A Raw Deal

William Graham Sumner, who at the turn of the twentieth century practically invented the field of political economy in the United States, was the first to coin the phrase "the forgotten man." It was his term to describe the citizen who loses out as a result of government interventions that favor special interests. The forgotten man, according to Sumner's definition, is someone looking for a chance to make it on his own -- and who the government can help most by protecting economic freedom, providing a stable currency, and limiting the burden of taxation.

Franklin Roosevelt's -- and, to a lesser extent, Herbert Hoover's -- forgotten man was based on a new idea, one largely antithetical to Sumner's. By 1933, the forgotten man had become someone who was unemployed and increasingly desperate, who was forgotten by the market and could be lifted up only by a beneficent government that took control of the economy, through such measures as the economic planning initiatives of the New Deal era: the National Industrial Recovery Act, the Tennessee Valley Authority, the Agricultural Adjustment Act, the Works Progress Administration, and model agricultural communities.

After 1935, in the wake of continuing policy failures and Supreme Court rulings against his initiatives, Roosevelt used the phrase in his appeals to particular classes of people whose political support he sought, people who felt disenfranchised within larger society: the unemployed, the underprivileged, and the generally disaffected. But there were others who sought to reclaim the original meaning of "the forgotten man" as Sumner had formulated it, not least Wendell Willkie, who made the concept part of his platform when he ran against Roosevelt as the Republican candidate for president in 1940.

The title of Amity Shlaes' new history of the Great Depression refers to a concept whose changing meaning mirrored the shift in ideology about the role of government during the 1930s. "To justify giving to one forgotten man," writes Shlaes, "the administration found, it had to make a scapegoat of another. Businessmen and businesses were the targets. Roosevelt's old mentor, the Democrat Al Smith, was furious. Even [John Maynard] Keynes was concerned. In 1938 he wrote to Roosevelt advising him to nationalize utilities or leave them alone -- but in any case cease his periodic and politicized attacks on them. Keynes saw no point 'in chasing utilities around the lot every other week.' Roosevelt and his staff were becoming habitual bullies, pitting Americans against one another. The polarization made the Depression feel worse. Franklin Roosevelt's forgotten man ... perpetually tangled with Sumner's original forgotten man." On the most basic level, The Forgotten Man is a comprehensive history of economic policymaking in the United States during the Great Depression. Shlaes seeks to explain why the Depression lasted as long as it did (over a decade) despite a panoply of aggressive policy experiments, especially by Roosevelt's administration. Each chapter of the book begins with bleak and sobering figures that highlight the Depression's persistence. Unemployment, which stood at roughly 5 percent in the fall of 1929, skyrocketed to 23 percent four years later and was still above 17 percent as late as January 1938. Industrial production peaked in September 1929 and, with the exception of a few months in 1937, did not reach the same level again until 1939. The Dow Jones industrial average, which had reached 343 on October 1, 1929, was still worth less than half that amount in January 1940. The main theme in Shlaes' account of the policy experiments that are collectively known as the New Deal (along with other measures related to monetary- and exchange-rate policy and banking system interventions) is their failure to restore economic activity to the levels of the 1920s.

But there is much more to the book than that narrative. It is also a history of the development of U.S. culture, politics, and economic policy, which were uniquely and inextricably intertwined during the Depression. Shlaes explores the changing popular conceptions during this period of what the roles and powers of government and business ought to be. As such, it is a work of great skill, even brilliance.

The Forgotten Man will also be a popular book, because it does all that while still managing to be a fun read. Alongside the highbrow ideological, economic, and political history are entertaining vignettes of individuals great and small. These insightful portraits, with their revealing facts and anecdotes, bring the policy history to life. At the same time, the portraits are absent of heavy doses of opinionated interpretation, leaving room for the reader to judge the characters based on their own words and actions instead of the author's pronouncements.

By the end of the book, the reader will be familiar with the author's admiration for Willkie's common sense and good manners (he is the hero of the book), the financier Andrew Mellon's forbearance and selflessness, and the courage of the Schechter brothers, kosher butchers from Brooklyn who stood up to dictatorial National Industrial Recovery Act policies prescribing how chickens should be sold and triumphed in a landmark 1935 Supreme Court case. Not all the portrayals are loving, of course, but even the negative ones are balanced; none of the characters is made of cardboard. Roosevelt is correctly portrayed as a pragmatist who began as an economic experimenter (1933-35) but then became a class warrior (1935-38) as his economic policies failed and he focused on the narrower goal of seeking to assemble a winning coalition for the 1936 presidential election.

A DEPRESSING RECOVERY