The Ruling Elite Read online

  Harold G. Moulton, the first president of the Brookings Institution, and Representative Meyer Jacobstein, author of The Tobacco Industry in the United States (1907) and an Aldrich Plan advocate, initiated the idea of the National Recovery Administration (NRA). Jacobstein, a former director of emergency employment management in the War Industries Board and a former congressman, drafted a detailed plan for business recovery in early 1933.301 FDR signed the National Industrial Recovery Act (NIRA) into law on June 16, 1933, the same day that the Banking Act of 1933 was enacted. Roosevelt appointed Johnson, named Time magazine’s Man of the Year for 1933, as head of the NRA.

  The NIRA, a unique experiment in American history, led to the creation of the NRA, Roosevelt’s primary New Deal agency, to administer provisions of Title I of the NIRA, and the Public Works Administration. The act also created the National Labor Relations Board on June 29, 1934. This independent federal agency was charged with conducting elections for labor union representation and with investigating and remedying unfair labor practices. The board may require an employer to engage in collective bargaining with a union. The act generated hundreds of new regulations, suspended antitrust laws, and allowed unions to expand after 1935 when the Supreme Court abolished the NRA. The National Labor Relations Act, effective July 5, 1935, protected employee rights in the private sector, enabling workers to organize and to discuss workplace issues with coworkers, to engage in collective bargaining, and to participate in strikes and other concerted activities.302

  Permitting unions to bargain for industry-wide wages probably contributed to cartelization in numerous industries. FDR’s New Deal initiative authorized him to regulate industry, which included the development of cartels and monopolies allegedly to help stimulate economic recovery. Johnson, Tugwell, Baruch, Raymond Moley, Donald Richberg (law partner of Harold L. Ickes), and Jerome Frank claimed that unrestrained competition helped instigate the Depression. They felt that the government had to play a major part in planning the national economy.

  The act required businesses to decrease production while increasing prices and wages during a time when people were unable to purchase essentials. Authorities arrested those who decreased their prices, and castigated intermediaries as criminals. It appeared that the government designed its objectives and its policies to implement an industrial economy. In 1934, Richberg, head of the NRA, said, “A nationally planned economy is the only salvation of our present situation and the only hope for the future.”303

  Under the NRA, more than two million employers signed FDR’s Re-Employment Agreement, pledging that they would limit hours to thirty-five to forty hours per week for most employees and pay minimum wages to approximately sixteen million nonagricultural workers out of a total workforce of some twenty-five million workers. The NRA, with presidential approval, over the next year and a half imposed approximately five hundred codes of “fair competition,” on industries and trades. The NRA enticed employers by promising exemption from antitrust laws. Agents from trade organizations managed to negotiate and gain approval from the NRA for hundreds of codes applicable to more than three-quarters of private, nonagricultural employment.304

  NRA policies had disastrous consequences, increasing business costs by 40 percent. Five months before the legislation passed, there was evidence of recovery—an increase in factory employment and payrolls by 23 and 35 percent respectively as the economy naturally adjusted. Requiring shorter work hours and increased wages and imposing new costs on doing business, the NRA reduced production by 25 percent six months after taking effect. The AAA, under the guise of fighting deflation, compelled farmers to cut production by destroying extra crops and livestock. In 1933, farmers slaughtered six million piglets and 220,000 pregnant cows, with most of the meat going to waste. Many cotton farmers razed between one-quarter and half of their acreage.305 In 1936, the Supreme Court declared the act unconstitutional.

  Higher prices and the destruction of food affected hungry Americans. Under the AAA, Agriculture Secretary Henry A. Wallace (son of Henry C. Wallace, a former agriculture secretary) initiated a system that benefited those owning large farms by paying them not to farm certain areas, primarily the lands of the tenant farmers that they had evicted. They received more from the government than they would have received in rent from their tenants.

  In eastern Arkansas in 1934, the Depression and the New Deal crop reduction programs caused mass evictions of black and white sharecroppers. In 1935, aided by socialist leaders, sharecroppers formed the Southern Tenant Farmers Union and attempted to lobby the federal government to get a share of crop reduction payments and to prevent landowners from displacing them. The union, with twenty-five thousand multiracial members by 1936, sent representatives to lobby officials in Washington. Landowners used terrorism against the members, including murders, beatings, and arrests, making it impossible to maintain their headquarters or to operate safely outside of Memphis. They formed other organizations, but the poorest people of the South, both blacks and whites, united by common goals, failed in their efforts.

  Hungarian-born Joszef Peter, master of a large spy network, transferred Whitaker Chambers from New York to Washington. Many members of Peter’s network worked in New Deal agencies and in the Navy, State, Interior, and other departments. In testimony before the House in 1948, Chambers pinpointed Soviet agents who worked for the AAA including Harold Ware, who operated his own spy network. Other policy-makers for America’s farmers working as Soviet spies included Alger Hiss, John Abt, Henry Collins, John Hermann, Victor Perlo, Lee Pressman, Nathaniel Weyl, and Nathan Witt, many of whom stole government documents.306 Wayne C. Taylor, later the undersecretary of commerce and assistant treasury secretary, was the AAA’s assistant administrator in 1933.307

  In 1933, George Peek became the first administrator of the AAA. Wilson was the agency’s chief wheat production secretary from May to September 1933. Peek was the president of the two banks that would become the Export-Import Bank of the United States, the official export credit agency of the US government. On February 2, 1934, FDR signed Executive Order 6581, creating the Export-Import Bank with the immediate goal of making loans to the Soviet Union.

  In May 1934, FDR obtained $25 million from Congress to establish subsistence farms. A century before, people lived on subsistence homesteads that provided families with food, while industrial employment provided money for clothes, taxes, and incidentals. This system worked well. FDR said that he wanted to establish subsistence “dwellings equipped with gardens sufficient to enable a worker to grow food for his family after factory hours.” He assigned the new unit in the Interior Department, headed by Wilson, to institute the program. Wilson directed its first major experiment, a “combined farm-and-factory community” in West Virginia for the benefit of coal miners. Wilson was an authority on the two extremes of agriculture: subsistence farming and large-scale farming.308

  Wilson would direct the Division of Subsistence Homesteads in the Interior Department until June 30, 1934, when FDR appointed him assistant secretary of agriculture. In 1937, Wilson was named undersecretary of agriculture. On February 1, 1940, he would become director of extension work at the USDA where he also functioned as the chief of nutrition programs. He wrote two books, Farm Relief and the Domestic Allotment Plan and Democracy Has Roots.309

  The NIRA, specifically Title II, Section 208, allowed the president to expend up to $25 million to develop ninety-nine model communities across the nation. The project functioned to redistribute the population, moving the urban poor—factory workers who had lost their jobs with the 1929 crash and the Depression and were unskilled in farming—to isolated rural areas. The total construction cost for these so-called self-sufficient towns was actually $108, 095,328.310 The first project to receive a federal loan was the Dayton Homestead Unit in Ohio.311 The concept served to alter society, based on a few factors, 1) the increased exploitation of the land; 2) the progressive monopolization of farming, and; 3) the
gradual decentralization of industry. There are now fewer than 2.2 million farmers, many part-time. A century ago, thirty million people were involved in agriculture. Big conglomerates have replaced the family farm.

  Another project was the Jersey Homesteads, a prototype, an agro-industrial cooperative including a farm, factories, and retail stores fourteen miles east of Trenton. After FDR’s death, residents renamed the community Roosevelt, which just celebrated its seventy-fifth year.312 Benjamin Brown, a Jewish immigrant, became wealthy by establishing such rural cooperatives, inspired by Birobidjan. He created the Provisional Commission for Jewish Farm Settlements in America. Albert Einstein and others linked to Jewish charitable and labor organizations participated. In just one example, the Division of Subsistence Homesteads awarded Brown $500,000 to establish Jersey Homesteads. He purchased land in Monmouth County and began taking applications for two hundred settlers. He appointed Max Blitzer as project manager, while Samuel Finkler selected families from the applicants.313

  Local homesteads were subsidiaries of the Federal Subsistence Homesteads Corporation. The federal government, in the person of Interior Secretary Harold Ickes, held the stock. Brown and members of his commission sat on the board of directors for the Homesteads project. David Dubinsky, president of the International Ladies’ Garment Workers Union, opposed the project because it would remove jobs from New York City. On May 27, 1935, the Supreme Court, in the Schechter case, declared that the National Industrial Recovery Act, enacted June 16, 1933, was unconstitutional, so officials shifted Section 208 to the Resettlement Administration, established by the Emergency Relief Appropriation Act passed April 8, 1935.314 Rexford Tugwell directed the administration. The garment workers agreed that the Jersey Homesteads factory would be a new cooperative run by the settlers, to prevent job loss in New York.315

  Alfred Kastner was the principle architect for the Homesteads project. He hired Louis I. Kahn as his assistant. A triple cooperative, Tripod, managed the project, each with a board of directors. The Jersey Homesteads Agricultural Association managed the poultry and dairy units. The Jersey Homesteads Consumers’ Cooperative Association managed the retail end, consisting of a clothing store, a grocery and meat market, and a tea room. The Workers’ Aim Cooperative Association, with a showroom and office space in Manhattan, had jurisdiction over the factory, which produced women’s coats and suits.

  In 1937, to promote and distribute garments nationwide, Brown poured $50,000 into creating a network with outlets throughout the country. A year later, the federal government awarded the settlement another loan, for $150,000, with the stipulation that the factory restructure itself as the Jersey Homesteads Industrial Cooperative Association, representing the workers, and the Consumers Wholesale Clothiers, Inc., representing management and distribution. The factory also increased production to include men and children’s clothing.316

  The Farm Security Administration (FSA), previously known as the Resettlement Administration, wanted to sell the houses at the Jersey Homesteads and relinquish the water and sewer plants, since many of the houses were still empty and numerous residents were unemployed. In April 1939, the FSA acknowledged the failure of the factory and attempted to sell the fixtures. However, the FSA was finally able to rent many of the houses to others, which generated animosity among the original Jewish families, many of whom were destitute after their initial investment. The borough council created an economic planning committee that negotiated with Kartiganer and Co., which began operating the factory in 1940. By then, the insolvent clothing factory and agricultural cooperative had ceased operations. Despite these failures, the grocery and meat market continued for a few more years.317

  The residents, many of whom spoke Yiddish, built a strong, cohesive community. They were concerned about the refugees in Europe. In 1938, the council heard about the alleged atrocities that the Germans were committing against Jews. In 1948, the community would ask the president to support the Zionists in their efforts to make Palestine a Jewish state. The community manager, via the Works Progress Administration, created adult education and recreational programs and helped found a library. Residents worshiped at various locations until they built a synagogue in 1956.318

  In 1936, Kastner asked artist Ben Shahn to create a mural in the school portraying the establishment of Jersey Homesteads. Shahn and his wife, Bernarda Bryson, moved to the community in 1939, drawing other artists, such as Jacob Landau, the former chairman of the Pratt Institute’s fine arts department. Others included painter Gregorio Prestopino, Liz Dauber, David Stone Martin, Stefan Martin, Edwin and Louise Rosskam, Anita Cervantes, Laurie Altman, Joshua Hecht, Benjamin Appel, Shan Ellentuck, and Franklin Folsom. In 1945, Shahn proposed building a monument to Franklin D. Roosevelt, but was never able to raise sufficient money. In 1960, individuals formed a new Roosevelt memorial committee to raise funds to create the memorial. Jonathan Shahn, Ben’s son, sculpted a bust of Roosevelt, and Marvin Feld designed the amphitheater and park where the bust resides.319

  By 1938, unemployment was 19.1 percent, and in 1939, it was 17.2 percent. In 1938 and 1939, the League of Nations conducted the World Economic Survey, comparing the major industrial economies. In 1932, American unemployment was average compared with other major countries. By mid-1938, after five years of New Deal policies, only the Netherlands, Norway, and Denmark suffered greater unemployment than America. In 1938, America’s industrial production attained just 65 percent of what it was in 1929. The UK in 1937 achieved 124 percent of its 1929 production rate, without artificial Keynesian deficit spending. Germany attained production of 117 percent, Sweden 149 percent, and Japan 170 percent compared with their 1929 rates. The league evaluated twenty-two nations and determined that nineteen experienced a higher industrial recovery rate than America.320 The Federal Reserve abruptly contracted the money supply in 1937, probably expanding unemployment.

  Donald Worster sees a close connection between the Dust Bowl and the Depression (1929-39) and claims that the same entity created both for comparable motives. The Dust Bowl, like the economic crisis of the 1930s, was the result of greed and monopoly capitalism and was part of the same crisis.321 Worster contends that certain monopoly capitalists used their influence and money against nature, with no thought about the consequences. The 1929 stock market crash led to factory closures, while the unsuitable use of technology triggered the Dust Bowl, a manmade calamity that struck a segment of the population that could least afford it.322 Karl Marx, as quoted by Worster, pointed to “a vicious class order in which a few owned the means of production and the rest sold their labor to stay alive.”323

  Reporting the “News” from Europe

  Walter Duranty

  Cambridge-educated Walter Duranty, after finishing college with a trust from his grandfather, moved to Paris where he met Aleister Crowley, who was eight years his senior. Crowley, who practiced black arts and magical-sexual rituals, referred to himself as “the wickedest man in the world.” The two men had much in common. They both enjoyed smoking opium and engaging in sexual escapades with numerous women. Duranty, though physically unattractive, was “highly sexed” and used his skills—intelligence and conversational abilities—to advance his sexual activities and to satisfy his “intense attraction for the opposite sex.” He preferred his women dumb and in a recreational mood and endorsed the ideas of the Jewish misogynist Otto Weininger, the author of Sex and Character: A Fundamental Investigation.324

  Duranty was creative, took liberal poetic license, and turned any event or circumstance into a useful subjective story in which he would ambiguously combine truth and fiction. In 1917, the Allied propaganda apparatus asked him and several of his colleagues to “write a fake story.” After a night of drinking in a local bar, he created a story that cited the “eyewitness account” of how Allied naval forces had thwarted a German submarine attack. He had some temporary moral misgivings about the falsified story but ultimately rationalized that “a noble end”
justified “somewhat doubtful means.”325

  During World War I, Duranty was a reporter. In 1919, he wrote a story about the Paris Peace Conference, which apparently drew the attention of certain people. In 1921, he went to the Soviet Union as a journalist, the same year as veteran reporter Donald Day. In 1929, Soviet officials granted Duranty, a willing participant in communist expansion, an exclusive interview with Josef Stalin. He portrayed the Soviet dictator in glowing terms. Duranty won a Pulitzer Prize in 1932 for thirteen articles analyzing the Soviet Union under Stalin. He was the Moscow bureau chief of the New York Times until 1934 when he returned to America. The Times kept him on a retainer, which required him to live in Moscow for several months each year. He reported the details of the show trials in the late 1930s.

  After Day obtained a Soviet visa, the Chicago Tribune offered him a job as the newspaper’s Northern Europe correspondent. He began work in August 1921 and was the only American reporter in the region, covering events in the Soviet Union, the Baltic States, and Finland. He also reported on the communist subversion of Estonia, Latvia, and Lithuania. Day, a committed anticommunist, was unlike most other Western reporters in his uncompromising reports on the Soviet Union. He opposed the compulsory collectivization of agriculture in the 1920s, which caused death and famine. The Soviets withdrew his visa when he refused to report favorably on their system. Thereafter, lacking direct access, he relied on refugee reports and the correspondents he sent across the Soviet border.

  Americans were unaware that Jews living in the United States had accumulated vast sums of money to facilitate the emigration of Eastern European Jews to America. Meanwhile, Jewish journalists in Europe submitted reports about persecution and pogroms to Jewish newspapers in Germany, America, Britain, and France. These journalists received reports from Jews who had bribed their way out of Russia and were attempting to bribe their way into other countries, using sympathy to attract funds to aid in their relocation. Many Jewish journalists asked Day to transmit similar stories, but after investigating the veracity of the reports, he refused to participate. However, dozens of Jewish newspapers all over the world eagerly published these fallacious stories.326