From Volume 4, Issue Number 24 of EIR Online, Published June 14, 2005
This Week in History

June 14 - 20, 1941

President Franklin Roosevelt Looks Back at the Blitzkrieg Against the New Deal

On June 16, 1941, President Roosevelt completed writing the introduction to the 1938 volume of his collected papers and addresses. Much had happened in the interval between 1938 and 1941, and events had proven that Roosevelt's efforts to restore the American economy had been most crucial. Not only had the New Deal brought America back from the precipice of destruction, it had also remoralized the population. Horrific events in Europe and Asia were about to hurl those American citizens into a world war against Fascism on two fronts, and thanks to Roosevelt's efforts they were at least partly prepared to face it.

But in 1938, as is also happening today, there had been forces hell-bent on destroying the policies of the New Deal. The control wielded by the "Economic Royalists" over much of the media ensured an outlet for a steady stream of vituperation. Using their favorite destructive method, the Tory Faction first did everything they could to sabotage Roosevelt's economic policies, including manipulating currency and investments, and then blamed the President when the beleaguered New Deal policies did not produce instant prosperity.

In writing his introduction to the 1938 volume, Roosevelt pointedly used terms associated with the contemporary Nazi onslaught to describe the actions of the financiers who opposed saving and developing the American economy. With the hindsight of only a few years, FDR opened by writing: "It has frequently been said that eternal vigilance is necessary to preserve our liberties. It is equally true that eternal vigilance is necessary to keep democracies and their governments truly liberal. We in the United States have had first-hand experience with that truism since the end of 1933, when, for the first time, the full effects of our program of recovery and reform began to be felt. For, as soon as the clear action of the new administration in 1933 had started the wheels of industry turning, there came the demand from some sources to stop all of the reforms, and to let things begin again to run on as they had during the previous decade.

"Of course, the people of the United States have always understood that the new administration never intended to be a mere rescue party—organized to save the economic system and turn it back to the small, powerful group which had formerly controlled it through their concentrated economic power. The Government in 1933 was determined not only to save the system, but also to remove from it the abuses, evils, and widespread maladjustments which had brought it to the very brink of destruction. The Government was determined that the system, thus preserved and reformed, should no longer be subject to the control of the handful of men and corporations that had dominated it in the false boom days before 1929.

"To carry out that determination was to resist, from 1933 down to date, all the efforts of mighty forces—day by day, year by year. These forces had tremendous interests at stake—wealth, privilege, economic power, political power. Although few in number, they had the resources which enabled them to make the most noise, and to become the most vociferous in the press, over the radio, through newspaper and outdoor advertising, by floods of telegrams and letters to the Congress, by employment of professional lobbyists, by all the many means of propaganda and public pressure which have been developed in recent years.

"In 1938 the efforts of this minority, consistent in its opposition since 1933, rose to new heights. They had tried stubbornly at the polls in 1936 to stop our program of reform. They had failed. They had tried in 1937 to stop it in the courts, where they had been so successful during 1935 and 1936. Here, too, they failed. Therefore, through the years of 1937 and 1938, their activities to impede progress and bring about a repeal or emasculation of the New Deal measures of reform were redoubled.

"There were several reasons for this particular burst of effort this year. First, the Supreme Court fight, although it had been finally successful in obtaining its objective, had been defeated in the Congress. The enemies of liberal government tried to hail that loss of a single battle as a defeat of the entire progressive program of the administration. A strong "putsch" was organized to try to make it appear as though the representatives of the people in the Congress had, by failing to pass the Supreme Court bill, repudiated the principles and conduct of the New Deal.

"Second, there had come a substantial business recession—commencing in the fall of 1937, and continuing through the first half of 1938. These same minority groups sought at once to take advantage of it by blaming it exclusively on the attitude and legislation of the Government, claiming that the administration was 'strangling business' and 'ruining confidence,' and preventing 'full recovery.'

"The policy of the Federal Government, however, continued to follow the only path of true recovery and the only assurance of preservation of our system of private profit and free enterprise—the continuance and strengthening of social reform and progressive legislation. These recommendations were renewed by me when the Congress reassembled in regular session in January, 1938. I recommended, for example, that new tax legislation was necessary—first, to prevent continued tax evasion by some few individuals and corporations; and, second, to make sure that the principle of ability to pay was not violated by the tax structure.

"I also called attention to some of the grave social abuses which had grown up in the use of capital—not all capital, but in a limited portion thereof. In other words, I made it clear that what I was attacking was not business in general or all business practices, but certain clearly wrongful business practices which were ruinous to the rest of the economic system of the country. I pointed out that, in addition to tax avoidance, these practices included: excessive capitalization, continued write-ups of investment values, security manipulations, collusive bidding and price rigging, high-pressure salesmanship which creates cycles of overproduction and recessions in production, the use of patent laws for monopolistic purposes, and unfair competition.

"I also called attention to the unfortunate practice of industry to move from one locality or region of the country to another—in an effort to find the cheapest possible wage scales, or in order to intimidate local and state governments from the passage of progressive legislation for the protection of labor.

"Above all, I stressed the grave danger and serious problems which had arisen, and which always arise, out of the growing concentration of economic power, involving, as it did, the control by a relatively few men of other people's money, other people's labor, and other people's lives.

"Many of the great measures debated in 1937 and 1938—farm legislation, reorganization of government, minimum wages and maximum hours, increased public works, monopoly controls, judicial reforms, water-power development, low-cost housing—have, by now, become more or less accepted as part of our economic life. It is a little difficult, therefore, to look back even across the short period to 1938 and remember how bitter and how difficult was the struggle—in the Congress and out of the Congress—which was necessary in order to have some of these laws adopted. The opposition to them—chiefly from the same sources which had opposed the whole program of reform since 1933—developed into 'blitzkrieg' proportions. Misrepresentation as to motives, and falsehoods as to objectives and results, became common practice, especially in the columns of some of the large newspapers."

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