Chapter 18-Secret Weaponry

There was another secret weapon valued more highly than the atom bomb by Anglo-American Fabians of the New Deal era. Namely, the university professor, who, as the British Fabian Socialist philosopher, John Atkinson Hobson, had suggested was to be the future secret weapon of national strategy. A familiar of Justice Louis D. Brandeis and of the latter’s protégée, Felix Frankfurter, Hobson merely pointed up a trend that had been gaining momentum in America since the turn of the century. With the Roosevelt Administration, the liberal-to-Left professor moved into his prescribed orbit as the planner and guide of national policies based on Fabian research, which officials and politicians would trigger.
A trio of university professors played a major part in shaping the seemingly impromptu social, fiscal, legal and diplomatic strategy of the Roosevelt Administration and other Democrat administrations to follow. Two were British nationals, closely identified with the Fabian Society of London. The third was an American citizen of European origin who had helped to found organizations in this country known to be affiliates of the (Fabian Socialist) League for Industrial Democracy, (1) and who had been rebuked by former President Theodore Roosevelt, for his radical bias, as displayed in a government report.
All three were equally at home in the lecture halls of England and the United States; and though they held forth in many localities, all left a particular imprint on Harvard University. They were brilliant conversationalists, tireless letter writers and mental gymnasts of the first order, with a talent for gaining the ear of important persons and a calculated appeal to youth that has caused their influence to outlast their times. Their names were Felix Frankfurter, Harold J. Laski and John Maynard Keynes.
It has been admitted by New Deal insiders that FDR privately agreed, more than a year before becoming President, to sponsor the Tennessee Valley Authority project; the Agricultural Adjustment, Public Works and Conservation programs; Securities Exchange and Holding Company control; and something resembling the National Recovery Act.(2) He had also agreed to sponsor a system of social insurance leading to the welfare state. (3) If no hint of those intentions appeared in the Democratic Party platform of 1932, only the public was surprised by the rapid-fire developments following Roosevelt’s accession to power. The original brain trusters, who trailed him from Albany to Washington, knew what to expect. Their immediate problem was to discover ways of writing the new program of encroaching Socialism into law.
For that purpose it seemed natural to turn to Felix Frankfurter, Byrnes Professor of Law at Harvard University, whose specialty was administrative law. Preeminent among FDR brain trusters, he was a tiny figure of a man, with a large head and keen, dark eyes behind gleaming spectacles. Endowed with exceptional brainpower and adroitness, he had championed many Socialist-approved causes at the intellectual level without ever descending into the pit of Socialist Party politics.
Born in Vienna, Felix was brought to New York City by his parents at the age of twelve, speaking only German and Hungarian. By the time he was nineteen he had mastered the English language and graduated third in his class from the City College of New York. In 1906 he took his law degree at Harvard University, tutoring less talented students to help pay expenses. That was the year when the Intercollegiate Socialist Society founded a club at Harvard, with Walter Lippmann as president. According to Lippmann’s biographer, in 1909 Frankfurter often joined the club members for happy, discursive weekends at the Chestnut Hill home of Dr. Ralph Albertson, a leading Christian Socialist of the day. (4) Characteristically, Felix Frankfurter was never named as having been a member of the club in anniversary speeches and publications of the LID.
Only a few years later, however, he was intimately associated with Walter Lippmann as a co-founder of the New Republic —the liberal weekly designed as an American opposite number of the British Fabian Socialist New Statesman. In that capacity, Frankfurter made the acquaintance of the chief stockholder of the New Republic, Dorothy Whitney Straight, who married Leonard K. Elmhirst and moved to England in 1925. As Mrs. Elmhirst, she helped to endow a Fabian Socialist-sponsored front organization in England called Political and Economic Planning or PEP, which was organized as a “charitable trust” in 1931 and helped to devise plans for the New Deal in advance of FDR’s election.
Between 1916 and 1922 Frankfurter filed briefs in several important cases involving hours of labor and minimum wages. He gave legal advice in the famous Scopes trial defended by the Socialist attorney, Clarence Darrow; in the 1926 case of the Patterson, New Jersey silk mill strikers; and in the still more controversial Sacco and Vanzetti appeals of 1927. Frankfurter used, advocated and taught the technique initiated by Justice Louis D. Brandeis before the latter’s ascension to the Supreme Court. Known as the Brandeis Brief, it involved amassing a volume of factual, historical and/or pseudo-philosophic material and presenting it with the shortest possible legal argument. Prudently, Frankfurter disclaimed any strict adherence to Brandeis’ sociological approach to the Law, leaving that reputation to his colleague and bosom friend, Dean Roscoe Pound of Harvard Law School.
Instead, he professed a deep concern for procedural regularity, a difficult point with which to take issue. By invoking the Olympian names of Brandeis and Holmes as often as possible and discoursing in the loftiest philosophic vein, he almost succeeded in diverting attention from his own radical associations and purposes. Yet, as late as 1930, Frankfurter wrote that through the use of due process the justices could read their own economic and social views into the neutral language of the Constitution. (5) As a Supreme Court Justice, he was to lean heavily on the same due process clause precisely because of its flexibility, proclaiming it “the most majestic concept in our whole constitutional system.” (6)
Although he lacked practical experience in drafting legislation, for years Frankfurter had advised his students to familiarize themselves with the legislative process. With their assistance he duly became the legal progenitor of the New Deal. At FDR’s request, Frankfurter supplied his own handpicked former students for every key legal post in the new Administration so that he controlled, in effect, both the writing and interpretation of the new legislative measures. It almost seemed as if he had been preparing for such a contingency ever since his appointment to the Harvard Law faculty in 1914, and when the moment came, he was ready.
Believing that the past is prologue and that changes in juristic concepts must be initiated through the law schools, Frankfurter had always selected his pupils with care. His classes, according to the Harvard University catalogue, were “open only to students of high standing with the consent of the instructor.” The most promising were invited on Sunday evenings to the Frankfurter cottage on Brattle Street for extracurricular discussions on law and life. For the chosen few, Frankfurter’s supervision went far beyond the classroom and into their future careers.
Each year two honor graduates of Harvard Law School had been assigned, largely on Frankfurter’s recommendation, as secretaries to the liberal Supreme Court Justices, Louis D. Brandeis and Oliver Wendell Holmes. In 1933, at least eight of those erstwhile prodigies quickly became prominent in the New Deal Administration. Brandeis’ former secretaries included Dean G. Acheson, who served briefly as Roosevelt’s Under Secretary of the Treasury and at Frankfurter’s urging was later installed in the State Department; James M. Landis, Federal Trade Commissioner and co-author, with Benjamin V. Cohen, Thomas G. Corcoran and Frankfurter himself, of the Securities and Exchange Act; William Sutherland, counsel to the Tennessee Valley Authority; and Paul Freund, a lawyer in the Reconstruction Finance Corporation, who returned to teach at Harvard. Holmes’ former secretaries accounted for Thomas G. Corcoran of the RFC; Lloyd Landau and Donald Hiss of the Public Works Administration; and Alger Hiss of the Agricultural Adjustment Administration, who went on to the State Department, the Carnegie Foundation—and ultimate disgrace. All were Frankfurter’s “boys.”
When the Tennessee Valley Authority was set up and needed an executive who was also a clever lawyer, Frankfurter produced David Lilienthal, whom he had previously placed with Wisconsin’s utilities control commission in training for just such a job.(7) To Agriculture, Frankfurter sent the aggressively liberal Jerome L. Frank; to Interior, he sent Nathan R. Margold; and to Labor, he sent Charles E. Wyzanski, Jr., more recently a trustee of the Ford Foundation and a member of the Council on Foreign Relations. In those days it was said— apparently with good reason—that no New Deal department nor agency would hire a lawyer unless he was on Frankfurter’s “White List.”
The professor’s influence, however, was not limited to supervising legislation and selecting legal personnel. He was consulted on every major administrative move and Presidential statement. For some six or eight months after Roosevelt took office, Frankfurter commuted each week to Washington from Cambridge, Massachusetts. The White House door was regularly open to him, and no official doors were closed. Within the first “hundred days” most of the basic New Deal legislation had been written and passed—a task that would clearly have been impossible in so short a time if not partially mapped out in advance.
With America’s first Socialist-inspired government program staffed and operating, Frankfurter left to spend a year as visiting professor at Oxford University in 1933-3~an invitation conveniently arranged by Fabian admirers in England. His parting words to exuberant New Dealers reflected the mood of the Fabian tortoise. “Go slowly,” he warned, “go slowly.” In particular, Frankfurter advised delaying as long as possible a Court test of the National Recovery Act, whose constitutionality he doubted. This was strange advice from a man whose own highest ambition was to sit on the Supreme Court, and on any grounds of principle the advice seems hard to justify.(8)
By a telltale coincidence, Frankfurter’s words were echoed before the year was out by a minor British financier, Israel M. Sieff, long regarded as one of the Fabian Society’s more able permeators. On May 3, 1934, Congressman Louis T. McFadden of Pennsylvania told the U.S. House of Representatives that a certain Israel Moses Sieff of London, England had recently declared in a public speech: “Let us go slowly for a while, until we can see how our plan works out in America.”(9) Sieff belonged to the British organization, Political and Economic Planning or PEP, and the plan to which he referred was the New Deal. Why on earth, the Congressman wondered, should a British national living in London refer to the New Deal as “our plan”? Unintentionally, Sieff had revealed a relationship between Fabian Socialist planners in England and in the United States.
Political and Economic Planning (PEP), of which Sieff was a founder, sponsored social, industrial and political “studies,” apparently with a view to influencing official action as well as “opinion-forming” groups. Some of its findings were eventually published and some were not. Its method of work, which has never varied, was described in a prospectus, About P.E.P., distributed in 1956 by the organization itself:
“The method of work is to bring together as a group a number of people who are concerned professionally with one or another aspect of the problem under discussion, as well as a few non-specialists who can ask the fundamental questions which sometimes escape the experts. This technique enables P.E.P. to bring to bear on a problem the combined experience of men and women working in different spheres including business, politics, the Government and local authority services, and the universities. The groups are assisted by a paid research stat, who act as their secretaries and drafters. The names of those who form the groups are not disclosed and the results of their work are published on the authority of the organisation as a whole. This rule was adopted deliberately from the first and has proved of great value. It enables people to serve who would not otherwise be able to d-o so; it ensures that members can contribute freely to discussion without being bound by the official views of any body with which they may be identified ….”
“For the convenience of working members, a club was also formed in 1931 with rooms im the building at Queen Anne’s Gate. The P.E.P. Trust and the P.E.P. Club are separate institutions, although there is naturally a large common membership…. As regards the subjects for study, the Council of Management tries to pick those which seem likely to have reached the forefront of public discussion at about the time when the work has been completed and the findings published …. The aim throughout has been to maintain a balanced programme of social, industrial and general economic studies, chiefly in order that the work of particular groups may be guided by an understanding of national needs and resources as a whole.
“. . . income is derived in roughly equal proportions from donations (given mainly by firms in industry and commerce); subscriptions to the broadsheets; grants from educational foundations. Many of the donations are made under covenant, thus enabling P.E.P. to claim refund of income tax paid by the donors.” (10)
The rule of secrecy, governing the activities of PEP from the start, not only concealed its sources of inspiration, but allowed American planners to participate without attracting any special notice. It also made possible an exchange of ideas and personnel with the New Fabian Research Bureau, which was organized at about the same time. Prominent members of the organization over the years have included Sir Julian Huxley, Israel Sieff, E. M. Nicholson, Kenneth Lindsay, Thomas Jones, Jack Pritchard, A. D. K. Owen, Richard Bailey, J. B. Priestley—all identified more or less intimately with the Fabian Society, which by its own definition “consists of Socialists.”
One of PEP’s first and most faithful donors was the American-born Dorothy Elmhirst, whose British spouse was to serve from 1939 to 1953 as director of the organization. At her Devonshire estate, Dorothy Elmhirst welcomed Professor Felix Frankfurter, who had visited her on Long Island with Herbert Croly during the formative days of the New Republic. Frankfurter was greeted no less warmly in 1933-1934 by his roommate of World War I years in Washington, Lord Eustace Percy, as well as by old friends at the New Statesman, the London School of Economics and the New Fabian Research Bureau. All exemplified for Frankfurter “those civilized standards of English-speaking people” which he was so eager to apply in America.
Political and Economic Planning was evidently conceived as a polite transmission belt for ideas and plans originating in the New Fabian Research Bureau. That is not to say its membership or donors’ lists were 100 per cent Fabian. On the contrary, a number of honestly liberal or conservative business firms and individuals were persuaded, at one time or another, to lend their names and to contribute funds to PEP projects. Whether they hoped to improve their own public image or were merely seeking information, they were charmed by the urbane manner, discreet privacy and studious pretensions of Political and Economic Planning. While their presence lent weight to PEP pronouncements, such persons still remained outsiders. They had little to do with selecting the subjects for survey, and no voice in the conclusions reached. For all practical purposes, the internal operations of the group were controlled by the Management Council and the permanent, paid office staff.
Political and Economic Planning was one of the earliest Fabian Socialist front organizations to employ the device of bringing together business men, public officials and professional intellectuals for planning and propaganda purposes. A forerunner of that mixed society which was to effect a “humane” transition to Socialism, the organization served the Fabians as an instrument of peaceful permeation and penetration, both in government and private industry. Its initial object was to secure coordination between Socialist planners in the United States and the United Kingdom, leaving emulation on an Empire-wide scale to come later.
A PEP document issued in 1931, under the title Freedom and Planning, had recommended setting up National Councils in Agriculture, Transport and Coal Mining—resembling the industry-wide councils afterwards set up in the United States under the National Recovery Act. The manufacturer was to be regulated through national planning. Waste in distribution was to be eliminated through a system of department and grocery store chains. The individual farmer would be told just what and how much he could plant. Large tracts of land were to be acquired by the Government, and publicly-owned electric power plants were to be administered by a government utilities trust. It was such recommendations, contained in PEP’s Freedom and Planning, that obviously emboldened Israel M. Sieff to refer to the New Deal as “our plan.”
Both in form and method of work, Political and Economic Planning was a pilot organization. Aside from the influence it boasted of exerting on the architects of the New Deal, the organization also became the model for a whole series of similar and related organizations in this country which by now have acquired almost mystic prestige. Some of the group’s present-day American offshoots specialize in economic and social studies; some in foreign affairs; some in world government schemes. All aim to affect national policy and to shape public opinion, while remaining immune from public control.
An immediate American counterpart of PEP was the National Planning Association, quietly reorganized m 1934 after Felix Frankfurter’s return to the United States. The new organization was reputedly financed by grace of Dorothy Elmhirst. It included New Deal officials, trade union leaders, business men and publicists, with a solid core of League for Industrial Democracy regulars. (11) Israel M. Sieff kept in touch during frequent trips to America. Sometimes he was accompanied by Leonard K. Elmhirst long time chairman of PEP. (12) A lineal descendant of both PEP and the National Planning Association is the Committee for Economic Development founded in 1941.
The National Recovery Act was duly declared unconstitutional in 1935 by unanimous decision of the Supreme Court. The Bituminous Coal, Agricultural Adjustment and National Labor Relations Acts suffered a similar fate by majority vote. A fresh legislative approach to the question of planned Federal control over industry and agriculture was urgently needed to salvage the main features of the New Deal program. It was supplied through the novel application of a provision in the Constitution empowering the Federal Government to regulate interstate commerce: an application that in its manifold effects is a far cry from any intention entertained by the Signers.
For this ingenious advice, FDR was obligated to Felix Frankfurter who continued to make himself available in a supernumerary capacity. Somewhat against his own better judgment, the little law professor also supported Roosevelt’s ill-fated attempt to pack the Supreme Court —though Frankfurter felt that time and new appointments could be depended upon to provide justices more nearly subservient to the Executive will. For service rendered, he was finally rewarded in 1938 with the fulfillment of his heart’s desire: a seat on the Supreme Court.
In that sheltered eminence Frankfurter could enjoy the prerogatives for which he had apparently yearned. Making some obvious concessions to the traditional aloofness of the Supreme Court, he appeared less frequently at the White House and proffered less direct advice; but when he did speak, he was listened to! (13) It was on Frankfurter’s recommendation that FDR dispatched Harry Hopkins to England even before the Lend-Lease Act had been passed. (14) And it was invariably Frankfurter who took a final, critical look at President Roosevelt’s major policy speeches and “fireside chats” before they were delivered. Frankfurters lifelong friendship and daily morning strolls with his Georgetown neighbor, Dean Acheson, whose rise in the State Department hierarchy he sponsored, are credited with having had a profound effect on American foreign policy—especially during those years when Presidents Roosevelt and Truman were delivering the hegemony of a large portion of the globe to Soviet Russia and Communist China.
Officially, the Supreme Court remained Frankfurter’s prime field of concentration until his retirement in 1961—as it had been the chief subject of his studies and published articles prior to his elevation to the Supreme Court. During his tenure, the quality and temper of that once-August body altered visibly, and its “law-making” function was emphasized at the expense of the legislative power of the Congress. Though Frankfurter’s role was conveniently veiled by the secrecy governing the Supreme Court’s deliberations, it has been a potent one. There he could contribute obliquely, whether by his own action or his influence on less learned colleagues, to the gradual decline of that separation of powers inherent in the Constitution, which has been recognized since 1898 by British Fabians as the most serious obstacle to the advance of Socialism in America.
2.
Among the self-proclaimed liberals and progressives clustered around FDR, most of whom dissembled their Socialist purpose for reasons of practical politics, Harold J. Laski was a bird of gaudier plumage. He was the popular image of the Red Professor, who could never resist airing his views in or out of season. Laski made no secret of his Marxist beliefs and openly advocated social revolution, whether by consent or by violence. Anyone who adopted him as a pet, solicited his articles, promoted him as a teacher of American youth, or listened seriously to his ideas on national or international policy, at least had no illusions as to where Laski stood. Possibly the only fact about him not fully advertised was his connection after 1940, with the Fabian International Bureau.
Precocious child of a middle class merchant in Manchester, England, Harold Laski joined the Fabian Society at Oxford and to the end of his life remained one of its most vocal members. Declared unfit for military service in World War I, he took a teaching post at McGill University in Canada. There he was speedily discovered by Norman Hapgood, a Hearst magazine editor of Socialist leanings, who made a special trip from Toronto to Montreal to meet Laski. Hapgood described this “extraordinary, brilliant young man” to Felix Frankfurter, who obtained an instructorship for Laski at Harvard in 1915 and became his closest friend. The following summer, to supplement a minute income, young Laski was also provided a job in Philadelphia cataloguing the papers of the deceased soap magnate, Joseph I. Fels.
During the four years he taught at Harvard, Laski edited the Harvard Law Review, devoting a whole issue to Duguit, the father of Soviet law, and began studies for a doctorate which he never completed. He contributed articles frequently to the New Republic; flashed like a comet across the Left Wing intellectual scene in Boston and New York; and wrote a rather pretentious book Authority in the Modern State, which he dedicated jointly to Felix Frankfurter and Justice Oliver Wendell Holmes. Laski’s May-and-December friendship with the aging Holmes has been widely publicized. Disingenuously, Laski once advised him to read the History of the Fabian Society by Edward R. Pease—”rather a pleasant book in its way.”(15)
Tired, bored and seeking mental diversion, Holmes took “great pleasure” in the “dear boy’s” companionship and phenomenal display of learning. Laski, like Sidney Webb, had a photographic memory. It enabled him to quote whole passages from the most recondite works, even citing the pages on which they appeared. An inveterate namedropper, he also had a lifelong tendency to recall meetings with the great that never happened—and in which, of course, he figured to advantage. Since he told a good story, and since he actually did know a surprising number of distinguished persons for one so young, his admirers condoned that harmless mythomania. (16)
When he went to teach at Harvard, Laski was just twenty-two. Frail, undersized and looking even smaller in his dark English suits, he had the air of a preternaturally wise child, mostly head, eyes and round horn-rimmed glasses. Appearing anything but dangerous, he still managed to attract an immoderate amount of attention, as he was destined to do all his life. This was not only because of his conspicuous gifts, but also because of the opinions he felt called upon to impart on a wide range of controversial topics—particularly, the Russian Revolution.
While he had his defenders, Laski provoked a good deal of spontaneous resentment among the general student body, which devoted an entire issue of the Harvard Lampoon to attacking him. He won notoriety in Greater Boston by getting himself involved in the police strike of 1919. Though never officially asked to leave Harvard, even his best friends agreed at the time it might be wiser for him to move on.
Leading lights of the Fabian Society made a concerted effort to find the proper niche for Harold at home. His sponsors included Graham Wallas, then lecturing in New York at the New School for Social Research; Sidney Webb, supreme pontiff of the Fabian Society; and Lord Haldane, a governor of the London School of Economics, who had just allied himself publicly with the Fabians and the British Labour Party. (17) With their backing, Laski was offered a place at the London School, and in a very few years inherited Graham Wallas’ chair of Political Science. To qualify for the promotion Laski wrote a massive tome, The Grammar of Politics, which started by taking gradualist Socialism for granted and ended with a frankly Marxist position. Praised by Sidney Webb, it became a standard university textbook, replacing nineteenth century texts on political science just as it has since been replaced by more fashionable Socialist works.
Laski’s highly personalized method of teaching—a technique similar to G. D. H. Cole’s in England and Felix Frankfurter’s in the United States—gained him fervent followers among the young people who Hocked to study under him. They came not only from the United Kingdom but from Asia, Africa and America, in the decades when Rockefeller Foundation grants were helping to build the London School of Economics into a world center of Socialist instruction. Laski’s classes were filled to overflowing with students of every hue and color, and they stood in line outside his office waiting to consult him.
Consciously he strove to instill his own Marxist doctrines in future leaders of revolutionary movements from outposts of tale Empire which he hoped and schemed to dissolve. Tom Mboya of Kenya’s African National Union Party and the saturnine Krishna Menon of India were among the pupils whose contact with him outlasted their university days. At one time, it was said, most of the senior civil servants in Nehru’s government were former students of Laski’s. Of the young men indoctrinated by him at the London School, not a few occupy top posts in their own countries today—especially in the so-called developing nations.
Outside of the classroom he agitated ceaselessly in public lectures, periodicals and personal correspondence for one burning global issue after another—Freedom for India, Ethiopia, the Spanish Loyalists— and generally urged cooperation between Liberals, Socialists and Communists. He served with Leonard Woolf and John Strachey as a director of the strongly pro-Soviet Left Book Club. Though the director of the London School, Sir William Beveridge, expressed some fear that Laski’s outspoken hostility to the capitalist system might discourage the flow of contributions, such fears proved groundless. A total of $3,000,000 for buildings, research and general expenses was donated by the Laura Spelman Rockefeller Memorial Fund and the Rockefeller Foundation to the London School from 1924 through 1949, while Harold Laski served in its department of Political Science.
Like G. D. H. Cole—an equally avowed Marxist, and a pedagogue whose influence on the coming generation of Fabian Socialist leaders rivaled Laski’s—he frankly aimed to mold the minds of future government officials at home and abroad. Britain’s post World War II Foreign Minister, Socialist Ernest Bevin, who did not always see eye to eye with Laski, once told a Labour Party Conference: “If it’s the universities that are to be criticized, well, put up a vote of censure on Harold Laski, because it’s the product of the universities I have got to accept!”(18)
Laski’s influence on alumni of the mines, shipyards and factories in Britain was also considerable. Despite his reputation for intellectual snobbism, a number of trade union officials who rose to government office with the British Labour Party regularly turned to him for advice. Emanuel Shinwell of the Miners’ Union, for example, who enjoyed quite a reputation as a revolutionary agitator, wrote in his autobiography: “My mind was finally made up after a conversation with my late friend, Harold Laski . . . I lifted up my telephone and spoke to Atlee. I told him I would accept the Secretaryship of State for War.” (19)
While Laski never aspired to nor accepted political office himself, he remained an audible offstage presence, irritating at times to the old pros of the Parliamentary Labour Party but impossible to ignore. In 1932, he joined a little group of militants inside the Labour Party who called themselves the Socialist League; and, in 1937, he signed their Unity Manifesto urging a united front in Britain between Labour and the Communist Party against Fascism. Significantly, most of the Labour Party members signing that petition were intellectuals and outstanding figures in the Fabian Society.(20)
After the Popular Front movement in which he was active had been forcibly dissolved, Laski still argued in 1939-40 for a friendly attitude toward Soviet Russia, no matter how badly that country had behaved in Finland, Poland and the Baltic States.(21) In February, 1941, he initiated a correspondence with Herbert Morrison, Fabian Socialist Home Secretary in the coalition Cabinet of Winston Churchill, to make sure that the “civil rights” of Communists in wartime Britain were being protected. Following Hitler’s invasion of Russia, Laski was one of the first and most ardent spokesmen for all-out aid to the Soviet Union, with a view to securing Russian cooperation in a postwar Socialist world.(22)
From 1939, Laski sat on the Executive of the British Labour Party. Under the prevailing system of rotation, he automatically became its chairman in 1945–the year in which the Party rode to power on the strength of its deceptive promise to abolish poverty. Chairman of the Labour Party’s campaign committee and policy subcommittee in that critical election year was Herbert Morrison, by then on exceedingly close terms with Laski.
Following the Party’s victory at the polls, Professor Laski made an astounding proposal to Clement Attlee, its Parliamentary Leader since 1935. He invited Attlee to abdicate and allow the incoming parliamentary majority to elect a leader—presumably Herbert Morrison, to whose campaign aid a number of the newly elected Labour M.P.’s owed their seats and who, in Laski’s opinion, would have made a much better Prime Minister than Attlee. While not unconstitutional under British law, a more inept suggestion has rarely been offered by a political pundit.
Curtly, Attlee replied, “Dear Laski, I thank you for your letter, contents of which have been noted.” (23) When Ernest Bevin, boss of the powerful Transport Workers’ Union, learned of the “chicanery,” he moved promptly in Attlee’s behalf and no more was heard of the matter. Needless to say, this bit of backstage business did not endear Laski to Prime Minister Attlee or Foreign Minister Bevin, and effectively precluded him from becoming personal adviser-in-chief to the Labour Party Government as he so ardently longed to be.
For all that, Laski could neither be ignored nor suppressed. From 1946 to 1948 he was voted chairman of the London Fabian Society, which supplied the plans, legislation and key personnel for the Labour Government in Britain and to which over two-thirds of its parliamentary majority belonged. Moreover, Laski was idolized by foreign Socialists, a number of whom held cabinet rank in their own countries after the war—especially in France, Belgium, the Scandinavian countries and in Czechoslovakia, where Laski advised the Benes Government to cooperate with the Communists. Followers of Pietro Nenni in postwar Italy hailed him as “a figure comparable with Marx in the intellectual history of Socialism.” Despite his ineptitude in practical affairs, to the end Harold Laski remained a symbol of the International Socialist Professor, who used his connections abroad to affect the course of British policy when deterred from doing so at home.
Never admitting that a man cannot serve two masters, Harold Laski often referred to the United States as his second country. Few Americans even in his own time realized how large a part of his adult life was spent in the United States, or how deep a swath he cut in both educational and governmental circles in America. Of his thirty-odd year teaching and advisory career, it is estimated that almost one third was spent in North American colleges and universities, either as a visiting professor or special lecturer.
Following his early fiasco at Harvard, Laski was to return to this country again and again as a paid and feted guest. He gave a series of formal lectures at the Universities of North Carolina and Indiana; taught for a semester in 1939 at Columbia University Teachers’ College; lectured more briefly at Yale and at Princeton’s bicentennial, and at the State Universities of Washington, Oregon, California and Colorado; and in 1948 Laski debated Senator Robert Taft at Kenyon College in Ohio. Of course, he made numerous appearances at the New School for Social Research in New York City where he helped to organize a group of Socialist refugee professors.
After World War II he spent some time at Roosevelt University in Chicago where his disciple from the London School, Professor Herman Finer, also held forth. Laski’s final tour in the United States was made under the auspices of the Amalgamated Clothing Workers, to deliver the Sidney Hillman Memorial Lectures, jointly sponsored by that Socialist-directed union and local institutions of higher learning from coast to coast.
More frankly Marxist in doctrine than some other members of the London Fabian Society, Laski’s lectures and writings conveyed a revolutionary message not necessarily couched in Marxist jargon. If it was true, as his friend Louis Fischer once wrote unkindly, that Laski lived increasingly in an “intellectual ghetto” on his visits to the United States, geographically the area was widely dispersed. Across the years he developed connections in the academic life of America enjoyed by few other foreign professors, and he recruited an army of followers among faculty and students. Though Laski seemed to cause only a passing furore at womens’ clubs and university pink teas, in the long run he built up a serious network of Socialist propagandists and Soviet sympathizers, many of whom are still active in education and politics today. In falling heir to Graham Wallas’ chair at the London School, Harold Laski also inherited Wallas’ function as the London Fabian Society’s foremost missionary to America’s colleges and universities.
In 1929, Laski contributed a significant article to The Socialism of Our Times, the symposium edited by Harry W. Laidler and Norman Thomas and issued by the League for Industrial Democracy. (24) Some of the points contained in that article had previously appeared over his signature in Harper’s magazine for June, 1928, and subsequently reappeared mor concretely in the programs of the New Deal.
Specifically, Laski urged Socialists to take the initiative in sponsoring an eventual Federal program of “social insurance” leading, as always, to the welfare state. He supported municipal ownership of public services, such as gas and electricity, street railways and savings banks, “to demonstrate the superiority of collectivism to the average voter.” He advocated for the courts in America, “reform” such as his good friend, Felix Frankfurter, was then attempting on a state-wide scale for Governor Franklin Roosevelt of New York. Above all, Laski advised Socialists to agitate endlessly in favor of taxation for social—not merely administrative—uses. “Pressure for higher taxation on unearned and larger incomes is vital,” he wrote, [with] “amounts so raised to be used as grants in aid to the States for social purposes.” (25) What Laski did not say, was that the lion’s share of any funds raised for such purposes would still have to come from the pockets of the working people—since taxes on the rich, however punitive, would never suffice to pay for the program.
In conclusion, he stated: “I feel strongly the impossibility of American political institutions today, from the angle of a movement toward Socialist measures. The separation of powers is the protective rampart of American individualism.(26) This is interesting in view of Laski’s prolonged intimacy with Felix Frankfurter, who became a Justice of the Supreme Court of the United States. Laski was a periodic house guest of Frankfurter in Cambridge and later in Washington, and for a quarter century carried on a voluminous correspondence with his “dearest Felix” that kept the latter constantly informed on the Fabian Socialist outlook in London. Those letters, profusely quoted in Laski’s biography by Kingsley Martin, editor of the New Statesman, also included comments and recommendations on American policy which Frankfurter was in an unrivaled position to transmit to President Franklin D. Roosevelt.
Professor Laski’s politico-social fellowship with Felix Frankfurter and Evans Clark of the Twentieth Century Fund cannot be discounted as a merely personal association. For Laski, like G. D. H. Cole, Graham Wallas and the Webbs, was first, last and always a professional revolutionary of the gradualist school. Every private contact he cultivated and virtually every line he wrote in his microscopic handwriting, no matter how heavily coated with endearments, was as charged with political intention as a telegraph cable is charged with electricity.
His intimacy in America with members of the original Roosevelt brain trust in Albany, plus his close connections in London with Israel Sieff and the founders of PEP, gave him a matchless opportunity to synchronize the ideas of British and American Fabian Socialists in formulating plans for the New Deal. Inevitably, he was aware that FDR would be pushed as the Democratic Party’s candidate for the Presidency, long before the American public had any knowledge of it.
Laski was in the United States in 1928-29 following FDR’s election as Governor of New York, and again in 1931, returning to deliver a Kingsway Hall lecture in London on “The American Collapse.” (27) He was in America during the fateful first “hundred days” of 1933 and reported his observations briefly at a Fabian Society evening social. (28) Soon after the National Recovery Act was declared unconstitutional by the Supreme Court, Professor Laski spoke at a Fabian Society Friends’ Hall lecture on “The Failure of the American Experiment.” He {rayed the United States Constitution as a class document, calling it “Capitalism’s strongest safeguard on earth today”; and added that Roosevelt was America’s sole bulwark “against the Fascist form of Capitalism.” What was needed both in America and England, he claimed, was a united front of all liberal and left wing groups (including the Communists) to “save Democracy.” Either Capitalism or Democracy would prevail, he said, in America as in Europe—a strange species of political science, equating democracy with the Socialist commonwealth.(29)
Precisely when, where or how Professor Laski first met Franklin D. Roosevelt is not recorded by their official biographers. Evidently the two were introduced by a trusted mutual friend—generally believed to have been Felix Frankfurter—under casual and informal circumstances. Their original encounter could have taken place during any one of Laski’s frequent trips to the United States in the late nineteen-twenties or early nineteen-thirties. Eleanor Roosevelt was not present, for she stated in 1956 (30) that she had never met Laski but believed he was “honest”—a characteristic non sequitur! Nevertheless, it is recorded that the honestly Marxist professor paid a number of calls on FDR at his office in the White House; was acquainted with the Roosevelt daughter, Anna; and was the recipient of warm and approving personal letters from the President himself.
The extent to which Professor Laski and his ideas were persona grata at the White House from the very outset of the Roosevelt Administration can be gauged by the fact that Joseph P. Kennedy, Sr. sent his two eldest sons to study under Laski at the London School of Economics. No Marxist himself, the senior Kennedy was already several times a millionaire. The stock market crash of 1929 and the ensuing depression had shaken Kennedy’s confidence, however, in the durability of the capitalist economy, although he suffered no serious financial loss and was even reputed to have made money by selling short on the market.
During 1932 Kennedy, Sr. was quoted as saying that he would gladly sacrifice half his fortune in order to save the other half for his children—a pledge which he was, happily for him, never called upon to fulfill. In that frame of mind, he traveled aboard the original Roosevelt campaign train and contributed generously to FDR’s election. While waiting to succeed James M. Landis, Dean of the Harvard Law School, as head of the Securities and Exchange Commission, Kennedy pere offered up his firstborn as an ideological hostage. During 1933-34, in the interval between his graduation from Choate School and matriculation at Harvard, Joseph P. Kennedy, Jr. was sent to study political science at the London School. He made the grand tour to Moscow under the chaperonage of Professor and Mrs. Laski. (31)
According to the Harvard College De-cennial Report on the Class of 1938, Joe’s year at the London School,
“was a tremendous experience, as it was under Professor Laski that young Joe developed his dominant ambition to devote himself to a career in public service. Indeed, referring to Joe’s interest in politics, Professor Laski speaks of his determination to be nothing less than President of the United States.” It was this interest that was to guide his studies at Harvard . . . and which dominated his whole life after graduation in 1938.”
In 1940, as a junior member of the Massachusetts delegation to the Democratic National Convention, young Joe resisted the pressures for a third term “draft” of President Roosevelt and bravely cast his vote for James M. Farley. Though he may not have realized it at the time, that vote ended Joe Kennedy, Jr.’s hopes for a political career via the Democratic Party almost as effectively as his subsequent tragic demise in a World War II bomber over Germany.
There was a second Kennedy son, however, who did almost everything that Joe did, being the understudy of his admired older brother. In 1934-35 he, too, went to learn about politics from Professor Laski in London. Imitatively he was no less affected by the experience than Joe, Jr. had been, even though he did not complete the full scholastic year owing to an attack of jaundice. When Joe, Jr. was killed in action during World War II, it was Jack who stepped into his brother’s shoes and achieved his brother’s hoped-for political role. Thus Professor H. J. Laski, British Fabian Socialist and self-proclaimed Marxist, had the rare distinction of helping indirectly to select and to educate two Democrat Presidents of the United States: Franklin D. Roosevelt and John F. Kennedy
Probably Laski’s most prized contribution to the domestic policies of the New Deal was the idea of using Federal tax-moneys as grants in aid to the States for social purposes. Eagerly adopted by New Deal strategists and never legally challenged to this day, Laski’s suggestion proved remarkably useful to FDR in perpetuating both himself and the Democratic Party in office.
As the apparent author of that handy device, Laski became a special favorite of President Roosevelt. In a letter of January 10, 1939, FDR wrote Professor Laski that he would be “honored and happy to have you dedicate the little book to me.” (32) The book in question was a series of essays entitled The American Presidency. Three weeks later the American President again wrote to Laski, then in Seattle, thanking him for a reprint of one of the essays and saying: “Come and see me as soon as you get East.” (33) The book was published in 1940, the year when Roosevelt ran for a third term in defiance of all previous Presidential tradition.
Complaints about Laski, no matter how valid, never reached the American people, entranced as they were by the beneficent father-image of FDR that New Deal psychologists had created. On January 14,1941, Congressman Tinkham of Massachusetts read into the House Record a warning by Amos Pinchot, disillusioned former Socialist and brother of Pennsylvania’s liberal former Governor. Somewhat belatedly, Pinchot pointed out that Laski and other English radicals were working on President Roosevelt with the object of introducing Socialism into the United States. He stated boldly: “Many young Socialists declare that what is generally called the Roosevelt Program is in reality the Laski Program, imposed on New Deal thinkers, and finally on the President, by the London Professor of Economics [sic] and his friends.”
Still the great voting public in America remained unaware of Laski’s existence: he was caviar for the intellectual elite. After Roosevelt’s death, Congressman Woodruff of Michigan published an extension of remarks in the House Record of February 6, 1946, denouncing Laski and to a lesser extent Lord Keynes. The Congressman declared that Professor Laski had for some time “had a backdoor key to the White House.” And he added, “a surprising number of us, Professor, have begun to think it is time to change the lock.”
Such rare observations, while correctly assessing the general influence of British Fabian Socialists on the New Deal and its successor, the Fair Deal, were weakened by a lack of corroborative detail. They failed to note that a number of the ideas advanced before 1940 by Professor Laski and his friends originated in the New Fabian Research Bureau, and after 1940 mirrored programs of the Fabian International Bureau and the Socialist International. Moreover, patriots of an earlier day were hampered by not having access to the Laski-Frankfurter and Laski-Roosevelt letters—which have since been quoted in part by the Professor’s friendly biographer, Kingsley Martin, although never revealed in their entirety.
Even Robert Sherwood’s heavily documented volume, Roosevelt and Hopkins, which appeared in 1948, omitted any mention of Harry Hopkins’ talks with Laski during Lend-Lease taps to England. Himself a New Deal henchman, Sherwood scrupulously avoided pointing out that Hopkins’ views on wartime aid to Russia coincided with the opinions expressed by Professor Laski both in letters and in print. (34) In fact, Harold Laski’s name was not even listed in the index of the Sherwood opus. Yet President Roosevelt, replying to a letter from Laski after America’s entry into World War II, wrote: “Dear Harold, So good to hear from you again. Hopkins has already told me of his visit with you, and everything reported to me checks with the many things you told me.”(35)
Again and again during World War II, Laski asserted that it was the duty of a popular leader to lay the foundations for postwar Socialism. (36) In that way, social revolution might be brought about by popular consent—perhaps simultaneously in many countries. (37) This Fabian Socialist design also involved preserving, at any price and any sacrifice, the friendship of Soviet Russia; for the kind of postwar world that Laski envisioned presumed something more than superficial coexistence with the USSR. The question of Allied war aims became the main burden of his articles in both British and American publications, as it was of his private correspondence.
After Hitler’s invasion of the USSR, Laski argued that the future depended on America’s and Britain’s ability to convert a temporary wartime alliance with the Soviet Union into a lasting postwar partnership. No guarantees of good faith were required from the Soviets. The immediate program of wartime assistance must be such as to convince Communist leaders that the capitalist nations were their loyal allies, and that they would only make peace on terms acceptable to Soviet Russia.(38)
The long-range program of cooperation to follow the war was more subtle. Laski contended that Soviet Russia and the Western powers might learn a great deal from each other.(39) While the USSR was more advanced in Socialist organization, possibly she could be induced to see the advantage of practicing a little more social and religious tolerance. The eternal hope of Fabian Socialists that the Soviet Union would “mellow” as a result of contacts with the West was still being echoed as recently as 1963 by spokesmen of the New Frontier, and was announced as a presumptive fact in the Fabian News of August, 1963.
About six months after Pearl Harbor, Professor Laski received a cordial invitation from Eleanor Roosevelt to address the International Students’ Congress to be held in Washington during September, 1942. Eleanor Roosevelt wrote that she would be “particularly happy” if Laski could be there to speak to the young people, and she invited him to stay at the White House—”as I know it would give my husband as well as myself a great deal of pleasure to have an opportunity to see you.”(40)
If Laski had quietly applied for a visa in the routine way, he would probably have received it. Filled with a strong sense of his own importance, however, he took the unusual step of asking Churchill’s permission. Since Laski had for months been publicly critical of Churchill, as possessing an anti-Socialist outlook and “eighteenth century mentality,” the Prime Minister quite reasonably declined to grant him an opportunity for airing such sentiments in Washington.(41) So Eleanor Roosevelt never had the pleasure of seeing him—and Laski seems naively to have lost his only chance for a face-to-face discussion with FDR concerning the shape of the postwar world to come.
He could still wield a potent pen, however, and he proceeded to do so until the end of the war. Since mail to and from the President of the United States or a Supreme Court Justice was classed as “privileged” by Allied censors, Laski could be assured of privacy when writing to Roosevelt and Frankfurter. If he preferred, he could always send letters or articles to the Washington Post and the New York Nation via the U.S. Embassy pouch. Soon after Christmas in 1942 he wrote to FDR: “…above all, I hope you will teach our Prime Minister that it is the hopes of the future and not the achievements of the past from which he must draw his inspiration.” Though Roosevelt and Frankfurter both reproved Laski for his increasingly sharp attacks on Churchill, privately they enjoyed his comments—especially FDR, who according to eyewitnesses found personal amusement in forcing Winston to play second fiddle to himself and Stalin at Big Three conferences.
Essentially, Laski’s wartime mission with reference to the United States resembled Ray Stannard Baker’s at the end of World War I. In private letters, destined to be read by the President or retailed to him, Laski discoursed on the state of the nation and the state of mind of the “common man” in England. Hints on postwar aims and “some sort of world organisation” to follow the war were interwoven with human anecdotes and the political gossip that Roosevelt loved.
Just as Baker had done, Laski reported that America’s President was the only hope of the working masses in Britain—and everywhere else—for a better life after the war. By nourishing Roosevelt’s messianic delusion, which was no less pronounced in its way than Woodrow Wilson’s had been, Laski encouraged the President to take a stand on postwar matters that coincided with the views of the Fabian International Bureau. Often it involved preferring the interests of Soviet Russia over those of the British Empire or the United States itself.
As early as December, 1941, Laski had written to Felix Frankfurter:
“At present the masses of Britain have, I think, three clear convictions. (i) Churchill is a grand war leader. (ii) The U.S.S.R. shows it has roots in popular opinion more profound than any other system. (iii) The only man who can define purposes which prevent collapse and chaos after the war is the President. Whether he will have his chance in time, whether he can find a successor to continue his policies, these are things we endlessly discuss in common, not I fear, too hopefully.”(42)
This was no simple outpouring of private hopes and fears. Coming from a member of the Fabian Executive and addressed to FDR’s foremost privy councillor, it had the quality of a succinct and far-reaching policy directive. It sheds new light on the peculiar urgency of Harry Hopkins, Frankfurter’s nominee for Lend-Lease powers, to give the USSR more than enough of everything to carry her through the fighting phases of the war; and helps to explain Hopkins’ insistence on regarding Soviet Russia rather than Britain as the “decisive factor” to be considered.(43) Moreover, it provides a clue to the otherwise inexplicable Big Three conferences, where the United States was committed to satisfying the Soviet Union’s territorial and geographic postwar aims. Historically, secret covenants between nations have sometimes preceded a war; but never before has a superior power rushed to award the fruits of victory to the greediest and most impoverished of military partners while a war was still in progress!
Fear that President Roosevelt, a willing Fabian Socialist captive, might fail to succeed himself in 1944, or might not physically survive World War II, supplied a motive for the premature concessions granted to Soviet Russia at Teheran and Yalta. The Teheran Conference of 1943, which preceded the cross-Channel invasion of Europe desired by Stalin and opposed by Churchill, in effect assured the USSR of a free hand in Eastern Europe plus confirming her hold on Poland and the Baltic countries. Roosevelt’s obviously failing health in 1945 hastened the Yalta Conference that delivered Manchuria to Soviet forces and enabled them to furnish the Chinese Communist armies with enough captured Japanese military materiel to insure Communist control over the mainland of China.
Thus a President of the United States, acting in his Supreme Court-affirmed capacity of absolute military Commander-in-chief, circumvented the postwar treaty-making powers of the Congress by presenting it with a series of accomplished facts. Even the format of the postwar United Nations was agreed upon at Teheran. The Fabian Socialist allies of Bolshevism had learned a lesson from Woodrow Wilson’s experience after World War I, and were determined not to risk a repetition. On the strength of these events it has since been alleged, with reason, that in modern times the most effective foreign agents of the Soviet Union operate as Fabian Socialists.
Before leaving Washington for Yalta, Franklin D. Roosevelt on January 16, 1945, dictated and signed what must have been his last personal letter to Harold Laski. From the broken, almost illegible handwriting that appears in the signature, one seeing it could deduce that the author was a very sick man.(44) Besides mentioning the forthcoming meeting with Marshal Stalin and Prime Minister Churchill, and FDR’s own hope of visiting England and seeing Laski in the summer to come, the letter contained this meaningful assurance: “Our goal is, as you say, identical for the long range objectives ….” (45)
3.
Men whose goal is revolution, whether subtle or violent, have often made use of inspired charlatans—soothsayers, astrologers, numerologists, cultists of one kind or another, who could convey a revolutionary message in high-flown double talk. During the decades culminating in the French Revolution, for example, there arose a whole line of magnificent imposters, “who posed as initiators of the occult sciences, as possessors of the Great Secret and the Grand Magisterium; and there in consequence, the Higher Mysteries . . . They took root and flourished, developing an hundred splendors of romantic legends, of sonorous names and titles.”(46)
Of these the most splendid and the most successful was a self-ennobled Italian barber known as Count Cagliostro. Practicing alchemy, occultism and the healing arts, he bewitched a cultivated public in half a dozen tongues, as well as in a private jargon that had meaning for the initiate alone. Forecasting the future was his specialty. Even now, almost two centuries later, there are still scholars prepared to debate the point as to whether he was a savant or a rogue.
Cagliostro was the sensation of Paris and Strasbourg, where respectable bankers vied with one another to take advantage of his prognostications and to supply him with funds. At one time his patron was a Prince Royal, the brother of Louis XVI, sometimes called Philippe Egalite—leader of that liberal wing of the nobility who sympathized with the first stages of the French Revolution and most of whom subsequently went to the guillotine. Cagliostro’s elaborate intrigues played a well-known part in hastening the fall of the established order in France.(47) Who would have suspected him, in his heyday, of harboring such a purpose?
Spiritual heir and latter-day facsimile of that darling of the eighteenth century Enlightenment, was a Cambridge University don named John Maynard Keynes. He, too, was a magnificent figure: six feet three, and superbly tailored; an authority on wines, fine foods and beautiful women; patron of the arts, and master of the English language which he only distorted by design. He, too, posed as the possessor of elusive secrets, key to the Higher Mysteries of economics and public finance. More fortunate in his origins than Cagliostro, Keynes’ final role was as bursar of Kings College, Cambridge. There he studied the dietary habits of pigs with a view to improving the breed on the college-owned farm; and he ruled over the Political Economy Club, where his followers were made privy to the master’s techniques for apprehending and controlling future events.
An alchemist who succeeded in substituting paper for gold, a mystifier who claimed that money multiplied itself in the spending, Keynes compelled bankers to do his bidding and imposed his schemes on the highest personages in an age of political unreason. In the long run, his inspired economic gibberish and esoteric fiscal panaceas did more to promote the insolvency of English-speaking nations and speed the timetable of world-wide social revolution than any forthright revolutionary arguments could have done. It is a commentary on the moral and intellectual fiber of the times that, while Cagliostro died in poverty and disgrace, John Maynard Keynes ended his days as a self-made millionaire and authentic peer of the realm, mourned by a school of professional disciples pledged to perpetuate and update his more destructive fantasies.
The same question can be asked about Keynes that is asked about Cagliostro: Was he charlatan, adventurer, trickster, or the friend of humanity he claimed to be? Was Lord Keynes a highly polished secret weapon of the Fabian Socialist conspiracy to weaken the capitalist system progressively by consent of its beneficiaries—at the same time retaining its productive machinery intact for the benefit of the heirs? Or was he the good physician dedicated to prolonging life? The plain answer has long been obscured by the circumstance that Keynes’ reputation(48)—like the currencies he strove to manage—was systematically inflated through the efforts of a fervent Fabian Socialist claque on both sides of the Atlantic, while his ideas were usually represented as being too profound for the ordinary man and woman to grasp.
The story of his life, told by followers and friends, in some details approaches the fabulous. Dr. Seymour Harris—professor of Economics at Harvard’s Littauer School of Business Administration, who became Senior Consultant to the United States Treasury Department in 1961 (49)—gravely reaffirms that Keynes was fascinated by the theory of compound interest before he was five years old. (50) While such Gargantuan precocity can be doubted, it is true that Keynes was born to an assured future in left wing economics. His father, John Neville Keynes, was a professor at Cambridge, who published a book in 1890 entitled The Scope and Method of Political Economy For its strictures against the free enterprise system, therein called laissez faire, the book was approved by early leaders of the London Fabian Society. It was also included on reading lists of Socialist-slanted works recommended by The American Fabian magazine to its public.
The younger Keynes was educated at Eton and King’s College, Cambridge, which qualified him almost automatically for entry into the British Civil Service. Though he took no scholastic honors at the university, somehow he acquired a reputation for brilliance due to his conversational talent and his cool insolence in debate. Moreover, as he was prompt to point out, the name Keynes properly pronounced rhymed with “brains.” His gifts of persuasion were apparent to undergraduate friends who nicknamed him Pozzo, (51) after a Renaissance mercenary noted for skill in courtly intrigue as well as in administering slow poisons.
Campus political organizations gave Keynes an opportunity to test his fine Italian hand. As a freshman he joined the Liberal Club, a youthful adjunct of the Liberal Party that came to power in England not many years later. As a sophomore he also became a member of the Fabian Society’s student chapter at Cambridge (52) guided by Professor G. Lowes Dickinson, whose adepts were enjoined to capture the Liberal Club by penetration. Keynes’ college circle included Bertrand Russell and Leonard Woolf, both well-known in later life for their propaganda services to Fabian Socialism; and the poet, Rupert Brooke, whom some Fabians still claim as their own, even though he discovered the meaning of patriotism before he died as a soldier in World War I. Keynes himself—in common with many British and American Socialists—was to file as a conscientious objector.(53)
Two of his father’s associates, Professor Alfred Marshall and A. C. Pigou, groomed young Keynes for a career in economics; but even with their help, he placed no better than twelfth in his final examination. It is amusing to find Marshall and Pigou, both classified in their day as Fabian Socialist sympathizers, dismissed by present-day Keynesians as “classical economists”–(54) along with any others who preceded or failed to accept the vision of revealed economic truth ultimately vouchsafed to the world by John Maynard Keynes.
The sympathetic Professor Marshall rescued Keynes from a minor clerkship in the Colonial Office, bringing him back to lecture on economics at Cambridge University. Later the joint patronage of Marshall, Pigou and Sidney Webb (himself escaped form bondage in the Colonial Office, to become the high priest of Fabian Socialism) was responsible for making Keynes editor of the Economic Journal in 1911, and secretary of the Royal Economic Society in 1913. These posts established the young hopeful as a presumably serious economist and lent him the prestige so necessary to his future policy-making role. The Fabian Research Department, organized in 1912, was available to supply statistics and to prepare articles on request.
After the outbreak of World War I, Keynes took refuge in the British Treasury Department, where he diverted himself in spare moments by working out a foolproof method of stock market speculation. All his life he enjoyed gambling(55)—bridge, poker, roulette; but like most people, he preferred a sure thing. When the war ended, he found an opportunity for putting his system of mental wagers into practice. Beginning in 1919 with a moderate stake of four thousand pounds (less than $20,000), he parlayed it by 1937 into a neat fortune of 500,000 pounds (about 2.5 million dollars). A goodly share of his winnings resulted from the lowered interest rates that he promoted so assiduously in official quarters, and that caused the list prices of certain common stocks to rise.(56) Throughout the thirties he also speculated profitably in foreign exchange and public utilities stocks.
During the nineteen-twenties Keynes headed an investment firm in London, in partnership with former Treasury colleagues, and displayed what appeared to be an uncanny faculty for predicting politico-economic trends likely to affect the stock market. To selected clients, he gave the benefit of his insight. These included his future bade, a beauteous Russian ballerina of the Diaghilev troupe, whose investments he offered to handle and whom he married in 1925—the same year that he made a trip to Soviet Russia. It has been reported by informed sources that stock market tips, originating with Keynes, paid the expenses of the unofficial and official Soviet embassies in London from 1924 to 1932. At that period he was tireless in his demands that the British Treasury provide fuller statistics on national investment and foreign exchange.
Keynes’ international bent owed much to a friendship renewed in London with his old Fabian Socialist college chum, Leonard Woolf. Throughout his long bachelorhood (he married at forty-two) the lanky and personable Keynes was identified with the so-called Bloomsbury group revolving about Leonard Woolf and his wife, Virginia. It was composed of highly educated and magnified(57) upper middle class bohemians, talented and successful practitioners of literature or the arts. They were addicted to group-opinions and to a superficially critical, but none the less protective, attitude towards Soviet Russia.
An apparent point of difference with Russian Marxism was their belief that collectivist-minded intellectuals—rather than what Keynes called “the boorish proletariat”—were destined to become the professional rulers of an ideal future world. Bertrand Russell once described the Bloomsbury Fabians as a passionate mutual admiration clique of the elite; and there is no doubt they contributed greatly to the myth of Keynes’ unique mental powers.
It may be recalled that from 1915 Leonard Woolf was also the London Fabian Society’s leading amateur of international affairs; the author of International Government, which supplied the first blueprint for the League of Nations; head of the New Fabian Research Bureau’s international committee; a founder and for ten years chairman of the Fabian International Bureau. Woolf’s views on World Government and German reparations were faithfully reflected by John Maynard Keynes, when the latter attended the Versailles Peace Conference as a member of the British Treasury delegation.
There, as one of the younger dissidents, British and American, grouped around Colonel E. M. House, Keynes established long-lasting ties with Walter Lippmann and with Felix Frankfurter who represented the Zionist cause at the Peace Conference. (58) Returning from Paris, Keynes expressed their mutual dissatisfactions in his first book-length work, The Economic Consequences of the Peace. Lippmann and Frankfurter helped arrange for its publication in America, where it was touted and officially distributed by the League for Industrial Democracy as it was by the Fabian Society in Great Britain and the Colonies. (59) Here Keynes announced frankly that capitalism in Europe was doomed.
Not directly active in politics, Keynes retained a nominal affiliation with the Liberal Party and avoided declaring himself a Socialist. Inevitably, he sided with the Asquith Liberals, who were instrumental in handing over the reins of government to the Fabian-led Labour Party in 1924. During the election year, he delivered a famed anticapitalist lecture at Cambridge, published in 1926 as The End of Laissez Faire. There—like his father before him—he identified modern capitalism with the early nineteenth century foreign trade doctrine known as laissez faire, based on earlier and cruder forms of industrial production. Professor David McCord Wright of McGill University, Montreal—himself an admirer, in some respects, of Keynes —has noted that the “day of judgment” which Keynes predicted recurrently for capitalism was in reality purest milk of the Marxian word.(60)
In 1923, Keynes bought a controlling interest in The Nation and Athenaeum, placed it under the editorship of the well-known Fabian Socialist, Kingsley Martin; and utilized it as a vehicle of personal opinion and aggrandizement for himself and his friends. His widely-publicized attacks on the gold standard, appearing there and elsewhere, eventually persuaded the British people and certain Treasury officials as well, that the use of gold as a basis for monetary value was the chief cause of unemployment in England and the only begetter of the Great Depression. When Keynes complained in 1932 that for twelve years he had exercised no influence whatever on British Treasury policy, there was more than a touch of poetic license in his lament.
In 1929, he was named by Philip Snowden, Fabian Socialist Chancellor of the Exchequer, to an official Committee of Inquiry into Finance and Industry; and from 1930 he served on the MacDonald government’s economic Advisory Council. The unprecedented attack and public humiliation to which he subjected Sir Montagu Norman, Governor of the Bank of England, as a witness before the Macmillan Committee in 1931, set the stage for Great Britain’s abandonment of the gold standard, so strongly advocated by Keynes.
Fiscal and economic plans of the Labour Party Government from 1929 to 1931 echoed a Keynesian formula by now grown familiar to Americans. It was estimated that a government-financed public works program, designed to increase employment by 5 per cent, would “increase” the Treasury’s income by one and one half per cent via taxes. This windfall, supplemented by a 7 percent cut in defense expenditures, would serve to launch the Labour Party’s welfare program. Deficit spending and a managed currency, both implied in these recommendations, were not stressed in the public announcement.
When politics intervened to prevent application of such a plan in England, it was exported to the United States, where it provided a basic pattern for New Deal budgets of the nineteen-thirties. The idea of “paying” for politically profitable welfare programs’ by stripping the defense establishment was a long-cherished Socialist scheme that proved agreeable to Franklin D. Roosevelt. In consequence, U.S. Army recruits hastily called up after Pearl Harbor were discovered to be drilling with dummy rifles made of wood. Shelved for almost twenty-five years thereafter, the double-barreled Fabian Socialist scheme to procure funds for the “war against poverty” by a gradual process of military disarmament was suddenly revived by the Johnson Administration in 1964, as if it were a new invention.
First public intimation that British Fabian Socialists meant to foist their largely untried fiscal remedies upon the United States Government came on December 31,1933. On that date, The New York Times printed an open letter from John Maynard Keynes to President Franklin D. Roosevelt which filled the better part of a page in the Sunday paper. The advice it contained was at once so paradoxical and so remote from the preoccupations of the average citizen that relatively few readers took it seriously. Only a handful of New Deal insiders, long allied with the London Fabian Society and its American offshoots, realized that Keynes’ open letter laid down guidelines for financial policy which the keepers of the United States Treasury would observe for years to come.
In October, the Roosevelt Administration, following the Keynes-inspired example of the British Government, had abandoned the gold standard and adopted the device of a managed currency. To avoid serious fluctuations in the value of the dollar, Keynes now advised the United States Treasury to go into the business of buying and selling bullion. He also stated flatly that a permanent program of government “investment” in public works should be contemplated to supplement the inadequacies of private investment in creating employment. As aids to economic recovery, he recommended higher wages and higher prices—the latter to be achieved through a policy of cheap money and lower interest rates, touched off by lowered interest rates on government loans.
Above all, Keynes warned the President against “that crude economic fallacy known as the quantity theory of money!” This was a delicate way of suggesting that a government’s spending need not be limited to the amount of its income, actual or anticipated. By inference, cheap money could always be borrowed to meet any threatened day-to-day deficits—leaving the long-range Government deficits a mere item of Treasury bookkeeping. In retrospect, it is obvious that every proposal made by Keynes in his open letter was subsequently adopted by the New Deal Administration.
For whatever reason, vast and still vaster sums were “invested” in public works. The United States Treasury proceeded to buy and sell silver as well as gold, at immense cost to taxpayers yet unborn and profit to the knowledgeable few. Through increased gold and silver purchases from Mexico in 1938, the New Deal Administration compensated the Mexican Government almost to the penny for loss of oil royalties incurred as a result of the latter’s expropriation of American and British-owned oil leases and related properties—a maneuver attributed to Keynes’ great friend, Harry Dexter White, then Assistant Secretary of the U.S. Treasury.
Between 1932 and 1953, “liberal” Democratic Administrations in Washington performed the remarkable feat of borrowing 250 billion dollars at steadily declining rates of interest, accomplished in part by pressure on the banks to absorb ever-larger quantities of government bonds. While each individual bond issue was repaid as it fell due, somehow the total remained on the Government books as an ever-mounting public debt. It was frenzied finance—a prescription for hand-to-mouth government operation, via a system of double entry bookkeeping.
Keynes paid a triumphal visit to the United States in June, 1934, one of numerous visitations. At that time, he was frequently consulted by many key persons in the Government, all eager for his comments and suggestions.(61) According to Secretary Perkins, he pointed out that in every respect the New Deal was doing exactly what his own theories called for. This was not surprising, in view of the fact that Keynes had cooperated closely with the British Fabian Socialist planners of PEP in drafting the preliminary plans for the New Deal, which were transmitted to Roosevelt via Felix Frankfurter, Stuart Chase, Harry Hopkins and Frances Perkins herself. When relief and public works appropriations were cut in 1937, Keynes warned of an economic recession—as did, in fact, occur, though not entirely for the reasons he alleged.
In 1934, Keynes was personally received by President Roosevelt, who wrote to their mutual friend, Felix Frankfurter, “I had a grand talk with K. and liked him immensely.” (62) To Frances Perkins, however, the President confided: “I saw your friend Keynes. He left a whole rigamarole of figures. He must be a mathematician rather than a political economist.” (63) On the whole, Keynes’ invitation to a higher, wider and handsomer program of government spending proved a pleasant prospect to the President, even if the attempt to justify it mathematically did not. Roosevelt’s own uncomplicated attitude toward money was best revealed in a mock-serious reproof to one of his secretaries who tended to be over-generous in her use of punctuation marks: “Grace, how often must I tell you not to waste the taxpayers’ commas? (64) Dollars or commas, they were much the same to FDR: if anything, he was more averse to wasting commas!
Following his interview at the White House, Keynes took the precaution of stopping in to see Secretary Perkins at the Department of Labor. After remarking ruefully that he had “supposed the President to be more literate, economically speaking,” he rehearsed his famous theory of “the multiplier” in simple terms. The “multiplier” was actually an invention of Richard F. Kahn, (65) one of Keynes’ clever students, which the “master” appropriated as his own.
As reported by Frances Perkins (on whose economic literacy he failed to comment), Keynes said that a dollar spent on relief was a dollar given in turn to the retailer, the wholesaler, and finally to the farmer—which, as any American farmer can testify, never happens! ‘With one dollar,” Secretary Perkins enthused, “you have created four dollars worth of national income!” (66) And she added, “I wish Keynes had been as concrete when he talked to Roosevelt instead of treating him as though he belonged to the higher echelons of economic knowledge!” (67) Keynes shrewdly surmised that Secretary Perkins would convey his simplified explanations to the President. In consequence, Roosevelt soon afterwards requested—and received—a 4 billion dollar appropriation for public works from the Congress.(68)
It was not necessary to be a serious student of Keynes in order to put his preachings into practice. Marriner Eccles, chairman of the Federal Reserve Board under Roosevelt, for instance, definitely helped to promote policies based on Keynesian economics. These, as Professor Seymour Harris has mentioned approvingly, included: printing-press money, unbalanced budgets, attacks on thrift, a redistribution of national income; all leading to increased production, especially in consumers’ industries, and to a larger volume of retail sales. Yet Eccles himself declared in 1951, “I have never read Keynes’ writings except in small extracts to this day.” (69)
Evidently Eccles derived his ideas from secondary sources, including some of his own assistants who were ardent Keynesians—among them, Lauchlin Currie. It may be useful to observe that Keynes’ views were officially derided by Soviet economists, who declared with unexpected veracity that his recipes could not possibly save capitalism in the long run. Nevertheless, individuals since disclosed as agents of the Soviet conspiracy in Washington, such as Lauchlin Currie and Harry Dexter White, were among the most active promoters of Keynesian measures. That circumstance alone might lead one to suspect his policies did not coincide with the best interests of the United States.
With the appearance in 1936 of his General Theory of Employment, Interest and Money, the various anti-depression remedies advanced by Keynes were codified and elevated to the status of an economic doctrine. For its influence on men and events to come, publication of the General Theory has been held comparable only to that of Karl Marx’s Das Kapital. Despite a difficult style quite unlike Keynes’ lucid journalistic prose, the burden of the work is a simple one. Employing a strange vocabulary and an authoritative manner, the General Theory undertakes to demonstrate that public investment (or government spending) must be indefinitely prolonged to correct the “deficiencies” of private capital.
It is based on two major assumptions, both of Marxist origin and both open to serious question. First, that a government is in duty bound to provide.”full employment” for its citizens: a condition only attained in the past under slave-economies. Second, that periodic slumps are inherent in the “sick” capitalist system. Regular infusions of government aid, therefore, are prescribed to insure a perpetual boom. The cure-all is attractively packaged and easy to swallow, even though the aftertaste may be bitter. If the patient eventually weakens and dies—well, that is bound to happen some day, and by then the hopeful physician will be out of reach. In the long run, as Keynes remarked, not too originally, we are all dead.
For devotees of pure English or uncluttered logic, reading Keynes’ General Theory is a painful experience. The text abounds in such stock terms as “durable consumer goods”—though clearly, nothing consumed can properly be called durable. The word which Keynes used most assiduously, however, and to which he attached the most variable meanings, is a word reminiscent of the stock market speculation: namely, “marginal.” Thus he speaks of “marginal tendency to consume”; the “marginal utility (70) of labor”; the “marginal efficiency of capital,” by which he really means “inefficiency.” All of these singular factors are measured percentage-wise and their effect on the national economy is computed.
“Liquidity preference” is the horrid phrase used by Keynes to describe the normal human impulse to keep some ready cash on hand, instead of spending or investing it at once. This, says Keynes, should be discouraged, because it takes money out of circulation. Saving is equated with hoarding, like the gold in the French peasant’s sock— even though modern savings banks often play a very useful role in private investment. In that Keynesian wonderland of topsy-turvy verbiage and distorted logic, one notes a gradual but implacable trend toward shutting off all the sources which are the lifeblood of private investment—including a campaign to dishearten the long-term investor by ever lower interest rates. Thus, in an artificially stimulated economy, which Keynes visualizes as constantly expanding, the role of private capital must inevitably shrink in proportion to the always more dominant public or government sector, until initiative fails at last and free enterprise gives up the ghost without a struggle.
Though Keynes is usually regarded, quite correctly, as the father of deficit spending, the implications of his General Theory are more far-reaching than the average American who is not “economically literate” might suppose. Public investment—so called because it allegedly reaps dividends in the shape of larger tax returns, even if the original capital outlay is never recovered—involves a great deal more than the mere act of spending.(71) It means “planning” of the nation’s economic life by invisible government planners; it means political supervision of private industry to measure its “social utility” and “efficiency” in providing jobs; it means a manipulated currency, to make certain that real wages do not rise too rapidly and that the only benefit of last week’s wage raise will be a bigger tax deduction. In other words, it means Big and Bigger Government.
Total employment itself calls for higher and higher levels of production, presumably to absorb the labor of a growing population. It means Big Industry and Big Labor, both increasingly subservient to Big Government. Moreover, total employment demands total consumption—that is, continuous and frantic personal spending without thought for the future. Whatever is not spent returns as taxes to the Government, which will care in some fashion for its carefree citizens in old age, sickness and other contingencies. The society evolving from all this combines the philosophy of the grasshopper with the community life of the ant—a synthesis never imagined by LaFontaine, that innocent of the ancien regime!
The revolutionary nature of Keynes’ New Economics was, of course, unnoticed by and unknown to the great American public. Its inner meaning was divulged only to the illumined few and has never to this day been generally acknowledged. Leaders of the international Socialist movement, however, were quick to grasp the point. The first enthusiastic review of Keynes’ General Theory by any professional economist came from the pen of G. D. H. Cole, (72) avowed Marxist, lifelong foe of the profit system and foremost Fabian Socialist doctrinaire of his time.
Whether Keynes himself remained an overt or covert member of the British Fabian Society is a purely academic question. Born, bred and nourished in the Fabian creed, he is not known to have ever forsaken it. Most of his relatives and close friends were openly connected with Fabian Socialist organizations. In 1922, his sister, Helen Keynes, revived the Fabian Educational Group, a “liberal” women’s group founded during World War I. Years later his niece, Polly Hill, became a staff member of the New Fabian Research Bureau, employed at her uncle’s request.
Although Keynes declined to join the New Fabian Research Bureau except as an Associate Member, his refusal caused no rancor and his views on economics were reflected in a majority of the forty-two “solid research pamphlets” published by the Bureau between 1933 and 1938. It was understood that his gesture had been prompted by a desire to avoid compromising his policy-making role as financial adviser to liberal statesmen abroad and Coalition governments at home. For years he continued to draw overflow crowds at lectures sponsored by the London Fabian Society. If he was not formally a member of the Society, he was still its most conspicuous ornament—and most effective secret weapon.
To disarm non-Socialist critics and to convey his true purpose to a Socialist elite, the author of the General Theory described himself blandly as an “economic nationalist.”(73) Though the term mystified many, others recognized it as a reference to the nationalism of Edward Bellamy, early prophet of the cooperative commonwealth, whose novel, Looking Backward, Keynes had read as a boy in Cambridge, England. Memories of the Bellamy Nationalist clubs, America’s first Fabian Socialist-inspired political movement, still survived in Cambridge, Massachusetts, where Keynes’ influence was to become a potent latter-day force. Elsewhere he stated delicately: “The Republic of my imagination lies on the extreme left of celestial space.” (74)
Keynes’ views on the nationalization of basic industries were more candidly disclosed in a private letter of February 1, 1938, to President Franklin Delano Roosevelt. There he wrote:
“. . . If I was in your place, I should buy out the utilities at a fair price in every district where the situation was ripe for doing so, and announce that the ultimate ideal was to make this policy nationwide. But elsewhere I would make peace on liberal terms, guaranteeing fair earnings for new investment and a fair basis of valuation in the event of the public taking them over hereafter.”
That there should be no misunderstanding, he added: “I accept the view that durable investment must come increasingly under state direction.” (75)
The system promulgated by Keynes, as even his most loyal disciples admit, was in reality no system at all. It was a rationale and a tool for achieving total political control, at a gradually increased tempo, over the economic life of a nation. Specifically designed to affect public policy, it adapted the once-pedestrian methods of Fabian Socialism to an age of high-powered mass production. More than any other contrivance, Keynes’ New Economics performed the feat of lifting the Fabian tortoise off the back roads and byways, and putting it on a modern freeway in a fast car supplied by its own willing victims.
Many years earlier—back in 1909, when the British Empire was strong enough to enforce peace throughout the world—spokesmen for the Conservative Party of Great Britain had asserted that Fabian Socialists would never be able to achieve their declared aim of nonviolent social revolution—because the free enterprise system would never consent meekly to its own destruction.(76) To that taunt John Maynard Keynes, who became Lord Keynes of Tilton, supplied a delayed but deadly answer. He furnished a formula for the peaceful transition to Socialism and helped mightily to induce the United States, greatest industrial nation on earth, to adopt it as an official policy.
Dealing in broad generalities based on equally broad assumptions, the General Theory was merely a framework to which Keynes’ acolytes and heirs could add such refinements or excrescences as their fancy dictated. It bred a new scholasticism, rather than objective study: for there could be no tampering with the basic concepts. Moreover, the macro-economics of Keynes, being primarily designed to influence public policy, implied that its adepts alone were qualified to plan the economic and fiscal destiny of nations. Thus the keys to the future were delivered into the hands of an intellectual elite trained to interpret the New Economics. This perhaps was the secret of its profound appeal to students and professors of political economy, intoxicated by the vistas of power and influence which their monopoly of the Keynesian technique conferred.
In academic circles the success of the General Theory was prompt and lasting. The young took it up and their elders followed, one of the first “older” economists to promote it being Professor Alvin Hansen of Harvard and the LID. A Keynesian school of thought arose, a close-knit fraternal entity whose members supported and advanced each other professionally. As Harvard Professor A.J. Schumpeter explained, this was a well-organized group professing “allegiance to one master and one doctrine,” with “its propagandists, its watchwords, its esoteric and popular doctrine.” (77) Linked to it was a wider ring of sympathizers in public and private life, and beyond these a still wider ring of persons who had absorbed, consciously or unconsciously, some phases of the Keynesian mystique.
Harvard University, where Keynes lectured in person, appears to have been the first influential center from which those widening smoke rings of modern Fabian Socialist doctrine were wafted. Its glowing core was the Department of Economics which, by affiliation with the School of Business Administration, was even able to extend the Keynesian outlook into the industrial and managerial field. A proud example of this permeation process was Robert S. McNamara, who, after serving as an assistant professor of Business Administration at Harvard from 1940 to 1943 and flying a desk for several years in the Army Air Force, became an executive of the Ford Motor Company— and ultimately civilian czar of the United States Department of Defense. His role, as professional army men have pointed out, was to devise and execute a series of nonmilitary actions for encirclement of the military.
Anyone who studied at a leading American or British university in the middle nineteen-thirties remembers how all at once the whole character of political economy seemed to change; along with such allied subjects as sociology, history and political science. Every previous approach was suddenly found to be outdated, and the New Economics of John Maynard Keynes became the harbinger of a New Social Order. Actually, the New Economics was not quite so new as its name. It borrowed something from Jevons, the nineteenth century Briton applauded in the original Fabian Essays, and much from minor Scandinavian economists engaged in applying a type of Socialism which has been called the Middle Way. The only major economic prophet, however, whose teachings the new doctrine did not wholly contradict, was Karl Marx; for Keynes discreetly left some things unsaid.
Paul Sweezy, known today as a “brilliant” Marxist as well as an ardent Keynesian, still recalls the electric excitement, the tingling sense of power and opportunity unlimited, that swept the campus in his student days.(78) Even a nonprofessional economist like the late John F. Kennedy, who was a Harvard undergraduate in the years when the Keynesian revelation first dawned, could hardly have avoided being impressed by the newly fashionable economic gospel. Many years later, by way of a practical testimonial, President Kennedy invited a number of his old teachers to Washington to aid him in planning policies for the nation and the world. His own talk was rich in such Keynesian catchwords as the gross national product, the balance of payments, and especially National Growth, which seemed vague but full of promise to a largely untutored popular audience.
It is generally agreed today that there is hardly a political economist of prominence in America who—even when he appears critical of Keynes—has not been influenced by the Keynesian method.(79) If he had resisted seriously, it is safe to say he would not be prominent. So strong and widespread is the influence of the Keynesian School, as exerted through the American Economic Society, the American Academy of Political Science, the American Association of University Professors and other respected bodies—not to mention the League for Industrial Democracy and the Americans for Democratic Action.
A graduate student in economics at a major American university who was bold enough to attack the Keynesian method as the intellectual fraud of the century and the product of an inspired charlatan, would be surprised to receive a doctorate—and would probably have difficulty in securing either an academic or government post, or the publishing outlets needed to rise in the profession. So dominant and so exclusive has the New Economics become, that the posthumous authority of Keynes is even greater than it was in his lifetime, when he framed international monetary policy and dictated postwar trade policies for England and the United States.
For some thirty years the New Economics launched by Keynes has been potent political medicine in Washington. Deficit budgets and grandiose spending became the hallmarks not only of the New Deal, but also of its liberally permeated successors, the Fair Deal and the New Frontier. Public “investment” in public works was superseded by Lend-Lease in World War II, to be followed by the multiple forms of foreign aid and civilian-planned defense in the postwar era. A reversion to the early New Deal emphasis on welfare and public works, with some added global overtones, was evident in President Johnson’s first State of the Union message.
One of the questions that appears to have escaped Keynes, as even the faithful Professor Harris admits, was: How high can a national debt rise without resulting in national bankruptcy? (80) Spurred by advice from John Maynard Keynes and macro-economists of the Keynesian School, the architects of the official public debt of the United States caused it to soar to 305 billion dollars by July 1, 1963—some 25 billion dollars more than the combined public debts of the other 112 nations of the world. Yet the Government was still borrowing money to finance a permanent program of foreign aid, on which a substantial part of our domestic production and employment seemed to depend. Even now there are Keynesians in the United States and England who complain that our annual deficits are not high enough to assure prosperity for all!
Although Lord Keynes died peacefully in 1946 and was interred with all the pomp an admiring Labour Party Government in Britain could provide, the mischief he compounded lives on. If his influence was vast during his lifetime, it has been enormously magnified since his death. In the pantheon of Fabian Socialism, even a demigod is not irreplaceable: there are always trained heads and hands prepared to push his theories, with appropriate variations, to their unnatural conclusion.
The cult of national suicide, initiated by Keynes and known as the New Economics, is not only preserved but expanded by his sophisticated followers, operating through the twin channels of politics and higher education with the blessing of the Socialist International. An entire generation of political economists has been reared in Keynes’ image; and Keynesian cliches have become the debased tender of intellectual exchange from Washington and London to Calcutta and Damascus. As The New York Times proclaimed in a banner headline on September 9,1963: “Once revolutionary, the economics of Keynes now is orthodox.”(81)
Almost imperceptibly, John Maynard Keynes became the “prophet of the new radicalism,” as a current spokesman of that radicalism, Arthur M. Schlesinger, Jr., has confessed. Since its goals do not differ noticeably from those of the old radicalism, little public mention is made of ultimate aims. The technical expedients for achieving them at ever-accelerated speed are stressed. Thus the methodology of Keynes has inspired a whole series of new high speed techniques and new forms of penetration for effecting a tacit transition to Socialism under the somewhat bewildering conditions of the post World War II atomic era.
Far from being defunct today, the Keynesian approach has become almost unassailable by virtue of time and repetition. The deceptively innocent slogan of “full employment,” for instance, was embodied in a Resolution passed in 1952 by the International Labor Organization in Geneva.(82) The same slogan reappears in the present-day programs of Socialist-directed trade unions and political organizations in the United States.
The Keynesian promise of a perpetual boom maintained through government spending—modern version of the Greek myth of the miraculous pitcher—was dished out as a basis for the Democratic Party’s national election campaign of 1964. In the shape of dazzling and generally unsubstantiated statistics, it has been rewarmed and served up to an uncritical public through popular magazines, (83) daily columnists (84) and news releases from official sources. All presage, often without realizing it, a transition to that Socialist way of life which the London Sunday Times once defined as “competition without prizes, boredom without hope, war without victory and statistics without end.”
The time-honored Fabian Socialist tenet, reaffirmed by Keynes, of indirect rule by an academic elite, was echoed as recently as 1963 in the Godkin Lectures delivered at Harvard by Clark Kerr, President of the University of California. The role of the professor in government, he noted, is no longer confined to Washington, but extends more and more into the fields of state and local administration as well. With the proliferation of the Federal-grant universities, that role seems destined to increase still further. Today, as never before, the campus is being drawn to the city hall and the state capitol. As Dr. Kerr explained it, the politicians need new ideas to meet new problems and the agencies need “expert” advice to handle the old problems. The professor, he asserted, can supply both.
By way of authority, he quoted the concluding sentences of Keynes’ General Theory: “. . . ‘the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by tattle else …. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.’ As for example, the ideas of Keynes.” (85)


Footnotes

1. Frankfurter was a founder and director of the American Civil Liberties Union; a legal counsel for the NAACP. He was also one of the original stockholders and contributors of the New Republic and a member of the board of Survey Associates, publishers of Survey Graphic. Helen Shirley Thomas, Felix Frankfurter: Scholar on the Bench (Baltimore, Johns Hopkins University Press, 1960), p. 21.
2. Robert Sherwood, Roosevelt and Hopkins (New York, Harper & Brothers, 1948), p. 47-48.
3. Ibid., p. 47.
4. David Elliot Weingast, Walter Lippmann (A Study in Personal Journalism) (New Brunswick, Rutgers Press, 1949), p. 10.
5. Felix Frankfurter, “The Supreme Court and the Public,” Forum magazine, (June, 1930), pp. 332-333.
6. Joint Anti-Fascist Refugee Committee vs. McGrath, 341 U. S. 123, 174 (1951). The Joint Anti-Fascist Refugee Committee is cited on the Attorney General’s list of subversive organizations.
7. Frankfurter’s personal interest in public ownership of public utilities dated from 1914, when he was a member of the board of trustees of the National Bureau of Public Utilities Research.
8. Thomas, op. cit., p. 29.
9. Congressional Record, House of Representatives (May 3, 1934), pp. 8042-43.
10. Italics added, then removed.
11. Among those who have been named as members of the National Planning Association were: Frank Altschul, Chester Bowles, James Carey, Harry Carman, Norman Cousins, Felix Frankfurter, A. J. Hayes, Eric Johnston, Laird Bell, James G. Patton, Walter Reuther, Elmo Roper, Beardsley Ruml, H. Christian Sonne, Clarence E. Pickett, Wayne C. Taylor, L. S. Buckmaster, Harry A. Bullis, J. D. Zellerbach, Jacob Panken, Randolph S. Paul, George Soule. Many of these individuals later joined the Committee for Economic Development.
12. Elizabeth Edwards, The Planners and Bureaucracy (Liverpool, K. R. P. Publications, no date), p. 22. From internal evidence, this pamphlet appears to have been written in the middle nineteen-forties.
13. Sherwood, op. cit., p. 230.
14. Ibid., pp. 230 ff.
15. Holmes-Laski Letters, Mark DeWolfe Howe, ed. (Cambridge, Harvard University Press, 1953), p. 141. (Laski to Holmes, March 11, 1918.)
16. Kingsley Martin, Harold Laski: A Biographical Memoir (New York, The Viking Press, Inc., 1953), pp. 45-46.
17. Ibid., pp. 38-40. Lord Beveridge in his autobiography Power and Influence (New York, The Beechhurst Press, Inc., 1955), p. 181 also states: “one of my first appointments (i.e. to the faculty of the London School) was Hugh Dalton. Another was Harold Laski, urged on me by Graham Wallas to rescue him from an uncomfortable position at Harvard.)
18. Francis Williams, Ernest Bevin (London, Hutchinson & Co., Ltd., 1952), p. 237.
19. Emanuel Shinwell, Conflict without Malice (London, Odhams Press, Ltd., 1955), p. 187.
20. Williams, op. cit., p. 210. Labour Party members who signed the Unity Manifesto included Stafford Cripps, Harold Laski, Aneurin Bevan, John Strachey, William Mellor. It was also signed by such leaders of the British Communist Party as Harry Pollitt, William Gallacher, James Maxton, Tom Mann.
21. Martin, op. cit., p. 130.
22. Ibid., p. 131.
23. Williams, op. cit., pp. 238-239.
24. The Socialism of Our Times. A Symposium. Harry W. Laidler and Norman Thomas, eds. (New York, The Vanguard Press, Inc.,–League for Industrial Democracy, 1929), pp. 131 ff.
25. Italics added, then removed.
26. Italics added, then removed.
27. Fabian News (October, 1931). Announcement of forthcoming lecture on Thursday, November 19, 1931 by Professor H. J. Laski.
28. “The Fabian Social,” Fabian News (June, 1933). This item states: “The Social evening party held at the Livingstone Hall on Thursday, May 4 was very successful. About 200 members and friends assembled and an enjoyable evening was spent. Short speeches were given by Sir Stafford Cripps, K. C. M. P., G. Bernard Shaw, Professor H. J. Laski and S. K. Ratcliffe, the last three having just returned to this country from America.”
29. “Friends Hall Lectures,” Fabian News (December, 1935). Review of Professor H. J. Laski’s speech of November 14 on “The Failure of the American Experiment.”
30. In a personal letter from Eleanor Roosevelt to M. P. McCarran.
31. Mrs. Laski was a well-known advocate of birth control clinics in England.
32. Martin, op. cit., p. 114.
33. Ibid., p. 114.
34. Cf. Articles by J. H. Laski, New Statesman, July 5, 1941 and September 13, 1941.
35. In this letter to President Roosevelt, Laski had expressed gratitude for the “noble appointments” of John Winant and Benjamin V. Cohen, as Winant’s adviser at the U. S. Embassy in London. He had also written: “[It is] exhilarating . . . when you believe that the two nations, after we’ve won, hold the fate of the world in their hands. If liberal America makes England speak the right words and do the right acts, even this may in the end be worth the blood and tears that have been shed.” Martin, op. cit., p. 141.
36. Ibid., p. 141. (Footnote)
37. Cf. President Roosevelt’s Message to Congress of January 6, 1941.
38. Martin, op. cit., pp. 141-142.
39. Apparently this has become a standard Fabian Socialist cliche. “We saw much and learned much,” wrote John Parker in Fabian News for October, 1963, describing a recent Fabian Society tour to Russia which he conducted. A long time member of the Fabian Executive, John Parker has been making “educational” visits to the USSR since 1932, when he accompanied Margaret Cole and the original New Fabian Research Bureau delegation on a study trip.
40. Martin, op. cit., p. 145.
41. On March 25, 1942 Churchill had written Laski: “I certainly should think it very undemocratic if anyone were to try to carry socialism during a party truce without a parliamentary majority.”
42. Martin, op. cit., p. 143.
43. Sherwood, op. cit., pp. 748-749. Sherwood states that Hopkins had with him at the Quebec Conference, which set the stage for the Teheran Conference of 1943, a document that contained the following estimate: “Russia’s post-war position in Europe will be a dominant one. With Germany crushed, there is no power in Europe to oppose her tremendous military forces. It is true that Great Britain is building up a position in the Mediterranean vis-a-vis Russia that she may find useful in balancing power in Europe. However, even here she may not b able to oppose Russia unless she is otherwise supported.
“The conclusions from the foregoing are obvious. Since Russia is the decisive factor in the war, she must be given every assistance and every effort must be made to obtain her friendship. Likewise, since without question she will dominate Europe on the defeat of the Axis, it is even more essential to develop and maintain the most friendly relations with Russia.
“Finally, the most important factor the United States has to consider in relation to Russia is the prosecution of the war in the Pacific. With Russia as an ally in the war against Japan, the war can be terminated in less time and at less expense in life and resources than if the reverse were the case. Should the war in the Pacific have to be carried on with an unfriendly or negative attitude on the part of Russia, the difficulties will be immeasurably increased and operations might become abortive.
This remarkable document, headed “Russia’s Position,” was alleged to have been quoted from “a very high level United States military strategic estimate.” It reflected with singular fidelity estimates published in the Fabian Socialist New Statesman by that high level nonmilitary expert, Professor H. J. Laski.
44. Martin, op. cit., This letter is reproduced on the page opposite, p. 135.
45. Italics added, then removed.
46. William R. H. Trowbridge, Cagliostro (Savant or Scoundrel?) (New Hyde Park, University Books, 1961), p. x.
47. Cagliostro is best known for having engineered the notorious affair of the Diamond Necklace, in which a Cardinal and a Queen of France were unwittingly entangled. The scandal touched off by that incident rocked the country and helped bring about the end of the monarchy.
48. In an editorial note, The New York Times (Western edition) of September 9, 1963 stated concerning Keynes: “. . . the greatness of his reputation is unassailable.”
49. Dr. Seymour E. Harris worked with Presidential candidate Adlai Stevenson on his press campaign and two-day seminars in 1954. He was also a member of his task force on the economy. Harris has served as consultant to a dozen federal departments. As of 1962 he was Senior Consultant to the Secretary of the Treasury and to the Council of Economic Advisors; a member of the National Academy of Sciences, the National Research Council, the Committee on Textile Research, and the Public Advisory Committee on Area Development. Seymour E. Harris, The Economics of the Political Parties, With Special Attention to Presidents Eisenhower and Kennedy. (New York, The Macmillan Co., 1962). Dedication reads: “For Arthur M. Schlesinger, Jr. and John Kenneth Galbraith,” p. vii Introduction.
50. Seymour Harris, John Maynard Keynes: Economist and Policy Maker (New York, Charles Scribner’s Sons, 1955), p. 19.
51. R. F. Harrod, The Life of John Maynard Keynes (New York, The Macmillan Co., 1951), p. 180.
52. Ibid., pp. 60-61.
53. Ibid., p. 63.
54. Seymour E. Harris, John Maynard Keynes: Economist and Policy Maker (New York, Charles Scribner’s Sons, 1955), p. 5, et al.
55. Ibid., p. 23.
56. Ibid., p. 24.
57. Cf. L. Frank Baum, The Wizard of Oz. (“The Highly Magnified Woggle-bug, H. E.”)
58. Thomas, op. cit., p. 17.
59. Fabian News (March, 1920).
60. David McCord Wright, “Mr. Keynes and the ‘Day of Judgment’,” Science, November 21, 1958, Vol. 128, No. 3334, p. 1259. Published by the American Association for the Advancement of Science.
61. Frances Perkins, The Roosevelt I Knew (New York, The Viking Press, 1946), p. 225.
62. Harrod, op. cit., p. 448.
63. Perkins, op. cit., p. 225.
64. Sherwood, op. cit., 217.
65. Harris, op. cit., p. 51.
66. Italics added, then removed.
67. Perkins, op. cit., p. 226.
68. T. R. B., “Washington Letter,” New Republic (June 17, 1934).
69. Marriner Eccles, Beckoning Frontiers (New York, Alfred A. Knopf, 1951), pp. 37-39; 78-79; 132.
70. A term borrowed from Jevons and used as a replacement for the Marxian theory of surplus value.
71. Some followers of Keynes assert that if sufficiently large sums are invested by government, the entire amount will return in taxes–thanks to the operation of the “multiplier.” To date, this phenomenon has not occurred.
72. Seymour E. Harris, John Maynard Keynes: Economist and Policy Maker (New York, Charles Scribner’s Sons, 1955), p. 206.
73. In his later years, Keynes also described himself solemnly as a “mercantilist”–referring to the eighteenth century mercantile theory, when foreign trade was under State control!
74. Nation and Athenaeum (February 20, 1926).
75. Franklin D. Roosevelt, Papers, Keynes to Roosevelt (February 1, 1938). Franklin D. Roosevelt Library, Hyde Park, New York.
76. The Case Against Socialism, A Handbook for Speakers and Candidates. With prefatory letter by the Rt. Honourable A. J. Balfour. (London, George Allen & Sons, 1909), p. 90.
77. The New Economics: Keynes Influence on Theory and Public Policy. A Symposium, Seymour E. Harris, ed. (New York, Alfred A. Knopf, 1947), p. 339.
78. Ibid., p. 106.
79. Seymour E. Harris, John Maynard Keynes: Economist and Policy Maker (New York, Charles Scribner’s Sons, 1955), p. 208.
80. Ibid., p. 214.
81. The New York Times (Western edition), (September 9, 1963). Article by British economist George Schwartz.
82. The Resolution referred to included the following significant sentence: “The Conference draws attention to the possible advantages of an international Convention which would provide for the assumption by Governments to accept full employment as a primary objective of social and economic policy, and to establish or designate appropriate national authorities which would be responsible for studying continuously the evolution of the employment situation and for making recommendations concerning the action to be taken to maintain full employment.” (From a Report on the 34th Conference of the International Labor Organization, by William L. McGrath, Adviser to Charles P. McCormick, Employer Delegate on the United States Delegation, p. 10).
83. See special Report: “$50 Billion Worth of Good News,” Life magazine (January 10, 1964).
84. See nationally syndicated column by Sylvia Porter, published January 23, 1964 in the Riverside, California Daily enterprise.
85. Clark Kerr, The Uses of the University (Cambridge, Harvard University Press, 1963). Chapter III, “The Future of the City of Intellect,” p. 116.