The 'Hundred Days' of F.D.R.

This is from a small collection of NY Times articles by Arthur M. Schlesinger Jr. It's about the New Deal and Roosevelt's first hundred days in office:

The 'Hundred Days' of F.D.R., by Arthur Schlesinger Jr., Commentary, NY Times, 1983: Exactly half a century ago, the Republic plunged into the Hundred Days - that time of tumultuous change when a flood of legislation swept away venerable market practices and gave the American economic system a new contour.

In the frenzied weeks from March to June 1933, Franklin D. Roosevelt sent 15 messages to Congress and steered 15 major laws to enactment: among them, central planning for industry and for agriculture, new regulation for banking and for the securities exchanges, the Tennessee Valley Authority, the Civilian Conservation Corps and a national system of unemployment relief.

''At the end of February,'' Walter Lippmann wrote when the special session adjourned, ''we were a con-geries of disorderly panicstricken mobs and factions. In the hundred days from March to June we became again an organized nation confident of our power to provide for our own security and to control our own destiny.''

The Hundred Days were only the start of a process that ended by transforming American society. Who can now imagine a day when America offered no Social Security, no unemployment compensation, no food stamps, no Federal guarantee of bank deposits, no Federal supervision of the stock market, no Federal protection for collective bargaining, no Federal standards for wages and hours, no Federal support for farm prices or rural electrification, no Federal refinancing for farm and home mortgages, no Federal commitment to high employment or to equal opportunity - in short, no Federal responsibility for Americans who found themselves, through no fault of their own, in economic or social distress?

These social changes have won general approval. Even the Reagan counterrevolution, for all its 19th-century laissez-faire and Social Darwinist passions, shrinks from abolishing the framework of social protection -the ''safety nets'' - created by the New Deal.

But what of the narrowly economic results? How effective was the New Deal in reducing unemployment, promoting economic growth and altering the distribution of income? And does the experience of half a century ago offer any guidance to the nation in its economic perplexities today?

The technique of the New Deal was improvisation and experiment. ''It is common sense to take a method and try it,'' F.D.R. said in the 1932 campaign: ''If it fails, admit it frankly and try another. But above all, try something.''

Except for that part about admitting failure frankly, this continued the rule for Roosevelt's 12 years in the White House. In the intellectual circumstances of the time, there was really no alternative to experiment. The Hundred Days found the country in a state of invincible ignorance. No one knew the causes of the Depression. No one knew the cure. Business leaders and academic economists alike were analytically baffled and impotent.

A fortnight before Roosevelt took office, the Senate Finance Committee summoned a procession of business leaders to testify on the crisis. ''I have nothing to offer, either of fact or theory,'' said John W. Davis, the head of the American bar. ''There is no panacea,'' said W.W. Atterbury, president of the Pennsylvania Railroad.

Economists had been so wrong in the recent past and were in such hot disagreement in the urgent present that no non-economist could take the profession seriously.

In its detail, New Deal experimentation was often chaotic and not seldom contradictory. But it was unified by F.D.R.'s definite conviction about the ends of economic policy - ends prescribed not only by the miseries of the Great Depression but by the President's alert, resourceful and generous-hearted personality.

Born in the Hudson River aristocracy, he inherited a sense of obligation to land and to community. He was indeed, as John T. Flynn labeled him in a once famous polemic, a country squire in the White House. The Republic was Hyde Park writ large, and he saw himself as trustee for a national estate that required vigilant protection and cultivation.

There was more than a touch of paternalism and noblesse oblige in all this, but there was also a vivid feeling of responsibility for the national community as a whole, especially its most defenseless members.

F.D.R. had had a reasonable exposure to the economic thought of his time. At Harvard he had taken more credits in economics than in any field except history and English. His teachers -William Z. Ripley, A. Piatt Andrew, O.M.W. Sprague - were in the reformist school that hoped to mitigate laissez-faire by regulation.

In the 1920's he had been active in the business self-regulation movement. As Governor of New York, he had pioneered in regional planning, conservation, electric power development and welfare legislation.

The President-elect emerged from this varied experience with a patrician disdain for business wisdom and a curiosity about economists. ''This nation asks for action, and action now,'' he said in his inaugural address.

He looked first to national planning, ''a fair and just concert of interests,'' with business, labor, agriculture and consumers working together under government leadership. Each unit ''must think of itself as a part of a greater whole; one piece in a large design.''

This integrative approach sprang from his sense of the nation as a great community. It found particular expression in the National Recovery Administration and the Agricultural Adjustment Administration. These mechanisms of negotiation and coordination soon arrested the fall in production and prices and brought about a measure of re-employment.

But they also encountered difficulties. N.R.A. especially tried to run too much; and, though it gave new status to organized labor, business used its dominating position in many industrial codes to fix prices and restrict production. In the end, the laws fell afoul of the Supreme Court.

The Second New Deal After 1935 Roosevelt embarked on a new tack: leftward in rhetoric, rightward in policy. Instead of seeking business partnership in the reorganization of economic institutions, the Second New Deal embraced the theory of a competitive economy and strove for recovery through a three-pronged reform campaign.

One prong, which naturally outraged those businessmen who endorsed competition in principle but hated it in practice, was a campaign against the ''economic royalists'' and the concentration of private economic power. The thesis, Roosevelt said in 1938, ''is not that the system of free private enterprise for profit has failed in this generation, but that it has not yet been tried.''

A second prong aimed at the stimulus of the economy through deficit spending. Keynes in his 1936 book ''The General Theory of Employment, Interest, and Money'' gave compensatory fiscal policy its classic rationale.

But the New Deal came to public spending earlier and for its own reasons. It created deficits to combat human suffering, and it found its early justification in the arguments of the Utah banker Marriner Eccles, whom Roosevelt made chairman of the Federal Reserve Board.

He took his ideas from two now forgotten American economic writers, William Trufant Foster and Waddill Catchings, whose irreverent critique of Say's Law in the 1920's had demonstrated the perils of oversaving, concluding with the brisk injunction: ''When business begins to look rotten, more public spending.''

F.D.R. had scrawled in his copy of the Foster-Catchings book ''The Road to Plenty'' (1928), ''Too good to be true - You can't get something for nothing.'' Very likely he continued to prefer structural to fiscal remedies. But ''above all, try something.''

The third prong in the Second New Deal was targeted attention to weak sectors in the economy - the South, the West, housing, railroads. Here the Reconstruction Finance Corporation, headed by a Texas banker, Jesse Jones, played a key role. The R.F.C., and later its wartime subsidiary, the Defense Plant Corporation, liberated the colonial South and West from the New York capital market and used government money to lay the foundation for the postwar boom in the Sun Belt.

(The Sun Belt today repays Washington's initiative by opposing, in the sacred name of free enterprise, government intervention on behalf of other parts of the country, as, for example, the decaying industrial heartland of the Middle West and Northeast.)

All this Rooseveltian hyperactivity brought the country through the worst of the Depression. By 1940 the gross national product was higher than in 1929 and over 60 percent higher than in 1933.

As has been often noted, the New Deal did not solve the problem of unemployment. By 1940 the jobless rate had been cut by nearly two-thirds, to 9.3 percent of the labor force from 25.2 percent in 1933. Still five million people lacked jobs.

So much re-employment in half a dozen years was a not inconsiderable accomplishment, as Reagan economists, faced with their own problems of reducing unemployment, will perhaps agree.

A Budget Balancer The reason the New Deal did not do even better was that Roosevelt, though much denounced at the time as a profligate spender, remained at heart a budget-balancer and a planner. In any event, the hysterical opposition of businessmen to public spending for anyone but themselves made it politically impossible for him to spend very much.

The largest peacetime deficit the big spender produced was a feeble $3.5 billion in 1936. The increase in public debt through the 1930's hardly offset the contraction in private debt. It was not until war legitimized really effective deficits - $18 billion in 1942, $54 billion in 1943 - that unemployment disappeared; proving incidentally how right Eccles and Keynes were.

The New Deal, aided by wartime full employment, also had some impact on the distribution of income. The top fifth of American families received only 46 percent of aggregate personal income in 1946, down from 54.4 percent in 1929, while the share of the lowest two-fifths rose to 16 percent from 12.5 percent.

This was not a great change. But it was the only reversal in the trend of income distribution in American history before or since (except for a brief moment in the 1960's), and is thereby an achievement.

The Inflation Legacy Roosevelt was concerned not only with getting out of the Depression but with preventing new depressions in the future. For the Great Depression was a traumatic experience. Mass unemployment, doubt whether democratic institutions could master economic crisis, the waiting specters of Communism and fascism - all this gave democratic society such a scare in the 1930's that a primary New Deal goal was to make the American economy depression-proof.

Before the New Deal, in those glorious days of the gold standard and the unregulated marketplace, the nation had gone through a bad depression every 20 years or so - 1819, 1837, 1857, 1873, 1893, 1907, 1921, 1929. The New Deal now moved to equip the economy with built-in stabilizers designed to protect individuals against unemployment, businesses against bankruptcy and society as a whole against the roller coaster of boom-and-bust.

This effort to make the economy depression-proof was remarkably successful - as proven by the fact that, for the first time in American history, the nation has gone 40 years without a major depression. If we avoid such a depression today, it will be not because of voodoo economics, but because of the stabilizers that Franklin Roosevelt built into the economy.

The drive to secure the economy against depression had, however, one unforeseen consequence. The traditional cure for inflation had been to put the whole economy through the wringer. Denied that ancient remedy, the post-New Deal economy has experienced a chronic propensity to inflation, before which businessmen and economists appear as analytically impotent as they were before the chronic propensity to depression half a century ago.

By making the economy relatively depression-proof, we made it at the same time inflation-prone.

A Third New Deal? In dealing with the problems of our time, have we anything to learn from the brilliant experiments of the 1930's? In so far as New Deal issues remain, like mass unemployment, regional poverty, conservation and income distribution, it does no harm to consider New Deal remedies. Felix Rohatyn has long called for a resurrection of the R.F.C. The House of Representatives recently voted to establish an American Conservation Corps. Secretary Watt's effort to deliver the public domain to private greed has revitalized the conservation cause.

But what about problems unknown to the 1930's, like inflation? Here we may note the changing light that the rush of years casts on New Deal policies. For a long time historians condemned Roosevelt's First New Deal, with its focus on structure, negotiation and planning, as a bad turn on a wrong road. This judgment prevailed so long as fiscal and monetary fine-tuning appeared to contain the solution to our economic dilemmas.

But we have come to understand that, in an economy dominated by market power concentrated in large corporations and unions, fiscal and monetary policy can restrain inflation only by very crude-tuning - to put it bluntly, by inducing mass unemployment.

The economic logic of N.R.A. was perhaps not so irrelevant as conventional critics have assumed. Perhaps it was the Second New Deal that made the bad turn down the wrong road when it sought to revive the pure competitive model in an economy whose commanding heights had been seized by concentrated market power.

The First New Deal aimed to replace the institutionalized warfare of government against business, labor against management, by negotiation and coordination under government direction: instead of the adversarial cockpit, social partnership. The institutions of the early 1930's were too sketchy and improvised, too sweeping in their reach, too distorted by special interests, too confused by melodrama, to attain effective coordination.

But what is experiment, after all, but trial and error? The First New Deal at least operated in terms of a realistic model of the market.

If N.R.A. and A.A.A. could stop prices from plummeting in the 1930's, it is not beyond possibility that they may conceivably offer some clues as to how to stop prices from soaring in the 1980's. Nor will we ever get high employment, high utilization of plant and steady expansion if our only remedy for inflation continues to be recession.

We must evolve an incomes policy that effectively relates wage rates and profit margins to productivity growth - and we can only do that through experiment, through trial and error.

In the search for such a policy and for other pressing reasons - the deterioration of our infrastructure, the decline of Smokestack America, the global redivision of labor - we can no longer reject the idea of a concert of interests that F.D.R. affirmed in the 1932 campaign nor dodge the challenge of coordination he set out to explore in the Hundred Days.

There may also be something of value in the moral philosophy that animated the Hundred Days. We all recall from F.D.R.'s first inaugural that the only thing we have to fear is fear itself.

While magnificent rhetoric, that line isn't much help now. It didn't really make great sense even then. We had quite a number of things to fear in 1933 besides fear itself. Nor would the rejection of fear have sent our troubles away.

Rereading the inaugural today, one is struck by a different passage - by Roosevelt's stinging indictment of the ethic of the ''money changers'' who, ''stripped of the lure of profit by which to induce our people to follow their false leadership ... have fled from their high seats in the temple of our civilization.''

The time had come, Roosevelt said, to ''restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit. ... These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and our fellow men.''

Perhaps our nation will be more united, more equitable and more prosperous, too, if we abandon the current program of cutting taxes for the rich and social programs for the poor and recall the proposition Roosevelt set forth in his second inaugural:

''The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.''