When election day came around, the revitalized Democrats gave the Republicans the political thrashing of their lives at every level. Roosevelt defeated Kansas Governor Alf Landon 523–8 in the Electoral College, winning every state except Maine and Vermont. Democrats gleefully amended the old saying that “as goes Maine, so goes the country” to declare, “as goes Maine, so goes Vermont.”53 The Democrats controlled the House 331–89 and the Senate 76–16, after accounting for the Farmer-Laborites and George Norris’s switch to Independent.
The Chicago Tribune saw the lopsided vote as an unambiguous endorsement of the president’s agenda. “The result of the election is a vote of confidence in Mr. Roosevelt and the New Deal… he will enter upon his second term with what amounts to a blank check signed yesterday by an overwhelming majority of the American people.” The conservative Tribune worriedly pointed to the coalition Roosevelt had formed with the Farmer-Labor, American Labor, Socialist, and Communist parties: “How Mr. Roosevelt will discharge his obligations to his radical partners becomes a matter of intense interest.”54
But the near universal hopes for further reform would be frustrated by political and economic miscalculation on the part of the usually savvy president. Roosevelt lost momentum following the election with his ill-fated scheme to pack the Supreme Court with progressive judges out of frustration with the Court’s repeated vetoing of New Deal programs. If the New Deal stumbled over the Supreme Court, it was knocked flat by the economic crisis of 1937, which critics quickly dubbed the “Roosevelt recession.” Believing incorrectly that economic progress was self-sustaining and the Depression’s end in sight, administration officials decided to cut spending and balance the budget. Roosevelt particularly targeted the WPA and PWA for deep cuts. The economy plummeted almost overnight. In fact, the collapse was so stunning that Roosevelt and other administration officials believed it was deliberately staged by businessmen seeking to bring Roosevelt down. Stocks rapidly lost one-third of their value, and corporate profits fell by 80 percent. Unemployment skyrocketed anew as millions lost jobs.
Reformers were now on the defensive. Despite that, many Americans realized that one essential human need had yet to be addressed and set out to correct that oversight. Few people appreciate how close the United States came to adopting a national health care program in 1938 and 1939. The Committee of Physicians for the Improvement of Medical Care, an insurgent group of progressive physicians, largely based at the nation’s most prestigious medical schools, acting in defiance of the conservative American Medical Association, sparked a national movement to create a sweeping national health care system. The administration threw its weight behind the effort, arguing that health care was a right, not a privilege, a position strongly supported by labor and a broad range of reform-minded organizations. In fact, administration support was so strong that the editors of The Nation were convinced that “no government would” so mobilize public opinion or “put such expert effort and the time and attention of more than half of its cabinet officials into the development of such a program and then abandon it.”55 In late February 1939, New York Senator Robert Wagner submitted his administration-backed bill for a national health program, claiming that no legislation had received “more widespread approval” from the American people.56 But faced with vehement AMA opposition and seeking to avoid a nasty fight with elections approaching, Roosevelt decided to abandon the effort. New Deal reform was over once and for all.57
The progressive reforms that the New Dealers had been able to implement provoked sharp opposition from the still powerful business community. Roosevelt and advisor Rexford Guy Tugwell, agency heads Harry Hopkins and David Lilienthal, and progressive cabinet members like Henry Wallace, Harold Ickes, and Frances Perkins incurred the wrath of much of the business and banking communities. Though some businessmen, like Joseph Kennedy, thanked Roosevelt for rescuing capitalism from shortsighted capitalists, most considered him the enemy and fought the New Deal every step of the way. A U.S. Chamber of Commerce membership survey registered 97 percent opposition to the philosophy of the New Deal.58
The most extreme of these right-wing businessmen set out to prove that the New York Times’ obituary for the Republican Right was premature. They announced formation of the American Liberty League in August 1934, a few months before the midterm elections, although they had begun gathering forces long before that.
The American Liberty League was the brainchild of members of the du Pont family, including brothers Irénée, Pierre, and Lammot, and in-law and top executive Robert “Ruly” Carpenter. Carpenter alleged that Roosevelt was being controlled by “[Felix] Frankfurter and his thirty-eight hot dogs—a gang of fanatical and communistic Jew professors.” He recruited John Raskob, former chairman of the Democratic National Committee, to the cause. Raskob, a strong proponent of shifting the tax burden from the wealthy to the working class, had engineered du Pont’s purchase of General Motors and had simultaneously served as chief financial officer in both corporations. Others brought on board included GM President Alfred Sloan, former Democratic presidential candidates Al Smith and John Davis, National Steel Corporation President Ernest Weir, Sun Oil Company President J. Howard Pew, and General Foods Chairman E. F. Hutton. Charles Lindbergh turned down the League’s offer to serve as president.59
The American Liberty League went public on August 22, 1934, announcing its intention to combat radicalism, defend property rights, and uphold the Constitution. Headed by Jouett Shouse, former chairman of the Democratic Executive Committee, the five-member executive committee included Irénée du Pont, Al Smith, John Davis, former New York Republican Governor Nathan Miller, and New York Republican Congressman James Wadsworth, Jr. Shouse announced plans to recruit 2 million to 3 million members and hundreds of thousands of contributors. The League unfurled a massive, though largely ineffectual, “education” campaign over the next few years in a concerted effort to stem the liberal tide. It fell far short, however, of its recruitment and fund-raising targets, claiming 125,000 members and 27,000 contributors. But most of the members were inactive, and most of the funds came from the du Ponts and a handful of other right-wing businessmen. Its reputation was also tarnished by two damning congressional investigations of 1934 and 1935.60
The first investigation was short-lived but shocking in its implications. In November 1934, highly decorated retired Marine General Smedley Butler told the House Special Committee on Un-American Activities that William Doyle, commander of the American Legion’s Massachusetts branch, and bond salesman Gerald MacGuire had tried to recruit him to organize a military coup against the Roosevelt administration. Paul Comly French, a reporter for the New York Evening Post and the Philadelphia Record, corroborated Butler’s account, testifying that he overheard MacGuire say at one point, “We need a Fascist government in this country to save the Nation from the Communists who want to tear it down and wreck all that we have built in America. The only men who have patriotism to do it are the soldiers and Smedley Butler is the ideal leader. He could organize one million overnight.” MacGuire had gone to France to study fascist veterans’ movements, which he envisioned as a model for the force Butler could organize in the United States.
Butler rejected MacGuire’s entreaties. “If you get the 500,000 soldiers advocating anything smelling of Fascism,” he warned, “I am going to get 500,000 more and lick the hell out of you, and we will have a real war right at home.” Testimony revealed that Doyle and MacGuire were fronting for many of the same Morgan and du Pont–linked bankers and industrialists who had formed the American Liberty League. MacGuire denied the charges, and New York Mayor Fiorello LaGuardia mockingly dismissed the episode as a “cocktail putsch.” Morgan partner Thomas Lamont called the allegations “Purest moonshine! Too utterly ridiculous to comment upon!” But James Van Zandt, national commander of the American Legion and a future congressman, lent support to Butler’s testimony, reporting that “agents of Wall Street” had also approached him.61