tv Burt Folsom The Myth of the Robber Barons CSPAN August 25, 2019 6:50am-7:46am EDT
lot of american watchmakers thought good, , if art of 45 and the swiss is 60, maybe more people will buy our watches. even though they don't tell time very well. well, you might say may be and remain at least we gain a few watch sales but look at it this way. we lose car sales. because switzerland absolutely cut us off in our exports. now, think about this, old.applr country, we put a high tariff on british blankets, on french wine. we put a tariff on spanish olives. all of these things. we got tariffs on all of these items and that all of those countries, european and otherwise, refused to buy our products. so now american cars which sold over 5 million in 1929 are down to 1.5 million by 1932, and
michigan, detroit, is in the great depression. we lost those sales and that became part of the problem in the auto industry. so what i'm saying is that tariff, the smoot-hawley tariff, was a key cause in the great depression. the third and final one of what to do under the great depression is that president hoover responded, you know, you're saying hoover was republican. he absolutely was. he was a member of the liberal wing of the republican party. his presidency was indeed as a disaster but he wanted to use government whenever he could thought it would be good, and he raised taxes because he thought this would be good to gather more money for the government because we are losing money because the depression is creating lower revenues, lower income and, therefore, lower revenue coming to the united states. so he thought a tax rate would
be good. the tax rate in 1929 when hoover became president was 25% maximum. i have an essay by the way, a chapter in the book, "the myth of the robber barons" on andrew mellon which you have, which talks about the tax rate, which actually was lowering the tax rate in the the 1920s to get it down to 29%. 29%. with tremendous inventions like talking movies, radio. here's one that's good for a summer day in d.c., air-conditioning. i'm enjoying it right now. air-conditioning. those inventions in some cases the air-conditioning was invented before the 20 but it was not adopted until the 20 when we got the tax rate down and then those inventions, those entrepreneurs like willis carrier in air-conditioning had the incentives to invest.
they did so in the 20s, was very prosperous. the tax rate goes from 25%, which is which is a maximum rate, on top incomes, up to 63%. that means that wealthy people at some point are paying more than half of the income to the government. if you're going to pay more than half your income to the government, you're going to be very careful about what you invest in and maybe you shouldn't be investing in much at all. in other words, it camps down heavily on entrepreneurship, on investment, right when we need investment to create jobs to replace the ones that are being lost by the federal reserve raising its interest rates and by the smoot-hawley tariff. so what i'm saying here is we have three things, the federal reserve raising interest rates, the high tariff, and raising taxes. think about that. is that capitalism or is that
government? you have government creating the great depression. those changes are changes that made it hard almost impossible for capitalists to operate. free enterprise thinkers were at a standstill because of high taxes, because the tariffs affected imports so much, and because of the federal reserve raising interest rates. so what we have here i would suggest is the great depression was caused not by capitalism. the great depression was caused by government. capitalism is going to be ultimately part of the solution, not part of the problem. that's a myth number one. myth number two is connected. myth number two is this. franklin roosevelt's, right, because hoover lost the election of 1932 the franklin roosevelt's
and so the republican is out. the democrats income roosevelt and his program was called the new deal. it's one of a set of programs which he could use to try to combat the great depression. myth number two, fdr with his new deal used government effectively to help get the united states out of the great depression. franklin roosevelt roosevelt'ss new deal used government effectively to help get the united states out of the great depression. how many of you have had that talk to you in school? that's exactly what i had talked to me. and over here, how many of you had that? wow. that is the prominent teaching. there's sometimes some
variations. some professors will say welcome the new deal may not completely gotten us out by to tell. it was a movement in the right direction of the other things came later to help more. now, so the new deal is always great, a step in the right direction and some will say it was really the whole way out of the great depression. or some part of the great depression. capitalism failed, government, through new deal programs, is ready to come to the rescue. franklin roosevelt new deal. when i was writing my book and this is an important subject, i wrote the book new deal or raw deal. and in writing that book i spent a lot of time, about ten years writing it, the longest i've ever spent writing the book. the reason i did so was because i wanted to get this right. i went and asked my fellow history professors and students,
too, what do you think was franklin roosevelt's best policy maneuver? what you think was his best program? i would then sometimes say franklin roosevelt failed and that would site program after program that was a failure or that had horrible unintended consequences. and i would say what you think of that? they frankly would say may be, but he did this which was good. and often came back to one particular program, the program which went under the name of the emergency relief and construction act. it was the program that gave food or money immediately to cities and states to feed starving people because we had almost 25% unemployment. i think that there's some logic in that argument, if you take it just that far.
if you have a situation where you have 25% of the people unemployed, and naturally they are going to run out of money at some point, unless there savings is huge, and most people didn't have that come then they're going to be hungry. they can't feed their families. and so even if other parts of roosevelt program are not so good, the fact he was willing to feed people and use that money is a good thing and it shows the importance of a good government program. what i want you to do though is look at this. i've explored this emergency relief act in the first program to give, it surely the first federal welfare program in use history. they called it released back in the 1930s. we with often called welfare toy but the first one. here's an interesting point. it was $300 million, which is a lot if you put it in today's
terms of many, many billions of dollars. it was a large program, and the way it was distributed you might find interesting. the state of illinois, which was -- now, we have some illinois students. we are not doing them. these are the politicians in the state of illinois. those politicians in the state of illinois were very clever and very crafty, and they maneuvered the situation so that their state received almost 20% of all the money. in other words, out of the 300 million, illinois got close to come over 55 million. they get more money in illinois than new york, california and texas put together. they did it by pleading need,
but they did it more by pleading we are good with franklin roosevelt getting votes for him when he needs it the most. roosevelt could count on illinois delivering votes to him in emergency situations. so they were politically important. illinois was a swing state that roosevelt wanted to carry, and thus, illinois ends up the number one state receiving this release money. pennsylvania is number two. i know those are large estates, but they are not the larger states. you will also find it interesting to know that states that tended to be republican in the 1930s didn't do so well. massachusetts, it's hard to believe that massachusetts was a republican state at one time, but it was. in 1930, massachusetts and connecticut were both republican states. massachusetts and connecticut received a grand total of zero money.
so in other words, $300 million is being spent for relief, and massachusetts, boston, all that, and connecticut, get zero. and they were not the only states to get zero. the bottom five states all got zero, and the tended to vote republican. and the top five states got over half the money. so you $300 million. the top five states get over half the money. the bottom five states get zero. now, what this in effect is is not a welfare program or a really program. it's a redistribution program. we are redistributing wealth from republican states, or states that are not in some way serviceable to franklin roosevelt, the states that are very influential and tn franklin
roosevelt's economic or political career. -- key. harry hopkins was one of the leaders on the relief act, was one of fdr's people in his administration, was helping to disturb the money and it would be careful to distribute the money to the people who they thought were politically most worthy of receiving it. now, boston is caught in a bind, and as part of my research in the book i was trying to deal with, nasa chooses was dealing with this. listen to this. massachusetts constantly work to raise money. massachusetts has to feed its own unemployed plus it has to syntaxes to washington to feed illinois. listen to this. in massachusetts a statewide unemployment drive raised over $3 million. by the way, that in today's money would be more like
$50 million. the boston civic symphony repeatedly gave concerts to benefit the jobless. boston college and holocaust played an exhibition football game for charity. benefit wrestling match at boston garden supplied $5000 for local need. that would be closer to 100,000 today. city officials held mayor curley of boston raised for merkel $2.5 million as gifts from city employees. now here's the one i like the best. teachers donated 2% of their salaries. let's hear it for the teachers. [applause] i can take any credit. i wasn't one of the teachers, but teachers did donate 2% of the salaries to help feed the poor. historian charles trout who have studied boston's amazing effort wrote quote no major city assisted so high a percentage of
its jobless asked boston did in the 1930s. boston had to because remember the money is being redistributed from massachusetts to illinois. so boston has to take care of its own for people plus it has to send money to washington so that it can be given to illinois. once you see the relief program in this way, you realize my gosh, this wasn't really so much helping needy people, although i guess if you were in illinois you may even help, but this is a redistribution taking away from massachusetts, which is usually a republican state, and giving it to illinois which is a swing state. so that's a key component, , and one that is most vigorously defended as part of franklin roosevelt's new deal. that was greatly expanded under roosevelt. technically, the relief and
construction act was passed late in hoover's administration but very light entering the campaign of 32 32 and is really operated mostly under roosevelt and expanded under roosevelt. the program that is perhaps best known in the new deal is the wpa. some of you heard that. works progress administration come to give jobs, roadbuilding. other things beside roadbuilding but a lot of roads being built by the wpa. the ideas they are unemployed, now we will have them build roads. that puts them to work and get some roads built and, therefore, that's a good program, too. well, in studying the wpa we find that there's kind of your picture here, those people, that's a south american like a listen to a broken record? those people from democrats states what influence were able to get a lot of wpa funds. most people who are not from influential states did not get very much at all. i have some quotations that i i
thought maybe would make the point in the book. democratic county chairman of indian explained it this way, quote what i think will help is to change the wpa management from top to bottom. put me in there who are in favor of using these democratic projects to make votes for the democratic party. that doesn't leave a lot to the imagination, does it? james dougherty from new hampshire said quote, it is my personal belief that to the victor belongs the spoils. the democrats should be holding most of those wpa positions so that we might strengthen our fences for the 1940 election. wow. the wpa director in new jersey answered his phone always come
he's a a wpa director picky als antedates telephone democratic headquarters. because that is what he had to show yourself important to be able to get the job in new jersey on the wpa. frank cowie with the congressman from newark, new jersey, said this. in this county that are 18,000 people on the wpa. with an average of three people in the family you have 54,000 potential democratic votes. can anyone beat that if it is properly mobilized? so what you have to think, this is again a program to redistribute money in a political direction the benefit president roosevelt. the final program i want to mention is the aaa, agriculture adjustment act because farmers were in trouble, too.
armors were in trouble, too. and so roosevelt came up with a plan to help the farmers. this plant the president came up with is so wild, it could only have been invented by a college professor. and it was, professor john black, a harvard economist help with this program, the aaa. we will get a to the farmers, get aid to the farmers because there getting low prices for their crops. so what were going to do is were going to get more money to the farmers because their crops are not getting much money. we're going to do it by paying farmers not to produce. they will be allowed to take part of their land out of circulation, up to one-fourth of the land, and they will be paid
not to produce on that land. that way they get more money because they are being paid not to produce, they don't have to work as hard, and it doesn't produce as much crop and so maybe that will raise crop prices. it turns out a lot of the farmers were buying fertilizer with the money is in heavily fertilizing the other land and they had boom crops that were bigger than ever. but anyway, put that aside. the idea is you pay farmers not to produce. how many students -- let's be honest, students. i have my glasses on ready to look. how many of you would like to be paid not to do homework? this is really big. now, i don't want to appear self-righteous. i would like to be paid not to great homework.
[applause] -- grade. the crazy thing is one of roosevelt cabinet members harold picky with saint if we're going to pay farmers to produce, how are going going to tell others that we're not going to pay them not to produce? that's something that was the question but it never extended beyond the farmers the idea is we are paying the farmers not to produce. that's a key control of the aaa. you might say how is this going to the program that's going, it almost doesn't make sense. the republican candidate for slander against roosevelt said this is a stupid program ain't people not to produce the he was the governor of kansas. this is stupid. and then he got applause. there were a lot of people applauding. and in the farmers came up to him and said are you going to take our program away from us? are you going to take our program away from us?
he was kind of a rhino. his name was, he was out land and of kansas, and he said no, no, i'll just run better than the democrats. well, it raises a question, doesn't it? if if you going to validate evet as it reasonable program, who should the farmers vote for, the guy who paid them have gave him a program that pays them not to produce? or a guy who says i'm going to write it better? we got an answer to the question, historically. in 1936 governor landon was republican candidate running against franklin roosevelt, and he received, well, let's start it this way. roosevelt carried kansas. that says a lot, doesn't it? he couldn't carry his home state. he's lost kansas because people
like subsidies. in fact, outlands and lost in the electoral college -- alf landon lost in electoral college. roosevelt had five and 23 electoral votes in landon had eight. ---23. that was the first message, even the one employment was very high, that roosevelt by redirecting the way that people thought about politics, i'll give you a subsidy and i hope to get your vote. this kind of politics was going to be new and is going to change the american political landscape forever. the final thing i want to make in the roosevelt did, you have to ask a question, okay, if i do put people are getting subsidies, , if people who don't have anything to eat, they are getting at least some of them if you're in illinois maybe you get
a subsidy, and if farmers are getting subsidies, who's going to pay for all this? the taxpayers are going to pay for it, which means roosevelt says we're going to raise the tax return roosevelt raised the top tactic, what we call the top marginal rate on the highest income earners to 79%. then he raised it to 90%. he then brought it, he ultimately brought the tax up to 94% on all income over $200,000. 94% tax rate. now, you might think, boy, roosevelt is really pushing it. roosevelt wanted more. he personally wanted a tax rate of 99%, 99.5% on all income over
$100,000 is suggested that to his budget director. that means, just to put this in perspective, if you earned $200,000, you pay a lot on your first 100, but on your second, you pay, you get to keep $500 and you sent 99,500 washington. when roosevelt proposed this his budget director said oh, my gosh. then roosevelt said, why not? why not? and it was something called the why not solution. the why not solution. why not? when i bring this up, , okay, il be roosevelt. i think went to have a tax of 99% 5% of all income over 100,000.
there you go. why not? when i raise this. that did not become law. roosevelt tried an executive order of 100% on all income over $25,000. well, that got repealed by congress. then roosevelt tried another attempt to, of 100.6% tax on millionaires. >> why not? >> 100.6% tax on millionaires. >> why not? >> what i'm saying is, if you were a millionaire, according to this tax bill, you would pay 1 million, $6000. so in other words, if you earn a
million dollars, you pay 1 million, $6000. now, i thought this would be good to read the congressional record and see what people are saying about this. i co-authored this book with my wife, it's called fdr goes to war. and this was in the 1940s, and we had a 100.6% tax proposed second i thought let's just see -- doesn't strike you? i have not seen any historian who would ever done that. and i thought i would like to know how the debate went on this tax. i discovered one congressman, many sellers, said this, from new york, the government at any time they can come taxes as something big as the necessities of war required. thus, if any plant is not raise enough money, taxis can income
be increased. the government always has a moral if not an actual lien on all of our income. wow. senator chandler, senator chandler from kentucky, happy chandler from the state of kentucky, he said this. mr. president, all of us owe the government. we owe it for everything we have. and that is the basis of obligation, and the government can take everything we have if the government needs it. the government can assert its right to have all the taxes it needs for any purpose, either now or at any time in the future. in other words, there is support for this tax bill.
now, i can see by the looks on some faces here, did anybody protest this? date anybody speak against it? i comb the record and you'll be happy to know, there are people who spoke against it. [applause] i want to honor them now, forevermore. one of them, and again this is back in the days, remember massachusetts was a republican state. congressman charles gifford of massachusetts. before i read his comment, this 100.6% 100.6% tax that was supposed to be in effect for three years. so it was not initially propose as a for everything, but a three-year thing for what had .6. however, it had the potential to be forever but it would have a three-year trial.
charles gifford stated the problem this way. quote, for three long years he has two paid more than he receives. how does he pay his other taxes? how does he meet his living expenses? i was glad to see somebody asked that. there was a response. congressman jerry cooper from tennessee, defended the 100.6. he said this, the first statement is profound, it's with philosophical. i want to give this to you. it may not be possible to pay more than one years taxes out of one years income. wow. let me read the whole thing. it may not be possible to pay more than one years taxes out of one years income, but with few
exceptions person in the highest brackets have assets that they can use to pay it. and that is the defense, and we had the same defense in the senate. senator alan allender of louisiana said quote, , i submit that the taxpayer is likely to have accumulated sufficient assets with which to make the necessary income payments. .. the bill was defeated. [applause] president
roosevelt had tosettle for 94 percent on all income over $200,000 . well, you might say what did get us out of the depression? we cut taxes after world war ii and we cut the corporate tax from 90 percent to 39 percent. we cut the income tax, promised more tax cuts later. roosevelt died and all of a sudden the republicans had a resurgence, the conservative democratsplus republicans took control of congress in 1946 and theyfreed up the economy and all of a sudden , we get incredible inventions . we get expansion of television which had been
invented expanded. now allof a sudden people have the capital to make these kind of investments . things like fast food and mcdonald's comes in at this time . like the copy machine, chester carlson invented what we would call xerox or the xerox machine in the 1930s but he could not raise capital to invest in that, because of the high tax rates. once the tax rates go down after world war ii, he is able to invest so what happens is after world war ii with the cutting of the tax rate and the freeing up of our economy, the capitalists come back into the lineup and begin to make the investments and the united states unemployment rate dropped to less than four percent in 1946 and also in 1947 and with that freeing of the economy, atlast we are out of the great depression . [applause] why not?
okay. that's myth numbertwo. in other words, and these are important because they go together . if you believe capitalism caused the great depression and you believe government got us out of the great depression, that biases any discussion that you're going to be in onwhy shouldn't we use free enterprise in our economy , but if you realize agreement really got us into the great depression or at least was a huge force , getting us into the great depression and that it took a lot of free markets, not the new deal or world war ii which was not getting us out of thegreat depression because what happens to the soldiers when they come back home ? are they going to have a free economy or not west and mark because of the tax rate cuts in the 1940s and freeing up of the economy, they did have places to work and we are out
of the great depression in the 1940s and incentives were put in place for entrepreneurs to invest, to invent and to expand and we are out of the great depression. it's the reverseof the myth . government got us into the great depression, capitalism got us out . [applause] let's do one more myth. myth number three, the final one . black americans supported -- let me ask you this. after the civil war, we're talking about voting. were going to get the 13th amendment which will end slavery, the 14th amendment which gives civil rights to black americans and then you have the 15th amendment which gives the vote to blacks
from say 1860s, 1870 when , then were going to get black americans running for office , we had -- let me put it this way. after the civil war to the time of franklinroosevelt, 60 something years , we had 23 members of congress who were african-americanwere black, 23 members . it we know what party they were in? they all 23 were republican. [applause] 23 out of 23 were republican, 21 members of the u.s. house and to members of the senate over that 65 or so year period and everyone was arepublican . in part because not only because republican abraham lincoln was instrumental in securing their freedom, but because when it came to voting on it, that's where the republicans were.
on ending slavery, on the boat, the 13th amendment in congress, 100 percent of republicans supported it and less than a quarter of the blacks supported it . you take the 14th amendment which gives civil rights to blacks, 100 percent of republicans supported it. zero percent of democrats support it. so what i'm saying, we're having northern and southern democrats involved in opposing voting rights, civil rights and even freedom for african americans so yes, they're going to be republican. the ku klux klan became the arm of the democratic party. and there were even massacres that occurred, not just stopping voting rights but massacres that occurred with deaths because of the behavior of the ku klux klan and you might think the vote
is sacred, isn't it?this is before we had thesecret ballot . that happens more in the 1890s and a lot of blacks were threatened by employers sometimes. you had to come in with, they could see your ballot. if you vote republican, you're fired but there was all sorts of pressure. even with all thatpressure, we had 23 congressmen, all republicans . the question is and yes, you've seen how franklin roosevelt is a politically shrewd person and he looks at this and he not only notices, not only is every black republican but the first woman to be elected to congress, republican. the first hispanic in theu.s. senate, republican . when roosevelt sees hoover, hoovers vicepresident was an indian . senator from kansas, ran then as hoovers vice president so you have a native american as
a vice president, and you have the first woman in congress as a republican so roosevelt is wanting to break that because republicans tend to say we want limited government and therefore we want lots of opportunity so immigrants and others come over and we want to minimize barriers so that they can participate in the american economy and benefit from the freedoms that is so special with the united states. roosevelt is practicingmore identity politics here .we pick roots, we tried to get theirvotes with money . i exaggerate here but it's like both of those farmers over here, let's wield a truckload of dollars over here and drop it. that's the farm vote. now wield the truck over to unemployed, dump it and we're going to try to get those votes and put together a coalition to win elections.
obviously roosevelt is sitting there saying the blacks are in the republican party and roosevelt says yes, but maybe i can change it. maybe i can change it. roosevelt was not in a great position to change it. the staff at the white house was segregated. thathad been traditional so i don't want to put that on roosevelt . that had been the traditional thing that was done in the white house. however, in roosevelt's private residence in new york, hyde park of the hudson river , the staff was segregated to . roosevelt had a summer home in warm springs georgia. the staff was segregated at the warm springs resort. he bought warm springs and he had that because as many of you know roosevelt had polio and it says something positive about him that he didn't just sit at home, he tried to do something with
his life and he came present but he did have polio and it was incapacitating and he had some springs there in georgia that he used that helped him be able to move his body a little bit, gave him relief . however, only whites were allowed to use the springs, the blacks were barred. if your were a black and had polio you couldn't come in, only if you were white. roosevelt was not exactly a friend to black americans, in fact is first appointee to the supreme court was hugo black from alabama who was a member of the ku klux klan and who had his campaign for senate, is not exactly campaignmanager but chief advisor was the leader of the ku klux klan in alabama . so that was roosevelt's first appointment. the question iscan someone with that record when the black vote ? roosevelt wanted to give it a
try . what roosevelt did is he looked at the one republican congressman, oscar decreased who oddly enough of all things will was from chicago. so you know, i said the first 23 black members of congress were republican. they all had come and gone and there was one who was in office when roosevelt became president and that was often priest from chicago and roosevelt said let's get somebody to run against the priest. so they couldn't find anybody, really so they went to another republican in chicago and got him to exchange his registration and said they'd back him and his name was arthur mitchell so arthur mitchell was going to run against the priest as a democrat. then we have the funding and it often went through black churches in the area, of the
priests district and he became complacent because he was such an advocate for african-american rights. the cafeteria and the house of representatives is segregated and he was working to integrate that . mrs. hoover was meeting with the wives of congressman and so his wife was involved and you see what i mean, we're integrating blacks into life in washington dc and oscar depriest was a big part of it so he thought this is going to pull me through. this is who i am. i integration us, i'm helping to advance liberties . he discovered on election day that the pile of money that was attributed to arthur mitchell overpowered what he brought to the table in a 51 percent to 49 percent vote. the first democrat ever elected to the u.s. congress in 1934, arthur mitchell beat oster depriest.
in 1936 there was yet more federal aid to african-american areas . franklin roosevelt was the first democrat to win a majority of the black vote. it shifted from about 75 percent or more republican to about 75 percent democrat under franklin roosevelt and when he put those pieces into his new deal coalition, he won four straight elections and died in the midst of his fourth term but my point on the myth is black african americans or blacks did not support the democratic party because the democrats earned the trust of the black community. african americans like the farmers i guess and like others who were unemployed supported the democrats because the democrats bought the votes.
that may be hard, the democrats made monetary contributions that increase the vote in those areas . that is myth number three. those three, i was in college decades ago but i was in college too. my professors came forward with those three arguments again and again and i found it difficult having conservative instincts to combat that because it capitalism caused the great depression and i'm defending it they say yes, but it caused the great depression, let's continue to use government. once we turn this around, we do the research that the great depression was caused by government, that capitalism help to get us out and that the shift of black voters was during roosevelt's time because of the idea of making contributions to to secure votes, then we began to understand better why the world is as it is today and
the task that conservatives have to try to create better laws that are more sympathetic to freedom to change this country around so that we have less agreement and more people having the opportunity to rise without an oppressive government taxing them,regulating them and inhibiting their lives . iq.[applause] thank you, why not freedom? >> i'm no rocket and my new big is mobituary and you're