A frustrated Stimson did not know what more to say. “If [you really feel] that way, we [are] indeed on such different ground that I … ought not to be [your] adviser.”16 He tried to resign.
In the end, Hoover refused to accept the resignation. But he also refused Stimson’s advice. The moratorium remained temporary, and the disagreement strained the two men’s relationship thereafter.
Ultimately, Europe settled the issue on its own. Germany defaulted on reparations, and when the 1932 war debt came due only the British paid in full. The next year another payment came due, and this time no one paid. American loans to Europe, whether for war or peace, had been a cause of, and ultimately a casualty of the depression.
As he often did in his long career, the journalist Walter Lippmann captured succinctly the transition that had occurred between 1919 and 1933. “The theory was,” wrote Lippmann of the thinking in 1919, “under free trade, national frontiers would mark off cultural and local interests, but that economic opportunity would not be determined by political boundaries.” Ideally, once “there were no great barriers to trade at the frontiers, the problem of the frontiers would cease to be so troublesome.” By 1933, that charter had failed. Rather than cooperate economically, the victors had “insisted upon payments from the defeated powers and upon payments from one another,” with “a destructive and deflationary effect upon world commerce.” Now, in the face of depression, all nations seemed to agree that governments “must organize industry and agriculture and finance to a much greater degree than they have ever been organized before.” To do this “it follows inevitably that the system must be protected against external forces that cannot be controlled”—that is, the domestic economy had to be shielded from the vicissitudes of global competition. Thus, the world had entered into a new phase, a “Second Reconstruction” that combined political nationalism with economic nationalism. “Along these general lines the Second Reconstruction is now being carried out,” he concluded. “Will it bring that peace and that prosperity which the First failed to establish? Who can say?”17
* * *
At the end of 1932, Franklin Roosevelt beat Herbert Hoover handily in the presidential election. As it turned out, MacArthur, Eisenhower, Clay, and Stimson all had front-row seats to the unfolding drama of the Roosevelt administration. MacArthur and Eisenhower had been in Washington for several years before the election. “He had greatly changed and matured since our former days in Washington,” MacArthur said of Roosevelt in 1933.18 Clay had coincidentally received orders to report to Washington almost immediately after Roosevelt’s inaugural. He would supervise all river and harbor projects for the Army Corps of Engineers. For the first time (but not the last), all three future proconsuls found themselves together in the same place. Stimson ultimately joined the Roosevelt administration for a second stint as secretary of war in 1940.
In solving the Great Depression, Roosevelt tended to play to his strengths. He was first and foremost a politician, not an economist, and he tended to answer economic questions in political rather than technical terms. “If I read the temper of our people correctly,” he explained in his inaugural, “we now realize as we have never realized before our interdependence on each other; that we cannot merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline.”19
Roosevelt’s choice of metaphor, suggesting that the country must become a “trained and loyal army,” became embodied in the National Industrial Recovery and Agricultural Adjustment Acts. Each aimed to create giant cartels in every segment of the economy as a means to rid it of “ruinous” competition. “The jig is up. The cat is out of the bag. There is no invisible hand. There never was,” wrote Rexford Tugwell, a member of Roosevelt’s “Brains Trust” and later an official in the agriculture department. “Time was when the anarchy of the competitive struggle was not too costly. Today it is tragically wasteful. It leads to disaster. We must now supply a real and visible guiding hand to do the task which that mythical, nonexistent, invisible agency was supposed to perform, but never did.”20
For their part, Eisenhower and Clay both held high hopes that Roosevelt could end the depression. Clay had “followed the election very closely, and I can remember sitting up election night listening to the returns.… I was thrilled at the election results.”21 For Eisenhower, the early New Deal’s rhetoric proved intoxicating. “Congress met and gave the Pres. extraordinary powers over banking,” Eisenhower wrote in 1933. “Now if they’ll just do the same with respect to law enforcement, federal expenditures, trans. systems, there will be such a revival of confidence that things will begin to move.”22 Later that year he noted, “The purpose of the [National Recovery Administration] is to establish codes of business practice among our various trades associations, with the idea of … raising prices … and wages for labor. As in all other ideas of the President’s that have been translated into actual national effort—the announced objective is a most desirable one.”23
In large measure, Eisenhower embraced the early New Deal because its intellectual genealogy included a common progenitor of his own—the War Industries Board headed by Bernard Baruch. Indeed, Baruch and other members of that board proved deeply influential in the design of the National Recovery Administration (NRA) and in the general thinking about the economy that permeated Washington in Roosevelt’s first years.24 Eisenhower sensed the way these ideas had come of age. As he noted, “a course that three years ago would have been unquestioned, either by the govt. or by any private citizen” had fallen out of favor. Now “unity of action is essential to success in the current struggle.” Indeed, Eisenhower felt that “individual right must be subordinated to public good”—that “we must conform to the President’s program.… Otherwise dissension, confusion and partisan politics will ruin us.”25
Yet for all the talk of American society functioning like an army, Roosevelt had little interest in helping the actual army. Looking to make good on promises to eliminate waste in the federal government, he sought to trim two-fifths of the army’s appropriation, requiring the dismissal of about twelve thousand men. He also sought to “furlough at half-pay any army officers the President may select.”26
MacArthur felt compelled to speak up. In a meeting soon after the inauguration he confronted Roosevelt. “The world situation [has] become too dangerous to allow a weakening of our defense.” Japan, Germany, and Italy all showed signs of rearming. The American army had already been cut to the bone. “The country’s safety [is] at stake,” MacArthur said bluntly.
Roosevelt dug in. He ridiculed MacArthur’s concerns and mocked his tone. Roosevelt had no interest in sparing the army, and did not appreciate MacArthur’s second-guessing.
The two went back and forth for a few minutes until MacArthur finally lost his cool: “When we [have] lost the next war, and an American boy, lying in the mud with an enemy bayonet through his belly and an enemy foot on his dying throat, [has] spat out his last curse, I [want] the name not to be MacArthur, but Roosevelt.”
“You must not talk that way to the President!” Roosevelt boomed.
The room went silent. MacArthur knew he had overstepped.
“I’m sorry,” he said. “[You have] my resignation as Chief of Staff.” His career, he assumed, had come to an end.
As he turned to leave, he heard a conciliating voice: “Don’t be foolish, Douglas; you and the budget must get together on this.” Roosevelt blinked first. Both men took deep breaths and agreed to work together. Then MacArthur left the president’s office, went to the White House steps, and threw up.27
The underlying message, though, quickly became clear. To protect itself, the army needed to become relevant