The Forgotten Man: A New History of the Great Depression
This month I’m reverting back to a theme…sort of. The theme is the 1930’s and the colossal fuck up that was the Roosevelt administration. We’re starting this exploration with The Forgotten Man: A New History of the Great Depression by Amity Shlaes.
Shlaes wisely starts her book with two, diametrically opposed quotes on the forgotten man. She starts with Roosevelt’s quote “These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power, for plans like those of 1917 that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.” See what he did there? He made the forgotten man be the poor man…the one at the bottom of the pyramid. This was part of his campaign speech in 1932, but Roosevelt cribbed the line from a half remembered quote fifty years before in 1883.
The original quote was from William Graham Sumner “As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X, or in the better case, what A, B, and C shall do for X…What I want to do is to look up C. I want to show you what manner of man he is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who is never thought of….He works, he votes, generally he prays—but he always pays…”
Now…taken in context of the original quote, you get a sense of what this book will cover. The Forgotten Man is not the poor man at the bottom of the economic pyramid. The Forgotten Man is the one who is expected to pay for whatever A and B decide is needed for the welfare and benefit of X.
And sometimes C IS the ultra-wealthy who are put on the hook to pay for social programs via prohibitive income taxes. But usually, the forgotten man is…me. And you. Is anyone whose tax dollars are being used to pay for programs and wars they don’t agree with.
The book starts in January 1927, before the crash, before Hoover was even president. Unemployment was 3.3% and the Dow Jones was sitting at a relatively healthy 155. It was during the floods of 1927 that Hoover really shot to the front of national prominence.
Just seven months later, in July 1927, the Dow Jones has climbed higher to 168, and the core of what would become Roosevelt’s brain trust, was traveling to Russia to see what Stalin was doing with the USSR. This included Rexford Guy Tugwell, John Bartlet Brebner. Stuart Chase, F.J. Schlink, Carlos Israels, Silas Axtell, James Hudson Maurer, John Brophy, Albert Coyle. There were others, but you get the idea. This dream team was the first unofficial envoy to the USSR which had not been recognized by the United States as a nation.
And they came back all a twitter over how amazing life in Russia was. This despite the fact that several of their own anarchist heros from the United States, including Emma Goldman, had walked away from Russia in disgust by the time the Junket made their way to this country. The Junket determined that family didn’t matter in the new and improved USSR….there’s some odd parallels with what happened during this trip 100 years ago, and a lot of what you hear today, especially in social media. The parallels are quite alarming.
From here, Shlaes starts to dismantle several of the enduring myths of the Great Depression, starting with the myth that suicides spiked as a result of the market crash. Now, she doesn’t deny that some people did commit suicide. Can’t deny it, it literally happened. But the stories of such were outliers of the time, not symptoms of the time.
She does a bit of a deeper dive into what Hoover did wrong, and note, she does NOT like Hoover. She stops short of calling him a Nazi sympathizer, but she does not like him. And he did a lot wrong, including freezing wages. And in a time where there’s suddenly no money coming in to a business, a business owner has to choose between cutting wages, or laying people off. Hoover basically forced owners into statis. This basically ushered in the financial woes of the next decade.
In the more rural areas of the country, specifically cited in the book was Utah, where they literally reinstituted a barter system. And because it’s easier to transport pieces of paper over whole chickens, pigs, or cows, Salt Lake City began printing their own currency, called vallar, which were used for barter in town and were accepted as payment with all the local stores. Not so different from stores opting to accept cryptocurrency today.
Hoover signed the disastrous Smoot-Hawley Tarriff which of course added fuel to the global depression, despite bankers and economists literally begging him to veto it. And then in November 1932 Hoover lost to Roosevelt, and in the intervening four months, Hoover tried to ask Roosevelt on several policy plans what Roosevelt’s stance was, and Roosevelt ignored him. What kills me reading things like this is the outgoing president is STILL the president. He is the guy in charge until he hands off to the incumbent. But Hoover froze and did nothing, and Roosevelt was so fucking arrogant…
Ok, so by October 1933, Roosevelt was setting the target price for gold. Based on no real evidence, he would just pick a number and say this is what gold should be today. And his sycophantic yes men would just agree with him. Including removing us from the gold standard for a few months. He brought about the NRA (National Recovery Act) and the AAA (Agricultural Adjustment Administration). Both of these were brought to law suits, the suit for the NRA all the way to the supreme court, with the administration actually losing that one. And that is a big part of the story.
The NRA court case was between the Brooklyn Schechters and the NRA. The Schechters were kosher butchers. Now, this was incredibly informative. The Schechters were the middle men…the C in Sumner’s original analogy of the forgotten man… Roosevelts admin HATED middle men. The NRA code that applied to the Schechters was that if someone came into their shop to buy a chicken, they had to buy the first chicken that came to hand. No picking what chicken they wanted.
Here's the rub…other than that is mandating poor customer service. Part of a kosher butchers job is to inspect the meat for disease. Disease which may not be immediately obvious when the bird is alive. Like tuberculosis, which could be spread via contaminated meat, and the infection would be obvious on inspection of the lung tissue.
This straight killing was mandated, and if a customer came in and said they wanted a specific bird, the Schechter’s would apologize and say they were under the code and that violated the code. This frequently resulted in lost customers.
During their first trial, which they ultimately lost, the Schechters pointed out that the NRA inspectors were too difficult to work with. Philip Alampi would argue with the Schechter’s customers and insult them, “He told the customer that he is full of shit, and ‘I am the Code Authority, and I get a right to do anything I want, and if you don’t like it, get out.” Just like a government man. Give a petty bureaucrat a bit of power and he turns into a dictatorial asshole.
The code, as written did not make sense. And the Schecthers knew it. The Schechters lost their first case, their second at the state level, but when it went before the Supreme Court, the justices voted I think unanimously in favor of the Schechters. This ultimately led to the expiration of the NRA. And it put the supreme court in the crosshairs of FDR, who was already a petty, vindictive prick. Following the administrations loss on the Schechter case, FDR started talking about packing the court with up to 15 justices.
This plan backfired in a haze of public opinion. But what was not subject to public opinion was the administrations malicious persecution of former Secretary of the Treasury Andrew Mellon and Samuel Insull who helped build some of America’s infrastructure. Both had filed taxes quite legally, using legal tax loopholes. The administration felt those loopholes should not exist and rather than close the loopholes, they persecuted those who used them.
The tax code even back then was so convoluted that even Roosevelt had a problem determining what he owed. When he submitted his taxes one year, he included a letter apologizing and suggesting that the IRS should forgive him any errors. While at the same time insisting they prosecute other for the errors because while Roosevelts was from genuine confusion, everyone else was because they were trying to defraud the government.
And despite this malicious prosecution, Mellon still donated funds and building and the initial art work for the National Gallery in DC. With no expectation that the charges against him be dropped.
This book did an excellent job highlighting the stories that so frequently go untold during the Depression. It goes over the epic struggle between private business entities and government encroachment where it should not be. It discusses how the New Deal accomplished nothing but make work, hired less people than is usually given credit for, and discusses in depth how petty, vindictive, and small minded Roosevelt was. How the reason the depression dragged on for a decade is that Roosevelt’s New Deal did nothing for the people of America, beyond making them feel like something was being done.
And it REALLY highlighted how Roosevelt was the first of a long line of politicians to make use of the new media, radio, to spread his message. It was an interesting read on many levels because as I sit with what I learned in this book, I see so many alarming parallels between what happened 100 years ago and today. I see how the politicians of today use the new media….social media…to push their message and drive division and class warfare. A class warfare that did not exist prior to Roosevelt telling those at the bottom of the economic pyramid that they SHOULD feel hatred towards everyone better off than them.
There was a lot of information to process in this book and I’ll be processing it for awhile. And if you want to understand how counterproductive Roosevelt’s policies were, I recommend it.
