FDR & The Role of Government

Franklin D. Roosevelt, on September 23, 1932 gave a speech that laid out the future of the Democratic Party's philosophy on the role of government in the economy and in the lives of the American People. He begins by discussing the American Industrial Revolution, remembering that, "The dream was the dream of an economic machine, able to raise the standard of living for everyone; to bring luxury within the reach of the humblest; to annihilate distance by steam power and later by electricity, and to release everyone from the drudgery of the heaviest manual toil". This dream was a dream of national passion and enthusiasm, so much so that we did not pay too much attention to the means, so far as we achieved our ends. So long as the railroads were built, we did not complain too much how they were built, how the railroad companies acquired their land, how the workers were treated, or even how the laws applied.

"So manifest", Roosevelt trumpeted, "were the advantages of the machine age, however, that the United States fearlessly, cheerfully, and I think, rightly, accepted the bitter with the sweet".  Yet, eventually the expansion could only go so far before all that free land had become private property and powerful companies began closing in on monopoly, and the hopes of the average man were no longer in discovering the American Dream, but rather in laboring for those who already had. While we were not a nation that had historically desired too great a relationship with our Government, these Business concerns commonly petitioned the government for aid.

Roosevelt reminds us that, "The railroads were subsidized, sometimes by grants of money, oftener by grants of land; some of the most valuable oil lands in the United States were granted to assist the financing of the railroad which pushed through the Southwest. A nascent merchant marine was assisted by grants of money, or by mail subsidies, so that our steam shipping might ply the seven seas". And so, the US Government paved the way for American Business to prosper, in the hopes of establishing a better life and living for all Americans. In Roosevelt's mind, this hope was exhausted at the end of the Industrial Revolution when after receiving all this help and grace and charity from Government, these Corporations did not spread the wealth. Roosevelt lamented, "More striking still, it appeared that if the process of concentration goes on at the same rate, at the end of another century we shall have all American industry controlled by a dozen corporations, and run by perhaps a hundred men. Put plainly, we are steering a steady course toward economic oligarchy, if we are not there already".

The question remains, then, what must the government do?

"Clearly", Roosevelt opined, "all this calls for a re-appraisal of values. A mere builder of more industrial plants, a creator of more railroad systems, an organizer of more corporations, is as likely to be a danger as a help. The day of the great promoter or the the financial Titan, to whom we granted anything if only he would build, or develop, is over. Our task now is not discovery or exploitation of natural resources, or necessarily producing more goods. It is the soberer, less dramatic business of administering resources and plants already in hand, of seeking to re-establish foreign markets for our surplus production, of meeting the problem of underconsumption, of adjusting production to consumption, of distributing wealth and products more equitably, of adapting existing economic organizations to the service of the people. The day of enlightened administration has come".

And Thus the pinnacle of American Liberalism was born. The argument was made that the governments' role in the United States economy was to change, to be an instrument for regulating production, redistributing wealth, and securing economic equity with the objective of better serving the people. Which people? The people who failed to rise to the top in that great Industrial Race for the American Dream. The people who now worked for the victors. The people who no longer had a frontier to conquer, or a steam engine to invent, or access to land and resources to live off of. The Government must evolve, to involve itself in the careful planning, regulating, and legislating of an equitable national economy.

"As I see it", Roosevelt laid out, "the task of Government in its relation to business is to assist the development of an economic declaration of rights, and an economic constitutional order. This is the common task of statesmen and businessman. It is the minimum requirement of a more permanently safe order of things...".

An so a "permanent revolution" was began in America. The American People were about to gain new Rights.

"Every man", proclaimed the President, "has a right to life; and this means that he has also a right to make a comfortable living. He may by sloth or crime decline to exercise that right; but it may not be denied him. We have no actual famine or dearth; our industrial and agricultural mechanism can produce enough and to spare. Our Government, formal and informal, political and economic, owes to everyone an avenue to possess himself of a portion of that plenty sufficient for his needs, through his own work". And of course there is the rub. The question that has faced the Democrat Party for generations. Can all Americans possess himself of a portion of that plenty sufficient for his needs through his own work? And in what ways can the government open an avenue for them to possess a portion of that plenty?

Roosevelt continued, "Every man has a right to his own property; which means a right to be assured, to the fullest extent attainable, in the safety of his savings. By no other means can men carry the burdens of those parts of life which, in the nature of things, afford no chance of labor; childhood, sickness, old age. In all thought of property, this right is paramount; all other property rights must yield to it. If, in accord with this principle, we must restrict the operations of the speculator, the manipulator, even the financier, I believe we must accept the restriction as needful, not to hamper individualism but to protect it".

This is a profound economic sentiment in stark contrast to the economic observances of Adam Smith. In Smiths' Theory of Moral Sentiments, (part 4, Chapter 1), he states, "The rich ... divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made, had the earth been divided into equal proportions among all its inhabitants". President Roosevelt has a much different vision for the future of the American Economy. No longer shall we trust the prosperity of the poor to an invisible hand, or to the laws of nature, or even to the charity of the rich.

"This implication is, briefly, that the responsible heads of finance and industry, instead of acting each for himself, must work together to achieve the common end. They must, where necessary, sacrifice this or that private advantage; and in reciprocal self-denial must seek a general advantage. It is here that formal Government - political government, if you choose - comes in. Whenever in the pursuit of this objective the lone wolf, the un-ethical competitor, the reckless promoter, the Ishmael or Insull whose hand is against every man's, declines to join in achieving an end recognized as being for the public welfare, and threatens to drag industry back to a state of anarchy, the Government may properly be asked to apply restraint. Likewise, should the group ever use its collective power contrary to the public welfare, the Government must be swift to enter and protect the public interest".

That this new role of government would seem like a threat to capitalists and individualists did not go unnoticed by President Roosevelt. He concluded that all the rights, liberties, and protections would and ought to remain in place for the individual and that "every individual may attain such power as his ability permits, consistent with his assuming the accompanying responsibility". And so, the great economic debate began. The questions were laid out and the philosophies proscribed. And still today, the views of Roosevelt and Smith are compelled to combat each other in the public discourse, unresolved, but each gaining and losing popular support with each consecutive generation. Just as Aristotle and Plato, Empiricism and Rationalism, has waged an intellectual battle for over 2,000 years, Capitalism and Liberalism (for lack of a less offensive term) may well continue to engage each other for the years to come.

(Roosevelt Quotes from an Address by Franklin D. Roosevelt given at the Commonwealth Club, San Francisco, September 23, 1932. Printed in American Government: Readings and Documents, by Peter H. Odegard, second edition. Published by Harper & Row, New York, Evanston, and London, 1964).