What’s Behind the “New Deal”?
(1904 - 1981)
Paul Mattick Sr. (March 13, 1904 – February 7, 1981) was a Marxist political writer and social revolutionary, whose thought can be placed within the council communist and left communist traditions. Throughout his life, Mattick continually criticized Bolshevism, Vladimir Lenin and Leninist organizational methods, describing their political legacy as "serving as a mere ideology to justify the rise of modified capitalist (state-capitalist) systems, which were [...] controlled by way of an authoritarian state". (From : Wikipedia.org.)
What’s Behind the “New Deal”?
Published: in International Council Correspondence Vol. 1, no.3, December 1934, pp 18-22.
Source: Antonie Pannekoek Archives
Transcribed: by Graham Dyer
The New Deal is no harbinger of a “new social order”, nor is its apostle, Franklin Delano Roosevelt, self-proclaimed Messiah for the “forgotten man”, the really unselfish and public-spirited individual he is portrayed.
Roosevelt’s election was engineered, just like all other previous elections, by a group of individuals whose economic interests required urgent governmental aid.
The fall of 1932 saw the complete collapse of American industry and a rising tide of agrarian discontent. The current occupant of the White House, Herbert Hoover, placed there by the Morgan and Mellon financial interests, appeared totally oblivious to the desperate straits of these two groups. It was only natural that these groups should strive for that political power in the coming election which would enable them to pass beneficial legislation for themselves.
Why was Roosevelt selected to “lead” the country out of economic chaos? Not only because he had caught the nation’s attention as a much advertised “liberal” politician, but even more so because his own economic interests were identical with those of the group pushing his candidacy.
James Roosevelt, father of Franklin D., one-time vice-president of the Delaware & Hudson R.R., accumulated such a tremendous fortune in railroad organization, both down South following the Civil War, and in the East, that he was considered one of the five richest men in New York City. Although young Franklin D. had expressed a desire to enter the Navy, the elder Roosevelt persuaded him to study law instead and thus better equip himself for the ultimate management of the extensive Roosevelt holdings. Following graduation from Harvard and Columbia Law School, Roosevelt entered the offices of the best established firm of management lawyers in New York City. While in their employ, he directed the affairs of the huge Astor estate, and thereby established a very close friendship with William Vincent Astor, one of the country's most influential industrialists and bankers. In a spirit of fun, Roosevelt then entered politics. Running for the state Senate on the Democratic ticket, he surprised everyone by capturing the office. No sooner was he seated, than Roosevelt, the comparatively unknown, drew national attention to himself by leading an opposition to the Tammany nomination for U.S. senator (in those days, 1911, they were elected by the state legislature). Thus he gained through this one act that unfounded reputation for unselfish devotion to the people's interests that has endured to this day. Next Roosevelt boosted Woodrow Wilson for the Democratic presidential nomination in 1912, stumping for him afterwards during the successful election campaign. As a reward, Wilson appointed him Assistant Secretary of the Navy. Roosevelt spent seven years in this position. Several months ago, the Administration publicity agencies made much of the State department's order removing the U.S. Marines who had been stationed in San Domingo (Haiti). They discreetly neglected to mention that it was this same Franklin D. Roosevelt who sent them there in 1913 in his first official act as Assistant Secretary ostensibly to protect American lives, actually to protect American investments, Astor interests among others! During the summer and fall of 1915, our peace-loving Asst. Secretary of the Navy began preparing the Navy for eventual participation in the World War, two years before our actual entry! In addition, he developed a gift for oratory and began to advocate publicly for a much larger Navy. This missionary work was largely instrumental in causing President Wilson to sponsor the largest Navy appropriation bill up to that time. Passed in 1916, it provided an appropriation of $320,000,000 for naval expansion.
After America was propagandized into the war, thanks to paid Allied propaganda plus the help tendered by American financial interests, (J.P. Morgan & Co.), and young jingoists of the Roosevelt type, our hero proved himself quite capable. Roosevelt invented the “Macy Board” the first governmental war labor board, which coordinated wages in every part of the country. The National War Labor Board developed from this. This latter Board showed its regard for Labor by forbidding all strikes for the termination of the war. Roosevelt also served as representative of the Navy on the War Labor Polices Board, charged with working out labor policies. In his capacity as Navy labor expert, Roosevelt helped “arbitrate” labor disputes pertaining to the Navy construction yards. This work brought him into contact with various American Federation of Labor officials who all displayed great patriotism and extreme reasonableness in their dealings.
The greatest of these patriots and the most reasonable in his demands was the vice-president of the International Association of Machinists. Roosevelt never forgot the favors he received from this official, and so when the C.C.C. was instituted last year, at its head was placed this sterling patriot, Robert Fechner.
After helping to win the war to “make the World Safe for Democracy”, Roosevelt returned to civilian life, resuming his law practice. At Alfred E. Smith's behest, he reentered politics, gaining the governorship of New York in 1928, and again in ’30. During this period, the Governor discovered he possessed a remarkable radio voice, for a politician. From such humble beginnings sprang that great American Institution: Intimate Fireside Chats With The President (through the courtesy of both broadcasting systems).
His administration as governor, in spite of press-agency to the contrary, shows no benefits for labor. The legislation to which Roosevelt points with greatest pride as a boon to labor, the New York State Old Age Pension Act, doesn’t benefit labor at all. Not only must applicants be 70 years or over (surely no help to most workers who never reach 60, let alone 70, because of modern working conditions), but the procedure is so loaded with red-tape that really needy individuals without money for legal aid can hardly hope to secure its meager benefits.
Roosevelt is not the only member of his family with extensive railroad holdings. His first cousin on his mother's side, Lyman Delano, is today Chairman of the board of directors of the Atlantic Coast Line R.R. Co., the Louisville & Nashville, and has an interest in many others. Other relatives are J.J. Pelley, recently resigned president of the New York, New Haven & Hartford R.R., and a shareholder in others; and Mr. Curry of the Union Pacific. Roosevelt's three most intimate friends are likewise industrialists with huge railroad holdings. The aforementioned Vincent Astor, besides extensive interests in industry and ocean transportation, is a director of the Great Northern Ry. Co., and the Illinois Central. Wm. A. Harriman, heir of the old railroad king, is a director of both the Illinois Central and the Union Pacific. Wm. K. Vanderbilt holds directorates in the New York Central, the Michigan Central, and other railroads. Besides these relatives and close friends, all who supported Roosevelt's presidential campaign with substantial financial contributions, almost every other railroad mogul in the country likewise backed him: Robert Goelet, Arthur C. James, Edward S. Harkness, C.S. McCain, David Bruce, Howard Bruce, Wm. T. Kemper, and F.H. Rawson. The railroad group behind Roosevelt numbered almost everyone but, significantly enough, the representatives of the roads controlled by the J.P. Morgan financial interests.
The railroads had indeed taken the worst beating of any capitalist group during the period of the crisis, and certainly needed help. For example, in 1932, 150 selected railroads showed a deficit of $150,634,000 compared to earnings of $896,807,000 in 1929. The railroad equipment industry led by Wm. Woodin also marshaled behind Roosevelt.
Another section of industry that rallied behind Franklin D. was the mining, particularly the precious metals - gold and silver - group. Most prominent here were the Guggenheim and Bernard M. Baruch interests, exerting a virtual monopoly on silver through control of the American Smelting & Refining Co., which either extracts or refines for others almost one-half of the world’s silver produced yearly. Included with these is also Wm. R. Hearst, newspaper publisher, large Mexican silver mine owner and shareholder in the Homestake Gold Mining Co. This group in advocating gold devaluation and greater use of silver for monetary purposes enlisted the large farmers' vote who demanded that farm product prices be raised through monetary legislation.
A political party that promised to raise farmer purchasing power (fallen in 1932 to almost one-half that of 1929) was bound to gain the support of industrial interests dependent on the farmers and so we find the McCormicks, owning the monopolistic International Harvester Co., and other farm implement and fertilizer manufacturers joining the Roosevelt band-wagon.
Minor industrial interests included the liquor concerns who wanted repeal of the Prohibition Amendment, and construction industry moguls such as C.R. Crane of Crane Co., Jesse H. Jones (R.F.C. head) and J.T. Jones of the Jones Lumber Co., etc.
Behind both political parties was also a grim struggle between two factions for control of the giant Chase National Bank. Backing the Republican Hoover were his 1928 mentors, the House of Morgan. Opposing J.P. Morgan was this other group of stockholders headed by John Rockefeller, Jr., and including Vincent Astor, the Vanderbilts and Guggenheims. The fight centered about the policy of J.P. Morgan, who controlled the bank, in forcing the Chase National to engage in practices outside its own legitimate field, such as lending money for speculative purposes, the floating of new stock and bond issues, and buying and selling on the stock market. Rockefeller, Jr., and his allies who are primarily industrialists, violently disapproved of this policy blaming it in great part for the stock market crash of '29. They not only wanted to gain control of the bank and return it to its normal commercial banking practice, which is to provide funds to industry and business for meeting current expenses, on good security, but they wanted control of the federal government in order to enact federal legislation against the Morgan policy which had become widespread under the influence and example of the Chase National. The Lehman Bros. (among which is Gov. H.H. Lehman of N.Y.) the country’s second largest firm of investment bankers, and other investment houses such as Halsey Stuart, supported this attempt to legalize against their competitors.
Roosevelt was no sooner inaugurated than he commenced to remember the “forgotten men”. First on the list, of course, were the Rockefellers. So on March 15, 1933, J.P. Morgan was summoned before the Senate Banking Investigation. His revelations and those of Albert H. Wiggin, the nominal head of the Chase National appointed by Morgan, were so damaging that Wiggin was forced to resign and the Rockefellers gained the balance of voting power, enabling them to elect their own man Winthrop W. Aldrich to the Chairmanship of the Board of the Chase National Bank. When Aldrich appeared before the Banking Investigation, he announced that the Chase National would divorce its Chase Securities Corp. He argued for a complete divorce of the securities business and commercial deposit banking. This suggestion was embodied in the Glass-Steagall Banking Act (June 16, 1933) ordering all commercial banks to be separated from their securities business within twelve months. Restrictions were also placed against loans for speculative purposes.
The devaluation of the gold dollar, followed later by the nationalization of silver, enriched immediately the gold and silver producers. This monetary policy plus crop curtailment as practiced by the A.A.A. has increased farm prices to some degree. The Administration, however, overlooked the obvious fact that higher food prices raise the cost of living for the worker, which is directly opposed to the interests of the industrialist who desires low production costs.
The N.R.A. whose first form was suggested by Bernard M. Baruch as the result of his war-time experience as Chairman of the War Industries Board, was administered by Hugh Johnson (a former employee and disciple of Baruch’s) in such fashion as to allow the natural tendency toward monopoly inherent in capitalism to develop unrestrictedly. Codes were drawn by the largest industrialists in each industry and naturally they were drawn in their own interests. Minimum wages and hours served to eliminate the small competitors who were only able to stay in the race by paying unbelievably low wages and working long hours. Governmental restriction, therefore, helped to liquidate these small fry and fostered monopoly. Since anti-trust restrictions have been set aside during the course of N.R.A., it is evident that this will be continued.
In the effort to help those other “forgotten men”, the backbone of his political support, the railroad and affiliated interests (including himself) the President has been forced to adopt a cautious and slow policy. Because they are subject to federal regulation, the railroads present a delicate problem. Rates cannot be arbitrarily raised without consent of the Interstate Commerce Commission. Competition at the hands of the bus, waterway and the airplane has caused a great drop in railroad traffic. For example: volume of freight traffic today is only 60% that of 1929; passenger traffic today is only 50% of 1929 and 33% of 1920. A coordinator of railroads was established after Roosevelt took office. His job has been to develop a plan to reestablish the roads. His plans call for greater consolidation among the various competing roads which would eliminate competition between them - one of the requirements of the I.C.C. In addition, it has been suggested that the I.C.C. be reorganized with separate divisions for railroads, motor lines, air lines and other carriers in a coordinated system of government regulation. If these plans are carried through, and they should considering Roosevelt's hold on Congress today, then the railroads will become more of a monopoly than ever, and rival forms of transportation will suffer. The government will also be forced to subsidize the railroads in order to modernize them. Private capital could hardly finance the costs involved today.
Having secured most of its real objects, or about to secure them, the “New Deal” can now afford to drop its mask of “radicalism”. Overtures have been made to big business assuring it that the administration is inherently devoted to preserving the profit system. Because of Labor's growing militancy and its refusal to obey and accept docilely the traditional trade-union leadership of the A.F. of L., in the face of ever-growing misery, a change in the governmental labor policy may be expected shortly. In return for some sop, such as unemployment insurance of a kind, labor will be made to give up its right to strike. Once the strike is outlawed, is made illegal, wage cuts will become the rule. Of course, Labor will be asked to accept these cuts only “temporarily until business revives!”
Our only conclusion is that Labor only by completely changing the social and economic system can really and truly give itself a New Deal for all time.
From : Marxists.org
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