Essay on Workers' Capitalism and the Forgotten Man: continued

FDR and Workers' Capitalism

'Trickle Down Economics' vs. the 'Forgotten Man'

The primary difference between Hoover's and Roosevelt's economic policies was that Hoover believed in providing incentives to business to restart the economy from the top, while Roosevelt wanted to give direct, immediate assistance to the workers at the bottom.

This clash of views dominated American politics for the rest of the century, the Republican position being derided as 'trickle down economics', while the Democratic perspective was condemned as 'welfare-state socialism'.

Roosevelt made his point clear in his 'forgotten man' radio address on April 7, 2020:

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 … 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.

In the election of 1932, the press and the public blamed Hoover for not getting the country out of the Depression immediately.

The workers were now in the majority and no longer would endure a few years of 'hard times' until the financial panic passed, as had their ancestors.

A Mandate Like Hitler's

The Republican Party was in disarray and out of ideas.

In fact, Hoover was ineffective and incompetent on critical economic issues.

Like the inept Jimmy Carter years later, he was an engineer with an inclination for social work and charity. By the election, even Wall Street was unhappy with him.

Hoover signed the infamous Smoot-Hawley Tariff and raised the top rate on income taxes to 63%

He signed the infamous Smoot-Hawley Tariff and the Revenue Act of 1932 that, at the pit of the depression, raised the top rate on individual income taxes from twenty-five to sixty-three percent!

Hoover was an interventionist, favoring Big Government, and most of his initiatives were continued and expanded by FDR.

Seizing the opportunity, the Democratic Party was organized and raring to go, and Roosevelt was loaded with cock-eyed schemes and crack-brain ideas, promising direct aid to workers, and seeing an easy target in the dismal record of Herbert Hoover.

Roosevelt had on his side the corrupt, but well-organized political machines in the big cities, the labor unions, immigrants from the last great wave, intellectuals, and supporters of the Ku Klux Klan in the racist South.

Since half of voters didn't bother to go to the polls, FDR won the election with the approval of about thirty percent of the people – a mandate of similar magnitude to that of Hitler in Weimar Germany (where voter turnout was far higher) in the same year.

Anti-Capitalism Revealed

In Roosevelt's 1932 platform, he promised:

'an immediate and drastic reduction of governmental expenditures by abolishing useless commissions and offices, consolidating departments and bureaus, and eliminating extravagances to accomplish a savings of not less than twenty-five percent of the cost of the Federal Government.'

Like Hitler, Mussolini, and Huey Long (who supported Roosevelt), FDR was a demagogue, not to be constrained by campaign promises.

As President, he proved to be ruthless and unprincipled in attacking his enemies.

He put Harry Hopkins, his right hand man, in the Department of Commerce to shake down businessmen that did not contribute to the Democratic Party, by threats of regulatory and legal retaliation.

He used the IRS to prosecute Moses Annenberg, owner of the Philadelphia Inquirer, when that newspaper questioned New Deal policies.

Harry Hopkins was FDR's closed advisor

Most of the country was nowhere as radical as Roosevelt.

Even the press did not want socialism.

One political cartoon, labeled 'When the Way is Dark, Keep to the Main Road', showed Roosevelt leading Uncle Sam through the fog of 'Depression' along 'The Way of Jefferson, Madison, and Lincoln', avoiding the 'Radical Shortcut' where the unwary fell into the quicksand of 'Bolshevism'.

Another, entitled 'Lets Leave Out the Joker', showed an arm labeled 'Roosevelt New Deal' flashing a card showing a furry-bearded Russian and the words, 'Socialistic Experiments'.

The Commonwealth Club Speech

Before the election, Roosevelt clearly expressed his radical distrust of capitalism and his intention to have government control the economic system.

His address at the Commonwealth Club in San Francisco fourteen days before the election, like Hitler's musings in Mein Kampf, gave warning to those who were alert, but not that many noticed or cared; it was too late in the campaign, Hoover was a failure, and the speech – laced with negative views on capitalism – was never repeated.

He said:

In retrospect we can now see that the turn of the tide came with the turn of the century.

We were reaching our last frontier; there was no more free land and our industrial combinations had become great uncontrolled and irresponsible units of power within the state.

Clear-sighted men saw with fear the danger that opportunity would no longer be equal; that the growing corporation, like the feudal baron of old, might threaten the economic freedom of individuals to earn a living.

In that hour, our antitrust laws were born. The cry was raised against the great corporations. …

A glance at the situation today only too clearly indicates that equality of opportunity as we have known it no longer exists.

Our industrial plant is built; the problem just now is whether under existing conditions it is not overbuilt.

Our last frontier has long since been reached, and there is practically no more free land.

More than half of our people do not live on the farms or on lands and cannot derive a living by cultivating their own property.

There is no safety valve in the form of a Western prairie to which those thrown out of work by the Eastern economic machines can go for a new start.

A mere builder of industrial plants ... is as likely to be a danger as a help

We are not able to invite the immigration from Europe to share our endless plenty.

We are now providing a drab living for our own people. …

Just as freedom to farm has ceased, so also the opportunity in business has narrowed.

It still is true that men can start small enterprises, trusting to native shrewdness and ability to keep abreast of competitors, but area after area has been preempted altogether by the great corporations, and even in the fields which still have no great concerns, the small man starts under a handicap.

The unfeeling statistics of the past three decades show that the independent businessman is running a losing race. …

Clearly, all this calls for a reappraisal of values.

A mere builder of more industrial plants, a creator of more railroad systems, an organizer of more corporations is as likely to be a danger as a help.

The day of the great promoter or the financial Titan, to whom we granted anything if only he would build or develop, is over.

Our task now is not discovery or exploitation of natural resources, or necessarily producing more goods.

It is the soberer, less dramatic business of administering resources and plants already in hand, of seeking to reestablish foreign markets for our surplus production, of meeting the problem of under-consumption, of adjusting production to consumption, of distributing wealth and products more equitably, of adapting existing economic organizations to the service of the people.

The day of enlightened administration has come.

[Address to the Commonwealth Club, Franklin D. Roosevelt, published in the New York Times, Setember 24, 1932. (excerpts) ]

Roosevelt's New Deal ushered in the third great phase of American capitalism that has lasted until the present day.

The astonishing thing about his administration was that not only did he fail to stimulate employment and bring the economy out of the Depression, but this lack of success was ignored by the people, and for generations, by the history books in American high schools and colleges.

He was re-elected, not once (as the tradition established by George Washington would allow), but three more times!

Harry Hopkins: Soviet Spy

Subsequent to the fall of the Soviet Union, previously secret information regarding the role of Harry L. Hopkins as a Soviet agent came to light. Iskhak Akhmerov, the KGB official who controlled Soviet agents in the U.S. during World War II is reported to have described Harry Hopkins as 'the most important of all Soviet wartime agents in the United States.' See: 'KGB: The Inside Story of its Operations from Lenin to Gorbachev,' Christopher Andrew, Oleg Gordievsky, May, 1992, HarperCollins; See also: 'The Sword and the Shield: the Mitrokhin Archive and the Secret History of the KGB', Christopher Andrew, Vasili Mitrokhin, September 1999, Basic Books

Why FDR Failed

The reasons for Roosevelt's failure to boost the economy are clear enough, although liberal economists after half of century of study still have difficulty in grasping the obvious.

Employment rises only when those who control the factors of production feel well enough about their economic future to risk hiring people.

Unlike Josef Stalin, Roosevelt did not actually control enough factories and businesses to make a difference; he was dependent upon the entrepreneurial spirits of those that did.

Roosevelt did everything possible to alienate and terrify businessmen

Unlike Hitler and Mussolini, he did not get in bed with business interests or rev up industry to build a war machine, creating employment in the process.

Instead, he did almost everything possible to alienate and terrify businessmen, thereby extending the Depression.

He started by defaming them and by saying they were not needed.

In his address to the Commonwealth Club, he called capitalists 'mere builders of … industrial plants … as likely to be a danger as a help.' He said the country had no interest in 'discovery or exploitation of natural resources, or necessarily producing more goods.'

The time when capitalists were respected was over; 'the day of enlightened administration' (i.e., Big Government) had come.

Roosevelt not only did not like capitalism or business, he insisted, at every turn, on insulting those on whom recovery depended.

Any business person with a reasonable level of literacy and interest in public affairs could discern what was happening by reading H. L. Mencken in the New Mercury magazine and noting the facts reported even by liberal newspapers.

Left-wing economists have long presumed that capitalists and entrepreneurs are so avaricious and money-grubbing that they will take any amount of slander and societal snubbing and still continue to play their now-despised role.

They are wrong.

Capitalists are human and, like the workers they hire, react to praise and emotional stimulus.

Consequently, many capitalists sat on their wallets, waiting for the New Deal nightmare to go away.

FDR's New World Order

Roosevelt saw the New Deal not as a political slogan but as a call for establishing a 'New Order for the Ages'  in which 'the process of democracy must be greatly improved'  ('Speech to Joint Session of Congress, January 6, 2020', Franklin D. Roosevelt.).

To indicate this, he put a Masonic Seal on the reverse of the dollar bill (no longer backed by gold) with the inscription, 'Novus Ordo Seclorum' and a thirteen-stepped, unfinished pyramid representing the thirteen, thirteen-year periods since 1776, the last of which signified his time in office, 1932-1945.

Roosevelt was more than willing to back up his dislike of capitalism with deeds.

He put into law significant tax increases, raising the top level of income taxes to seventy-nine percent in 1936, reducing personal exemptions, eliminating the earned-income credit, imposing an excise tax on dividends, and levying a capital stock tax, liquor taxes, a social security payroll tax, and increased estate taxes.

Federal tax revenues increased from $1.9 billion in 1932 to $6.5 billion in 1940, in a non-inflationary economy, while budget deficits rose from $2.7 billion in 1932 to $2.9 billion in 1940.

The more radical he became, the more business retreated into non-action.

Essay: continued >

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