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The New Deal, Part 2: Foreign Policy


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As noted in part 1, the New Deal was in serious political trouble by 1937. (See Frederic Sanborn, “Collapse of the New Deal,” in W.A. Williams, ed., Shaping of American Diplomacy, II.) Agriculture Secretary Henry Wallace’s book New Frontiers (1934) was an early sign of the administration’s turn toward foreign markets as the most promising escape from the Depression. By 1937-38, the recession-within-the-Depression was pushing many New Dealers toward Open Door Empire. But fascist autarchy, local corporatism, Soviet communism, and new trade restrictions walling off European colonial empires blocked that path. Pursuit of the Open Door would risk war — a choice Herbert Hoover had rejected when faced with a U.S.-Japanese conflict over the China market. Latin America, of course, was meant to be America’s sphere of influence (Closed Door). Recent German and Italian commercial competition there was even less welcome than Japanese competition in Asia. For old-school McKinley Republican imperialists such as Henry L. Stimson and Frank Knox, soon to join the government (1940), and Stanley K. Hornbeck (already at State), military solutions seemed obvious.

John T. Flynn noted that increased military spending was the only remaining economic stimulus the administration could sell to “conservative groups who fear taxation and inflation.” Defense did the trick, and “the Congress and the nation that [were] howling for economy only six months ago [are] now talking about military budgets of monstrous dimensions.…” (Country Squire in the White House). Roosevelt’s 1937 naval budget aimed at economic recovery, overseas commerce, and force with which to secure them.

Roosevelt’s own views (navalism, militarism, Anglophilia, collective security) helped to over-determine events. According to Flynn, New Dealers exaggerated foreign dangers to justify military spending to combat economic stagnation threatening their political survival. For various reasons, then, the administration was taking an alarmed view of world affairs. Congress funded Roosevelt’s spending requests and the administration projected ever larger armed forces, complained of German subversion in Latin America, and launched patrols against supposed German submarines off the Atlantic coast.

New Deal policy analysts restated the Open Door program of the 1890s in new terms serving the needs of the internationally oriented corporations mentioned in part 1 — Thomas Ferguson’s new historical bloc. According to historian Gabriel Kolko, that coalition was especially eager to secure supplies of scarce raw materials essential to modern industrial processes. From mid 1940, regular meetings of business, State Department, and military planners shaped a complete strategy for U.S. global domination. Subgroups developed aeromania and polarmania (my terms) — the geopolitics of air power and intercontinental bombing. If war pulled America out of the Depression, America was never going back in. (See David W. Eakins, “Business Planners and America’s Postwar Expansion,” in David Horowitz, ed., Corporations and the Cold War; and Carlo Maria Santoro, Diffidence and Ambition: Intellectual Sources of U.S. Foreign Policy.)

The gathering war party included Northeastern interventionist conservatives who opposed Roosevelt and worked to nominate Wendell Willkie as his Republican opponent (as did British intelligence). Their corporations ran U.S. war production once war came, and later were the core of the Cold War military-industrial complex. Aubrey Herbert (a pen name of Murray Rothbard) wrote in October 1954 of a decisive moment in 1940: “[Many] elements of big business, particularly ‘Wall Street’ … saw that they could make a good thing out of statism … direct and indirect subsidies galore.”

Some well-placed, unsentimental Anglophiles stood ready to substitute for their beloved British Empire a better American one (David P. Calleo and Benjamin M. Rowland, America and the World Economy). Another war faction was the China Lobby: U.S. missionaries, congressmen, and businessmen lobbying for Chiang Kai-shek. As unilateral imperialists of the McKinley school, they had little in common with genuine noninterventionists.

More important were the prominent Anglophile WASPs in official peace circles, men such as James T. Shotwell and Nicholas Murray Butler at the Carnegie Endowment, where “peace” simply meant preservation of the famously peaceful British Empire.

The battle over intervention

In June 1939, Roosevelt served hotdogs to visiting King George VI and promised firm U.S. support in the next war. By September that war existed. Kansas editor William Allen White formed an interventionist front, the Committee to Defend America by Aiding the Allies, and Yale students influenced by Edwin M. Borchard, defender of American neutrality, formed the America First Committee (AFC) in opposition.

We cannot review here the administration’s moves toward war, which included neutrality-law revision, beginnings of mass conscription, and covert anti-German naval warfare in the North Atlantic. The AFC publicly opposed each move with writing, speeches, and mass rallies, but the interventionists’ victory came from a neglected quarter: East Asia, where U.S. Open Door plans for the China market clashed with Japan’s goal of regional empire.

Already in January 1941, U.S. Ambassador Joseph Grew reported from Tokyo that numerous sources predicted “a surprise mass attack on Pearl Harbor … by the Japanese military forces, in case of ‘trouble’ between Japan and the United States” (Peace and War: U.S. Foreign Policy).

Of the war abroad, we need say little here. We have the History Channel for that.

For four or more years, Americans lived under pervasive wartime controls and compulsory labor assignments. Big business got sweetheart military-industrial contracts. Executive power ran wild, as Roosevelt invented new government departments on his own motion. (See Thomas Fleming, The New Dealers’ War.) Radical sociologist C. Wright Mills complained in 1956 that World War Two’s “totalitarian liberals” had developed a “metaphysics of the war,” supplied by “[Van Wyck] Brooks, [Archibald] MacLeish, and [Lewis] Mumford, official spokesmen of the war ideology” (White Collar). Very soon, this “war liberalism” yielded Cold War liberalism, and thus also neo-conservatism.

The war had a massive effect on American law. Historian Richard P. Adelstein recounts how Wickard v. Filburn (1942) determined that a farmer could not exceed his federal wheat quota, even for household consumption, because his doing so might (conceivably) affect prices, microscopically, thereby defeating national-planning goals. The Supreme Court thus “wrote its own version of the general equilibrium theory into the commerce clause and brought virtually all forms of private activity, ‘economic’ or otherwise, within the regulatory reach of the federal government” (“The Nation as an Economic Unit,” Journal of American History).

Such decisions suggest that the wartime Court might have sustained even the NRA’s formal corporatism, had that still been at issue. A much earlier case — United States v. Macintosh (1931) — already sketched the judiciary’s vision of an alternate wartime (anything goes) Constitution:

To the end that the war may not result in defeat, freedom of speech may, by act of Congress, be curtailed or denied so that the morale of the people and the spirit of the army may not be broken … freedom of the press curtailed to preserve our military plans … deserters and spies put to death without indictment or trial … ships and supplies requisitioned; property of alien enemies … seized without process and converted to the public use without compensation … prices of food and other necessities of life fixed or regulated; railways taken over and operated…; and other drastic powers, wholly inadmissible in time of peace (quoted in Edward S. Corwin, Total War and the Constitution).

This affirmation of the ever-murky war power set a laughably low standard for wartime totalitarianism, which (alas) tends to outlive actual wars.

Wartime critics

John T. Flynn pioneered the comparative study of “fascist” regimes in As We Go Marching. Italy’s version displayed irresponsible government and dictatorship (“totalitarianism”), an immense corporative bureaucracy to coordinate capitalism, economic autarchy, public debt to create purchasing power, militarism as an outlet for public spending, and imperialism. The German pattern was much the same, but with superior and far more homicidal organization.

America was spending, borrowing, and experimenting with economic planning — testing “militarism as an economic institution” and using imperialism to justify militarism. (We might consider Flynn a co-discoverer, at least, of “military Keynesianism” — a subject he pursued into the Cold War.) Together, those policies would bring America very near to a totalitarian state. The president had become “dispenser of all good things” and Congress a “rubber stamp.” The last hallmark of fascism — unrestrained, dictatorial government —was close at hand. A nation with all those features was fascist, a nation with some of them, potentially fascist.

Under fascism, the state managed major productive assets without owning them. It undertook “incessant, comprehensive intrusion into the affairs of every business enterprise.” Bureaucracies spread on “a totalitarian scale,” displacing private and even corporative decision-making. The system required autarchy, since planning could not succeed beyond a particular state’s reach. (On all this, see As We Go Marching.) Flynn could not foresee, however, that if one state could impose its regulations regionally — or even globally — it might reap the benefits of autarchy while jabbering on about “free trade.” (Here was a future project, a peculiarly American one.)

We have already seen Garet Garrett’s view of the domestic New Deal. In its foreign policy he spied an imperial pattern, with executive dominance, primacy of foreign policy, “ascendancy of the military mind,” a “system of satellite nations,” a “complex of vaunting and fear,” and a fatalistic self-understanding of the empire as a “prisoner of history” (The People’s Pottage).

Toward the end of President Roosevelt and the Coming of the War, 1941, historian Charles A. Beard discussed runaway presidential power. Following Roosevelt’s example, a president could “misrepresent” his policies to Congress and the public; “secretly prepare plans for waging an undeclared ‘shooting war’”; “make a secret agreement with a foreign power far more fateful … than any alliance”; be delegated “the power to designate … foreign governments as enemies … and to commit hostile acts against them” in violation of existing law; “invite” military attack; “secretly determine any form of military and naval strategy” suited to his personal goals; employ private propagandists “to stir up a popular demand for some drastic action”; “maneuver” another power into war; and privately agree with leaders of another state “to police the world.”

Executive supremacy was “old in the history of empires and despotisms.” Like militarism, it was an age-old enemy of republican government. Unchecked, such power would lead America to “a terrible defeat in a war in Europe or Asia.” Beard concluded that “a quest for absolute power not only corrupts but in time destroys.” Other dangerous doctrines claimed for the president a “constitutional and moral right to proclaim noble sentiments of politics, economics, and peace” and pledge America to them. Official U.S. theorems on peace, trade, and global prosperity multiplied potential problems, since subsidized trade risked “collisions with the controlled or semi-controlled economies of foreign countries.” In his Farewell Address George Washington had cautioned against “forcing” trade, but in the 19th century there arrived “a full-blown concept … for using the engines of state to break and keep channels open for foreign trade and to create spheres of economic interest” (President Roosevelt and the Coming of the War, 1941).

A new pattern for tiring the world

A new pattern set in for the duration. We still live under it, having never since had a genuine peacetime economy or real demobilization. Life never went back to what we used to call normal. One reason is that the noninterventionist or peace party is discontinuous and short of memory; another is that the war party (bipartisan since the 1950s) has had continuous institutional existence since at least 1938.

Early in the war, critics speculated on how far the war party might go. The Beards wrote, “The only imperialist hope worthy of ‘great politics’ for the United States lay in the overthrow of the British empire and the substitution of an American empire for it, and no such prospect seemed enclosed in the contours of fate” (Charles and Mary Beard, America in Midpassage, I, italics added). William Henry Chamberlin thought that on their broad notion of defense, the war party would soon declare possession of Afghanistan or Tibet essential to American safety (“War —Shortcut to Fascism,” The American Mercury).

Unluckily, the Beards were too sanguine and Chamberlin’s attempted joke is no longer funny. But the New Dealers were right about one thing: war did “cure” the Great Depression, in a manner of speaking.

This article was originally published in the December 2016 edition of Future of Freedom.

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    Joseph R. Stromberg is an independent historian and writer who was born in Fort Myers, Florida. He received his B.A. and M.A. from Florida Atlantic University and his further graduate work was completed at the University of Florida. Mr. Stromberg was a Richard M. Weaver Fellow from 1970-1971. His work has appeared in the Individualist, Libertarian Forum, Journal of Libertarian Studies, The Freeman, Chronicles, Independent Review, Freedom Daily as well as in several books of essays.