By far the most influential of Woodrow Wilson’s advisers (who always disclaimed responsibility, however, for any errors in Mexican policy) was a gray, neat, quiet, almost wraith-like little man, with luminous blue eyes and receding chin, Edward M. House of Texas. He held the honorary title of Colonel, conferred on him by Governor Hogg, one of two Texas “reform” governors he had propelled into office. In disgust, House gave the gold-braided uniform and regalia that went with the title to his Negro coachman, preferring to be addressed simply as “Mister.”
He was a potent but anonymous figure in Democratic Party councils and knew politics from the grass roots up. His support, pre-convention strategy and adroit instructions to floor lieutenants insured Wilson’s nomination at Baltimore in 1912. So confident was House about the outcome that he felt no need to watch the proceedings and sailed for Europe the day the convention opened. Without his help Wilson could not have been nominated—nor without the Texas delegation and its resounding “Forty Votes for Woodrow Wilson of New Jersey,” repeated throughout 48 ballots.
Since 1902, the very year Woodrow Wilson became president of conservative and Presbyterian Princeton University, House had waited patiently for this moment. He was looking for a fail-proof candidate to replace William Jennings Bryan, perennial Democratic candidate for the Presidency. A brilliant orator, the Great Commoner thundered against the trusts, “the interests” and the gold standard, (1) and deified labor and the common man. Bryan held audiences spellbound, but he could not win elections and would not stop running. What House wanted was a candidate who might be trusted to carry out a program fully as radical but more systematic than Bryan’s—quietly and without alarming the public.
A southerner born and bred, who had migrated to the North and captured the governorship of an important industrial state, Woodrow Wilson seemed the ideal candidate—in fact, almost too good to be true. He was a respected scholar who had been exposed since 1885 to Fabian Socialist views on economics and the social sciences; he was a specialist in American history and constitutional law who wanted to see the Constitution revised; and to top it all, he was a perfect model of decorum and schoolmasterly rectitude. From Sidney Mezes—the brother-in-law whom House elevated by political leverage to the presidency of the University of Texas—and from other professorial friends, House heard about the battles waged by Dr. Wilson at Princeton in the interests of academic “liberalism.”
During what he sometimes referred to as his twilight years from 1902 to 1911, House made a point of cultivating key persons in the academic world. Even President Charles W. Eliot of Harvard was numbered among his friends. As one who had failed to meet the entrance requirements at Yale and barely squeezed through a few years at Cornell, it gave House a good deal of quiet satisfaction to move among the academic mandarins—and even be able through his political connections to name the heads of certain city and state universities. At a later date he arranged to have his brother-in-law made president of the City College of New York, where Mezes instituted a regime of hospitality towards radical professors and students. (2)
From afar House watched Wilson’s progress as governor of New Jersey, previously a Republican stronghold, where the former professor was being educated for still higher things. When the two men finally met in 1911 through publisher Walter Hines Page of World’s Work, afterwards Ambassador to England, an immediate bond of sympathy was established. It was the beginning of what Woodrow Wilson called “the perfect friendship,” one of the strangest friendships in American political history.
Of his second meeting with Wilson, House said: “It was remarkable. We found ourselves in agreement upon practically every one of the issues of the day. I never met a man whose thoughts ran so identically with mine.” And a few weeks later, when Woodrow Wilson again visited him, House could not resist saying as his caller rose to go: “Governor, isn’t it strange that two men, who never knew each other before, should think so much alike?”
Wilson answered: “My dear fellow, we have known each other all our lives?” (3)
Edward M. House has been described by another friend, who actually did know him for more than twenty-five years, as being “highly conventional in the social sense” and “highly radical, more than liberal, in the politico-social sense.” (4) House believed the United States Constitution, creation of eighteenth century minds, was “not only outmoded, but grotesque” and ought to be scrapped or rewritten. (5) As a practical politician, he realized this could not be done all at once, given the existing state of popular education; so he favored gradual changes which, in the long run, would produce the same results.
A similar point of view was expressed in Woodrow Wilson’s campaign speeches, afterwards printed as The New Freedom. Previously it had been voiced by both American and British Fabians. Perhaps the voters who read or heard Wilson’s speeches at the time dismissed the point as mere campaign oratory; but it was one of those basic issues on which Wilson and House found themselves in full agreement, having reached identical conclusions by alternate routes. As a man who never held an official position, though for nearly seven years he was to wield extraordinary power, the Texas Colonel was technically free to subscribe to any ideas he chose. One cannot help wondering, however, by what superior intellectual process President Wilson was able to reconcile such convictions with the oath he took on March 4, 1913, to uphold and defend the Constitution of the United States.
The political and social credo of Colonel House, in which Wilson so warmly concurred, was unveiled in fictional form shortly after the presidential election. Late in the fall of 1912 there appeared a curious novel entitled Philip Dru, Administrator. It was published by B. W. Huebsch, a favorite publisher of the Left and for many years a valued collaborator of American Fabian Socialist groups. (6) Though the book was anonymous, some people surmised that House was the author, and he confessed as much to intimates. The Colonel had written the first draft in December, 1911, while in Austin, Texas, recovering from an illness.
Its radical ideas attracted a degree of attention unwarranted by the book’s literary merits, or lack of them. Philip Dru was a young West Pointer who led an armed rebellion against a tyrannical and reactionary government in Washington subservient to the privileged “interests.” He became the ruler of America and by a series of Executive decrees proceeded to remold the mechanics of administration, revise the Judiciary, reshape the laws affecting labor and capital, revamp the nation’s military forces, and arrange to set up an international body or league of nations.
More specifically, the Administrator appointed a board of economists to work out a tariff law leading to “the abolition of the theory of protection as a government policy.” He also instructed the board to work out a graduated income tax. Philip Dru further called for “a new banking law, affording a flexible currency bottomed largely on commercial assets”; and proposed to make corporations “share with the government and states a certain part of their earnings.” (7) The former foreshadowed the Federal Reserve Bank; the latter, the corporation income tax.
Labor, said Dru, should “no longer be classed as an inert commodity to be bought and sold according to the law of supply and demand.” The Government would give employment to all who needed it. Dru “prepared an old-age pension law and also a laborers’ insurance law,” and provided for certain reforms “in the study and practice of medicine.” Finally, he “incorporated in the Franchise Law the right of labor to have one representative on the boards of corporations and to share a certain per cent of the earnings above wages, after a reasonable per cent upon the capital had been earned.” In return, labor was to submit all grievances to compulsory arbitration.
When the newly installed Democratic Administration announced the legislative program it wished enacted, House’s novel aroused even more pointed comments. Cabinet members remarked on the similarity between Dru’s program and the legislation requested over the years by Woodrow Wilson. “All that book has said should be, comes about,” wrote Franklin K. Lane, Wilson’s Secretary of the Interior, in 1918 to a personal friend. “The President comes to Philip Dru in the end.” (8)
Among the junior officials who read the novel and took it to heart was a handsome young Assistant Secretary of the Navy. His name was Franklin Delano Roosevelt, and his doting mother, Sara Delano Roosevelt, was then and always a close friend of Colonel House. The Texas Colonel was the first important Democrat to support Roosevelt’s nomination for the Presidency in 1932.(9) Whether House presented a copy of Philip Dru, Administrator to the dowager Mrs. Roosevelt or to her son, (10) its contents unquestionably played a part in the political education of still another American president. It even recommended “fireside chats.”
Few works of fiction have so deeply affected, for better or worse, the trends of contemporary life in the United States. In effect, Philip Dru, Administrator became a kind of handbook or Cooke’s Guide for Democratic presidents, who proceeded to throw away the old book of presidential protocol spelling out the Chief Executive’s relation to the Congress, the Judiciary and the military. Those tried and true precepts had been honored by every American president, irrespective of party, until Woodrow Wilson and, whatever the personal inadequacies of the incumbent, had served to hold the country together along constitutional lines and preserve it from the dangers noted by de Tocqueville as inherent in any democratic system of government.
Strongly opposed to the division of powers prescribed in the Constitution, Edward M. House was one of the first Americans to foresee the possibility of evading constitutional safeguards by Executive decree and to perceive the vast power to be derived from control over the mechanics of administration—two lush possibilities further explored by other White House advisers since 1932 on a scale unimagined by Colonel House. In 1963, a Chief Executive even induced the Congress to convey its traditional and long-cherished tariff-making authority to his office, with hardly a voice throughout the country raised in protest.
There was nothing so very mysterious about the source of Woodrow Wilson’s radicalism, which he preferred to call “liberalism.” It developed (and in his case was perhaps deliberately fostered by far-seeing associates) in an academic atmosphere already tinged with Socialist thinking, where the “scientific” approach to economics and sociology was being extended to history and to the law. From John Stuart Mill, whom Wilson admired, it was not such a far cry to Sidney Webb, who claimed Mill had died a Socialist. The real mystery is how a man like Edward M. House, product of the Old Frontier and the pistol-packing politics of the Southwest, happened to become a vehicle for ideas and programs that were plainly Socialist in origin. For some reason, this has never been explained.
Two years younger than Wilson, House was born in Houston, Texas, in 1858. Reared in an era of gunplay, Comanche raids and rule-of-thumb law in the wild Southwest, he was soft-spoken and courteous; but to the end of his life, prided himself on his skill with a pistol. His father, Thomas William House, was an Englishman who had gone to Texas to fight under General Sam Houston and stayed on to make a fortune there. The elder House often remarked that he wanted to raise his sons to “know and serve England.”
Thomas William House acted as an American agent for London banking interests, said by some to be the House of Rothschild, which had invested in Texas rice, cotton and indigo from 1825. At any rate, he was one of the few residents of a Confederate state to emerge from the Civil War with a handsome personal fortune in cotton, land and private banking. (11) He gave his seventh son, Edward, the middle name of Mandell, after a Houston merchant who was a family friend. In later years, this gave rise to a rumor that Edward Mandell House, who became a friend and ally of Kuhn, Loeb and Company in New York City, was of Jewish origin—which was not the case.
As a small boy, Edward attended school for several years in England Much of his youth and adult life was spent in the British Isles, which he regularly revisited. Like his well-cut suits and proper boots, the radical views he affected so unobtrusively from early manhood were made to order for him in London. Being his father’s son, he was readily accepted into those prosperous middle class circles that voted traditionally for a Liberal Party which was increasingly penetrated, after the turn of the century, by Fabian Socialists. Concerning the period from 1895 to 1911 in Britain, a distinguished European visitor, Professor Francisco J. Nitti of Milan, observed:
“Indeed, in no country of the world are the middle classes so much inclined towards Socialism as in England, where eminent men of science, dignitaries of the Church and profound thinkers tend more and more towards Socialist doctrines.” (12)
Personally, House preferred the company of authors, playwrights and professors, of which the British Fabian Society boasted a noteworthy assortment. Among other connections, Edward M. House formed a lasting friendship with the journalist, George Lansbury, (13) a lifelong pillar of the Fabian Society, who for some years represented its more outspokenly radical wing inside the Independent Labour Party and finally became Parliamentary Leader of the Labour Party. Lansbury’s biographer tells how he once persuaded the American soap millionaire, Joseph Fels (a member of the London Fabian Society, thanks to the prodding of Mrs. Fels, nee Rothschild (14)), to lend five hundred pounds sterling to underground Russian Social Democrats including Lenin and Trotsky, when they were stranded in England. (14a) From 1912 to 1925 George Lansbury was the editor of the London Daily Herald, organ of the Fabian-dominated Labour Party until it ceased publication in 1964.
Though few historians mention it, the medical history of Edward M. House accounts in part for a career that might otherwise seem a marplot’s dream. An attack of brain fever in boyhood, followed by a severe sunstroke, had permanently impaired his health. House lived to be nearly eighty, but only by taking precautions not to over exert himself. His preference for remaining in the shadow of large events he had helped shape was due, in the first instance, to a physical inability to endure strong sunlight or heat. He could never spend a summer in Washington.
Passionately interested in politics, domestic and international, House faced the fact as a very young man that he could not hope to withstand the strain and stress of public office. After his father’s death, he arranged matters so as to be assured of a regular income of $25,000 a year—an amount he judged suitable to support him comfortably throughout a lifetime of anonymous and unsalaried “public service.” A similar notion of Socialist “public service,” subsidized by capitalist dividends, was popular among leading British Fabians of Victorian and Edwardian days, notably Sidney Webb, and has its modern counterpart in the support received by outstanding Fabian Socialists from private foundations in the United States.
It is hard to say just when House conceived the bold plan of penetrating America’s Democratic Party at the apex and molding the policies of a sympathetic Chief Executive in the interests of a Socialist program to change the face of America. Whether the idea was his own or inspired by Fabian friends in Britain, every step he took over the years appeared to be directed toward its fulfillment. Though it involved years of obscure political chores and patient waiting, in the end House came closer to achieving his purpose than England’s Fabian Socialists were ever able to do within the framework of the Liberal Party. His career was a living example of Socialist gradualism at work.
With the election of Woodrow Wilson, House became a power at home and abroad. From then until their final break at Paris in 1918, the President relied on House, trusted him completely and never made a move without consulting him. While previous Presidents had their confidants, nothing quite like the association between House and Wilson had ever been seen before in America. The understanding between them was based on ideology as well as affection. It was as if they shared a mutual secret not to be divulged to the American people.
As Bernard Baruch said, and he had reason to know, “the Colonel’s hand was in everything”—from Cabinet appointments to decisions affecting war and peace. The small apartment Colonel House had rented in an unfashionable block on East Thirty-fifth Street in New York City became a nerve center of the nation. There was a switchboard with direct telephone lines to the White House and the State, War and Navy Departments, and a constant stream of callers. People came to House, as they had been doing all his life, because he was too fragile in health to go to them; and this merely enhanced his importance. Even the President visited him incognito, almost as often as the Colonel visited the White House.
From the time the United States declared war on Germany, the apartment above Colonel House’s was occupied by Sir William Wiseman, wartime chief of the British Secret Service in America, whose functions included counterespionage as well as high politics. Introduced to the President by House, the young and enterprising Sir William had already become a great favorite with Wilson, who naively used him as a personal emissary on various confidential missions to London and Paris. When the war ended, Sir William Wiseman remained in the United States and joined the firm of Kuhn, Loeb and Company.
Just after the United States broke diplomatic relations with Germany as a preliminary to declaring war, an episode involving Sir William occurred, which shows the partiality that highly placed American liberals felt for the outbreak of revolution in Russia. In New York City Leon Trotsky—then employed as an electrician at the Fox Film Studios—was the leader of a Russian revolutionary group with headquarters at 63 West 107th Street. (15) Wiseman was interested in this group principally because its activities were financed by a German-language newspaper in New York known to be receiving funds from German Government sources. Following the Kerensky Revolution, Trotsky sailed for Russia with a group of associates on March 27, 1917, via the Norwegian American Line. He was carrying a substantial amount of money.
When the vessel stopped at Halifax, Nova Scotia, Canadian authorities picked Trotsky off the ship and held him. (16) From Petrograd the gentle Social Democrat, Kerensky, cabled Woodrow Wilson asking the latter to intervene. Colonel House informed Wiseman of the President’s desire that Trotsky be allowed to proceed. Wishing to oblige its new and powerful Ally in what did not appear to be a very important matter, London instructed the Canadians to send Trotsky on his way—leaving Sir William Wiseman, who had forwarded the President’s request, technically blameless.
So Washington and London innocently furthered the plans of German Military Intelligence, which at about the same time passed Lenin in a sealed railway car through Germany to Russia, there to assume with Trotsky the leadership of the Bolsheviki. Together, Lenin and Trotsky soon overthrew Kerensky, pulled Russia out of the war, and freed German armies on the Eastern front to fight Allied troops in the West. The release of Trotsky was a prime instance of the dangerous results of high-level civilian meddling in wartime; (17) as well as a classic demonstration, the first in history, of how Socialism opens the door to Communism.
This remarkable episode has been preserved for posterity by the usually well-informed Sir Arthur Willert, London Times correspondent in Washington, who worked closely with Sir William Wiseman. Willert was distressed by what he called the “deplorable” tendencies of a good many British lecturers and travelers who roved the United States during the earlier part of the war “saying whatever their politics and prejudices dictated.” (18) Conspicuous among them was Mrs. F. W. Pethick-Lawrence, distaff member of a well-known British Fabian husband-and-wife team, who waged an energetic “peace campaign” in America after her own country was at war.
Mrs. Pethick-Lawrence stayed at Hull House in Chicago, rallying feminists, social workers and college professors and receiving the wholehearted backing of Jane Addams and her many Socialist friends. (19) Jane Addams, an American Fabian Socialist and an eventual Nobel Peace Prize winner, became a world celebrity as a result of her pacifist activities, which continued throughout the war. Even Colonel House had conferred with her before departing for Berlin on his own peace mission preceding the outbreak of hostilities in 1914. (20) In June, 1915, on her way to the Hague Conference as a leading representative of the “neutral women,” Jane Addams was the admired guest in London of Sidney and Beatrice Webb, who had visited her at Hull House seventeen years before. (21)
What troubled Willert and other more or less official British observers was the fact that so many of these self-styled peace movements were also fostered by representatives of the German Foreign Office, (22) eager to deter the United States at any cost from joining the war on the side of the Allies. Among the groups supporting Mrs. Pethick-Lawrence was the Organization of American Women for Strict Neutrality, founded by a Miss L. N. Miller of Roland Park Baltimore. Supposedly an independent movement, this organization received monetary and other aid from German Government sources and had branches in many American cities. (23) It was reported that the Chicago membership list included Nina Nitze, wife of a University of Chicago professor.
Nina Nitze’s brother, Paul Hilken (24) of Roland Park, Baltimore, was later discovered to have served as the chief paymaster for German saboteurs in the United States, who on instructions from the Dritte Abteilung in Berlin set off the notorious Black Tom and Kingsland explosions.(25) Her son, Paul Nitze, has risen in our own day to become Secretary of the Navy in the Kennedy and Johnson Administrations and a spokesman for civilian as opposed to military defense planning—which only goes to show how neatly World War I memories have been swept under the rug.
2.
In March, 1916, Sir Arthur Willert wrote to his editor in London: “We ought to make it impossible for people like _____, _____, _____ , or _____ to find here the hearing they are refused in England. It is really extraordinary how the country is being penetrated by the wrong sort of Englishmen . . . . I imagine there are plenty of German Social Democrats who would be only too glad to come over here from Germany and air their views. But they do not come for obvious reasons; and I cannot see why our own precautions should be so patently inferior to those of Germany.” (26)
As a result of this pointed suggestion, some official steps seem to have been taken. Soon Willert was pleased to report a “different” type of British lecturer and traveler coming to the United States. Among the “right sort,” he guilelessly listed Emmeline Pankhurst, the suffragist; Granville Barker, the playwright; G. M. Trevelyan, the historian; and S. K. Ratcliffe, author and editor.(27) Ironically enough, they too all belonged to the London Fabian Society which, like American Socialism, was divided on the war issue. S. K. Ratcliffe was a member of the Fabian Executive and its chief wartime courier to the United States. He was an editor of the Fabian-controlled New Statesman (28) and became the London representative of the New Republic, a so-called liberal weekly which had been founded in New York in 191314 as an opposite number to the New Statesman.
Financed by Dorothy Whitney Straight, whose brother was a J. P. Morgan partner, the New Republic was staffed in the beginning by a number of talented, ambitious and socially acceptable young Socialists from Harvard, who dropped the Socialist label but not its program soon after graduation. Among them was the pundit and columnist, Walter Lippmann, who had joined the Fabian Society of London in 1909.(29)
The British Marxist and Fabian, Professor Harold J. Laski, teaching at Harvard from 1915 to 1919, was a frequent wartime contributor, though his articles were discreetly signed H. J. L. The New Republic (30) supported Woodrow Wilson and continued to support him throughout the war—in contrast to its more overtly radical sister weekly, The Nation, which maintained a pacifist and anti-war stand, idolized conscientious objectors like Eugene V. Debs and Scott Nearing, yet did not blanch at bloody revolution in Russia.
Always limited in circulation, the New Republic catered to an intellectual and professional elite rather than to the perfervid mass of Socialist sympathizers in New York City. Apparently, it was in high favor with key personages in the Wilson Administration, especially Colonel House. By what Lippmann prudently calls “a certain parallelism of reasoning,” the New Republic often suggested policies that President Wilson followed. In those years the paper enjoyed a kind of mysterious importance which it never quite equaled again, not even under the New Frontier.
During the winter of 1916 young Lippmann had several interviews, “such as any journalist has,” with the President; but he denied that his personal relations with Wilson were ever close. Thereafter, Herbert Croly, senior editor of the New Republic, and Walter Lippmann met about once every fortnight with Colonel House to discuss problems “relating to the management of neutrality” prior to the reelection of President Wilson in 1916. (31) With S. K. Ratcliffe commuting from London to attend editorial luncheons at the New Republic, the Fabian circuit was complete.
Following the example of top-level British Fabians, New Republic editors moved in good society and were considered eminently respectable. Penetration and permeation were their tasks. Like the Webbs and other worldly-wise leaders of the London Fabian Society, they accepted the war as inevitable and concentrated on planning for the New Order, which all good Socialists felt sure must emerge from social unrest anticipated after the war. (32)
It was no accident that the Fabian Socialist Walter Lippmann, while on the staff of the New Republic, was named by Colonel House in 1917 as executive secretary of a confidential group to formulate war aims and postwar policy for President Wilson. There the famous—or infamous—slogan, “Peace Without Victory” was born, to be revived in a more literal sense many years later during the Korean War.
That postwar planning group, dubbed The Inquiry (or Enquiry), was headed by Dr. Sidney Mezes, president of the City College of New York and brother-in-law of Colonel House. On the pretext that any publicity might give rise to rumors that the United States was preparing to accept a negotiated peace, the existence of the group was kept secret. Meetings were held in the New York headquarters of the National Geographic Society at 156th Street and Broadway by courtesy of Dr. Isaiah Bowman, a director of the Geographical Society and longtime president of Johns Hopkins University. According to Lippmann, some 150 college professors and other “specialists” (who included the Reverend Norman Thomas, later head of the American Socialist Party) were recruited to collect data for eventual use at the Peace Conference. Since no government funds were provided in those days for such lofty projects, the working expenses of the group were privately paid—presumably by President Wilson himself, although he was not a wealthy man.
Eight memoranda, the so-called territorial sections of the Fourteen Points, were prepared by The Inquiry. This document, with several additions, was given by the President to Congress and to a waiting world on January 8, 1918. One impromptu addition was some kind words uttered by President Wilson about the “sincerity of purpose” of the Russian Bolsheviki—though the same might also be said of any forthright thug. While the implications of the Fourteen Points, wrapped as they were in high-flown verbiage, were not generally understood, the document was widely applauded by members of President Wilson’s own party in Congress as well as by Progressive Republicans and Socialists—and, of course, by the college professors whose thinking was guided by the New Republic. (33)
Since then, it has sometimes been said that Walter Lippmann “wrote the Fourteen Points for President Wilson,” a claim Lippmann has taken pains to disavow. Obviously, he assisted at the birth in more ways than one. When a clarification of the Fourteen Points was asked by Allied Prime Ministers in November, 1918, thirteen of the fourteen interpretive sections were written by Walter Lippmann at the request of Colonel House. The fourteenth (relating to the League of Nations) was written by Frank Cobb, editor of the Pulitzer-owned New York World, where Lippmann was subsequently employed as chief editorial writer. The demands outlined in the Fourteen Points, however, did not originate with Lippmann nor with The Inquiry. They were conceived by Sidney Webb and the Fabian Society of London.
In December, 1917, a statement of war aims, prepared by Fabian members of the International Socialist Bureau in London, had been laid before a special conference of the British Labour Party and Trades Union Council. Its authors were Camille Huysmans, a Belgian Socialist, then secretary of the International Socialist Bureau; British Fabians Arthur Henderson and Sidney Webb; and the alleged “ex”Fabian, Ramsay MacDonald. Sidney Webb, whose skill in drafting memoranda has rarely been equaled, did the actual writing. Promptly published as Labour’s War Aims, it was the first general statement of British Fabian Socialist policy in world affairs and was designed to be copied by Socialists in other countries and to establish the primacy of the Fabian Society within the postwar Socialist International.
Labour’s War Aims antedated the Fourteen Points and included every item covered in the later document: universal “democracy”; an end to imperialism and secret diplomacy; arms limitation, and abolition of profits from armaments; plans for settling such thorny issues as Alsace-Lorraine, Poland and Palestine, and for the self-determination of subject nationalities in the Austro-Hungarian and Ottoman Empires; economic controls and an international commission for reparations and war damage. Moreover, it called for collective security, a supranational authority, an international court of justice and international legislation on labor and social matters, (34) in what its Fabian authors fondly hoped might soon be an all-Socialist world.
These were the high-sounding aims which afterwards became the stock in trade of liberal-Socialist and Socialist-labor groups in every Allied country. Somehow, Woodrow Wilson, the President of the United States, became a mouthpiece for the selfsame demands. Walter Lippmann, always gifted at double-talk, would doubtless attribute the resemblance to “a certain parallelism of reasoning.” It hardly seems necessary, however, to invoke extrasensory perception when such well-placed physical facilities existed for transmitting the original Fabian program verbally and textually to the President. How far Woodrow Wilson was aware of his debt to the British Fabian Socialist planners, we may never know; but it seems impossible that the alert, omniscient Colonel House, who shortly before the New Year, 1918, carried all documentary material relating to the Fourteen Points to the White House, could have failed to be informed of or to connive in the transmission.
That view is confirmed by the curious mission on which Ray Stannard Baker, the former muckraker who became press chief at the Paris Peace Conference, was sent by House in February, 1918. Baker was to “report fully for the information of the President and the State Department on the state of radical opinion and organization, especially the attitude of labor in England, and later possibly in France and Italy.” (35) He was given confidential introductions to various left wing leaders in Great Britain and instructed to send his letters via Embassy pouch and his cabled reports in secret code. At House’s suggestion that it would be better if Baker were not known to be an agent of the government, he was accredited as a correspondent of the New Republic and the New York World—though he never sent dispatches to either.
The first person Baker met in England was Professor Gilbert Murray, an Asquith Liberal of long-standing Fabian sympathies. Murray told him that the Asquith faction, opposing Prime Minister Lloyd George, was prepared to accept Wilson’s leadership and program of action, and in this was supported by nearly all of the labor groups, including the Labour Party. The next Englishman he saw was Graham Wallas, one of the original Big Four of the Fabian Society, who had delivered the Lowell Lectures at Harvard and dedicated his book, The Great Society, to young Walter Lippmann. A further list of the persons interviewed by Baker reads like a Who’s Who of the London Fabian Society—G. M. Trevelyan, Arthur Ponsonby, Philip Snowden, H. W. Massingham, George Lansbury, Arthur Henderson, Bertrand Russell and Mary Agnes Hamilton, to mention only a few.
Though he met several Lords of the Round Table group, who backed Lloyd George and the Empire, Baker felt they had outlived their time. His real enthusiasm was reserved for the Fabians; although he did not appear to be aware of the existence or function of that discreet Socialist Society. To him the Fabians were merely “thoughtful intellectuals” and Labourites. Finally, at the invitation of the playwright, Granville Barker, he lunched with Sidney and Beatrice Webb —and pronounced it one of the great experiences of his life to sit between them and be instructed in the laws of economic affairs. Baker found the Webbs “great admirers of President Wilson, and anxious for a better understanding between the ‘democratic’ groups of England and the United States.” (36)
Even now, almost half a century after the fact, it is humiliating for an American to find an emissary of the White House displaying such worshipful admiration for the leaders of a foreign secret society, anxious only to utilize the world-wide prestige of the President of the United States to further their own radical intrigues at home and abroad. Yet Baker’s abject performance was praised by House’s man in the State Department, the then-Counselor, Frank Polk. And much later, Wilson himself told Baker, “Your letters at that time helped me.” (37) Ray Stannard Baker was the individual finally chosen by Wilson to be his official biographer.
As Sidney Webb’s honored guest, Baker was present at the fateful conference of June, 1918, when the British Labour Party was formally constituted under Fabian Socialist control and adopted Webb’s blueprint for chaos, Labour and the New Social Order, as its permanent platform. Baker appraised that managed conference as being quite the most revealing exhibit of British opinion he had yet seen. In a lyric report to Washington he described the new Party as “the most precious and vital force in British life today”—differing sharply with America’s wise old labor chieftain, Samuel Gompers, who said the Labour Party in England did not really represent the rank-and-file of the British working class. (38)
The confidential reports sent by Baker were calculated to persuade President Wilson that labor in Britain, as well as on the Continent, regarded him as a man of supreme vision, called by destiny to unite the forces of “true liberalism” throughout the world. Slightly reversing the true order of events, Baker assured Wilson that British labor was not only in sympathy with his “democratic” policies, but “indeed, had incorporated them in its own statement of War Aims!” At the same time, Baker’s letters warned that “Mr. Wilson can never hope for whole-hearted support upon the reconstructive side of his program from those at present in power, either here or in France.” Thus the ground was prepared for the Peace Conference, even before the bloodshed had ended; and seeds of personal prejudice were planted in the President’s mind against the Allied statesmen, representing old-line Liberal Parties, with whom he would be obliged to deal.
Such advice from a trusted source naturally tended to strengthen Wilson in his determination to hold out for unconditional acceptance of the Fourteen Points as a basis for peace, and to insist that the League of Nations be considered an integral part of any peace treaty. The first American version of a “convention” for a League was drafted by the President’s friend, Colonel House, on July 13 and 14, 1918, in his summer home at Magnolia, Massachusetts, with the aid of Professor David H. Miller of The Inquiry group. Colonel House did not undertake this task until after he received a copy of the British Government’s draft plan, which was forwarded to him, unread, by the President.(39) It was by no means the first plan for a supranational authority, purporting to be a preventive against war, that had come to the Colonel’s attention.
Fully three years earlier the Fabian Research Department in London, then shepherded by Beatrice Webb, had prepared two reports of its own on the subject, together with a project by a Fabian Committee for an international authority along Socialist lines. Bearing the signature of Leonard Woolf, it was printed in 1915 as a special supplement of the New Statesman and hailed with rapture by Herbert Croly’s New Republic. Under the title International Government, this Fabian Socialist document was published the following year by Brentano’s in New York.
The draft so speedily produced by Colonel House on two summer days m Massachusetts bore a striking resemblance to the Fabian proposals, whose Socialist authors were not otherwise in a position to impose their ideas on the British Foreign Office. House’s twenty-three articles formed the basis for the President’s tentative draft, which adopted all but five of those articles and became the first official American plan for a League of Nations. Eventually the so-called Wilson plan was incorporated with a revised British Government version for presentation to the League of Nations Commission at the Paris Peace Conference.
From such motley materials the Covenant of the League was stitched together. And yet, when it was finally completed, Woodrow Wilson considered it so peculiarly his own that he was willing to invite personal and political defeat, to sacrifice the fortunes of his Party and his own far from robust health rather than allow a single line of it to be changed. To a practical politician like Colonel House —who had long since learned, as Sidney Webb also had, the necessity for graceful compromise when no better recourse offered—Wilson’s attitude must have seemed fantastic as well as suicidal.
The perfect friendship of Woodrow Wilson and Edward M. House ended as abruptly as it began. All the world knows that the break between the two men, predicted annually for seven years by newsmen, occurred at the Peace Conference in Paris. No two historians agree on the reasons, and the principals have never divulged them. Certain facts, however, are evident. Public sentiment in America had turned against the President and his internationalist views. In November, 1918, he lost the Congress and with it any hope of securing rubber-stamp approval for the Treaty or the League. House attributed this, in part, to Wilson’s own indiscretion. For Wilson, House had lost his political magic.
In December, 1918, Woodrow Wilson went to the Peace Conference in Paris, a defeated man too unfamiliar with defeat to recognize it. Such authority as he enjoyed was derived from popular acclaim in Europe and was largely ceremonial. Though hailed as a savior by millions, his power was strictly limited. He was a president nearing the end of his second term who had forfeited his support at home— and every politician in the world knew it. While he might persuade, he could not command.
Shrewdly, House had advised Wilson to make no more than a brief appearance and a few speeches in Europe, and return to pull strings from the White House. The Colonel also recommended sending a bipartisan committee of Congress to the Peace Conference. But their relationship had already changed: Wilson no longer listened to anything so unflattering as common sense. As Sir William Wiseman cynically remarked, the President was drawn to Paris as a debutante is entranced by the prospect of her first ball.
In those days it was a generally accepted fact that the treaty-making power of the United States resided not merely in the President, but in the President with two-thirds of the Senate present and voting. The Constitution said so; and as yet no techniques had been devised by faceless bureaucrats or Executive aides for diverting or assigning that power, or preempting it piecemeal. Philip Dru, Administrator, was not yet in the saddle—Yalta and Teheran were still undreamed of—and nobody in America except a handful of Socialist intellectuals and foreign-born radicals wanted any part of International Government. So Wilson, the bitter-ender, went home to failure and~collapse; while House, the gradualist who never stopped trying, remained in Paris, attempting to salvage by negotiation whatever fragments of his program could still be saved. As it had been from the beginning, their real quarrel was still with the Constitution, and on that rock they foundered separately.
The first attempt by Fabian Socialists to penetrate and permeate the Executive branch of the United States Government failed in the end. But they would try again, and go on trying, until fortress America was leveled, or until their own long-range subversion was definitely exposed. Colonel House was only one man, where a multitude was needed. He had set the pattern and outlined goals for the future, and he still had a scheme or two in mind. In particular, he foresaw it would be necessary for the Fabians to develop a top-level Anglo-American planning group in the field of foreign relations which could secretly influence policy on the one hand and gradually “educate” public opinion on the other. His experience in Paris had shown him that it must be a bipartisan group.
To the ambitious young Fabians, British and American, who had flocked to the Peace Conference as economists and junior officials, it soon became evident that a New World Order was not about to be produced at Paris. Most of the younger men in whom House placed his hopes for the future of liberalism and a positive foreign policy in America had already departed—Walter Lippmann, Felix Frankfurter, and above all, young Franklin D. Roosevelt. The few American intellectuals still remaining in Paris, who clustered around Professor James T. Shotwell, were young men of still undefined political affiliations and excellent social standing—such as John Foster and Allen Dulles, nephews of Wilson’s Secretary of State, Robert Lansing; Christian Herter, and Tasker Bliss, the political general who did not get along well with Pershing.
For them, Colonel House arranged a dinner meeting at the Hotel Majestic on May 19, 1919, together with a select group of Fabian-certified Englishmen—notably, Arnold Toynbee, R. H. Tawney and John Maynard Keynes. All were equally disillusioned, for varied reasons, by the consequences of the peace. They made a gentlemen’s agreement to set up an organization, with branches in England and America, “to facilitate the scientific study of international questions.” As a result two potent and closely related opinion-making bodies were founded, which only began to reach their full growth in the nineteen-forties, coincident with the formation of the Fabian International Bureau. The English branch was called the Royal Institute of International Affairs. The American branch, first known as the Institute of International Affairs, was reorganized in 1921 as the Council on Foreign Relations.
Edward M. House, the lifelong radical whose name was listed in the New York Social Register, in his quiet way had set the wave of the future in motion.
Footnotes
1. Bryan’s famous Cross of Gold speech proclaimed, “You shall not crucify mankind on a cross of gold!”
2. See Appendix II for names of professors at the City College of New York who were student-leaders and/or valued “cooperators” of the Intercollegiate Socialist Society and its successor, the League for Industrial Democracy.
3. Arthur D. Howden Smith, Mr. House of Texas (New York, Funk and Wagnalls, Co., Inc., 1940), p. 43.
4. Ibid., p. 23.
5. Ibid., pp. 23; 93.
6. In 1922, B. W. Heubsch was a member of the Executive Committee of the American Civil Liberties Union, a Socialist-inspired organization; and in April, 1961 he was one of the sponsors of a rally in New York City to abolish the House Un-American Activities Committee.
7. The Intimate Papers of Colonel House, Charles Seymour ed. (Boston, Houghton Mifflin Co., 1926), pp. 152-159.
8. Smith, op. cit., pp. 49-50.
9. Arthur Willert, The Road to Safety (London, Derek Verschoyle, 1952), p. 172. From a letter of Sir William Wiseman to Lord Grey of Falloden.
10. Smith, op. cit., pp. 366-367.
11. Ibid., pp. 8-11.
12. Francisco, J. Nitti, Catholic Socialism (London, Sonnenschein, 1895; New York, The Macmillan Co., 1911), p. 312.
13. Smith, op. cit., pp. 35; 102.
14. Fabian News (March, 1905), in an article entitled “New Farm Colonies,” refers to Joseph Fels as “one of our members.” Beatrice Webb, in her diary during May, 1904 quoted by Margaret Cole, Beatrice Webb (New York, Harcourt, Brace, 1946), p. 189 confirms the fact that both Joseph and Mary Fels belonged to the Fabian Society of London. A descendant, Joseph Fels Barnes, currently on the editorial staff of a New York publishing house, was in Moscow on a Rockefeller fellowship during 1931-32, where he was warmly received in deference to his family history.
14a. Raymond Postgate, The Life of George Lansbury (New York, Longmans, Green and Company, Ltd., 1951), pp. 69-70.
15. Willert, op. cit., p. 29.
16. On the night before his departure, Trotsky had made a speech before a joint meeting of German and Russian Socialists at Harlem River Park Casino in New York City. Speaking in both German and Russian, he said: “I am going back to Russia to overthrow the provisional government and stop the war with Germany and allow no interference from any outside government.” A report on this meeting had been submitted to Colonel Van Deman and General Churchill of United State Military Intelligence. Senate Document No. 62, 66th Congress, Report and Hearings of the Subcommittee on the Judiciary, United States Senate, 1919, Vol. II, p. 2680.
17. Willert, op. cit., p. 29. Based on information obtained from the private papers of Sir William Wiseman.
18. Ibid., p. 89.
19. Revolutionary Radicalism, Its History, Purpose and Tactics. Report of the Joint Legislative committee Investigating Seditious Activities, filed April 24, 1920, in the Senate of the State of New York (Albany, J. P. Lyon Co., 1920), Vol. I, p. 974. Report by Louis P. Lochner, January 18, 1915: “Almost coincident with Mme. (Rosika) Schwimmer (A German agent) came a noted Englishwoman, Mrs. Pethick-Lawrence of London, England. For several weeks she was a guest of Miss Addams, and came before many organizations with her Woman’s Movement for Constructive Peace.”
20. Smith, op. cit., p. 102.
21. Cole, Beatrice Webb, p. 40.
22. Senate Document No. 62, 66th Congress. Extensive testimony and exhibits to this effect are presented throughout Vol. I and Vol. II. See especially Vol. II, pp. 1394-95; 1791-1795.
23. Ibid., p. 1792.
24. A special Act of congress was passed compelling Paul Hilken to testify concerning his World War I dealings with German sabotage agents. This testimony became a part of the Mixed Claims Commission Record, now preserved at the National Archives in Washington. It was reviewed in Justice Owen D. Roberts’ report on his decision of October 30, 1939, rendered as Umpire for the Commission.
25. The Dritte Abteilung, or Section III of German Military Intelligence, planned for and recruited volunteers for sabotage and terrorist acts abroad. See Records of the Mixed Claims Commission, National Archives, Washington.
26. Willert, op. cit., p. 89.
27. Ibid., p. 93.
28. In the Jubilee Issue of the New Statesman (April 19, 1963, p. 543) the editor, John Freeman, stated: “We were founded in April, 1913, by a group of Fabians, among whom Beatrice and Sidney Webb, Bernard Shaw and J. C. Squire were most closely concerned. Clifford Sharp was the first editor. He was succeeded in 1931 by Kingsley Martin, who occupied the editorial chair for 30 years.” In the same issue, R. H. S. Crossman, a former chairman of the Fabian Society, stated (p. 551): “During 50 years the fortunes of the New Statesman and the Labour Party have been more intimately linked than either side would care to admit. Why have successive editors and successive Party Leaders deliberately underestimated this intimacy?”
29. Fabian News (October, 1909).
30. In addition to Lippmann, the original staff of the New Republic included Herbert Croly, author of The Promise of American Life, who secured the financial backing; Philip Littell, Walter Weyl, Charles Rudyard and Francis Hackett. Soon Charles Merz and Alvin Johnson, later to head the New School for Social Research, joined the board of editors. In 1922 Robert Morss Lovett became its book review editor.
31. Walter Lippmann, “Notes for a Biography,” New Republic (July 16, 1930).
32. In 1919, the Reverend Lyman P. Powell, President Wilson’s old friend, edited a two volume symposium published by The Review of Reviews Company, entitled Social Unrest. It contained articles by many well-known British and American Fabian Socialists as well as some non-Socialists.
33. John Dos Passos, Mr. Wilson’s War, Lewis Gannett, ed. (New York, Doubleday & Co., 1962), p. 307.
34. Margaret Cole, The Story of Fabian Socialism (London, Heinemann Educational Books, Ltd., 1961), pp 169-171.
35. Ray Stannard Baker, An American Chronicle (New York, Charles Scribner’s Sons, 1945), p. 306.
36. Baker, op. cit., p. 339.
37. Ibid., p. 355.
38. Ibid., pp. 343-345.
39. Smith, op. cit., pp. 259-260.
Tuesday, April 30, 2013
Will The New Housing Bubble That Bernanke Is Creating End As Badly As The Last One Did?
By Michael, on April 30th, 2013
Federal Reserve Chairman Ben Bernanke has done it. He has succeeded in creating a new housing bubble. By driving mortgage rates down to the lowest level in 100 years and recklessly printing money with wild abandon, Bernanke has been able to get housing prices to rebound a bit. In fact, in some of the more prosperous areas of the country you would be tempted to think that it is 2005 all over again. If you can believe it, in some areas of the country builders are actually holding lotteries to see who will get the chance to buy their homes. Wow - that sounds great, right? Unfortunately, this "housing recovery" is not based on solid economic fundamentals. As you will see below, this is a recovery that is being led by investors. They are paying cash for cheap properties that they believe will appreciate rapidly in the coming years. Meanwhile, the homeownership rate in the United States continues to decline. It is now the lowest that it has been since 1995. There are a couple of reasons for this. Number one, there has not been a jobs recovery in the United States. The percentage of working age Americans with a job has not rebounded at all and is still about the exact same place where it was at the end of the last recession. Secondly, crippling levels of student loan debt continue to drive down the percentage of young people that are buying homes. So no, this is not a real housing recovery. It is an investor-led recovery that is mostly limited to the more prosperous areas of the country. For example, the median sale price of a home in Washington D.C. just hit a new all-time record high. But this bubble will not last, and when this new housing bubble does burst, will it end as badly as the last one did?
Federal Reserve Chairman Ben Bernanke has stated over and over that one of his main goals is to "support the housing market" (i.e. get housing prices to go up). It took a while, but it looks like he is finally getting his wish. According to USA Today, U.S. home prices have been rising at the fastest rate in nearly seven years...
But surely things will turn out differently this time, right?
I wouldn't count on it.
Right now, an increasingly large percentage of homes are being purchased as investments. The following is from a recent Washington Times article...
If this truly was a real housing recovery, the percentage of Americans that own a home would be going up.
Instead, it is going down.
As I mentioned above, the U.S. Census Bureau is reporting that the homeownership rate in the United States is now the lowest that it has been since 1995.
In particular, homeownership among college-educated young people is way down. They can't afford to buy homes due to crippling levels of student loan debt...
And as I mentioned above, the "housing recovery" is mostly happening in the prosperous areas of the country.
In other areas of the United States, the devastating results of the last housing crash are still clearly apparent.
For example, the city of Dayton, Ohio is dealing with an estimated 7,000 abandoned properties.
As I wrote about the other day, there are approximately 70,000 abandoned buildings in Detroit, Michigan.
And all over the nation there are still "ghost towns" that were created when builders abruptly abandoned housing developments during the last recession. You can see some pictures of some of these ghost towns right here.
So the truth is that this is an isolated housing recovery that is being led by investors and that is being fueled by very reckless behavior by the Federal Reserve. It is not based on economic reality whatsoever.
In the end, will the collapse of this new housing bubble be as bad as the collapse of the last one was?
Federal Reserve Chairman Ben Bernanke has done it. He has succeeded in creating a new housing bubble. By driving mortgage rates down to the lowest level in 100 years and recklessly printing money with wild abandon, Bernanke has been able to get housing prices to rebound a bit. In fact, in some of the more prosperous areas of the country you would be tempted to think that it is 2005 all over again. If you can believe it, in some areas of the country builders are actually holding lotteries to see who will get the chance to buy their homes. Wow - that sounds great, right? Unfortunately, this "housing recovery" is not based on solid economic fundamentals. As you will see below, this is a recovery that is being led by investors. They are paying cash for cheap properties that they believe will appreciate rapidly in the coming years. Meanwhile, the homeownership rate in the United States continues to decline. It is now the lowest that it has been since 1995. There are a couple of reasons for this. Number one, there has not been a jobs recovery in the United States. The percentage of working age Americans with a job has not rebounded at all and is still about the exact same place where it was at the end of the last recession. Secondly, crippling levels of student loan debt continue to drive down the percentage of young people that are buying homes. So no, this is not a real housing recovery. It is an investor-led recovery that is mostly limited to the more prosperous areas of the country. For example, the median sale price of a home in Washington D.C. just hit a new all-time record high. But this bubble will not last, and when this new housing bubble does burst, will it end as badly as the last one did?
Federal Reserve Chairman Ben Bernanke has stated over and over that one of his main goals is to "support the housing market" (i.e. get housing prices to go up). It took a while, but it looks like he is finally getting his wish. According to USA Today, U.S. home prices have been rising at the fastest rate in nearly seven years...
U.S. home prices in the USA's 20 biggest cities rose 9.3% in the 12 months ending in February. It was the biggest annual growth rates in almost seven years, a closely watched housing index out Tuesday said.In particular, home prices have been rising most rapidly in cities that experienced a boom during the last housing bubble...
Year over year, Phoenix continued to stand out with a gain of 23%, followed by San Francisco at almost 19% and Las Vegas at nearly 18%, the S&P/Case-Shiller index showed. Most of the cities seeing the biggest gains also fell hardest during the crash.But is this really a reason for celebration? Instead of addressing the fundamental problems in our economy that caused the last housing crash, Bernanke has been seemingly obsessed with reinflating the housing bubble. As a recent article by Edward Pinto explained, the housing market is being greatly manipulated by the government and by the Fed...
While a housing recovery of sorts has developed, it is by no means a normal one. The government continues to go to extraordinary lengths to prop up sales by guaranteeing nearly 90% of new mortgage debt, financing half of all home purchase mortgages to buyers with zero equity at closing, driving mortgage interest rates to the lowest level in 100 years, and turning the Fed into the world's largest buyer of new mortgage debt.And the Obama administration has been pushing very hard to get lenders to give mortgages to those with "weaker credit". In other words, the government is once again trying to get the banks to give home loans to people that cannot afford them. The following is from the Washington Post...
Thus, with real incomes essentially stagnant, this is a market recovery largely driven by low interest rates and plentiful government financing. This is eerily familiar to the previous government policy-induced boom that went bust in 2006, and from which the country is still struggling to recover. Creating over a trillion dollars in additional home value out of thin air does sound like a variant of dropping money out of helicopters.
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.We are repeating so many of the same mistakes that we made the last time.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
But surely things will turn out differently this time, right?
I wouldn't count on it.
Right now, an increasingly large percentage of homes are being purchased as investments. The following is from a recent Washington Times article...
Much of the pickup in sales and prices has been powered by investors who, convinced that the market is bottoming, are scooping up bountiful supplies of distressed and foreclosed properties at bargain prices and often paying with cash.And as we have seen in the past, an investor-led boom can turn into an investor-led bust very rapidly.
With investors targeting lower-priced homes that they intend to purchase and rent out, they have been crowding out many first-time buyers who are having difficulty getting mortgage loans and are at a disadvantage when competing with well-heeled buyers. Cash sales to investors now account for about one-third of all home sales, according to the National Association of Realtors.
If this truly was a real housing recovery, the percentage of Americans that own a home would be going up.
Instead, it is going down.
As I mentioned above, the U.S. Census Bureau is reporting that the homeownership rate in the United States is now the lowest that it has been since 1995.
In particular, homeownership among college-educated young people is way down. They can't afford to buy homes due to crippling levels of student loan debt...
For the average homeowner, the worst news is that these overleveraged and defaulting young borrowers no longer qualify for other kinds of loans — particularly home loans. In 2005, nearly nine percent of 25- to 30-year-olds with student debt were granted a mortgage. By late last year, that percentage, as an annual rate, was down to just above four percent.And the truth is that there simply are not enough good jobs in this country to support a housing recovery. In a previous article, I used the government's own statistics to prove that there has not been a jobs recovery. If we were having a jobs recovery, the percentage of working age Americans with a job would be going up. Sadly, that is not happening...
The most precipitous drop was among those who owe $100,000 or more. New mortgages among these more deeply indebted borrowers have declined 10 percentage points, from above 16 percent in 2005 to a little more than 6 percent today.
"These are the people you'd expect to buy big houses," said student loan expert Heather Jarvis. "They owe a lot because they have a lot of education. They have been through professional and graduate schools, but their payments are so significant, they have trouble getting a mortgage. They have mortgage-sized loans already."
And as I mentioned above, the "housing recovery" is mostly happening in the prosperous areas of the country.
In other areas of the United States, the devastating results of the last housing crash are still clearly apparent.
For example, the city of Dayton, Ohio is dealing with an estimated 7,000 abandoned properties.
As I wrote about the other day, there are approximately 70,000 abandoned buildings in Detroit, Michigan.
And all over the nation there are still "ghost towns" that were created when builders abruptly abandoned housing developments during the last recession. You can see some pictures of some of these ghost towns right here.
So the truth is that this is an isolated housing recovery that is being led by investors and that is being fueled by very reckless behavior by the Federal Reserve. It is not based on economic reality whatsoever.
In the end, will the collapse of this new housing bubble be as bad as the collapse of the last one was?
Monday, April 29, 2013
Lesbian Activist’s Surprisingly Candid Speech: Gay Marriage Fight Is a ‘Lie’ to Destroy Marriage
Apr. 29, 2013 10:13am
A 2012 speech by Masha Gessen, an author and outspoken activist for the LGBT community, is just now going viral and it includes a theory that many supporters of traditional marriage have speculated about for years: The push for gay marriage has less to do with the right to marry – it is about diminishing and eventually destroying the institution of marriage and redefining the “traditional family.”
Image: YouTube
The subject of gay marriage stirs powerful reactions on both sides of the argument. There are those who argue that legalizing it would diminish traditional marriage. And those advocating for gay marriage have long stated that the issue will not harm traditional marriage. Ms. Gessen’s comments on the subject seem to contradict the pro-gay-marriage party lines.
Gessen shared her views on the subject and very specifically stated;
- “Gay marriage is a lie.”
- “Fighting for gay marriage generally involves lying about what we’re going to do with marriage when we get there.”
- “It’s a no-brainer that the institution of marriage should not exist.” (This statement is met with very loud applause.)
As mentioned above, Gessen also talked about redefining the traditional family. This may have something to do with the fact that she has “three children with five parents”:
“I don’t see why they (her children) shouldn’t have five parents legally. I don’t see why we should choose two of those parents and make them a sanctioned couple.”
The entire presentation is here, but the most curious portion starts about six minutes into the the audio:
The excerpt above was recorded on May 19, 2012 when Ms. Gessen appeared at the Sydney Writer’s Festival on a panel titled, “Why Get Married When You Can Be Happy?” She has been speaking on the subject of gay marriage, gay divorce, her curious custody situation and more for many years.
Statistics: Achilles' Heel of Government
Sunday, April 28, 2013
by Murray N. Rothbard
[This essay was published in Essays on Liberty, VIII (Irvington-on-Hudson, NY: Foundation for Economic Education, 1961), pp.255–261, and in The Freeman, June 1961, pp. 40–44.) It was republished in The Logic of Action Two (Edward Elgar, 1997, pp. 180 184). Rothbard had developed a similar argument in "The Politics of Political Economists: Comment," Quarterly Journal of Economics, 74, 4 (November 1960), pp. 659–665, a critique of some theses put forward by economist George Stigler.]
Ours is truly an Age of Statistics. In a country and an era that worships statistical data as super "scientific," as offering us the keys to all knowledge, a vast supply of data of all shapes and sizes pours forth upon us. Mostly, it pours forth from government.
While private agencies and trade associations do gather and issue some statistics, they are limited to specific wants of specific industries. The vast bulk of statistics is gathered and disseminated by government. The overall statistics of the economy, the popular "gross national product" data that permits every economist to be a soothsayer of business conditions, come from government.
Furthermore, many statistics are by-products of other governmental activities: from the Internal Revenue bureau come tax data, from unemployment insurance departments come estimates of the unemployed, from customs offices come data on foreign trade, from the Federal Reserve flow statistics on banking, and so on. And as new statistical techniques are developed, new divisions of government departments are created to refine and use them.
The burgeoning of government statistics offers several obvious evils to the libertarian. In the first place, it is clear that too many resources are being channeled into statistics-gathering and statistics-production. Given a wholly free market, the amount of labor, land, and capital resources devoted to statistics would dwindle to a small fraction of the present total. It has been estimated that the federal government alone spends over $48,000,000 on statistics, and that statistical work employs the services of over 10,000 full-time civilian employees of the government.[1]
Hidden Costs of Reporting
Secondly, the great bulk of statistics is gathered by government coercion. This not only means that they are products of unwelcome activities; it also means that the true cost of these statistics to the American public is much greater than the mere amount of tax money spent by the government agencies. Private industry, and the private consumer, must bear the burdensome costs of record keeping, filing, and the like, that these statistics demand. Not only that; these fixed costs impose a relatively great burden on small business firms, which are ill equipped to handle the mountains of red tape. Hence, these seemingly innocent statistics cripple small business enterprise and help to rigidify the American business system. A Hoover Commission task force found, for example, that:
But there are other important, and not so obvious, reasons for the libertarian to regard government statistics with dismay. Not only do statistics gathering and producing go beyond the governmental function of defense of persons and property; not only are economic resources wasted and misallocated, and the taxpayers, industry, small business, and the consumer burdened. But, furthermore, statistics are, in a crucial sense, critical to all interventionist and socialist activities of government.
The individual consumer, in his daily rounds, has little need of statistics; through advertising, through the information of friends, and through his own experience, he finds out what is going on in the markets around him. The same is true of the business firm. The businessman must also size up his particular market, determine the prices he has to pay for what he buys and charge for what he sells, engage in cost accounting to estimate his costs, and so on. But none of this activity is really dependent upon the omnium gatherum of statistical facts about the economy ingested by the federal government. The businessman, like the consumer, knows and learns about his particular market through his daily experience.
A Substitute for Market Data
Bureaucrats as well as statist reformers, however, are in a completely different state of affairs. They are decidedly outside the market. Therefore, in order to get "into" the situation that they are trying to plan and reform, they must obtain knowledge that is not personal, day-to-day experience; the only form that such knowledge can take is statistics.[3]
Statistics are the eyes and ears of the bureaucrat, the politician, the socialistic reformer. Only by statistics can they know, or at least have any idea about, what is going on in the economy.[4]
Only by statistics can they find out how many old people have rickets, or how many young people have cavities, or how many Eskimos have defective sealskins — and therefore only by statistics can these interventionists discover who "needs" what throughout the economy, and how much federal money should be channeled in what directions.
The Master Plan
Certainly, only by statistics, can the federal government make even a fitful attempt to plan, regulate, control, or reform various industries — or impose central planning and socialization on the entire economic system. If the government received no railroad statistics, for example, how in the world could it even start to regulate railroad rates, finances, and other affairs? How could the government impose price controls if it didn't even know what goods have been sold on the market, and what prices were prevailing? Statistics, to repeat, are the eyes and ears of the interventionists: of the intellectual reformer, the politician, and the government bureaucrat. Cut off those eyes and ears, destroy those crucial guidelines to knowledge, and the whole threat of government intervention is almost completely eliminated.[5]
It is true, of course, that even deprived of all statistical knowledge of the nation's affairs, the government could still try to intervene, to tax and subsidize, to regulate and control. It could try to subsidize the aged even without having the slightest idea of how many aged there are and where they are located; it could try to regulate an industry without even knowing how many firms there are or any other basic facts of the industry; it could try to regulate the business cycle without even knowing whether prices or business activity are going up or down. It could try, but it would not get very far. The utter chaos would be too patent and too evident even for the bureaucracy, and certainly for the citizens.
And this is especially true since one of the major reasons put forth for government intervention is that it "corrects" the market, and makes the market and the economy more rational. Obviously, if the government were deprived of all knowledge whatever of economic affairs, there could not even be a pretense of rationality in government intervention.
Surely, the absence of statistics would absolutely and immediately wreck any attempt at socialistic planning. It is difficult to see what, for example, the central planners at the Kremlin could do to plan the lives of Soviet citizens if the planners were deprived of all information, of all statistical data, about these citizens. The government would not even know to whom to give orders, much less how to try to plan an intricate economy.
Thus, in all the host of measures that have been proposed over the years to check and limit government or to repeal its interventions, the simple and unspectacular abolition of government statistics would probably be the most thorough and most effective. Statistics, so vital to statism, its namesake, is also the State's Achilles' heel.
Notes
[1] Cf. Neil Macneil and Harold W. Metz, The Hoover Report, 1953–1955 (New York: Macmillan, 1956), pp. 90–91; Commission on Organization of the Executive Branch of the Government, Task Force Report on Paperwork Management (Washington: June 1955); and idem, Report on Budgeting and Accounting (Washington: February 1949).
[2] Macneil and Metz, op. cit., pp. 90–91.
[3] On the deficiencies of statistics as compared to the personal knowledge of all participants utilized on the free market, see the illuminating discussion in F.A. Hayek, Individualism and the Economic Order (Chicago: University Press, 1948), Chapter 4. Also see Geoffrey Dobbs, On Planning the Earth (Liverpool: K.R.P. Pubs., 1951), pp. 77–86.
[4] As early as 1863, Samuel B. Ruggles, American delegate to the International Statistical Congress in Berlin, declared: "Statisitics are the very eyes of the statesmen, enabling him to survey and scan with clear and comprehensive vision the whole structure and economy of the body politic." For more on the interrelation of statistics — and statisticians — and the government, see Murray N. Rothbard, "The Politics of Political Economists: Comment," The Quarterly Journal of Economics (November 1960), pp. 659–65. Also see Dobbs, op. cit.
[5] "Government policy depends upon much detailed knowledge about the Nation's employment, production, and purchasing power. The formulation of legislation and administrative progress… Supervision … regulation … and control … must be guided by knowledge of a wide range of relevant facts. Today as never before, statistical data play a major role in the supervision of Government activities. Administrators not only make plans in the light of known facts in their field of interest, but also they must have reports on the actual progress achieved in accomplishing their goals." Reports on Budgeting and Accounting, op. cit., pp. 91–92.
by Murray N. Rothbard
[This essay was published in Essays on Liberty, VIII (Irvington-on-Hudson, NY: Foundation for Economic Education, 1961), pp.255–261, and in The Freeman, June 1961, pp. 40–44.) It was republished in The Logic of Action Two (Edward Elgar, 1997, pp. 180 184). Rothbard had developed a similar argument in "The Politics of Political Economists: Comment," Quarterly Journal of Economics, 74, 4 (November 1960), pp. 659–665, a critique of some theses put forward by economist George Stigler.]
Ours is truly an Age of Statistics. In a country and an era that worships statistical data as super "scientific," as offering us the keys to all knowledge, a vast supply of data of all shapes and sizes pours forth upon us. Mostly, it pours forth from government. While private agencies and trade associations do gather and issue some statistics, they are limited to specific wants of specific industries. The vast bulk of statistics is gathered and disseminated by government. The overall statistics of the economy, the popular "gross national product" data that permits every economist to be a soothsayer of business conditions, come from government.
Furthermore, many statistics are by-products of other governmental activities: from the Internal Revenue bureau come tax data, from unemployment insurance departments come estimates of the unemployed, from customs offices come data on foreign trade, from the Federal Reserve flow statistics on banking, and so on. And as new statistical techniques are developed, new divisions of government departments are created to refine and use them.
The burgeoning of government statistics offers several obvious evils to the libertarian. In the first place, it is clear that too many resources are being channeled into statistics-gathering and statistics-production. Given a wholly free market, the amount of labor, land, and capital resources devoted to statistics would dwindle to a small fraction of the present total. It has been estimated that the federal government alone spends over $48,000,000 on statistics, and that statistical work employs the services of over 10,000 full-time civilian employees of the government.[1]
Hidden Costs of Reporting
Secondly, the great bulk of statistics is gathered by government coercion. This not only means that they are products of unwelcome activities; it also means that the true cost of these statistics to the American public is much greater than the mere amount of tax money spent by the government agencies. Private industry, and the private consumer, must bear the burdensome costs of record keeping, filing, and the like, that these statistics demand. Not only that; these fixed costs impose a relatively great burden on small business firms, which are ill equipped to handle the mountains of red tape. Hence, these seemingly innocent statistics cripple small business enterprise and help to rigidify the American business system. A Hoover Commission task force found, for example, that:
No one knows how much it costs American industry to compile the statistics that the Government demands. The chemical industry alone reports that each year it spends $8,850,000 to supply statistical reports demanded by three departments of the Government. The utility industry spends $32,000,000 a year in preparing reports for Government agencies…Other Objections
All industrial users of peanuts must report their consumption to the Department of Agriculture… Upon the intervention of the Task Force, the Department of Agriculture agreed that henceforth only those that consume more than ten thousand pounds a year need report…
If small alterations are made in two reports, the Task Force says one industry alone can save $800,000 a year in statistical reporting.
Many employees of private industry are occupied with the collection of Government statistics. This is especially burdensome to small businesses. A small hardware store owner in Ohio estimated that 29 per cent of his time is absorbed in filling out such reports. Not infrequently people dealing with the Government have to keep several sets of books to fit the diverse and dissimilar requirements of Federal agencies.[2]
But there are other important, and not so obvious, reasons for the libertarian to regard government statistics with dismay. Not only do statistics gathering and producing go beyond the governmental function of defense of persons and property; not only are economic resources wasted and misallocated, and the taxpayers, industry, small business, and the consumer burdened. But, furthermore, statistics are, in a crucial sense, critical to all interventionist and socialist activities of government.
The individual consumer, in his daily rounds, has little need of statistics; through advertising, through the information of friends, and through his own experience, he finds out what is going on in the markets around him. The same is true of the business firm. The businessman must also size up his particular market, determine the prices he has to pay for what he buys and charge for what he sells, engage in cost accounting to estimate his costs, and so on. But none of this activity is really dependent upon the omnium gatherum of statistical facts about the economy ingested by the federal government. The businessman, like the consumer, knows and learns about his particular market through his daily experience.
A Substitute for Market Data
Bureaucrats as well as statist reformers, however, are in a completely different state of affairs. They are decidedly outside the market. Therefore, in order to get "into" the situation that they are trying to plan and reform, they must obtain knowledge that is not personal, day-to-day experience; the only form that such knowledge can take is statistics.[3]
Statistics are the eyes and ears of the bureaucrat, the politician, the socialistic reformer. Only by statistics can they know, or at least have any idea about, what is going on in the economy.[4]
Only by statistics can they find out how many old people have rickets, or how many young people have cavities, or how many Eskimos have defective sealskins — and therefore only by statistics can these interventionists discover who "needs" what throughout the economy, and how much federal money should be channeled in what directions.
The Master Plan
Certainly, only by statistics, can the federal government make even a fitful attempt to plan, regulate, control, or reform various industries — or impose central planning and socialization on the entire economic system. If the government received no railroad statistics, for example, how in the world could it even start to regulate railroad rates, finances, and other affairs? How could the government impose price controls if it didn't even know what goods have been sold on the market, and what prices were prevailing? Statistics, to repeat, are the eyes and ears of the interventionists: of the intellectual reformer, the politician, and the government bureaucrat. Cut off those eyes and ears, destroy those crucial guidelines to knowledge, and the whole threat of government intervention is almost completely eliminated.[5]
It is true, of course, that even deprived of all statistical knowledge of the nation's affairs, the government could still try to intervene, to tax and subsidize, to regulate and control. It could try to subsidize the aged even without having the slightest idea of how many aged there are and where they are located; it could try to regulate an industry without even knowing how many firms there are or any other basic facts of the industry; it could try to regulate the business cycle without even knowing whether prices or business activity are going up or down. It could try, but it would not get very far. The utter chaos would be too patent and too evident even for the bureaucracy, and certainly for the citizens.
Surely, the absence of statistics would absolutely and immediately wreck any attempt at socialistic planning. It is difficult to see what, for example, the central planners at the Kremlin could do to plan the lives of Soviet citizens if the planners were deprived of all information, of all statistical data, about these citizens. The government would not even know to whom to give orders, much less how to try to plan an intricate economy.
Thus, in all the host of measures that have been proposed over the years to check and limit government or to repeal its interventions, the simple and unspectacular abolition of government statistics would probably be the most thorough and most effective. Statistics, so vital to statism, its namesake, is also the State's Achilles' heel.
Notes
[1] Cf. Neil Macneil and Harold W. Metz, The Hoover Report, 1953–1955 (New York: Macmillan, 1956), pp. 90–91; Commission on Organization of the Executive Branch of the Government, Task Force Report on Paperwork Management (Washington: June 1955); and idem, Report on Budgeting and Accounting (Washington: February 1949).
[2] Macneil and Metz, op. cit., pp. 90–91.
[3] On the deficiencies of statistics as compared to the personal knowledge of all participants utilized on the free market, see the illuminating discussion in F.A. Hayek, Individualism and the Economic Order (Chicago: University Press, 1948), Chapter 4. Also see Geoffrey Dobbs, On Planning the Earth (Liverpool: K.R.P. Pubs., 1951), pp. 77–86.
[4] As early as 1863, Samuel B. Ruggles, American delegate to the International Statistical Congress in Berlin, declared: "Statisitics are the very eyes of the statesmen, enabling him to survey and scan with clear and comprehensive vision the whole structure and economy of the body politic." For more on the interrelation of statistics — and statisticians — and the government, see Murray N. Rothbard, "The Politics of Political Economists: Comment," The Quarterly Journal of Economics (November 1960), pp. 659–65. Also see Dobbs, op. cit.
[5] "Government policy depends upon much detailed knowledge about the Nation's employment, production, and purchasing power. The formulation of legislation and administrative progress… Supervision … regulation … and control … must be guided by knowledge of a wide range of relevant facts. Today as never before, statistical data play a major role in the supervision of Government activities. Administrators not only make plans in the light of known facts in their field of interest, but also they must have reports on the actual progress achieved in accomplishing their goals." Reports on Budgeting and Accounting, op. cit., pp. 91–92.
Sunday, April 28, 2013
Chapter 11-The Professor Goes To Washington
Far from the noise of popular celebrations which hailed the hopeful opening of the twentieth century, a small but crucial event occurred in England that seemed straight out of Alice in Wonderland. Sidney Webb induced the Royal Commission of London University to declare economics a science—and once declared so by that August body, it was assumed to be so! On February 20,1900, Beatrice Webb confided to her diary, “This divorce of economies from metaphysics and shoddy history is a great gain,” that is, for the advancement of scientific Socialism in the English-speaking world. She admitted blandly that the coup had been achieved by trickery, through successfully packing the University of London Commission.(1)
In those days science was a word to conjure with and the Webbs were gifted at legerdemain. While attracting little general notice, the Royal Commission’s pronouncement went a long way toward establishing the authority of research and teaching methods pursued with political intent by British Fabians—not only at the little London School of Economies (2) where they ruled supreme, but also at the larger universities of England and America where they were making converts.
Soon other types of social inquiry were invested with the lofty title of “social science” and presumed by a guileless public to be as free as the physical sciences from subjective or doctrinal bias. Thus professors who happened to be Socialists could present propagandist conclusions as though they were laws of nature, determined by “impartial” research. No wonder the British Fabian Socialist, John Atkinson Hobson—who wrote Free Thought in the Social Sciences, pointing out the uses of social psychology as a tool for manipulating the masses—could assert so confidently, if somewhat after the fact, that the future secret weapon of strategy would be the university professor!
More speedily than in England, Hobson’s dictum proved true in the United States, where professors as well as students aspired to become the future rulers of America. All across the continent at the turn of the century, little clusters of college professors had begun studying Socialism in secret, because an open avowal of such interest might have led to their dismissal. Recalling his youth as an instructor at the University of California, Dr. Harry L. Overstreet—long a professor of Philosophy at the City College of New York and sponsor of many Socialist causes—said: “We were studying Socialism [at California] and didn’t want anyone to know we were doing it.” (3)
At the Philadelphia University Extension, a group of self-styled liberals gathered around Woodrow Wilson, professor of Jurisprudence and Political Science at Princeton University. Most of them held regular positions elsewhere, as Wilson did, commuting to Philadelphia (4) to lecture in their free time as a means of augmenting their incomes and improving their extracurricular contacts. Some, like Professor Henry C. Adams and, at a later date, Professor Richard T. Ely, were the acknowledged leaders of academic Socialism in their day.
Others belonging to the Wilson circle were Dr. Albert Shaw, of the Review of Reviews; Professor William Graham Sumner, who explained morality in terms of folkways and tribal taboos, and who helped blur the distinctions between primitive and civilized man to an extent still reflected today in United States foreign policy; and the Reverend William Bayard Hale, editor and correspondent, who had gone to Oxford in 1695 and returned to write The Eternal Teacher, advocating a species of Christian Socialism akin to that of W. D. P. Bliss. They contributed to the University Extension World, which became the American Journal of Sociology; and they brought to the group, if nothing more, an awareness of the municipal politics of Sidney and Beatrice Webb.
With other American intellectuals of British ancestry, they attended summer meetings at Oxford announced in The Citizen (1895-1901), a publication of the Philadelphia University. British extension-type lecturers such as J. Hudson Shaw (better known as Broughman Villiers) and the arch-Fabian Graham Wallas—both of whom also taught at summer sessions in Philadelphia and New York—addressed the visiting scholars. The ancient halls and towers of Oxford provided a mellow setting for spokesmen from the London School of Economics still in its somewhat unpromising infancy. It is remarkable, and certainly a tribute to the Fabian talent for impressing Americans, that so small and ill-favored a nursling, which the London School continued to be for some years, had already gained so large a reputation among leaders of liberal thought in the United States.
Even after he became president of Princeton University in 1902 and could no longer participate actively in the work of tho Philadelphia University Extension, Woodrow Wilson continued to take a lively interest in that little backwater of academic ferment. New personalities appeared there from time to time whose interest in national politics was undisguised. Among them were William T. Harrison, United States Commissioner of Education under Theodore Roosevelt, and Columbia University’s chief political economist, Dr. E. R. A. Seligman, one of the earliest to perceive the presidential possibilities of Woodrow Wilson.
There was also Lincoln Steffens, who wrote “The Shame of the Cities” for McClure’s Magazine—a series purporting to expose corruption and poverty in American cities and suggested by the Fabian tract, “Facts for Londoners.” An early article in the New England Magazine (June, 1894) by the migrant British Fabian William A. Clarke had quoted the poet Shelley as saying, “Hell is a city very much like London,” and remarked that Shelley was unfair to Hell. The same Manichean spirit pervaded Steffens’ work, though expressed in the astringent journalistic style, known as muckraking, then coming into vogue. For a dozen years Fabian-type “fact finding” in a popular vein—practiced not only by outspoken Socialists like Lincoln Steffens and Upton Sinclair, but by such skilled reporters as Ray Stannard Baker and Ida Tarbell, who only leaned toward Socialism—enjoyed a field day in the American press.
In a period when Fabian Socialists were devoting themselves to penetration and permeation of the Liberal Party in England, a mixed bag of professors and publicists who had borrowed the liberal label prepared the way for a similar parasitic development in the United States. To a greater or lesser degree, they had been touched by Socialist ideas—a condition unsuspected by the general run of Americans. Within a surprisingly short time, Dr. Woodrow Wilson, the professors’ choice, became the Democratic Party’s candidate for the Presidency of the United States. He was elected due to a split in Republican ranks, fomented in part by old-fashioned patriots, in part by Eastern liberals and Midwestern progressives.
Immediately after Wilson’s election, the United States Department of Labor was established. It absorbed the old Bureau of Labor, now the Bureau of Labor Statistics. The Bureau furnished, like the factory inspectors’ reports in England, facts and figures Socialists have utilized to advantage for agitation and propaganda purposes. The Bureau of Labor Statistics is known today chiefly as the oracular source of the monthly Consumer Price Index, to which the “escalator-clause” in many modern union contracts is tied and which assures an overall, if gradual, inflationary spiral.
That move to consolidate Federal labor agencies in Washington had been promoted by the Fabian W. D. P. Bliss, who became a Bureau of Labor investigator in 1907, the first of a flock of Socialist bureaucrats who have quietly roosted in the Department of Labor ever since. The wide and variegated connections enjoyed by Bliss were evident in the list of contributors to his New Encyclopedia of Social Reform, published by Funk and Wagnalls in 1908. There the names of well-known British Fabians (Percy Alden, M.P., Right Honorable John Burns, Sidney Webb, Edward R. Pease) and leading American Socialists of the day (Professors E. W. Bemis and F. H. Giddings, Morris Hillquit, Robert Hunter, Upton Sinclair) appeared side by side with names of such eminent non-Socialists as Samuel Gompers, Honorable Oscar Straus, Booker T. Washington and Cardinal Gibbons.
Under the Wilson Administration still another long-desired Fabian Socialist objective became a reality: the income tax, which was super-imposed on the older and kindlier American tradition of indirect taxation. Originally proposed by Karl Marx in the Communist Manifesto, a heavily graduated income tax had been urged by American Fabian Leaguers as well as by their mentors of the London Fabian Society. Twice branded unconstitutional by the United States Supreme Court, it was finally legalized by pushing through the Sixteenth Amendment to the Constitution after the outbreak of World War I— at a time when distracting questions of foreign policy were uppermost in the public mind. The income tax became law in 1918, just in time to help pay for the war, a war out of which Woodrow Wilson had vowed to keep the country. Feather light at the beginning, like the “Old Man of the Sea” it has proved a progressively heavier burden upon the shoulders of an entire people—as well as a subtle political device for altering the basic economy and social structure of the nation.
While Woodrow Wilson could not actually be named a Socialist, he was the first Chief Executive of the United States to accept Socialist-minded intellectuals as aides and advisers and to present Fabian Socialist programs as his own. His book, The New Freedom, was an early attempt to equate the Democratic Party with a strange new concept of democracy which mirrored the Industrial or Social Democracy of the British Fabians. As he admitted in the preface, with a frankness seldom matched today, he did not write the book at all.5 It was compiled by a former colleague of the Philadelphia University Extension days, the Christian Socialist William Bayard Hale, on the basis of Wilson’s 1912 campaign speeches.
From first to last, The New Freedom denounced capitalism as being contrary to the interests of the common man. Justice, not charity, was its theme. Somewhat quaintly, it identified the captains of industry of the day with the trustees of Princeton University who seemed to have given Dr. Wilson a hard time during his presidency of that institution. Opening with the bleak assertion (reiterated by Wilson’s political successors during half a century of unparalleled industrial growth) that the American economy was stagnant and individual opportunity was dead, it stated:
“We stand in the presence of a revolution—not a bloody revolution, America is not given to spiring of blood—but a silent revolution, whereby America will insist upon recovering in practice those ideals which she has always professed, upon securing a government devoted to the general and not to special interests.” (6)
And it concluded with the premature but eerie prediction:
“. . . We are just upon the threshold of a time when the systematic life of this country will be sustained, or at least supplemented, at every point by government activity. And we have now to determine what kind of governmental activity it shall be; whether, in the first place, it shall be direct from the government itself, or whether it shall be indirect, through instrumentalities which have already constituted themselves and which stand ready to supersede the government.”(7)
The instrumentalities referred to by Wilson were large industrial and financial concerns, headed by the United States Steel Corporation and J. P. Morgan and Company, which according to the Socialist demonology of the period constituted a kind of invisible government. Whatever instrumentalities may stand ready to supersede the American Government today are internationalist in character and Fabian Socialist-directed; and it was in Wilson’s time that such left wing groups made their first tentative efforts to grasp power in the United States by exerting influence over the Chief Executive.
As Bellamy had done, The New Freedom called for “a new declaration of independence.” (8) It deplored the system of checks and balances in government, devised by well-meaning but sadly outdated Founding Fathers, and demanded an “evolutionary” interpretation of the Constitution, as well as sweeping changes in the Judiciary. “Development” and “evolution” were the “new scientific watchwords.”(9)
Having been a teacher of law in its political aspects, Wilson found the judicial outlook of Louis D. Brandeis, Harvard Law School professor, highly congenial. Brandeis was the author of the historic “Brandeis Brief,” which ushered in a whole new phase of constitutional law based more on sociological than legal interpretations. He was a frequent caller at the White House during the first Wilson Administration, when others found it difficult to see the President. Together with the Progressive Senator La Follette of Wisconsin, he plied Wilson liberally with advice and information.(10)
Brandeis had read and greatly admired Wealth Against Commonwealth by Henry Demarest Lloyd of the American Fabian League. (11) In fact, it was through Lloyd that Brandeis was asked to serve on a panel of lawyers to present the miners’ case before Theodore Roosevelt’s Anthracite Coal Commission of 1902. For a time, American Fabians and their “liberal” satellites had hoped to advance their cause through the “New Nationalism” of the first President Roosevelt. But they found that Roosevelt’s interest in genuinely needed regulation and reforms stopped short of tampering with the Constitution.
The Harvard jurist was a close friend of Florence Kelley, of the National Consumers League,(12) whose activities in behalf of working-class women and children demonstrated dramatically how middle class Socialists in the early nineteen-hundreds managed to capture the momentum of legitimate reform drives for their own far-flung ends. Brandeis was for years a neighbor of Elizabeth Glendower Evans, Socialist hostess and financial angel with whom Florence Kelley’s daughter lived while studying at Radcliffe. When the Oregon Ten Hour Law for Women was due for a test before the Supreme Court, Florence Kelley enlisted the services of Brandeis.
His niece, Josephine Goldmark—aide and biographer of Florence Kelley—has described the circumstances under which the now-famous Brandeis Brief was prepared in 1907.(13) For two hectic weeks Josephine Goldmark and Florence Kelley assembled and sifted a huge mass of statistics, reports and precedents from foreign lands, hastily supplied by Socialist researchers. The result was something new in legal presentations, with a mere page and a half of legal argument attached to many pages of carefully slanted social and economic research, which the honorable Justices were scarcely equipped by training or experience to evaluate. Termed revolutionary at the time, this method (based on a novel concept of “juridical notice”) has by now become standard practice and serves, at least in part, to explain some otherwise teaming Supreme Court decisions of recent years.
Significantly, Woodrow Wilson named Louis D. Brandeis, nominally a Progressive Republican, to the Supreme Court in 1915, where he continued to work for liberalization of the Constitution. His appointment was bitterly contested in the Senate, along with the appointment of a former Harvard Law School instructor and fellow Progressive, George Rublee, to the Federal Trade Commission. Born in Wisconsin, Rublee was a polished product of both Groton and Harvard. His vacations in Cornish, New Hampshire, dated from an era when visitors to Washington, who had tried and failed to reach the President, complained: “Wilson stays in Cornish and communes with God.”(14) During the summer of 1914, Wilson occupied the spacious red brick home of the American novelist, Winston Churchill, in Cornish, while the chief presidential adviser, Colonel Edward M. House, resided in nearby Manchester.
Members of the discreet summer colony which developed in Cornish and survived for decades included Edward Burling, Sr., Rublee’s colleague on the World War I Shipping Board, and his partner in a Washington law firm that specialized in hiring Harvard alumni who had been law clerks in Justice Brandeis’ office. Cornish familiars also included Philip Littell, later an editor of the liberal-Fabian weekly, the New Republic; and the very personable Professor Robert Morss Lovett, who was to serve as the leading front man for revived American Fabian Socialist organizations after World War I. (15) Some wintered at the Turtle Bay colony in Manhattan.
All had been honor students at Harvard together in the late eighteen-eighties and early eighteen-nineties when Bellamy’s Nationalism, adorned with touches of John Ruskin and William Morris, captivated young campus intellectuals. The old school tie endured, and in a rarefied, profitable and mysterious fashion, certain of its wearers permeated the highest circles in Washington politics and New York finance—particularly after a third partner in the Burling-Rublee law firm, Dean Acheson, became Under Secretary of the Treasury and Secretary of State in later Administrations.
Still another member of that long-lived Harvard group was Thomas W. Lamont, Sr.—affectionately known to old college chums as “Tommy”—who never ceased to be impressed by the superior wisdom of George Rublee, an upperclassman when Lamont was a sophomore. From financial reporter on a New Jersey newspaper, Lamont rose to become a senior partner of J. P. Morgan and Company, in the dismantlement of which he eventually assisted. In 1933 Lamont signed the so-called Bankers’ Report advocating diplomatic recognition of Soviet Russia.
As President of the United States, Woodrow Wilson did not hesitate to name outspoken Socialists to obscure but critical posts in government A case in point was Fred C. Howe, Wilson’s Commissioner of Immigration at the Port of New York. A writer and lecturer by profession, Howe resigned after a congressional investigation into alleged neglect of duty, in connection with his unauthorized action in releasing alien radicals held for deportation by the Department of Justice.(16) Both before and after the incident, he figured prominently in a number of Socialist-dominated organizations. (17)
Wilson had also sent the Christian Socialist William Bayard Hale (18) as his special representative to revolution-torn Mexico in 1913-14, instituting a species of presidential diplomacy which has since become almost routine. In Mexico Wilson received private reports both from Hale and from another erstwhile lecturer at the Philadelphia University Extension, Lincoln Steffens, who was in Vera Cruz to attend a Socialist conference in 1914. Those reports helped to effect some curious results, including support and eventual recognition of the junta of General Venustiano Carranza, at a time when the latter controlled no more than ninety square kilometers in all Mexico and when his councils were deeply infiltrated by agents of German Military Intelligence.
In 1940-41 the writer of this book was permitted to examine the Woodrow Wilson Papers in the Library of Congress. A folder relating to Mexico contained a personal letter from Secretary of State Robert Lansing commenting on Wilson’s preference for soliciting amateur advice often contrary to the observations of seasoned and responsible officials.
Recent hearings before the Senate Subcommittee on Internal Security disclosed that, in a more recent Latin American crisis, diplomatic policies of the United States, which placed and have maintained Fidel Castro in power, were similarly instigated by reports from a “liberal,” journalist, Herbert L. Matthews, of The New York Times. Meanwhile, well-founded advance warnings by professional diplomats, concerning Castro’s long-standing Moscow ties, were ignored or suppressed.(19) Compounding that folly, plans for the ill-starred Bay of Pigs invasion were entrusted to amateurs under presidential supervision rather than to military technicians. So, from all indications, history repeats itself; and the same brand of Socialist-suggested ineptitude as practiced by President Wilson, has once more invited penetration of the Western Hemisphere by a European military power.
Footnotes
1. Beatrice Webb, Our Partnership (London, Longmans, Green & Co., Ltd., 1948), p. 195.
2. In 1895, five years after its founding, the London School of Economics, then occupying two rooms in Adelphi, boasted exactly eight registered students and two lecturers. One of these instructors was the Director, W. A. S. Hewins, who voiced conservative views on economics but faithfully followed Sidney Webb’s lead in matters of organization. The other was the radical Graham Wallas, whose field was politics. Max Beer, Fifty Years of International Socialism (London, Allen & Unwin, 19350, pp. 83-83.
3. Forty Years of Education (New York, League for Industrial Democracy, 1945), pp. 46-47.
4. From 1893 to 1898 the Nationalists continued to maintain their “Bureau of Nationalist Literature” in Philadelphia, which distributed Bellamy’s speeches and Looking Backward, and Professor Frank Parsons’ Public Ownership of Monopolies and Philosophy of Mutualism–all known to Woodrow Wilson. Sylvia E. Bowman, The Year 2000–A Critical Biography of Edward Bellamy (New York, Bookman Associates, 1958), p. 136.
5. Woodrow Wilson, The New Freedom, A Call for the Emancipation of the Generous Energies of a People (New York, Doubleday, Page & Co., 1913), p. vii.
6. Ibid., p. 30.
7. Ibid., p. 217.
8. Ibid., pp. 48-49.
9. Ibid., pp. 4247.
10. Ray Stannard Baker, An American Chronicle (New York, Charles Scribner’s Sons, 1945), p. 276. Wilson later excoriated Senator La Follette as one of “a little group of wilful men” for his continued opposition to United States participation in World War I, even after war had been declared.
11. Josephine Goldmark, Impatient Crusader, Florence Kelley’s Life Story. (Urbana, University of Illinois Press, 1953), p. 153.
12. Florence Kelley, who called herself a Marxist, had been a Nationalist and an American Fabian. She later served as president of the Intercollegiate Socialist Society, and vice president of the League for Industrial Democracy, affiliates of the London Fabian Society. See Appendix II.
13. Goldmark, op. cit., pp. 143-159. On page 159, Miss Goldmark states: “The Brandeis Brief in the Muller case, reprinted together with Judge Brewer’s opinion, was in great demand from law schools and universities as well as from labor unions and libraries . . . Gone was the deadening weight of legal precedent.”
14. Baker, loc. cit., p. 276.
15. To the end of his life, Professor Lovett was the house guest of Edward Burling, Sr., when visiting Washington.
16. Record of the Sixty Sixth Congress (Washington, U. S. Government Printing Office, 1919), pp. 1522-23.
17. Railway Review, Chicago (January 27, 1923). “Fred C. Howe, New York City; National Committee, American Civil Liberties Union; special writer, Federated Press; . . . chairman, committee on resolutions and member of National Council, Peoples’ Legislative Service; contributing editor, Labor Age; Defense Committee, I. W. W.; organizer, School of Thought, Siasconset, Nantucket, Mass.” Howe was also a director of the League for Industrial Democracy. See Appendix II.
18. A telegram of June, 1916, from the German Ambassador in Washington to the German Foreign Office, furnished by the United States Department of State and presented by Bruce Bielaski testifying before the Senate Subcommittee on the Judiciary on December 6, 1918, revealed that from the outset of World War I William Bayard Hale held a contract extending until June 23, 1918, as a confidential agent of the German Foreign Office at a salary of $15,000 per year. Subsequently he went to Germany as correspondent for an American press service which, as the telegram also reveals, was not aware of Hale’s connection with the German Government. He returned to America following the entry of the United States into World War I. Senate Document No. 672, 66th Congress. Report and Hearings of the Subcommittee on the Judiciary, United States Senate (Washington, U. S. Government Printing Office, 1919), Vol. II, pp. 1393-94.
19. Hearings before the Subcommittee to Investigate the Administration of the Internal Security Act and Other Internal Security Laws of the Committee on the Judiciary, United States Senate. (Washington, U. S. Government Printing Office, 1962), 87th Congress, Part 5 (January 9, February 8, 1961. February 2, 1962). Testimony of William Wieland, pp. 485-681, Part 13 (July 13, 1962). Testimony of Whiting Willauer, pp. 861-888.
In those days science was a word to conjure with and the Webbs were gifted at legerdemain. While attracting little general notice, the Royal Commission’s pronouncement went a long way toward establishing the authority of research and teaching methods pursued with political intent by British Fabians—not only at the little London School of Economies (2) where they ruled supreme, but also at the larger universities of England and America where they were making converts.
Soon other types of social inquiry were invested with the lofty title of “social science” and presumed by a guileless public to be as free as the physical sciences from subjective or doctrinal bias. Thus professors who happened to be Socialists could present propagandist conclusions as though they were laws of nature, determined by “impartial” research. No wonder the British Fabian Socialist, John Atkinson Hobson—who wrote Free Thought in the Social Sciences, pointing out the uses of social psychology as a tool for manipulating the masses—could assert so confidently, if somewhat after the fact, that the future secret weapon of strategy would be the university professor!
More speedily than in England, Hobson’s dictum proved true in the United States, where professors as well as students aspired to become the future rulers of America. All across the continent at the turn of the century, little clusters of college professors had begun studying Socialism in secret, because an open avowal of such interest might have led to their dismissal. Recalling his youth as an instructor at the University of California, Dr. Harry L. Overstreet—long a professor of Philosophy at the City College of New York and sponsor of many Socialist causes—said: “We were studying Socialism [at California] and didn’t want anyone to know we were doing it.” (3)
At the Philadelphia University Extension, a group of self-styled liberals gathered around Woodrow Wilson, professor of Jurisprudence and Political Science at Princeton University. Most of them held regular positions elsewhere, as Wilson did, commuting to Philadelphia (4) to lecture in their free time as a means of augmenting their incomes and improving their extracurricular contacts. Some, like Professor Henry C. Adams and, at a later date, Professor Richard T. Ely, were the acknowledged leaders of academic Socialism in their day.
Others belonging to the Wilson circle were Dr. Albert Shaw, of the Review of Reviews; Professor William Graham Sumner, who explained morality in terms of folkways and tribal taboos, and who helped blur the distinctions between primitive and civilized man to an extent still reflected today in United States foreign policy; and the Reverend William Bayard Hale, editor and correspondent, who had gone to Oxford in 1695 and returned to write The Eternal Teacher, advocating a species of Christian Socialism akin to that of W. D. P. Bliss. They contributed to the University Extension World, which became the American Journal of Sociology; and they brought to the group, if nothing more, an awareness of the municipal politics of Sidney and Beatrice Webb.
With other American intellectuals of British ancestry, they attended summer meetings at Oxford announced in The Citizen (1895-1901), a publication of the Philadelphia University. British extension-type lecturers such as J. Hudson Shaw (better known as Broughman Villiers) and the arch-Fabian Graham Wallas—both of whom also taught at summer sessions in Philadelphia and New York—addressed the visiting scholars. The ancient halls and towers of Oxford provided a mellow setting for spokesmen from the London School of Economics still in its somewhat unpromising infancy. It is remarkable, and certainly a tribute to the Fabian talent for impressing Americans, that so small and ill-favored a nursling, which the London School continued to be for some years, had already gained so large a reputation among leaders of liberal thought in the United States.
Even after he became president of Princeton University in 1902 and could no longer participate actively in the work of tho Philadelphia University Extension, Woodrow Wilson continued to take a lively interest in that little backwater of academic ferment. New personalities appeared there from time to time whose interest in national politics was undisguised. Among them were William T. Harrison, United States Commissioner of Education under Theodore Roosevelt, and Columbia University’s chief political economist, Dr. E. R. A. Seligman, one of the earliest to perceive the presidential possibilities of Woodrow Wilson.
There was also Lincoln Steffens, who wrote “The Shame of the Cities” for McClure’s Magazine—a series purporting to expose corruption and poverty in American cities and suggested by the Fabian tract, “Facts for Londoners.” An early article in the New England Magazine (June, 1894) by the migrant British Fabian William A. Clarke had quoted the poet Shelley as saying, “Hell is a city very much like London,” and remarked that Shelley was unfair to Hell. The same Manichean spirit pervaded Steffens’ work, though expressed in the astringent journalistic style, known as muckraking, then coming into vogue. For a dozen years Fabian-type “fact finding” in a popular vein—practiced not only by outspoken Socialists like Lincoln Steffens and Upton Sinclair, but by such skilled reporters as Ray Stannard Baker and Ida Tarbell, who only leaned toward Socialism—enjoyed a field day in the American press.
In a period when Fabian Socialists were devoting themselves to penetration and permeation of the Liberal Party in England, a mixed bag of professors and publicists who had borrowed the liberal label prepared the way for a similar parasitic development in the United States. To a greater or lesser degree, they had been touched by Socialist ideas—a condition unsuspected by the general run of Americans. Within a surprisingly short time, Dr. Woodrow Wilson, the professors’ choice, became the Democratic Party’s candidate for the Presidency of the United States. He was elected due to a split in Republican ranks, fomented in part by old-fashioned patriots, in part by Eastern liberals and Midwestern progressives.
Immediately after Wilson’s election, the United States Department of Labor was established. It absorbed the old Bureau of Labor, now the Bureau of Labor Statistics. The Bureau furnished, like the factory inspectors’ reports in England, facts and figures Socialists have utilized to advantage for agitation and propaganda purposes. The Bureau of Labor Statistics is known today chiefly as the oracular source of the monthly Consumer Price Index, to which the “escalator-clause” in many modern union contracts is tied and which assures an overall, if gradual, inflationary spiral.
That move to consolidate Federal labor agencies in Washington had been promoted by the Fabian W. D. P. Bliss, who became a Bureau of Labor investigator in 1907, the first of a flock of Socialist bureaucrats who have quietly roosted in the Department of Labor ever since. The wide and variegated connections enjoyed by Bliss were evident in the list of contributors to his New Encyclopedia of Social Reform, published by Funk and Wagnalls in 1908. There the names of well-known British Fabians (Percy Alden, M.P., Right Honorable John Burns, Sidney Webb, Edward R. Pease) and leading American Socialists of the day (Professors E. W. Bemis and F. H. Giddings, Morris Hillquit, Robert Hunter, Upton Sinclair) appeared side by side with names of such eminent non-Socialists as Samuel Gompers, Honorable Oscar Straus, Booker T. Washington and Cardinal Gibbons.
Under the Wilson Administration still another long-desired Fabian Socialist objective became a reality: the income tax, which was super-imposed on the older and kindlier American tradition of indirect taxation. Originally proposed by Karl Marx in the Communist Manifesto, a heavily graduated income tax had been urged by American Fabian Leaguers as well as by their mentors of the London Fabian Society. Twice branded unconstitutional by the United States Supreme Court, it was finally legalized by pushing through the Sixteenth Amendment to the Constitution after the outbreak of World War I— at a time when distracting questions of foreign policy were uppermost in the public mind. The income tax became law in 1918, just in time to help pay for the war, a war out of which Woodrow Wilson had vowed to keep the country. Feather light at the beginning, like the “Old Man of the Sea” it has proved a progressively heavier burden upon the shoulders of an entire people—as well as a subtle political device for altering the basic economy and social structure of the nation.
While Woodrow Wilson could not actually be named a Socialist, he was the first Chief Executive of the United States to accept Socialist-minded intellectuals as aides and advisers and to present Fabian Socialist programs as his own. His book, The New Freedom, was an early attempt to equate the Democratic Party with a strange new concept of democracy which mirrored the Industrial or Social Democracy of the British Fabians. As he admitted in the preface, with a frankness seldom matched today, he did not write the book at all.5 It was compiled by a former colleague of the Philadelphia University Extension days, the Christian Socialist William Bayard Hale, on the basis of Wilson’s 1912 campaign speeches.
From first to last, The New Freedom denounced capitalism as being contrary to the interests of the common man. Justice, not charity, was its theme. Somewhat quaintly, it identified the captains of industry of the day with the trustees of Princeton University who seemed to have given Dr. Wilson a hard time during his presidency of that institution. Opening with the bleak assertion (reiterated by Wilson’s political successors during half a century of unparalleled industrial growth) that the American economy was stagnant and individual opportunity was dead, it stated:
“We stand in the presence of a revolution—not a bloody revolution, America is not given to spiring of blood—but a silent revolution, whereby America will insist upon recovering in practice those ideals which she has always professed, upon securing a government devoted to the general and not to special interests.” (6)
And it concluded with the premature but eerie prediction:
“. . . We are just upon the threshold of a time when the systematic life of this country will be sustained, or at least supplemented, at every point by government activity. And we have now to determine what kind of governmental activity it shall be; whether, in the first place, it shall be direct from the government itself, or whether it shall be indirect, through instrumentalities which have already constituted themselves and which stand ready to supersede the government.”(7)
The instrumentalities referred to by Wilson were large industrial and financial concerns, headed by the United States Steel Corporation and J. P. Morgan and Company, which according to the Socialist demonology of the period constituted a kind of invisible government. Whatever instrumentalities may stand ready to supersede the American Government today are internationalist in character and Fabian Socialist-directed; and it was in Wilson’s time that such left wing groups made their first tentative efforts to grasp power in the United States by exerting influence over the Chief Executive.
As Bellamy had done, The New Freedom called for “a new declaration of independence.” (8) It deplored the system of checks and balances in government, devised by well-meaning but sadly outdated Founding Fathers, and demanded an “evolutionary” interpretation of the Constitution, as well as sweeping changes in the Judiciary. “Development” and “evolution” were the “new scientific watchwords.”(9)
Having been a teacher of law in its political aspects, Wilson found the judicial outlook of Louis D. Brandeis, Harvard Law School professor, highly congenial. Brandeis was the author of the historic “Brandeis Brief,” which ushered in a whole new phase of constitutional law based more on sociological than legal interpretations. He was a frequent caller at the White House during the first Wilson Administration, when others found it difficult to see the President. Together with the Progressive Senator La Follette of Wisconsin, he plied Wilson liberally with advice and information.(10)
Brandeis had read and greatly admired Wealth Against Commonwealth by Henry Demarest Lloyd of the American Fabian League. (11) In fact, it was through Lloyd that Brandeis was asked to serve on a panel of lawyers to present the miners’ case before Theodore Roosevelt’s Anthracite Coal Commission of 1902. For a time, American Fabians and their “liberal” satellites had hoped to advance their cause through the “New Nationalism” of the first President Roosevelt. But they found that Roosevelt’s interest in genuinely needed regulation and reforms stopped short of tampering with the Constitution.
The Harvard jurist was a close friend of Florence Kelley, of the National Consumers League,(12) whose activities in behalf of working-class women and children demonstrated dramatically how middle class Socialists in the early nineteen-hundreds managed to capture the momentum of legitimate reform drives for their own far-flung ends. Brandeis was for years a neighbor of Elizabeth Glendower Evans, Socialist hostess and financial angel with whom Florence Kelley’s daughter lived while studying at Radcliffe. When the Oregon Ten Hour Law for Women was due for a test before the Supreme Court, Florence Kelley enlisted the services of Brandeis.
His niece, Josephine Goldmark—aide and biographer of Florence Kelley—has described the circumstances under which the now-famous Brandeis Brief was prepared in 1907.(13) For two hectic weeks Josephine Goldmark and Florence Kelley assembled and sifted a huge mass of statistics, reports and precedents from foreign lands, hastily supplied by Socialist researchers. The result was something new in legal presentations, with a mere page and a half of legal argument attached to many pages of carefully slanted social and economic research, which the honorable Justices were scarcely equipped by training or experience to evaluate. Termed revolutionary at the time, this method (based on a novel concept of “juridical notice”) has by now become standard practice and serves, at least in part, to explain some otherwise teaming Supreme Court decisions of recent years.
Significantly, Woodrow Wilson named Louis D. Brandeis, nominally a Progressive Republican, to the Supreme Court in 1915, where he continued to work for liberalization of the Constitution. His appointment was bitterly contested in the Senate, along with the appointment of a former Harvard Law School instructor and fellow Progressive, George Rublee, to the Federal Trade Commission. Born in Wisconsin, Rublee was a polished product of both Groton and Harvard. His vacations in Cornish, New Hampshire, dated from an era when visitors to Washington, who had tried and failed to reach the President, complained: “Wilson stays in Cornish and communes with God.”(14) During the summer of 1914, Wilson occupied the spacious red brick home of the American novelist, Winston Churchill, in Cornish, while the chief presidential adviser, Colonel Edward M. House, resided in nearby Manchester.
Members of the discreet summer colony which developed in Cornish and survived for decades included Edward Burling, Sr., Rublee’s colleague on the World War I Shipping Board, and his partner in a Washington law firm that specialized in hiring Harvard alumni who had been law clerks in Justice Brandeis’ office. Cornish familiars also included Philip Littell, later an editor of the liberal-Fabian weekly, the New Republic; and the very personable Professor Robert Morss Lovett, who was to serve as the leading front man for revived American Fabian Socialist organizations after World War I. (15) Some wintered at the Turtle Bay colony in Manhattan.
All had been honor students at Harvard together in the late eighteen-eighties and early eighteen-nineties when Bellamy’s Nationalism, adorned with touches of John Ruskin and William Morris, captivated young campus intellectuals. The old school tie endured, and in a rarefied, profitable and mysterious fashion, certain of its wearers permeated the highest circles in Washington politics and New York finance—particularly after a third partner in the Burling-Rublee law firm, Dean Acheson, became Under Secretary of the Treasury and Secretary of State in later Administrations.
Still another member of that long-lived Harvard group was Thomas W. Lamont, Sr.—affectionately known to old college chums as “Tommy”—who never ceased to be impressed by the superior wisdom of George Rublee, an upperclassman when Lamont was a sophomore. From financial reporter on a New Jersey newspaper, Lamont rose to become a senior partner of J. P. Morgan and Company, in the dismantlement of which he eventually assisted. In 1933 Lamont signed the so-called Bankers’ Report advocating diplomatic recognition of Soviet Russia.
As President of the United States, Woodrow Wilson did not hesitate to name outspoken Socialists to obscure but critical posts in government A case in point was Fred C. Howe, Wilson’s Commissioner of Immigration at the Port of New York. A writer and lecturer by profession, Howe resigned after a congressional investigation into alleged neglect of duty, in connection with his unauthorized action in releasing alien radicals held for deportation by the Department of Justice.(16) Both before and after the incident, he figured prominently in a number of Socialist-dominated organizations. (17)
Wilson had also sent the Christian Socialist William Bayard Hale (18) as his special representative to revolution-torn Mexico in 1913-14, instituting a species of presidential diplomacy which has since become almost routine. In Mexico Wilson received private reports both from Hale and from another erstwhile lecturer at the Philadelphia University Extension, Lincoln Steffens, who was in Vera Cruz to attend a Socialist conference in 1914. Those reports helped to effect some curious results, including support and eventual recognition of the junta of General Venustiano Carranza, at a time when the latter controlled no more than ninety square kilometers in all Mexico and when his councils were deeply infiltrated by agents of German Military Intelligence.
In 1940-41 the writer of this book was permitted to examine the Woodrow Wilson Papers in the Library of Congress. A folder relating to Mexico contained a personal letter from Secretary of State Robert Lansing commenting on Wilson’s preference for soliciting amateur advice often contrary to the observations of seasoned and responsible officials.
Recent hearings before the Senate Subcommittee on Internal Security disclosed that, in a more recent Latin American crisis, diplomatic policies of the United States, which placed and have maintained Fidel Castro in power, were similarly instigated by reports from a “liberal,” journalist, Herbert L. Matthews, of The New York Times. Meanwhile, well-founded advance warnings by professional diplomats, concerning Castro’s long-standing Moscow ties, were ignored or suppressed.(19) Compounding that folly, plans for the ill-starred Bay of Pigs invasion were entrusted to amateurs under presidential supervision rather than to military technicians. So, from all indications, history repeats itself; and the same brand of Socialist-suggested ineptitude as practiced by President Wilson, has once more invited penetration of the Western Hemisphere by a European military power.
Footnotes
1. Beatrice Webb, Our Partnership (London, Longmans, Green & Co., Ltd., 1948), p. 195.
2. In 1895, five years after its founding, the London School of Economics, then occupying two rooms in Adelphi, boasted exactly eight registered students and two lecturers. One of these instructors was the Director, W. A. S. Hewins, who voiced conservative views on economics but faithfully followed Sidney Webb’s lead in matters of organization. The other was the radical Graham Wallas, whose field was politics. Max Beer, Fifty Years of International Socialism (London, Allen & Unwin, 19350, pp. 83-83.
3. Forty Years of Education (New York, League for Industrial Democracy, 1945), pp. 46-47.
4. From 1893 to 1898 the Nationalists continued to maintain their “Bureau of Nationalist Literature” in Philadelphia, which distributed Bellamy’s speeches and Looking Backward, and Professor Frank Parsons’ Public Ownership of Monopolies and Philosophy of Mutualism–all known to Woodrow Wilson. Sylvia E. Bowman, The Year 2000–A Critical Biography of Edward Bellamy (New York, Bookman Associates, 1958), p. 136.
5. Woodrow Wilson, The New Freedom, A Call for the Emancipation of the Generous Energies of a People (New York, Doubleday, Page & Co., 1913), p. vii.
6. Ibid., p. 30.
7. Ibid., p. 217.
8. Ibid., pp. 48-49.
9. Ibid., pp. 4247.
10. Ray Stannard Baker, An American Chronicle (New York, Charles Scribner’s Sons, 1945), p. 276. Wilson later excoriated Senator La Follette as one of “a little group of wilful men” for his continued opposition to United States participation in World War I, even after war had been declared.
11. Josephine Goldmark, Impatient Crusader, Florence Kelley’s Life Story. (Urbana, University of Illinois Press, 1953), p. 153.
12. Florence Kelley, who called herself a Marxist, had been a Nationalist and an American Fabian. She later served as president of the Intercollegiate Socialist Society, and vice president of the League for Industrial Democracy, affiliates of the London Fabian Society. See Appendix II.
13. Goldmark, op. cit., pp. 143-159. On page 159, Miss Goldmark states: “The Brandeis Brief in the Muller case, reprinted together with Judge Brewer’s opinion, was in great demand from law schools and universities as well as from labor unions and libraries . . . Gone was the deadening weight of legal precedent.”
14. Baker, loc. cit., p. 276.
15. To the end of his life, Professor Lovett was the house guest of Edward Burling, Sr., when visiting Washington.
16. Record of the Sixty Sixth Congress (Washington, U. S. Government Printing Office, 1919), pp. 1522-23.
17. Railway Review, Chicago (January 27, 1923). “Fred C. Howe, New York City; National Committee, American Civil Liberties Union; special writer, Federated Press; . . . chairman, committee on resolutions and member of National Council, Peoples’ Legislative Service; contributing editor, Labor Age; Defense Committee, I. W. W.; organizer, School of Thought, Siasconset, Nantucket, Mass.” Howe was also a director of the League for Industrial Democracy. See Appendix II.
18. A telegram of June, 1916, from the German Ambassador in Washington to the German Foreign Office, furnished by the United States Department of State and presented by Bruce Bielaski testifying before the Senate Subcommittee on the Judiciary on December 6, 1918, revealed that from the outset of World War I William Bayard Hale held a contract extending until June 23, 1918, as a confidential agent of the German Foreign Office at a salary of $15,000 per year. Subsequently he went to Germany as correspondent for an American press service which, as the telegram also reveals, was not aware of Hale’s connection with the German Government. He returned to America following the entry of the United States into World War I. Senate Document No. 672, 66th Congress. Report and Hearings of the Subcommittee on the Judiciary, United States Senate (Washington, U. S. Government Printing Office, 1919), Vol. II, pp. 1393-94.
19. Hearings before the Subcommittee to Investigate the Administration of the Internal Security Act and Other Internal Security Laws of the Committee on the Judiciary, United States Senate. (Washington, U. S. Government Printing Office, 1962), 87th Congress, Part 5 (January 9, February 8, 1961. February 2, 1962). Testimony of William Wieland, pp. 485-681, Part 13 (July 13, 1962). Testimony of Whiting Willauer, pp. 861-888.