Performing Government in the New Deal

FDR, and the New Deal, were especially good at “performing” government. They even managed to stage a gigantic piece of “security theater” the gold vault at Ft. Knox. FDR had a genius for government as theatrical performance.

tanks used against the bonus army

In 1924, Congress voted to give WWI veterans a “bonus” as thanks for their service, payable in 1945. As the depression worsened, unemployed veterans began asking that the bonus be paid now. A group of about 40, 000 veterans, nicknamed “the bonus army,” gathered in Washington in 1932. Hoover responded by sending out the US Army. Against Hoovers’ orders, the Army (including Douglas MacCarthur, Dwight Eisenhower, and George Patton) charged the unemployed veterans in their camp and ran them into the Anacostia River. Two were killed: it was a public relations disaster and greatly contributed to his defeat.

Like Hoover, FDR opposed paying the bonus immediately. But when a smaller bonus army returned in 1933, FDR set up a campsite in Virginia and provided them with three meals a day. He sent Eleanor Roosevelt out to visit: she listened to their stories and songs and suggested they might find work in the newly formed Civilian Conservation Corps. They still didn’t get the bonus, but FDR was widely perceived as compassionate and decent, even though he opposed paying the bonus.

Eleanor Roosevelt at Bonus Army Encampment

 

The incident points to FDR’s political savvy, but it also points to how well FDR could “perform” government. Hoover’s performance was unsubtle, one dimensional, and simplistic: “No, you can’t have it. Here comes the Army. Now leave.” FDR’s performance, thanks to Eleanor, was subtle, flexible, personal and full of nuance.

Office of War Information photo of Woman in Defense plant, WWII

If the New Deal was really different, I would argue, it was different in the way it performed, or dramatized the performance of, government in action. It funded the arts, and of course the theater through the Federal Theater Program. It recorded the oral histories of ordinary Americans, and local lore in WPA guidebooks. But it also dramatized the organizational work of government visibly in the CCC, where young men lived in barracks and wore uniforms as they built national parks, and in the NRA, the WPA, the TVA, the FSA and the usual range of government agencies. It’s not so much that this stuff was new: it’s that they knew how to sell the performance of government.

Civilian Conservation Corps Poster

My favorite example comes out of my research on money: Fort Knox. Roosevelt took the United States off the domestic gold standard in the Gold Reserve Act of 1934. The Act made it illegal for private citizens or banks to hold “monetary gold,” requiring that they turn in any such hoards in to the Treasury in exchange for paper dollars at a price set by Roosevelt. You could no longer redeem paper dollars be for gold1. Under the Act individuals could still own gold jewelry or keep their gold dental fillings. But anyone owning “monetary gold”—coins or bullion—had to sell it to the Federal Government at higher than market rates.

The Act ended the domestic gold standard and gave FDR control over the money supply to an extent not seen since the Civil War.

To reassure people jittery about money, Roosevelt built an entirely new vault to hold the gold the Treasury bought, at Fort Knox in Kentucky. The vault was pure theater: there was no shortage of space in  existing vaults. There were no demands for more space coming from banks. As J.M. Keynes noted, all the gold in the world could fit easily in the cargo hold of the Queen Mary. The exterior dimensions of the Fort Knox vault itself are only forty by sixty feet, so clearly the gold required no vast space.

Roosevelt used the construction of Fort Knox to create an impression of permanence and natural solidity.

In the bank panic of 1792, Bray Hammond wrote, the Bank of North America tried to stave off a run by its customers by having its porters “carry its specie busily to and from the cellar in order to give magnified notion of what it had.” The bank’s managers, he added, “ostentatiously brought in deposits of gold and silver that had unostentatiously been carried out a little while before.” The show of specie money reassured the jittery customers, saving the bank from failure. Hammond himself recalled, as a young bank clerk in Iowa during the panic of 1907, employing the same dodge: heaping impressively large piles and sacks of low value coin in plain view, and ostentatiously counting it, in order to give the impression of overflowing vaults.

With Fort Knox, the government made a great show of moving its bullion to Kentucky. Press releases described the elaborate precautions necessary to move as six billion dollars worth of gold. “Fifty armored trains to carry Federal gold,” announced the New York Times. Soldiers and submachine gun toting Treasury agents rode with the gold as it moved by rail on a secret route. False “dummy” trains decoyed would-be thieves. Tanks and soldiers on foot protected armored trucks as they drove the yellow bars from railhead to vault. It cost well over a million dollars to move the gold, many times more than it cost to build the vault. Although the Treasury kept both the actual moving day and the amount moved secret, it took pains to call attention to fact of the move, and to the gold’s enormous but unspecified value.

The elaborate and well-publicized precautions demonstrated unmistakably that the US owned the gold, that the gold was immensely valuable, and that it now sat in an impregnable fortress in the nation’s heartland.

“It is the greatest treasure of all time,” wrote Popular Mechanics: “the strongest, best guarded, least expensive, most sensible strongbox owned by any nation.” Popular magazines and newspapers seized on the vault as a symbol of security and strength: several accounts noted that any potential invaders would have to “first fight their way across the Appalachians” just to approach the Fort. They also repeated Treasury department press releases describing the vault’s extraordinary security measures, including electric fences, a moat, steel and concrete walls of unknown but doubtless staggering thickness, a bombproof roof, poison gas booby traps and an emergency flooding system. The Treasury hinted at other forms of protection, too secret and awful to mention. “We thought Fort Knox would be a safe place,” Morgenthau answered cryptically when a reporter asked why he chose Fort Knox: “you know what I mean—safe.”

Fort Knox amounted to a performance of government, government as security,  as impregnability: “security theater.”

So even as the US left the gold standard, in the public imagination Fort Knox symbolized the connection between government and money, and the security of both. See for example, Yosemite Sam’s encouter with Fort Knox in 14 Carrot Rabbit (1952), or this illustration from Life magazine:

 

But to make this kind of theater work, FDR also needed to establish a more intimate relationship with the public, like an actor.

It’s probably fair to say that before the 1930s, one of the primary requirements for election to office was a very loud voice. In an age before microphone, politicians a booming, room filling oratorical style and a voicebox to match.  On the right see FDR’s cousin Theodore: Speaking without microphones required a lot of volume and a blustery style. FDR was possibly the first to recognize that radio brought you into people’s living rooms and made you their intimate. Shouting at them, as you might in a lodge hall or from the back of a rail car, sounded harsh and off-putting. His “fireside chats” sounded like he was talking in you living room, or as if you were listening in his.

Even in his public addresses, FDR managed a more intimate style. The day of the 1st inaugural address, recalled lifelong Republican John R. Tunis, his family had $3.50 left. Their bank had failed that morning. “Then we turned on the radio and Franklin D. Roosevelt’s inaugural address came on. It was a talk the nation had not heard in my lifetime…I felt not merely the words—arousing, challenging, unexpected—but the tone and great courage and the strength of the man behind them.”

You see this kind of thing a lot about FDR, much as you see it about Reagan: he built some kind of emotional connection because he could perform what people thought they wanted government to be doing.

There’s no good historical overview of the New Deal, partly because the New Deal wasn’t very consistent or coherent. Lizabeth Cohen’s Consumers Republic does a great job from a specific angle. Amity Shlaes has a really hostile account of both Hoover and FDR: her primary motivation is proving that government interventions in the economy don’t work and it’s too tendentious to be taken seriously as history. I’m neither pro nor con on FDR and the New Deal: I’m generally inclined towards the view that FDR was a fundamentally conservative guy who staved off both fascism and communism, and that while he staged some big interventions into the economy they were much smaller than they could have been—consider, for example, Huey Long. The real change in American society isn’t the New Deal, it’s WWII and after: the GI Bill, the Federal Highways, the military industrial complex; the subsidy to home ownership and suburbanization.

Shlaes, in her ideological zeal, makes the important point that Hoover and FDR had a lot in common. Hoover’s Reconstruction Finance Corporation initiated  a program of direct loans to businesses: FDR liked it so much that he kept it in place and expanded it. Historians have seen these similarities before: my mentor, Larry Levine, used to lecture on how much Hoover and FDR had in common.

Levine argued that the difference between them lay in their sense of empathy and ability to connect with ordinary people. He cited Hoover’s and Roosevelt’s treatment of the “Bonus Army” as an example. I’m inclined to argue that what FDR had was a talent for the theater of governing, the performance of government.

 

  1. Except at the discretion of the Secretary of the Treasury, a provision designed for foreign exchange: The US remained on the gold standard in foreign exchange until 1971

7 Comments

  • Tom King wrote:

    This is interesting. How do we convince people today that government works for them? Did FDR have anything like Fox News presenting a counter message or a deconstruction of his security theater?

  • He had lots of opposition from the left and the right (http://theaporetic.com/?p=1470) but no unified media presence on the scale of Fox. National broadcast media was only a decade old at best and much more closely regulated.

    Wash post did a story today on how even though Oklahoma gets back $1.38 for every tax dollar it sends to DC, people in OK think govt. has no impact on them.

    Obama should have let them shut the govt. down. It would have been instructive

  • […] and Jol­son had a “hot” style: loud, projective. Just as FDR fig­ured out that with a micro­phone you could drop the windy style of the whis­tle stop spee…, and estab­lish an inti­mate rela­tion­ship with the lis­tener, so Bing Crosby real­ized that […]

  • Corrinne N wrote:

    Tom King said \This is inter­est­ing. How do we con­vince peo­ple today that gov­ern­ment works for them?\

    You can not convince anyone who has looked at the facts because the US government actually works for the bankers and Corporations not us serfs.

    For example, the banking bills that Clinton signed into law and the WTO treaty he ratified is directly responsible for the economic mess we are now in.

    But that is alright Ben Bernanke is finishing the job by \printing\ money like mad. This makes workers \REAL\ wages fall until we are on the same wage scale as the rest of the world – a pittance.

    This lowering of the real wage is nothing new:

    In 1976 A typical American CEO earned 36 times as much as the average worker. By 2008 the average CEO pay increased to 369 times that of the average worker.
    See: http://timelines.ws/subjects/Labor.HTML

    BANKING LAWS:
    Clinton’s signed laws that repealed the McFadden Act of 1927, the Glass-Steagall Act of 1933 and the Bank Holding Company Act of 1956 This lead to the Formation of Mega Banks.

    Clinton’s repeal of the Glass-Steagall Act (the Gramm-Leach-Bliley Act) which had prevented the coupling of investment banking and lending allowed commercial and investment banks to consolidate.

    He is also responsible for the Housing and Community Development Act of 1992 and the Commodity Futures Modernization Act of 2000 that was responsible for marginal mortgage loans doomed to fail and the unregulated CDSs used to insure the banks against foreclosure.

    This led to the AIG bailout and foreclosure mess. By bailing out AIG, the US taxpayer PAYS the banks to force people into foreclosure. A bank can have several CDSs on one mortgage making foreclosure \VERY attractive\ since they can collect sever times the amount of the mortgage AND get the home too.

    Reagan gave use leveraged Buyouts that wiped out well run American businesses and Bush gave us the Patriot Act.

    TRUST the US Government???? You have GOT to be kidding!

  • The argument about Bernanke printing money to make wages fall simply isn’t true–what inflation we;ve seen has not been caused by the Fed printing money. In fact, I wish they’d print more. Inflation would cause wages to rise, stimulate spending, and reduce the burden of fixed debt costs.

    The group that’s most injured by inflation isn’t those in debt, it’s those with a lot of capital and those who lend, e.g. the large banks. Bernanke would do the average american a great favor if he caused some inflation. That he doesn’t indicates who his real clients are.

  • […] posted ear­lier about Ft. Knox, and FDR’s strat­egy of build­ing a vault to guard gold which no longer had any func­tion as back­ing for cur­rency, a kind of […]

  • […] an audit of Fort Knox, which I argue in in my book Face Value was never any­thing more than an elab­o­rate pubic rela­tons scheme […]

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