The New Deal and corporatism

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Main articles: Corporatism and New Deal

When Franklin D. Roosevelt became President of the United States in March 1933, he expressly adopted a variety of measures to see which would work; including several which their proponents felt would be inconsistent with each other. One of these programs was the National Recovery Administration (NRA), which, with its codes and industry organizations, was said by some critics to have a certain resemblance, as an economic institution, to Mussolini's corporatism ^[1] ^[2] ^[3] ^[4] ^[5] ^[6]. This comparison was made at the time, and it was not always a critical one; even Winston Churchill had praised Mussolini. Churchill controversially claimed that the Fascism of Benito Mussolini had "rendered a service to the whole world," showing, as it had, "a way to combat subversive forces" — that is, he considered the regime to be a bulwark against the perceived threat of Communist revolution. At one point, Churchill went as far as to call Mussolini the "Roman genius ... the greatest lawgiver among men." ^[7] FDR's personal letters reveal that he was impressed by what Mussolini was doing and said that he kept in close touch with that "admirable gentlemen."^[8] Mussolini himself praised the New Deal as following his own corporate state, as quoted in a July 1933 article in the New York Times, "Your plan for coordination of industry follows precisely our lines of cooperation."^[9]

"Fascism" in the 21st century has very strong connotations of mass murder and death camps, making it a highly loaded term. However, in the 1930s for some it meant the planned economy and corporativism exemplified by the economic plans of Benito Mussolini in Italy. Some Communists as well as pro-capitalist journalists, essayists, and politicians, including Herbert Hoover, used the term "fascism" that way. At the time of the New Deal, criticism came from both the left and right. Some "socialists and communists suggested the New Deal's industrial recovery program was really the basis for establishing a fascist state" that failed to protect against the "evils of capitaism." ^[9]

Concerning the NRA laws Herbert Hoover wrote in reply to a 1935 press inquiry ^[1]:

"There are already sufficient agencies of government for enforcement of the laws of the land. Where necessary those laws should be strengthened, but not replaced with personal government. The prevention of waste in mineral resources should be carried out by the States operating under Federally encouraged interstate compacts. That is an American method of eradicating economic abuses and wastes, as distinguished from Fascist regimentation. The multitude of code administrators, agents or committees has spread into every hamlet, and, whether authorized or not, they have engaged in the coercion and intimidation of presumably free citizens. People have been sent to jail, but far more have been threatened with jail."

In a 2002 book ^[2] ^[3] historian Benjamin Alpers writes on page 35:

"A second major source of the decline of dictatorial rhetoric following the spring of 1933 was the disenchantment of American business with the Italian economic model. Much conservative business support for a dictator or a 'semi-dictator' had been related to the idea of establishing a corporative state in the United States..... The last gasp of support for Mussolini's solution to the problems of labor and management may have been the publication of Fortune magazine's special issue on the fascist state in July 1934. Business approval of government intervention in capital-labor relations had begun to wear off as the business community began to actually experience it under the NRA; it discovered that such an arrangement, at least in its American incarnation, meant state involvement in business, not self-government by wealth...."

American Lawrence Dennis, in his 1936 book, The Coming of American Fascism, wrote that "history and present day experience are full of demonstrations that the more there is of what is commonly called laissez-faire, economic freedom, democracy or parliamentary government, the more economic maladjustments there will be, and the more difficult of readjustment they will prove." ^[10]

Journalist John T. Flynn, a former socialist, in his 1944 book As We Go Marching, surveyed the interwar policies of Fascist Italy and Nazi Germany, and pointed to what he called uncomfortably similar American policies. Flynn saw links between 'generic' fascism and a large number of policies of the United States. He said that "the New Dealers...began to flirt with the alluring pastime of reconstructing the capitalist system...and in the process of this new career they began to fashion doctrines that turned out to be the principles of fascism." See a further discussion of these claims linking the New Deal to statism, corporatism, and fascism at Fascism and ideology.

Several portions of the New Deal were struck down as unconstitutional by the US Supreme Court, and some saw these rulings as saving the U.S. from having a long-term fascist corporate state. ^[11]. In response to the Court's striking down the NRA as unconstitutional, Huey Long said "I raise my hand in reverence to the Surpreme Court that saved this nation from fascism."^[12] In 1936 the Court in striking down the first version of the Agricultural Adjustment Act stated that "a statutory plan to regulate and control agricultural production, [is] a matter beyond the powers delegated to the federal government..."

The Supreme Court failed to strike down similar laws after 1937. Also, these and other laws were later passed by the Supreme Court. Some claim that it was due to Roosevelt's threat to pack the court, and the apparent sudden shift by Justice Owen J. Roberts from the conservative wing to the liberal wing of the Supreme Court ("the switch in time that saved nine"). Also, Roosevelt appointed 9 Supreme Court justices during his over 12 years as President.

When the National Recovery Administration was found unconstitutional in 1935, many supporters of the New Deal, including Adolf Berle and Harold Ickes, did not regret its passing. ^[13]

In his 1951 memoirs former Republican President Herbert Hoover argued that some (but not all) New Deal programs were "fascist," carrying a combination of rule by big business corporations and presidential dictatorship. [Memoirs v3, p420] ^[6]

"Among the early Roosevelt fascist measures was the National Industry Recovery Act (NRA) of June 16, 1933 .... These ideas were first suggested by Gerald Swope (of the General Electric Company)....[and] the United States Chamber of Commerce. During the campaign of 1932, Henry I. Harriman, president of that body, urged that I agree to support these proposals, informing me that Mr. Roosevelt had agreed to do so. I tried to show him that this stuff was pure fascism; that it was a remaking of Mussolini's 'corporate state' and refused to agree to any of it. He informed me that in view of my attitude, the business world would support Roosevelt with money and influence. That for the most part proved true."

Whatever Hoover was told, Roosevelt had not agreed to any such plan. In 1934, Roosevelt himself warned his "fireside chat" radio audiences against linguistic confusion. Some people, he said:

will try to give you new and strange names for what we are doing. Sometimes they will call it 'Fascism,' sometimes 'Communism,' sometimes 'Regimentation,' sometimes 'Socialism.' But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical. . . . Plausible self-seekers and theoretical die-hards will tell you of the loss of individual liberty. Answer this question out of the facts of your own life. Have you lost any of your rights or liberty or constitutional freedom of action and choice? ^[14]

In September 1934 Roosevelt defended a more powerful national government as he believed was necessary to control the economy, by quoting conservative Republican Elihu Root:

The tremendous power of organization [Root had said] has combined great aggregations of capital in enormous industrial establishments . . . so great in the mass that each individual concerned in them is quite helpless by himself. . . . The old reliance upon the free action of individual wills appears quite inadequate. . . . The intervention of that organized control we call government seems necessary. . . . Men may differ as to the particular form of governmental activity with respect to industry or business, but nearly all are agreed that private enterprise in times such as these cannot be left without assistance and without reasonable safeguards lest it destroy not only itself but also our process of civilization. ^[14]

In the 1960s historians generally maintained that the NRA was a composite based on input from strictly American ideas -- it was modeled after the 1917 War Industries Board of Woodrow Wilson; Ellis Hawley found no similarities with European fascist models whatsoever ^[15]. Hugh Johnson, from the War Industries Board, had helped draft the NRA and was its first head, but he vehemently denied any Italian inspiration.

Historians such as Ellis Hawley (1966) have examined the origins of the NRA in detail, showing the main inspiration came from Senators Hugo Black and Robert Wagner and from American business leaders such as the Chamber of Commerce. The main model was Woodrow Wilson's War Industries Board, in which Johnson had been involved.

In a 1973 article ^[16] in The Libertarian Forum Joseph R. Stromberg wrote:

"Herbert Hoover was a major architect of peacetime corporatism. As Commerce Secretary he encouraged the cartelistic integration of trade associations with labor unions. As President, he pioneered most of the New Deal measures, which had the unexpected effect of prolonging a depression itself caused by governmental monetary policy. In the election of 1932, important Business liberals shifted their support to FDR when Hoover refused to go over to a fully fascist form of corporatism. By contrast, the Roosevelt Administration pushed through the National Recovery Act, which openly sanctioned the cartelizing activities of trade associations, and the Agricultural Adjustment Act, cartelizing the farm sector. The Wagner Act of 1935 integrated labor into the nascent system."

Ronald Reagan, a strong supporter of the New Deal at the time reversed positions and in the May 17, 1976 issue of Time magazine is quoted saying:

Fascism was really the basis for the New Deal. It was Mussolini's success in Italy, with his government-directed economy, that led the early New Dealers to say 'But Mussolini keeps the trains running on time.' ^[17] ^[18]

There was also a 1981 New York Times article titled "Reagan says many New Dealers wanted fascism." ^[19].

William P. Hoar, of the John Birch Society, in his 1985 book Architects of Conspiracy (page 127) ^[20] ^[21], wrote:

"The economics of Fascist Italy were soon being imported into this country by President Franklin D. Roosevelt, whose C.C.C., W.P.A., PWA. and other Depression-era schemes proved so damaging."

Some Austrian School economists, such as David Gordon and Thomas DiLorenzo, have also compared aspects of the New Deal to Mussolini's corporatism.^[22] ^[23]

In 1993 author Sheldon Richman wrote:

Roosevelt's National Recovery Act (NRA) attempted to cartelize the American economy just as Mussolini had cartelized Italy's. Under the NRA Roosevelt established industry-wide boards with the power to set and enforce prices, wages, and other terms of employment, production, and distribution for all companies in an industry. Through the Agricultural Adjustment Act the government exercised similar control over farmers. Interestingly, Mussolini viewed Roosevelt's New Deal as "boldly... interventionist in the field of economics." ^[24].

However, other historians who have analyzed the origins of the Agricultural Adjustment Act in depth have discovered no inspiration from Europe. For example; Theodore Saloutos in his 1982 book ^[25] "The American Farmer and the New Deal."

Other scholars believe linking the New Deal to Fascism to be overly simplistic. Historian Stanley Payne, in his 1995 book, "A History of Fascism, 1914-1945" ^[4], wrote:

"What Fascist corporatism and the New Deal had in common was a certain amount of state intervention in the economy. Beyond that, the only figure who seemed to look on Fascist corporatism as a kind of model was Hugh Johnson, head of the National Recovery Administration."

Johnson strenuously denied any association with Mussolini, saying the NRA "is being organized almost as you would organize a business. I want to avoid any Mussolini appearance -- the President calls this Act industrial self-government." ^[5] Donald Richberg eventually replaced General Hugh Johnson as head of NRA and speaking before a Senate committee said "A nationally planned economy is the only salvation of our present situation and the only hope for the future."^[26]

American historian Srđa Trifković, (originally from Serbia), in a 2000 article, wrote:

"Roosevelt and his 'Brain Trust,' the architects of the New Deal, were fascinated by Italy’s fascism - a term which was not pejorative at the time. In America, it was seen as a form of economic nationalism built around consensus planning by the established elites in government, business, and labor." ^[27]

In his September 13, 2002 article, "What is American Corporatism?" ^[28], Robert Locke writes

"In classical capitalism, what has been called the 'night-watchman' state, government's role in the economy is simply to prevent force or fraud from disrupting the autonomous operation of the free market. The market is trusted to provide. Under corporatism, it is not, instead being systematically manipulated to deliver goods to political constituencies."

He states that the Federal Reserve System and the New Deal were the major beginnings of American corporatism. He details 13 other examples. He states that the Federal Reserve Bank is a government-approved cartel of private banks.

Few people in the United States ever identified themselves as "fascists" or openly supported fascism. Official fascist groups tended to be small and existed mostly during the 1930s. For example, the Silver Legion of William Dudley Pelley and the German-American Bund of Fritz Kuhn openly supported Nazi Germany in the 1930s. At the same time, Catholic radio host Father Charles Coughlin began to show sympathy towards Nazism and strong anti-semitism. The American Nazi Party of George Rockwell was a small fringe group for the following decades, supporting white power and opposing the growing civil rights movement.

However, there have been numerous claims that certain people, organizations or institutions in the United States exhibited similarities to fascism, particularly in the 1930s while fascism was on the rise in Europe. For instance, Huey Long was accused of setting up a strong-arm state in Louisiana. In 1933, there was an alleged attempt to overthrow President Franklin D. Roosevelt by military coup. This was known as the Business Plot, because it had been supported by the industrial and financial elite whose interests were threatened by the New Deal. The Business Plot became popularly known when retired General Smedley Butler testified to the McCormack-Dickstein Committee that he had been approached by a group of wealthy business interests, led by the Du Pont and J. P. Morgan industrial empires, to orchestrate a fascist coup against Roosevelt. The Fascist sympathies and support for Germany and Italy of many of the richest families in America and payments to William Randolph Hearst for favorable articles in the American press were mentioned in the letters of William Dodd, the American ambassador to Germany. The idea of fascism developing in the United States was presented in the 1935 satirical novel It Can't Happen Here by Sinclair Lewis and more recently in the 2004 Phillip Roth novel The Plot Against America.