Tuesday, August 18, 2015

Unsanctioned Voice; Fighting back against the New Deal; National Recovery Act (NRA); Frank Fetter; Alf Landon; Rose Wilder Lane

Click these links for discussions of the Writer's Note , Chapters 1 and 2, Chapter 3, Chapters 4-6, Chapters 7-10 , Chapters 11 and 12 , Chapter 13 , Chapter 14 , Chapters 15 and 16 , Chapters 17-19 , Chapter 20 and Chapters 21 and 22 of Bruce Ramsey's Unsanctioned Voice.

Chapter 23 describes Garrett's opposition to the New Deal policy of supporting minimum prices and wages.

On page 162, Ramsey describes the New Deal's NRA (National Recovery Act) as having been run by the general whose previous experience included drafting the conscription act in World War I. Under the NRA, new investment to expand industrial capacity could be accomplished by permission only. It was "sort of" voluntary (Ramsey's quote), but once enough businesses signed up, it became mandatory. Parades and public relations campaigns demonized those who did not comply. Ford was the only major automaker that did not join the NRA [p. 165]. The NRA would eventually be struck down as unconstitutional by the Supreme Court [p. 164]. The blue eagle NRA symbol would later appear on the cover of Ramsey's Salvos Against the New Deal.

Garrett quotes FDR [p. 163] as referring to new industrial plant and machinery as "weeds." Saturday Evening Post, "Fifth Anniversary N.D.", March 5, 1938.

Garrett argued that prices and wages should be allowed to fall to encourage new investment, innovation and full employment. [pp. 162-166].

Ramsey briefly discusses the deepening of the Depression in 1937-1938 and Garrett's response to FDR blaming "economic royalists." [165]. Today, instead of blaming "economic royalists," FDR's intellectual heirs blame the "1%." Slogans change, but the policies remain the same.

Ramsey far too optimistically argues that modern Democrats have abandoned the idea of propping up wages and prices (citing advice by the Clinton administration to South Korea in 1997) [p. 166]. The Obama administration would later enact or advocate a number of programs designed to prop up prices and wages - cash for clunkers, first time home-buyer credits, stimulus bills, minimum wage increases, Obamacare, fossil fuel restrictions, etc. It is today far too common even among "conservative" businessmen to say that "we need a little inflation" in order to stimulate business. All of these programs and the thinking behind them reflect the opposite of what Garrett advocated in Chapter 23.

Chapter 24 is about two concepts. (1) Garrett specifies that his major reason for opposing the New Deal is the loss of liberty that the New Deal brings (as opposed to mere economic arguments). [pp. 167 - 170]. (2) "Fear" brought about by this new loss of liberty prevented long term investment and lengthened the Depression until the start of the war. [pp. 170 - 172].

Garrett wrote to Frank Fetter (p. 167) that arguing about "what works" ignores the basic issue of liberty. Austrian economist Fetter is introduced here and in footnote #1 (p. 173).

Ramsey summarizes the battle over the Commerce Clause, FDR's court packing plan and the agencies that still survive as the New Deal's legacy [pp. 167-169]:

Government power was sudden and threatening, its purpose transformative. And it was new. People read about it in the same newspapers in which they read of Hitler's belligerence and Stalin's show trials. The destination was not clear.

p. 169. Ramsey makes the same mistake as many political commentators when he argues that government power since the New Deal has rarely been "in leftist hands" because "[b]usiness has large influence over it." [p. 169]. As we have seen numerous times, business owners can be and often are leftist.

Ramsey includes a Garrett quote in which Garrett argues that we should not expect the New Deal to make economic sense or to be consistent on economic grounds. All of the New Deal actions (and those of government since that time) are consistent in that they support increased government power (except in those rare cases where some old right winger manages to repeal something). Garrett quotes FDR to the effect that the New Deal would shackle liberty if such power were in someone else's hands. But FDR stressed that the power was held in his own hands. (pp. 169-170).

Garrett concludes prophetically:
. . . conquest of power for purposes of all-doing . . . would involve many inconsistencies of immediate policy, because the peaceable course to the seizure of great political power is a zigzag path.

Saturday Evening Post, "National Hill Notes," February 29, 1936 [quoted by Ramsey, p. 170].

Ramsey concludes the chapter with a discussion of the "fear" that gripped investors over the sudden increase in government power. While short-term investment returned in the mid-1930's, long-term investment did not [pp. 170-171]. The reason that long-term investment did not return was the political instability that the New Deal created. Investors feared their government and viewed long-term investment as unsafe.

Chapter 25 discusses the election of 1936, and the advice Garrett gave to Alf Landon (pp. 175-177). He advised Landon to challenge the very idea that a recovery had taken place:
There has been no recovery . . . Recovery, with ten million unemployed? Recovery, with money at one per cent? The cheapness of money is a sign of disease. It means we have ceased to perform creative works for the future. It means we are creating no new industry.
[p. 176].

Garrett's advice was of little effect, as Landon did not directly challenge the New Deal. Garrett felt that each piece of advice to Landon was being dropped ". . . down a dry well. There is no splash." [p. 177]. H. L. Mencken shares Garrett's concerns. [p. 177].

Ramsey quotes at length from Garrett's correspondence with Rose Wilder Lane, including those letters revealing Garrett's despair after FDR's reelection in 1936. [pp. 177-180].

Garrett understood the stakes and the natural base that each side would rely on:
It is the hardest intelligence test we have ever faced. Roosevelt will get the entire moron vote. Most intelligent Republicans will have to vote the Republican ticket in spite of Landon. I am sick with disappointment. All he has said is that he will go on doing as much for people as they expect the New Deal to do for them, only in a Constitutional manner, and it will cost less. Merdes.
[p. 178.]

The post-election letters are valuable for understanding how socialism wins so many votes, despite such a miserable record [pp. 179-180]. Garrett's explanation ("They want manna and water out of the rock" (pp. 179-180)) is a precursor to certain ideas that would later appear in People's Pottage.

Click here for more detail about Garrett and Lane in Chapter 26.

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