|This speech appeared in the June 16, 2000 issue of Executive Intelligence Review.
The following speech was delivered to the conference of the Schiller Institute and International Caucus of Labor Committees in Bad Schwalbach, Germany on May 28, 2000. Subheads and footnotes have been added.
The core of what I am going to say is, that contrary to all lies about Franklin Delano Roosevelt's "New Deal"--and there are many of these flying around, especially here in Europe--it was a very good, though by no means perfect, example of the American System of economics. That may seem to be a quite unusual statement about a member of one of the leading patrician U.S. families, especially since this family had produced a President--Theodore Roosevelt, FDR's cousin--who was an outright disaster, betraying the United States to the British Empire, against which the Founding Fathers had fought--and won--a bitter war, because the colonial British system of looting and the humanist American system of nation-building cannot coexist. Not on one continent, not on the same planet, and ultimately not in the same universe.
What I will present to you here in a brief, but I think convincing manner, is that, because of a profound personal crisis, the gifted, but primarily pro-British, young Franklin Roosevelt developed his personality in such an extraordinary way, that he was emotionally strong and courageous enough to lead his nation out of a deep crisis--a crisis, bordering even on complete disintegration of the country. This he accomplished by using dirigist methods, with which he launched great infrastructure projects to reconstruct the economy and build the nation: proven methods, which go back to the early days of the American Revolution.
This is the real New Deal of FDR, which in principle was nothing new. In preparing this report, I could rely very much on the groundbreaking research our organization has done on Franklin Roosevelt: Apart from Lyndon LaRouche's writings and speeches on this subject, I refer to the work of Lonnie Wolfe and Marsha Freeman, but especially the detailed work of Richard Freeman on FDR's economic policy--most of it unpublished so far, which, I hope, will change very soon.
One preliminary note: As we have discussed here so much about the importance of music and the principles of Classical composition, please keep in the back of your mind--while I am speaking about how President Roosevelt led the U.S. out of the Depression--LaRouche's present policies, as sort of "thorough-bass line." This exercise in "political counterpoint" will help you to understand more about FDR and his fight--and its significance for us today--than I could express in words.
In the first four decades of his life, everything went "normally" for Roosevelt. Being part of one of the top U.S. families, he largely fulfilled the expectations of his pro-British "class": top education, sports, frequent travels to Europe. Although some unusual points do emerge: the fact that he greatly admired his great-great-grandfather, "Isaac the Patriot," who had fought for the American Revolution with the Founding Fathers and who was very close to Alexander Hamilton; the fact that FDR was proud that his ancestors had been Revolutionaries, and that his father, an owner of a railway company, had been active in the nation-building circles of Lincoln; and that he wrote his Harvard paper on Hamilton, in which he showed that he understood the significance of a dirigist economic policy for building a nation.
But at the time he went into politics, the "Roosevelt Clan" had nothing to fear. FDR, who greatly admired his cousin Teddy, was on a clear pro-British line, and Teddy personally saw to it, that it remained so during Franklin's two terms as Assistant Secretary of the Navy. Nevertheless, during this time--the time of World War I--FDR got a good lesson on the significance of physical economy, in the form of his country's mobilization for war. But otherwise he was an "awfully mean cuss"--as he was to recall later--an arrogant young aristocrat, who at the outbreak of war, in a letter to his wife Eleanor, ridiculed the fact, that his boss, Secretary of the Navy Daniels, was feeling "very sad that his faith in human nature and civilization and similar idealistic nonsense was receiving such a rude shock." He exhibited some of this behavior to the outside world, as a cold-blooded lawyer, a stiff politician, and a mean and arrogant Assistant Secretary of the Navy. No wonder, the "Roosevelt Clan" considered him one of "their class." That he would become President and work in their favor, was a given; it was just a question of time, manipulation--and money.
But then, disaster struck: In August 1921, Franklin Roosevelt, at the age of 39, was stricken with poliomyelitis. Overnight he had become a poor, crippled man, with almost no expectation to recover and lead a normal life, let alone become President. But, what at first seemed a catastrophe, turned out to be, according to Eleanor, a "blessing in disguise." FDR used this deep personal crisis, and the healthy distance it placed him from day-to-day politics, in the most constructive way. With enormous willpower, he not only fought to restore his health, and to learn to walk again, but he also thought things through. He re-studied the history of the American Revolution and wrote papers: one on U.S. history, in which he treated America as an extended part of the development of European civilization, singling out as one crucial aspect, for instance, "Louis XI of France, who put down the power of the great feudal lords."
The personality emerging after this years-long battle for physical--and mental--survival, was quite different than the "mean cuss." Roosevelt is still a patrician, but one, who is proud having just learned again how to stand up, humbly accepting the help of his doctor and that of his black servant; a politician heartily laughing while walking on crutches; a New York Governor honestly listening to the proverbial "forgotten man"; a feisty Democratic candidate campaigning even in heavy rain; a dedicated U.S. President, strongly attacking the "economic royalists" of Wall Street.
To grasp the very nature of this change--and it was a big change, a non-linear development--just think about what the crucial passage of the Declaration of Independence on the "inalienable rights" of man, among them "life, liberty, and the pursuit of happiness," as well as the General Welfare clause of the U.S. Constitution meant for the arrogant patrician--just a big persona--and how different this mature man, who, after having to fight through an existential crisis, had become a real person, a personality, thought--and especially felt--about the same concepts.
After that experience, Roosevelt was emotionally capable of thinking through what was needed to successfully confront an existential crisis of the nation. And such a crisis was clearly looming just over the horizon, toward the end of the 1920s. No wonder, that FDR during this time came in contact with politicians, who fought to solve the economic crisis with policies in the tradition of the American System and Lincoln's famous program for "internal improvements," the catchword for the nation's infrastructural development. To these people, who later played a big role in the New Deal, belonged: George Norris, who had fought for the TVA and rural electrification for a decade; William Lemke, an energetic fighter for Hamiltonian credit policies; and Robert Wagner, who fought for the development of labor power.
It is also no wonder, that FDR around that time openly broke with the imperialist policies of his class. In a July 1928 article in Foreign Affairs on future U.S. foreign policy, Roosevelt proposed a "Good Neighbor" policy, i.e., respect for the sovereignty of other countries--a clear blow to the British. The shape of FDR's future policy became visible: As a U.S. patrician, Roosevelt knew all the "rules of the game" very well from the inside. Being intellectually brilliant, it was clear to him, that no other big power, not even the British Empire, could match America, if the U.S. developed its economy, including its military; as a patriot, he saw no reason that the U.S. should act as the dumb "brawn to British brains," once the power of Wall Street was broken by a strong President; and his political instinct--greatly sharpened by the development of his character--told him, that the broad support, which such a President needed, could only come from mobilizing and educating the majority of the American people, especially the skilled workers and farmers, the small businessmen, the millions of unemployed and their family members--the proverbial "forgotten man."
That FDR was prepared to seize the right moment--a big crisis--and capture his Democratic Party, which at the top was controlled by the "money-changers" of Wall Street, he wrote in a letter to a friend after his inauguration as Governor of New York early in 1929, long before "Black Friday" (and a comparison to the present is not only permitted, but welcome). Roosevelt: "You are right that the business community is not much interested in good government and it wants the present Republican control to continue just so long as the stock market soars and the new combinations of capital are left undisturbed. The trouble before Republican leaders is that prevailing conditions are bound to come to an end some time. When that time comes, I want to see the Democratic Party sanely radical enough to have most of the disgruntled ones turn to it to put us in power again."
On July 2, 1932, on accepting the nomination as Democratic Presidential candidate, FDR made his famous promise of a "New Deal" for the American people. And what a dramatic shift this policy was intended to be becomes clear, when we hear FDR himself. Again: Think about the counterpoint of the "LaRouchean thorough-bass" singing in the back of your head:
No wonder, that the breathtaking development of the first months after FDR had taken office in March 1933, was widely called the "Roosevelt Revolution"; in fact, it was one: a new phase of the American Revolution. (As the President told the Daughters of the American Revolution in 1938: "Remember, remember always, that all of us--and you and I especially--are descended from immigrants and revolutionists.")
This theme, that he would seize the moment of crisis to take away power from Wall Street, Roosevelt hammered home during his entire election campaign of 1932: "I believe, that our industrial and economic system is made for individual men and women, and not individual men and women for the benefit of the system," FDR said in August in Ohio, and continued: "I believe, that the individual should have full liberty of action to make the most of himself; but I do not believe, that in the name of that sacred word, a few powerful interests should be permitted to make industrial cannon fodder of the lives of half of the population of the United States."
At the end of September 1932, as the economic and financial crisis deepened and even more banks failed, with many citizens losing their savings, FDR said: "Every man has a right to his own property, which means a right to be assured, to the fullest extent attainable, in the safety of his savings. . . . If, in accord with this principle, we must restrict the operations of the speculator, the manipulator, even the financier, I believe we must accept the restriction as needful, not to hamper individualism, but to protect it."
This he repeated throughout his campaign: to labor and farmers, the unemployed and homeless, small businessmen and industrialists, and also to America's blacks, whom he congratulated for the "truly remarkable things" they had accomplished, "their progress in agriculture and industry, their achievement in the field of education, their contributions to the arts and sciences." He told America's students, "Human resources are above physical resources," and that "knowledge--that is, education in its true sense--is our best protection against unreasoning, prejudice, and panic-making fear, whether engendered by special interests, illiberal minorities, or panic-stricken leaders." This latter remark, issued in Boston at the end of October, was a clear reference to the panic which meanwhile had gripped Wall Street, since it was clear, that Franklin Roosevelt had won over the majority of the U.S. population to his program of reconstruction, and was to carry the November elections; which he did--by a landslide.
The panic on Wall Street and especially in London now reached a fever pitch, since in continental Europe the oligarchs had to stage a fascist coup to kill the "German New Deal"--the "Lautenbach Plan"--by hastily bringing Hitler to power; in the U.S. these forces sent a clear message to Roosevelt on Feb. 15, 1933--in the form of bullets. Since the frontal attack on Roosevelt did not succeed, Wall Street and London organized a run on the dollar and gold reserves of the U.S. In the four months following FDR's election, the country was almost bankrupted, mainly because the Depression and financial crisis took its toll, but also because the international financial oligarchy destabilized the U.S. to "get FDR back in line."
When Franklin D. Roosevelt was finally inaugurated on Saturday, March 4, 1933, the country was ruined. Almost all banking activities had ceased; the financial system was disintegrating; industrial production had collapsed; agriculture barely existed any more; many of the 12.8 million unemployed (this figure was not only in absolute numbers, but also relative--officially it stood at 25%--much higher than in Germany then) were wandering around homeless, hungry, even starving. A mood of utter despair had gripped the country.
Roosevelt, in less than one hour, turned the mood in the country around, with his inaugural address: "This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first let me assert my firm belief that the only thing we have to fear is fear itself--nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."
After that powerful introduction, Roosevelt went on to establish truth, by asking the population to "support my leadership in these critical days," and then painting with rough, but clear strokes the reality of the country's deep crisis. Then FDR exposed the real culprits, the oligarchical financial interests: "Practices of the unscrupulous money-changers stand indicted in the court of public opinion, rejected by the hearts and minds of men. . . . Faced by failure of credit they have proposed only the lending of more money. . . . They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision, the people perish. The money-changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profits."
After this ruthless attack, FDR reminded the American people of one of the most important philosophical concepts of the U.S. Declaration of Independence--the pursuit of happiness--and elaborated it in the true Leibnizian sense of Glückseligkeit. For Leibniz Glück (luck) and Glückseligkeit (happiness) are the same concept: that elevated state of mind where the soul is striving for perfection and reason, i.e., creativity. Thus Roosevelt said: "Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits."
Acknowledging that "changes in ethics alone" are not enough, he said:
Coming to the heart of the New Deal, FDR announced "strict supervision of all banking and credits and investments" and "an end to speculation with other people's money." Now his language gets even tougher:
The war on Wall Street was declared, but FDR wouldn't stop here. "I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require," he said, adding:
With that speech, the "war against the Depression" was officially launched. And Roosevelt escalated it: Returning from his inauguration--and taking a leaf from Machiavelli's Prince--that in a fundamental crisis the most difficult political decisions have to be executed at once--he rapidly fired one shot after the other. This momentum was characteristic especially of his "First 100 Days," during which he pushed through 13 important legislative measures.
Over the weekend, FDR drafted emergency legislation to deal with the financial crisis. On Monday he announced a four-day "banking holiday" and the issuance of his Emergency Banking Act of 1933, which put the entire U.S. banking system through an orderly bankruptcy reorganization. On Thursday, March 9, this bill was voted up in both chambers of Congress and signed into law by the President. The American people experienced that Washington could deal effectively with a deep crisis in a single day! (Again, think about the "LaRouchean counterpoint.") Apart from opening up banks successively in the next days--relative to the gravity of their problems--and putting them for some time under government control, this bill established, that the hopelessly bankrupt banks remained closed forever.
Roosevelt expanded this emergency legislation: Commercial banks were strictly separated from investment houses, so by law they could not "speculate with other people's money." This effort culminated in the famous Glass-Steagall Act of June 1933, which not only established sound banking practices, but also greatly weakened Wall Street's grip over U.S. financial policy. Then FDR reorganized the Federal Reserve system by having its governors appointed by the U.S. President. The result of this financial reorganization was not the establishment of a U.S. National Bank--FDR apparently considered it to be politically too hot at that time--but that government could issue credit to finance public works and large-scale infrastructure projects.
Even if limited, these measures weakened the Wall Street interests considerably. How was Roosevelt able to do this? By launching a critical flanking attack. One of his political allies, Ferdinand Pecora, in early 1933, became counsel to special hearings of the Senate Banking Committee. And in these hearings held in the next months, he aggressively exposed the Morgan interests as having been the center of a "secret" government of the U.S.--a small group of Wall Street interests which effectively controlled the country's politics. Due to Pecora's grilling of J.P. Morgan personally, Wall Street's dirty machinations of bribing the entire political class of the U.S. became known in detail! Pecora's revelations were a political sensation during FDR's "First 100 Days." Morgan and Wall Street were put on the defensive, exactly at the time when FDR was reorganizing the U.S. banking system.
With these bold measures, Roosevelt had worked himself and the nation out of almost-hopeless financial chaos and had pinned down Wall Street to such an extent, that he could issue credits for his reconstruction program. These he channelled mainly through the Reconstruction Finance Corporation, which had been established in early 1932 by a panicked President Herbert Hoover to bail out a bankrupt banking system. Roosevelt instead used the RFC for productive purposes: to channel money into projects with a "multiplier effect" on the nation's entire physical economy. In effect, FDR made the RFC into a model for the Kreditanstalt für Wiederaufbau [the Reconstruction Credit Bank, established in Germany at the end of World War II, to finance the rebuilding of the war-torn country].
Franklin Roosevelt initiated numerous measures for national reconstruction. Overall, the various institutions he created built about 50,000 infrastructure projects--small, medium, big, and very big ones--and he was very conscious about what he was doing: "We are definitely in an era of building, the best kind of building--the building of great projects for the benefit of the public and with the definite objective of building human happiness," he said in a radio address in August 1934: "We know more and more that the . . . Nation must and shall be considered as a whole."
Concretely, Roosevelt attacked the problem on two levels: First, emergency measures, such as social relief programs and make-work programs of all kinds, urgently needed to prevent millions of Americans from literally starving, and give them work--any work. Secondly, on a strategic level, were those measures to reconstruct and develop the country's totally ruined infrastructure.
In terms of large-scale planning and realization of big "hard" infrastructure projects being carried out under the New Deal, the best examples are the results of the Public Works Administration (PWA), and the almost legendary Tennessee Valley Authority (TVA), both of which, President Roosevelt ran, more or less directly. The PWA, run by FDR's close ally Harold Ickes, became, with its "multiplier-effect" and first two-year budget of $3.3 billion--then an enormous sum--the driving force of America's biggest construction effort up to that date. For every worker on a PWA project, almost two additional workers were employed elsewhere--productively. The PWA carried out the electrification of rural America, the building of canals, tunnels, bridges, highways, streets, sewage systems, and housing areas, as well as hospitals, schools, and universities. To give you an idea of the "multiplier-effect" of the PWA: Every year it used up roughly half of the concrete and one-third of the steel of the entire nation!
The development of the huge Tennessee River basin in the South by the TVA was a model for what a modern nation can accomplish. The plans for the infrastructural development of this poor, malaria-stricken region--potentially a very rich area because of its minerals and water, plus its labor power--went back to the time of the American Revolution. By stopping the yearly floods of the Tennessee River and making it navigable, an entire area of almost the size of England, could be opened up for development. All plans had failed, mainly because Wall Street's big monopolies didn't want to develop the area.
Franklin Delano Roosevelt was the first President who attacked this problem from a higher level. He proposed to place the development of the entire region, which includes portions of seven states, under one single authority, whose director--the engineer David Lilienthal--reported directly to the President. FDR's plan foresaw "multi-purpose dams" which provided flood control, river navigation, and hydroelectricity at the same time, plus production of fertilizer. In addition, Roosevelt wanted the electricity to be produced--and sold--at low cost; thereby undercutting the monopolies--a policy whose efficiency he had already proven as Governor of New York.
Signalling that this project was one of the priorities of his New Deal, FDR, with his friend Senator Norris, the "Father of the TVA," visited the Tennessee area two months before taking office. After inauguration, things went very quickly: In April, he sent the TVA bill to Congress, which passed it in May. This project--a sort of "pilot-project" for the entire New Deal--became a huge success. Not only did the TVA in a few years construct 20 multi-purpose dams, erect power plants and fertilizer factories, produce cheap and abundant electricity, but it completely--physically--transformed an entire region and its 3 million people: no more floods, a navigable river, malaria wiped out. The entire area was electrified--both literally and metaphorically: Farming improved; factories were built; industries developed; schools, hospitals, libraries were built; wages increased, the young people of the area remained there, because they found a place to work or study. The people sensuously felt what "increasing the standard of living" meant.
In short: Almost overnight, the "poor-house" of the nation became one of its most productive areas. And electricity production in the Tennessee Valley didn't stop with water power: As soon as the possibility of nuclear power became visible, plans were made to use it to secure the region's--and nation's--future. America's first "nuclear city" of Oak Ridge in the Tennessee Valley is one example; the nuclear power plants built here are another. Roosevelt had regarded the TVA only as the beginning; he had similar plans for the entire U.S.A.! In addition, FDR offered the TVA model to other countries all over the world.
The projects to develop the "hard" infrastructure of the country were flanked by measures to improve its "soft" counterpart: important social measures, which for the first time in U.S. history, established the concept of a minimum wage, created insurance for the unemployed, sick and old, established decent health care, and abolished child labor. The crowning achievement of these measures was the Social Security Act of 1935, which alone, secured FDR a place in history; as well as his support for labor. The much contested "Article 7a" gave American labor the right to organize itself. This law was overturned by the Supreme Court, so that Roosevelt had to pass it in another form--the Wagner Act of 1935, the "Bill of Rights" of American labor. (You see, the U.S. Supreme Court at that time was no better than it is today!)
To sum it up: With his New Deal, President Roosevelt demonstrated firstly, that a strong government working for the common good and promoting the general welfare, fully exploiting the U.S. Constitution and making dirigistic interventions based on the principles of the American System, could stop the Depression--FDR reduced unemployment by over 5 million in his first term--and reconstruct the country by physically changing its economy. Secondly, that by so doing, he developed and enlarged his social base, forging a "Harmony of Interest" among workers, farmers, and entrepreneurs. With that, FDR got an increasing part of the American people--the "minorities"--actively engaged in the task of national reconstruction and nation-building. The huge popular support for the "Roosevelt coalition" showed itself in the next Presidential elections, where Roosevelt increased his popular votes from 22.8 million to 27.7 million, winning all states except Vermont and Maine.
The success of the New Deal had made it impossible for the international financial oligarchy to impose fascism on America in the midst of the Depression--as they unfortunately were able to do, first in Italy, then in Germany, and also in other countries, including Britain, which just had a less violent variety, with Ramsay MacDonald's corporatist fascism. Not that London and Wall Street didn't try in the U.S.--they did try in 1933-34, as was documented in the U.S. Senate, where Gen. Smedley Butler detailed a fascist plot, financed by the Morgans, to force Roosevelt to change his policies. But they could not, because FDR had effectively outflanked them [see footnote 2].
Among the many proofs that FDR was a conscious proponent of the "American System," is the speech he gave accepting the nomination as Presidential candidate for a second time in June 1936. These words, with which I want to conclude, are as important today as they were then--and by listening to them, again have in mind the "LaRouchean thorough-bass line."
Attacking Wall Street's "economic tyranny," which had established "new dynasties," Roosevelt said:
And especially the way FDR deals with the concept of charity--you notice, he was quoting Paul's famous Epistle to the Corinthians--shows how profoundly the mature Roosevelt understood this fundamental Christian principle, the basis of any great idea and political action. Said Roosevelt:
Concluding his speech, he said:
And so do we today--all of us assembled here, together with our many members, supporters, and sympathizers all over the world--have a rendezvous with mankind's destiny. A destiny, which is even a bigger one: to make sure, that the power of LaRouche's ideas, the power of reason, in the immediate period ahead actually rules not just politics in the U.S., but civilization worldwide. And this rendezvous, we must not miss.
 An unpublished manuscript by Richard Freeman, based on extensive study of Roosevelt's papers at the FDR Library in Hyde Park, New York, shows that FDR identified more strongly with the family lineage of "Isaac the Patriot," rather than with his anglophile forebears, than has previously been appreciated.
 On the evening of Feb. 15, 1933, Roosevelt arrived in Miami, just weeks before his first inauguration. As FDR, speaking from the seat of an open car, concluded brief remarks, several shots rang out. Five people on or near the bandstand directly behind the President-elect were hit, although FDR, miraculously, was not. No competent invesigation of the assassination attempt has ever been carried out. (See L. Wolfe, "The Morgan-British Fascist Coup Against FDR," New Federalist, Feb. 4, 1999.)