In 1932 Hugh S. Johnson went on a tour of the midwestern industrial centers in which he had discussed economic conditions with manufacturers and bankers. He was shocked by the large-scale unemployment he encountered. Conditions were so bad that he told a friend that the "government is going to have to provide between five and six billion dollars this winter for the relief of unemployed in nearly every industry." Johnson's report convinced Bernard Baruch, a fiscal conservative, to declare that the jobless were Washington's responsibility and to consider expansion of federal public works.
When Franklin D. Roosevelt won the nomination Johnson decided to give him his support. On 2nd July, Johnson and Baruch visited Roosevelt at the Congress Hotel. At the end of the meeting it was agreed that the two men would work closely with the Brains Trust in the campaign against Herbert Hoover during the 1932 Presidential Election. At the time the group included Raymond Moley, Rexford Guy Tugwell, Adolf Berle and Basil O'Connor. One historian, Jean Edward Smith, has described Johnson as "hard drinking and hard living... a flamboyant protege of Bernard Baruch, renowned for his can-do military spirit and robust invective." Roosevelt felt that this new spirit could help his campaign.
In December 1932 Senator Hugo Black of Alabama introduced a bill to bar from interstate commerce articles produced in plant in which employees worked more than five days a week or six hours a day. Black claimed that his proposal would create six million jobs. William Green, the president of the American Federation of Labor, claimed the Black measure struck "at the root of the problem - technological unemployment" and threatened a national strike in support of the 30-hour week. Frances Perkins, who was expected to be the Secretary of Labor in Roosevelt's government, was sceptical of the value of a 30-hour week unless it included provision for maintaining wages for those paid by the hour. So she suggested amendments to combine minimum wages with reduced hours. Although this was supported by the trade unions, it was opposed by the employers.
Hugh S. Johnson joined with Bernard Baruch and Alexander Sachs, an economist with Lehman Corporation, to draw up a proposal to help stimulate the economy. The central feature was the the provision for the legalization of business agreements (codes) on competitive and labour practices. Johnson believed that the nation's traditional commitment to laissez-faire was outdated. He argued that scientific and technological improvements had led to over-production and chronically unstable markets. This, in turn, led to more extreme methods of competition, such as sweatshops, child labour, falling prices and low wages.
Johnson pointed out that he had leant a lot from his experiences with the War Industries Board (WIB) He hoped that businessmen would cooperate out of enlightened self-interest, but discovered they had trouble looking beyond their own immediate profits. Despite appeals to patriotism, they had hoarded materials, charged exorbitant prices and given preference to civilian customers. Johnson explained that the WIB had dealt with these men during the First World War by threatening to commandeer their production or to deny them fuel and raw materials. These threats usually won co-operation from the owners of these companies.
Johnson therefore argued any successful scheme would need to inject an element of compulsion. He told Frances Perkins, Roosevelt's Secretary of Labor: "This is just like a war. We're in a war. We're in a war against depression and poverty and we've got to fight this war. We've got to come out of this war. You've got to do here what you do in a war. You've got to give authority and you've got to apply regulations and enforce them on everybody, no matter who they are or what they do.... The individual who has the power to apply and enforce these regulations is the President. There is nothing that the President can't do if he wishes to! The President's powers are unlimited. The President can do anything."
On 9th March 1933, President Franklin D. Roosevelt called a special session of Congress. He told the members that unemployment could only be solved "by direct recruiting by the Government itself." For the next three months, Roosevelt proposed, and Congress passed, a series of important bills that attempted to deal with the problem of unemployment. The special session of Congress became known as the Hundred Days and provided the basis for Roosevelt's New Deal.
Johnson became convinced that his plan should play a central role in encouraging industrial recovery. However, its original draft was rejected by Raymond Moley. He argued that the proposed bill would give the president dictatorial powers that Roosevelt did not want. Moley suggested he worked with Donald R. Richberg, a lawyer with good relationship with the trade union movement. Together they produced a new draft bill. Richberg argued that business codes would increase prices. If purchasing power did not rise correspondingly, the nation would remain mired in the the Great Depression. He therefore suggested that the industrial recovery legislation would need to include public works spending. Johnson became convinced of this argument and added that the promise of public spending could be used to persuade industries to agree to these codes.
President Franklin D. Roosevelt suggested that Johnson and Richberg should work with Senator Robert F. Wagner, who also had strong ideas on industrial recovery policy and other key figures in his administration, Frances Perkins, Guy Tugwell and John Dickinson. He told them to "shut themselves up in a room" until they could come up with a common proposal. According to Perkins it was Johnson's voice that dominated these meetings. When it was suggested that the Supreme Court might well rule the legislation as unconstitutional, Johnson argued: "Well, what difference does it make anyhow, because before they can get these cases to the Supreme Court we will have won the victory. The unemployment will be over and over so fast that nobody will care."
The draft legislation was finished on 14th May. It went before Congress and the National Industrial Recovery Act (NIRA) was passed by the Senate on 13th June by a vote of 46 to 37. The National Recovery Administration (NRA) was set up to enforce the NIRA. President Franklin D. Roosevelt named Hugh S. Johnson to head it. Roosevelt found Johnson's energy and enthusiasm irresistible and was impressed with his knowledge of industry and business. William E. Leuchtenburg has commented: "A gruff, pugnacious martinet with the leathery face and order-barking rasp of a former cavalry officer, Johnson had no illusions about the dimensions of the job." Robert F. Wagner argued: "I do not think we will ever have industry in order until we have nationally planned economy, and this is the first step toward it."
Huey P. Long was totally opposed to the appointment. He argued that Hugh S. Johnson was nothing more than an employee of Bernard Baruch and would permit the most conservative elements in the Democratic Party to do as they pleased with American industry. Guy Tugwell also had his concerns about his relationship with Baruch: "It would have been better if he had been further from Baruch's special influence." He was concerned about other matters: "I think his tendency to be gruff in personal matters will be an handicap and his occasional drunken sprees will not help." However, overall he thought it was a good appointment: "Hugh is sincere, honest, believes in many social changes which seem to me right, and will do a good job." Surprisingly, Baruch himself had warned Frances Perkins against the appointment: "Hugh isn't fit to be head of the NRA. He's been my number-three man for years. I think he's a good number-three man, maybe a number-two man, but he's not a number-one man. He's dangerous and unstable. He gets nervous and sometimes goes away without notice. I'm fond of him, but do tell the President to be careful. Hugh needs a firm hand."
Johnson expected to run the whole of the NRA. However, Roosevelt decided to split it into two and placed the Public Works Administration (PWA) with its 3.3 billion dollar public works programme, under the control of Harold Ickes. As David M. Kennedy has pointed out in Freedom from Fear (1999), they "were to be like two lungs, each necessary for breathing life into the moribund industrial sector". When he heard the news Johnson stormed out of the cabinet meeting. Roosevelt sent Frances Perkins after him and she eventually persuaded him not to resign.
Jean Edward Smith, the author of FDR (2007): "No two appointees could have been more dissimilar, and no two less likely to cooperate. For Johnson, an old cavalryman, every undertaking was a hell-for-leather charge into the face of the enemy. Ickes, on the other hand, was pathologically prudent. As he saw it, the problem of the public works program was not to spend money quickly but to spend it wisely. Obsessively tightfisted, personally examining every project in minute detail, Ickes spent a minuscule $110 million of PWA money in 1933."
Someone suggested that Frances Robinson should become Johnson's secretary. John Kennedy Ohl, the author of Hugh S. Johnson and the New Deal (1985), has pointed out: "Although a devout Catholic, at twenty-six she was no schoolgirl. She was pert, auburn-haired, and experienced at flattery and strong language. A superb secretary, she was unshockable by Johnson. She had drive and ambition and moved quickly to make herself important by taking hold of Johnson's affairs. Within days, she seemed to be everywhere - attending meetings with Johnson, guarding the door to his office, giving orders to fellow NRA workers. She was becoming a power in NRA." Johnson told Frances Perkins that "every man should have a Robbie."
The National Recovery Act allowed industry to write its own codes of fair competition but at the same time provided special safeguards for labor. Section 7a of NIRA stipulated that workers should have the right to organize and bargain collectively through representatives of their own choosing and that no one should be banned from joining an independent union. The NIRA also stated that employers must comply with maximum hours, minimum pay and other conditions approved by the government. Johnson asked Roosevelt if Donald R. Richberg could be general counsel of the NRA. Roosevelt agreed and on 20th June, 1933, Roosevelt appointed him to the post. Richberg's main task was to implement and defend Section 7(a).
Employers ratified these codes with the slogan "We Do Our Part", displayed under a Blue Eagle at huge publicity parades across the country, Franklin D. Roosevelt used this propaganda cleverly to sell the New Deal to the public. At a Blue Eagle parade in New York City a quarter of a million people marched down Fifth Avenue. Hugh S. Johnson argued that the NIRA would "eliminate eye-gouging and knee-groining and ear-chewing in business." He added that "above the belt any man can be just as rugged and just as individual as he pleases."
The NRA program was voluntary. However, those businessmen who accepted the codes developed by the various trade associations, could place the NRA blue eagle symbol in their windows and on the packaging of their goods. This virtually made the scheme compulsory as those companies that did not display the NRA symbol were seen as unpatriotic and selfish.
Some people argued that Hugh S. Johnson had pro-fascist tendencies. He gave Frances Perkins a copy of The Corporate State by Raffaello Viglione, a book stressed the achievements of Benito Mussolini. Johnson told Perkins that Mussolini was using measures that he would like to adopt. Perkins later claimed that Johnson was no fascist but was worried that comments like this would lead to his critics claiming that he "harbored fascist leanings."
Johnson told Perkins that he intended to draft a code for an industry simply by meeting with the representatives of its trade association. This would follow the pattern of the way the War Industries Board worked during the First World War. Perkins recognized that this approach could be justified in times of war but saw no compelling reason for them in 1933. She informed him that everything must be done in public hearings at which anyone, particularly representatives of labour and the public, could make objections or suggest modifications.
Johnson's first success was with the textile industry. This included bringing an end to child labour. As William E. Leuchtenburg, the author of Franklin D. Roosevelt and the New Deal (1963), has pointed out: "At the dramatic cotton-code hearing, the room burst into cheers when textile magnates announced their intention to abolish child labor in the mills. In addition, the cotton textile code stipulated maximum hours, minimum wages, and collective bargaining." As Johnson pointed out: "The Textile Code had done in a few minutes what neither law nor constitutional amendment had been able to do in forty years."
On 30th June, 1933, Hugh S. Johnson commented: "You men of the textile industry have done a very remarkable thing. Never in economic history have labor, industry, government and consumers' representatives sat together in the presence of the public to work out by mutual agreement a 'law merchant' for an entire industry... The textile industry is to be congratulated on its courage and spirit in being first to assume this patriotic duty and on the generosity of its proposals." However, some trade unionists criticized the agreement to a $11 minimum wage as a "bare subsistence wage" that would provide workers with little more than "an animal existence."
By the end of July 1933 Johnson had half the main ten industries, textiles, shipbuilding, woolens, electricals and the garment industry, signed up. This was followed by the oil industry but he was forced to make a raft of concessions on price policy to persuade the steel industry to join. According to one commentator, during this period "Johnson became the most discussed and best known figure in the administration after Roosevelt".
John Kennedy Ohl, the author of Hugh S. Johnson and the New Deal (1985) has argued that during the summer of 1933 he was called the "busiest man" in the United States: "Whether sitting at the desk in the Commerce Department or on the platform in the auditorium, Johnson, with his coat off, shirt open at the neck, sleeves rolled up, and perspiration streaming down his cheek... He chain-smoked Old Gold cigarettes, often lighting up one while two others were still burning in a nearby ashtray. Between visitors, sometimes over a hundred a day, and telephone calls, he scanned official documents and hurriedly scribbled his signature on letters brought in by his secretary."
Frances Robinson became increasingly important to Johnson. In her book, The Roosevelt I Knew (1946), Frances Perkins claimed: "People began to realize that if you wanted to get something done, you got to know Miss Robinson, you got on the good side of Miss Robinson." Some of Johnson's senior officials began to resent her influence. Donald R. Richberg constantly complained about her presence at private meetings. On one occasion they two had a stand-up row and afterwards Richberg told Henry Morgenthau, that it was one of the worst experiences of his life.
Some leading figures in the Roosevelt administration, including Harold L. Ickes, Rex Tugwell, Frances Perkins and Henry A. Wallace, became highly suspicious of Johnson's policies. They believed that Johnson was permitting the larger industries "to get a stranglehold on the economy" and suspected that "these industries would use their power to raise prices, restrict production, and allocate capital and materials among themselves". They decided to closely monitor his actions.
On 27th August, the automobile manufacturers, except for Henry Ford, who believed the NIRA was a plot instigated by his competitors, agreed terms of a deal. Ford announced he intended to meet the wage and hour provision of the code or even to improve on them. However, he refused to sign up to the code. Johnson reacted by urging the public not to purchase Ford vehicles. He also told the federal government not to purchase vehicles from Ford dealers. Johnson commented: "If we weaken on this, it will greatly harm the Blue Eagle principle and campaign." Johnson's actions resulted in a decline in sales of Ford cars and trucks in 1933. However, it only had a short-term impact and in 1934 the company had increased sales and profits.
The last of the top ten, the coal industry, joined on 18th September. The coal code brought dramatic gains for miners. It included the right of miners to a checkweighman and payment on a net-ton basis and prohibitions against child labour, compulsory scrip wages and the compulsory company store. It also meant higher wages. As a result of the agreement, the United Mine Workers increased union membership from 100,000 to 300,000.
However, the NIRA was not very successful in helping employees. Section 7a which gave workers the right to form unions was not effectively enforced. Nor did the NIRA codes solve the fundamental problem of providing jobs for unemployed millions. Housewives complained about high prices and businessmen complained about government edicts. William Borah and Gerald Nye, two members of the progressive wing of the Republican Party, argued the NIRA was an oppressors of small business.
Some critics described Johnson as behaving like a fascist. John T. Flynn argued: "He (Johnson) began with a blanket code which every business man was summoned to sign to pay minimum wages and observe the maximum hours of work, to abolish child labor, abjure price increases and put people to work. Every instrument of human exhortation opened fire on business to comply the press, pulpit, radio, movies. Bands played, men paraded, trucks toured the streets blaring the message through megaphones. Johnson hatched out an amazing bird called the Blue Eagle. Every business concern that signed up got a Blue Eagle, which was the badge of compliance.... The NRA provided that in America each industry should be organized into a federally supervised trade association. It was not called a corporative. It was called a Code Authority. But it was essentially the same thing. These code authorities could regulate production, quantities, qualities, prices, distribution methods, etc., under the supervision of the NRA. This was fascism."
In January 1934 Hugh S. Johnson made a speech where he claimed that the National Recovery Administration (NRA) had created 3 million new jobs: "NRA employed three million people, who were without jobs before, and added $3,000,000,000 to the annual wherewithal of workers to live. It must be remembered, too, that all this happened during a downward cycle of production when, without NRA, we would probably have had a fresh deluge of unemployment. That, as I have said before, was why we hurried." The American Federation of Labor said Johnson's figures were too high and it estimated that the NRA had created between 1,750,000 and 1,900,000 workers.
On 7th March, 1934, President Franklin D. Roosevelt created a National Recovery Review Board to study monopolistic tendencies in the codes. This was in response to criticism of the NRA by influential figures such as Gerald Nye, William Borah and Robert LaFollette. Johnson, in what he later said was "a moment of total aberration," agreed with Donald Richberg that Clarence Darrow should head the investigation. Johnson was furious when Darrow reported back that he "found that giant corporations dominated the NIRA code authorities and this was having a detrimental impact on small business". Darrow also signed a supplementary report which argued that recovery could only be achieved through the fullest use of productive capacity, which lay "in the planned use of America's resources following socialization".
Johnson was furious with the report and wrote to President Roosevelt that it was the most "superficial, intemperate and inaccurate document" he had ever seen. He added that Darrow had given the United States a choice between "Fascism and Communism, neither of which can be espoused by anyone who believes in our democratic institutions of self-government." Johnson advised Roosevelt that the National Recovery Review Board should be abolished immediately.
Hugh S. Johnson was also having financial problems. His $6,000-a-year salary did not meet his outgoings. Between October 1933 and September 1934 he borrowed $31,000 from Bernard Baruch, who told Frances Perkins, "I like him. I'm fond of him. I'll always see that he has work to do and a salary coming in one way or another." Perkins took this opportunity to try and get rid of Johnson and asked Baruch "to say to Hugh that you need him badly and want him back.... tell him you need him and have a good post for him".
Baruch said this was impossible: "Hugh's got so swell headed now that he sometimes won't even talk to me on the telephone. I've called him up and tried to save him from two or three disasters that I've heard about. People have come to me because they knew that I knew him well, but sometimes he won't even talk to me. When he does talk to me, he doesn't say anything, or he isn't coherent... He's just pushing off. I never could manage him again. Hugh has got too big for his boots. He's got too big for me. I could never manage him again. My organization could never absorb him. He's learned publicity too, which he never knew before. He's tasted the tempting, but poisonous cup of publicity. It makes a difference. He never again can be just a plain fellow working in Baruch's organization. He's now the great General Hugh Johnson of the blue eagle. I can never put him in a place where I can use him again, so he's just utterly useless."
On 9th May 1934, the International Longshoremen's Association went on strike in order to obtain a thirty-hour week, union recognition and a wage increase. A federal mediating team, led by Edward McGrady, worked out a compromise. Joseph P. Ryan, president of the union, accepted it, but the rank and file, influenced by Harry Bridges, rejected it. In San Francisco the vehemently anti-union Industrial Association, an organization representing the city's leading industrial, banking, shipping, railroad and utility interests, decided to open the port by force. This resulted in considerable violence and on 13th July the San Francisco Central Labor Council voted for a general strike.
Johnson visited the city where he spoke to John Francis Neylan, chief counsel for the Hearst Corporation, and the most significant figure in the Industrial Association. Neylan convinced Johnson that the general strike was under the control of the American Communist Party and was a revolutionary attack against law and order. Johnson later wrote: "I did not know what a general strike looked like and I hope that you may never know. I soon learned and it gave me cold shivers."
On 17th July 1934 Johnson gave a speech to a crowd of 5,000 assembled at the University of California, where he called for the end of the strike: "You are living here under the stress of a general strike... and it is a threat to the community. It is a menace to government. It is civil war... When the means of food supply - milk to children, necessities of life to the whole people - are threatened, that is bloody insurrection... I am for organized labor and collective bargaining with all my heart and soul and I will support it with all the power at my command, but this ugly thing is a blow to the flag of our common country and it has to stop.... Insurrection against the common interest of the community is not a proper weapon and will not for one moment be tolerated by the American people who are one - whether they live in California, Oregon or the sunny South."
Johnson's speech inspired local right-wing groups to take action against the strikers. Union offices and meeting halls were raided, equipment and other property destroyed, and communists and socialists were beaten up. Johnson further inflamed the situation when he turned up for a meeting with John McLaughlin, the secretary of the San Francisco Teamsters Union, on 18th July, drunk. Instead of entering into negotiations, he made a passionate speech attacking trade unions. McLaughlin stormed out of the meeting and the strike continued.
The New Republic urged President Franklin D. Roosevelt to "crack down on Johnson" before he destroys the New Deal. Labor Secretary Frances Perkins was also furious with Johnson. In her opinion he had no right to become involved in the dispute and made it look like the government, in the form of the National Recovery Administration, was on the side of the employers. Demonstrations took place at NRA headquarters with protestors carrying placards claiming that it was biased against the trade union movement.
On 21st August 1934, the National Labor Relations Board ruled against Johnson and rebuked him for "unjustified interference" in union activity. Henry Morgenthau informed Roosevelt that in his opinion Johnson should be removed from the NRA. Rex Tugwell and Henry Wallace also told Roosevelt that Johnson should be sacked. Harry Hopkins, the head of the Federal Emergency Relief Administration and the Civil Works Administration, advised Roosevelt that 145 out of 150 of the highest officials in the government believed that Johnson's usefulness was at an end and that he should be retired.
Within the NRA many officials resented the power of Frances Robinson. One official reported to Adolf Berle that as many as half of the men in the agency were in danger of resigning "because of the affair between Johnson and Robby". He had also lost the confidence of many of his colleagues. Donald Richberg wrote in a memo dated 18th August 1934: "The General himself is, in the opinion of many, in the worst physical and mental condition and needs an immediate relief from responsibility."
President Franklin D. Roosevelt asked to see Johnson. He wrote in his autobiography that he knew he was going to be sacked when he saw his two main enemies in Roosevelt's office "when Mr. Richberg and Madam Secretary did not look up" I realised they had "been skinning a cow". Roosevelt asked him to go on a tour and make a report on European recovery. Sensing that this was "the sugary lipstick smeared over the kiss of death" he replied: "Mr. President, of course there is nothing for me to do but resign immediately." Roosevelt now backed down and said he did not want him to go.
Hugh S. Johnson believed that Donald Richberg was the main person behind the plot to get him removed. He wrote to Roosevelt on 24th August: "I was completely fooled by him (Richberg) until recently but may I suggest to you that if he would double-cross me, he would double-cross you.... I am leaving merely because I have a pride and a manhood to maintain which I can no longer sustain after the conference of this afternoon and I cannot regard the proposal you made to me as anything more than a banishment with futile flowers and nothing more insulting has ever been done to me than Miss Perkins' suggestion that, as a valedictory, I ought to get credit for the work I have done with NRA. Nobody can do that for me."
Johnson continued to make controversial attacks on those on the left. He accused Norman Thomas, the leader of the Socialist Party of America, of inspiring the United Textile Workers to carry out an illegal strike. The charge against Thomas was without foundation. It was also not an illegal strike and he was later forced to apologize for these inaccurate statements.
Johnson also made a speech on the future of the NRA. He said it needed to be scaled back. Johnson added that Louis Brandeis, a member of the Supreme Court, agreed with him: "During the whole intense experience I have been in constant touch with that old counselor, Judge Louis Brandeis. As you know, he thinks that anything that is too big is bound to be wrong. He thinks NRA is too big, and I agree with him." Brandeis quickly told Roosevelt that this was not true. It also implied that Brandeis had prejudged NRA even before the Supreme Court had ruled on the NRA's constitutionality.
President Franklin D. Roosevelt decided that Johnson must now resign. He was unable to do it himself and asked Bernard Baruch to do it for him. Baruch contacted Johnson and bluntly told him he must go. He later recalled that "Johnson kicked up a bit" but he made it clear that he had no choice. "When the Captain wants your resignation you better resign." On 24th September, 1934, Hugh S. Johnson submitted his resignation.
Three days later, Roosevelt appointed Richberg as Executive Director of the National Industrial Recovery Board, that had replaced the National Recovery Administration. Richberg had difficulty running this new organization. Arthur M. Schlesinger, the author of The Age of Roosevelt: The Coming of the New Deal (2003) has argued that "Richberg engaged in double-dealing, lying to the President about the views of his subordinates and agreeing to his staff's requests that he raise issues with the President and later refusing to do so."
On 27th May 1935 the Supreme Court declared the National Industrial Recovery Board as unconstitutional. The reasons given were that many codes were an illegal delegation of legislative authority and the federal government had invaded fields reserved to the individual states. Donald Richberg resigned on 16th June, 1935.