Joan Blondell sings the climactic Forgotten Man number in Gold Diggers of 1933.
Monday, January 11, 2010

The Forgotten Man

The picture above is from Gold Diggers of 1933. To see a larger version click on the picture. The musical number is Remember My Forgotten Man, and comes at the end of the movie. Gold Diggers is one of at least two movies that uses the motif of the forgotten man. The other is My Man Godfrey with William Powell and Carole Lombard. In My Man Godfrey Lombard plays a socialite who goes out on a scavenger hunt to find a forgotten man.

The phrase comes from a speech by FDR, where it refers to the impoverished, the unemployed, and so on. Amity Shlaes, in her book The Forgotten Man, gives another variant from the 19th century. This comes from William Graham Sumner:

"As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X, or in the better case, what A, B, and C shall do for X…. What I want to do is to look up C. I want to show you what manner of man he is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of…. "He works, he votes, generally he prays—but he always pays. . . ."

In Roosevelt’s speech, and in the movies that I’ve mentioned, the forgotten man is X. To Sumner, and to Shlaes, the forgotten man is C, the taxpayer.

Shlaes book is evidently somewhat controversial. There is some conflict over her unemployment statistics, which she says are based on the Lebergott/BLS data for the period. She also mentions that all surveys of unemployment find that during the period 1931-40 it never went below 9%.

The Depression required government action to make it great. Hoover’s attitude, as portrayed by Shlaes, was that of a can-do engineer. He had aided in war relief and flood disaster programs, and his instinct, following the stock market crash was to do something. The problem is that he should have done nothing.

Shlaes opens with a description of a young boy’s suicide that is, in it’s way, as depressing as the end of Hardy’s Jude the Obscure. This suicide, however, takes place not at the beginning of the Depression but in 1937, during what she terms the Depression within the Depression. The chart over on the left shows GDP for the period 1910-60. The pinkish area shows the Depression era. There is a small, but perceptible drop in GDP shown at about the 1937 mark. The chart for unemployment shown over at the right shows a similar rise about 1937. It is Shlaes’ contention that Roosevelt’s experimentation and assorted programs essentially prolonged the depression. Her hero, or actually heroes, in this story include men like Wendell Wilkie, who operated a power company, and Bill Wilson, one of the founders of AA.

The Depression, in her view, was not caused so much by the stock market crash, as it was by inappropriate monetary policy. For example, in 1929 gold flowed into the treasury from places such as Germany. This should have resulted in an expansion of the money supply. The NY Fed, under George Harrison, sterilized the effect of the incoming gold by selling bonds. The money supply should have been eased instead (90-1).

Protectionism, in the form of the Smoot-Hawley tariff, made American markets unattractive to foreign companies, so there was no influx of goods from abroad, and no purchases of American goods. This wasn’t offset until Cordell Hull began negotiating better rates.

Taxes also rose. People do not like the argument that job creation comes from the top down, but it is true. It is the man with a few extra dollars that he can risk who starts up businesses, and the profits enable the business to grow. Under Roosevelt an undistributed profits tax was instituted. The idea was to force businesses to disgorge money that was sitting idle, and not being paid out in dividends. Now there are arguments for a company paying out dividends, and retaining only a portion of its profits as a reserve, but Roosevelt and his minions didn’t make those arguments.

The cash reserve of a company such as Apple, in which I used to own shares, functions as a hoard from which the company can make investments, or acquire other companies. It also functions as a cushion during economic downturns that allows it to retain employees. In technology companies the retention of experienced talent is vital, but it was also important in the less technological companies of the 1930s where a pool of employees who could be kept working was vital to a company’s recovery. By forcing companies to disgorge retained profit that cushion was lost, and the alternative became additional job losses.

Attempts to raise wages artificially also meant additional job losses.

The mania for taxation did not stop with merely raising taxes, it also included the prosecution of figures such as Andrew Mellon for tax evasion. Mellon asserted, correctly, that he should not be prosecuted because the deductions that he claimed were perfectly legal. As Shlaes presents the case it seems that Mellon was prosecuted precisely because he was rich. The prosecution of Mellon, and some other figures, seems clearly rooted in what Nietzsche called ressentiment. This is something akin to envy. Envy, as I understand it, is not merely seeing that someone has a beautiful house, thereby inspiring you to want a beautiful house, but a desire to destroy that house so that he may not have. Ressentiment is not merely envy, but also a recognition of one’s own inferiority based on the achievement of another. So while envy may seek to destroy the house, ressentiment seeks to take the house and pass it on to someone else, possibly including oneself. The appeals to “redistribute the wealth,” and attacks on “corporate fatcats,” have this at their source. You also see it in the jealous attacks on Mellon, and the prosecutions attempts to draw out an enumeration of his art collection.

Shlaes provides a good discussion of the Schechter case (Schechter Poultry Company v. United States, 295 US 495), which was instrumental in bringing an end to the NRA (National Recovery Administration). I won’t go into a lot of detail about the case, but one aspect of it that is interesting is the focus on straight killing. The NRA code prohibited straight killing. This meant that a customer who went into a store to pick out a live bird could not select the individual bird to be his dinner. He could only pick a coop or half coop, and take whatever bird the poulterer pulled out.

What emerges in the discussion of the case is the attitude of the prosecutors. There was a strong element of class bias, not so much rich against poor, though that was present, as elite against non-elite. The prosecution’s attitude was not so much “We’re rich, and you’re poor,” as it was “We’re educated and superior, and you’re a bunch of dumb Jews.” (See pp. 222-3 for Rice’s examination of Louis Spatz. This is an example of the prosecution’s attitude.)

While Roosevelt built coalitions with Jews, Catholics, and Blacks, others, such as Drew Pearson, engaged in anti-Semitism and anti-Catholicism. Pearson, and Robert Allen wrote an account of the Schechter case called “Joseph and His Brethren” that played up the Jewish elements of the case. They said of the Shechters that “where the kosher butchers of the city work in filth, blood, and chicken feathers, they operated jointly a prosperous pair of smelly chicken companies” (239). When Roosevelt was attempting to pack the Supreme Court, they attacked Pierce Butler, one of the sitting justices and a Catholic, by saying that he had “striven zealously to promote the power and glory of the Holy Roman Church and the power and profits of big business” (273).

What emerges from the book is a devastating critique of the New Deal and its many failures, including a failure, which was there in the beginning, to put Social Security on a more stable basis. The book as a whole is worth reading for its critique of government intervention, and its demonstration of the failure of many of the programs that were tried then, and are being revived now.

Buy this, keep it on your bed stand next to your Bible, and give copies to your liberal friends and relatives.