6. DECLINE AND REVIVAL
The Roosevelts made their way back east, stopping to highlight the massive Grand Coulee and Fort Peck dams and to dedicate a WPA bridge in Chicago, and they were back in Washington by the end of the first week in October. From there, the president witnessed the painful drop in the economy. Before it was to bottom out in March 1938, two-thirds of the economic gains achieved since 1933 had been lost. Industrial output fell 40 percent overall, steel production 75 percent, and corporate profits 80 percent. The stock market as reflected by the Dow fell to 99, losing nearly half its value. By then, 4 million Americans who had regained jobs since 1933 had lost them, and the unemployment rate had jumped back up to 19 percent. Harry Hopkins and the other nascent Keynesians had been correct: the unprimed pump was sucking air.
Equally painful to the president was the failure of his legislative package in the special session to which he called the Congress in November. He had summoned it because he wanted a farm bill to replace the struck-down AAA, the industrial wage-and-hours bill that had so far eluded him, the authority to reorganize the executive branch to give him more flexibility in managing the government, and a plan that would create seven regional planning bodies to develop and manage natural resources as the Tennessee Valley Authority was doing in six states in the Southeast. But the revitalized conservatives were in no mood to cooperate, and when the session adjourned in December after five contentious weeks, it had produced literally nothing on Roosevelt’s list.
By the time he delivered his fifth State of the Union address in January 1938, he was no longer talking about balancing the budget in the year ahead. He threw a bone to Morgenthau and the other budget balancers, saying his budget request for fiscal 1939 “will exhibit a further decrease in the deficit.” But he added that while he was “as anxious as any banker or industrialist or business man or investor or economist that the budget of the United States government be brought into balance as quickly as possible,” he would not permit “any needy American who can and is willing to work to starve because the Federal Government does not provide the work.” He hinted that the blame for the shrinking economy lay with businesses that were preventing expansion by withholding investments in new plants. This he interpreted as a politically motivated strike at his economic program. “The selfish suspension of the employment of capital must be ended,” he declared.
In fact, there was blame aplenty for the economic plunge, although if a single word could describe the cause, it was probably confusion. True, industry was not investing in new production capacity, but whether this was the work of monopolists and profiteers determined to undermine the reforms of the New Deal, or simply uncertainty over how far those reforms would go, was unclear. “We don’t know,” Lamont du Pont had said in 1937, addressing questions that ranged from the future course of everything from taxation to the advance of unions. Indeed, business was still coming to terms with the new landscape as approved by the Supreme Court: the collective bargaining provisions of the Wagner Act, as well as taxes for Social Security and unemployment compensation. Roosevelt’s attacks on what he termed “economic royalists” and “selfish interests” suggested that more, and more drastic, measures might be in the offing. Now that the Washington State minimum wage had been upheld, his push for a national wage-and-hours law threatened to raise business’s operating costs, and he made it clear at every turn that he would not rest until it passed. The people favored it “by an overwhelming vote,” he had said in the State of the Union address. They wanted “the Congress—this Congress” to install a floor beneath wages and a ceiling over hours. In a similar vein, the vast gains in unionization in the auto, steel, and mining industries had contributed to the nervousness with which business viewed its future prospects.
Blame aside, the first months of 1938 recalled the depths of 1933. The relief rolls swelled in hard-hit industrial cities still trying to regain their economic footing. Cleveland exhausted its relief budget in the first week of the year, leaving 65,000 people without emergency food and clothing. Chicago had no money to keep open its nineteen municipal relief stations. Detroit’s rolls of employable relief recipients eligible for WPA jobs jumped a startling 434 percent, and Toledo’s rose 194 percent. St. Louis and Omaha foresaw the end of their relief funds, and Omaha cut back to token payments. Many people were once again forced to scavenge for food, and starvation and suicide crept back into the public consciousness.
Hopkins was watching all this from Palm Beach, where he was recuperating from cancer surgery. He had finally mustered the courage to seek a diagnosis of the eating problems that had plagued him for more than a year. Doctors at the Mayo Clinic in Rochester, Minnesota, had confirmed his worst fears and performed an operation that removed the cancer, together with most of his stomach. Around the first of the year, when he was again able to travel, he had accepted Joe Kennedy’s invitation to convalesce at his winter home.
But although he was absent from Washington, Hopkins was not silent. He resumed his advocacy of deficits to shore up purchasing power, his allies including Marriner Eccles and Leon Henderson, and when Roosevelt invited him to Warm Springs at the end of March he made his case directly to the president. By then, reeling from the business wipeout and the reappearance of staggering human hardship, and looking ahead to the midterm elections in the fall, Roosevelt had heard enough. He passed his decision on to Hopkins on the train back to Washington: budget balancing was off the table and he would ask the Congress for new spending to try to pump up the economy.
On April 14, he sent a $3 billion spending plan to Congress. It would add money to the WPA, CCC, and National Youth Administration and fund new public works, highways, federal buildings, slum clearance, housing, and flood control projects. He also said he was loosening credit by reducing bank reserve requirements. It had been a mistake, he told the people the same night in a fireside chat, to have tried to reduce spending. One week later, the WPA rolls were back above 2.5 million.
Hopkins was soon on the stump again, touting the rebirth of the WPA. The president was monitoring Hopkins’s health personally, having decided that the WPA head was the best choice to succeed him as the Democratic candidate in 1940, and Eleanor had invited him to move into the White House, where Diana had been living since Barbara’s death. Although he was in what for him was fine health following his surgery and long recuperation, to Eleanor, his longtime ally on programs for youth, women, and the unemployed, Hopkins now gave the impression of “being hollow” physically. He had always been thin and slumped, but the operation had increased that sense of concavity; his suits hung even looser and his collars gapped around his scrawny neck. He was also in fine fettle; in a nationwide radio broadcast on May 8, he toted up the agency’s accomplishments: 43,000 miles of new roads and 119,000 miles of road improvements, 19,000 new bridges, 185,000 culverts, 105 new airports, 12,000 new schools and other public buildings, 15,000 small dams, 10,000 miles of water and sewer lines, and more than 10 million trees planted and improvements on millions of acres of land.
“These things constitute national wealth and national assets. Any private business which builds improvements to its physical plant counts these improvements as assets, and considers itself richer because of them. Government alone counts the cost of such improvements on the red side of the ledger,” Hopkins said.
By the end of June, Congress had passed Roosevelt’s new spending plan and the Fair Labor Standards Act. This was his wage-and-hours law at last. It banned the employment of workers under age sixteen in industry and established a forty-hour workweek, a minimum wage of 40 cents an hour (phased in over eight years, after starting at 25 cents an hour), and time and a half for overtime. The night before he signed the law on June 25, Roosevelt delivered a fireside chat in which he said that except perhaps for Social Security, it was “the most far-reaching, the most far-sighted program for the benefit of workers ever adopted here or in any other country.” But despite these successes, his opposition was solidifying in Congress. This was a result of the continuing fallout from the court fight and the new vigor of conservatives, so the prospect for further New Deal reforms was dim.
That month, Hopkins released a WPA survey that assessed relief needs since 1933. Its conclusions were based in part on an “unemployment census” that Roosevelt had launched with a fireside chat the previous November, seeking data on the skills and locations of those who were then jobless. Unemployment relief is “not the permanent cure,” the president had said. But as the recession persisted and deepened and Hopkins gained in influence, the administration’s thinking changed. The data now suggested, said Hopkins, that high unemployment “can no longer be regarded as a temporary problem to be treated on an emergency basis.”
The report recommended the establishment of a three-part program that included relief, unemployment insurance, and an ongoing government-sponsored work component. “No single program will eliminate the distress from unemployment,” it stated.
Time took note of Hopkins’s reemerging profile a month later, in a cover story in its issue of July 18. He had last graced the magazine’s cover during the CWA’s flurry of temporary job creation in the winter of 1934. Now, more than four years later, the WPA was adding 60,000 workers a week. Hopkins’s portrait, this time rendered in color, showed him in a typical pose, his hands cupped around a match as he lit a cigarette, his dark, bulging eyes gleaming. The story noted that he was hard at work in his “plebian” office in the Walker-Johnson Building at a time when most of official Washington was on vacation, and elaborated on his view of the need for a permanent work program, which he had been touting in speeches and on national radio. “This new frontier of idle overhead,” as he described it in a May radio address, meaning jobless workers, idle machines, and unused capital, had cost Americans $200 billion in lost wages since 1929. With 12 or 13 million still unemployed, he said, only the government had the resources to organize all their “resourcefulness, ingenuity and courage” into a program that would “provide a broad base of purchasing power…increasing the stability of the economic system.”
Hopkins was less voluble when it came to his personal life. He told Time it was “nobody’s g——d——business” whether he was engaged to thirty-three-year-old Dorothy Donovan Thomas Hale, the widow of artist Gardner Hale, who had died in an automobile crash in 1931. The magazine described her as a “beauteous Pittsburgh-born glamour girl” with homes in Paris and Southampton and a résumé that included a Broadway chorus line. In fact, she and Hopkins were not engaged. And his tongue loosened once again when he was reminded of attacks on the WPA by Representative Hamilton Fish, a New York Republican. Fish had applied to the WPA an often-used damnation of corruption orginally attributed to eighteenth-century Jacksonian Party representative and Senator John Randolph of Virginia, that “like a dead mackerel in the moonlight, it stinks and shines and shines and stinks.”
“They can call names just so often,” Hopkins said. “I know a lot of adjectives myself and I am going to start in pretty soon.”
It was not an idle threat. The WPA was demonstrably not corrupt at the national level. Hopkins still rejected patronage in WPA hiring, and pressuring workers to support a favored candidate was a firing offense. But five years in Washington had inured him to the ways of politics. He knew that politicians would lay claim to WPA votes if they could. He also knew that jobs translated into votes without a lot of prompting, and rolls that increased before elections sent a message. So did pay raises, such as the across-the-board wage hikes that had gone through in Kentucky and Oklahoma after pro–New Deal senators Alben Barkley and Elmer Thomas, who were fighting tough renomination battles, were attacked by opponents who pointed out that WPA workers in neighboring states made more than they did. The primary election season that was now under way before the midterm elections in November found many of the administration’s friends under pressure from the right. Reform remained a part of the Roosevelt agenda, and Hopkins, especially now that he had entered the inner circle, was committed to pursuing that agenda. Between his hopes for a permanent WPA and a new interest in his own electoral possibilities, he was more than ever the politician, ready to do battle with the administration’s enemies.
Meanwhile, the agency continued its resurgence. By late August 1938, the numbers of men and women working for the WPA had surpassed the previous high reached in February 1936, and they continued to climb toward 3.3 million, more than double the 1,435,169 of one year earlier. The agency, as if reflecting the thrust of its own study, was showing undeniable signs of permanence.