Part II - Toward the Point of No Return

In the final decades of the nineteenth century a number of dissenting movements developed, mainly among farmers of the Middle West, the Northwest, and the South. There were Grangerism, Populism, Greenbackism, and other political movements and parties. There were many notable agitators, such as Ben Tillman, Jerry Simpson, and Jacob Coxey. There were writers like "Coin" Harvey and Henry George, and later there were authentic statesmen like Robert M. La Follette, Hiram Johnson, Tom L. Johnson, Hazen S. Pen- . and John P. Altgeld. In Congress there finally arose a 73 Origins, Theories, and Motives of Statism group of recalcitrant Republicans led by Victor Murdock, George Norris, and others. There was William Jennings Bryan, whose life spanned the whole era and whose naIve belief in the power of govern ment to cure economic and social ills was revealed in a series of such proposals as free silver and government ownership of railroads. As Secretary of State, Bryan proposed and secured the adoption of "cooling-off" treaties to cure war. In the twi light of life, still turning to governmental panaceas, he would have cured intemperance by prohibition and atheism by laws against the teaching of evolution. His life was an epic in primitive statism.

This movement of protest, of which Lincoln Steffens was the most colorful historian, challenged the existing order on three fronts. It protested against corruption in government. It sought, through legislation, a larger control by govern ment over economic life. And it sought through government to provide a larger measure of services· and social ameliora tion for the so-called underprivileged. Theodore Roosevelt, who joined and became the leader of this movement, added a new factor to its program-the en largement of Federal power. He pointed out that the control of business by government failed because there was a "twi light zone" between Federal and state authority, and he sought to push Federal power into this gap. The essential character of the progressive movement was therefore a greater intervention by government in private economy and life, and the enlargement of Federal authority at the expense of the states.

Noone except the extremists in this progressive movement envisaged or advocated socialism as a remedy. They assumed free enterprise. There was socialism and "labor" socialism. But the plat forms of the Socialist and Socialist Labor parties of those 74 Sources of American Statism years contain a .mixture of proposals for government owner ship, easy money, and paternalism of various kinds. Organized labor played only a small part in these move ments of protest. There were great strikes, but these had no direct political significance. Samuel Compers, the major la bor leader of those times, was as valiant a champion of free enterprise as was his friend Mark Hanna. Progressivism. in more recent years has moved far beyond its original scope, assuming that because a small amount of government intervention proved to be a healthy corrective for the evils of capitalism, more and more is needed. In this perversion, more than in an invasion of alien doctrines, lies our present danger.

WESTERN SEEDS OF SOCIALISM Mingled here and there with grass-roots progressivism in the Middle West and Northwest was authentic socialism brought over by Scandinavian, ·German, and Czech immi grants. The traditions of the forebears of these excellent peo ple were developed quite independently of those of the Brit ish ancestors of earlier immigrants. They did not share the deep Anglo-American distrust of government. Nor were they essentially Marxist, for Marxism in Europe did not really get under way until most of our North European immigrants had come to America. But in the heritage of these people there was a deeply rooted antagonism to feudal rulers. The Norwegians also brought a dislike for the trading classes of the Norwegian cities. . It is also important to note that these immigrants brought with them well established practices of municipal ownership ..and cooperative buying and selling. The ideals of the free market and free enterprise were never basic in· Germany and Scandinavia, but were always overshadowed by the centuries75 Origins, Theories, and Motives of Statism old "corporation" or guild spirit. Cartels and other forms of regulated markets were taken as a matter of course.

Even in such a stalwart Republican state as Nebraska, mu nicipal ownership of public utilities, especially electricity, is quite general. That state, it may he added, for forty years consistently supported George Norris, the father of TVA. Later there came great numbers of Poles and other Slavic strains. They had no republican government in their past, only oppression, grinding poverty, and the shadow of great landowners. The more vital minds among them were already aware of Marx. Volumes might be written on the influence "in our life of the collectivist and socialistic thought of various immigrant groups. While all these strains of new Americans have been potent factors in our economic progress, the immensely com plex and long-standing influences toward statism which they brought are a part of the background of our problem. The influence of these Continental ideas has been shown in the preachments and acts of many political leaders in the Midwest and Northwest, and of such groups in that region as the NonPartisan League, the Farmer-Labor Party and, more recently, the Farmers' Union.

Their influence on economic theory has been noticeable. Thorstein Veblen, the inspiration of many economists, was the embitter~ed son of impoverished Scandinavian parents. THE MARXIAN INVASION The voluminous writings of British Fabians have had wide acceptance among educators and other leaders of American opinion. George Bernard Shaw, Sidney and Beatrice Webb, Harold Laski, and others have made thousands of Americans sympathetically aware of socialism. The influence of John Maynard Keynes, who was not a 76 Growth and Manifestations of Statism Fabian but who believed in compensatory spending, is too well known to need more than a mention. A considerable number of American economists have also been deeply moved by such Continental writers as Werner Sombart, who rather regretfully predicted that socialism was inevitable. Professor Joseph Schumpeter of Harvard, who was at one time Austrian Minister of Finance, said again and again,· and most impressively shortly before nis death in 1949, that the trend in the United· States toward the .welfare state had become too strong to be stopped.

The idea of economic planning by the state was vigorously promoted by Walter. Rathenau in a pamphlet published in 1914, "Germany's Raw Material Management." This had its place in the over-all economic planning of the First World War. Ironically, its partial use here became a major factor in crushing Germany in two wars. Four hundred thousand cop" ies of the English translation of Rathenau's pamphlet: were sold. Lenin, suddenly possessed of power, had no plans. Later, he said: "I do not know of any socialist who has dealt with these problems. . . . We need a plan at once to give the masses a shining, unimpeded example to work for." Rathenau supplied the idea and Communism adopted planning as state policy. Planning came also to the bewildered British Fabians. And its echoes reached many Americans. Growth and Manifestations of Statism THE REVOLUTION IN EDUCATION There has been, also over the past half century, a profound change in American education. An entire generation has 77 Origins, Theories, and Motives of Statism been indoctrinated in a point of view quite unlike that of the youths of fifty years ago. This point of view has affected all learning and literature, but it is sufficient here to note only the aspect dealing with the so-called social sciences, includ ing history.

Our schools, except for a fe,v large universities, before the beginning of this century taught practically no economics, political science, or sociology. History was dominated by a classic tradition, perhaps best illustrated by Bancroft's great work on the United States. That tradition was pervaded by an almost mythological view of America· as a· sort of preserve guarded by divine concern and dedicated to a Manifest Des tiny. Early in this century, with the leadership of Charles A. Beard, James Harvey Robinson, Carl Becker, and others, his tory ,vas rewritten, with emphasis upon economic and social facts and developments. It was to be expected that this change should be overemphasized, since these new writers were engaged in overwhelming an old and highly entrenched and privileged intellectual order. Their writings expounded plenty of the materialistic interpretation of history. Some of this came from Marx, but it also had roots in more remote philosophers and historians. The new order was almost com pletely victorious and its viewpoints penetrated the texts not only at the college level but far down into the common schools. John Dewey has been the philosopher and prophet of this movement.

This emphasis on economic and social facts manifested it self in the rise of the so-called social studies in the lower grades, and sociology in higher education. The old "civics," in which the Constitution and governmental institutions were stressed, was almost obliterated in the lower ranges of education. In the colleges the social sciences burgeoned into large departments with many specialized and detailed courses. Ultimately the great law schools were impregnated by so78 Growth and Manifestations of Statism cial studies, and courses and research originally devoted to precedent in case-law threw more and more emphasis on eco nomic and social facts. The influence of this trend upon a 'new generation of lawyers and judges has been apparent in judicial lawmaking. Not only in the slant of education, but in its services has there been immense change. Under the leadership· of the great state universities there has been an enlargement of the range of teachable subjects and an extension of general as sistance to citizens.· Since this expansion has been most nota ble in public schools and state-supported universities and colleges~ the importance of government in our life has in creased.

A large part of this expansion has been a wholesome influ ence in our life. I note it merely to point up an enlargement of emphasis on government. Still it deserves to be said that this indiscriminate expan sion of education has offered a good deal of opportunity for the wholesale infusion of propaganda into teaching. The forces released in such a revolution involve much special pleading under the guise of free inquiry. Our so-called "so cial" teaching tends to assume that, since government has steadily increased in importance over a generation or so, "progress" can only consist in a continuation of that trend. In that respect, pioneers like Beard set·.in motion more. than they anticipated, and in some cases·.they lived to view with great apprehension the perversion of their ideas. This was especially true of Beard. THE PERVERSION OF THE NEW DEAL The early New Deal measures, with the exception of the Tennessee Valley Authority plan, were fairly mild reforms.

They came from many sources. In general the early or, as I would designate it, the first 79 Origins, Theories, and Motives of Statism New Deal was merely an extension of the 1912 Progressive Party platform. It seemed in 1932 that we had merely picked up the trail abandoned two decades before. The famous Na tional Recovery Act was an adaptation of the Progressive idea of a cooperative effort of competitors in an industry for wholesome common purposes under the mediating but not the controlling influence of the government. The farm pro gram was created by organized farm movements in the Mid dle West. The idea of regulating the issue and exchange of securities for the protection of investors was taken from the "blue sky" laws of several states and from century-old British legislation. The Tennessee Valley Plan, the socialistic poten tialities of which were not widely realized at the time, caIne largely from the public-ownership ideas of Senator George Norris. The fiscal policies of Franklin D. Roosevelt were largely hit-or-miss improvisations mixed with plenty of the old inflationary ideas of Bryan and others. Social security plans later were derived from those of some of the states and Britain.

After two or three years some of these measures were ex tended, not to say perverted, by Roosevelt into a trend that is the source for much of our present danger. After the NRA, there was enacted the Wagner Labor Relations Act, which threw the power of government on the side of labor in indus trial disputes and authorized government intervention in or ganizing labor. The relief program and the carrying on of public works on a modest scale were perverted into a great spend and spend, tax and tax, elect and elect government agency. The farm program, which Roosevelt originally said would not be a burden on the Treasury, developed into an immense structure of subsidies, supports, and guarantees. The TVA excited the imaginatio~ of the planners and led to the present effort to create such authorities on a nationwide scale. And the acceptance of deficits, first regarded as a nec80 Growth and Manifestations of Statism essClrry evil, finally, under the influence of the new economics, was regarded as an unmitigated good. Meanwhile, bureauc~ racy and Federal power grew apace at the expense of the tax· payers and the states.