American Dreamer: A Life of Henry A. Wallace by John C. Culver and John Hyde
A Portrait of How Statist Ideas Were Conceived and Implemented in the New Deal Era
SEPTEMBER 01, 2001 by BURTON FOLSOM
Filed Under : Statism, Subsidies, Special Interests
W. W. Norton & Company · 2000 · 608 pages · $35.00
Reviewed by Burton Folsom, Jr.
Possibly the most prominent statist politician in America in the first half of the twentieth century was Henry A. Wallace—vice-president, secretary of agriculture, and candidate for president in 1948. In American Dreamer, former U.S. Senator John C. Culver and journalist John Hyde have written the first full-length biography of Wallace. By studying him and his career, we can explore how statist ideas were conceived and implemented in the New Deal era.
Henry A. Wallace (1888–1965) grew up in Iowa in a family of prominent journalists. His father, Henry C. Wallace, edited Wallaces’ Farmer, an influential farming newspaper. His grandfather wrote for the family paper as did young Henry when he was growing up. Until the 1920s, as the authors make clear, the Wallaces tended to promote free markets and vote Republican. The farm depression after World War I was what turned them toward government intervention. Henry C. Wallace became secretary of agriculture under Presidents Harding and Coolidge, and both Henry and his son became ardent enthusiasts for the McNary-Haugen farm plan, the first massive government farm program to pass Congress.
Under McNary-Haugen, the government would prop up crop prices by tariffs and export subsidies. Farmers could overproduce with full confidence that price supports would guarantee them profits. The crop surplus, which would of course steadily increase year by year, would be dumped on the foreign market—where other countries would presumably buy it even though we would be tariffing their exports. Liberty must be sacrificed to raising farm prices, the elder Wallace argued in his defense of McNary-Haugen. But President Coolidge vetoed the bill and called it a recipe for national debt and bureaucratic meddling. The Wallaces, however, persevered. With the death of Henry C. Wallace, young Henry A. took charge of Wallaces’ Farmer and backed Democrat Franklin Roosevelt, who won the presidency in 1932.
When Roosevelt appointed Wallace secretary of agriculture, American farming was changed forever. Their program, the Agricultural Adjustment Act (AAA), was a response to the Great Depression, which had beaten down farm prices to all-time lows. It would artificially raise prices by cutting production—farmers would be paid not to produce. In 1933, the first year of the program, Americans were forced to pay farmers to plow under corn and cotton and to kill and destroy six million pigs. Wallace was no sentimentalist. “Some people may object to killing pigs at any age,” Wallace observed. “Perhaps, they think that farmers should run a sort of old-folks home for hogs and keep them around indefinitely as barnyard pets.”
Wallace himself, however, confessed that plowing under cotton and killing pigs “were not acts of idealism in any sane society.” But the program won votes. Farmers with government checks voted Democratic in droves. The subsidies and the rise in farm prices outweighed, in the minds of most farmers, the loss of liberty and the sharp increase in the number of bureaucrats—tens of thousands of whom were needed to keep farmers from secretly overproducing. In other words, the political benefits of the farm program—subsidies and higher crop prices—were concentrated on farmers; the costs of the program—a spiraling federal debt and increased inflation—were spread out among the general population. Thus even though the AAA was an economic failure, it was a political success.
Roosevelt and Wallace played the subsidy game to perfection in the election in 1936. The authors, who strongly support both Roosevelt and Wallace, print a revealing quotation from that campaign: “Henry,” the President told Wallace, “through July, August, September, October, and up to the fifth of November [just after election day] I want cotton to sell at 12 cents [a pound]. I do not care how you do it. That is your problem. It can’t go below 12 cents. Is that clear?” The authors draw no inferences from the way Roosevelt and Wallace were using government. If Culver and Hyde had researched more deeply, they would have noticed that even within the cabinet there was dissent: Treasury Secretary Henry Morgenthau deplored the unintended consequences of pegging cotton prices this way to win southern votes. If American cotton is priced artificially high, Morgenthau wrote in his diary, exports will decline, and markets might be permanently lost.
When Roosevelt won re-election in a landslide, Wallace moved further into his inner circle and was tapped as vice president for his third term. In 1948 Wallace challenged Truman and made a run for the presidency as an independent. His platform called for national health insurance and public ownership of many banks, railroads, and utilities. He raised and spent over $3 million—“the most costly campaign [up to that time] in American history,” according to the authors—but received less than 2.4 percent of the vote.
Culver and Hyde, both Iowans and headstrong “liberals,” admire Wallace and celebrate with him the growth of government in America. Yet for free-market thinkers, Wallace’s life is worth scrutinizing as well. In the 1920s Wallace was merely a man with an idea—that farming should be subsidized by government. But he wrote, talked, and cajoled until others began listening to his idea and taking it seriously. In the next decade, Wallace’s idea became reality; in the decade after that, Wallace was second in line to the throne and in a position to make his idea a permanent fixture in the American economy. Ideas have consequences only when men care enough to fight for them, shun the critics who scorn them, and then fight some more until the climate of opinion changes.