The Role Of Croly In Franklin D. Roosevelt And The New Deal
Croly’s recommendation of a universal acceptance of economic and political centralization was in his belief system, the only mechanism available and strong enough to organize a modern society. This meant the development of a strong national government capable….of taxation to redistribute wealth, elevation of unions…and a general faith in leadership and expertise…” While Croly did not promote socialism directly; his proposals were more than one of a cultural significance. I believe this work was the critical base from which the Progressive agenda, lasting through today resides. Of all the authors/historians regarding the New Deal; only Leuchtenburg in his book “Franklin D. Roosevelt and the New Deal” fully recognized the contribution of Croly as one of most influential in the New Nationalism movement of the Roosevelt administration. Croly’s influence cannot be understated in the context of influencing the up and coming New Deal thinkers. Croly’s role as one of the primary contributors to the “New Republic” along with the earlier forerunners of the New Nationalism movement with others such as Lippmann, Van Hise and Patten served to refine and redefine the influence of government by nationally and
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internationally. Others like Tugwell took it to heart. Tugwell stated that “….he would recall later, “…it gave us a text to live by.” I believe as well as most conservative historians do, in the rise and power of Lewis Brandeis as part of the movement against corporations was his long lasting legacy. His actions prior to his selection as a Supreme Court Justice as well as his opinions regarding the Tennessee Valley Authority (TVA) based on his opinion on Alabama Power Co. v. Ickes and the powerful ruling of Schechter Poultry Corp. v. United States (effectively dismantling the NRA), provides both a conflicting and differentiating opinion on exactly what were his guiding principles. His nomination for the Supreme Court was vehemently rejected by most Congressmen. He was considered at best as a radical, but more over as an “anti-business” lawyer. However, Brandeis was the master of the long game (decades versus single actions) against corporations. Brandeis selected individuals who held to similar values like Felix Frankfurter (later nominated by FDR in 1939 replacing former Justice Benjamin N. Cardozo) to clerk for him. Brandeis used Frankfurter “…..to send down others to be law clerks to the Justices or to staff the New Deal Agencies”. While a staunch proponent for individual privacy rights he staunchly attacked monopolies and corporations with vigor prior to his nomination and acceptance to the Supreme Court. Where Herbert Croly was the political philosopher for the Progressive movement; Brandeis was one of its foremost tacticians as well as one of its social consciences. Justice Brandeis prior to his selection to the Supreme Court had strongly advocated in the power of the government as well as the individual. However, Brandeis's early flirtations with "….Brahmin culture (an understandably arresting image given Brandeis's “outsiderness” and his later association with a more egalitarian tradition) should not obscure the importance of his relationship with the fervent liberal Wilson.” Wilson, as the Democratic candidate for President in the 1912 election, asked Brandeis to sketch out a position for him on the “Trust problem” which would be different from that of Theodore Roosevelt, who was running as a third-party candidate.
Brandeis wrote a letter making the point that the Democrats were for enforced competition in industry, whereas Roosevelt’s Bull Moose Party believed that trusts and monopolies “should be made ‘good’ by regulation.” Brandeis went on, “We believe that no methods of regulation ever have been or can be devised to remove the menace inherent in private monopoly and overweening commercial power. This difference in the economic policy of the two parties is fundamental and irreconcilable.” Brandeis, in his letter to Wilson, he advocated the government’s taking over ownership of monopolies, so that they would be “owned by the people and not by the capitalists.” President Wilson, then signed into law the Clayton Act, which Brandeis had helped devise, and which was a significant enhancement of the Sherman Act. But over the years Brandeis’s aversion to bigness seems to have trumped his friendliness to government. In 1935, he joined the Supreme Court decision that decreed the National Recovery Administration as unconstitutional, and told one of Franklin Roosevelt’s aides, “I want you to go back and tell the President that we are not going to let this government centralize everything.” Justice Brandeis quietly lobbied Roosevelt to make the breakup of big businesses into “smaller units” to create more competiveness. Jefferson Cowie, in his book “The Great Exception,” writes, “The Democrats’ historic mission had been to restore the individual smallholder and his community to a place of economic prominence through dismantling the trusts,” but “industry of once unimaginable scope and scale now dominated the economic landscape, and the ‘Brain Trust’ that Roosevelt gathered around him had come to believe that the future of the political economy lay in regulating monopoly—not eliminating it.” The culminating factor in the role of Progressive movement and the restrictions which were being placed on laissez-faire capitalism was the New Deal. The historical background of the “Brain Trust” rejected “…the traditional Wilson-Brandeis philosophy that if America could once more become a nation of small proprietors, of corner grocers and smithies…” Instead, the members of the Brain Trust believed in a some kind of business cooperation, yet in their common aversion to other alternatives-laissez faire, trust busting or socialism. Today, some would call it a hybrid of incorporating both government and business into a mutually beneficial organism. While most recent historians view the major works of the New Deal was built by the leadership of FDR himself, others now differ with a new interpretation. This new revisionist view “….is that Roosevelt and a handful of advisors were farsighted enough to grasp what was required save capitalism from itself. Accordingly Roosevelt engineered sweeping attacks on big business for the sake of big business’s own long-run interest.” However, the New Deal and their advisors were private industries primary competitor. The use of government funding and regulations allowed it to single out one sector – utilities. One must remember that the Progressive movement has primarily targeted since the 1880s those businesses sectors that are heavily invested in infrastructure (railroads, energy and utilities). While banks can be nudged or controlled by regulation (Glass-Steagall or Dodd-Franks) since their value is primarily a fluid asset; a company which is deeply invested into physical asset has to comply or be forced into bankruptcy. The Tennessee Valley Authority or TVA was the classic example of government over-reach in to the private sector. The role of the private sector could help to bring the economy back- specifically the utilities. The creation of the TVA “….snuffed out a growing and potentially successful effort to light up the South. The company that would have delivered that electricity was Commonwealth and Southern.” There was a panic throughout Wall Street regarding future investments in the utility sector. The TVA had effectively shrank the value of the $680M which had been previously invested in southern utilities. Roosevelt saw the private sector were not reinvesting their cash into the market; retaliated by using the undistributed profits tax to squeeze more money out of the potential investors. More importantly, the TVA effectively undercut the price per kilowatt hour from the current private sector pricing. While the TVA/government had the authority under the powers invested in the ICC to make the river navigable, did its existence now give the government to right to litigate a “hostile” takeover of the power business? FDR traveled In November 1943 to Tupelo, Mississippi and announced that was being done in the TVA would be “…copied in every state of the Union before we get through.” Yet the TVA was heavily subsidized by the “forgotten man” at the expense of privately owned businesses. The situation grew even more precarious for utility companies. FDR had allowed Harold Ickes to woo towns by Federal subsidies for construction of power plants. Again, here was a use of Federal subsidies to undercut private corporations. More importantly, Frankfurter had assigned Corcoran and Cohan (two protégés of Frankfurter) to the White House staff. They were tasked to prepare for legislative verbiage the implementation of the pending Public Utilities Holding Companies Act of 1935 or the Wheeler-Rayburn Act. This act basically limited the scope and breadth of electrical holding companies, forcing a massive divestiture of their assets. The Federal government effectively hamstringed the ability for market forces to compete. This stifling of free and open competition is an example of the Progressive influence into laissez-faire capitalism. While many liberal historians consider the New Deal marked a continuation of the long struggle between public power and private interests, but that Roosevelt moved that struggle to a new level.
The unrestrained power of the business community was finally confronted with an effective challenge, and what emerged was a system of reformed capitalism, with far more protection for workers, farmers, consumers, and others than in the past. While New Left historians consider the New Deal as a failure, a dreary chronicle of missed opportunities, inadequate responses to problems, and damaging New Deal initiatives. The Roosevelt administration may have saved capitalism, but it failed to help—and in many ways actually harmed—those groups most in need of
assistance. While the Reagan revolution attempted to dismantle some of the Progressive era and earlier programs; it still remains deeply embedded into the capitalistic culture. Once it was thought that the New Deal and its attempt to dismantle big business was the high water mark of the Progressive era, instead seventy years later the Progressive movement against capitalism remains active.
internationally. Others like Tugwell took it to heart. Tugwell stated that “….he would recall later, “…it gave us a text to live by.” I believe as well as most conservative historians do, in the rise and power of Lewis Brandeis as part of the movement against corporations was his long lasting legacy. His actions prior to his selection as a Supreme Court Justice as well as his opinions regarding the Tennessee Valley Authority (TVA) based on his opinion on Alabama Power Co. v. Ickes and the powerful ruling of Schechter Poultry Corp. v. United States (effectively dismantling the NRA), provides both a conflicting and differentiating opinion on exactly what were his guiding principles. His nomination for the Supreme Court was vehemently rejected by most Congressmen. He was considered at best as a radical, but more over as an “anti-business” lawyer. However, Brandeis was the master of the long game (decades versus single actions) against corporations. Brandeis selected individuals who held to similar values like Felix Frankfurter (later nominated by FDR in 1939 replacing former Justice Benjamin N. Cardozo) to clerk for him. Brandeis used Frankfurter “…..to send down others to be law clerks to the Justices or to staff the New Deal Agencies”. While a staunch proponent for individual privacy rights he staunchly attacked monopolies and corporations with vigor prior to his nomination and acceptance to the Supreme Court. Where Herbert Croly was the political philosopher for the Progressive movement; Brandeis was one of its foremost tacticians as well as one of its social consciences. Justice Brandeis prior to his selection to the Supreme Court had strongly advocated in the power of the government as well as the individual. However, Brandeis's early flirtations with "….Brahmin culture (an understandably arresting image given Brandeis's “outsiderness” and his later association with a more egalitarian tradition) should not obscure the importance of his relationship with the fervent liberal Wilson.” Wilson, as the Democratic candidate for President in the 1912 election, asked Brandeis to sketch out a position for him on the “Trust problem” which would be different from that of Theodore Roosevelt, who was running as a third-party candidate.
Brandeis wrote a letter making the point that the Democrats were for enforced competition in industry, whereas Roosevelt’s Bull Moose Party believed that trusts and monopolies “should be made ‘good’ by regulation.” Brandeis went on, “We believe that no methods of regulation ever have been or can be devised to remove the menace inherent in private monopoly and overweening commercial power. This difference in the economic policy of the two parties is fundamental and irreconcilable.” Brandeis, in his letter to Wilson, he advocated the government’s taking over ownership of monopolies, so that they would be “owned by the people and not by the capitalists.” President Wilson, then signed into law the Clayton Act, which Brandeis had helped devise, and which was a significant enhancement of the Sherman Act. But over the years Brandeis’s aversion to bigness seems to have trumped his friendliness to government. In 1935, he joined the Supreme Court decision that decreed the National Recovery Administration as unconstitutional, and told one of Franklin Roosevelt’s aides, “I want you to go back and tell the President that we are not going to let this government centralize everything.” Justice Brandeis quietly lobbied Roosevelt to make the breakup of big businesses into “smaller units” to create more competiveness. Jefferson Cowie, in his book “The Great Exception,” writes, “The Democrats’ historic mission had been to restore the individual smallholder and his community to a place of economic prominence through dismantling the trusts,” but “industry of once unimaginable scope and scale now dominated the economic landscape, and the ‘Brain Trust’ that Roosevelt gathered around him had come to believe that the future of the political economy lay in regulating monopoly—not eliminating it.” The culminating factor in the role of Progressive movement and the restrictions which were being placed on laissez-faire capitalism was the New Deal. The historical background of the “Brain Trust” rejected “…the traditional Wilson-Brandeis philosophy that if America could once more become a nation of small proprietors, of corner grocers and smithies…” Instead, the members of the Brain Trust believed in a some kind of business cooperation, yet in their common aversion to other alternatives-laissez faire, trust busting or socialism. Today, some would call it a hybrid of incorporating both government and business into a mutually beneficial organism. While most recent historians view the major works of the New Deal was built by the leadership of FDR himself, others now differ with a new interpretation. This new revisionist view “….is that Roosevelt and a handful of advisors were farsighted enough to grasp what was required save capitalism from itself. Accordingly Roosevelt engineered sweeping attacks on big business for the sake of big business’s own long-run interest.” However, the New Deal and their advisors were private industries primary competitor. The use of government funding and regulations allowed it to single out one sector – utilities. One must remember that the Progressive movement has primarily targeted since the 1880s those businesses sectors that are heavily invested in infrastructure (railroads, energy and utilities). While banks can be nudged or controlled by regulation (Glass-Steagall or Dodd-Franks) since their value is primarily a fluid asset; a company which is deeply invested into physical asset has to comply or be forced into bankruptcy. The Tennessee Valley Authority or TVA was the classic example of government over-reach in to the private sector. The role of the private sector could help to bring the economy back- specifically the utilities. The creation of the TVA “….snuffed out a growing and potentially successful effort to light up the South. The company that would have delivered that electricity was Commonwealth and Southern.” There was a panic throughout Wall Street regarding future investments in the utility sector. The TVA had effectively shrank the value of the $680M which had been previously invested in southern utilities. Roosevelt saw the private sector were not reinvesting their cash into the market; retaliated by using the undistributed profits tax to squeeze more money out of the potential investors. More importantly, the TVA effectively undercut the price per kilowatt hour from the current private sector pricing. While the TVA/government had the authority under the powers invested in the ICC to make the river navigable, did its existence now give the government to right to litigate a “hostile” takeover of the power business? FDR traveled In November 1943 to Tupelo, Mississippi and announced that was being done in the TVA would be “…copied in every state of the Union before we get through.” Yet the TVA was heavily subsidized by the “forgotten man” at the expense of privately owned businesses. The situation grew even more precarious for utility companies. FDR had allowed Harold Ickes to woo towns by Federal subsidies for construction of power plants. Again, here was a use of Federal subsidies to undercut private corporations. More importantly, Frankfurter had assigned Corcoran and Cohan (two protégés of Frankfurter) to the White House staff. They were tasked to prepare for legislative verbiage the implementation of the pending Public Utilities Holding Companies Act of 1935 or the Wheeler-Rayburn Act. This act basically limited the scope and breadth of electrical holding companies, forcing a massive divestiture of their assets. The Federal government effectively hamstringed the ability for market forces to compete. This stifling of free and open competition is an example of the Progressive influence into laissez-faire capitalism. While many liberal historians consider the New Deal marked a continuation of the long struggle between public power and private interests, but that Roosevelt moved that struggle to a new level.
The unrestrained power of the business community was finally confronted with an effective challenge, and what emerged was a system of reformed capitalism, with far more protection for workers, farmers, consumers, and others than in the past. While New Left historians consider the New Deal as a failure, a dreary chronicle of missed opportunities, inadequate responses to problems, and damaging New Deal initiatives. The Roosevelt administration may have saved capitalism, but it failed to help—and in many ways actually harmed—those groups most in need of
assistance. While the Reagan revolution attempted to dismantle some of the Progressive era and earlier programs; it still remains deeply embedded into the capitalistic culture. Once it was thought that the New Deal and its attempt to dismantle big business was the high water mark of the Progressive era, instead seventy years later the Progressive movement against capitalism remains active.