Even before the war, the country had become a bureaucrat's paradise. But with the launching of the war effort the bureaus proliferated and the bureaucrats swarmed over the land like a plague of locusts. In 1940, Roosevelt named a National Defense Commission with three horns. Edward Stettinius, of United States Steel, managed one horn on industrial materials, Sidney Hillman another on labor and Leon Henderson a third on price stabilization. It didn't work. In January, 1941, it became the illfated Office of Production Management (OPM) under William S. Knudsen and Sidney Hillman. By August it was snarled in feuds. Roosevelt named a superbureau over it called the Supply Priorities and Allocation Board (SPAB) with Henry Wallace at its head. That blew up, of course, before it got well started and after Pearl Harbor was attacked the WPB War Production Board under Donald Nelson took over. At some point, Leon Henderson and his Price Stabilization Division got lost until April, 1941 when it was made a separate bureau and called the Office of Price Administration with Henderson at its head. After that it proceeded to go to town. The odor it created still lingers amongst us and it will remain for all time a classic for students in what not to do and how not to do it.
Henderson was perhaps the worst possible selection for this post. In a position requiring infinite tact and understanding, he had as much tact as a runaway elephant. By no means a basically bad person, he was congenitally incapable of resisting the destructive personal effects of power. Power went not merely to his head, as in the case of others; it went to his muscles besides. Five feet six, weighing 210 pounds, he began to throw his pudgy body around, to yell and shout orders, to threaten to throw people out of the windows and to exhibit himself before the populace as a sort of burly ideological comedian. He had himself photographed riding a victory bicycle in front of the Capitol; he rode ostentatiously around town in a dilapidated automobile; he appeared, like Churchill, with a huge sixinch cigar, and generally displayed himself as a man of imposing and terrifying power. He did the light fantastic at the night clubs and presently his home became the rendezvous of the intelligentsia where at numerously attended cocktail parties the mighty thinkers gathered to rest their massive brains.
He antagonized everybody, he made everybody mad. But he had a wonderful time. The poor housewives cursed him. The harried business man, driven almost mad by his foggy and multitudinous directives, asked only for his blood. But to Leon, it was all just good fun. Writing about it all after he himself had been heaved out, he said: "When I think now it's already the good old days. It's like reminiscing with my old cronies of the Millville baseball team I can't remember ever losing a game or making more than one error. Nature is kind that way." He recalled that he had almost missed the bus it all came out of a chance talk with Harry Hopkins which led him to a job in the TNEC. Then it was just a romp from one bureau to another the TNEC, SEC, NDAC, SPAB, OPM, WPB, OES, OPACS and, of course, OPA. "And," he said, "it was fun all the time, even when I was mad." For the rest of us, of course, it was no fun at all just being mad. But for Leon poor Leon, who before his accidental appearance in Washington had never had a real first class job it was a world of fun pushing 130 million people around.
He went to work upon a wholly crazy basic principle that inflation is caused by high prices and that the inflation could be prevented by holding prices down. It is really the other way around. Inflation is not caused by high prices. High prices are caused by inflation. The inflation is the expansion of the quantity of purchasing power available to buy things in excess of the goods available for purchase. Increase the number of dollars in the pockets of people without increasing the volume of goods on the shelves for sale and you have inflation. The inflation came from the method by which the government financed the war. First of all, it threw itself with something approaching utter intoxication into the job. This started at the top. Money was no object. Throw it around with complete abandon! While the prices that merchants charged for goods were watched by Henderson's price police, the prices paid by the government for war materials and war production and war wages were no object. Money was poured out freely. And the money was obtained chiefly from loans made at the banks, the most inflationary kind of money. A nation whose people had been collecting from their wages and profits about 70 billion dollars a year were suddenly collecting 100 billion and then 150 billion and then 200 billion a year, but the number of automobiles and refrigerators and radios and electric irons and the amount of meat and butter and flour and eggs and clothing was less and less. That is what produced the inflation. Of course, prices had to be kept down within reason because runaway prices tend to aggravate the central cause of the inflation and, more than that, result in the necessities of life going to those with the most money to spend. But whatever was done about this there had to be some rational relationship between the prices and the costs of production and this law the OPA snapped its fingers at.
And of course it did not keep prices down. It put out press releases boasting of the price scales that were maintained. But the scarcer goods went into the black markets where prices in the end were far higher than they would have been if the regulation had been first of all realistic, and second, managed by an agency that understood the popular mind and that would have treated the people with some degree of understanding.
It began with controls on coffee and sugar. And it began as it ended by supposing that it could reach into every office, every warehouse, every shop and every home and watch and regulate every transaction. It is impossible in a small space to describe the colossal folly of the experiments in sugar and coffee, the first result of which was to paralyze almost completely the whole trade. The same thing was done with meat. Meat begins, as to most of its supply, far out on the ranches among the big herds. Next the young steers and cows move East to the feeding lots where the farmers dispose of their grain by feeding it to the cattle for a season and then selling the cattle to the slaughtering houses. Then it goes to the wholesalers and then to the retail butchers. But in between are warehouses, railroads, truckers, commission agents and processors of all sorts.
This vast complexity of men and trades and utilities has grown up through the years through that hit or miss method that characterizes our system, one man trying an experiment that works and then being imitated by all the others in his trade. The cattle thus move from the ranch to the retail butcher shop through a long series of transactions and processes which the men in this vast business understand. Now whether this was the best system in the world or not, it was the system in existence the system that has always been able to produce all the meat required upon a scale exceeded by no other country. OPA was not created to change this system. As a matter of practical horse sense any attempt to change it could only result in enormous delays while some other system was put into operation. It is too immense and complicated a thing for such a change. And what is more, any attempt to change it would meet resistance, bitter and even violent, all along the line. The problem before OPA was to prevent prices from going to unreasonable heights, while at the same time getting as much production as possible and ensuring a fair distribution of the supply to all the people. The only way to do this was to aim at making the existing system function at its highest efficiency and this would require the cooperation of all the various groups engaged in it.
OPA was in the hands of men who knew little or nothing of the meat industry. They could, of course, have got expert aid, but they were determined to make the meat industry over. Fate had put the vast productive and distributive system of America into their power. Here was the golden chance to change it to show these dumb business men how so much of this costly and ignorant mechanism could be dispensed with. They believed that Fate had presented them with the precious opportunity of making America over. They proceeded to administer to the meat industry a wallop which staggered it and in the end almost ruined it. For instance, their first target was the commission man that hated middleman, that wretched interloper who has been the object of the scorn of the economic dilettante for decades.
They did not realize that when they tried to liquidate the commission man they made no provision for handling the function he performed. Also, if ceilings are put on prices, the ceiling must govern all along the line as the cattle pass from one stage of distribution to another. OPA put ceilings on prices at various points but not on the rancher, which was about as stupid a performance as the human mind could invent. Meat on a cow is produced by eating - eating fattening foods, chiefly corn. The corn farmer can sell his corn directly in the corn market or he can buy a cow and feed the corn to her. He decides what he will do by the price of corn. If he can get a better price for his corn selling it in the market he will not feed it to cattle. If the meat prices are more attractive he will turn his corn into meat. Our highly intelligent bureaucrats allowed the price of corn to soar while holding down the ceiling on meat. The corn farmer sold his corn in the corn market. He refused to buy cattle to fatten and the young animals, minus two or three hundred pounds of meat, went directly to the slaughterers. Countless millions of pounds of meat were lost. The whole story of meat is full of these costly blunders. Wages were held down in slaughter houses. The workers quit the legitimate slaughterers and went to work for blackmarket slaughterers at twice the legal wages, or went into munitions plants, and scores of slaughter houses were put out of business. The unfortunate slaughterer or meat dealer or packer who complained was called a fascist.
This stemmed from the kind of men who were brought into OPA. At first it began with the redoubtable Leon Henderson and 84 office assistants. In August, 1941 a new bill, reorganizing OPA, was being considered by Congress. A member asked if the plan would not require a staff of 100,000. Henderson replied: "Oh, no. This bill will be practically selfenforcing." The next year May, 1942 Henderson asked for 110 million dollars and said he needed a staff of 90,000. The next year it cost 153 million and the following year it had a staff of 53,500 paid workers and 204,000 volunteers.
From the four corners of the land, as well as from the pink and Red purlieus of New York and Chicago and every big city, came the molders of the Brave New World. At the top, as economic adviser, was Richard V. Gilbert, one of those young professors who in 1938 marched on Washington and sold Roosevelt the theory that government debt is practically meaningless, that it is not a burden, that we owe it to ourselves and that Roosevelt could go right on borrowing indefinitely without ever wrinkling his godlike brow in worry. The place swarmed with little professors fresh from their $2500ayear jobs now stimulated by five, six and seventhousanddollar salaries and whole big chunks of the American economy resting in their laps. Tugwell in college had sung: "I am young. I am strong. I will make America over." And here was the Godgiven chance. They put their busy fingers into everything. They dictated women's styles, the shapes of women's stockings; they told butchers how to carve a roast; they limited the length of Santa Claus' whiskers in department stores.
Back in the days of the TNEC one of Henderson's early adventures a gentleman named A. C. Hoffman made studies in merchandising. He wrote: "One of the aspects of food distribution which the writer finds much to his dislike is the growing expenditure of money on brand advertising for food products." Under OPA manufacturers began to be aware that OPA was trying to do away with all brands and quality differentials. This was also one of Tugwell's pet theories no brand names on goods, no quality differentials, just a label telling what was in the can. And sure enough, it was A. C. Hoffman, from Henderson's old TNEC days, who was ranking officer in the OPA food Price Section working to put over his pet theory. He was forced out and went back to the Agricultural Department.
From the London School of Economics came an organization to advance Political and Economic Planning PEP. This was a scheme for fascist planning through a "national Council of Agriculture, a National Council for Industry, a National Council for Transport, all to be statutory bodies with powers to govern their special provinces of business." The chairman of this group was Israel Moses Sieff. He turned up as a special consultant to OPA in 1941. The place was full of these boys.
At one time there was an almost complete breakdown of food distribution throughout the United States. The paper work required of an ordinary small merchant was so extensive that it was practically impossible to comply with. A Michigan grocer who had run a successful business for 40 years testified that "For the last six months I have been behind the counter ten hours a day, then up half the night filling out government forms. Sunday is needed for inventory reports, ration accounts or applications for coffee, sugar and canned goods. I couldn't keep up with it, so I closed my doors." Small food distributors were going out of business by the tens of thousands a month. Whole states were insufficiently supplied with meat, butter, lard or potatoes for two months at a time. OPA fixed the price of Louisiana potatoes at $2.50 per cwt., and the price of Texas potatoes at $3.75 per cwt. Louisiana potatoes were just trucked across the line and sold as Texas potatoes. Uniform prices on farm products for all markets very nearly starved out many large cities. Shippers sent their supplies to the nearby markets and abandoned the highfreight markets. OPA put a ceiling price on lard of $14.55 a hundred pounds, but they allowed a price of $26.50 on dressed hogs including fat. A packer could get 26 cents a pound for the fat on the hog but only 15 cents for the same fat as lard. This was done at a time when this country and the world were starving for fats. Approximately a billion pounds of lard went to the food stores on the hogs at 26 cents a pound; then we had to have a salvage campaign to get back from the housewives the drippings which should never have gone into their kitchens.48
The rules and regulations, the directives issued were frequently beyond the power of the human mind to understand. Here is a sample:
"The maximum price which a manufacturer may charge to any class of purchasers for any packaged cosmetic priced under the general maximum price regulation shall be the maximum price established under the general maximum price regulation for sales of such packaged cosmetics by him to a purchaser of the same class."
These rules and regulations became so irksome that people ignored them. Then the OPA set up a nationwide network of courts before which citizens could be hauled up and tried for breaking laws enacted by OPA bureaucrats. If convicted, they could, under OPA rulings, have their ration cards taken away from them sentenced to starve. But the OPA heads themselves were not too meticulous about observing the government rules. All buildings were ordered to keep their heat no higher than 65 degrees. A reporter took a thermometer to Leon Henderson's office at this time, where it registered 80 degrees.
The record of OPA's follies and blunders is incredible. I can give merely those types of examples that can be quickly explained without going into the intricacies of trade practices. The trouble stemmed fundamentally from the type of men who were put in control, men of the stamp of Leon Henderson who had been, as I have already pointed out, a technocrat and one of the sponsors of Howard Scott and later a director of Technocracy, Inc. It was during this OPA circus that Henderson was charged with being part of the Technocracy movement. Henderson denied it and said if it could be proved he would eat a Washington telephone book on the steps of the Capitol. As we have seen, Leon's name is signed to a document published in the New York Times when he and some others resigned from Technocracy, Inc., not because they disagreed with Scott's fundamental theories, as they explained, but did not like his methods. And what happened in OPA happened wherever these New Deal minds were put in control. In December, 1942, things got so bad that Henderson had to be eased out. A former senator, Prentiss Brown, succeeded him with no better results, after which Chester Bowles was made head of that bureau. He did a better job, but by that time it was impossible for anyone to do very much better.
This mere peep behind the curtain of the hippodrome will serve to afford a glimpse of that stupendous fiscal extravaganza put on in Washington. On the economic side of the war there was the formidable task of producing the mountains of materials which the generals and admirals demanded. That was done by the American productive machine. This was a machine of epic proportions that had been created and developed long before the New Deal was heard of. And it was, in fact, that very machine upon which all the engines of scorn and calumny of the New Deal had been trained and which the Tugwells and Wallaces and their subalterns wanted to liquidate. This machine was operated by that immense army of engineers, technicians, financiers and administrative leaders who had developed the great resources of the nation, who had invented and perfected the amazing technical processes and who had built that fabulous mass of plants and machines which turned out guns, planes, tanks, cars, ships, arms, munitions, food and all the accouterments and necessities of war. They were told what was wanted and they supplied it. The Tugwells, the Hopkinses, the Hendersons and Wallaces had nothing to do with this. This was the work of the hated business man.
In the hurry and jostling of the war there were miscalculations and even misdeeds. But a good deal of that will be found in the wide ranks of that horde of suddenly aroused and hungry gentry who from the corners of the land swarmed into Washington to get a little piece of the monstrous melon and who took their illgotten gains into that economic jungle called the black market. One may talk about the profits of war, but there were in truth little profits for honest men because the government and rightly during the war drained away in drastic taxes most of the profits.
But there was another sector on this economic front the embattled legions of the bureaucrats mobilized to police the real producers and to supervise for the State the actual task of production. And at their side was that other battalion of New Deal fiscal philosophers the bright evangelists of national debt, who were now permitted to gorge themselves on their pet theories. At the top, in the driver's seat, sat a man who despised all the traffic rules and the warning signals, the red lights and the hazards along the road. He threw the monstrous machine into high, stepped on the gas, closed his eyes and turned it loose. Had some commission of hostile angels been named to devise a scheme for making production costly they could not have done a better job. The tens of thousands of bureaucrats from a score of bureaus crawled over the producing plants. They inserted themselves into the processes at each new step, to slow it up, to increase its costs and to drive to distraction the practical men who were running the machine. The feeling that cost meant nothing, that the only thing that mattered was "hurry," the theory that a hurrying engine need not be careful, introduced so many distractions and halts and changes and bickerings into the whole process that both economy and speed were sacrificed. Worst of all, sane and sober men surrendered after a while to the contagion and, equally with their bureaucratic persecutors, threw arithmetic to the winds. In the financing and supervision of the war effort from Washington practically every fiscal crime was committed. And the plain evidence of that is before us in the bill for the war. Few realize how vast it was. For the mind, even of the trained financier, begins to lose its capacity for proportion after the figures pass beyond the limit of understandable billions. The war cost I reckon at 363 billion dollars. To form some estimate of this figure it may help to recall that during the 144 years which cover the administrations of all the presidents from Washington to the first inauguration of Franklin Roosevelt, the total expenditures of the federal government equaled 117 billion dollars. Yet in the seven years from 1941 to 1947, the cost of supporting the war and its consequences alone was 363 billion three times as much in seven years as in 144 years of our history. The total amount expended in these seven years was 463 billion. I have subtracted a hundred billion to cover the sums which our extravagant government would have spent had we not entered the war. To complete this picture we must not overlook the solemn fact that we have paid to date only onethird of this prodigious bill. The remaining twothirds stands against us as the national debt, the interest on which alone, when the debt is all funded, will be nearly twice the cost of government before Mr. Roosevelt came to power.
The story of how this vast account and this staggering debt was accumulated is a long and an intricate one. The follies, the recklessness, the appalling ineptness and incompetence, the deep and dark corruption remain yet to be told. It would be futile to attempt it until the government has passed into responsible hands charged with the task of subjecting the whole terrible performance to the fullest investigation.
There is no doubt that this intolerable burden, which will bear down upon the shoulders of this generation and the next, is the direct result of President Roosevelt's utter incapacity for administration. Here, again, we may turn to a cabinet officer for the testimony. Secretary of War Stimson is lavish in his praise of Mr. Roosevelt and is prepared to forgive him the most costly defects of character in his admiration for Roosevelt's great stroke of genius in naming Stimson to his cabinet. However, he wrote in his diary in March, 1943: "The President is the poorest administrator I have ever worked under in respect to the orderly procedure and routine of his performance. He is not a good chooser of men and does not know how to use them in coordination."49
The positive task of stimulating and directing war production, as distinguished from policing it, was given to Donald Nelson, a business man competent in the limited field in which he worked but of no special distinction. He was made head of the War Production Board in January, 1942, after a whole series of breakdowns. Nelson proved inadequate to the task committed to him. In February, 1943, the Secretary of War and other administrative leaders joined in asking the President to replace Nelson with Bernard Baruch. But, says Stimson, no action was taken for 18 months. Stimson sums up the story by saying that after tinkering for two years with a variety of boards and commissions, the President finally put power into the hands of one man and then named the wrong one, and when that man got into trouble he neither backed him nor fired him.50
Yet we are asked to accept Roosevelt as the great administrator, the great military leader, the great naval leader, the great civil statesman and finally the great master in the field of foreign affairs. We shall presently see that in the last he chalked up for himself the most unbelievable record of failure in the annals of foreign relations in the history of this country.