointed Treasury Under Secretary one
month earlier, arrived quickly. Acheson would take over when
Woodin (already beginning to suffer from throat cancer) left
that night for New York to meet with Reserve Bank officials.
This "war council," as Moley later termed it, convened around

six o'clock and ended within an hour.17

They met amidst
earlier reports that stock and Commodity prices had fallen
that day to the lowest levels in weeks. But gold value of

the dollar rose from 80 to 83¢, while sterling dropped from
$4.19 to $4.02. These deflationary tendencies were attributed

(incorrectly) to rumors of impending stabilization. In

383

London the American delegation also knew these facts.
Warburg, Harrison, and some delegates knew them too, as they
were receiving personal calls and telegrams daily from
bankers at home. Warburg and Harrison met early on June 17
(before Roosevelt had answered), convinced from these reports
that there existed "great opposition to stabilization at
home" due to the "recession in prices." Despairing, Harrison
decided to sail for home before a rejection could arrive from
Washington.18

By seven o'clock Roosevelt and his "war council" had
drawn up as much of a draft reply as they could without
seeing the complete Sprague communication. They sought pri-
marily to protect domestic recovery, particularly rising
prices. They unanimously opposed any multilateral stabiliza-
tion plan. To indicate this, the President directed Moley to
include in the reply: "It is my thought that instead of an
agreement based upon mutual action, it might be possible for
us to announce unilateral action by the United States by
which if the pound goes to $4.25 we will expect to be willing

to export gold to an amount of fifty to eighty million

 

dollars to hold the dollar within that limit." They disap-
proved Warburg's separate statement about a "gold basis" as
an ultimate U. S. objective.19 Rather than issue a hasty
reply, however, FDR decided to wait another day until the
remainder of the Sprague plan was available. Clambering

aboard his train shortly after eight-thirty, he waved and

384
remarked that he was "tired but happy that Congress has ended
its important legislative program so successfully."20
On the following day, Saturday, the President arrived
in Boston by forenoon, received political visitors while
still on board his train, and began a long and enthusiasti-

cally received motorcade to Groton and to Marion. By five-

thirty he had boarded the Amberjack II. He would begin

 

sailing tomorrow morning. Somewhere along the route he had
been handed the remainder of Sprague's cable. From Washing—
ton, Moley had conferred long distance with him. They had
slightly revised the message. And at six o'clock Moley's
secretary, Annette Pomeranz, sent off "the 'bomb'--a clear
and indisputable statement of policy."21
Roosevelt's June 17 reply is important, since it
became part of the basis of his later "bombshell." FDR
responded first to Warburg's recommended statement. He could
not approve this because it would appear to be U. S.-British
stabilization without Similar worldwide action. "The broad
principle we advocated in preliminary discussions in

Washington," ran his reply, "was based on a re-establishment

of currencies based on gold or gold and Silver by all nations

 

and not by three or four only. Please bear this fact in mind
because we do not want to go part way in a conference of 66
nations." If he had that point in mind before, he had never
made it so explicit.

As for the rest of the "declaration and proposal

plan," Roosevelt feared that what looked to us to be

385

permissive and general in scope might result in charges of

"bad faith" by London and Paris if we later declined their

interpretation of it. As a general principle, he was opposed

to any "close stabilization" of the dollar and pound,
especially at present 1eve1S--meaning the $4.00 suggestion.

Rather, we should limit ourselves to an informal statement

that we would consider some unilateral action, yet to be

determined, if the pound rose to an "excessive point," like
$4.25. He had deleted any mention of exporting gold, which

Sprague had proposed. On the other hand, if commodity prices

continued to decline, we must retain full freedom "under

Thomas amendment in order to hold up price level at home."

In conclusion, he stated:22
It is my personal view that far too much importance is
being placed on existing and temporary fluctuations
of pound, franc and dollars and that bigger ultimate
objective of balanced budgets and permanent national
currencies in all countries based on standard reserves
of gold or gold and Silver far outweigh these temporary
conditions in importance.

This statement of monetary policy was definitely
intranationalist, or economic nationalist, in substance. It
ranked domestic over foreign policy, as the President con-
sistently did throughout the Hundred Days. It also embraced
the Thomas amendment. Although amenable to exporting gold
during the "war council," Roosevelt had deleted that con-
cession--probably because now it had been proposed. And
acceptance would have modified the substance of the entire

rejection. On the afternoon of the 17th, with FDR on

vacation, Moley and Acheson discussed the statement with

386
reporters. Between them they made two points. First, the
U. S. would not enter any temporary or permanent monetary
agreement to its own economic disadvantage. But equally, the
U. S. did not want to close the door on stabilization pro—
posals. "In the form in which the proposals came to the
United States," Acheson was quoted as saying, "they were not
agreeable to this government."23

It looked as if Roosevelt, in his message and through
his advisers Moley and Acheson, was bargaining. In other
words, the door for de facto stabilization was open, but his
London negotiators did not yet have the right password. But
FDR was having second thoughts over the public exhortations
he made during the month of May. He had qualified his
position on stabilization. But what else he meant, if he
meant any more, or less, is unknown.

In any event, it is important to note the extenuating
communication circumstances under which this June 17 rejection
was formulated. It was not as carefully considered as it
might later appear. But it became a firm policy thereafter.

The American embassy in London received Roosevelt's
rejection after midnight on June 17, but Warburg and the
others did not see it until the following morning. It
deepened growing gloom for most of the delegates except
Warburg, who realized that de facto stabilization was the
bottleneck to British and French efforts on the rest of the
WEC agenda. Taking the lead, he rallied Sprague and Cox for

another try. AS they understood it, Roosevelt was making

387
four points. First, any declaration regarding the ultimate
establishment of the gold standard must include all nations
before it could become America's objective. Second, pro-
tecting "freedom of action" could lead to charges of bad
faith. Third, the exchange rates proposed were too narrow,
so a range of 3.75-4.25 might be acceptable. Fourth, the
"real important thing" was the permanent program.24 But
Since they read it through an internationalist, pro—stabiliza-
tion perspective, they did not grasp FDR's concern over
domestic priorities or the Thomas amendment.

Warburg's reply, signed also by Cox and Sprague, met
what they saw as Roosevelt's conditions. First, they agreed
that the gold standard objection was "perfectly valid," and
that a clause could be added to clarify it so that all
nations so inclined would be included. Second, there need
be no fear of bad faith, as they had made it "perfectly
clear that present proposal is of purely temporary nature
designed to facilitate work of Conference in laying permanent
groundwork." Third, they pointed out that the dollar-sterling
rate was not narrow, that 4.00 was only a "middle rate," and
that the upper and lower limits of 3.88-4.12 could be enlarged
from 3% to 5%, making a range of 3.80-4.20. And last, they
agreed about the "undue importance" attached to stabilization.
But they pointed out that immediate agreement was still vital
because many delegates felt the permanent program was being
hindered by fluctuations and a feeling that America "is an

entirely unknown, uncertain and perhaps indifferent factor,"

388

and that "if we eliminate this feeling by the proposed action
we Shall be able to carry our program through in rapid
order." And they concluded by emphasizing that a failure to
agree would likely be interpreted by other nations as meaning
the American "special representatives" either had changed
their minds on stabilization, or else exceeded their
authority. Warburg was confident that he had answered all of
Roosevelt's objections.25

Events conspired against such optimism. AS Americans
were able to read in daily newspapers, their President was
at sea proving his mettle as an expert yachtsman--only days
after proving to be a strong leader with Congress. Communi-
cations to him from London, however, went first to the State
Department, where William Phillips transmitted them to one of
the two destroyers shadowing FDR, the Ellis or the Bernadou.
Then a Coast Guard cutter took dispatches to him, along with
a daily mail pouch; and his answers reversed this procedure.
Nearby sailed a three-boat flotilla, carrying Special
correspondents, reporters, and photographers. Battling stiff
weather during the first two days, Skipper Roosevelt had
sailed barely 45 miles, a third of his expectations. He
would not disembark until June 29. Communication with London
and Washington would be difficult at best, broken at worst;
and an excited press was reporting the entire Spectacle.26

As the President vacationed, the WEC deteriorated

into chaos and confusion almost as rapidly as did the

American delegation. In his inarticulate manner Hull conveyed

389

the impression that the U. S. was considering a 10%
all-around tariff cut. Pittman, recovered from his first
drinking "beeno" (as FDR's cousin put it), immediately, and
correctly, denied the tariff rumor--while preparing his own
resolution for introduction. Morrison was telephoning daily
reports to associates at home who were speculating on stocks
and currencies. Couzens was telling reporters he would state
his own opinion on each issue. McReynolds was doing nothing.
Hull was in a "complete state of melancholia," Warburg
lamented, and would not lead. "With depressed rage," Feis
wrote about Hull, "he is fumbling with the affairs of each
day, agonizing every decision, but unwilling to take any step
that would force the issue." Part of this depressed rage was
due to Hull's loss of his bow's one string—~1owering trade
barriers; part was due to Moley's coming (about which Phillips
had informed him on June 17). Hull bitterly told Warburg
this would only "add to the confusion of the situation."27

The crux of the monetary muddle at the Kensington
Museum was at once simple and complex. The Americans,
perhaps stalling, were proposing ultimate intentions of
creating international monetary stability and a gold standard,
as embodied in the Pittman resolution. But anxieties and
desires of the "gold bloc," including France, Netherlands,

Belgium, and Switzerland had fastened on the immediate

 

present. Partly because European recovery had proceeded
beyond the American version, they were now more concerned

with de facto, or longer range, currency stabilization. But

390

28 Time

as yet Roosevelt and Moley were not so concerned.
wasted without progress. The Economic Conference drifted
toward the monetary shoals while Roosevelt happily skudded

up the rocky New England coast.

III
In Washington Moley Spent all day Sunday, June 18,
clearing up "ancient correspondence" and preparing materials
so that he could sail for London on the let. Bernard
Baruch, at the President's suggestion (to keep him off the

29), had arrived from New York to advise on the

delegation
American end of WEC. Herbert Swope, an impulsive figure with
a good journalistic reputation and personally and politically
close to Baruch, would accompany the professor abroad and
render whatever assistance possible. Arthur ("Art") Mullen,
Jr., a young press assistant to McIntyre during the campaign
and now a White House aide and State Department legal adviser,
would also go abroad. At three o'clock that afternoon Moley
received the Warburg-Sprague-Cox counter-proposal, followed
quickly by a separate Warburg endorsement.30

In Moley's opinion, this latest proposal did not
differ substantially from that of June 16. He dispatched
copies of both cables to the President at sea, adding that he
would discuss the "subject matter" with Baruch Monday morning.
"My Opinion is that these representations do not alter
general Situation and your telegram yesterday remains

adequate answer."31

391

The President, receiving Moley's message at his
overnight stop off Edgartown, Massachusetts, agreed. On the
following afternoon he wired Phillips that the situation was
"not greatly altered." Why not try his suggestion of keeping
the pound below $4.25, he stated, but make it "perfectly
clear" that the four dollar median was too low. "Talk with
Baruch and Moley about advisability of suggestion to Cox a
final medium point of 4.15 with maximum point of 4.25 and
minimum 4.05. I hesitate to go even that far but it is worth

32 The President was evidently, if reluctantly,

considering."
bargaining. Stabilization was still alive.

Monday, an "incredibly hectic day," Moley, Baruch,
Swope, and sometimes Acheson, conferred over the latest
revisions. All but Acheson wanted to stand on Roosevelt's
rejection of June 17. Baruch and Swope drafted an anti-
stabilization statement as background for the President.33
Baruch preferred not to Sign it; but he and Moley concurred
in the views Swope elaborated. "We are advancing towards a
national self—containment that should not be militated against
by possibly hostile influences until it has had a chance to
work," ran the statement's theme. It was a cogent argument
against a "fixed formula of stabilization" in light of
various unknown domestic factors which should be tried first.
Since NRA agencies, for example, did not know at what price
levels to aim, how could foreign limitations be accepted?

"It is a restatement of the obvious to say that our improve-

ment, now so definitely under way, will be the greatest

392

34 Thus

contribution we can make to the good of the world."
the monetary advisers who had the closest access to Roosevelt
espoused economic intranationalism.

While packing that night, Moley finally decided to
fly to Nantucket and personally confer with Roosevelt.35
Several reasons prompted him. Acheson later wrote that Moley
wanted to put the entire stabilization issue up to FDR, after
inconclusive discussions that afternoon with Baruch and
Swope.36 Also, around nine that evening Senator James Byrnes
and Marvin McIntyre saw Moley. Having read newspaper
accounts of the confusion in London, they urged him not to
go. He would serve the President best, Byrnes remembered
arguing, by staying home and advising on "instructions" for
the delegation. And furthermore, if he left now as a
"special envoy," other nations would ignore the Americans in
London and flock to him as the true Rooseveltian representa-

tive.37

This worried Moley, probably because what in May had
offered a potentially prestigious opportunity now could
inflict hazardous effects upon both himself and the WEC.
After they left, he recalled seeking out Hugh Johnson, head
of NRA. General Johnson, a sound money man in the Baruch
tradition, assured his friend that an agreement to stabilize,
on terms then proposed, would end price raising--a key NRA

objective with which Roosevelt sympathized.38

Putting these
all together, Moley asked Mullen to arrange for a flying

visit the next day to see the President.

393

Publicity now became a major factor. As Moley and
Mullen arrived by Navy seaplane in Nantucket Harbor around
7:30 a.m. on June 20, the Témsg published stories on stabili-
zation and "Baruch In Office Without Portfolio." From
Moley's remarks to reporters the previous afternoon, another
article concluded that "Every indication here [Washingtog7
today pointed to a standstill attitude of the United States
Government on foreign affairs, awaiting the functioning of
the domestic recovery program." Reporters had found this
even more interesting because Moley, whose long planned trip
to London had the avowed purpose of carrying the latest
information about "domestic recovery" and bringing back con-
fidential information for the President's guidance, was often
identified with "isolationist views" within the administra-
tion. By ten o'clock Moley and his assistant were aboard the

Amberjack. Roosevelt, pleased with the visit (as far as

 

reporters could tell), and his adviser talked for almost two
hours, while FDR navigated northeastward.39
Only Moley has left any record of this long, discur-
sive conversation. First, he remembered repeating the
warnings from Byrnes and McIntyre. At these Roosevelt only
scoffed. He saw no reason to cancel the mission. Then Moley
reminded the President that the Warburg-Sprague-Cox counter—
proposal of the 18th had not yet been answered. FDR
pencilled out his reply: after "full discussion" he was

still standing on his June 17 rejection. Insist on the

"larger or more permanent program," he instructed Hull,

394
because "banker-influenced cabinets" were attaching too much
importance to exchange stability. Besides, this only con-

40 He handed this

cerned about 3% of America's total trade.
to Moley to dispatch from the Ellig. On the issue of stabi-
lization, if need be, Roosevelt suggested (as he had in his
June 19 cable) a possible middle point of $4.15, with a range
of 4.05-4.25. "I'm not crazy about it," he added, "but I
think I might go that far." He did not say how this could be
done technically, because neither knew; Moley then handed
him the Swope stabilization memorandum. FDR pocketed it
without comment.

At this point, Roosevelt emphasized that the delega-
tion Should know his primary objective for the WEC was to
raise world price levels. This was the first time he defined
any WEC objective as "primary." Since Walter Lippmann's
column had articulated this aim just days earlier, Moley
noted that Lippmann was then in London. They agreed that he
should consult with Lippmann, French monetary expert Charles
Rist, and Walter Runciman of the British Board of Trade.
Moley jotted these names in his notebook along with FDR's
term fOr an international monetary unit, the "dinarzg7"; but
what either man had in mind about this unit is not known.
Finally, Moley asked the President to write out and make
public his authorization. Picking up his pad, Roosevelt
pencilled a two-paragraph press release. Assistant Secretary
Moley would go to London as a "messenger or liaison officer"

to convey news about recent domestic developments and the

395

President's views about the effect of these on the delega-
tion's original instructions. He would stay about a week,
and then return to bring the President full information about
the Conference. Having given reporters this statement, before
noon Moley and Mullen had boarded the Ellig for New York.41

While the President was now sending the second of his
three liaisons, he evidently overlooked some major points
about the Moley mission. Roosevelt and Moley both knew about
the deteriorating condition of the American delegation and of
the WEC itself, as it had been in the papers for days. The
President knew this because McIntyre daily contacted him from
aboard a nearby destroyer and, in addition, secret service
men brought aboard food, mail, telegrams, supplies, and

newspapers.42 Second, the Amberjack conversation never

 

touched upon the danger of rampant publicity, except as a

43 Third, Warren Delano Robbins, the first

parting joke.
liaison, was only a State Department protocol officer whose
presence would go unreported. But Moley, publicly touted as
the chief brains truster, would obviously make headlines--
particularly Since he came directly from Roosevelt just when
the Conference seemed to be marking time. Fourth, while the
President still intended the Moley mission to take the
"look-see" mentioned in his June 16 press conference, this
would be hard to believe after the dramatic sea rendezvous.

Also, Moley understandably construed his authorization as

"messenger or liaison officer" to mean that his authority--as

396

it had during the Hundred Days--would run straight to the
President, not through Hull or the delegation.

Did Roosevelt err in his handling of the mission?
Perhaps he realized that Moley would get exaggerated pub-
licity. Perhaps he believed this would show the WBC that
American power lay with the President and Congress, not with
the delegation. Perhaps he had no intention of cooperating
with the WEC. Perhaps, but these are doubtful.

Considering the context of his diplomacy during the
Hundred Days and his June 17 and 20 messages to the delega-
tion, a more likely answer emerges. Roosevelt would cooperate
with the Conference, but in limited ways. Now he was both
vacationing and conducting foreign policy. Understandably,
he may have more carefully handled the Moley mission had he
been in Washington. Now on vacation but under the eye of the
nation's correspondents, the President who had thus far
mastered the press came to be mastered by the press. He had
temporarily lost the tool of captive press conferences.
Undoubtedly he needed the vacation, the change of pace, the
limited inaccessibility so difficult for a man with crippled
legs to obtain. It was the timing of his vacation that was
beginning to prove unfortunate, that is, unfortunate for the
success of the WEC.

On the issue of de facto stabilization, Roosevelt

contemplated by June 20 nothing except possible unilateral

 

action. Moley heard this reaffirmed on the Amberjack. Just

 

before sailing Moley "told [Prench Ambassado£7 m. de LaBoulaye

397
that his principal mission is to represent the views of the
President on stabilization. Moley added that internal
necessities do not permit FDR to accept stabilization of the
dollar on the basis proposed at London."44 Moley telephoned
this and other FDR messages to Miss Jedel in England on the
let. "I was to tell Key [Pittman7 ’Bravo' and to go ahead,
Morrison to be patient, Bill lfiullit£7 to tell people to
shut up, and Jim [Warburg7 to bind up the wounds, the thing

was dead." She delivered the messages.45

Warburg under-
stood. Roosevelt had said that the Conference must go on to
the larger program, or recess, or perhaps adjourn. But
stabilization as presently proposed was unacceptable to the
President. Most of the delegation had been further demoral—
ized by FDR's June 20 confirmation of his June 17 rejection.
The Warburg-Sprague—Cox counterproposal of the 18th had
answered all of the objections raised on the 17th. But
because the first rejection was general enough to be inter-
preted differently, according to the reader's perspective on
stabilization, conflicting views resulted. To Moley, an
economic nationalist, it was a "bomb.” To Warburg and
Sprague, internationalists on monetary policy, it was a bar-
gaining counter. What discouraged the Warburg group most was
that Roosevelt's recent message did not reply to their
arguments, but simply rested on his previous statement. That
confirmed press reports, Warburg recorded, that Baruch and

the intranationalists were now "in the saddle."46

398
When Moley, Swope, and Mullen sailed June 21 on

the Manhattan, the professor faced the most difficult task

 

Roosevelt had ever given him.

IV

The President continued northeasterly, reefing and
jibbing, tacking and coming round, gaily calling out commands
for his amateur crew of four. Before he arrived at Campobello
on June 29, he had several visitors aboard his chartered
yacht, including Colonel Edward HOuse on the let. The old
Wilsonian, reputed to be in regular telephone contact with
Roosevelt throughout the Hundred Days,47 learned about the
stillborn veterans' veto and left some favorable editorial
clippings on the President and a letter to himself from
B. H. I. Brown discoursing against stabilization. A disciple
of George Warren and a supporter of the Committee for the
Nation's expansionist views, Brown had argued cogently that
Roosevelt had been correct in his June 17 rejection. Price
raises and market expansion thus far, he reasoned, were based
on anticipated inflation under the Thomas amendment. There-
fore, any attempt now at stabilization, before the adminis-
tration actually increased the amount of demand deposits and
currency in circulation, would prick the psychological bubble

48 Coming from House, who likely supported the

of recovery.
ideas Brown had embraced, this argument articulated ideas

that Roosevelt and Moley had already discussed.

399

Continuing to receive occasional visitors and local
dignitaries, to correspond, and to skim reports from the WEC,
Roosevelt sailed into bad weather. From June 26 until he
finally forced his way to clear weather on the 29th, the
presidential party was trapped under a dense pea soup fog off
the Maine coast. They were unable to sail on or even communi-
cate with shore or the flotilla except via a flimsy lobster
boat secured by secret serviceman E. W. Starling. During
these fogbound days, the Economic Conference marked time as
the Moley mission approached British shores.49

Publicity for the Moley group, beginning with his
sea rendezvous and Roosevelt's press release, had spiraled
upward, all out of proportion to its purposes. Baruch cabled
Moley on the first day out that the press had misconstrued
his (Moley's) remarks about Baruch sitting in, in effect as
acting secretary of State. Therefore he warned: "Advise
saying nothing as something else happens every day." Moley
regretted this, but wired "FDR pleased," meaning with the

50

Amberjack conversations. One day later the Times con-

 

tributed editorially to the publicity, labelling the "liaison
man" a falsehood. The Roosevelt—Moley talk really meant,

opined the editors savagely, that the "Professor ex machina"

 

was actually going to London to supersede and humiliate Hull.
Hence the conspiracies were in Washington, not London. In
response to this, Moley nervously conferred with his com-
panions and then privately collected his thoughts. "It's

thisz::7equal to hold delegation together—~stop strife--make

400
Hull feel assured--," he wrote. "He [Hull7 sees it too
simply . . . To keep my thinking straight--To confirm nothing
selfish." As Moley reflected, the most extreme of London
news reports arrived, written by the famous William Allen

White of the Emporia Gazette. White scored the American

 

delegation for being as ignorant of WEC's realities as if
they had arrived "from another planet." In so doing his
article combined all the worst rumors, saying that, whether
true or not, Europe believed Roosevelt had vacillated, the
delegation had no status at home, Baruch was in charge at
Washington, Moley was coming to take charge in London, and
Swope was bringing an assorted consignment of "monkey
wrenches" to fOul WEC machinery. Then he observed:51
Fairly or unfairly, Professor Moley has been badly
stage-managed. His entrance is to be greeted by the
jeers: "Moley, Moley, Moley, Lord God Almighty." A
chant of gibing Britishers which roughly indicates
Opinion in Europe about the professor. It is unjust.
He will overcome it, probably, but he is having a bad
entrance.
White did not have to identify the stage manager.
Such publicity helped sting the President into action.
When Moley telegraphed a bland press release for approval,
Roosevelt merely sent word through Phillips that the release
was fully lucid. "I am inclined to think," he added, "that
from now on he [Moley7 should give out no further statements
or talk with press because he is under the Secretary and is
not a member of the Delegation." This included Swope, too.52

This curious note implied a different interpretation of

"liaison officer." While Moley was apparently subject to

401

Hull, he was not a member of the delegation. This was not
what Moley understood. In any event, it suggests the Presi-
dent belatedly recognized that adverse publicity could
irreparably damage the Moley mission. And he repeated a
warning about "publicity of any kind" two days later.53

By this time, however, all discipline and cohesive-
ness within the delegation had gone "bolshevik," in Warburg's
words. If the newspapers carried any truth, Moley had new
instructions. So the Conference stalled, waiting to hear
from the new savior. Feis recorded gloomily on June 24 that
Pittman now solely preoccupied himself with the silver sub-
section of his resolution, and no longer attended the morning
delegation sessions; Couzens was looking along "national
lines" for recovery, and wanted only to go home quickly;
McReynolds plodded along with the economic committee's work,
which was over his head; Morrison, disappointed because he
was not allowed to participate in monetary policy, was not
helping out at all. "The Secretary has arrived at a point of
virtually giving up hope that any of his ideas or purposes
can be carried through the conference." In sum, while
Washington press dispatches emphasizing price-raising were
defeating tariff reductions, Feis concluded that Roosevelt's
refusal to accept "temporary stabilization is producing
increasing antagonism between ourselves and the rest of the
conference, and generating an atmosphere most unhealthy to
the whole future conduct of the foreign relations of the

United States."54

402

The President was either unaware of or unwilling to
accept the apparent despondency of his delegation. At that
point he wrote Sumner Welles in Cuba: ”We seem to have
straightened ourselves out in London and as a result--combined
with good weather-~I am having a grand cruise along the coast
of'Maine."55 Even when enveloped in fog for days, he seemed
to be enjoying himself thoroughly. The WEC was not uppermost
in his thoughts. He was deferring decision, waiting for
alternatives to develop. By late Thursday afternoon, June 29,
when he entered Welchpool Harbor to the cheers of hundreds of
spectators and of his family and friends, including Henry
Morgenthau and Louis Howe, events in London were moving toward

an unexpected climax.

V

Moley, Swope, and Mullen arrived at London's
Paddington Station around 1:00 a.m. on June 28 after a bizarre
trip from Ireland which the British and American press overly
publicized.56 As invited, they lodged themselves at the
American embassy rather than with the delegation at Claridge's
Hotel, to emphasize that Moley's mission was "liaison" and
not subject to the delegation's control. If the main purpose
of the mission was to transmit information, that purpose
soon became a low priority. Around eight-thirty that morning
Moley met with a distressed Hull, saying that he regretted
press interpretations of his trip, pledging him "my sword,"

and otherwise seeking to reassure the Secretary that he only

403

sought to help the delegation in any way. Moley met with the
delegation in Claridge's smoke-filled rooms at 9:30. After
Hull had introduced him as "also of the State Department,"
Moley pledged his support and loyalty to the Secretary. He
bore no mysterious messages, "except the general idea that
the President wanted the Conference to move to more funda—
mental things and that I would say more later about this."57
To correspondents afterwards, Moley stressed he would issue
no statements, except through "my chief, Hull," and generally
spoke optimistically about WEC's chances of success.58

After these ordeals, Moley returned to the embassy to
confer with Lippmann, Swope, and British economist John
Maynard Keynes. He told them Roosevelt had instructed him to
bring them together and to discuss the possibility of some
international adoption of "the commodity dollar idea and the
idea of a unit of international exchange, i.e. dinard." He
gave no details, as he had none. Because both Lippmann and
Keynes preferred a policy of "general devaluation," they
agreed to further discussions. Around twelve-thirty Moley
talked to Hull, again to reassure him. The Secretary had
several complaints. First, the press had featured his
Assistant Secretary as the savior of the situation and the
only authentic presidential representative. Second, he (Hull)
had no authority over certain questions, notably debts and
temporary stabilization. Third, he had no hand in selecting

what had proved to be a disobedient, recalcitrant, and

overly talkative (to reporters) delegation. After reassuring

404
Hull on these points, Moley returned to the embassy to
resume the morning's discussions.59
While Moley believed he knew the President's monetary
formula on June 28, several messages and conversations

between London, New York, and the Amberjack on the preceding

 

days reveal that he did not. In fact nobody did, probably
not even Roosevelt. Lodged apart from the delegation, Moley
was unaware of these developments. For example, two hours
before Moley arrived in London, Hull telegraphed Roosevelt
that in a joint meeting with the British delegation, MacDonald
had informed the Americans that HOIland, France, Switzerland,
and Belgium were all saying that unless something was done to
stabilize the dollar in the near future, "complete confusion"
would result, further WEC work would probably end, and the
tariff truce would be rendered null and void. Hull noted
that some of his delegates believed the meeting was a British
step toward fixing blame on the U. S. for disrupting the
Conference. The Americans had refused to "consider or deal"
with proposals to limit fluctuations, Hull reported. But
then he hinted for some guidelines on stabilization: "If you
desire any suggestions from Sprague, Warburg, or members of
the delegation kindly advise." He feared the situation was
”acute" and would slow down and confuse WEC's work.60
Hull had referred to two earlier messages about
limiting exchange fluctuations. On June 22 Warburg had

recommended to Roosevelt that he authorize the Federal Reserve

Banks unilaterally to "limit fluctuations." Two days later

405
the President wired Phillips and agreed that "my suggestion”
of having the Federal Reserve banks keep the pound from
"fluctuating violently" above 4.25 be referred to Baruch and
Woodin in New York for discussion and a possible "draft of

61 On Tuesday afternoon, June 27, Harrison

further message.”
telephoned Sprague in London to relay Roosevelt's latest
monetary ideas. Harrison said that before Sprague sailed on
July 2, both Acheson and Baruch wanted him to get in touch
with Moley (yet to arrive via Ireland), and most particularly
to emphasize the difference between "unilateral" Federal
Reserve action and the "tripartite proposal" which had been
rejected on the 17th. He explained Roosevelt's request of
doing something "unilaterally," but he also said that the

New York advisers preferred tripartite action. Sprague

agreed with this, and learned that he was only to discuss
possibilities with Moley. warburg then heard the same

points, and told Harrison that something might have to be

done "in a great hurry," explaining this only by "saying that
'Philomena [Butch guilde37 is very sick.'" This would all
come by cable (Hu11's at 11:00 p.m.).62 In London, Warburg
recorded that Harrison had related his conversations with
Roosevelt and with Baruch about the June 16 stabilization plan,
which had ”not been clear to them"; and he also confirmed the

63

New York group's dislike of FDR's unilateral ideas. But

following this transatlantic talk, Acheson cabled the Presi-
dent that an important message was being sent from London,

so they were reserving judgment on his request.64

406
All of these messages concerned possible American
proposals for temporary stabilization, whether unilateral or
tripartite; but delays in communications caused confusion.
Sometime on June 28, Roosevelt received both the Acheson and
the Hull cables of the 27th. At 7:00 p.m. he replied to
Washington, suggesting that Phillips discuss his enclosed new
message with Acheson, Baruch and others, and send it if there
was "no serious disagreement." He fully appreciated the
importance that France, Holland, and Switzerland attached to
staying on gold; on the other hand, going off gold would
probably help France "balance her budget." He did not think
it would hurt U. S. domestic price levels if all of them
abandoned gold.
But the most important fact is that our London
delegation is absolutely right in distinguishing
between government action at Conference and private
action by central banks. The United States must con-
tinue to make this action clear and that the Treasury

Department cannot participate in the exercise of form
of tripartite action.

 

Furthermore, he suggested again that the delegation, Moley,
and those "close to it" avoid "publicity of any kind except
through Secretary Hull."65 After thinking over this warning
for a couple of hours, FDR telegraphed indirectly to Acheson
in New York: "Please get copy my wire to Phillips and

discuss with him and Baruch. If Harrison and central banks

arrive at a purely temporary modus vivendi this would not be

 

a function of governments so long as no government action is

implied or required."66

407

Roosevelt would go no further on stabilization.
Following through on his idea of June 19 and 20, he would
suggest some form of temporary unilateral action by the
Federal Reserve banks, so long as it neither required nor
implied government cooperation. In other words, it had to be
done outside the Conference. The Hull message concerning the
"gold bloc's" virtual demand for temporary stabilization had
backed FDR into a corner. If there was "no serious disagree-
ment” from his New York advisers, he would send this admoni—
tion to London.

At this point chance intervened and Roosevelt never
sent this new policy statement. For also at nine o'clock that
night, even as he cabled Phillips, Acheson telegraphed him.
Baruch prepared this message after consulting Woodin; and
Harrison, Lewis Douglas (now conferring with the Baruch
group), and Acheson all concurred. These advisers stated
that they did not want to risk having the other nations (Hull
mentioned) forced off the gold standard--which to them now
appeared likely if the exchange value of the dollar declined
further-~because the result would be a "rapid rise" of the
dollar. They wanted to limit "extreme exchange fluctuations."
Detailing the flexibility and the temporary nature of the
"tripartite arrangement" rejected on June 17, they recom-
mended a unilateral tightening up of exchange control in
America to be coordinated with a similar unilateral British

effort, and a reconsideration of Sprague's original plan,

408
now based on new market levels, rates, and other factors
which had accrued to America's advantage since June 17.67

Baruch and Woodin had reversed themselves on the
Sprague plan since Moley had sailed. Perhaps Hull's state-
ment of the 27th caused this. More likely, as Warburg
recorded after the transatlantic talk, Harrison had learned
that both Roosevelt and Baruch had not understood that
Sprague's June 16 plan proposed U. S. stabilization 2211 for
the Conference's duration. These advisers had mentioned a
unilateral action (such as Roosevelt had cabled them)
simultaneous with their double-barreled recommendation. But
now FDR had added a new twist: unilateral action, outside
the WEC. WOuld the President switch too?

On the following day, Thursday, June 29, as Moley
examined the joint declaration and the President arrived at
Campobello, Baruch and the others again telegraphed FDR.
Having finally received and discussed the two presidential
wires of yesterday, they advised Roosevelt to withhold his
"proposed cable." Now their reason was that Sprague and

Moley were working on a "proposal which is in accord with

 

your policy as stated in your cables to Delegation of June 17
and June 20 and which will be cabled tomorrow for submission
to you."68 Not sent until six o'clock that night, however,
the New York advisers message probably did not reach FDR
until Friday. Enjoying a "quiet evening" with family and
friends,69 he neither replied that night nor the next day.

Perhaps these recommendations of tripartite arrangements were

409

disquieting to him. Perhaps he was just tired from the sea
vacation. Perhaps, as usual, he was now waiting on events.
For whatever reason, he withheld his proposed admonition to
London. About all of these cross-communications Moley knew
nothing. It remained to be seen whether the proposal he was
working on would be "in accord" with his chief's rejections.
And so did a presidential vacation,manifesting delay in
communications, contribute to an unusual chain of events

soon to have worldwide repercussions.

VI

On the 29th Moley plunged into the apparent stabili-
zation maelstrom. While his diary and Warburg's journal
conflict on the details of that day's meetings and maneuvers,
the essential points are clear. Bullitt and Moley break-
fasted together at the embassy. On the preceding day, the
"gold bloc" countries had approached Prime Minister MacDonald
with a draft declaration affirming ultimate intentions to
return to the gold standard. Caught off guard, MacDonald
suggested that they approach the Americans, too. Learning
this at breakfast, Moley asked Bullitt to tell Hull that only
himself and Sprague should be liaisons with the negotiators.
Bullitt repeated this to Hull, who had hinted to Roosevelt on
June 27 for "suggestions" on this issue. At the delegation
meeting, Hull announced that he did not want to handle these
negotiations, Warburg recorded, "and suggested that Moley and

Sprague do it, to which Moley agreed." Sometime after this

410
meeting, Moley saw copies of the "gold bloc's" draft declara-
tion. Through Warburg, Moley arranged to meet that afternoon
with Englishmen Sir Frederick Leith-Ross and Neville Chamber-
lain, Chancellor of the Exchequer. At that meeting he

accepted ad referendum the proposed declaration that he
70

 

finally sent to Washington late that night.
Several personal crosscurrents buffeted these events.
Moley thought he had won Hull's confidence and acquiescence.
But this was only superficially true. When he conferred over
"general matters" with the Prime Minister between four and
six o'clock, after clearing it with Hull,71 the latter became
more convinced Moley had exceeded his authority. Warburg saw
the despondent Secretary just after 3:30, learning that Hull
skipped a meeting of the British and French in MacDonald's
rooms "because he didn't want to hear about stabilization!"
Thus Warburg lamented that since Hull was anti-stabilization,
the only other way to communicate with Roosevelt on stabili-
zation was through Moley; "but I cannot take the initiative
on this because Hull is hipped on the subject of Moley anyway
and particularly asked MacDonald this morning not to see
Moley at all!" In addition, Warburg would soon be clearing
the air with Moley, who had been decidedly cool toward him.
Moley thought that Warburg had deliberately kept Washington
uninformed on the early negotiations, an error caused by
FDR's oversight on Warburg's June 13 cable.72 Personal
animosities between the Americans were not absent from the

stabilization issue, from June 28 on. The major point,

411
however, is that Moley entered these negotiations as liaison
on his own initiative.

As a result of these negotiations, Moley telegraphed
Washington twice about the new proposal. The first he listed
as from Sprague for Woodin and Baruch, which he sent as back-
ground for his own message. Composed with Swope's help, it
went out at 2 a.m. on June 30. The second Moley (whose name
appeared only at the end) sent to Woodin and Baruch, and it
went out one hour later. Moley's message quoted and explained
the "Joint declaration by the countries on the gold standard
and by those which are not on the gold standard," to which
he and Sprague only "tentatively agreed." The declaration's
two-part gist was contained in paragraph one. It stated that
the undersigned governments agreed, first, that international
monetary stability should be attained as "quickly as prac-
ticable," and second, that the international gold standard
"should be re-established" while the parity and timing of
undertaking "to stabilize" should be decided by each govern-
ment. Three paragraphs followed, the first two saying that
the undersigned took note of paragraph one, while the third
said each agreed to use whatever means it considered appro-
priate to limit exchange fluctuations. The declaration
phrased nothing in specific terms. In fact Moley further
commented that he, Sprague, and the British were holding firm
against French attempts to convert paragraph four into an
"agreement for joint action by central banks against 'violent

fluctuations.'" They believed the French, who considered

412

the declaration too noncommittal, would yield at the final
meeting tomorrow morning.73

Was this a tentative agreement for stabilization?
Was it an approach to stabilization? Convinced then and
later that it was neither, Moley wired Roosevelt at 10:00 a.m.
on July 1 to stress that the Conference needed the "tonic
effect" of the declaration. He further explained that
references to the gold standard still permitted "your sugges-
tion to me" (unilateral action for a $4.25 pound) to be
worked out. In fact, those references merely combined
resolutions already introduced by the American delegation
(by Pittman) and fell within its original instructions. Also,
the references to central banks came within the context of
the June 17 rejection.74 At 6:00 p.m. on the 30th Baruch,
Woodin, and Acheson also wired the President, concurring in
the views of Moley and Sprague. The New York advisers also
pointed out that the declaration fell within FDR's May 16
"letter to Chiefs of State" and the delegation's resolutions.
And they said that the London negotiators "feel strongly"
that the WEC's continuance depended on this declaration, and
that whatever measures the central banks needed would not
"require governmental action" and could be resolved infor-

mally.75

These opinions and recommendations did not matter,
however, because they all came too late.

On June 30 Phillips sent the original tentative
declaration, addressed to woodin and Baruch, to New York and

repeated it to Campobello.76 Phillips made a costly, if

413

understandable, error. Moley had cautiously sent the text
first to the Baruch group for their approval. In this way he
sought the approval of Roosevelt's advisers before he would
send the declaration to the President. But since he used
the delegation's code room, and since the wire therefore bore
Hull's name also, the acting Secretary in Washington presumed
it was for the President too. Since Phillips sent the
original to Roosevelt, he had it long before getting the views
of his monetary advisers. Communication delay therefore
became a vital factor. Slight changes in the text were made
all day Friday, both by Moley and the New York advisers.77
But these are of little interest, because FDR based his
decision upon the first draft, forwarded to him earlier than
Moley had intended.

At his family's Campobello Island summer home on
the 29th, Roosevelt Spent a "quiet evening" among family
and friends, including Morgenthau, Howe, Eleanor, and Missy
LeHand. That afternoon Morgenthau noted that the President
"seemed rather distracted and not at his ease." Probably he
noticed this because it was an unusual condition for the
exuberant Roosevelt. Morgenthau also recorded:

Either that day or the next, Louis Howe took me
aside and said that there was tremendous pressure on the
President to agree to have the Government go into a
stabilization of our currency operation. I gathered
from Louis that Norman Davis had been advocating it
strongly. Louis said the trouble with this idea is that
there are no limits to how much money they might need and
he said, "I am against it." He said, "We will be dis-
cussing it on the trip back and I wanted to know how you

felt about it." Not knowing a lot about it, I sort of
felt my way but told him in principle I agreed with Howe.

 

414
Later that evening Eleanor bluntly told her husband
that he had made a "grave mistake" in sending Moley to London
because it was "belittling" to Hull and must weaken Hull's
position. FDR "tried to explain to her that this was not
so," Morgenthau observed, "but he was not very convincing

about it."78

The President, having already had third
thoughts on stabilization and having almost cabled an admoni—
tion to that effect, now began to have second thoughts about
the Moley mission.

Roosevelt made his decision on Moley's proposal
during the following day. Special correspondents who saw him
that afternoon noted the stack of metropolitan newspapers at

his elbow.79

That morning's Times, datelined in London on
the 29th, announced: "EUROPE ASKS ROOSEVELT AID TO END
DOLLAR SPECULATION, CALLED MENACE TO PARLEY." Correspondent
F. T. Birchall reported the dollar had fluctuated Thursday
between 4.29%-4.41%, creating a crisis for the WEC. This
story reported that the declaration, put up to the President
.by Moley, "is to the effect that all these countries, being
in favor of a gold standard and desiring to return to it as
soon as possible, will assist each other in preventing purely
Speculative movements during a certain period." The period
was for the WEC's duration; and if Roosevelt approved this
declaration, "the way toward stability will become clearer."80

The headline and the contents of this article implied that an

approach to stabilization had been proposed.

415

Exactly when Roosevelt received Moley's June 30 cable
is not known. Since Phillips transmitted it from Washington
at ten o'clock that morning, the President should have
received it within two or three hours at most. During a 1935
press conference, he reminisced that the message began to
come in around 1:00, at which time an afternoon-long "picnic"
was beginning. But because it arrived in "garbled form," he
said he did not see a decoded version until much later.
During that night's discussions, however, Morgenthau recorded
that "Sometime during the evening, McIntyre came in and dis-
cussed the tentative draft which Hull sent over to Roosevelt
for his approval." Morgenthau did not read this message, but
he heard Roosevelt's reply: "Send word to Hull to say nothing,
do nothing and agree to nothing." As instructed, McIntyre
called Washington around a quarter to nine and said that the
President would answer the Sprague and Moley cables as soon
as possible. "Meanwhile he asks that the delegation refrain
from any action or comment."81 This terse message would be
no cheering news to those in London who were on pins and
needles, hoping for an acceptance.

Roosevelt had made his fateful decision much earlier
that day, probably partly on the basis of newspaper reports.
Toward the end of an overcast afternoon, the President
invited the four special correspondents who were covering his
vacation to his summer cottage situated on a small cliff over-
looking the Bay of Fundy. After some rambling stories amidst

a highly informal atmOSphere, he suggested a game of cut-in

416

bridge. This lasted an hour. Suddenly FDR pushed back in
his wheelchair and remarked, "I think it might be more
interesting just to talk for a while." Amazed, the reporters
suddenly realized they had been taken. As Charles Hurd of
the Times recounted it, for many minutes the President angrily
developed several reasons why he agreed with his public that
America must not be pushed around in London by Europeans bent
on "concessions." Suddenly his anger disappeared and he
ended as abruptly as he had begun. He conceded that they
could use this material as "background." How to handle it?
It was up to them, he smiled. "But isn't a Campobello date—
line a pretty good hedge?"82

Hurd's remarkable story appeared in the Times the
following morning. It had been learned on "high authority,"

he asserted, that Roosevelt would not obligate the U. S. to

any form of "stabilization of the dollar." He would take no

 

action, direct or indirect, that "will tie his hands in the
future." Hurd listed three factors making up FDR's attitude.
First, there had been no so-called gyrations of the dollar as
reported abroad, only a fairly consistent gradual decline in
the dollar's exchange value. Second, so far the dollar had
not declined low enough to afford a fair stabilization value.
Third, America's stake in the WEC, represented as imperiled
by the dollar's fluctuations, would be "sorely injured by
pegging the dollar at this time." In addition, Roosevelt
had made it known that he saw "temporary stabilization of

currency as a banking rather than a governmental problem and,

417

therefore, outside the immediate realm of the troubled
economic conference."83

Roosevelt's thrust concerned stabilization; Moley's
proposal did not. FDR's remarks evidenced many of the con-
ditions of his proposed cable of June 28, which, due to
chance and poor communications, he had not sent to London.
It likely would have averted the proposal of any kind of
multilateral declaration.

Roosevelt's reply to London was written late that

night, and was not dispatched from the Indianapolis until

 

2:00 a.m. on July 1. In many ways it followed his private
remarks to the reporters, suggesting his decision was made
before he saw them and therefore before any of the recommenda-
tions from Moley or the Baruch group arrived. Although
responding to Sprague and Moley, the rejection was sent to
Hull and repeated to Woodin and Baruch. "In regard to the
suggested joint declaration I must tell you frankly that I
believe the greater part of it relates primarily to functions
of private banks and not to governments." This distinction
between functions of "banks" and "governments" was a new
qualification, added in the stillborn admonition of June 28.
Moley knew nothing of this. This distinction was specious,
as Federal Reserve Banks were hardly independent of the
workings of the federal government. He went on: "Other
parts of the declaration relating to broad governmental
policies go so far as to erect probable barriers against our

own economic fiscal development." These were familiar words,

418
which Moley would quickly recognize as coming directly from

the June 19 Swope memorandum left on the Amberjack.

 

To illustrate his general statements, Roosevelt then
turned to a confusing commentary upon the specific paragraphs
of the declaration. As to paragraph 1 (a), he stated that
its language assumed "immediate stabilization" would create
permanent stability in international monetary affairs, which
he "gravely doubted." He cited France as an example of a
country which, through the declaration, would be allowed to
continue unbalanced budgets and other operations resulting in
"eventually unsound currencies." In fact 1 (a) neither men-
tioned nor implied stabilization. It merely read: "That it
is in the interests of all concerned that stability in the
international monetary field be attained as quickly as
practicable." FDR interpreted this to mean stabilization.

As to 1 (b), he asserted if "gold or gold and silver" were
re-established as the international measures of exchange
value, the U. S. still must be free "to adopt our own method
of stabilizing our own domestic price level in terms of the
dollar regardless of foreign exchange rates." Except for his
phrase "or gold and silver," 1 (b) said the same thing that
he did. In fact the entire declaration was drawn up and
entitled in such a way as to include all gold and Egg-gold
countries-~which is exactly what the President had specified
in his June 17 rejection when he declared he wanted a
"re-establishment of currencies based on gold or gold and

silver by all nations and not by three or four only." He

419
ignored paragraph 2, as it was innocuous. Paragraph 3 stated
that countries not on gold would "take note" that those on
gold intended to remain there (paragraph 2); and they
reaffirmed that they, too, ultimately sought "to restore
under proper conditions an international monetary standard
based on gold." His comment was that this was possible for
the U. S. only if "we are fully free to maintain stable
domestic price level as our first consideration"-—a condition
assured by the clause on "proper conditions." Then he again
added his insistence for including "gold and silver" to any
possible currency reserve--a qualifier unnecessary for the
same reasons as in l (b). Paragraph 4 he "did not think
means anything on our part"-—because it only stated that the
respective governments agreed to "discuss" with their
”central banks" whatever action they deemed necessary to
limit fluctuations. He said he knew of no "governmental
action" by which to limit exchange speculation, that it could
be done only as a "private banking function," and then only
without any implication of government authority--again the
thin distinction between government and central banking
functions. But since the agreement was only to "discuss,"
his criticism fell short. But he went on to elaborate his
distinction: "In other words, I cannot assent to private
action HOW‘WhiCh might morally obligate our Government now or
later to approval of export of gold from the United States."

Here in fact was the basis of his rejection.

420

None of his comments related directly to the declara—
tion's substance; but he evidently would not accept anything
which could be interpreted as having even the appearance of
stabilization, thus entailing the export of gold.

With this interpretation of stabilization in mind, the
President then returned to his paraphrase of the Swope memo—
randum. He maintained any "fixed formula of stabilization"
(quoting Swope) would be artificial and speculative, and
unwise politically and psychologically as it would hurt "price
lifting efforts" which were now well in hand. England had
been off gold almost two years and only now wanted to stabi-
lize, while France had waited over three years to stabilize.
This would be (as Hurd later explained) an unfair concession
extracted from America. Therefore, if France tried to break
up the Conference on this issue, "we should take the sound
position that the Economic Conference was initiated and
called to discuss and agree on permanent solutions of world
economics and not to discuss domestic economic policy of one

84 This was, of course, the

nation out of the 66 present."
entire purpose behind the declaration: to get the Conference
around the issue of stabilization.

Roosevelt's was a forceful, if curious, response to
the joint declaration. Several points should be emphasized.
First, he responded as if it signified an agreement for at
least temporary stabilization--which it did not. Therefore,

second, his criticisms displayed a woeful lack of the

declaration's specifics and its overall context. But his

421
comments did confirm, as did his unofficial press "conference"
that day, that he interpreted the proposal to mean stabiliza-
tion, as did his advisers Howe and Morgenthau. Third, his
answer to Hull and Morgenthau's diary entry suggest Roosevelt
failed to realize the declaration's transmitter, which, if
true, may have contributed to its rejection. And fourth, the
above points incidentally illustrate the dangers of usually
relying heavily on experts both for oral advice and for com-
position of policy statements. Unfortunately, neither type

of expertise was available on the Amberjack or Campobello.

 

And the relatively slow quadrangular telegraphic communica-
tions between London-Washington-New York-New Brunswick further
damaged a bad situation. Hence the President improvised with
what materials he had on hand. For a reply he forced his

own interpretation of the declaration onto much of the Swope
memorandum, which he altered in context by some ideas from
the Brown letter given him by Colonel House on June 21. By
this latter means did FDR ironically use the Swope-Baruch-
Moley document-—an argument against a rigid and inflexible
stabilization--to rationalize against a vague and innocuous
agreement not involving stabilization which they now
recommended.

The joint declaration was further denuded by changes
and enhanced by unanimous recommendations, all of which came
after Roosevelt's basic decision had been made.85 Since it
was Saturday and not a Conference working day when the

rejection arrived, Moley attempted to recoup by approving a

422

disingenuous press statement to gain time to interpret FDR's
new meanings. "The Secretary of State has received a reply
from the President rejecting the declaration in its present
form. He will issue a statement of American policy on the
subject Monday." Frantic weekend efforts by Moley, Swope,
and Lippmann proved of no avail because by Monday morning the
President had spoken again, finally and definitively, with
his "bombshell" message. Over the weekend, however, Warburg
and Bullitt "laughed a good deal" about the predicament.
"Why on earth the President should turn down this innocuous
declaration," Warburg recorded, "completely baffles both of
us, and the funniest part of it is that Moley, who is supposed
to have been the anti-stabilization man, is now put in the
same position as the rest of us."86

Roosevelt's July 2 message, made public on Monday the
3rd, repeated and enlarged upon his two earlier rejections in
such a way as to detonate the WEC. Composed aboard the

Indiangpolis, he rewrote it completely after a poor first

 

draft by Howe. "This afternoon, Sunday," Morgenthau recorded,
"the President took off his coat, sat down at his desk for a
couple of hours, and wrote his message to London on money."

He read it to Howe and Morgenthau, "and with a few slight
changes of his own, he sent it as he wrote it the first time."
In a harsh tone, FDR blasted all efforts at "purely artifi-
cial and temporary" exchange limitations, insisted that the

most important factor was each nation's "sound internal

423
economic system" and declared that the WEC must return to
its "larger purposes":87

I would regard it as a catastrophe amounting to a world

tragedy . . . . specious fallacy of achieving a temporary
and probably an artificial stability in foreign exchange
on the part of a few large countries only . . . . old

fetishes of so-called international bankers are being
replaced by efforts to plan national currencies . .
broad purpose is the permanent stabilization of every

nation's currency . . . . produce balanced budgets
and living within their means . . . . we must mitigate
existing embargoes . . . . Conference was called to

better and perhaps to cure fundamental economic ills.
It must not be diverted from that effort.

The "bombshell" provoked varied reactions. On Monday
morning in the hotel lobby, Warburg mingled with the crowd of
delegates as the message was posted. Describing the reaction
as "complete bafflement," he observed: "Inasmuch as I am no
less baffled than our foreign friends, I am not surprised."
Positive that Moley would never propose stabilization,
Ambassador de Laboulaye advised Paris that some American
observers nevertheless believed the message to be the work of
Moley, "who probably gave in London about [FDR's7 intentions
an impression quite contrary to reality and probably advised
underhandedly to the President an attitude of categorical and
brutal resistance." The same observers believed that FDR
was now concentrating upon domestic recovery because of the
discouraging results—-particularly concerning the attitude
of the debtor nations-~of his cooperative gestures toward
international recovery during April and May.88

A majority of American newspapers, especially the

non-East coast press, endorsed the message. Commented the

424

Cleveland Plain Dealer: "The President's telegram makes it

 

clear that Washington places its domestic recovery program
ahead of the objectives of the London Conference." Concluded

the editors of the New York Evenimg_Post: "We are at the end

 

of an era of soft 'love everybody' Americanism.'" Having
declared editorially on June 14 that the "old order" laissez-
faire was no longer viable nationally or internationally,

the New Republic agreed fully with presidential objectives.

 

It praised Roosevelt's apparent desire to establish "the
kind of dollar which a generation hence will have the same
purchasing power and debt—paying power as the dollar value
we hope to attain in the near future." On the other hand,
the Times criticized FDR for "A Confusing Statement." Who
put the questions of foreign exchanges and currency stabili-
zation, the editors asked rhetorically, in the forefront of
the WEC program? The President himself, was the answer.
Citing his May 16 message, the Times observed: "It must
naturally puzzle somewhat the untutored minds of Europeans to
find Mr. Roosevelt now speaking of his own proposal, less
than two months ago, as among the 'fetishes of so-called
international bankers.'" Concluding that he certainly had
the right to change his mind, that his real motive was to
raise domestic prices, the editors concluded that his message
from the sea failed to act like a fresh breeze and clear the
air.89
Torpedoed, the Conference sunk slowly for three more

'weeks. Primarily through the efforts of Keynes, Lippmann,

425

Swope, and Moley, a new statement of presidential objectives
had been prepared by July 4, stressing price raising before
any form of stabilization. During this process of trying to
interpret the new Rooseveltian views, Moley had asked Warburg
to further develop the "commodity dollar as an international
standard and launch that as a resolution." By the 4th, how-
ever, FDR telegraphed the delegation that the "people here
are united in praise of our stand and regard the French
position as wholly selfish and ignoring utterly the big
objectives of Conference." In such a way did he indicate
that he read the opposition press selectively.90

The American delegation and the Moley mission spent
much of the remaining time of the London Conference in saving
face. That was the purpose of the Keynes-Lippmann-Swope-
Moley policy statement: to refurbish the tarnished presiden-
tial image abroad. That partly motivated Warburg to resign
on July 6. Most likely it partially motivated Moley when on
July 4 he sent a confidential and secret cable to Roosevelt
"to form basis for telephone conversation—~discussing person-
nel of delegation, whether he wanted a new draft of 4th
resolution [monetary policz7—-etc. etc.--eight points for
discussion." A copy of this cable was given to Hull and was
later misused by him. The second topic engaged him the most:
"On personal side Pittman is only member of delegation able
intellectually and aggressively to present your ideas on
conference." And saving face had preoccupied Hull, as

indicated by Feis' memorandum of June 24, by the Secretary's

426
equivocal role in the stabilization crisis, and by his per-
sonal vendetta against Moley—-which assumed crusade propor-

tions after the eight-point telegram was leaked.91

VII

During the slow death of the World Economic Conference,
Moley and Warburg returned home at different times to confer
separately with their allies, including Baruch, Woodin,
Frankfurter, Douglas, Acheson, and others. All wanted to
find out what happened and why. During middle and late July
they pieced together available information to determine the
course that presidential monetary policy would now take. An
analysis of the events leading up to the July 2 message
combined with information his advisers gathered make it
possible to answer better questions which his July 5 press
conference primarily skirted.

What were Roosevelt's attitudes and purposes toward
the WEC? As suggested by his April 12 Pan American Union
speech, his May 7 radio broadcast, his May 16 world appeal,
the multitude of platitudinous statements he issued during
the Washington talks, and the delegation's instructions, FDR
originally sought to exhort international recovery through
oral diplomacy. Time and time again he publicly stated his
general objectives, listing (but not defining) his major aims
as stabilizing currencies, freeing the flow of world trade,
and coordinating international action to raise world price

levels. The stabilization objective, usually given first,

427

was endorsed by Roosevelt and delegated to Warburg to discuss
and, later, to Warburg, Sprague, and Harrison to negotiate--
even when Moley (and probably Howe) knew it was not adminis-
tration policy, and when those like Baruch and Feis were
trying to emphasize the conflict between WEC aims and NRA-AAA
programs. That it was not administration policy the President
finally confirmed with the June 17 rejection, which came only
after the London Conference had convened and the pressure of
the Hundred Days was over. That statement demonstrated his
reactions when confronted for the first time with the actual
fact of temporary and immediate stabilization of currencies
(although hedged with reservations), as opposed to just
talking about it. By June 17 he had second thoughts about
world recovery or cooperation. Probably these were caused
partly by the poor European response to FDR's cooperative
sentiments by June, particularly on debts--at least that was
what Bullitt and Phillips told the French ambassador on
June 6.92 Thus second thoughts caused him to jettison his
earlier statements on stabilization, making it his last WEC
aim--although it had never been more than an ultimate objec-
tive anyway. Now he stressed protecting domestic recovery
first and urged his delegation to consider the entire
66-nation program. In these recommendations Moley played an
influential part.

Did Roosevelt change positions? The answer is yes
and no. His private views on monetary policies, as indicated

by his handling of the Thomas amendment (which he specifically

428
adhered to on June 17) were moving toward monetary experi-
mentation and devaluation. But he characteristically kept
his own counsel, evidently because the time was not yet right.
Therefore he only redefined his public views on the 17th,
which meant that his stabilization policy became restricted
to unilateral action. One public result was that the nations
who had participated in the Washington talks and who had
taken his public statements at face value were now disap-
pointed and, as William Allen White pointed out, certain that
FDR had vacillated.

Why did Roosevelt redefine his public WEC aims? The
difference between his earlier statements and that of June 17
was the ending of the Hundred Days and the general European
debts default. Now he had a New Deal program which, particu-
larly NRA and AAA (he only approved crop reduction on
June 13), must be put into operation. He would not jeopardize
these programs by commitments to the WEC, particularly when
it appeared to him that most European nations were not as
willing as America to cooperate for international recovery.
Thus he simultaneously hedged and restricted earlier stabili-
zation policies, even while seeming--depending upon one's
monetary perspective-~to keep the door ajar for agreements.
Meanwhile, his objective of freeing world trade barriers had
been sacrificed to the congressional revolt; but it is
doubtful whether he ever fully intended to push for reciprocal
tariff authority during the Hundred Days. In sum, the

President's attitudes toward the London Conference were

429

ambivalent and improvised, depending upon the issue, the
timing--in relation to the domestic program's progress toward
enactment and the response of Europe to cooperative gestures,
and the necessity (or lack of it) for decision and commitment.
Only his aim of raising world price levels, by which means he
never made clear, remained intact throughout the Hundred Days
and the Conference.

Next, what were Roosevelt's attitudes and purposes
toward the Moley mission? In the beginning, the idea of
liaison messengers had been only vaguely proposed. But
characteristic of both FDR and Moley, they never thought it
through. Finally Moley decided to go to London after the
delegation. Then in June the President's cousin, a State
Department functionary, departed as the first liaison. By
June 16, when he remarked to reporters that Moley was going
for a "look-see," Roosevelt should have realized that this
was an understatement at least. This was more obvious when,
amidst negative reports from London, it became necessary for
Moley to rendezvous with his chief at sea and recommend a
reiteration of the June 17 rejection, confirm what he knew
were the presidential views on stabilization, and have FDR
make his authorization public. On June 20 Roosevelt publicly
described Moley's mission as one of "messenger or liaison
officer." But six days later he wired Phillips that Moley
was both "under the Secretary and is not a member of the
delegation." This equivocation meant that Hull (as Moley

already did) could understandably develop his own

430
interpretation of Moley's authorization, a view distinctly
more restricted than the latter's. In view of the Hull-Moley
rift, this casual presidential handling of the mission
naturally led to later conflicts. Furthermore, neither
Roosevelt nor Moley appreciated, until it was too late, the
powerful effect that publicity, especially adverse publicity,
would have on the mission's purposes, to wit, the Professor

ex machina editorial and the White column. And if the timing

 

of the presidential vacation was not unfortunate, the
resulting slow communication with advisers and the delegation
certainly made effective transatlantic diplomacy difficult.
By June 28, when Roosevelt had third thoughts and
further restricted his stabilization policy to rule out
anything except unilateral and mem-governmental action, com-
munication lags and chance killed his new admonition. Thus
on June 29 Moley, on his own initiative but in keeping with
his understanding of liaison, transmitted the joint declara-
tion--which both he and the New York advisers regarded as a
face-saving formula to nudge the WEC past the stabilization
crisis. On June 30 FDR found himself confronted with
unpleasant alternatives for decision, partly a direct result
of his own vague handling of the line of authority between
himself, Hull, and the now over-publicized Assistant
Secretary. The President's methods had come home to roost.
And his June 30 rejection and July 2 "bombshell" were both

related to those methods.

431

But the most damaging personal result was yet to come.
Again acting on his own initiative as liaison, Moley dis-
patched on July 4 the eight-point cable to the President.
But as Warburg later impressed upon Moley: "As Assistant
Secretary of State he cannot possibly send a cable to the
President saying the Secretary is no good. On the other
hand, as the President's confidential adviser this is just
what he is supposed to do. The two things are irreconcila—
ble." What happened to this cable was chance and vengeance.
Even though labelled "From Moley to the President alone and
exclusively, with no distribution in the Department,"
Ambassador Robert Bingham saw a copy because it went through
the embassy code room. He gave it to Hull. Outraged, the
Secretary unethically folded it, according to Warburg and
Couzens who saw it, concealing topic one (suggesting a WEC
recess) and the "alone and exclusively" prefix. Hull showed
the damaging personal section to the others, who were also
outraged.93 On July 11, the same day Hull received this
secret document, he telegraphed the President a long, mis-
leading catalogue of particulars against his Assistant
Secretary, culminating this with his implied threat of
resignation. Thereafter Hull combed "every record" for all
the evidence he could obtain or manufacture against Moley.94
Shortly after Hull's missive had been received, Tugwell Spent
an "hilarious hour" with the President over the goings-on in

London. With a twinkle, FDR showed him various confidential

432
cables and remarked, "None of these will ever find their way
into the history books."95
The final outcome by the end of July was that
Roosevelt had to make an unpleasant political decision.
Morgenthau recorded that:96
F.D.R. told me as a deep secret that it was abso-
lutely necessary for him to get Moley out of Washington
before Hull returned as Hull would kick up such a
terrible fuss. F.D.R. said that after Moley was in
London two days he started dealing direct with some of
the countries, which, naturally made Hull furious. He
said, "I am thinking of sending Moley to Hawaii to make
a study of conditions there, and in this way get him
out of the path of Hull." F.D.R. said Moley had done
a number of stupid things.
Either Hull or Moley now had to go, but FDR believed he could
not afford to lose either. Regardless, he was largely to
blame if Moley's loyalty went astray. As Warburg succinctly
observed, on learning of the eight-point cable: "There is
no question that Moley has been disloyal to everybody except
the President."97
What did the mission finally achieve in its liaison
role? The contemporary report of Moley and Swope is roughly
accurate. They accomplished five things, they telegraphed
Baruch from the boat home: "first--suggesting father [FDE7
might want to continue sittings; second—-giving him specific
formula to that end; third--helping eradicate stabilization;
fourth--quieting deep unrest among delegates; fifth-—getting
help of Dominions through formula prepared under our direc-

tion." If they exaggerated, Frankfurter was soon convinced

their efforts were not in vain. "You remember Wilson's

433

remark," he wrote Moley: "'I play for the verdict of
history.' You have every right to feel assured about that."98

Finally, what were Roosevelt's intentions and pur-
poses in the "bombshell" message? What were the results?
Behind the July 2 pronounciamento were his earlier rejections,
notably that of June 30. But the circumstances surrounding
the "bombshell," as learned by his returned advisers, were
revealing. Physically closest to FDR on June 29 through
July 3 were his personal friends H6we and Morgenthau. The
latter recorded on June 29 that Roosevelt was "distracted"
and "not at his ease." Regarding the tone of the "bomb-
shell," one report that Warburg was inclined to believe was
that the President was "thorOUghly upset" over the news that
his son Elliott was getting the first of many Roosevelt
divorces, with plans to remarry quickly.99 As soon as Moley
landed on July 13, he immediately huddled with Swope,
Frankfurter, and Baruch. The latter two reported, and their
story was soon confirmed by Herbert Swope's brother Gerard,

that Howe had been with FDR on the Indianapolis when the

 

message was written, that both had been "rather high," and
that the President was also "harassed by family troubles."100
Thus FDR's emotional state likely played a part.

But the Budget Director's firsthand account revealed
more about the American side of the WEC. On July 22 Warburg
spent two hours in Douglas' office, and each told the other

what they knew happened. Warburg recorded:101

434

On the stabilization business, what happened was that

no one ever heard of my cable of the 13th and, conse-
quently, when on the 16th of June the newspapers

carried a story that Cox stated that stabilization was
just around the corner, everyone here got violently
excited and a statement was issued from the White House
saying that there would be no stabilization unless

first referred to Washington. Incidentally that was

the first intimation I had in London of which way the
wind was blowing. Lew said that at this time there was
great anger at Sprague for not having cabled anything,--
all of which would have been different if the President
had not sat on my cable of the 13th and told no one
about it. On the 18th [I6th Sprague's and my cables
arrived with the proposed p an. Acheson took it over

to Moley, Baruch and Swope and recommended that it be
accepted. All three of them jumped all over Acheson and
said that it was crazy to think of such a thing. Woodin
was in New York sick, but was also opposed to it. The
President saw the first half of the cable before he left
Washington and the rest of it was wired to him at
various stages on his journey north. In talking to
Acheson, the President never let on that he had pre-
viously received my cable and apparently was much at sea
as to what the whole thing meant. Eventually Moley flew
to Nantucket [June 207 and brought back the President's
definite refusal to accept the plan.

Moley then sailed, and my wire [june 227 that the
President make no promise or declaration but quietly
authorize the Federal Reserve to reduce fluctuations
arrived while he was on the water, but nothing was done
about this at all. ‘

Then the declaration was cabled over after Moley had
arrived. Acheson, Douglas, Harrison and Baruch were all
in favor of accepting it. Acheson and Harrison saw
Woodin on his sick-bed and he fainted during the conver-
sation. In spite of the unanimous recommendation by all
his advisers, the President refused to accept the
declaration and sent the famous message of July 1st ZZnQ7.
Baruch at this moment swung completely around and admitted
that the first plan should have been accepted. Acheson
and Douglas had thought so right along.

Lew saw the President after he got back and told him
very frankly that he thought a great mistake had been
made, both in the substance and in the form of the
message. He said that the President was very pleased
with himself for havin sent it.

Then [James Harvey? Rogers and [George Fe7‘Warren
appeared on the scene and Lew put up a battle, with the
result that they were told to keep out of the budget.

Finally, the middle of last week [July 1_3_7, the
President got thoroughly frightened by the runaway market
and he agreed very secretly to allow the Federal Reserve

435
Bank to export up to $20 million in gold in order to
keep the dollar from going through 4.86. That accounts
for the stock market break of last week. If this had
been done a month sooner, it might have done some good.
It is exactly what I recommended in the third week of
June.

Warburg's detailed account, although showing slight
confusion in dates, is more remarkable because it was con-
firmed "entirely" by other advisers like Acheson. Two days
later Warburg conferred alone with Roosevelt for almost two
hours. On the disappearance of the June 13 cable, FDR "said
that he had been so busy with the revolt in Congress at that
time that his mind had not been on stabilization." When
Warburg said his July 2 message was most unfortunate in both
substance and tone, the President got "quite angry and he
said that I should have seen the American press comment,
which had been universally favorable."102 J. P. T. O'Connor
learned of the July 13 exporting-gold decision from Eugene
Black, Governor of the Federal Reserve Board.103 Exporting
gold was precisely what Roosevelt adamantly told reporters
on July 5 he was not prepared to do, and was in fact a major
reason behind all of his rejections and the "bombshell."

More information from the President added details.
When Moley saw him for the first time on July 14, Roosevelt
offered words of personal encouragement. But "he seemed
delighted with the acclaim the newspapers had given to the
July 2nd statement. This was all he seemed to be able to

see in the picture." FDR also remarked that he had "care-

lessly misread" the joint declaration and thought that Hull

436
had sent it, which Moley doubted. Three days later Roosevelt,
in the presence of both Douglas and Moley, "laughing rather
sheepishly," revealed that he had secretly ordered the FRB
to export gold if the pound went above $4.86. The crowning
blow, Moley could not resist sarcastically remarking: "The

104 Years

only trouble is that I was ten days too early."
afterward Douglas recounted the conversation to which Warburg
had referred. After some presidential urging, the Budget
Director stated his opinion on the "bombshell": "If you
deliberately set out to cast the die for war, you succeeded."
Why? Because he had torpedoed the last chance to reconstruct
the first two of three pillars of the old world order: free
trade, a common currency, and the British fleet. Intense
nationalism and world war would surely result. FDR was
thoughtful for a moment.

"Lew, I think you are seeing ghosts under the bed."

"Well, Mr. President, perhaps I am; but I am going
to leave this verdict to history."105

Why then did Roosevelt bomb the London Conference?
Was it as James Farley professed, that FDR saw it as a "great
international plot" of bankers against him? Farley later
wrote that the President once told him that J. P. Morgan's
Company had put Swope on the delegation so that he could
influence Moley, who presumably in turn worked for stabiliza-
tion in the interests of international bankers.106 Such a

report would be more credible if Frankfurter had not endorsed

Moley's recommendation of Swope as early as April. Swope had

437
been considered for two months, even though FDR did not

107 But historian

issue the formal invitation until June 16.
Herbert Feis has expressed it better. Is it not possible
that the President believed the gold bloc countries working
hand in hand with the "international banking houses" were
trying to force his hand to jettison national for inter-

108 Is this view not supported

national recovery measures?
by the language of the July 2 message-~that the "fetishes of
so-called international bankers" were being replaced by a
nation's "sound internal economic system"? Superficially,
some evidence supports this view. But upon closer inquiry,
most of the evidence points toward domestic economic and
political reasons being behind the "bombshell." The rhetoric
about bankers can be dismissed as just that: rhetoric to
disguise true domestic reasons, just as rhetoric from the
inaugural about "money changers" disguised a willingness to
work with bankers to surmount the banking crisis. Rather,
FDR's true views on banking were revealed in his equivocal
handling of FDIC.

Roosevelt based his June 30 statement upon his
assumption that stabilization was at issue. In doing so, he
used the Swope memorandum plus some tangential reasoning.

It was clearly a rejection, whether or not it made sense.
On June 20 he had simply stood on his rejection of the 17th.

And the July 2 message essentially enlarged upon the same

substance of two days earlier.

438

Then why bother to send a second message, restating
the first in more offensive language? First, he believed the
issue was stabilization, confirmed by his July 5 press con-
ference. Second, he believed stabilization posed a threat
to domestic recovery. But so did Swope, Moley, and Baruch,
who put their views in writing. There are other clues to the
reasons for the "bombshell." First, the only messages of
import that the President received from New York and London
between June 30 and July 2 were various recommendations for
acceptance of the joint declaration, including the Baruch
group's advice to revive the Sprague plan. Also, both before
and afterwards, Roosevelt considered press reports of his and
the delegation's avowedly American position as being strongly
favorable, a View which he reached by ignoring Eastern papers
like the Times.109 Third, he deliberately rewrote the July 2
statement for the public (it could be released as a "White
House statement" if the delegation preferred), while he
specified that the June 30 rejection was only to form the

110 And fourth, the "bombshell"

"basis" of a policy statement.
conspicuously lacks both the paraphrase of the Swope memo-
randum and the strange reasoning found in the June 30 rejec—
tion, instead stating broad principles and urging that the
WEC go on to the larger program.

Roosevelt was impelled to go "on the record" on
July 2 to make public his basic purposes of protecting

national recovery and price-raising. To protect and supple-

ment these he bombed once and for all both what he saw as the

439

negative stabilization issue, and the monetary and fiscal
advisers who were recommending it. Due to his peculiar
temperament, he found it easier to repudiate subordinates
by privately writing a message--even though it would be
released to the world-~than to confront loyal (but now
erring) subordinates directly. Moley, his most trusted
policy adviser and an avowed intranationalist, seemed to have
failed him. As Roosevelt now saw it, Moley and the New York
advisers had switched. They were all recommending stabili-
zation. This was not only bad advice, but worse; it would
be unpopular at home. Europe could not be allowed to push
Uncle Sam around, as FDR told the four special correspondents
on June 30. This session occurred even before he dropped the
same news on his advisers, whose pleas and endorsement came
in late on the 30th and on July 1. The rejection had to be
rewritten, therefore, and rewritten both to leave no doubt
of the President's position and also without the Swope memo-
randum and the turgid reasoning, lest Moley have time to
recognize this source and once more urge acceptance. The
President simply sat down that Sunday afternoon and produced
his own message. The Conference and the advisers were bombed.

There were other reasons. Roosevelt's personal
distress may have contributed, particularly to the message's
harsh tone. But poor style should be no surprise because he
seldom wrote his own state papers or messages. No doubt
Howe's anti-stabilization influence also played a part,

although doubtless less than the forces already mentioned and

440

less than other advisers would ever believe. By late June,
for example, Moley, Warburg, and Douglas each resented, for
different reasons, what they considered Howe's meddling in
policies about which he knew nothing. The Budget Director
had been most recently affected. In the case of the CCC kit
scandal, Warburg recorded, Howe had tried to humiliate
Douglas "and had not hesitated to misrepresent the truth to

111 All three advisers were prepared

the Senate Committee."
to blame Howe.

What was the domestic effect of the "bombshell"?
Having discredited some of Roosevelt's moderate and conserva-
tive monetary and fiscal advisers, it led toward monetary
experimentation. In fact such experimentation may have been
cause and effect, since the Thomas amendment laid the ground-
work. In any event, it openly encouraged economists like
Fisher, Warren, and Rogers to espouse their unorthodox ideas
at the White House. Evidence about this effect comes from
the sub rosa conversations during late July as Douglas and
Warburg agreed, with the full backing of Moley, Acheson, and
others, to "rally the conservative element and make a great
effort [397 that we can beat off the commodity dollar boys
and the out-and-out inflationists and save the situation once

more."112

Also, it was not until then that Douglas privately
admitted a balanced budget was no longer possible, because he
realized the President now leaned toward the liberal spending

and public works ideas of advisers like Tugwell.113 Thus,

the "bombshell" resulted in Roosevelt's inclining toward more

441
liberal monetary and fiscal advisers. In its own way, this
devastating message also epitomized the Rooseveltian mind in
action in foreign affairs, a culmination of his methods to
improvise and muddle through during the Hundred Days, with
the primary emphasis always on domestic affairs and political
considerations. Indeed, with this message FDR illustrated
his mettle in the handling of foreign policies just as
his handling of the congressional revolt had for domestic

policies.

CHAPTER IX
THE HUNDRED DAYS

"The choices before the nation when Mr. Roosevelt
came into office," concluded Ernest K. Lindley in the fall of
1933, "were chaotic social upheaval, a big business dictator—
ship along Fascist lines, or an orderly readjustment within
the framework of democratic institutions." Although Lindley
did not know whether the "Roosevelt Revolution" would succeed
when he published his perceptive book, he realized that FDR
had preserved the democratic alternative--scarcely an
insignificant undertaking within the context of the times.
Historian Arthur M. Schlesinger, Jr., outlined Roosevelt's
achievements by June 16:

This was the Hundred Days; and in this period Franklin
Roosevelt sent fifteen messages to Congress, guided
fifteen major laws to enactment, delivered ten speeches,
held press conferences and Cabinet meetings twice a week,
conducted talks with foreign heads of state, sponsored
an international conference, made all the major decisions
in domestic and foreign policy, and never displayed
fright or panic and rarely even bad temper.
Political scientist James MacGregor Burns found many orderly
continuities with the past, and many inconsistencies among
Hundred Days' policies-~between strengthening the government
for social betterment while reducing its cost, between

spending for public works and saving with the Economy Act,

442

443

between the humanitarianism of federal relief and the miser-
liness of the veterans cuts. But he nevertheless pointed
out that FDR had cast himself "as the man of action, as the
experimenter, as the quarterback, and consistency was a small
virtue." In essential agreement, historian William E. Leuch-
tenburg observed: "The nation, at last, had found a leader."1

Yet these are only outlines stressing the fact of
leadership. The histories of scholars like Schlesinger,
Burns, and Leuchtenburg did not really come to grips with
Roosevelt's involvement in the Hundred Days. The political
forces, the economic and social milieu, the intellectual con-
text-~all are explored, particularly by Schlesinger. But
Roosevelt the politician, the leader, and particularly the
policy-maker, is too often lost in the maze of legislation,
programs, anecdotes, quotes. Yet he was the center of
attention. The Hundred Days and the early New Deal would
have been different without him. As historian T. Harry
Williams has written about Huey Long, the times were right
for a strong and vigorous leader of the stature that Roosevelt
proved to be. But Roosevelt did not have to be that leader;
nor did his leadership have to manifest itself the way it did.
He was hardly inevitable. And few would have believed in
1932 that he would Show the signs of greatness that he had by
mid-1933. Indeed, historian Frank Freidel concluded that by
election night: "Most of his friends expected no more of him

2

than that he would be a good President." But they discounted

FDR's capacity for growth.

444

Several themes concerning Roosevelt and the Hundred
Days are particularly significant because they have received
too little historical treatment. The overriding theme of
this period is his growth into the presidency, a growth cul-
minated in domestic affairs by his struggle in June over
veterans compensation and governmental economies, and in
foreign affairs by his July 2 "bombshell" message to the
World Economic Conference. This central theme is interrelated
with and illustrated by three sub-themes. First, he achieved
this gradual growth through the use of important advisers
like Raymond Moley, Lewis Douglas, James Warburg, and others.
Second, FDR realized from the beginning the importance of
"action, and action now." Thus he constantly led toward a
viable, although inconsistent, domestic program, a program
reflecting more fiscal conservatism than has been generally
acknowledged. And third, he gave foreign policy a lower
priority than his domestic policies. This resulted in less-
well developed, even improvised, efforts toward international
recovery and the unsuccessful London Conference. All of
these embody Roosevelt's growth into the presidency, a growth
uneven at best but which ultimately produced a great leader.

The first sub-theme is that Roosevelt relied heavily
upon trusted advisers, notably Raymond Moley. From the
election through the WEC, the professor was FDR's most
influential adviser on a broad range of policies. Moley
primarily handled the war debts and the WEC preparations,

intervening in such domestic matters as securities, inflation,

445
industrial recovery, and personnel recommendations. Above
all, he drafted or wrote virtually every presidential special
message, speech, and statement, and the inaugural--excluding
only the first major radio broadcast and the AAA message.
Throughout this period he counselled for practical action and
intranationalism, the moderate policy of having countries
coordinate their nationalist domestic recovery programs. In
all of these he excelled. But Roosevelt erred in placing him
officially within the hierarchy of the State Department. For
Moley was neither temperamentally nor ideologically suited to
cooperate with weak leaders like Cordell Hull. Moley should
have been in the White House, serving as a presidential
administrative assistant--which in fact he was. But whatever
the professor lacked in temperament, he more than replaced
by solid achievements. He was the President's right-hand man
in policy matters, helping his chief over the period of
transition into the presidency. If he had possessed the
personable manner of Douglas, Moley might well have been an
official New Deal fixture long after mid-1933. As it was, he
served FDR loyally and well. In return he learned, as he
later ironically put it, that "kings cannot err," that his

3 But in

chief could not and would not return the loyalty.
serving, Moley set the precedent for future presidential
assistants, an indispensable element in modern presidential
leadership.

Roosevelt also depended heavily upon Lewis Douglas,

although the former congressman's position as Budget Director

446

was more secure than Moley's Assistant Secretaryship.
Douglas handled or supervised all matters of fiscal policy,
particularly economy in government, and helped plan and
organize agencies like CCC. Fully supported by FDR, Douglas
carried out the President's fiscally conservative views as
they affected almost every piece of legislation. That Roose-
velt lagged behind liberal congressional leaders and some
members of the administration on spending for public works
and relief (even for pump-priming), that he held the line on
economies, and that he pursued orderly spending and budget
balancing, are points too often overlooked concerning the
Hundred Days. On public works, for example, he and Douglas
delayed as long as possible; and when works were linked to
NIRA, they insisted that works be financed by increased taxes
and long-range federal borrowing. And on June 16 Roosevelt
placed suspicious, secretive Harold Ickes rather than impul-
sive Hugh Johnson in charge of works, knowing that Ickes'
caution would mean slow progress. Indeed, in fiscal policy
the only major difference between Hoover's administration in
1932 and Roosevelt's in 1933 was that the New Deal was forced
to drop the annually balanced budget as a policy goal in
order to finance emergency programs, thus the advent of the
"emergency," or dual, budget. But FDR still believed in the
balanced budget as a policy goal until at least 1937.4

Roosevelt would experiment with liberal or progressive
legislation; but he would not experiment with either the

administration of new agencies (created by such legislation)

447
or with what he considered to be essential to protect the
credit of the U.S. government. The evidence indicates that
he placed AAA first on his scale of political and economic
importance, followed by the Economy Act and then NIRA. In
fact, if the Senate had not persisted with the thirty-hour
week and if farm credit enthusiasts and inflationists had not
stalled AAA, Congress might well have adjourned in late April
(FDR temporarily hoped for adjournment by the 25th5) without
passing industrial recovery, public works, or railroad legis-
lation. Douglas' stellar liaison and advising during June
helped the President climax the struggle for the early New
Deal, although they were forced to compromise on governmental
economies. Had Douglas' viewpoints been as politically
flexible and wide-ranging as most of Moley's, he too would
likely have been an influential New Dealer along after the
London Conference. And had the early New Deal moved toward
compensatory spending and an enlightened taxing policy to
stimulate recovery and consumer purchasing power, the general
recovery which Roosevelt sought probably could have been
achieved during his first administration.

Roosevelt also relied upon James Warburg, but only
for monetary policy, and not so heavily as with either Moley
or Douglas. An internationalist, advocate of a revised gold
standard and an ingenious debt settlement scheme, Warburg
almost singlehandedly formulated the American WEC agenda.

In addition, he carried the diplomatic burden in the experts'

negotiations during April and May. Unable to get a lasting

448
commitment on currency stabilization from FDR, his hopes
for a sound national and international monetary policy were
dashed by the June 17 and 30 rejections, then exploded on
July 2. The President wanted a domestically managed currency
which--while not knowing how to achieve it-—he sensed would
help general recovery. Monetary expert Sir Frederick Leith-
Ross later concluded:
Looking back on the President's policy in the light of
hindsight, I feel that, considering how little experi-
enced financial advice he had, the atmosphere of muddle
and improvisation that ruled in Washington and the
political difficulties he had to face with Congress,
the President succeeded in taking the right decisions
for the wrong reasons. He was, in fact, pioneering the
policy of a managed currency.
But that was only part of Roosevelt's motivation. Inter-
national monetary problems "bored the hell" out of FDR,
Warburg remembered, and he would not take them seriously:6
He wasn't interested in economics and particularly not
monetary economics. And yet it exercised a curious kind
of fascination for him. He didn't like it and yet he
felt there ought to be a trick in this area which he
didn't like by which the whole thing could be juggled
into place. You always felt that you were dealing with
a fellow who had an exaggerated idea of what could be
accomplished through fooling around with money, and who
lacked the patience to let you sit down and tell him
why you couldn't fool around with money.

Characteristic of Roosevelt, he enjoyed the company
and advice of Warburg. Warburg was not only personable,
witty, and articulate, but he espoused the kinds of policies
that the President hoped could be achieved—-so long as they
did not conflict with domestic recovery. Had the debts
imbroglio been settled by June 15, for example using the

"Bunny," it is entirely possible that Warburg's monetary

449
program could have been more successful in London. But
recovery and the raising of prices did not come quickly; and
once FDR ordered the implementation of AAA and NRA and once
his exhortations for international recovery evidently had
failed to secure European cooperation, Warburg's advice
became expendable. While Moley bore the personal brunt of
the "bombshell," Douglas and Warburg lost their positions of
primary influence. But neither was inevitable.

While Moley, Douglas, and Warburg played crucial
parts in the Hundred Days, Roosevelt used a plethora of
lesser but still important advisers on the muliplicity of
issues facing him. Louis Howe, doubtless a major influence
on appointments, patronage, and politics in general, had
little to do with policy. The exceptions were his work with
CCC'S implementation and his urging of the anti-stabilization
decision of June 29-30, although contemporaries exaggerated
his impact on both. Henry Morgenthau was the principal
adviser on credit. But as yet he lacked the stature and the
versatile expertise of the others. Rexford Tugwell's activi-
ties were confined primarily to AAA, the Agriculture Depart-
ment, a new food and drug bill, and preliminary WEC talks.
But there is little evidence that he was as close or influ-
ential with Roosevelt as he would be during 1934 or 1935. On
the contrary, Tugwell's liberalism has caused like-minded
historians to exaggerate his importance prior to 1934. And
Adolf Berle, the third member of the 1932 Brains Trust, had

little connection with FDR's activities during 1933.7

450
Roosevelt used advisers for several reasons. He
needed them. Not only was he imperfectly informed on many
policy issues, as Presidents perforce are, he preferred to
get his advice orally from trusted subordinates. Those were

crucial features of his modus operandi during 1933. Hence

 

any approach to Roosevelt and the early New Deal which fails
to focus on key advisers is incomplete. Advisers generally
helped FDR by presenting him with more clearly defined
choices for decision. They helped spell out issues, public
opinion, alternatives, consequences, and more. His own sense
of intuition and of congressional and public opinion aided
him in making the final decisions. Haphazard, improvised, or
casual, he nevertheless proved highly successful. But within
the yearning, demanding social milieu of the times, any
decision for action was more acceptable than one for inaction—-
particularly in domestic policy. Roosevelt could hardly fail,
unless he lacked political finesse and instincts. He lacked
neither.

The second sub-theme is the importance of Roosevelt's
domestic New Deal in reviving the economy as well as public
confidence in the governmental, even the democratic, system.
He realized by March 4 that "action, and action now" was the
only alternative. Prosperity was never around the corner,
and attempts to ballyhoo its return without decisive legisla-
tive and federal government action would cast him in Hoover's
image. So FDR acted. He had Douglas' Economy bill ready to

submit by March 10, having launched his CCC idea a day earlier.

451
Legalized beer gave time to formulate AAA and CCC. Federal
relief, securities, farm mortgage, TVA, and home mortgage
bills all followed by mid-April. Only the railroad bill and
NIRA remained, and these were submitted in May--once an early
adjournment proved impossible. The Glass-Steagall Banking
Act with FDIC became a quasi-administration measure by
chance, not choice. But Roosevelt had grasped the signifi—
cance of s New Deal. It gave him a program. Proposing and
legislating it gave him leverage with the public, Congress,
vested interests, and pressure groups. He made the most of
this leverage.

Although parts of his program were inconsistent, one
striking feature of the early New Deal was its acceptability,
even to conservatives. The March 9 Emergency Banking Act was
hardly a New Deal law, and it was almost unanimously sup-
ported by both parties. The Economy Act passed because of
Republican votes. Democrats in Congress would have legalized
beer if FDR had not led. AAA would likely have been legis—
lated without Roosevelt, Wallace, or Tugwell; it had been
formulated by January. FERA differed little from H60ver's
mid—1932 federal relief policy. Farm credit was immensely
popular by the interregnum, and Morgenthau and W. I. Myers
had to outmaneuver the opposition to succeed with their pro-
gram. HOLC was built upon the foundations of the Federal
HOme Loan Bank passed under Hoover. Senator Robert Wagner's
associates produced almost all of NIRA. And the climate of

business and other opinion was such that industrial recovery

452
had become acceptable to any administration seeking business
support. Finally, the Railroad Act was the ambiguous result
of ideas mulled over within that industry since 1920.

In other words, consider the difference for the
Hundred Days if a conservative like Bernard Baruch-~or any
of the 1932 Democratic contenders, like Alfred E. Smith,

John Nance Garner, or Newton D. Baker--had been President and
had to accept or reject the laws that were passed. Baruch,
for example, would probably have approved all of Roosevelt's
early New Deal except CCC (assuming somebody else proposed
it), TVA, the Thomas amendment, and the gold clause abroga-
tion. Speculation aside, however, FDR gig act. He did Tees,
often spectacularly. And his radio talks, press conferences,
speeches, conferences, and key advisers cannot be subtracted
from the equation.

The other striking feature of the early New Deal,
which led to its acceptability, was its continuity with the
past. Precedents with the Hoover years and before abound.

In addition to the legislation which conservatives could have
accepted, even TVA was not new as Senator George Norris and
others had advocated some of its leading features throughout
the 19205. NIRA had precedents from wartime and later. In
fact, as James MacGregor Burns pointed out: "The Square
Deal, the New Freedom, the New Nationalism, the associational
activities of the 19205, all elbowed one another in uneasy

8

intimacy." The change or the revolutionary aspect of the

New Deal came with its enactment. The federal government had

453
finally acted, and decisively. But that continuity surpassed
change is hardly surprising. Reform movements do not
emerge from voids. Was the early New Deal evolutionary, or
revolutionary? Observers like Ernest K. Lindley saw a
"Roosevelt Revolution" because they saw decisive federal
action. Precedents were sometimes overlooked by those who
emphasized "revolution." Striking legislative change,
fostered by a presidential image of action, led people to
believe in a preponderance of change. Since what is believed
is often more important than the objective situation, a
continuing but pointless controversy ensued over evolutionary
or revolutionary.

Part of the early New Deal's significance is, there-
fore, that Roosevelt persisted in securing its rapid enactment.
Action combined with leadership restored confidence. And it
resulted in FDR being widely accepted as ime leader. He had
mastered the moment and the crisis. He boldly declared that
the only thing to fear was "fear itself"; and by June, the
New Deal had proven the rhetoric of March.

There are several other important points about the
Hundred Days and the origins of the early New Deal. Obviously
there was no overall plan. It was primarily a rescue opera-
tion, and improvisation played a crucial part. Many of the
laws, notably NIRA and FDIC, did not originate with the White
House. Collaboration, compromises, amendments, diverse and
conflicting advice--all played their parts, and all came

from throughout the administration and from the Congress.

454

Obviously the 73rd Congress was no "rubber stamp"--a cry
raised at the time by Republicans, who found themselves
outnumbered on party-line votes. While some measures were
regarded as experimental or temporary, AAA and the Railroad
Act for examples, Roosevelt endorsed them because of the
need for action. Some of the laws were forced upon FDR,
particularly NIRA, although the Thomas amendment-~which he
personally favored--he would likely have originated himself,
had that been politically possible. Clearly the early New
Deal was not homogenous. Relief, recovery, and reform are
often cited. But in practice the three "r's" were hard to
distinguish. Doubtless reform was the least important of
the three, except in the Securities and the Glass-Steagall
Acts. On the whole, Roosevelt's program was a practical
attempt mostly by practical-minded people to turn the corner
of the depression. General recovery was their rationale;
immediate relief was their primary objective.9

The third sub—theme is that Roosevelt necessarily
relegated foreign policy to a second priority during the
Hundred Days. He had spoken about this during the campaign
(but not publicly) and the interregnum, finally committing
himself on January 20 at the second White House confrontation.
He and Moley wrote this priority into the inaugural, and FDR
reiterated it during their March 18 conversation. While
Roosevelt wisely realized that he needed diverse and wide-
ranging advice on domestic policies, he inclined away from

that same need in foreign policy. Depending primarily on

455
those like Moley, Warburg, and Bill Bullitt, and with less
time to spend, he played it by ear. War debts were of
primary importance. But owing to the intransigence of the
debtor countries--who, like Britain, properly considered that
debts should be written off in repayment for their wartime

10--little possibility existed that the semi—

contributions
annual June 15 installment would be paid. Aside from debts,
Roosevelt and Moley concentrated largely upon WEC prepara-
tions. But their work, like their thinking, reflected
appearances of Sloppiness. Thus FDR improvised an American
program (with Warburg's drafting), an American delegation,
the Moley mission, and the June 30 rejection. Yet in the
end, Roosevelt succeeded in protecting domestic recovery.
Following Moley's intranationalist views throughout, he
refused to accept any semblance of commitment to what he
interpreted to be stabilization. He therefore rejected the
"proposed declaration" for the wrong reasons. But, not
knowing this, he doubtless knew that American opinion on the
whole would applaud his decision. Uncle Sam for once had
outmaneuvered John Bull and the Europeans. But this point
having been made, he reaffirmed it in peculiarly Rooseveltian
terms in the "bombshell." If economic nationalism and
domestic-first were the order of the day, this message was
not. It was Roosevelt at his worst. It was an unfortunate

climax to a Conference doomed to limited success, if not

failure. Scarcely a "good neighbor" policy, the message

456
blasted hopes for international economic cooperation in
incalculable ways.

While the domestic program evidenced continuity pri-
marily, the foreign policy program demonstrated more change.
Roosevelt's keynote was intranationalism. He veered away
from the internationalism of the preceding administration,
although the speeches and statements of Hull incorrectly
implied the opposite. Backed by Moley, on debts, FDR insisted
at least upon partial payment, at most on the Warburg scheme.
Hoover's moratorium would not be renewed. On international
recovery, FDR exhorted other nations to stabilize currencies,
lower trade barriers, and attempt price-raising--although he
conveniently refused to define these before the Hundred Days
ended. Actually, price-raising was the only one which he
fully contemplated and which he carried through. Indeed, it
survived because it was an integral part of the domestic
program. In terms of continuity, his disarmament program
resembled that of Hoover, as did the "good neighbor" policy.
But in the inaugural, Roosevelt had stated his practical
policy of "putting first things first." Domestic recovery,
therefore, would have to precede international recovery, at
least at this point in time. So in June, having thus far
delayed most of the foreign program in order first to secure
passage of the domestic program, the congressional revolt led
him to sacrifice debt authority, the reciprocal trade bill,

and the St. Lawrence Treaty. Leading Congress on the domestic

457
program proved far more politically possible than leading on
the foreign program, particularly with the Senate.

When the President torpedoed the London Conference
on July 2, he culminated his growth into the presidency in
foreign affairs. In effect, he declared independence from
any one coterie of personal advisers. Or from another view-
point, he reopened his approaches to Hull and State. This
domestic-first priority would make foreign policy the
stepchild of the New Deal until 1938.

Considering the close personal advisers, the crucial
domestic program, and the domestic-first priority, what is
the uniqueness of Roosevelt during the Hundred Days? How
did his key advisers evaluate him, then and later? While
noting that FDR was not the source of the New Deal's ideas,
Moley nevertheless later commented: "It detracts nothing
from the greatness of St. Paul to say that his comments upon
Christianity were not original with him but were a compound
of not only the teachings of Christ but many of the tradi-
tional beliefs of the Hebrew people." Roosevelt, that is,
proved to be a remarkable expositor of the NewDeal.11
Douglas later observed that he always had tremendous respect
and affection for the President. "I should add that I have
never said anything uncomplimentary about him personally. I
was sometimes disturbed by the methods he used in arriving at

decisions-~but that is another matter."12

Douglas was con-
cerned more than most by FDR's unorthodox, intuitive approach.

Warburg commented upon this approach and Roosevelt personally

458
in a candid assessment written just before he departed for
London in June:13
The President has shown an amazing vigor, a complete
imperviousness to fatigue or nervous strain, and
extraordinary openmindedness and willingness to listen,
and an almost inspired intuition, which at times has
led him to do things which, on the basis of logic,
seemed fantastic and yet have shown themselves to be
correct. If he does not succeed it will be because the
bad advice he receives outweighs the good. He is, if
anything, too accessible and there are too many people
taking advantage of this accessibility.

Roosevelt's continual growth as a leader, his
advisers, his New Deal, his policy priorities--all these and
more had restored national confidence by July 1933, when he
broadcast his third major radio Speech. Summarizing the
historic "hundred days," he breezily asserted that all of the
legislation since March 4 had been "the orderly component
parts of a connected and logical whole." Ranging over the
value of everything from the Economy Act to the Industrial
Recovery Act, for which he asked national support and
cooperation, he again expressed his philosophy that only fear
itself was the enemy. Putting it in common language, he told
the story of how Andrew Jackson--"'Old Hickory'"--would have
gone to heaven if he wanted to. "If I am asked whether the
American people will pull themselves out of this depression,
I answer, 'They will if they want to.'"14

Of course it would take more than persuasive
rhetoric, more than courage and desire to end the depression.

But the Hundred Days and Franklin Roosevelt had gotten

America on its way, because the question of leadership had

459
been resolved. And the new leader had a New Deal foundation
to build upon. But the crucial questions remained. Would
Roosevelt, could Roosevelt, lead boldly enough toward
achieving real recovery, toward a significant restructuring

of the economic order, toward a genuine concert of interests?

NOTES

NOTES

All dates cited are 1933 unless otherwise indicated.
Abbreviations used throughout are:

The Franklin D. Roosevelt Library's files are cited without
the name of the Library. These files are:

OF -- Official File

PPF -- President's Personal File
PSF -- President's Secretary's File
PC -- Press Conference

Locations of collections of papers (Mss) at other institu-
tions are given only on the first full citation, and in the
bibliographical essay.

LC is the Library of Congress.

NA is the National Archives; RG is Record Group.

COHC is Columbia's Oral History Collection.

PPA: 1933 is Samuel I. Rosenman, ed., The Public Papers and

Addresses of Franklin D. Roosevelt, Vol. II, The Year
of Crisis, 1933I(New York: RandEm House, 19385.

 

 

 

 

PL: 1928-45 is Elliott Roosevelt, ed., F.D.R.: His Personal
Letters, Vol. III, 1928-1945 (N.Y.: Duell, Sloan,

1950).

FR: 1933 is Department of State, Foreign Relations of the
United States: Diplomatic Papers, 1933, VOI. I,
General (Wash., D. C.: U. S. Government Printing
Office, 1950).

FDRFA: 1933-34 is Edgar B. Nixon, ed., Franklin D. Roosevelt
and Foreign Affairs, Vol. I, Januaryfil933-Februagy
1934 (Cambridge: Harvard U. Press, 19697.

 

 

 

 

 

 

 

 

 

British Foreign Policy: 1933 is E. L. Woodward, ed., Documents

on British Foreign Policy, 1919—1939, Second Series,
Vol. V, 1933 (London: H} M. Stationery Office, 1956).

 

 

 

460

461
All other published works are cited in full only the first

time, and thereafter a shortened form of the title is used.

CHAPTER I (pages 1-7)

1Time, The Weekly Newsmagazine, XX, June 26, pp. 9-10;
The New Republic, LXXVDTJune 28), I67, italics added.

 

 

2FDR first publicly used this term in his third major
radio broadcast on July 24; see PPA: 1933, 295. The term
"fireside chat" did not come :uwe* use during the Hundred
Days.

 

3LiteraryDigest, CXVI, July 1, pp. 3-4; Ernest K.
Lindley, The Roosevelt Revolution: First Phase (N.Y.: Viking,
1933), ch. ll; James P. warburg Journal,7May 30, in Warburg
COHC. Also see Time, XXI, June 19, p. 11, on adjournment.

 

 

4Time, June 26, pp. 9—14; Arthur M. Schlesinger, Jr.,
The Age of Roosevelt, II, The Coming of the New Deal (Boston:
Houghton Mifflin, 1958), ch.ll; Lindley, Roosevelt Revolution,
pp. 164-6.

 

 

 

5Grace Tully, F.D.R.: My Boss (Chitago: People's
Book Club, 1949), pp. 76—7; Eleanor Roosevelt, This I
Remember (N.Y.: Harper, 1949), p. 84; A. J. Wann, The
Pre51dent as Chief Administrator: A Study of Franklin D.
Roosevelt (Wash., D. C.: Public Affairslpress, l9687, pp. 32—7.

6Ross T. McIntire, White House Physician (N.Y.:
Putnam's, 1946), pp. 65-72.

 

 

 

 

7Raymond Moley, After Seven Years (N.Y.: Harper, 1939),
pp. 166-8, and Moley Diary, June l6, infMoley Mss, Hoover
Institution, Stanford, Calif.; interview with Lewis W.

Douglas, Feb. 1970, Tucson, Ariz., and Douglas to FDR, FDR to
Douglas, both June 16, OF 285-C; Dean G. Acheson, Morning_and
Noon (Boston: Houghton Mifflin, 1965), pp. 164-5; Rexford G.
Tugwell, The Brains Trust (N.Y.: Viking, 1968), pp. 30-1.

 

 

 

8Alfred B. Rollins, Jr., Roosevelt and Howe (N.Y.:
Knopf, 1962), pp. 381-401; Edward J. Flynn, You're the Boss
(N.Y.: Collier Books, 1962 ed.), P. 159; "Unofficial Observer"
[3. F. Cartem7, The New Dealers (N.Y.: Literary Guild, 1934),
pp. 216-33; Patrick Anderson, The Presidents' Men: White

 

 

 

 

 

House Assistants of Franklin D. Roosevelt . . .‘Lyfidon B.
Johnson (Garden City, N.Y.: Doubleday Anchor, 1969 ed.),
pp. 12-23, 64-74; Tully, F.D.R., pp. 150-4; Samuel 1. Rosenman

cone, pp. 107—10.

462
(pages 7-17)

9Tully, F.D.R., pp. 77-8. See e.g., McIntyre memo
for FDR, March 17, White House (W.H.) memo, March 31,
April 3, 7, W.H. memo for FDR, April 12, W.H. memo for
McIntyre, April 20, 9:30 a.m., W.H. memo for FDR, May 25,
4:15 p.m., all OF 259, and FDR memo to McIntyre, May 3,
OF 503.

10FDR memo for Navy Secretary Claude Swanson and War
Secretary George Dern, April 3, and their replies, both
April 7, and FDR to Dern, April 25, Dern to FDR, April 29,
Swanson to FDR, May 2, FDR to Swanson and Dern, May 3, and
FDR to the 48 governors, May 5, all OF 52.

11Harold L. Ickes, The Secret Diary of Harold L. Ickes:
The First Thousand Days, 1933-1936, I (N.Y.: Simon & Schuster,
1954), 9, l4, l6, 19, 23, 26, 33-4, 37, 40, 45-6, 48, 53;
PC #7, March 29, #25, May 31.

 

 

12Henrietta Nesbitt, White House Diary (Garden City,
N.Y.: Doubleday, 1948), pp. 34-5.

 

13See N. Y. Times, June l-l7; Warburg Journal, May 15,
10:00 a.m.; E.’Roosevelt, Remember, p. 117.

 

14James Roosevelt and Sidney Shallett, Affectionately,
F.D.R.: A Son's Story of a Lonely Man (N.Y.: HErcourt,IBrace,
I959) , PP. 75K5.

 

 

15J. F. T. O'Connor Diary, June 16, in O'Connor Mss,
U. of California, Berkeley.

16N. Y. Times, June 17.

 

17William E. Dodd, Jr., and Martha Dodd, eds.,
Ambassador Dodd's Diarylfl933-l938 (N.Y.: Harcourt, Brace,
nal—)7, pp. 3‘6.

 

18PPA: 1933, 256; N. Y. Times, June 17.

 

 

19Frances Perkins, The Roosevelt I Knew (N.Y.: Harper
Colophon, 1964 ed.), pp. 20l-4, 275-6; Ickes, Diary, I, 53-5;
PPA: 1933, 247—50, for texts of orders.

 

 

20Ickes, Diary, I, 37, 48, 51—2.

21PC #30, June 16; N. Y. Times, June 17; Moley, The
First New Deal (N.Y.: Harcourt, Brace, 1966), pp. 427-9, and
M6ley Diary, June 16, and Sprague cable to Woodin, June 16,

5:22 p.m., Moley Mss, Box 48.

 

 

463
(pages 17-19)

22Rexford Tugwell, "Notes From A New Deal Diary,"
May 6, Tugwell Mss, Roosevelt Library (hereafter cited as
Tugwell Diary).

CHAPTER II (pages 20-31)

1Interviews with Raymond Moley, March 1970,
N. Y. City, and Moley, Seven Years, p. 165, Moley, 27 Masters
of Politics: In A Personal Perspective (N.Y.: Funkhh
Wagnall's, 1949), p. 176.

 

 

 

2Frank Freidel, "Foreword," pp. vii-xiv, in Moley,
New Deal, and Moley's "Autobiographical Note," pp. 11-18, in
1b13.; Moley, "Statement," Dec. 2, 1970, Moley Mss; Moley to
George Creel, Feb. 25, Moley Mss, Box 8. On the function of
and Moley's part in the Brains Trust, see e.g., Frank
Freidel, Franklin D. Roosevelt, III, The Triumph (Boston:
Little, Brown, I956), 264—7, 272, 317-IS, 368—9; and Rollins,
Roosevelt and Howe, pp. 331-2.

 

3Lindley, Roosevelt Revolution, pp. 298-300; Arthur M.
Schlesinger, Jr., The Age of Roosevelt, I, The Crisis of the
Old Order (Boston:'Houghton Mifflih, I957), 398-400.
Schlesihger's mention of Moley's "interior stresses" is
undocumented, but it evidently came from the Warburg COHC--the
reminiscences portion rather than the journal.

4Louis B. Wehle, Hidden Threads of History: Wilson
Through Roosevelt (N.Y.: Macmillan,’l9537, pp.lll5-l7;
JTlRoosevelt, F.D.R., pp. 231-2; Freidel, Trium h, pp. 248-9;
Tugwell, The Democratic Roosevelt: A Biography of Franklin D.
RooseveltVTGarden’City, N.Y.: Doublhday{hl957), p. 222. th
FDR's development and career, also see Preidel's Vols. I and
II, The A renticeshi and The Ordeal (Boston: Little, Brown,
1952—45; Eollins, Roosevelt and Howe, parts I-IV; and James
MacG. Burns, Roosevelt: The Lion and the Fox (N.Y.: Harcourt
Brace, Harvest Books, 1956), parts I and’II.

 

 

 

 

 

5Freidel, Triumph, pp. 368-9; Schlesinger, Old Order,
pp. 454-5.

 

6Tugwell Diary, Dec. 20, 1932.

7Eliot A. Rosen, "Intranationalism vs. International-
ism: The Interregnum Struggle for the Sanctity of the New

Deal," Political Science Quarteriy, LXXXI (June, 1966),
274-97.

8Tugwell Diary, Dec. 20, 1932.

464
(pages 31-45)

9Anderson, Presidents' Men, p. 28; Moley, Seven Years,
pp. 72-7; Rosen,'Tntranationalism," pp. 278-80; Herbert Feis,
1933: Characters in Crisis (Boston: Little, Brown, 1966),
pp.‘3557.

 

 

 

10Interview with Moley, April 1970; Tugwell Diary,
Dec. 23, 1932.

11Moley, Seven Years, pp. 79-84.

 

12Ibid., p. 84; Rollins, Roosevelt and Howe, pp. 367—9;
Schlesinger, Old Order, pp. 450-2.

 

 

13Rosen, "Intranationalism," pp. 380-7; Feis, 1933,
ch. 4.

14Tugwell Diary, Dec. 30, 1932, italics added.

15Interviews with Moley, Feb. 1970, Palo Alto, Calif.,
and March and April, 1970, N.Y.C. The Diary runs from Jan. 1
to July 31, 1933, and a typewritten version is in the Moley
Mss.

16Moley Diary, Jan. 3.

17Rosen, "Intranationalism," pp. 287—90; Feis, 1933,
ChSo 6'70

18Moley Diary, Jan. 18, italics in original. See
J. Roosevelt, F.D.R., chs. 5, 7, 15, e.g., p. 236.

19Moley Diary, Jan. 21.

20£2i§°v and Jan. 22; Rosen, "Intranationalism,"
pp. 292'4; Feis, £212, ch. 8; Tugwell Diary, Jan. 22,

21Moley Diary, Jan. 21; Tugwell Diary, Jan. 22.
22Tugwell Diary, Jan. 31.

23Moley Notebook, Jan. 19, in Moley Mss, and Moley
Diary, Jan. 21.

24Moley Diary, Feb. 2.

25Moley Notebook, Feb. 3; brackets in original, but
italics added.

26Statement of duties, n.d. [Feb. 37, in Moley Mss,
and Moley, Seven Years, pp. 114-16.

 

465

(pages 45—57)
27
chs. 5-6.

Moley Diary, Jan. 11. Also see Moley, New Deal,

28Moley Diary, Jan. 27.

29Ibid., and Moley, New Deal, pp. 80-3; Rixey Smith
and Norman Beasley, Carter Glass: A Biograpmy (N.Y.: Long—
mans, Green, 1939), ch. 23.

 

30Moley Diary, Jan. 31.

32

311bid., Feb. 14. Ibid., Feb. 21.

33Moley, Seven Years, pp. 111-12.

 

34Rollins, Roosevelt and Howe, pp. 370, 372-3.

 

35Moley Notebook, Jan. 27, and Diary, Jan. 31, and
New Deal, pp. 89-91. Also see Julius W. Pratt, Cordell Hull,
I, (N.Y.: Cooper Square, 1964), 9-12.

 

36Pratt, Hull, I, 9—12, 13.

37Moley, New Deal, ch. 7, is the first published and
accurate account of the origins of the 1933 inaugural.

38Flynn, You're the Boss (1962 ed.), pp. 138-9.

 

39Moley, New Deal, pp. 99-112; William E. Leuchtenburg,
Franklin D. Roosevelt and the NeW'Deal,¢l932:l94Q (N.Y.:
Harper Torchbook, 1965 ed.), pp. 30-40; Tugwell Diary,
Feb. 13, 15.

 

4OMoley Diary, Feb. 14.

41Moley Notebook, Feb. 27, and Diary, Feb. 28, and
New Deal, pp. 113-14, and interviews with Moley, Feb. and
March, I970. The only recorded mention FDR ever made of
Moley's collaboration was in a 1942 memorandum in which he
recalled that during February 1933, when he was beginning to
formulate the inaugural, he mentioned the term "good neighbor"
in a discussion with Moley-~and he said the latter immediately
seized upon it as just the "right term" for the speech. See
FDRFA: 1933-34, 20-1, note 1.

 

42Moley, New Deal, p. 115; James R. Kearney, Anna
Eleanor Roosevelt: The Evolution of a Reformer (Bosfon:
Houghton Mifflin, I968), pp. l46e7, and notes. On the same
tactic used in the 1932 acceptance speech, see Tugwell,
Brains Trust, pp. 258-62.

 

 

466
(pages 57-64)

43FDR memo, March 25, 1933, Master Speech File 610,
Roosevelt Library. The likely explanation of this memo, con-
sidering the closeness of the Roosevelt-Moley relationship in
early 1933, is that FDR dictated it in 1939 or afterwards
when Moley's After Seven Years was published, without any
mention of collaboration on the first inaugural.

 

44Anderson, Presidents' Men, p. 11.

 

45Ibid., p. 29.

46Moley, Seven Years, pp. 117-18.

 

47Moley to Fred Charles, Feb. 24, Moley Mss; Moley
Diary, March 1.

48Frankfurter to Moley, Feb. 26, Moley Mss, Box 11,
italics added.

49Tugwell, Brains Trust, pp. 480—4.

 

50Lindley, Roosevelt Revolution, pp. 298, 304; Carter,
New Dealers, pp. 32546; George Creel: Rebel at Large:
RecollectiOns of Fifty Crowded Years (N. Y. : Putnamls, 1947),
p. 273.7IAISO see CreeITs similar description in Collier' s,
XCL, June 17, p. 36.

 

 

 

51$chlesinger, Old Order, pp. 400—1; Freidel, Triumph,
pp. 316-18, 354-5.

 

52New Republic, LXXV (June 21), 139—40.
53PPA: 1933, 13-14, italics added.

 

54Moley was not alone among those who shared certain
Progressive ideals but who later broke with the New Deal.
See Otis L. Graham, Jr., An Encore for Reform: The Old
Progressives and the New Deal (N.Y.:IOXIord U. Press,_l967),
esp. pp. 39-43.

 

CHAPTER III (page 66)

1Jordan A. Schwarz, The Interregnum of Despair:
Hoover,_Congress, and the Depression (Urbana, Ill.: U. of
Illinois Press, I970), esp. pp. 230-8.

 

2Lindley, Roosevelt Revolution, pp. 47-8.

467
(pages 66-79)

3Ibid., pp. 304-8; Bernard Sternsher, Rexford Tugwell
and the New Deal (New Brunswick, N.J.: Rutgers—U. Press,
1964), p. 5, for poem, and chs. 2, 12; Carter, New Dealers,
pp. 85-92.

 

 

 

4Tugwell, Brains Trust, pp. 422-3; Carter, New
Dealers, pp. 91-2.

 

5Tugwell, Brains Trust, pp. 27, 139-40.

 

6Sternsher, Tu well, chs. 6, 23; and Sternsher,
"Tugwell's Appraisal 0% F.D.R.," Western Political Quarterly,
XV (March, 1962), 67-79.

7Rollins, Roosevelt and Howe, pp. 371-5.

 

8Tugwell Diary, Jan. 21, italics added.
9Ibid., Dec. 20, 1932.
10Sternsher, Tugwell, Chs. 5-7.

11Tugwell Diary, Dec. 25, 1932; also see Jan. 12,
31, 1933.

lzlbid., Jan. 17, 13Moley, Seven Years, p. 95.

 

14Tugwell Diary, Jan. 23; Moley Diary, Jan. 23, 24;
letter from L. W. Douglas, July 26, 1971.

15Moley Diary, Jan. 26; Schlesinger, Old Order, p. 451.

 

16Moley Diary, Jan. 27.

17Sternsher, "Tugwell's Appraisal," pp. 69-70.
18Tugwe11 Diary, Feb. 4, 6, 7, 12.

lgipig., Feb. 27, italics added.

20Ibid., Feb. 10. 21

“lgig., Feb. 18.
22l2£9-, Feb- 26- 23gpig., Feb. 18.
24lpig., Feb. 15, and Dec. 29, 1932.

25Sternsher, Tugwell, p. 320.

26Anderson, Presidents' Men, pp. 38-9.

 

468

(pages 79—92)

28

27Tugwell Diary, Jan. 29. Ibid., Jan. 31.

29John M. Blum, From the Morgenthau Diaries, I, Years
of Crisis, 1928-1938 (Boston: Houghton Mifflin, 1959), l-34.

 

 

30Schwarz, Interregnum, pp. 205-29.

 

31Blum, Morgenthau, I, 15-27, 35—40, 61; William I.
Myers Oral History (OH), pp. 222-3, Cornell U.

 

32Moley, Seven Years, p. 84; Baruch to FDR, Dec. 15,
1932, Bernard M. Baruch Mss, Princeton U.; Myers OH,
pp. 230-1, 237-8.

 

33J. Roosevelt, F.D.R., pp. 195-6; Marvin Jones COHC,
pp. 481-30

34Blum, Morgenthau, I, 39-40; M. L. Wilson COHC,
852—6; Myers memoranda I and II, both Dec. 3-4, 1932.
William I. Myers Mss, in Myers' possession, Ithaca, N. Y.
Myers later maintained that he and Morgenthau were "unenthusi-
astic" about production control legislation, but that "we did
not Oppose the bill at any time"; letter from W. I. Myers,
Jan. 7, 1972.

 

35Myers OH, p. 245, and memorandum V, Dec. 29, 1932,
Myers Mss; Tugwell Diary, Jan. 12.

36Myers OH, pp. 230—1, 237-8.

37Ibid., pp. 231-2, and memorandum IV, Dec. 16, 1932,
Myers Mss; N. Y. Times, Dec. 13, 1932.

 

 

38Blum, Morgenthau, I, 39-40; Van L. Perkins, Crisis
in Agriculture: The Agricultural Adjustment Administration
and thelNEW'Deal, 1933 (Berkeley: U. of California Press,
1969), pp. 32-5; Jones COHC, pp. 483-90, 494, 509.

 

 

39Tugwe11 Diary, Dec. 25, 1932; Moley Diary, Jan. 4.

4OTugwell Diary, Jan. 13. 41

Moley Diary, Jan. 12.
42Tugwell Diary, Jan. 12.

43Myers memorandum, XIII, Jan. 12-17, Myers Mss.
44;23g., XVI, Jan. 20 - Feb. 10, Myers Mss.

45Tugwell Diary, Jan. 31.

469
(pages 92-104)

46LEiflo, FEb- 18; Blum, Morgenthau, I, 31-2, 42.

 

47Blum, Morgenthau, I, 10, 61-2; Myers memoranda I and
II, both Dec. 3-4, 1932, Myers Mss.

 

48Richard s. Kirkendall, "A. A. Berle, Jr.: Student
of the Corporation, 1917-1932," Business History Review,
XXXV (Spring, 1961), 45-58; Anderson, Presidents' Men,
pp. 26-7.

 

49Kirkendall, "Berle," pp. 45-55.

SOLindley, Roosevelt Revolution, pp. 308-10;
Schlesinger, Old Order, p. 400? Rosenman COHC, pp. 112-13;
Warburg COHC, pp. 234:5.

 

 

51Tugwell, Brains Trust, p. 129; Berle and Faulker
memorandum, n.d. [May l932/, A. A. Berle Mss, in Mrs. Berle's
possession, N.Y.C.; and interview with Adolf A. Berle,
June 1969, N.Y.C.

 

52Berle to "R.M.," Nov. 10, 1932, Moley Mss, Box 5;
and Moley, New Deal, pp. 229-31, for paraphrase.

53Berle to Moley, Nov. 23, 1932, Moley Mss, Box 1;
Berle to FDR, Dec. 22, 1932, OF 31; Moley Diary, Jan. 13.

54Berle to FDR, Jan. 31, Moley Mss, Box 5.

55Moley Notebook, n.d. [Feb. 1—37, and Diary, Feb. 8;
Tugwell Diary, Feb. 15.

56Lindley, Roosevelt Revolution, pp. 309-10; interview
with Berle, June 1969.

 

 

57Tugwell, Brains Trust, p. 520.

58Freidel, Trium h, pp. 362—3; Lewis H. Kimmel,
Federal Budget and Fiscal Policy,‘l]89;}958_(Wash., D. C.:
Brookings Institution, 1959), pp. 175-6, 215.

59N. Y. Times, Feb. 24; Bernice Cosulich, "Mr. Douglas
of Arizona: Friend of Cowboys and Kings," Arizona Highways,
XXIX (Sept. 1953), 2—6; Morris Markey, "He's Got Hi§ Hand in
Your Pocket," American Magazine, CXV (June, 1933), 22-3, 77;
letter from L. W. Douglas, July 26, 1971.

 

 

 

60Williams (Ariz.) News, Sept. 30, 1932, Douglas to
Moley, May 4, 1964, both LeW1s W. Douglas Mss, U. of Arizona;
and interview with Douglas, Feb. 1970.

470

(pages 104—115)

61Tugwell Diary, Dec. 25, 1932; interview with Douglas,
Feb. 1970; Douglas to FDR, Dec. 30, 1932, Douglas Mss.

62FDR to John N. Garner, Jan. 26, in PL: 1928-45,
322-3; Moley, Seven Years, p. 84, and Diary, Jan. 3776;
James F. Byrnes, All In One Lifetime (N.Y.: Harper, 1958),
p. 70; Tugwell Diary, Jan. 13; Edmond D. Coblentz, William
Randolph Hearst: A Portrait in His Own Words (N.Y.: Simon &
Schuster, 19527, p. 149; interviéw with Douglas, Feb. 1970.

 

 

 

63FDR to Sherley, Jan. 17, in PL: 1928-45, 321;
Tugwell Diary, Dec. 29, 1932; Byrnes,ILifetime, p. 67;
N. Y. Times, Feb. 24.

 

 

64Douglas memorandum, Feb. 18, Douglas Mss;
N. Y. Times, Feb. 24.

 

65Interview with Douglas, Feb. 1970; longhand state—
ment for press, Feb. 22, Douglas Mss.

66Moley Diary, Jan. 22, 23; Tugwell Diary, Jan. 24.

67M61ey Diary, Jan. 22; James P. Warburg, The Lon
Road Home: The Autobiography of a Maverick (Garden City, N.Y.:
Doubleday, 1964), pp. 105-6, and Warburg COHC, pp. 68-9.

 

68Moley Diary, Jan. 23, 24; Warburg, Long Road HOme,
p. 106.

 

69Carter, New Dealers, pp. 119-20; N. Y. Times,
March 17; Tugwell Diary, Jan. 29.

 

 

7OTugwell Diary, Jan. 29, Feb. 4, 7, 12; Moley Diary,
n.d. mid-Febi7; Warburg, Long Road Home, pp. 106-7.

 

71Warburg, Long Road HOme, pp. 106-7, and COHC,
pp. 90-2.

 

72Richard Polenberg, Reorganizing Roosevelt's Govern-
ment: The Controversy over Executive'ReorgeniEatiOn, I936-
1939 (Cambridge: Harvard U. Press, 1966), esp. pp. 35ll,
l9l-5; Anderson, Presidents' Men, pp. l-ll.

 

 

CHAPTER IV (pages 116-117)

1Tugwe11 Diary, March 31; PPA: 1933, 74; N. Y. Times,
March 17.

 

 

471
(pages 117-131)

2Wi1s6n COHC, pp. 940-1; Tugwell to FDR, March 17,
OF 1; Frankfurter to FDR, March 18, PPF 140.

3Freide1, Triumph, p. 192.
4Moley Notebook, Jan. 19.

5Tugwell Diary, Feb. 18, italics added.

6Mo1ey Diary, Feb. 21, 24.

7Tugwell Diary, Feb. 27; Frankfurter to Moley,
Feb. 9, Felix Frankfurter Mss, Box 355, LC; Pittman memorandum
to FDR, March 2, Key Pittman Mss, LC; Feis, 1933, pp. 117-19.

8sch1esinger, Old Order, p. 479, and note 29.

 

9F. G. Awalt, "Recollections of the Banking Crisis of
1933," Business History Review, XLIII (Autumn, 1969), 363-9;
Wyatt to Ballantine, Aug. 1, 1944, Walter Wyatt Mss, in
Wyatt's possession, Wash., D. C.; Moley, New Deal, pp. 214-20.

 

10Wyatt Contemporaneous Notes, March 2, Wyatt Mss.
11M61ey, New Deal, pp. 145-53; Feis, 1933, pp. 80-6.

leyatt Notes, March 3-4, Wyatt to Moley, March 16,
1966, Wyatt Mss.

13Charles S. Hamlin Diary, March 2, and also March 1-2,
Hamlin Mss, LC; E. A. Goldenweiser Diary, March 2, 3, Golden-
weiser Mss, LC; Chester Morrill COHC, pp. 244-6; Wyatt Notes,
March 2, 3, Wyatt Mss; interviews with Walter Wyatt, May 1970,
Wash., D. C. These interviews have been transcribed and form
part of the Wyatt COHC, in process.

14Warburg COHC, pp. 290-4.
15N. Y. Times, March 3, 5.

 

161bid., March 4, 5; Tully, F.D.R., pp. 68-9; E. w.
Starling, Starling of the White House (N.Y.: Simon & Schuster,
1946), pp. 305-6; Feis, 1933, pp. 95-7; Literary Digest, CXV,
March 11, pp. 5-7; Turnley Walker, Roosevelt and the Warm
Springs Story (N.Y.: Wynn, 1953), pp. 213-14; PPA: 1933,
11-16, italics added; "The Hundred Days," Encyclopaedia
Britannica film, U. of South Carolina Audiovisual Center.

 

 

 

 

17Feis, 1933, p. 96; F. W. Wile broadcast transcript,
sent to Early, March 6, PSF 55; Literary Digest, CXV,
March 11, p. 5; New Republic, LXXIV (March 15), 113-14.

 

 

472

(pages 131-141)
18N. Y. Times, March 5.

 

19Walker, Warm Springs Story, pp. 213-14; Daniel M.
Roper, Fifty Years of Public Life (Durham, N.C.: Duke U.
Press, 19417, p. 271; Starling, White House, pp. 305-7; and
on confidence and atmosphere also see Jay P. Moffat Diary,
April 26, in Moffat Mss, Harvard U.; Time, XXI, March 13,
pp. 11-12.

 

 

 

20Awalt, "Recollections," 347—71, esp. pp. 360-3;
Goldenweiser Diary, March 5; interview with Berle, June 1969.
Berle quoted from his notes, some of which are cited, taken
during the several days of bankers' conferences; and this
interview has been transcribed and is part of the Berle COHC,
in process. For other published accounts, see A. A. Ballan-
tine, "When All the Banks Closed," Harvard Business Review,
XXVI (March, 1948), 129-43; and Moley, New Deal, Ch§. 8-I5.

 

21Interview with Ralph Robey, May 1970, Wash., D. C.;
Moley Diary, March 15, and Seven Years, 149-50; Warburg
Journal, March 15, 8:00 a.m., and COHC, p. 140.

 

22Moley Diary, March 5; John H. Sharon, "The Fireside
Chat," F.D.R. Collector, I (Nov. 1949), 5-6.

 

23FDR Diary, March 5, Roosevelt Library.

24Moley Diary, March 5; Hamlin Diary, March 5.

25Wyatt Notes, March 5.

26Raymond C. Clapper Diary, March 5, in Clapper Mss, LC.

27George F. Warren Diary, March 5, italics added, in
Warren Mss, Cornell U. Also see F. A. Pearson, W. I. Myers,

and A. R. Gans, "Warren as Presidential Adviser," Farm
Economics, CCXL (Dec. 1957), 5998-5610.

 

28Tugwell, Brains Trust, pp. 56-7, and Diary, Jan. 14;
Coblentz, Hearst, p. 150; Warburg COHC, pp. 90-1.

 

29PPA: 1933, 17-18; N. Y. Times, March 6.

 

 

303123. XXI, March 13, pp. 11—12.

31PPA: 1933, 19—20; N. Y. Times, March 4, on Morgenthau.

 

 

32FDR Diary, March 6; interview with Douglas, Feb. 1970;
Caroline Bird, "Day the Money Stopped," Look, XXVII (March 12,
1963), 84; See Moley, Seven Years, p. 167, for another inter-
pretation of the origins of the "Children's Hour."

 

473

(pages 141—151)

33James A. Farley, Jim Farley's Story (N.Y.: Whittle-
sey House, 1948), p. 39; Ickes, Diar , I, 5, italics added.
The "again" refers to Sunday's informal Cabinet meeting.

 

34Moley Diary, March 7, and New Deal, pp. 171-2.
35Awalt, "Recollections," pp. 360-1.
36Goldenweiser Diary, March 4, italics added.
37Wyatt, "Skeleton Outline," March 5, Wyatt Mss.
38Awalt, "Recollections," p. 363, note 3.

39Warburg Journal, March 5-8; Gardner Jackson COHC,
pp. 168—70.

4OGoldenweiser Diary, March 6, "Monday Night,"
italics added; Awalt, "Recollections," pp. 362-3; Ballantine,
"Banks Closed," pp. 138-9.

41Moley, Seven Years, pp. 151—2, and New Deal,
pp. 171—2.

 

42Moley Diary, March 7.

43Wyatt Notes, March 6, 7; Hamlin Diary, March 7;
Moley, New Deal, pp. 172-80.

44Lindley, Roosevelt Revolution, pp. 64—9; interview
with Douglas, Feb. 1970; Literary Digest, CXV, Jan. 14,
pp. 3-5, March 4, pp. 7-8, MarEh I8, p. 9; N. Y. Times,
March 15.

 

 

 

45Tuiiy, F.D.R., pp. 89-91; PC #1, March 8, italics
added; Lindley, Roosevelt Revolution, pp. 114-15.

46Jackson COHC, pp. 409-10; Literary Digest, CXV,
March 25, p. 10.

 

47Byrnes, Lifetime, pp. 73-4; Tully, F.D.R., pp. 89—91;
N. Y. Times, March .

 

48Douglas memo for McIntyre, March 7, OF 79; interview
with Douglas, Feb. 1970; Douglas to Moley, May 4, 1964,
Moley-Douglas draft of economy message, March 8, Douglas Mss;
Moley Diary, March 8.

474
(pages 151-159)

49Tugwell Diary, March 31 (his only entry for March),
and Democratic Roosevelt, pp. 272-3; Henry A. Wallace, New
Frontiers (N.Y.: Reynal, 1934), p. 162; Russell Lord, Th3—
Wallace of Iowa (Boston: Houghton Mifflin, 1947), p. 327?
George S. Peek Diary, March 9, Peek Mss, U. of Missouri;
Jones COHC, 548.

 

 

 

50McIntyre memo, March 8, OF 259; LaFollette and
Costigan to FDR, March 9, OF 230; Schlesinger, New Deal, p. 5.

51Jones COHC, pp. 623-4; Byrnes, Lifetime, p. 74;
N. Y. Times, March 9.

 

52Wyatt Notes, March 8, Wyatt Mss; interview with
Wyatt, May 1970.

53Coblentz, Hearst, pp. 146-51; Creel, Rebel,
pp. 271-3; Frankfurter to Moley, Feb. 28, Frankfurter Mss,
Box 355; F. Perkins, Roosevelt, pp. 278-9, confirmed Creel's
mention of the social security idea, although like utilities
control and major tax reform, it too was not enacted until
1935.

 

54FDR longhand memorandum, n.d. [Marcm7,.Moley Mss,
Box 5. The likely date of this document is the evening of
March 4, when FDR retired after the White House tea. The
reasons for this are: (l) preparations for the Governors
Conference were not begun until after FDR and Moley arrived
in the capital on March 2; (2) Moley filed it away with his
Governors Conference materials, which were last used on the
morning of the 6th; (3) March 2 and 3 for FDR were jammed
with callers and with ill-fated liaison efforts with the
Hoover administration; and (5) FDR's Diary indicated that he
had little time for such contemplative work on either
March 5 or 6.

55Freide1, Triumph, pp. 60-2; Tully, F.D.R., pp. 88-9;
and see Max Freedman, annot., Roosevelt and Frankfurter:
Their Correspondence, 1928-1945) (Boston: Little, Brown,
1967), PP. 104, 105:6, 108-9, 122.

 

 

56On Morgenthau, see Jones COHC, pp. 544-6, and
Myers OH, pp. 150-1; on Roper, see Michael E. Parrish,
Securities Regulation and the New Deal (New Haven: Yale U.
Press, 1970), p. 44, and Earl Latham, The Politics of Rail-
road Coordination, 1933:1936 (Cambridge, Mass.: Harvard U.
Press, 1959), p. 37.

 

 

 

57E. P. Herring, "First Session of the Seventy-third
Congress, March 9, 1933, to June 16, 1933," American
Political Science Review, XXVIII (Jan. 1934), 65-70.

 

475

(pages 159-168)

58Wyatt Notes, March 9; N. Y. Times, March 10.

 

59CCC's newspaper, Ha py Da s, Sept. 30, RG 35, NA;
Rucker memorandum, March ll, OF 268; John A. Salmond, Tme
Civilian Conservation Corps, 1933-1942: A New Deal Case
Study (Durham, N.C.: Duke U. Press, I967), esp. pp. 95I0.

 

60PPA: 1933, 45—7.

61Happy Da s, Sept. 30, RG 35; Rucker memorandum,
March 11, OF 268. Ickes, Diary, I, 5, mistakenly dated this
Y

meeting on the 10th, probab ue to his having no entries
on March 8-9.

 

62Walker, Warm Springs Story, pp. 67, 99, 304, 308-9;
Wehle, Hidden Threads, p. I16;*Blum, Morgenthau, 1, 25-7;
Salmond, 999, pp. 6-9; B. Roosevelt, Remember, p. 135;
Happy Days, Oct. 14, RG 35, NA; Harry Barnard, Independent
Man: The Life of Senator James Couzens (N.Y.: Scribner's,
W537 P. 223.

 

 

 

 

63F. Perkins, Roosevelt, p. 177.

 

64Interview with Douglas, Feb. 1970.

65Moley, Seven Years, p. 153; PPA: 1933, 49-51;
McIntyre memo for FDR, March 10, Early memo for FDR, March 11,
[Douglas7 Memo for FDR, March 11, all OF 259; Literarprigest,
CXV, March 25, pp. 5-6; Congressional Record, 73 Cong., lst
Sess. (March 11), p. 214.

 

 

 

 

66Ickes, Diar , I, 5. Probably this was the discussion
referred to by Farley, Farley's Story, p. 39, which he remem-
bered occurring on Tuesday.

 

67PC #2, March 10; N. Y. Times, March 11.

 

68V. Perkins, Agriculture, 36-8; Wilson COHC,
pp. 902-4.

 

69Wi1son COHC, pp. 920—2; Wallace, Frontiers,
pp. 163-4.

 

70Ezekiel to Lee, to O'Neal, both March 7, RG 16, NA;
Peek Diary, March ll-16. There is no contemporary evidence
that Jerome Frank, later AAA's general counsel, participated
in the drafting.

71Moley Diary, March 9, l4; Peek Diary, March 15, 16;
Tugwell Diary, March 31; V. Perkins, Agriculture, pp. 28-9.

 

476

(pages 168—175)
72PPA: 1933, 59—60. 73M61ey, New Deal, pp. 172—4.

 

74Sharon, "Fireside Chat," pp. 14-15.

75"Notes of a Conversation Aug. 1, 1944, with Golden-
weiser Re the Bank Holiday," Wyatt Mss.

76Charles Michelson, The Ghost Talks (N.Y.: Putnam's,
1944), pp. 56-7; A. A. Ballantine, "The Ghost and the Banks,"
New York Herald-Tribune, Aug. 23, 1944; Moley, Seven Years,
p. I55, and note.

 

 

 

77Awalt, "Recollections," pp. 369-70.

78Samuel Rosenman, Working With Roosevelt (N.Y.:
Harper, 1952), pp. 92-3.

 

79Ibid.; Tu11y, F.D.R., p. 92; Sharon, "Fireside
Chat," pp. 3-20; N. Y. Times, March 13; PPA: 1933, 61—5,
italics added.

 

 

80N. Y. Times, March 29; PPA: 1933, 66-7. Lindley,
Roosevelt Revolution, p. 91, placed these events before the
Broadcast and named Howe as the secretary; but since he wrote
later in 1933 and was not present on March 12, Rosenman's
version is more plausible--although he did not include it in
his memoir.

 

 

 

81N. Y. Times, March 14, for Robinson's instructions;
Lindley, Roosevelt’Revolution, p. 91; Herring, "First
Session," pp. 72-3; Schlesinger, New Deal, p. 13.

 

 

 

82N. Y. Times, March 6, for Rainey interview; Literar
Digest, CXV, Feb. 25, p. 6, March 4, pp. 9-10. For legalizeg
beer as an FDR objective during the interregnum, see Moley
Diary, Jan. 3; and Lindley, Roosevelt Revolution, pp. 47-8.

 

83N. Y. Times, March 14-17; Baruch to Senator w. G.
McAdoo, March 157 Baruch Mss.

84Giannini cable to Jesse Jones, March 14, McIntyre
cable to Giannini, Giannini cable to McIntyre, both March 15,
Roy Roberts to Early, March 13, all OF 230; Eugene Meyer
COHC, A102; Ira T. Smith and Joe A. Morris, "Dear Mr. Presi-
dent...": The Story of Fifty Years in the White House Mail-
room (N.Y.: Messner, 1949), p. 214; New Re ublic, LXXIV
(March 22), 141; Clapper Diary, March l7. FDR‘s average mail
per day soon dropped to between 4,000 and 8,000 pieces during
the New Deal years, while Hoover's average for 1929—33 was
500-800 daily. See Leila A. Sussmann, "FDR and the White
House Mail," Public Opinion Quarteriy, XX (Spring, 1956), 5-6.

 

477

(pages 175-179)

85Literary Digest, CXV, Feb. 25, pp. 5-6, March 4,
pp. 28-32; Lihdley, Roosevelt Revolution, pp. 96-7.

 

 

86See Perkins, Wallace, Ickes, and Dern memorandum to
FDR, March 15, Moley Mss, Box 60; F. Perkins, Roosevelt,
pp. 183-4; Moley, New Deal, pp. 268-9.

 

87PC #4, March 17.

88New Republic, LXXIV (March 29), 169-70.

 

CHAPTER V (pages 180-189)

1Morgenthau to FDR, March 20, OF 27; Blum,
Morgenthau, I, 43.

 

2PC #12, April 14.

3N. Y. Times, April 14.

 

4Ibid., April 12-14, and editorials; Literary Digest,
CXV, April—l2, pp. 5, 9; Georgia L. Peek Diary, n.d., p. l6,
Peek Mss, U. Missouri.

 

5Coblentz, Hearst, p. 149; Schlesinger, New Deal,
p. 10; V. Perkins, Agriculture, pp. 58, 191; Leuchtenhurg,
Franklin D. Roosevelt, pp. 36-8.

 

 

6Douglas transcript, "Economy and Human Values,"
March 18, Douglas Mss; FDR to Daniels, March 27, in
FL: 1928-45, 339-40.

7N. Y. Times, March 21; Literar Di est, CXV,
March 25, p. 6? New Republic, LXXIV (March 22), 141-2;
interview with Douglas, Feb. 1970.

 

 

8N. Y. Times, March 16; The Nation, CXXXVI (March 22),
301; New Republic, LXXIV (March 225, l4l-2, (March 29), 170.

9PC #10, April 7; FDR to House, April 5, Edward M.
House Mss, Drawer 16, Yale U.; N. Y. Times, April 1, 3;
Warburg COHC, p. 346; Ickes, Diary, I, I6; Tugwell Diary,
April 3; Douglas memo to FDR, March 28, Douglas draft of
reply, April 5, both OF 79, Douglas to Howe, May 1, OF l-H.

 

10N. Y. Times, April 12, 23, May 11, 17; PPA: 1933,
168; Herring, "First Session," pp. 82-3.

 

11Moley, Seven Years, p. 162.

 

478

(pages 189-201)

12Moley Notebook, March 18.

13Moley, New Deal, pp. 230-2.
14N. Y. Times, March 14; Horace Albright COHC,

pp. 521-3; J. J. Huthmacher, Senator Robert F. Wagner and the
Rise of Urban Liberalism (N.Y.: Atheneum,)l968), pp. 93-l02.

 

 

 

15N. Y. Times, March 11, 12; PC #2, March 10.

 

16Moley Diary, March 14, and Seven Years, pp. 172-5.

 

17FDR memo to Secretaries, March 14, OF 268; Moley,
Seven Years, pp. 173-4, and New Deal, p. 268; Salmond, CCC,
pp. 9—12.

 

18Secretaries memo for FDR, March 15, Moley Mss,
Box 60; Moley Notebook, March 15, and New Deal, pp. 268—9;
F. Perkins, Roosevelt, pp. 183-4.

 

19Douglas personal memorandum for FDR, June 30,
Douglas Mss; interview with Douglas, Feb. 1970, letter from
Douglas, Dec. 5, 1970.

 

20Moley, New Deal, pp. 268-70; PPA: 1933, 80-1;
Salmond, CCC, pp. - .

21F. Perkins, Roosevelt, p. 197; Warbourg Journal,
March 19; Moley Diary, March 24.

 

22Moley, Seven Years, p. 173, and note; PC #3, March 15,
#7, March 29, #12, April 14.

23Moley, Seven Years, p. 175. Moley was less than a
gO-between on issues, for example, like intranationalism. See
F. Perkins, Roosevelt, pp. 197-8, 273, on FDR, Douglas and
public works. Douglas pressed more for orderly spending than
for a balanced budget; and the fact that Cabinet members like
Perkins, Wallace, and Ickes had to "continually" urge FDR to
back public works (p. 197) suggests that their arguments were
less than convincing to him--which indicates both his cautious
fiscal views as well as the influence of Douglas.

 

 

 

24N. Y. Times, March 13, 20; Huthmacher, Wagner,
pp. 139-4l.

 

258ee Salmond, CCC, pp. 13-25, for an excellent
analysis of CCC'S passage; N. Y. Times, March 23-31; PC #9,
March 29.

 

479
(pages 201—212)

26W.H. memo, March 31, OF 259; N. Y. Times, April 1.

 

27éD'ouglas7 memo for the Sec. of War, April 3, Howe
Mss, Box 7, Roosevelt Library; FDR work chart, April 3,
OF 268; Salmond, CCC, pp. 26-31.

28Douglas memo for FDR and order draft, March 27,
OF 285-C; FDR note on Order 6102, n.d., OF 161; Col. Duncan
Major to Fechner, with FDR comment, April 5, Howe Mss,
Box 59. On Howe, see Roper to Howe, April 4, OF 268; and
Rollins, Roosevelt and Howe, pp. 402-6.

 

29Salmond, CCC, pp. 31-45.

3OPPA: 1933, 93—4, 100-1, 122—3, 135-6; FDR memo to
Garner, April 19, OF 12.

 

31Michael E. Parrish, Securities Regulation and the
New Deal (New Haven: Yale U. Press, 1970), pp. 43:4, and
chs. l-2 for the best background of securities legislation;
and PPA: 1933, 94.

 

 

32Parrish, Securities Regulation, pp. 44-52; Huston
Thompson Diary, March 13, Thompson Mss, LC; Clapper Diary,
March 20.

 

33Thompson Diary, March 19; Moley, Seven Years,
pp. 177-8.

 

34Moley, Seven Years, p. 178. Also see Moley, New
Deal, pp. 310-11; ParriSh, Securities Regulation, pp. 46:7.

 

 

35Warburg Journal, March 29.

 

 

36PPA: 1933, 94—5; Parrish, Securities Regulation,
pp. 47-57. . '

37Lindley, Roosevelt Revolution, p. 105.

 

38PC #7, March 29; and #8, March 31, for his later
comment.

39PPA: 1933, 122-3; W.H. memo for FDR, April 8,
OF 259; N. Y. Times, April 11. Also see Literary Digest,
CXV, April 22, p. 6.

 

 

 

4OPreston J. Hubbard, Origins of the TVA: The Muscle
Shoals Controversy, 1920-1932 (N.Y.: NOrton, 1961), esp.
ch.)l2, pp. 3l2-l5; PPA: 1933, 123-9; Literary Digest, CXV,
Feb. 18, pp. 5-6.

 

 

 

 

480
(pages 212-222)
41Eric F. Goldman, Rendezvous With Destiny: A History

of Modern American Reform (N.Y.: Vintage, rev. ed., I956),
p. 263.

 

 

42N. Y. Times, April 12-14; Moley, New Deal, pp. 330-1;
Roy Talbert,’"Human Engineer: Arthur E. Morgan and the
Launching of the Tennessee Valley Authority" (M.A. Thesis,
Vanderbilt U., 1967), pp. 10-17.

 

43A. E. Morgan memorandum, "Statement of My Relations
with the President," July 1, 1938, Morgan Mss, Antioch
College.

44Morgan memo to FDR, April 12, PPF 290; Morgan,
"Relations," pp. 4-5; Talbert, "Human Engineer," pp. 17-18.

45See PC #5, March 22, #6, March 24, #10, April 7;
PPA: 1933, 135-6.

 

46Giese's to FDR, March 25, OF 266; McCormack to FDR,
March 30, FDR to McCormack, April 4, Horace Russel to FDR,
April 11, all OF-644-Misc.; Webb to Howe, March 31, April 6,
both OF 644; Stevenson to FDR, April 5, W.H. [Morgentham7
memo for Early, April 6, both OF 27; Huthmacher, Wagner,
pp. 141—2; N. Y. Times, April 12-13.

 

47N. Y. Times, March 24; Fred Pasley cable to Early,
March 26, OF 50-Misc.; J. Roosevelt, F.D.R., pp. 102-3.

 

48See above, pp. 188-91; Moley Notebook, March 18.
Also see PC #4, March 17, on arms embargo.

49John A. Garraty, Interpreting American History:
Conversations with Historians (NTY.: Machillan, 1970), II,
95. (This prOhIem of deciSion-making was not limited to the
State Department in 1933. Rather, more evidence is available
on foreign affairs than on other government departments.

 

 

5OSee ch. 2 on Moley; Morgenthau Diary, June 30; and
see Pratt, Hull, 1, 9, on political circumstances surrounding
Hull's appOintment.

51J. P. Moffat Diary, March 6, Moffat Mss, Harvard U.;
Moley to Mrs. Sarah Hess, March 14, Moley Mss, Box 5; Warburg
Journal, March 24.

52Feis, 1933, pp. 101—2, italics added; Sir Frederick
Leith-Ross, Money Talks: Fifty Years of International Finance
(London: Hutchinson, 1968), p.7l65. LeitheRoss compared
FDR's "Brains Trust" to Lloyd George's "garden suburb,"
noting that with Moley were Feis, Tugwell, and Taussig, "all

481
(pages 222-228)

competent economists but with little practical experience of
finance," and that the "most practical financial expert" was
Warburg (pp. 165—6). Feis' memo, incidentally, was inspired
by a remark which Warburg recorded in his Journal, March 25,
1:00 p.m. When Feis told Moley he should prepare for
Monday's talk with the British, Moley jokingly replied "that
an Irishman never needed to prepare to talk to an Englishman
and that his grandmother would roll over in her grave if he
should do any preparing."

53Weh1e, Hidden Threads, pp. 115-16; Pratt, Hull, I,
27-9; Anderson, Presidentsr Men, pp. 94-5, 8-11; and Warburg
COHC, pp. 230-1.

 

 

54Moffat Diary, March 1. "Colonel Howe" may have been
a misspelling of "Colonel House," who was affiliated with the
other Wilsonians named, Welles and Davis. Howe was not.
Moley's Diary entries at least as late as April 24 indicate
that he and Howe worked closely together.

55Feis, 1933, p. 101; Moley Diary, March 25.

56Warburg COHC, pp. 225—7; Moley Diary, April 14.
During this period Hull's desk diary (Hull Mss, Box 67, LC)
recorded appointments for Moley on March 5, 10, 14, 15 (2),

20, 22, 24 (2), 27, 29, and April 3, 4, 7, 8, 15, 18 (2);
and this pattern continued until late May.

57Moffat Diary, April 17; Sternsher, Tugwell, pp. 223—37.
58FR: 1933, 465-71.
59Moley Diary, March 6, 12, 13, 20.

60FR: 1933, 472-3; Moley Diary, March 22, and New Deal,
pp. 411-14.

61Warburg Journal, March 13, 14, 15 (8:00 a.m.,
5:15 p.m.).

62Warburg, Long Road Home, pp. 111-13, and Journal,
March 19-23.

 

63Warburg Journal, March 24, 9:00 p.m. On Bullitt,
see Moley Diary, March 14, 15, and FDR memo to Hull, n.d.
[March 2T7, Moley Mss.

64Feis, 1933, pp. 111—12; Moley Diary, March 25, and
Notebook, n.d. March 227; Warburg COHC, pp. 253-6, "Memoran-
dum for R. M. Silver," March 25; Tugwell Diary, April 2;
Baruch to Byrnes, April 24, Baruch Mss.

 

482
(pages 228-239)
65Moley Diary, March 27; Warburg Journal, March 29.

66Moley Diary, March 30, and Notebook, March 29;
Warburg Journal, March 29, 30.

67Moley Diary, March 31, and Notebook, March 31.

68FDR to Hull, April 1, in FDRFA: 1933-34, 31—2;
PC #9, April 5.

 

69Warburg Journal, March 29; Feis to Frankfurter,
April 3, Frankfurter Mss, Box 325; Tugwell Diary, April 2.

70FDRFA: 1933—34, 35—9; Warburg Journal, March 31,
April 3--9:00 p.m.

 

71Warburg Journal, April 4, 9:00 p.m.
7zipig., April 13, 8:00 p.m.; Feis, 1933, p. 112.

73Moley Diary, April 7, 17; Feis to Frankfurter,
April 3, l3, l7, Frankfurter Mss, Box 325; Warburg Journal,
April 10, 8:00 a.m.

74Moley Diary, March 25, April 10, 17, and Seven Years,
p. 198; Warburg Journal, April 3, 13; Pratt, Hull, I, I-I2;
PPA: 1933, 129-32. "“‘

 

 

75PPA: 1933, 116; FDRFA, 1933—34, 40; Moley, Seven
Years, p. I98; Warburg Journal, April 7, 9:30 p.m.

 

 

76Phillips to Davis, April 8, Norman Davis Mss,
Box 47, LC; Moffat Diary, April 7, for FDR comment to
Phillips; Minister of Foreign Affairs (signed by Robert de la
Baume) to the Minister of Finance, April 11, F3 1412, French
Ministry of Finance Archives, Paris; N. Y. Times, April 9.

 

77Feis to Frankfurter, April 13, Frankfurter Mss,
Box 325.

78Coblentz, Hearst, p. 150.

79V. Perkins, Agriculture, p. 49; N. Y. Times,
March 16, 20.

 

 

8OV. Perkins, Aggiculture, pp. 36-48, 49-78, presents
an excellent analysis of AAATand its enactment, respectively.

 

81Moley Notebook, March 20; PC #3, March 15, #14,
April 21; PPA: 1933, 74.

 

483

(pages 239-248)

82V. Perkins, Agriculture, pp. 65—9, 53-4; Literary
Digest, CXV, April 1, pp. 6-7.

 

83N. Y. Times, March 23; Marvin Jones COHC, p. 562;
Peek Diary, March 25, 28; V. Perkins, Agriculture, pp. 45-56.

84V. Perkins, Agriculture, pp. 62-71; Peek Diary,
March 25; N. Y. Times, March 25-31; PC #5, March 22, #6,
March 24; PPA: I933, 74.

85N. Y. Times, March 4; Marvin Jones COHC, pp. 644-6;
Myers OH, pp. ISO-l, 302-3; Byrnes to Oliphant, March 13,
Oliphant to Byrnes, March 15, Byrnes Mss, Misc. 1931—33,
Clemson U.; Blum, Morgenthau, 1, 42-5.

 

 

 

 

 

 

86V. Perkins, Agriculture, pp. 50, 70-1.
87N
March 23.

 

. Y. Times, March 14, 24; Myers Engagement Book,

 

88PPA: 1933, 84-5; N. Y. Times, March 27, 28; Wann,
President as Chief Administrator, pp. 22-5; Literary Digest,
CXV, April 8, p. 6.

 

 

 

 

89McIntyre memo for FDR, March 30, 9:15 a.m., OF 259;
N. Y. Times, April 1.

 

90Letter from Myers, Sept. 23 and 28, 1970; Myers
Engagement Book, March 22, 23, 28; N. Y. Times, March 30;
PC #8, March 31; Guy Greer memo for McAdOo, March 30,
William G. McAdoo Mss, Box 383, LC.

 

91N. Y. Times, April 3, 4; Literary Digest, CXV,
April 15, p. 7; V. Perkins, Agriculture, pp. I0-13.

 

 

 

92Letter from Myers, Sept. 23 and Nov. 9, 1970; Myers
Engagement Book, April 1.

93v. Perkins, Agriculture, p. 69; PPA: 1933, 100—1.

 

 

94N. Y. Times, April 7-14; Warren Diary, April 6, 6-12.

 

95Moley Diary, April 5, and Notebook, April 6; McIntyre
memo for FDR, April 5, W.H. memo for FDR, April 6, both OF
259; Warburg Journal, April 10, 6:00 p.m.

96N. Y. Times, April 6, 8.

 

97FDR to House, April 5, House Mss, Dr. 16; PC #10,
April 7, #11, April 12; Tugwell Diary, April 2, 3.

484

(pages 248-250)

98See PC #6, March 24; Baruch to FDR, April 10 ("Not
sent"), Baruch Mss; Freidel, Triumph, pp. 362-4; Kimmel,
Federal Budget and Fiscal Policy, pp. 177-8, 214-15.

99On "Bunny," see Moley, Seven Years, pp. 202—3;
Warburg Journal, April 12 memorandum (also, COHC, pp. 443-6),
and April 14, 8:30 and 11:30 a.m.; Leith-Ross, Money Talks,
p. 164.

 

 

ICON. y, Times, April 12, 15; Lindley, Roosevelt
Revolution, pp. 116-19; Feis, 1933, pp. 122-4.

101

 

 

 

Lindley, Roosevelt Revolution, p. 113.

 

CHAPTER VI (pages 252—259)

1Cordell Hull, The Memoirs of Cprdell Hull, I (N.Y.:
Macmillan, 1948), 226-7; Moley Diary, May 15? Thompson Diary,
May 16; Moffat Diary, May 13—15.

2PPA: 1933, 185-8; Moffat Diary, May 14, 15.

 

3PC #21, May 16; Moffat Diary, May 15.

4N. Y. Times, May 17; Moffat Diary, May 16.

 

5N. Y. Times, May 13; FDRFA: 1933-34, 128, note 1.

 

 

6Morgenthau Diary, May 15.
7Warburg Journal, May 15, 10:00 p.m.

8Moley, Seven Years, pp. 213-15.

 

9Ibid., p. 189.

10N. Y. Times, May 17.

 

11See above, pp. 250-1, on inflation; and V. Perkins,
Agriculture, pp. 49-78.

 

12Ibid., pp. 72-3.

13Elmer Thomas, "40 Years a Legislator," unpublished
Ms, pp. 224-6, Thomas Mss, U. Oklahoma.

14Warburg Journal, April 17, 8:00 and 9:30 a.m.

15Moiey Diary, April 18; N. Y. Times, April 18.

 

485

(pages 259-269)

16Byrnes, Lifetime, pp. 76-7; Moley, Seven Years,
pp. 158-9.

 

17Moley Diary, April 18.

18Warburg Journal, April 18, 8:30 a.m.
19Moley Diary, April 18.

20Warburg Journal, April 18, 10:30 a.m.

21Warren Diary, April 12; and see above, pp. 137-8,
on FDR and a managed currency or controlled inflation.

22Ickes, Diar I, 23; Byrnes, Lifetime, p.77;
Thomas to FDR, April 17, with copy of amendment, OF 229, and
Thomas, "40 Years a Legislator," pp. 229- 30, Thomas Mss.
23Warburg Journal, April 18, 8:45 p.m.
24Moley Diary, April 19.
25Warburg Journal, April 18, 8:45 p.m., and COHC,
pp. 502-8; Moley Diary, April 19; and interview with Douglas,
Feb. 1970. Also see Feis, 1933, pp. 124— 30; Moley, Seven
Years, pp. 156-61, and New Deal, pp. 298- 305.
26W.H. memo, April 19, OF 259; PC #13, April 19.
27Moley Diary, April 19.

28Warburg Journal, April 19; PPA: 1933, 141—3.

 

29Warburg COHC, p. 514.

3OLindley, Roosevelt Revolution, pp. 127- 9; Warburg
COHC, pp. 500- 8. The Times, April 20-May 13, continually
referred to the amended far rm bill as the "Inflation Bill,"
or merely "Inflation." See Moffat Diary, April 19, on how
quickly he reinvested away from bonds and utility stocks,
because these were big losers during "real inflation."

 

31Feis, 1933, pp. 125-6; Jordan Schwarz, ed., 1933:
Roosevelt's DeCiSion: the United States Leaves the Gold
Standard (N.Y.: Chelsea House, I969), esp. pp.Tl05-8.

32V. Perkins, Agriculture, pp. 58—9.

 

33Ibid., pp. 73- 8; Charles N. Cawley, "Campaign for
Inflation: Thomas Amendment to the Agricultural Adjustment
Act" (M. A. thesis, U. Oklahoma, 1970), pp. 66- 79.

486

(pages 269-279)

34Feis, 1933, ch. 13; Pratt, Hull, I, 32—4; and see
above, pp. 231-4, on U.S. program.

35Warburg Journal, April 21, 10 3o a.m., and COHC,
pp. 525—32 for aide memoire on "MAJOR AMERICAN OBJECTIVES
AND TACTICAL PROGRAM DIVIDED INTO THREE GROUPS, ECONOMIC,
POLITICAL, DEBTS"; Moley Diary, April 21.

36Warburg, Long Road HOme, p. 121.

 

37PPA: 1933, 145-52, 158-9, 174-5, 206—7, 211-13, 218.
See Feis, 1933, pp. 134-7.

 

38N. Y. Times, April 24, 26; Literary Digest, CXV,
May 6, pp. 6-7.

 

 

39N. Y. Times, May 8, italics added.

 

4OWarburg Journal, April 22; Moley, Seven Years,
pp. 205—6.

 

41Feis, 1933, pp. 142—4.

42Moley, Seven Years, pp. 203, 210—11, and Diary,
May 1, 2; Warburg Journal, May 1, 3:30 p.m., May 2, 5:00 p.m.;
British Foreign Policy: 1933, 797-803.

 

 

43Warburg Journal, May 3, 7:30 p.m.
44Moley Diary, April 24; Tugwell Diary, May 3.

45Warburg Journal, April 26, 1:00 p.m. See also
Tugwell Diary, May 3, on stabilization fund.

46Feis, 1933, pp. 144-6.

47Pratt, Hull, I, 37-8; PPA: 1933, 158-9, 167, 186.

 

48Moley Diary, April 24, and April 17, May 6.
49Moffat Diary, May 12; and see above, pp. 222-3.
50See e.g., Peek Diary, March 12, April 5, 22; Wallace

to Donald R. Murphy, April 20, Wallace Mss, U. Iowa; V. Per-
kins, Agriculture, pp. 79-90.

 

51V. Perkins, Agriculture, pp. 55-6, 87, makes this
assumption. See Schlesinger, New Deal, pp. 46-8, for a
different interpretation.

 

52Morgenthau Diary, May 1.

487
(pages 279-288)
53Peek Diary, May 3; Morgenthau Diary, May 3.
54Paul Appleby COHC, pp. 41—3.
55Morgenthau Diary, May 3, 4.

56Peek to Wallace, May 12, Wallace to Peek, May 12,
both Peek Mss, Box 11; N. Y. Times, May 14.

 

57Wallace to FDR, May 15, OF 1.
58Morgenthau Diary, May 15.

59V. Perkins, Agriculture, pp. 58-9.

 

60N. Y. Times, May 13. 61Ibid., May 20.

 

62Schwarz, Interregnum, pp. 161-73; Huthmacher,
Wagner, pp. 94-102; Searle F. Charles, Minister of Relief:
Harry HOpkins and the Depression (Syracuse, N.Y.: Syracuse U.
Press), pp. 25—37.

 

 

 

63Freidel, Trium h, pp. 217-27; Gertrude Springer,
"The New Deal and the Old Dole," Survey Graphic, XXII (July,
1933), 347-51, 385, 388; Robert S. Sherwood, Roosevelt and
Ho kins: An Intimate Histor (N.Y.: Grossett &”Dunlap, 1948,
, pp. - ; PP : , 39-41.

 

 

 

64Sherwood, Roosevelt and Hopkins, pp. 46-55; Charles,
Minister of Relief, pp. 34-9.

 

 

65Latham, Railroad Coordination, pp. 19-20, 28;
Tugwell Diary, Jan. 11.

 

66Ibid., pp. 1-34; Howard Zinn, LaGuardia in Congress
(N.Y.: Norton Library, 1969 ed.), pp. 254-5; Arthur Mann,
LaGuardia: A Fighter Against His Times, 1882-1933 (Chicago:
U. of Chicago Press, I969 ed.), pp. 32546,733I.

 

 

67PPA: 1933, 13; Latham, Railroad Coordination,
pp. 35-46; Berle to "My Dear Caesar," March 17, PPF7I306;
Warburg COHC, pp. 234-5. See also Berle to "Dear Caesar,"
March 11, Moley Mss, asking for RFC "retainer"; and above,
pp. 133—4, on Berle's difficulties with the White House
during early March.

 

 

68PC #4 through 8, March 17, 22, 24, 29, 31; N. Y.
Times, April 3, 27, 28; W.H. memo, April 1, OF 259; Roper to
McIntyre, April 15, Roper to FDR, April 19, Roper to
McIntyre, April 25, all OF 31; H. P. Willis to Roper, April 7,

488
(pages 288-296)

OF 31-B; Latham, Railroad Coordination, pp. 48-53, including
Eastman quotes.

 

69N. Y. Times, April 29; Ropter to McIntyre, April 25,
Roper to FDR, May 2, both OF 31; Moley Notebook, n.d. May 3 ;
Latham, Railroad Coordination, pp. 52-5, 1-7; PPA: 193 , 15 ,
italics added.

 

 

7ON. Y. Times, May 11; Dill to FDR, May 12 and 13,
W.H. memo, May I3, all OF 31.

 

71See Anderson Presidents' Men, pp. 26-7; Schlesinger,
Old Order, pp. 400-1; Thgwell, Brains Trust, pp. 150-8;
Freidel, Triumph, pp. 197-8; Moley, Seven Years, pp. 23-4,
184.

 

 

 

 

72V. Perkins, Agriculture, pp. 58-9; Huthmacher,
Wa ner, p. 137; Ellis W. Hawley, The New Deal and the Problem
of Monopoly: A Study in Economic Ahbivalence (Princeton:
Pfinceton U. Press, I966), pp. 3-31; Moley, Seven Years,
pp. 184-6; Leverett Lyon, et. al., The National Recovery
Administration: An AnalySis and Appraisal (WaSh.,’D.C.:
Brookings Institution, 1935), pp. 3-7.

 

 

 

 

73Warburg Journal, March 25, 12:15 p.m.; Moulton to
Baruch, March 6, Baruch to Moulton, March 25, both Baruch Mss;
McIntyre memo for Moley, March 28, OF 20; Walker D. Hines to
McIntyre, March 23, OF 466; Moley Notebook, March 9, and
Seven Years, p. 185; Wallace, New Frontiers, pp. 328-9.

 

 

74Warburg Journal, March 24 through April 5, and
April 7, and COHC, pp. 378-80, "Memorandum for R.M.
Industrial Rehabilitation by Reempioyment."

 

75Black to FDR, March 10, OF 272, with FDR's pencilled
notation: "Cabinet tomorrow." But he evidently did not
discuss it; see Ickes, Diary, I, 5.

76N. Y. Times, April 7; Moley, Seven Years, PP. 185-6;
Huthmacher, Wagner, pp. 142-6.

 

 

77F. Perkins, Roosevelt, pp. 197-200; Ickes, Diar , I,
19; Moley, Seven Years, p. 187; N. Y. Times, April 1 , and
see above, pp. 181-2.

 

78N. Y. Times, April 12, 13; F. Perkins, Roosevelt,

 

p. 197.

79Delano to Howe, April 7, PPF 77; PC #12, April 14.

489
(pages 296—305)

80N. Y. Times, April l4, l8; Hawley, Mono ol ,
pp. 21-3; Nation, CXXXVI (April 19), 432. AISO see New
Republic, LXXIV (May 3), 323-4.

81Warburg Journal, April 18, 10:30 a.m.; and Lauck to
Warburg, April 14, Warburg to Lauck, April 18, W. J. Lauck
Mss, Box 3, U. Virginia.

82Huthmacher, Wa ner, pp. 145-7; Lauck, draft of NIRA,
May 1, Lauck Mss, Box 3; N. Y. Times, April 29.

 

83Hawley, Mono ol , pp. 24-5; Draft of "National
Economic Recovery Act," April 21, and draft of NIRA, April 24,
in Douglas Mss, contained no mention of public works—-while
NIRA draft dated April 29 had attached memo which found that
$5 billion of public works to be excessive or unnecessary
when combined with industrial rehabilitation, also in
Douglas Mss; Tugwell Diary, April 21; Dickinson to Moley,
April 26, Moley Mss, Box 10; F. Perkins, Roosevelt, pp. 198-9.

 

84Ralph W. Robey, Roosevelt versus Recovery (N.Y.:
Harper, 1934), pp. 89-94; Hugh Johnsonfi/ "IS IT FUN TO BE
FOOLED?", April, and Baruc to Byrnes, pril 22 ("Not sent"),
Baruch Mss; Warburg Journal, April 28, 12:30 p.m.; Moley,
Seven Years, pp. 187-9; Sternsher, Tugwell, pp. 157-8. On
labor's noninvolvement, see "From Fortune Magazine-~Oct.
1933," Lauck Mss, Box 3.

 

 

85N. Y. Times, April 30, May 1-5; Warburg Journal,
May 1, 10:00 a.m.

 

86Memo for the President, April 6, OF 259; N. Y. Times,
May 5, PPA: 1933, 155—8; Literary Digest, CXV, May 13, p. 5.

 

 

 

87Moley, Seven Years, p. 189, and New Deal, pp. 290-1;
Douglas, "TENTATIVE MRTERIRL," April 20, Douglas Mss.

88PPA: 1933, 160-8, italics added.

 

89Literary Digest, CXV, May 20, pp. 3-4; N. Y. Times,
May 5, 9; Moffat'Diary, May 7; Morgenthau Diary, May 7, 8.

 

 

90Harold L. Ickes, Back to Work (N.Y.: Macmillan,
1935), p. 14.

 

913233., 13; Warburg Journal, May 9.

92Ickes, Diary, 1, 34; Warburg Journal, May 10,
3:30 p.m.; Donald Richberg, My Hero: The Indiscreet Memoirs
of an Eventful but Unheroic Liie (N.Y.: Putnam's, I954),

490

(pages 305-313)

pp. 164-5; Hugh Johnson, The Blue Eagle from Egg to Earth
(Garden City, N.Y.: Doubledhy, 1935), p. 224ilN. Y. Times,
May 10, 11.

 

 

93Tugwell Diary, May 30.

94
Huthmacher, Wa ner, pp. 147-8; Hawley, Mono ol ,
pp. 25-31; Donald RichEerg, The Rainbow (Garden City, N.Y.:
Doubleday, 1936), pp. 106-10.

 

95N. Y. Times, May 14-17; H. I. Harriman to FDR,
May 11, OF 466? Baruch to FDR, April 10 ("Not sent"),
Baruch Mss.

 

96PPA: 1933, 202-4, italics added. The Times, May 18,
headlined this message: "ROOSEVELT OFFERS PLAN—DN_INDUSTRY;
LINKS TO REPEAL."

 

97Feis, 1933, pp. 151-60.

98Literarprigest, CXV, April 1, pp. 3-4, 10-11,
April 8, pp. 1-3, 9, April 22, pp. 10-11, April 29, p. 15,
May 8, pp. 10-11; Fuller to FDR, May 11 (2 memoranda), Owen
Johnson to FDR, May 12, both FDRFA: 1933-34, 172-6, 120-3;
Moffat Diary, May 3, 6, 12.

 

99Frankfurter to FDR, May 9, in FDRFA: 1933-34, 101-2.

 

100See above, pp. 252-5.

101Moley Diary, May 10-13. On publicity, see Time,
XXI, May 8, pp. 9-11, and N. Y. Times, April 14, 29.

 

 

102Moley, Seven Years, pp. 207-9, and article reprinted
as Appendix D.

 

103See PC #19, May 10, #21, May 16.
104Warburg COHC, p. 230.

105N. Y. Times, May 11, 16; Rollins, Roosevelt and Howe,
pp. 386-8.

 

 

CHAPTER VII (pages 314-317)

1Warburg Journal, June 13, and COHC, p. 913.

2Morgenthau Diary, June 12.

491

(pages 317-327)

3PC #30, June 16, and see #27, June 7, on stabiliza-
tion.

4FDR to Long, June 16, in PL: 1928-45, 351-2.

 

5See e.g., Time, XXI, June 19, p. 11, June 26,
pp. 9-10.

6William Phillips COHC, pp. 102—4.

7Talbert, "Human Engineer," pp. 17-19, 23-6; Thompson
Diary, April 21; interview with A. E. Morgan, Oct. 1969,
Yellow Springs, Ohio; Morgan, "Relations," pp. 4-5, Morgan
Mss; FDR to Norris, April 20, OF 44; Ickes, Diary, I, 32-3;
N. Y. Times, May 10, 12, 19.

 

8Talbert, "Human Engineer," pp. 27-33. On power
policies, see Morgan, "Relations," pp. 5-8, Morgan Mss.

9David E. Lilienthal, The Journals of David E.
Lilienthal, I, The TVA Years, 1939-I945 (N.Y.: Harper, 1964),
35-6.

 

 

 

10McIntyre memo for FDR, May 31, OF 42; Floyd Reeves
to Hazel Reeves, June 17, Reeves Mss, personal possession,
East Lansing, Michigan; Lilienthal, Journals, I, 38-9.

11Parrish, Securities Regulation, pp. 48-56.

 

12Ibid., pp. 56-66; FDR memo for Rayburn, n.d.
éhpril 217, Thompson Mss, Box 1; Frankfurter cable to FDR,
pril l4, Moley Mss, Box 11; Warburg Journal, April 17,
8:00 a.m.; James M. Landis COHC, pp. 161-9.

13Parrish, Securities Regulation, pp. 66-70; memoran-
dum, "The Securities Act of 1933," esp. pp. 1-6 (unsigned),
James M. Landis Mss, Box 149, LC; Moley Diary, May 3; Warburg
Journal, May 3, 10:00 a.m.; N. Y. Times, May 6.

 

 

14Thompson Diary, May 5.

15N. Y. Times, May 9; Parrish, Securities Regplation,
pp. 73-88.

 

 

16Ickes, Diary, I, 33, 42.

17Warburg Journal, May 9, 4:30 p.m.; Feis to Howe,
May 10, with memorandum, OF 100-B.

18Morgenthau Diary, May 15.

492

(pages 327-335)

19W.H. memo for FDR, May 8, 5:00 p.m., OF 259;
Frankfurter cable to FDR, May 8, 10:38 a.m., PPF 140; Frank-
furter to Moley, May 10, Frankfurter Mss, Box 355; Richard W.
Child to FDR, May 11, Feis memorandum to Phillips, May 12,
both OF 242; Phillips to FDR, May 12, OF 212; Frankfurter
cable to Moley, May 16, Frankfurter Mss, Box 260; FDR to
Fletcher and Rayburn, May 20, OF 242.

20Landis COHC, pp. 169-72; W.H. memo from Rayburn,
n.d. May 297, OF 242.

2’lLiterary Digest, CXV, June 3, p. 7; FDR to
Wallace B. Donham, May7I9, OF 242; Parrish, Securities
Regulation, pp. 71-2; Moley, New Deal, pp. 306-16.

 

 

 

22Parrish, Securities Regulation, pp. 43-4, 86.

 

23Warren Diary, April 12.
24Moley Notebook, n.d. [Apri1 19—2e7, May 3.

25See e.g., Warren to FDR, with copies for Morgenthau
and W. I. Myers, April 24, OF 229, and FDR further sent
copies to Woodin, Douglas, and Moley; Pearson et. al., "Warren
as Presidential Adviser," p. 5601; Morgenthau Diary, May 2.
On FDR and Thomas amendment, see above, pp. 263-9.

26Fletcher to FDR, May 6, OF 229; Morgenthau Diary,
May 9, for quote, and May 15.

27Moley Notebook, May 9; Frankfurter cable to Moley,
May 10, Frankfurter Mss, Box 355; Warren Diary, May 24;
N. Y. Times, May 27; Nation, CXXXVI (May 10), 518-19.

 

28PC #24, May 26; N. Y. Times, May 30, June 4.

 

29N. Y. Times, June 1; British Foreign Policy: 1933,

 

 

816.

30J. H. Rand for FDR, June 8, OF 229; Warren to
[Morgentham7, June 10, Warren Mss; Pearson et. al., "Warren
as Presidential Adviser," pp. 5621-57.

31Webb to McIntyre, April 24, OF 644; McCormack to
FDR, April 21, FDR to McCormack, April 24, both OF 266.

32Webb to McIntyre, May 25, FDR to Hartley, May 27,
both OF 644; N. Y. Times, June 6.

 

493
(pages 335-345)
33N. Y. Times, June 12, 14; C. L. Harris, History and

Policies Of the Home Owners' Loan Corporation (N.Y.: National
Bureau of Economic Research, 1951), pp. 7:13.

 

 

 

34Marvin Jones COHC, pp. 623-4; Myers Engagement Book,
April 25, 26, May 2, 8, 11, 12, 20, 22-25; Blum, Morgenthau,
I, 44.

 

35Morgenthau Diary, May 22, 9:00 a.m., May 23, 25.

36Ibid., May 29; N. Y. Times, June 1; Myers Engagement
Book, May 27, 29-31, June 5, 6.

 

37Morgenthau Diary, June 5, 9, for quotes; also see
Blum, Morgenthau, I, 47-8, which erroneously credited
Morgenthau with "adamacy" over the salaries.

 

38Latham, Railroad Coordination, pp. 56-79; N. Y. Times,

 

 

June 9.

39See PC #16, April 28, #17, May 3; W.H. memo "re Dill
and the Railway Bill," May 13, OF 31.

4ODill to FDR, May 20, FDR memo for McIntyre, May 18,
both OF 31; Latham, Railroad Coordination, pp. 73-4;
N. Y. Times, June 9.

 

 

41Literary Digest, CXV, June 17, p. 6; Latham,
Railroad Coordination, pp. 78-83.

 

 

42See Warburg Journal, e.g. May 8, 1:30 p.m., May 10,
3:30 p.m., May 15, 12:00 m., May 16, 2:30 p.m.; N. Y. Times,
May 16; Hull to House, May 10, House Mss, Dr. 10.

 

43Feis, 1933, pp. 172-4; Barnard, Independent Man,

 

p. 268.
44Moley Diary, May 16.
45T2ig. Also see Warburg Journal, May 29, 3:00 p.m.
46Time, XXI, May 8, pp. 9-11.
47John Hanes to W. A. Harriman, May 18, Moley Mss,
Box 18; Moley Diary, May 17. Also see Literary Digest, CXV,

June 3, pp. 8-9, featuring as "brains trusters" Moley,
Tugwell, Berle, Mordecai Ezekiel, John Dickinson, and Bullitt.

 

48Moley Diary, May 18 and 19; N. Y. Times, May 19.

 

494

(pages 345—354)

49Moley, Seven Years, p. 209, and Diary, May 18 and
19; N. YaiTimes, May 24. Also see Hull, Memoirs, I, 49.

 

 

50Astor to Moley, May 31, Moley Mss, Box 4.

51Jonah J. Goldstein to Moley, June 2, with clipping,
Moley Mss.

52Moley Diary, May 18 and 19, and Seven Years,
pp. 211-13; Note by Monick, May 29, F30 14I4, French Ministry
of Finance Archives.

 

53See FR: 1933, 622—7.

54Warburg Journal, May 26, 10:30 p.m.

55Ibid., May 29, 10:30 a.m., and Long Road Home,
p. 125; Feis, "NOTES BEFORE DEPARTURE F0 C CON-
FERENCE," May 28, and Feis to Douglas, May 29, Douglas Mss.

On FDR's approval of pre-WEC stabilization talks, see
FR: 1933, 627-8.

56Feis, 1933, 172—4; Schlesinger, New Deal, pp. 208-9.
57Tugwell Diary, May 6.
58Warburg Journal, May 29, 3:00 p.m., and COHC, p. 856.

59Miss Jedel continued to keep Moley's Diary in London,
which is hereafter cited as Moley (London) Diary. Annette
Pomeranz (Gettinger), his other assistant and secretary, now
kept his Diary in Washington until June 21.

60See N. Y. Times, May 21; Cortland Smith to FDR,
May 24, enclosing editorials from Midwest, OF 172; Perkins to
Howe, June 14, OF 15 (published in Times, June 15); Morgen-
thau Diary, May 15, 22, 29; Warren to ZMorgentham7, June 10,
Warren Mss. Morgenthau spoke of a "revolution" over withheld
patronage, as early as April 28 (Diary, April 28).

61Morgenthau Diary, May 22; N. Y. Times, May 19.

 

62Tugwell Diary, May 31.

63See N. Y. Times, esp. June 1-17, particularly the
headlines; Lindley, Roosevelt Revolution, pp. 162-6.

64Memo for the President, May 28, 9:30 a.m., OF 259;
Moley, Seven Years, pp. 164, 168.

 

495

(pages 354-361)

65Interview with Berle, June 1969, who quoted from his
conference notes. Also see J. David Stern to FDR, March 22,
OF 230; Woodin to Glass, April 9, McAdoo Mss, Box 9.

66Early memo for FDR, n.d. [Tiled March 1g7, OF 230;
Chester Morrill COHC, pp. 237-9.

67Draft of Depositors' Insurance Bill, March 16, Box
381, Guy Greer memo for McAdoo, April 4, H. H. Cotton to
McAdoo, April 7, both Box 383, all McAdoo Mss; N. Y. Times,
April 8, 12; Irving Fisher to Margaret Fisher, April 12,
Fisher Mss, Box 14, Yale U.

 

68N. Y. Times, April 25, May 5, 11, 20; Glass to
McAdoo, April 25, Box 383, McAdoo to FDR, May 13, Box 384,
both McAdoo Mss; McAdoo to FDR, May 10, OF 230; Moley Note-
book, May 3; J. F. T. O'Connor Diary, May 10, 16, 17,
O'Connor Mss, U. California, Berkeley; Bascom N. Timmons,
Jesse H. Jones: the Man and the Statesman (N.Y.: Holt,
RineharI, 1956), pp. I93—5.

 

69Warburg Journal, June 2; O'Connor Diary, June 2;
N. Y. Times, June 3, 6; FDR to Glass and Steagall, June 2,
OF72l-B. Moley later denied telling Warburg that he would
help kill the banking bill; "I was for the bill and I was
persuaded that FDIC should be adopted." Letter from Moley,
Jan. 22, 1972.

 

7OO'Connor Diary, June 6, 7; N. Y. Times, June 7, 8;
Memo for the President, June 6, 11:10 a.m., OF 259. Also
see FDR to Clark Howell, June 6, OF 230-A.

 

71Lindley, Roosevelt Revolution, pp. 163-4; FDR
(Douglas reply) to James O. Turner, Ahril 15, Douglas to FDR,
April 26, with enclosed memorandum from VA, all OF 95-D;
Hines to FDR, May 6, Douglas to FDR, May 8, both OF 268;
N. Y. Times, May 10, 11.

 

 

72N. Y. Times, May 17, 20, 22, 30, June 1; Hines to
FDR, May 22, Douglas to FDR, May 23, both OF 95-C; W.H. memo
for FDR, May 23, 4:15 p.m., OF 259; Sen. Carl Hayden to FDR,
May 31, OF 95-D.

 

73Kimmel, Federal Budget and Fiscal Policy, pp. 176-7,
184 and note. On AAA and the recovery argument, see
V. Perkins, Agriculture, pp. 41-3.

 

 

74N. Y. Times, June 2, 3; Literary Digest, CXV,
June 17, pp. 354; interview with Douglas, Feb. 1970; FDR memo
to Hines, May 24, OF 8; Hines to FDR, June 3, OF 95-D.

 

 

496

(pages 361-370)
75O'Connor Diary, June 1; N. Y. Times, June 4, 5.

 

76N. Y. Times, June 6-8; Hines to FDR, June 5, FDR
(Douglas reply) to Hayden, June 6, both OF 95-D; PC #27,
June 7.

 

77N. Y. Times, May 19, 23, 26, 27, June 2; Memo for
the President, May 28, 9:20 a.m., OF 259; Ickes, Diary, 1,
46-7.

 

78N. Y. Times, June 3, 6; Clapper Diary, June 4—10;
Ickes, Diary, I, 49:51.

 

79Phillips to FDR, June 6, enclosing tariff bill and
message dated June 1, all OF 66 (FDR pencilled on the bill
that he wanted it rewritten to "3 pages"); Hull, Memoirs, 1,
250-2; also see FDR to Sumner Welles, June 8, in RL: I928-45,
349-50.

80PC #28, June 9.

81Howe to Pittman, May 26, Walsh to FDR, June 2, Basil
Manly to FDR, June 3, all OF 156; Memo for the President,
June 2, 9:45 a.m., OF 259; Gov. Paul V. McNutt cable to FDR,
June 8, OF 66.

82N. Y. Times, June 7, 9; draft of St. Lawrence
message, June 5, FDR to LaFollette, June 8, FDR handwritten
note, n.d. [Tiled June 1g7: "Sens. Robinson & Pittman--
St. Lawrence Treaty 60 votes for it--46 Dems. l3 Repub
1 Farmer Labor Let F. Walsh and D. Cosgrove know-—Willard
Hotel," Vandenburg, LaFollette, and 6 other senators to FDR,
May 18, LaFollette to FDR, June 29, all OF 156; PC #26,
June 2.

 

83N. Y. Times, May 26, 28, 30; Hull to FDR, May 27,
OF 404; Robert A.7DiVine, The Illusion of Neutralipy
(Chicago: Quadrangle, 1968 ed.), pp. 52-6; PC #26, June 2.

 

84See PPA: 1933, 225-6, for W.H. summary of orders.

 

85N. Y. Times, June 9-11; Clapper Diary, June 11.

 

86N. Y. Times, June 12-15; Moley Diary, June 11-15;
British ForeigniPoIicy: 1933, 813-39; Clapper Diary, June 14;
PC #29, June 14; Time, XXI, June 26, pp. 9, 12-14; A. E.
Morgan memoranda, June 7, 8, 10, Morgan Mss.

 

 

87N. Y. Times, June 12-15.

 

497

(pages 370-372)

88On his veto message, see FDR to House, June 24,
House to FDR, July 2, both PPF 222.

8C)N. Y. Times, June 16; FDR to Garner and Rainey,
June 15, OF 12,

 

90See PC #25, May 31; Warburg Journal, May 25,
8:15 a.m.; Memo for the President, May 28, 9:30 a.m., June 8,
3:07 p.m., both OF 259.

91N. Y. Times, June 6, 8, 16; Norris to FDR, June 13,
OF 400-Hawdii.

 

92Literary Digest, CXVI, July 1, p. 7.

 

93See N. Y. Times, June 2-5, 7, 8, on CCC kit
imbroglio and how Howe shifted blame to the Budget Bureau and
to CCC head Fechner. Also see Rep. Ross A. Collins to Howe,
June 9, Sen. Morris Sheppard to Howe, June 15, both OF 268,
for conflicting views on Howe's involvement; and Warburg
Journal, July 23, 1:00 p.m., for Douglas' statement that Howe
did not hesitate to "misrepresent the truth to the Senate
Committee."

 

CHAPTER VII (pages 373-379)
1PC #31, July 5; N. Y. Times, July 6.

 

2FDR first publicly used the term "hundred days" in
his third major radio broadcast on July 24, which Moley
helped draft. See PPA: 1933, 295; Moley Diary, July 24.

 

3Fisher to FDR, July 5, PPF 431; N. Y. Times,
July 4, 7.

 

4For the best published account of the WEC, see
Robert H. Ferrell, American Di lomac in the Great De ression:
Hoover-Stimson Foreign Policy, I929-I933 (New Haven: gale U.
Press, 1957), ch. 15, a short analysis; Feis, 1933, chs. 16-
20, and Moley, New Deal, chs. 32-38, both detailed and fairly

complete; and SchIeSinger, New Deal, ch. 13; Pratt, Hull, I,
ch. 3.

 

5N. Y. Times, June 8-10.

 

6Warburg Journal, June 13.
7Moley (London) Diary, June 13.

8Warburg Journal, July 22, 10:30 a.m.

498

(pages 379-388)

9Ibid., June 29, 2:30 p.m.

lOMoley Diary, June 15.
11N. Y. Times, June 14-16; Feis, 1933, 181-4; and see

above, pp. 314-19, 365—72 from last chapter, lst and last
secs.

 

12Sprague cable to Woodin, June 16, 5:22 p.m., Moley
Mss, Box 48. This document went only as far as part (a),
clause (four) of the plan: "Both governments and banks of
issue agree upon--"; see FR: 1933, 642-4. Section two, con-
taining the heart of the Sprague plan, was received at
8:27 p.m., and section three at 8:40 p.m.; see Department of
State, file 550.Sl Monetary Stabilization/18, at NA.

13PC #30, June 16.

14N. Y. Times, June 16; Tu11y, F.D.R., pp. 76-7.

 

15FR: 1933, 642-4. 16Ibid., 644-5.

17N. Y. Times, June 17, reported that FDR closed his
office at 7:00 p.m., and he swam, dined, and met with his
staff, all before departing on the 8:30 train.

 

18Ibid., June 15—17; Feis, 1933, pp. 183-4; Moley
(London) Diary, June 15, 16; Warburg Journal, June 16,
10:00 p.m., and June 17.

19Moley, New Deal, pp. 427-8, italics added, and Moley
Diary, June 16. That the "war council" ended by 7:00 is
confirmed by Moley, Seven Years, pp. 231-2, when he stated
that the last item of his talk with FDR was to have him
invite Swope--who cabled his reply from New York at 7:46 p.m.;
see Swope cable to FDR, June 16, Moley Mss, Box 48.

 

20N. Y. Times, June 17.

 

2112i§-: June 18; Moley Diary, June 17.
2223;_l2§§, 645-6, italics added.

23N. Y. Times, June 18; Moley Diary, June 18.

 

24Warburg Journal, June 18, 9:00 a.m.

25FR: 1933, 647-8, italics added; Moley (London)
Diary, June I8.

26N. Y. Times, June 19, 20.

 

499
(pages 388-397)

27Moley (London) Diary, June 18, 19; Warren D. Robbins
to FDR, June 15, in FDRFA: 1933-34, 237-9; Warburg Journal,
June 18, 19; Phillips cable tOTHull, June 17, Moley Mss,
Box 48 (not printed in FR: 1933); Feis, 1933, pp. 187-90.

 

28Feis, 1933, pp. 186-8.
29Warburg Journal, May 26, 10:30 a.m.
3OMoley Diary, June 14, 18, and New Deal, pp. 432-7.

31Moley cable to FDR, June 18, Moley Mss, Box 49 (not
printed in PR: 1933).

32N. Y. Times, June 20; FR: 1933, 649.

 

33Moley Diary, June 19.

34FDRFA: 1933—34, 248-50, italics added.

 

35Moley Diary, June 19.

36Acheson, Morning and Noon, pp. 170-1.

 

37Byrnes, Lifetime, p. 81.

38Moley, Seven Years, p. 234.

 

39N. Y. Times, June 20, 21.

 

40FR: 1933, 650.

41Moley, New Deal, pp. 439-42, and Notebook, n.d.
éjune 297, and handwritten copies of cable and authorization,
oley Mss, Box 48.

42Moley (London) Diary, June 12, 15, records two dates
that Moley telephoned; N. Y. Times, June 18-20, on WEC, and
June 23, on FDR daily scannihg newspapers; Starling, Starling,
p. 309.

 

43Moley, Seven Years, p. 237.

 

44F30 1415, June 23, Minister of Foreign Affairs to
Minister of Finance, French Ministry of Finance Archives.

45Moley (London) Diary, June 21.

46Warburg Journal, June 21, 9:00 a.m.

500

(pages 397-405)
47New Republic, LXXV (June 28), 180.

 

48N. Y. Times, June 22, 29; House to FDR, June 24,
B. H. I. Brown toTHouse, June 19, and clippings, all PPF 222.

 

4c9N. Y. Times, June 23-30; Starling, Starling,
pp. 309-ll.

 

SOBaruch cable to Moley, Moley cable to Baruch, both
June 21, Baruch Mss.

51Times editorial of June 22, Moley memo, June 22,
both Moley Mss, Box 48; N. Y. Times, June 24.

 

52Phillips cable to Moley, June 27, 5:00 p.m., Moley
Mss, Box 48. FR: 1933, 657, reprinted FDR's original to
Phillips, containing the final sentence--which was not
repeated to Moley: "You might suggest this to Moley and
inform the Secretary."

53FR: 1933, 660-1.

54Warburg Journal, June 21; Feis, 1933, pp. 190—7.

55FDR to Welles, June 24, OF 470.

56N. Y. Times, June 28.

 

57Moley Diary, June 28 (London). Moley wrote the diary
for June 28 through July 7, the date he sailed for the U.S.
He wrote it on the trip back, with help from a pooling of
memories of himself, Swope, Mullen, and Miss Jedel, as well as
from notes taken by Moley. Although dismissed by Feis as a
"memo" (1933, p. 350), this account appears as authentic as
possible under the circumstances. In fact it is more
reliable in places than the record kept by Warburg, himself
too rushed to make daily entries; see Warburg Journal, e.g.
June 30, 6:45 p.m.

 

58N. Y. Times, June 29. 59Moley Diary, June 28.
60FR: 1933, 658-9. 61Ibid., pp. 653, 655.

62Harrison Memorandum of transatlantic telephone con-
versation, June 27, 2:10 p.m., George Harrison Mss,
Columbia U.

63Warburg Journal, June 28 chtually the 27tm7,
7:30 p.m., italics added. This error in dating was probably
due to the impossibility for Warburg to make daily entries;
see note 57.

501
(pages 405-413)

64Acheson cable to FDR, June 27, OF 17 (not printed in
PR: 1933).

65FR: 1933, 660-1, italics added.
661bid.. p. 663. 67123g.. Pp- 661-3-
681bid,, p. 663, italics added.

69N. Y. Times, June 30.

 

7OMoley Diary, June 29; Warburg Journal, June 29;
Bullitt memorandum for Hull about his June 29 talk with Moley,
n.d., with notation: "The above statement is correct-~July 2,
1933 (signed) Cordell Hull," Hull Mss, Box 34; Hull memorandum
of Moley meetings with other nations' representatives, July 15,
Hull Mss, Box 77; and see Keith Feiling, The Life of Neville
Chamberlain (London: Macmillan, 1946), pp. 222-3, which
quotes Chamberlain's diary entry for the 29th. Moley later
pointed out that the war debts and stabilization were Treasury
responsibilities, and that neither the delegation nor Hull
had the right to commit the Treasury without its consent;
"This was admitted by Hull on the day when he said that
Sprague and I would take charge of the negotiations on those
subjects. In short, I represented in reality Woodin and not
Hull, and I thoroughly understood Woodin and had his confi—
dence and affection." Letter from Moley, Jan. 22, 1972; also
see New Deal, pp. 455, 457.

 

 

71Moley Diary, June 29.

72Warburg Journal, June 29, 2:30 p.m. Also see
June 30, 11:00 a.m., where warburg and Moley settled their
differences. Once before, in April, Warburg had confronted
Moley about temperamental differences. He later believed
that Moley resented his and Bullitt's closeness to FDR--while
the professor's Diary recorded that he was irritated with
Warburg's readiness to give concessions to the French (then
in Washington), which he considered to be against American
policy. See Warburg Journal, April 26, 10:00 a.m., and
COHC, pp. 559-62; and Moley Diary, April 26. Tempers and
nerves were strained by the pressure in London, even more
so than during the Hundred Days.

73FR: 1933, 664-6.
74£2£Qo9 Po 671; M01€y Diary, June 30, July 1.
75FR: 1933, 667-8. 76Ibid., p. 666.

77Ibid., pp. 667, 670-1; Moley Diary, June 30.

502

(pages 413—426)

78Morgenthau Diary, June 29, italics added. For an
abbreviated version of this quote (although no ellipse
appears), see Schlesinger, New Deal, p. 216, which omitted
the last part: "but he was not very convincing about it."
For examples of pressure, see Committee for the Nation cable
to FDR, June 30, and earlier, all PSF 54.

79Charles Hurd, When the New Deal was Young and Gay
(N.Y.: Hawthorne Books, I965), p. I66.

 

80N. Y. Times, June 30.

 

81Morgenthau Diary, June 30, italics added; FR: 1933,
668. If telegrams Nos. 79 and 80 were "garbled," as
later said (FDRFA: 1933-34, 263-4), then it is not surprising
that his reply was directed to Hull.

 

82Hurd, New Deal, pp. 166-71.

83N. Y. Times, July 1, italics added.

 

84FR: 1933, 669-70. The typed copy sent from Campo-
bello was timed at 11:55 p.m. on the 30th; see PSF 54.

85FR: 1933, 667-8, 670-2.

Séipip., p. 672, italics added; Moley Diary, July 1—3;
Warburg Journal, July 1, 11:30 p.m.

87Morgenthau Diary, July 2; FDRFA: 1933—34, 268-70,
and note.

 

88Warburg Journal, July 3, 10:15 a.m.; F30 1415,
July 5, Minister of Foreign Affairs to Minister of Finance,
French Ministry of Finance Archives.

89N. Y. Times, July 4; New Republic, LXXV (July 26),

 

 

275-7.

90Moley Diary, July 3-5; FR: 1933, 688, 692-4; Warburg
Journal, July 2, 2:00 p.m.; E. Roosevelt, Remember, p. 84.
Also see FR: 1933, 655, for FDR's June 24 message to Hull and
Cox folloWing the Times' editorial on Moley and the White
column: "Do not worry about the attitude of a few papers like
the New York Times. Prestige of delegation is generally
excellent at home and most people are saying you were all
clever enough to avoid an obvious trap."

 

91Moley Diary, July 4; Moley cable to FDR, July 4,
Hull Mss, Box 34; Feis, 1933, p. 194.

503
(pages 426-438)

92P30 1416, June 6, Minister of Foreign Affairs to
Minister of Finance, French Ministry of Finance Archives.

93FR: 1933, 680; Moley Diary, July 23, 24, 27. Begin-
ning with the July 6-13 entry, Miss Jedel resumed the Diary.

94Hull cable to FDR, July 11, PSF 54; Warburg Journal,
July 14, 7:30 p.m. Also see Hull's handiwork against Moley
in Hull to Howe, July 8, Morrison to Hull, July 31, both
Box 34, Hull memorandum, July 15, Box 77, Cummings memorandum
for Hull, July 16, Box 78, all Hull Mss; Bingham to House,
July 31 and Aug. 3, House to Bingham, Aug. 11, all Dr. 3,
House Mss; Bullitt to FDR, July 8, in FDRFA: 1933-34, 289-94.

 

95Tugwell, "The WOrld Economic Conference," unpub-
lished article, pp. 11-12, Tugwell Mss, Box 21; and see
Bingham cable to Howe, July 15, OF 491, telling of one such
confidential and personal letter that is not available in the
Roosevelt Library's files.

96Morgenthau Diary, July 30.
97Warburg Journal, July 14, 7:30 p.m.

98SWOpe cable to Baruch, July 8, Baruch Mss;
Frankfurter to Moley, July 14, Moley Mss, Box 11.

99Warburg COHC, pp. 1084-5. James Roosevelt, F.D.R.,
p. 260, later stated that his mother and, by implication, his
father were "considerably upset" by these divorce-remarriage
plans, announced in N. Y. Times, June 9.

 

100Moley Diary, July 13.

101Warburg Journal, July 22, 9:30 a.m.

lozipig., July 22, 1:15 p.m., and July 24, 1:00 p.m.
103O'Connor Diary, July 13.

104Moley Diary, July 14, 17.

105Interview with DouglaS, Feb. 1970:

106Farley, Farley's Story, pp. 40-1.

107Frankfurter to Moley, April 12, Frankfurter Mss,
BOX 355.

108Feis, 1933, pp. 232—3. 109FR: 1933, 655.

504
(pages 438-440)
110Ibid., 670, 673.

 

111Warburg Journal, July 20, 10:00 a.m.
llzipig., July 25, 1:00 p.m.
113Warren Diary, July 24; Douglas memorandum of first
Public Works Board meeting, June 30, Douglas Mss.
CHAPTER IX (pages 442-458)
1Lindley, Roosevelt Revolution, p. 327; Schlesinger,

New Deal, p. 21; Burns, Roosevelt, p. 179; Leuchtenburg,
Franklin D. Roosevelt, p. 62.

 

 

2T. Harry Williams, Hue Lon (N.Y.: Knopf, 1970),
pp. 418-19; Freidel, Triumph, p.

3Moley, Seven Years, ch. 7, esp. p. 268.

 

4Kimmel, Federal Bud et and Fiscal Poliey, pp. 171,
note 6, 175-84, 190-7, 2I4-I7;Louis Howe, "Balanced Govern—

ment--The Next Step," American Magazine, CXV (June, 1933),

84-5; Donald C. Swain, "Harold Ickes, Horace Albright, and

the Hundred Days: A Study in Conservation Administration,"
Pacific Historical Review, XXXIV (Nov. 1965), 455-7.

 

 

5Warburg Journal, April 4, 9:00 p.m.

6Leith-Ross, Money Talks, p. 177; Warburg COHC,
pp. 1194-5.

 

7Charles 0. Jackson, Food and Drug Legislation in the
New Deal (Princeton: Princeton U. Press, 1970), chs. 1, 2,
esp. pp. 381-406; Blum, Morgenthau, I, 35-68.

 

 

8Burns, Roosevelt, p. 179.

 

9See e.g. Moley, New Deal, pp. 338-9.
10British Foreign Policy: 1933, 813-15.
11Letter from Raymond Moley, April 22, 1969.
12Letter from Lewis W. Douglas, Nov. 12, 1969.
13Warburg Journal, May 30.

14PPA: 1933, 295-303, esp. p. 302.

 

COMMENTS ON SOURCES

COMMENTS ON SOURCES

Since all manuscript collections, primary and
secondary works, and published documents are cited fully the
first time they appear in the notes, these comments only deal
with a brief evaluation of some of the major sources, rather
than attempting a comprehensive analysis or a complete listing.

Any examination of the manuscript collections for the
Hundred Days must begin with the Franklin D. Roosevelt papers
at the Roosevelt Library in Hyde Park, New York. While these
materials are voluminous and often peripheral, the Official
File and the President's Personal File contain many of the
documents that are revealing on legislative and policy
issues; and the correspondence is useful for determining
opinion on given issues. The press conferences are often
candid, sometimes repetitive, and occasionally misleading;
but used carefully, they give the best day-to-day record of
Roosevelt's thinking and expressed views on current topics.
Another essential source is the many series of published
documents, the most recent being Edgar B. Nixon, ed.,

Franklin D. Roosevelt and Foreign Affairs (3 vols., Cambridge,

 

Mass., 1969), which is now complete through 1936 but which

will eventually cover all four administrations.

505

506

There are several indiSpensable manuscript collections
of close Roosevelt advisers. The best of these is the papers
and diary of Raymond Moley at Stanford's Hoover Institution,
much of which substantiates his memoirs. The Lewis W. Douglas
papers at the University of Arizona are recently opened and
have some revealing items on this period, and they should be
supplemented by the Douglas materials in the Roosevelt col-
lection. James P. Warburg's oral history at Columbia contains
a dictated version of his candid and almost hourly journal
for 1933, most of which is valuable, and his comments on the
journal which he made in 1951, which must be used with care.
Rexford G. Tugwell's papers at the Roosevelt Library contain
very few items of interest, but his "Notes From A New Deal
Diary" is enlightening, although the bulk of it covers the
interregnum. The Henry Morgenthau, Jr., Farm Credit Diary in
the Morgenthau papers at the Roosevelt Library yields several
insights on FDR, but the papers and the diaries prior to 1933
are closed. The Adolf A. Berle, Jr., papers are in the
possession of Mrs. Berle and are presently unavailable,
although my taped interview with him forms part of the Berle
oral history at Columbia, in process. The Louis Howe papers
at the Roosevelt Library offer only occasional references to
the Hundred Days.

Several other personal manuscripts are useful.
Walter Wyatt's contemporary notes in the possession of
Mr. Wyatt are excellent on the banking crisis. Also useful

on this topic are the E. A. Goldenweiser diary in the

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Goldenweiser papers and the Charles S. Hamlin diary in the
Hamlin papers, both at the Library of Congress. On securi-
ties, see Huston Thompson's diary in the Thompson papers

at the Library of Congress. On monetary policy, see the
George F. Warren diary and papers at Cornell. Cordell Hull's
papers at the Library of Congress have but few items for
1933, and nothing on his relationship to FDR or Moley prior
to the "bombshell" message. The Bernard M. Baruch papers

at Princeton indicate some of Baruch's advising and some
outside pressures. The George N. Peek diary in the Peek
papers at the University of Missouri is useful on the events
surrounding AAA, and Georgia Lindsey Peek's diary in the same
collection is an interesting social commentary on the early
New Deal. The Henry A. Wallace papers at the University of
Iowa Library were recently opened, but have few items on
early 1933; and the Wallace diary is closed until 1975, when
the oral history at Columbia will also be opened.

Interviews and oral histories proved valuable in
supplementing manuscripts and memoirs. I had many stimulating
conversations with Raymond Moley, Lewis Douglas, Walter Wyatt,
and Ralph Robey. I also interviewed Adolf Berle, Mordecai
Ezekiel, James A. Farley, Marvin Jones, Malcolm Moley,

Arthur E. Morgan, William I. Myers, and Floyd Reeves. I con-
sulted numerous oral histories at Columbia, which has the
most extensive and best organized collection, although the

references for the Hundred Days were scattered. Those I

508

examined included Horace M. Albright, Paul Appleby,
Chester C. Davis, Edward J. Flynn, Jerome Frank, Gardner
Jackson, Marvin Jones, Arthur Krock, James M. Landis, Eugene
and Agnes Meyer, Chester C. Morrill, Edward A. O'Neal,
William Phillips, Jackson Reynolds, Samuel I. Rosenman,
Rexford Tugwell, and M. L. Wilson. Two of the potentially
best memoirs are still closed: Frances Perkins and Henry
Wallace. The W. I. Myers oral history in the Myers papers
at Cornell is a good discussion of farm credit activities
during the interregnum, based on his fine collection of
memoranda covering those activities.

In addition to papers and oral history, several
memoirs prove indispensable. The best of these included

Raymond Moley, After Seven Years (N.Y., 1939), which should

 

be supplemented with his The First New Deal (N.Y., 1966).

 

Herbert Feis, 1933: Characters in Crisis (Boston, 1966), is

 

good on FDR's casualness in foreign policy, although uneven
in the treatment of some of FDR's close advisers. James
Warburg, The Long Road Home: The Autobiography of a Maverick
(Garden City, N.Y., 1964), has two interesting chapters on
early 1933. Henry Wallace, New Frontiers (N.Y., 1934), has

 

insights on AAA. Rexford Tugwell's The Democratic Roosevelt:

 

A Biography (Garden City, N.Y., 1957), based on his many
memories and articles, has his version of FDR's earlier life
and career but has very little on the Hundred Days; and

Tugwell's recent The Brains Trust (N.Y., 1968), while con-

 

taining useful 1932 background on FDR, was evidently written

509
almost entirely from memory. Eleanor Roosevelt's This I
Remember (N.Y., 1949), is terse, and must be supplemented by

biographies. Grace Tully, F.D.R., My Boss (Chicago, 1949),

 

has perceptive comments on Roosevelt's daily life and White
House routine. James Roosevelt and Sidney Shallett,

Affectionately, F.D.R.: A Son's Story of a Lonely Man

 

(N.Y., 1959), is revealing in the manner suggested by the
subtitle. The best of the Cabinet memoirs is Frances Perkins,

The Roosevelt I Knew (N.Y., 1946); it is sympathetic, gener-

 

ous, and perceptive about FDR, but not altogether reliable on
judgments and events of early 1933. While Harold L. Ickes,

The Secret Diamy of Harold L. Ickes: The First Thousand

 

Day_s_J 1933-1936 (N.Y., 1954), has a few useful observations

 

on Roosevelt and politics, James Farley's Behind the Ballots

 

(N.Y., 1938) and his bitter Jim Farley's Story (N.Y., 1948)

 

contribute little on the policies of this period. But two

books by journalists, Ernest K. Lindley, The Roosevelt

 

Revolution: First Phase (N.Y., 1933), and J. F. ("The

Unofficial Observer") Carter, The New Dealers (N.Y., 1934),

 

give excellent background and descriptions on personalities
and policies in 1933.

Public opinion and contemporary assessments of events
and policies can be gleaned particularly from the New York

Times, the Literary Digest, the New Republie, The Nation, and

 

 

Time magazine. Sometimes these topics were discussed or

commented upon in Roosevelt's press conferences.

510
Several well-known biographies of Roosevelt must be

read for background. Frank Freidel, Franklin D. Roosevelt

 

(3 vols., Boston, 1952-6), carries FDR up to the election of
1932, and contains forthright and judicious assessments.

Arthur M. Schlesinger, Jr., The Age ofTRoosevelt (vols. I and

 

II, Boston, 1957-9), are excellent for the intellectual and
social milieu of the times, although FDR is sometimes lost in
the account of the age and the sources are not always judi-

ciously used. James MacGregor Burns, Roosevelt: The Lion

 

and the Fox (N.Y., 1956), is the best one-volume treatment of

 

Roosevelt and his dual nature, although it is sparse on the
interregnum and the Hundred Days. Alfred B. Rollins, Jr.,

Roosevelt and Howe (N.Y., 1962), sympathetically delineates

 

the role of HOwe in the creation of a President. By far the
best volume to appear on FDR, particularly on his relation-
ships with Eleanor and with friends and advisers, is

Joseph P. Lash, Eleanor and Franklin: The Story of Their

 

Relationship Based on Eleanor Roosevelt's Private Papers.

 

(N.Y., 1971). Published too late to be used in my study, it
reveals FDR to be more politically and personally expedient
than other biographies have acknowledged, making the diffi-
culty of advisers' relationships with him more easily
understandable.

Last, the many biographies and monographs on the New
Deal have made the task of evaluating Roosevelt's impact
upon policies somewhat manageable. While there are no

biographies of figures like Moley, Douglas, Warburg, or

511

Berle, Bernard Sternsher's comprehensive Rexford Tugwell and

 

the New Deal (New Brunswick, N.J., 1964), and John M. Blum's

 

authorized From the Morgenthau Diaries: Years of Crisis,

 

1928-1938 (Boston, 1959), J. J. Huthmacher's Senator Robert

 

 

F. Wagner and the Rise of Urban Liberalism (N.Y., 1968), and

 

Julius W. Pratt's Cordell Hull (N.Y., 1964) are helpful.

 

Particularly useful are the following monographs: Ellis W.

Hawley, The New Deal and the Piobiems of Monopoly: A Study

 

in Economic Ambivalence (Princeton, N.J., 1966), which

 

analyzes the divergent background of NRA; Lewis H. Kimmel,

Federal Budget and Fiscal Policy, 1789-1958 (Wash., D.C.,

 

1959), which discusses the prevalent fiscal orthodoxy as well

as the emerging Keynesian trends; Earl Latham, The Politics

 

of Railroad Coordination, 1933—1936 (Cambridge, Mass., 1959),

 

which details the struggle for and emasculation of railroad

reform; Michael E. Parrish, Securities Regplation and the New

 

Deal (New Haven, Conn., 1970), an excellent treatment of the
complicated securities legislation; Van L. Perkins, Crisis

in Agriculture: The Agricultural Adjustment Administration

 

and the New Deal, 1933 (Berkeley, Calif., 1969), the best of

 

the case studies, which details the enactment of AAA as well
as personal involvements in that process; and John A. Salmond,

The Civilian Conservation Corps, 1933-1942: A New Deal Case

 

Study (Durham, N.C., 1967), the best of many works on CCC.
In conclusion, while case studies of New Deal
legislation and agencies proliferate, there are still many

significant figures who lack biographies. And Lash's unique

512
Eleanor and Franklin indicates the possibilities in the
areas of FDR's personal relationships, a topic too often
slighted by those who have attempted to capture the elusive

but magisterial character of Franklin D. Roosevelt.

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