All Commentary
Monday, March 1, 1993

Pride, Prejudice, and Politics: Roosevelt Versus Recovery, 1933-1938

Americans suffered needlessly from FDR’s antipathies toward business.


This study documents President Franklin Roosevelt’s hostility to business. In his 1933 inaugural address he spoke of the “plenty . . . at our doorstep” whose “generous use . . . languishes because rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetence, have admitted their failure, and have abdicated.” As the months and years passed, business leaders could see that such antagonism was not merely political hyperbole. FDR gave every indication of believing what he had said. So did persons close to him.

To help in the campaign of 1932 FDR’s advisers had recruited a “brain trust” from academia (chiefly Columbia University). “Only men . . . who could come to the many conferences . . . on a five cent fare” wrote Judge Rosenman, the recruiter. The economist, Professor Rexford Guy Tugwell, had just published an article decrying the profit motive.

The inauguration brought no substantial program for recovery. Throughout the period covered by this book (to 1938) reform seemed to take precedence over recovery as the key concern of persons close to FDR.

This scholarly, well-documented study—there are 1055 endnotes—makes a convincing case that FDR’s prejudices, antipathies based on emotion, worked against recovery. Despite evidence of the willingness of business leaders to cooperate in the early months, the President’s suspicions continued. “Businessmen who headed giant corporations were belittled . . . by Roosevelt for lack of intelligence.”

Recovery of the economy would be recovery of business. And business recovery would depend, in part at least, upon the beliefs and expectations, the “animal spirits,” of heads of businesses. Although one can never know how different the record would have been if FDR had not been so antagonistic, the author believes, I think correctly, that Americans suffered needlessly from FDR’s antipathies.

The policies of the first four New Deal years failed to produce sustained recovery. The economy suffered a serious and quite unexpected decline late in 1937. Treasury Secretary Henry Morgenthau informed the President in a telephone conversation on November 3, 1937, that another serious depression was under way and that the Federal Reserve should do something. Morgenthau recorded at the time: “From then on the President got very excited, very dictatorial and very disagreeable.”

He quoted at great length a man whom he described as a “wise old bird” who had told him that there were 2,000 men in this country who had made up their minds that they would hold a pistol to the President’s head and make certain demands of him, otherwise they would continue to depress business. He quoted a lot of other generalities.

I [Morgenthau] said, “A great deal depends on who this person is” and like a crack from a whip he said, “It is not necessary for you to know who that person is,” which led me to believe that the “wise old bird” was himself . . . .

Did the President really believe in such a conspiracy? Could such a thing possibly have been kept secret then or since?

FDR’s repeated refusals to accept and take seriously business leaders’ efforts to cooperate must have aggravated their alienation resulting from opposition to what the New Deal called reforms. Some advisers were unsuccessful in convincing the President that many of his policies on taxation, securities regulation, labor union organization, and so forth discouraged investment and business recovery.

The evidence in this study of FDR’s continuing anti-business allegations—one quotation after another, year after year—must convince the reader that something quite irrational influenced him profoundly.

The author, Professor of History at the University of Hawaii at Hilo, does not presume to present a complete history of the first five years of the New Deal. But no history of the period can be complete without taking account of the evidence in this study. The closing chapter presents a picture that supports the assessments of contemporary observers, some certainly of unquestioned stature, who found “pettiness and spitefulness” in FDR, a person “who was intolerant of criticism and critics, and who grasped for dictatorial power . . . .” The Roosevelt of the pre-World War II years does not, the author believes, rank among the great presidents.

C. Lowell Harriss is Professor Emeritus of Economics, Columbia University