Leon H. Keyserling: A Progressive Economist

LEon H. Keyserling A PROGRESSIVE ECONOMIST

DONALD K. PICKENS

Leon H. Keyserling

Leon H. Keyserling A Progressive Economist

Donald K. Pickens

LEXINGTON BOOKS A division of ROWMAN & LITTLEFIELD PUBLISHERS, INC.

Lanham • Boulder • New York • Toronto • Plymouth, UK

LEXINGTON BOOKS A division of Rowman & Littlefield Publishers, Inc. A wholly owned subsidiary of The Rowman & Littlefield Publishing Group, Inc. 4501 Forbes Boulevard, Suite 200 Lanham, MD 20706 Estover Road Plymouth PL6 7PY United Kingdom Copyright © 2009 by Lexington Books All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publisher. British Library Cataloguing in Publication Information Available Library of Congress Cataloging-in-Publication Data Pickens, Donald K. Leon H. keyserling : a progressive economist / Donald K. Pickens. p. cm. Includes bibliographical references and index. ISBN 978-0-7391-4083-3 (cloth : alk. paper) ISBN 978-0-7391-4085-7 (electronic) 1. Keyserling, Leon H. (Leon Hirsch), 1908–1987. 2. Economists—United States— Biography. 3. United States—Economic policy—1945–1960. 4. United States—Economic policy—1961–1971. 5. United States—Economic policy—1971–1981. I. Title. HB119.K47P53 2009 330.092—dc22 [B] 2009019114 Printed in the United States of America

 ™ The paper used in this publication meets the minimum requirements of American

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To the memory of Kenneth Pickens, my father, a good and gentle man. Rest in Peace.

Contents

Acknowledgments

ix

Introduction

1

1 The Beaufort and New York City Years

23

2 Keyserling, Wagner, and the New Deal̓s Integrative Liberalism

39

3 Housing, World War II, and Integrative Liberalism

57

4 Integrative Liberalism and the Council of Economic Advisers, 1946–1953

85

5 Keyserling and the “Defunct Economists”

119

6 A Liberal in Exile: Keyserling in Eisenhower’s America

145

7 The Sixties: The New Deal Legacy and Integrative Liberalism’s Future

8 From Nixon to Reagan: The Age of Limits

163

and the Eclipse of Integrative Liberalism

187

9 The End Game: Keyserling and Reaganism

211

Bibliography

219

Index

241 vii

Acknowledgments

First and foremost I thank my wife Mary Jo for over fifty years, a first-rate helpmate and an excellent mother to our children, Kenneth Leslie and Elizabeth Catherine. The University of North Texas and the Harry S. Truman Library provided financial support. The library staffs at the University of North Texas, Georgetown University, the Truman Library, and the Wisconsin Historical Society were all helpful in providing guidance to research materials. I am grateful to Dale Rosengarten, Curator, Special Collections; Joseph W. Rubin, Archivist, Jewish Heritage Collection; and Alyssa Neely, Research Associate, all of the College of Charleston Library. They were particularly helpful at critical points in the research. Editorial Assistant Jana Wilson was invaluable in preparing the manuscript copy, and Ashley Baird deftly prepared the manuscript for production.

ix

Introduction

It was raining the last time I saw Leon H. Keyserling. We had participated in the Hofstra University Conference on the Truman Presidency in 1985. He presented a personal comment on those years; I gave an academic paper on Keyserling’s role on Truman’s Council of Economic Advisers. Keyserling asked me if I needed a ride. I had already called a taxi. Visiting with him would have been enjoyable. I was surprised that he was on the program, having assumed that he was retired or dead. He was neither! At the conference he rejected my contention that Keynesianism influenced the policies of the Council of Economic Advisers under his Chairmanship.1 His rejection was strong but it was not a personal attack. In fact the entire incident was pleasant. The reasons Keyserling rejected the Keynesian label and similar intellectual concerns led me to write this book. Leon H. Keyserling was a major creator and reflector of American integrative liberal reform from his days in the New Deal until his death in 1987. Apparently his personality and style still irritate some people who dealt with him during his career and in his retirement. He was not all insight and wisdom. He made mistakes and often revealed his humanity. His personality and behavior will emerge as his life story unfolds.2 In the research for this book, I discovered that Keyserling’s contributions and personality provoked some people to make harsh judgments either for political or personal reasons. Recently W. Robert Brazelton published his analytical biography of Keyserling. Professor Brazelton observed that he had “an immense sense of humor, sarcastic and pointed at times, but never malicious.” He could be both “cooperative and irritating, sometimes simultaneously!” That said, he also had a reformer’s “heart, a political ego, and a strong desire and ability to lead the fight for the right 1

2

Introduction

and for justice for all.”3 Brazelton’s book’s focus is essentially concerned with Keyserling’s role on the Council of Economic Advisers during the Truman Presidency. An anonymous source was dismissive of Keyserling’s ideas and personality. He said, “It appears he simply did not understand the complexities of macroeconomics and as a result fell back on the repeated and tiresome claim that economic growth would solve all problems. Most professional economists found him tedious and rather pathetic. They would avoid him if they could. Those who sympathized with his values tried to humor him.” The chapters which follow will put this opinion in perspective. It is appropriate to place Keyserling’s life and career in the context of American reform movements in the twentieth century. Using J. H. Hexter’s distinction between historical splitting and lumping, this book’s thesis is one of continuity as viewed from the perspective of the early twenty-first century.4 The label for this lumping is integrative liberalism. The defining of this overarching concept, its origins and Keyserling’s contribution to it constitute the book’s thesis. Integrative liberalism puts an emphasis on community. If the modern world is a three-way tension among liberty, equality, and fraternity, integrative liberals put the weight on the last concept, community. After all, integrative liberals such as Keyserling saw alienation and exploitation as the twin challenges to the democratic order. Both the Left and Right offered their alternative to integrative liberalism. In the following pages I explore the integrative liberal vision and Keyserling’s contribution to it. As with Brazelton, I am generally favorable to Keyserling’s efforts while recognizing that his personality on occasion detracted from his reforming efforts. After all, his career took place when the New Deal and the Fair Deal were hotly contested policies. They still are in many parts of American life and politics.5 Keyserling was not perfect; no man is, but his life, his creed, and thought still resonate. Keyserling was an integrative liberal. From the progressive era of the early twentieth century, liberals cultivated a deeper national community with mixed results. Except for fighting wars and the Great Depression, was the nation too vast, too diffused to be a Great Community? The Great Community was John Dewey’s label for what is here called integrative liberalism. Rexford Tugwell, an institutional economist, Franklin D. Roosevelt, and other progressives wanted “to make a country in which no one is left out.” For most of this century the effort was successful. In fact, “without resort to revolution or abandonment of the Constitution, the New Deal constructed an institutional framework for such a society as its main heritage.”6 This was FDR’s legacy as well as that of Tugwell, Dewey, and of course Leon H. Keyserling. Progressivism had many distinct characteristics which historians have illuminated. Recently they have correctly stressed the international dimension

Introduction

3

of progressivism and the ways in which social and political groups sought relief from the alienation and exploitation that threatened industrial America. Progressives, such as John Dewey, Keyserling, and others sought the creation of a community, a civil society, based on a new interpretation of what liberty, equality, and fraternity meant for an industrial urban future. “A doctrine based on the idea of natural rights and culminating in the idea of a non-interventionist state turned the old liberalism into a new liberalism, a moral and political argument for the welfare state based on a concept of the individual as a social being whose values are shaped by personal choices and cultural conditions.”7 Integrative liberalism is the linking concept for these century-long political and philosophical developments. While reform themes (and reformers) might be thought of as diverse and, they were, they were also progressive, meaning that they generally looked toward the state rather than the market for solutions. Some differences, of course, did exist, but among progressives there was “an overarching, and at-least-tacitly-coherent outlook on the world.”8 A general sense of crisis, covering the last thirty years of the nineteenth century and much of the twentieth century, contributed to this unity of concern and action. “Ambivalence over the character of modern society, the accelerating tempo of historical change and the relativistic implications of historicism were robbing historical thought, too, of its power to generate certain knowledge and values.”9 Many progressives looked forward to a bright future while gazing at the past with a sense of loss.10 Emerging from the rich mix of progressivism and republicanism in the last decades of the nineteenth century and in the first decades of the twentieth century, liberalism began its cultural transformation as an icon representative of the market place to that of the polis. Republicanism, eighteenth-century political thought, shaped the rhetoric and issues in American politics until late in the nineteenth century. It contributed to both policy issues and cultural politics. Politics, of course, means who gets what and how and why; in addition, cultural politics deals with myth, symbol and image of how the American people should behave and what they should believe. Until recently, the icon, the organizing myth or ideal, of United States history was a story of a middleclass utopia, wherein a geographically small republic exists. In this utopia a close but limited government governs all citizens who are united by shared historical experiences and a material stake in society. The United States has never embodied all elements of this utopian vision but the ideal still commands large appeal.11 Chapter One covers Keyserling’s life until he joins the New Deal. Among other developments in Chapter Two, Senator Robert Wagner’s contributions to integrative liberalism are analyzed. In fact, his urban liberalism created the principle source for integrative liberalism. Wagner’s personal experiences

4

Introduction

in New York City led him to support state intervention in the economy. He believed just social legislation prevented revolution; therefore, the right to employment was both good economics and an integrative means to the ideal of the good society. Responding to the Great Depression, Wagner championed the causes of the Roosevelt Coalition in which organized labor and various ethnic groups were key elements. In a particular manner, the label “urban liberalism” became “integrative liberalism” because of Keyserling’s contributions.12 With great expectations, Americans shaped their corporate and individual futures by the work ethic and equal opportunity. During the nineteenth century, “land” or the “frontier” provided the means for a material stake in society for all who justly earned it. In the twentieth century, a “job” for all (a full-employment public policy) was the major national reform after 1933. The business cycle and limiting the “creative destructiveness” of capitalism became politically contested terrain. Attuned to this desire, the New Deal ideology blended the republican form of government (of and by the people) with the democratic ideal of the good society (government for the people). Until the Great Depression of 1929, this economic growth or the expanding economy thesis was an assumed automatic process—people would be free because they would become middle-class. “Unlike modern growth theory, classical economists were not primarily concerned with the adjustments of the economy to the growth process, but with how such a process could be generated and sustained.”13 Often his critics accused Keyserling of being a Johnny One-Note, always harping about economic growth and demand for more production and governmental planning. By 1967, when Keyserling was no longer in governmental service, discussion and debate about economic growth came back into fashion. As one critic observed, the concept appealed to “consumerism upon which growth’s vitality becomes more malignant, as regards (among other matters) astronomical level of debt, and the spread of adolescent behavior through all age levels, all sectors of society.”14 Two historical factors challenged this concern about an automatic economic growth. The first factor was the “discovery of society,” the complex story of how the modern social sciences, particularly institutional economics, and the rise of anti-formalism in American philosophy destroyed the moral order within the social order which existed in harmony with the natural order.15 In unity these three orders provided guidance for personal behavior and public policy. During the twentieth century this unity of orders disintegrated. They became unfixed. Challenged by the rise of historicism in its various forms and an epistemological skepticism grounded in relativism, the cultural center would not hold. Things fell apart. The shadow of European totalitarianism fell across twentieth-century American reform, increasing the need for a state-supported vital center.

Introduction

5

When did critics and the public notice the transformation? According to Daniel Bell, the abandonment of the Protestant ethic and Puritanism meant that twentieth-century capitalism embraced no transcendent ethic. The result was that significant contradictions “played out” over the last half of the twentieth century. From a cultural point of view, conflicts existed between the adversary culture and traditional normative, or traditional behavior. This adversarial culture (or Bell’s counter-culture) indicated a split. When this “outraging the middle class” became normative in the popular culture, having exploded out of the literary artistic sub-culture of the late nineteenth century and the early twentieth century, the ramifications were vast. Lifestyle became the key concept; celebrations of personal freedom found expression through experiments in drugs and “free love” became normative for many Americans. At the same time, many reforming liberals accepted a basic permissiveness but could not effectively define any recognizable cultural limits to behavior.16 Despite these expressions of anti-social behavior and philosophical chaos, the United States had a Hegelian secret. The division between the political realm, limited government, written constitution, etc., and a capitalist market, laissez-faire ideal, self-made man, etc. “masks the fact that a new kind of social order was attempted on this continent.” This concept of a new social order was a success “in the sense of being able to create an institutional foundation that has protected individual liberties and rights, and provided a degree of continuity and consensus, and thus a social stability, unmatched in the history of political societies.”17 The reason for this continuity was the ideal that the history of the United States was an expression of middle-class utopianism, an ideal which became a crisis as the twentieth century unfolded.18 According to Hegel, “a real State and a real government arise only after a distinction of classes has risen, when wealth and poverty become extreme, and when such a condition of things presents itself that a large portion of the people can no longer satisfy its necessities in the way in which it has been accustomed so to do.” As later discussed, this Hegelian notion meant a mature economy, a fear which concerned Keyserling. Hegel concluded his analysis by observing that “America is therefore the land of the future, where in the ages that lie before us, the burden of the World’s history shall reveal itself.” Echoing themes of American nationalism and exceptionalism, he concluded, “It is a land of desire for all those who are weary of the historical lumber room of old Europe.”19 For the progressives and their ideological descendants the New Dealers and their progeny, the future was now. In a world marked by exploitation, alienation, and an America racked by the Great Depression and soon challenged by the totalitarian left and right, the crisis was pressing. The American

6

Introduction

response was a century-long reply—integrative liberalism, resulting in the rise of the Hegelian state.20 It was critical for the construction of a just society. Two other elements contributed to the Hegelian state during Keyserling’s lifetime. Hot and cold wars and the business cycle underscore the emergence of integrative liberalism from the New Era to the New Deal and beyond.21 In some instances integrative liberalism lacked the rigorous ideology much admired by the Left and Right. An integrative liberal, such as Keyserling, defined the vital center by weaving the past, present, and future together and rejected the drift of a laissez-faire public policy. The spirit of this middle way continued during the twentieth century. It was pragmatism with an “Americanized” Hegelian patina. The preservation of the civil society was the objective. To Hegel and American integrative liberal followers, the civil society meant both the “bourgeois sphere of market relations and the civil sphere of institutionalized individual and communal rights.”22 The characteristic of the civil society was a wide range of intermediary and volunteer associations which allowed equal citizens to solve mutual problems collectively.23 In the twentieth century with war, economic disasters, and ethnic and class conflicts, the Hegelian state was the means for the realization of the integrative liberal ideal. Three historical developments contributed to the Hegelian state. They were “the changes in the scale of the society, the outcome of changing political realignments, and the logic of the mobilization for war.”24 With its civil society ideal, the Hegelian state was critical in understanding integrative liberalism. “The denigration of civil society as anomic cruelly misread the complexities of modern society and the difficulties of establishing the limits of freedom and civility.”25 Later the rhetorical political expressions such as a “thousand points of light” and “I feel your pain” were pathetic or possibly cynical attempts to use the integrative liberal ideal while rejecting it in the realm of public policy.26 The ethical life was the basis for Hegel’s ideal of the state. Reciprocity was key, the mediating link between the nineteenth-century laissez-faire liberalism and the ancient polis. Liberalism saw the individual as autonomous, while the ancient polis emphasized individual sacrifice for the common good. The modern ethical order permitted free expression within the community, the dialectical identity of the community and the individual. Hegel’s famous assertion that one (the king) was free in the ancient world, that a few (the nobility) in the middle ages, and all (the citizens) were free in the modern world under the institutional canopy of the nation-state has historical validity in United States history.27 Community based on a Hegelian assumption was a central concept for progressives including Keyserling. Time and time again Keyserling and other

Introduction

7

reformers claimed that “the individual cannot be properly viewed apart from the social relationship in which he is enmeshed.”28 This reforming spirit was modified in the latter years of the twentieth century. Its quest from Woodrow Wilson to Lyndon B. Johnson was for a deeper understanding of national community and civic awareness. War and the Great Depression sustained a philosophical and political interest in finding an integrated community that recognized the freedom of all citizens. Behind the rhetoric of the New Deal politician existed the writings of academic scribblers.29 After World War II and during the Cold War, liberals in the progressive/New Deal tradition, such as Tugwell and Keyserling, slowly turned “from the character of public life to the expansion of both rights against the government and entitlements backed by the government.” Under pressure from market conservatives, integrative liberalism slipped from the center of American political culture which it had held since 1932. The classical concept of the polis lost its ideological appeal as conservatives turned toward libertarianism. Cultural conservatives worried that this relativism meant moral decay. By the end of the twentieth century, “Liberals who think we need rights against the community flinch at the idea [Hegelian in origin] that freedom stems from identification with the community.”30 While Hegelian elements were present in nineteenth-century America,31 institutional economists were the American means for the Hegelian expressions in integrative liberal thought. Granted, institutional economics took many forms and covered economists from Thorstein Veblen to Arthur Burns, the creed’s main concern dealt with analyzing American institutions and offering academic solutions, some of which eventually found their way into public policy and law.32 This legacy significantly influenced Leon Keyserling’s creed of reformism as discussed in subsequent chapters. As for Dewey, he never forgot the “permanent deposit” of Hegelianism in his instrumentalism. “It was a factor in producing my belief,” Dewey said, “that the only possible psychology, as distinct from a biological account of behavior, is social psychology. With respect to more philosophical matters, the Hegelian emphasis upon continuity and function of conflict persisted on empirical grounds after my earlier confidence in dialectic had given way to skepticism.”33 Believing that he had completely discarded Hegel’s analysis, Dewey’s ideal remained a democratic commitment to social interaction which he called the Great Community. Befitting a major source for integrative liberalism, Dewey’s thought advocated unity. “In all versions, unification is linked to process: Hegelian, Darwinian, historicist, and process functions for Dewey as a universal solvent,” melting away dualism and the misguided concerns of earlier philosophers.34

8

Introduction

The other major element in the integrative liberal point of view was American institutional economics which also had a Germanic origin. Institutionalists such as Veblen, C. E. Ayers, and Rexford Tugwell accepted science as a community of investigators whose social and physical worlds responded to human direction and purpose. This instrumentalism, expressed as a technological theory of value, brought rationality and abundance to the human world of culture. This emphasis on abundance, drawn from the thought of Simon Patten (1852–1922), influenced Keyserling’s later concern about the prospect of a mature economy and questioned the assumed automatic validity of Say’s Law, production equals consumption as the market clears goods at a fair price. Hegel’s concept that the geist gradually liberated Mind (Culture) from Nature’s dictum became an important basis for integrative liberalism during Keyserling’s lifetime. This liberation, found in science and technology, meant a free universality of thought. Nature became “intelligible by science, and rendering it completely malleable to the purposes by the rational technology which springs from science.”35 To American progressives such as Keyserling, this belief sustained integrative liberalism. Keyserling’s core values were democracy and social justice. Using Deweyan instrumentalism and Veblenian institutionalism, this creed of reform endorsed the unity of means and ends and the unity of the subjective and objective aspects of experience and thought. Although Keyserling’s career was in the practical world of politics and public policy, his philosophical orientation was in the cosmopolitan origins of American progressivism. Another means to understanding the significant changes in American life during Keyserling’s lifetime is to use Say’s Law in terms of cultural politics. A French economist, Jean Baptiste Say (1767–1832), argued that in a free market production (P) equaled consumption (C) over time. This assertion or law was buried and resurrected on several occasions in the policy and ideological history of the twentieth century.36 Taken in cultural terms if P = C, the increase in demand became an imperative for both Keynesians and institutionists to maintain purchasing power against economic maturity, a major fear of the depression decade. This concern for increased demand led to the minimum wage ideal, higher wages for organized labor, pensions, retirement accounts, and a whole range of programs that in time constituted the American welfare state. According to Douglas Dowd this increase in demand had changed into a mindless consumerism by twentieth century’s end.37 Along the way, a counter emphasis stressed the supply side (production) of the formula as inflation and economic stagnation plagued American life. These supple-side revolutionaries called upon the old time middle-class virtues of the

Introduction

9

work ethic, personal savings, etc. In brief, the productive virtues, celebrated in various ways over the course of United States history, were employed by the emerging critics of integrative liberalism. The Reagan Presidency was a direct result of this half-century of development. In addition the fate of organized labor and other social elements in the Roosevelt Coalition were connected via this cultural emphasis to the “demand” side of the formula.38 The source for conflict was progressivism itself. Being good cultural Americans, progressives looked both forward and backward—forward to the realization of democratic values in an age of industrialism and backward to some ideal where economic and political power was limited. They “thought New Deal reform was defined by urban liberals looking to a consumer democracy of abundance instead of a republic of citizen producers.” Shaped by the all-powerful corporate culture, these progressives defined New Deal reform, integrative liberalism, as un-American statism destructive of the nation’s moral fiber.39 The popular and scholarly debates over the New Deal are endless. This book’s thesis is clear: the New Deal absorbed disaffected interest groups into a winning political and cultural coalition. The intellectual origins of the New Deal were both American and European. Challenged by the Great Depression, the New Dealers continued their construction of a mixed economy inherited from a reforming tradition. Their success or failure has not yet been determined but their behavior demonstrated the vitality of American democracy.40 Meanwhile, integrative liberals such as Leon Keyserling were more successful, up to a point, in the realm of the economy. Drawing on the concept of economic growth, Keyserling and other thinkers and politicians urged a planning approach to solving the business cycle: the federal government should set growth goals.41 Over time, the central issues, particularly after 1945, were taxation and the allocation of government revenues among the population, a form of fiscal sociology. Contending with the business cycle meant that in his career Keyserling dealt on several levels with the legacies of John Maynard Keynes, a fascinating intellectual and policy relationship. In addition to the issue of Keyserling’s personality, another significant issue was Keyserling’s connection to Keynesian thought. In brief, Keyserling dismissed the Keynesian label but the relationship was complex. “Keynesianism is far more than a theory or doctrine; it has become a way of political thinking.”42 Critics in and out of government used Keynes as a symbol, a code word for all that they perceived as bad in the New Deal and later reform administrations, particularly in the Truman Presidency when Keyserling served in the White House. He was defensive about being marked as a Keynesian. When the Great Depression struck the American economy, the fear of the frontier’s closing meant economic maturity or stationary capitalism. “Discus-

10

Introduction

sion about workplace change became entwined with particular musings about the meaning of American history, the western frontier, and a sense of national destiny.” It was a uniquely American reaction.43 Leon Keyserling’s response to economic maturity was his major contribution to the integrative liberal ideal. Generally western society and particularly the United States lacks “both civitas, the spontaneous willingness to make sacrifices for some public good, and a political philosophy that justifies the normative rules of priorities and allocations in the society.”44 Economic depressions and war were the major exceptions to this generalization. Strengthened by the New Deal and World War II, the integrative liberal ideal was a recognizable policy position in the United States after 1945. From 1941 to the mid sixties most Americans had a common political, cultural, and social vision. With the war in Vietnam and domestic cultural changes, national experiences unequally impacted various social groups and classes. By the time of the Nixon Presidency, “most Americans seemed to hate each other more than the enemy. In this, Nixon was not alone. As President, however, he set a peculiarly dangerous example.”45 This trend did not stop with Richard Nixon. The counter-culture of feelings and self-expression (expressed as “do your own thing”) rejected the politics as advocated by integrative liberals such as Leon Keyserling. Another fact was that integrative liberals suffered from some success, creating the ill will that later exploded during the Reagan Presidency and the 1990s. They “managed to win battles through either the court system or various governmental bureaucracies.”46 In the rise of Reagan-motivated populism such actions were undemocratic, according to the GOP right wing who borrowed the idea from George Wallace.47 The growing influence of eighteenth-century political thought, republicanism, contributed to understanding the last half of the twentieth century and integrative liberalism. Commercial republicanism gradually replaced classical republicanism with its emphasis on sacrifice for the public good, always considered to be larger than the sum of individuals in the community. Briefly, the market replaced the polis. Civic progressive reforms of the industrial twentieth century appealed to the classical version of civic virtue. Progressives wanted fraternity for urban America, restoring the polis. However, Americans generally work together chiefly for the purpose of making money except during wartime when they work to save Democracy. In recent times, for example, President John F. Kennedy told citizens to “ask not what your country can do for you” and President George Bush called for “a thousand points of light” in a kinder and gentler America, with minimal results.48 Recently John Higham provided another means of understanding integrative liberalism in his essay, “America’s Three Reconstructions.” Citing

Introduction

11

the cultural consequences of the American Revolution, the Civil War, and post-1945 civil rights history, Higham argued that these three events drew on a liberal national ethos that, while noting cultural differences among the people, nevertheless stressed the cultural desire for social unity.49 The crisis of war and economic depression motivated this argument. The post-1965 civil rights crusade originated in the New Deal and created a synthesis of religious sentiment and the secular Enlightenment vision recognized as the American Creed. Keyserling’s contributions were significant. “The United States is endowed with a non-ethnic ideology of the nation. It is possessed by a predominately ethnic history. It may be now squandering an opportunity to create for itself a post-ethnic future in which affiliation on the basis of shared descent would be voluntary rather than prescribed.”50 Integrative liberalism and Leon Keyserling’s contributions were significant responses to that historic opportunity. Toward the end of the twentieth century, a widespread mocking cynicism denied an inclusive national community and questioned the integrative liberal ideal.51 United States history has a deeply divided narrative of ethnic, racial, and class conflicts; however, it also has an inspired heritage as the last best hope of humankind. During his lifetime Keyserling felt the sum of these concerns.52 These sentiments of middle-class respectability, once standard in American political rhetoric, now only generate mild amusement or cynicism. Why? The adversary culture challenged and defeated the middle-class norms, the harmony of the three orders (natural, moral, social) inherited from the nineteenth century. Early in the twentieth century this adversarial culture, a liberating modernism, urged an ethical relativism against the moral absolutes of the nineteenth-century middle-class order. In terms of philosophy this adversarial culture was a post-Nietzshean attack on faith and reason. It had real political repercussions. Now in the twenty-first century, “we live at a moment when accumulating evidence, in the form of intractable economic inequalities, racial and sexual animosities and institutional disintegration, suggests that the great emancipation from the Enlightenment has exhausted itself.” Yet more American intellectuals claim to be Nietzsche’s heirs.53 Appealing first to intellectuals, later to elements of the Left, by the 1960s this modernism by its destructive glorification of sex and drugs outraged the middle class. Massive modernism as popular culture carried the day. By the 1990s the situation encouraged a reactionary cultural counter-attack led by the political right. Pat Buchanan’s speech at the 1992 Republican presidential convention was a capstone reaction to the cultural politics of modernism. The result was an increased stress on the democratic center with a resultant reduction in the integrative liberal ideal.

12

Introduction

The intellectual and emotional center inherited from the New Deal order collapsed. Two books by Arthur M. Schlesinger, Jr., The Vital Center (1946) and The Disuniting of America (1992), underscore the changes. They describe how the New Deal order of domestic reform in the 1930s and Cold War diplomacy after 1945 gave way to the limited vision of ethnic and identity politics and ideological disputes over the narrative of United States history. Defenders of these interest groups never claim anything larger than the sum of their own interests. Identity politics became an end in itself not a means to the larger ideal of community.54 In the rush toward equality and liberty, noble ideals indeed, fraternity was bruised and neglected. The last years of the twentieth century provided numerous examples of this process. Until his death, Leon Keyserling was a critical witness to this historical process. Often the assumption was made that liberty, equality, and fraternity—the secular trinity of modern reform—contained no irony, tension or paradox among the three ideals. Yet it is the historical resolution and continuing contemporary debate of these three concepts that have deeply marked the last two hundred years. In fact irony, social tension, and intellectual paradox were and are the constant contexts for these three concepts. Definition is critical. Liberty involved two major concepts. The first model of liberty was the laissez-faire ideal. It encouraged individualism by assuming that each person realized a priori natural rights and freedoms by following his own devices and desires. Nature as expressed in John Locke’s philosophy was the guide. The assumed result was the social good, an “automatic” fraternity. It was freedom from feudalism and mercantilism. Constant with the shape of twentieth-century history, the second definition of liberty was a positive force; the individual as citizen claimed shares of the social product later designed as entitlements. The modern welfare state was the institutional expression of this new liberty. New Deal reforms and Atlantic Charter idealism manifested this liberty based on a twentieth-century concept of citizenship, one origin of which was in the polis idea of classical republicanism. The origins of this combination of domestic reform and internationalism were present in the progressive years before the Great War and emerged later in World War II and the Cold War. This second concept of liberty was the basis for many of Keyserling’s values and steered the course of twentieth-century intellectual history. Franklin D. Roosevelt was the center of this process. His legacies gave liberalism its contemporary definition of governmental intervention and expansion of civil rights. Given the nature of American politics where the real issues are always expressed as constitutional questions, Roosevelt and New Dealers used the parlance of constitutionalism in this new citizenship as an expansion of the

Introduction

13

natural rights tradition. It was not a transcendence of that tradition. New Dealers argued the welfare state was constitutional.55 At the same time another intellectual development urged historicism, which emphasized the contextual nature of reform and often invoked the pragmatism of John Dewey. Science was the basis for a democratic public policy. Keyserling was a public-service intellectual who dealt with policy solutions for issues arising from the political process. Keyserling and other service intellectuals of his generation, trained in Deweyian instrumentalism, subscribed to the belief that social science was “a purposive science tied to specific moral goals, and individuals who neglected this aspect abandoned their cultural and ethical responsibilities.” Keyserling came to intellectual maturity during the scholarly disputes over objectivity and purposive social science.56 Keyserling knew the latest social science theories of his day. His mentor Rexford Tugwell introduced him to the institutionalism of Thorstein Veblen and Simon Patten. Later, in government service, Keyserling recognized the limits of the natural rights political tradition. He also knew that defenders of the market and the status quo appealed to the natural rights tradition of laissez-faire. Keyserling’s analysis was one grounded in history and appeals to scientific certainty. The ramifications of this operational definition of liberty from laissez-faire to governmental intervention in the cause of equity influenced both Keyserling’s practices as a governmental office-holder and as writer on current events.57 Equality is historically difficult to define. It has three main definitions. First it meant equality before the law, due process. Covering a wide range of human behavior and institutions, this definition has clarity. The second definition was equality of economic opportunity which offered the hope of improved social status. The third definition contributed to integrative liberalism’s demise—equality of conditions leading to an equality of results. Transforming civil rights or liberties into entitlements, this third definition disparaged the ideal of fraternity in integrative liberalism, resulting in a demonic inversion of the original concept. Over the course of United States history and particularly since 1932, fraternity’s meaning moved from a compact of states to a union of the people, including Lincoln’s mystical nationalism and the Reverend Martin Luther King, Jr.’s Dream. From the Great Depression to World War II, to the Cold War and beyond, in both the elite and popular culture, this vision of democratic fraternity supported integrative liberalism. It meant economic growth, equal opportunity, and social status based on individual achievement. In this definition the social sum is greater than the total of individual interests and activities in society. Hence the Hegelian expression that all individuals as

14

Introduction

citizens were free under the rule of the modern nation-state. The goal of an expanding economy was critical in realizing this idealistic concept of the American nation. During the last two decades of the twentieth century, liberals rejected this type of public life for the expansion of individual social rights against governmental authority. They still wanted the government to provide social and economic security. As a result of this conflict, the liberalism of entitlements and rights suffered from misplaced political appeal and a moral energy grounded in ethical relativism. Some historians have misjudged the dichotomy between individual rights and entitlements. One scholar observed that “the growth economy, rather than structural change, caught the fancy of mid-century liberals like Leon Keyserling, who called for government/business cooperation to stimulate expansion.”58 Serving in the government for twenty years, advocating varied policies, Keyserling was a practical reformer. Knowing politics as the art of the possible, Keyserling was still a man of vision. This combination of skills shaped his life and thought. Economic growth is the categorical imperative of United States history.59 One historian traces three versions of the liberal vision in the history of the twentieth century. Old fashioned laissez-faire liberalism from the nineteenth century defended the status quo against ideas of managerial and progressive liberals. It meant that the courts and political parties, being laissez-faire on social issues, upheld private property by military intervention in industrial strikes. Narrowly defining the public interest, these liberals sharply separated the public realm from the private. Such liberals, unchanged by the events of the twentieth century, supported white supremacy and segregation. Managerial liberals believed that the corporation was the cornerstone of American life and public policy. Seeking self-government for corporate industrial groups, Herbert Hoover illustrated this form of liberalism. Private corporations claimed an innate public benevolence. (The creation of the public relations industry in the early twentieth century was not accidental.) Liberals of this school sought a para-state, “nexus of private-public authority uniting corporate management and government regulation.” This version was strong in American life during World War II and the Cold War allowing military or reactionary Keynesianism to emerge in the last half of the twentieth century. With an emphasis on the “guns” side of the expression “guns and butter,” military Keynesianism meant increased federal expenditures. As described by C. Wright Mills’s The Power Elite, the socio-political situation became normative. In his Farewell Address President Eisenhower warned Americans about such political and policy developments.

Introduction

15

Progressive liberalism’s origins were in the early years of the twentieth century. The reformers believed that the state could justly regulate the private economic interests in the name of public welfare. Defining the issue in social terms, as the discovery of society, they stressed that only the state had the legitimate resources and the benevolent political will to ensure the public good.60 As society changed, the state changed and ultimately the polis, that combination of institutions and political culture, changed. For the progressive liberals, John Dewey was the cultural hero, the icon of reform.61 Dewey influenced Keyserling. Both men, as well as other progressives, sought the Great Community or integrative liberalism. They sought national community and civic engagement. By the 1960s, however, some liberals began discounting the character of public life. Instead they wanted to expand “both rights against the government and entitlements backed by the government.” In the last twenty-five years, this liberalism’s moral energy and political appeal have declined and so has integrative liberalism. Concepts such as managerial and progressive liberalism are informative. The more inclusive integrative liberalism places them in a larger time-frame. For example, the Wagner Act and the other legislative expressions of the second New Deal were the results of a renewed integrative liberalism. With the challenges of domestic economic stagnation and foreign totalitarianism, integrative liberalism offers considerable insight into the events following the Great Depression. Integrative liberalism became identified with the welfare state and an internationalist and interventionist foreign policy. Developments in the popular culture of the 1960s—rock and roll, teenage rebellion, the drug culture—were far removed from Keyserling’s experience and vision. Keyserling’s life and thought provided a basis for examining American history from the days of Woodrow Wilson’s progressivism to Ronald Reagan’s conservatism. Constancy and continuity were hallmarks of Keyserling’s life and career. His contributions to the New and Fair Deals expressed classical republicanism, preserving the polis by defending the citizen against the economic chaos of the market—commercial republicanism. By the 1980s when the country embraced Reaganism, the New Deal legacy was an electoral burden to Democrats and a cultural unknown to the youth culture. The Reagan supporters linked, unjustly, integrative liberalism with avant garde positions in the popular culture. Despite this victory of the market conservative right in cultural politics,62 Leon H. Keyserling remains a significant person in twentieth-century history. His life and thought, “warts and all,” can be removed from the shadows of the past and examined in the light of history.

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Introduction

NOTES 1. The two articles are Leon H. Keyserling, “Harry S. Truman: The Man and the President,” Harry S. Truman, The Man From Independence. William F. Levantrosser, ed. (New York: Greenwood Press, 1986), 235–245 and Donald K. Pickens, “Truman’s Council of Economic Advisers and the Legacy of New Deal Liberalism,” Ibid., 245–263. 2. William Breit, “Biography and the Making of Economic Worlds,” Southern Economic Journal 53 (April 1987), 823–833 provides an insightful context for this approach. W. Robert Brazelton, “The Economics of Leon Hirsch Keyserling,” Journal of Economic Perspectives 11 (Fall 1997), 189–197. 3. W. Robert Brazelton, Designing U.S. Economic Policy, An Analytical Biography of Leon H. Keyserling (New York: Palgrave, 2001), 27. 4. J. H. Hexter, On Historians (Cambridge, MA: Harvard University Press, 1979), 14. 5. Two recent examples are Thomas Fleming, The New Dealer’s War, Franklin D. Roosevelt and the War Within World War II (New York: Basic Books, 2001) and Jim Powell, FDR’s Folly, How Roosevelt and His New Deal Prolonged the Great Depression (New York: Crown Forum, 2003). 6. C. Vann Woodward’s insightful foreword in David M. Kennedy, Freedom From Fear, The American People in Depression and War, 1929–1945 (New York: Oxford University Press, 1999) explores the outline of that historic development. See H. W. Brands, The Strange Death of American Liberalism (New Haven, CT: Yale University Press, 2001) for another interpretation. 7. James T. Kloppenberg, Uncertain Victory, Social Democracy and Progressivism in European and American Thought, 1870–1920 (New York: Oxford University Press, 1986), 298. For an examination of Kant and Hegel on American institutional economic thought see Donald K. Pickens, “Clarence E. Ayres and the Legacy of German Idealism,” American Journal of Economics and Sociology, 46 (July, 1987), 287–298. The essays in Robert Hollinger and David Depew, eds., Pragmatism, From Progressivism to Postmodernism (Westport, CT: Praeger, 1995), 8, 64, 215, 233, 285 provide context to the theme of this essay: the development of integrative liberalism. For two recent treatments of early twentieth-century reform see Michael E. McGerr, A Fierce Discontent: The Rise and Fall of the Progressive Movement in America, 1870–1920 (New York: Free Press, 2003) and John Lewis Recchiuti, Civic Engagement: Social Science and Progressive Era Reform in New York City (Philadelphia: University of Pennsylvania Press, 2007). 8. Peter Novick, That Noble Dream, the Objectivity Question and the American Historical Profession (Cambridge, UK: Cambridge University Press, 1988), 61. Sidney M. Milkis, “Introduction: Progressivism, Then and Now,” Progressivism and the New Democracy, Sidney M. Milkis and Jerome M. Mileur, eds. (Amherst: University of Massachusetts Press, 1999), 5 is a splendid collection of essays that stress the basic contiguity of issues. 9. Dorothy Ross, “Modernism Reconsidered,” Modernist Impulses in the Human Sciences, 1870–1930, Dorothy Ross, ed. (Baltimore: The Johns Hopkins University Press, 1994), 1.

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10. For the “future” see Charles Forcey, The Crossroads of Liberalism (New York: Oxford University Press, 1961); for the “past” see David W. Noble, The Paradox of Progressive Thought (Minneapolis: University of Minnesota Press, 1958). An insightful book about the changes in the popular culture toward the rewards of abundance and consumerism is Matthew Schneirov, The Dream of a New Social Order: Popular Magazines in America, 1893–1914 (New York: Columbia University Press, 1994), 175, 251, 258. The task was difficult in the face of the success of consumerism. As one historian noted, “Throughout Pragmatic social thought we find the view that the work of establishing and maintaining democratic community must be rooted in the cooperative use of intelligence and that it will require the ongoing reconstruction of our educational, industrial and political systems both to create higher levels of shared interests and to foster clearer recognition of these interests among the citizenry.” James Campbell, The Community Reconstructs: The Meaning of Pragmatic Social Thought (Urbana: University of Illinois Press, 1992), 96. 11. Donald K. Pickens, “The Expanding Economy: An Overview of United States as an Exercise in Middle Class Utopianism,” Journal of American Studies Association of Texas, 4 (1973), 30–37. 12. J. Joseph Hutchmacher, Senator Robert F. Wagner and the Rise of Urban Liberalism (New York: Athenaeum, 1971) is the standard biography. Hutchmacher provided a fuller discussion of urban liberalism in his “Senator Robert F. Wagner and the Rise of Urban Liberalism,” American Jewish Historical Quarterly 58 (March 1969). This study deals with the historical and historiograpic developments since Hutchmacher’s excellent work. 13. Thomas Sowell, Classical Economics Reconsidered (Princeton, NJ: Princeton University Press, 1974), 33. The Great Depression, the New Deal, World War II, and the Cold War forced an examination of American institutions. Robert C. Lieberman, Shifting the Color Line: Race and the American Welfare State (Cambridge: Harvard University Press, 1998), 6, 8, 178, 216. 14. Douglas F. Dowd, “The Virtues of Their Defects and the Defects of Their Virtues: Reflections on John Kenneth Galbraith and Thorstein Veblen,” Economics With a Public Purpose: Essays in Honor of John Kenneth Galbraith, Michael Keaney, ed. (New York: Routledge, 2001), 128. 15. Morton White, Social Thought in America, The Revolt Against Formalism (Boston: Beacon Press, 1957) is the classic analysis. 16. Daniel Bell, The Cultural Contradictions of Capitalism, Twentieth Anniversary Edition (New York: Basic Books, 1996), 25. See also 71 and 79. In fact, Bell’s classic book is most instructive about integrative liberalism; he does not use the label, but he has developed a powerful argument for its existence. 17. Daniel Bell, “The Hegelian Secret: Civil Society and American Exceptionalism,” Is America Different? A New Look at American Exceptionalism, Byron E. Shafer, ed. (Oxford, UK: Clarendon Press, 1991), 57. See also James W. Ceaser, Reconstructing America, The Symbol of America in Modern Thought (New Haven, CT: Yale University Press, 1997), 166. 18. Pickens, “The Expanding Economy: An Overview of United States History as an Exercise in Middle Class Utopianism,” 30–37.

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19. George W. F. Hegel, Lecture on the Philosophy of History. J. Sibree, translator (New York: Colonial Press, 1900), 85–87. 20. Paul Lakeland, The Politics of Salvation: The Hegelian Idea of the State (Albany, NY: State University of New York Press, 1984), 25, 67. According to Manfred Riedel, Between Tradition and Revolution, The Hegelian Transformation of Political Philosophy (Cambridge, UK: Cambridge University Press, 1984), 42–44, 145, 188, Hegel offered a middle way, a vital center to the issues of the state, economic stability, and civil society. 21. See William J. Barber, From the New Era to New Deal, Herbert Hoover, The Economists, and American Economic Policy, 1921–1933 (Cambridge: Cambridge University Press, 1985). 22. Warren Breckman, Marx, the Young Hegelians, and the Origins of Radical Social Theory: Dethroning the Self (Cambridge, NY: Cambridge University Press, 1999), 3. Michael Waltzer, “The Idea of Civil Society, A Path to Social Reconstruction,” Dissent (Spring 1991), is insightful about this philosophical connection. His concept, “critical associationism,” is quite similar to integrative liberalism as defined in this essay. 23. Kevin Mattson, Creating a Democratic Public: The Struggle for Urban Participatory Democracy During the Progressive Era (University Park, PA: The Pennsylvania State University Press, 1998), 3. See also Patrick D. Reagan, Designing A New America: The Origins of the New Deal Planning, 1890–1943 (Amherst: University of Massachusetts Press, 1999), 2–9, 12. 24. Bell, “The Hegelian Secret,” 66. For two explorations of the link between war and the welfare state see Nancy K. Bristow, Making Men Moral: Social Engineering During the Great War (New York: New York University Press, 1996), 18 and John F. McClymer, War and Welfare: Social Engineering in America, 1890–1925 (Westport, CT: Greenwood Press, 1980), 73. 25. Ibid., 69. 26. For a discussion of this process see Donald K. Pickens, “Polis or Market?: The American Conservatives’ Search for Continuity,” Quarterly Journal of Ideology, 21 (October, 1999), 65–92. As a New Democrat, President Clinton ignored the New Deal and its legacies. 27. Breckman, Marx, the Young Hegelians, 75. For the idea of the civil society as an educational process, shades of John Dewey, see page 77; for the tension between the ancient polis and the modern ethical order see page 79. 28. David E. Price, “Community and Control: Critical Democratic Theory in the Progressive Period,”American Political Science Review 68 (December 1974), 1666. Dewey incorporated the political themes of progressivism. He collapsed democracy and community into one definition while recognizing that the crisis of a liberal society was a moral one. See pages 1671–1673. Nils Gilman, Mandarians of the Future: Modernization Theory in Cold War America (Baltimore: Johns Hopkins University Press, 2003) sees continuity—“lumping”—of New Deal planning and later foreign policy. See p. 38. 29. William Breit and Roger L. Ransom, The Academic Scribblers, American Economists in Collision (New York: Holt, Rinehart and Winston, 1971). William

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J. Barber, Design Wihtin Disorder: Franklin D. Roosevelt, the Economists, and the Shaping of American Economic Policy, 1993–1945 (New York: Cambridge University Press, 1996) provides historical context to this book’s argument. J. Ronnie Davis, The New Economics and the Old Economists (Ames: Iowa State University Press, 1971) is also instructive. 30. Alan Ryan, John Dewey and The High Tide of American Liberalism (New York: Norton, 1995), 320. Michael J. Sandel, “Dewey Rides Again,” The New York Review of Books (May 9, 1996), 38. Sandel labeled Dewey’s thought as civic liberalism; this essay offers integrative liberalism as the defining term. 31. Loyd D. Eaton, Hegel’s First American Followers (Athens, OH: Ohio University Press, 1966); William H. Goetzmann, The American Hegelians (New York: Knopf, 1973); Henry A. Pochmann, German Culture in America, Philosophical and Literary Influences (Madison: The University of Wisconsin Press, 1957). 32. For background see William J. Barber, ed., Breaking the Academic Mode, Economists and American Higher Learning in the Nineteenth Century (Middletown, CT: Wesleyan University Press, 1988); Joseph Dorfman, et al. Institutional Economic, Veblen, Commons, and Mitchell Reconsidered (Berkeley: University of California Press, 1963). See also Dorfman’s classical treatment of The Economic Mind in American Civilization, Five Volumes, Reprint (New York: A. M. Kelley, 1966). Another examination is Michel A. Bernstein, A Perilous Progress: Economists and Public Purpose in Twentieth-Century America (Princeton, NJ: Princeton University Press, 2001). 33. As quoted in John Dewey, The Early Works, 1882–1898 Volume One (Carbondale: Southern Illinois University Press, 1969), xxxvi. For a discussion of Dewey and Hegel see Neil Coughlan, Young John Dewey, An Essay in American Intellectual History (Chicago: The University of Chicago Press, 1975). See also Richard Rorty, “Dewey Between Hegel and Darwin,” Modernist Impulses, 54, 63, 65–66, 71, 77, 79. “Hegel was the framework within which Darwinism was incorporated into religious thought, and German historicism was the means by which God’s spirit was charted in both church and society. On this reading—and here the evidence in Progressive writings is simply overwhelming—the social gospel was both the fulfillment and the death knell for academic theology as the highest expression of American thought.” Eldon J. Eisenach, The Lost Promise of Progressivism (Lawrence: University Press of Kansas, 1994), 101. See also, Donald K. Pickens, “Clarence E. Ayres and the Legacy of German Idealism,” The American Journal of Economics and Sociology, 46 (July 1987), 287–298. 34. Leon Fink, Progressive Intellectuals, and the Dilemmas of Democratic Commitment (Cambridge, MA: Harvard University Press, 1997), 35, 53, 71, 89. 35. John N. Findley, “Hegel’s Use of Teleology,” New Studies in Hegel’s Philosophy, William Steinbram, ed. (New York: Holt, Rinehart and Winston, 1971), 105. 36. See Thomas Sowell, Say’s Law, An Historical Analysis (Princeton, NJ: Princeton University Press, 1972) for a discussion of this economic theory. 37. See endnote 13. 38. Robert Booth Fowler, Enduring Liberalism: American Political Thought Since the 1960s (Lawrence: University Press of Kansas, 1999), 35–36, 103–105, 107, 150.

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For an excellent analysis for understanding liberalism see John Patrick Diggins, Ronald Reagan, Fate, Freedom, and the Making of History (New York: Norton, 2007). 39. David A. Horowitz, Beyond Left & Right: Insurgency and the Establishment (Urbana: University of Illinois Press, 1997), 159. Ironically in the years since 1945, both the New Left and the Reagan Right used elements of this ideological position in their critiques of the New Deal legacy, integrative liberalism. Herbert Hoover was prime example of a particular kind of progressive who saw himself as a liberal, a progressive despite the New Deal “capture” of the label. See Joan Hoff Wilson, Herbert Hoover, Forgotten Progressive (New York: Reissued by Waveland Press, 1995) [1972]. 40. Thomas K. Mc Craw, “The New Deal and the Mixed Economy,” Fifty Years Later, The New Deal Evaluated, Harvard Sitoff, ed. (Philadelphia: Temple University Press, 1985), 64–66. Michael D. Bordo, et al., ed., The Defining Moment: The Great Depression and the American Economy in the Twentieth Century (Chicago: University of Chicago Press, 1998) provides an insightful overview. 41. Howard J. Sherman, The Business Cycle: Growth and Crisis Under Capitalism (Princeton, NJ: Princeton University Press, 1991) provides an interesting overview. 42. O. F. Hamouda and B. B. Price, eds., Keynesianism and the Keynesian Revolution in America (Northampton, MA: Edward Elgar, 1998), xiii. 43. Amy Sue Bix, Inventing Ourselves Out of Jobs? America’s Debate Over Technological Unemployment, 1929–1981 (Baltimore: Johns Hopkins University Press, 2000), 8, 38. 44. Daniel Bell, The Cultural Contradictions of Capitalism twentieth anniversary edition (New York: Basic Books, 1996), 25. See also 71 and 79. In fact, Bell’s classic book is most instructive about the rise and fall of integrative liberalism; he does not use the expression but has developed a powerful argument for its existence. 45. Michael S. Sherry, In the Shadow of War, The United States Since the 1930s (New Haven: Yale University Press, 1995), 278–279, 319. 46. William C. Berman, America’s Right Turn, From Nixon to Bush (Baltimore: The Johns Hopkins University Press, 1994), 43. Michael Flamm provides a critique of Berman’s book in an H-Net Book Review entitled “America’s Right Turn Revisited,” published in January, 1999. 47. Dan T. Carter, The Politics of Rage (New York: Simon & Schuster, 1995). Michael P. Federici, The Challenge of Populism: The Rise of Right-Wing Democratism in Postwar America (New York: Praeger, 1991), 39. 48. See the two articles by Donald K. Pickens, “Polis or Market?: The American Conservatives’ Search for Continuity,” Quarterly Journal of Ideology 21 (June 1998), 85–113 and “The Turner Thesis and Republicanism,” Pacific Historical Review 61 (August 1992), 319–340. 49. John Higham, “America’s Three Reconstructions,” New York Review of Books 44 (November 1997). 50. David A. Hollinger, “Postethnic America,” Beyond Pluralism: The Conception of Groups and Group Identities in America. Wendy F. Katin ed. (Urbana: University of Illinois Press, 1998), 47. Kenneth S. Baer, Reinventing the Democrats: The Politics of Liberalism From Reagan to Clinton (Lawrence: University Press of Kansas, 2000),

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24, 169 explores the connection between the New Dealer and the New Democrat. It was a “move to the center.” 51. See Robert D. Putnam, Bowling Alone, The Collapse and Revival of American Community (New York: Simon & Schuster, 2000) for an informative analysis of this process. 52. For a good comparison of domestic reform and foreign policy see David Steigerwald, Wilsonian Idealism in America (Ithaca: Cornell University Press, 1994) and Frank Ninkovich, The Wilsonian Century, U.S. Foreign Policy Since 1900 (Chicago: The University of Chicago Press, 1999). 53. Ibid., xi. For context see John Burt Foster, Heirs to Dionysus: A Nietzchean Current in Literary Modernism (Princeton, NJ: Princeton University Press, 1981). 54. James Hoopes, Community Denied, The Wrong Turn of Pragmatic Liberalism (Ithaca: Cornell University Press, 1998), 174. 55. See Sidney M. Milkin, “New Deal Party Politics, Administrative Reform and the Transformation of the American Constitution,” The New Deal and Its Legacy, Critique and Reappraisal, Robert Eden, ed. (New York: Greenwood Press, 1989) 128–145. For two informative accounts on this complex point see Maxwell H. Bloomfield, Peaceful Revolution: Constitutional Change and American Culture from Progressivism (Cambridge, MA: Harvard University Press, 2000) and G. Edward White, The Constitution and the New Deal (Cambridge, MA: Harvard University Press, 2000). 56. This point is more fully developed later in the essay. Mark C. Smith, Social Science in the Crucible, The American Debate Over Objectivity and Purpose, 1918– 1941 (Durham, NC: Duke University Press, 1994), 30. 57. In 1966, Ellis W. Hawley published The New Deal and the Problem of Monopoly, A Study in Economic Ambivalence (Princeton, NJ: Princeton University Press), a classic account of how the New Deal dealt with monopoly. This ambivalence was not restricted to economic policy. The tension between the natural rights tradition and historicism was a similar part of the Roosevelt Administration. This ambivalence was a major issue in Keyserling’s career as an advocate for reform. During his lifetime, integrative liberalism rose and fell depending on which side was carrying the day. 58. John J. Broesamle, Reform and Reaction in Twentieth Century Politics (New York: Greenwood Press, 1990), 65. The purpose here is not to play the academic game of one upsmanship in which an author claims that only the newest historical interpretation or latest book, however revisionist in tone and thesis, is worthy of consideration as the closest possible approximation of the truth. I am indebted to all the historians and scholars cited in this book. 59. Donald K. Pickens, “The Expanding Economy: An Overview of the United States as an Exercise in Middle Class Utopianism,” Journal of the American Studies Association of Texas, 4 (1973), 30–38. 60. Alan Dawley, Struggles for Social Justice, Social Responsibility and the Liberal State (Cambridge, MA: Harvard University Press, 1991), 128–138, 150. 61. Michael J. Sandel, “Dewey Rides Again,” The New York Review of Books, 43 (May 9, 1996), 38. 62. See Godfrey Hodgson, The World Turned Right Side Up, A History of the Conservative Ascendency in America (Boston: Houghton Mifflin, 1996).

1 The Beaufort and New York City Years

As part of the contemporary South, Beaufort, South Carolina, has a gracious style with a romantic sense of history. Beautiful antebellum homes are now bed and breakfast establishments. The Chamber of Commerce welcomes visitors with quaint shops and delightful eating places. African-American/Anglo relations are calm and cooperative. Like other communities in today’s South, Beaufort is officially hopeful of the future, seeking to attract investment and industry to the region. Beaufort and numerous other small communities want to combine the benefits of industrial development with the rural, pleasant atmosphere of the small town. It was not always so. Leon Keyserling’s life story began far from the low wetlands of his native South Carolina. William, his father, was born in Russia in 1869. He was a Jew.1 Migrating to New York City, William did not remain in the city for long. By 1888, he had moved to Beaufort County, South Carolina, where he invested in and worked on agricultural and mining projects. The 1893 storm which flooded much of the countryside greatly impacted his activities. Until 1916, he and his family lived on Ladies Island and St. Helena Island. William married Jennie Hyman of New York in 1907. They had four children. Leon was the oldest child in the family, born in 1908. Following the birth of two daughters, Herbert, the last child, was born in 1916. He practiced medicine in Beaufort. His wife Harriet Keyserling later became a leader in the South Carolina state legislature, serving for twelve years. Devoted to the region, William worked in the fields with small planters and farmers, developing the production of sea island long staple cotton, a plant which was supposed to resist the boll weevil. As a member of MacDonald, Wilkins and Company and later as president, he pushed for more ginning out23

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lets and extensive truck farming, particularly after the boll weevil blight. His company developed general stores on several of the islands and expanded its wholesale business. In 1907 William bought out MacDonald Corporation. During the Great War, he was president of the Dale Farms Corporation, a successor to MacDonald. The Corporation planted crops over several counties and islands, employing over 8,000 African-Americans. Working with several other businessmen, William became President of the South Carolina Produce Association, the largest distributor of vegetables in the Carolinas. As a part of that enterprise William and his associates organized the Enterprise Ice and Manufacturing Company, providing refrigeration for transporting truck crops.2 Over the years William Keyserling worked for the betterment of the Beaufort community, always seeking new industry for the area. As a member of the City Council, he urged strong financial planning for the coastal community. Having developed the charitable Community Club, he served as the Chairman of the County Board of Public Welfare. He practiced the Jewish ideal of bringing die velt (this world) into harmony with yene velt (the world to come). William Keyserling’s progressivism was connected to Jewish social thought and went beyond the southern ideal. He supported educational opportunities for African-Americans. He served as a trustee to Penn Center, an educational institution established by Quakers during Reconstruction. The organization is still active today. In addition, after World War II William wanted to acquire surplus facilities at the U.S. Naval Air Station for a recreational center for African-Americans in Beaufort County.3 Concern about community relations drew William into politics. In 1922, he publicly denounced the Ku Klux Klan in the local newspaper. During the Great Depression, William requested a farming program for the AfricanAmerican farmers in the county and he protested the abolition of AfricanAmerican demonstration agents in the Sea Island area. These actions were courageous, strong examples of his fair play and social justice.4 William’s personality was a strong contributing influence on his eldest son, Leon. “His interests were aroused and his energies challenged,” regarding the plight of Jews in the years following 1945. He organized the first chapter of B’nal B’rith in Beaufort. For the last fifteen years of his life, William raised money locally and nationally for the United Jewish appeal. “We must save Jewish lives,” he said. A sudden heart attack ended his life at the 1951 meeting of the National Conference of Jews.5 For William, Leon, and others, Israel and the Holocaust became twin pillars of American Jewish “civil religion.”6 Their Judaism expressed ethnic experience as much as religious belief. Other Jews shared this ideology.7

The Beaufort and New York City Years

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William’s legacy fostered Leon’s expression of integrative liberalism. Leon continued in his father’s liberal contributions to civic activities. While issues and tactics changed, the desire for an integrative vision of reform remained, an inheritance from father to son. Years later, in a doggerel, autobiographical poem, Leon described their relationship. “He was strongly minded; practical beyond description/ And all I’ve done within this sphere I owe to his prescription.”8 In a gracious obituary, The Beaufort Gazette observed that William Keyserling was a link between two eras in local and regional history. In braving meteorological storms from the Atlantic and human storms in Beaufort William proved he had the ability to survive and to rescue other people in the community. “He was that kind of personality that intimates are inclined to include among the great figures they are able to count on their fingers.” In conclusion the editor remarked that, “Those who knew him, and many who will never, are richer for his having lived.”9 It was a fair evaluation of William’s contribution that his eldest son advanced during his life. Jennie, Leon’s mother, significantly contributed to Leon’s development. She read diligently to Leon and the other children. Providing tutors, she closely followed Leon’s progress in Beaufort’s public schools. In the summers Leon and his family went to New York City, visiting relatives and enjoying cultural events. In addition to raising four active children Jennie was engaged in civic and educational work in Beaufort. Her influence on Leon endured long after her death from cancer in 1935.10 Leon was born on January 22, 1908, in a hospital in Charleston, South Carolina. The medical facilities were primitive in Beaufort County at the time. Until he was nine, the family lived on St. Helena Island where Leon was an active and bright child. He played with both African-American and Anglo children in the area. Leon was a smart student with almost photographic memory. Reading and writing were his life-long activities. In 1917, William built a fine house on Bay Street in Beaufort so the children could easily attend public school. At the time there was not a bridge connecting Beaufort with St. Helena Island. Now a town boy, Leon and his brother Herbert, younger by seven years, enjoyed the spacious house on Bay Street. Designed by Savannah architect Morton Levy, the property included the main house filled with such modern conveniences as a central baseboard vacuum system, indoor plumbing complete with a brass, European full-body shower. Steam radiator heating with an electric call-box system and ample closets were also parts of the main house. Grandmother Keyserling lived on the east side of the house in a small, adjacent setback cottage. On the other side, William’s brother Israel lived in another cottage which was surrounded by a dairy cow pasture. A house for servants, a two-car garage with a stepdown grease pit, and a clay tennis court were also parts of the homestead. It

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took eighteen months and $28,000 to complete the complex. It was a comfortable existence and Keyserling enjoyed it. Surrounded by family, friends, and playmates, Leon and Herbert roamed their large home and the village of Beaufort. Leon’s childhood was good and he was a fine son, despite an occasional boyish prank. He was active. Swimming, playing baseball and tennis, Leon also read widely. Beaufort was his home, but his family and his educational experiences opened a wider world to him at an early age. Leon’s formal education was first-rate. Beaufort public high school had small classes. An interested teacher of English helped Leon develop his writing skills. Leon’s educational development was exceptional. For example, he won a prize for his essay “Bigger and More Beautiful Beaufort” in the George Waterhouse Essay Contest. He wrote that his home town needed beautification, growth, and industrialization and that it was the duty of local citizens to improve many facets of the government. Leon had a framed newsprint copy of the essay hanging on his office wall until his death. His essay carried the basic elements of Leon’s creed for public service, the ideal of integrative liberalism. Time and again, Keyserling’s reforming philosophy (integrative liberalism) drew from secular and Jewish sources. While not a Temple Jew, Keyserling was always fully aware of his religious legacy which his secular experiences complimented in many ways. During his life, he was active in and provided leadership for several Jewish agencies. His ethics and politics were united. His younger brother Herbert understood Leon. As he later observed, “I cannot help but feel there was a predestined plan for Leon to spend much of his life in public service.”11 He also noted another experience that contributed to Keyserling’s liberalism. While in high school, on Saturdays, Keyserling worked at one of his father’s company stores from early morning to late at night. Many of the African-Americans in the area worked on the farms operated by William and his partners. “It was probably this association with the blacks and poverty that perhaps led him to do many of the things he did later.”12 With his parents’ legacy of community service and his own work experience Keyserling became a classic profile of the progressive, solidly middle class with a strong sense of stewardship. He was never a grim reformer; his ready sense of humor often came into play, particularly as he grew older. Years later Leon joked that upon hearing of his acceptance at Columbia, the Superintendent of Schools at Beaufort began changing his grades so the school district would not be ashamed! To be sure, he was an ambitious youngster who left for New York City and Columbia University. Leon returned often to Beaufort, remaining close to his family and community.

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A bright student, Keyserling was both naive and brash. Only sixteen when he entered Columbia University, a series of “fantastic accidents” led to his life’s work. In his freshman year he took contemporary civilization, a now famous course that featured a comprehensive approach. The same year he took advanced English, having placed out of the basic course. He also studied French and trigonometry. He was being helped by a couple of underclassmen who persuaded him to join a fraternity. William Keyserling opposed Leon’s joining on the grounds that such a social organization was “clannish.” Leon “did join against the advice of my father.” During the enrollment process, a faculty member questioned the wisdom of taking Greek and suggested “history or government or economics.” Because economics was last on the list, Keyserling enrolled in the introductory course in the dismal science. The instructor told him the course was for sophomores. As Keyserling was leaving the class, the instructor called him back and told him to go talk to the head of the department. Young Keyserling went to the head who only asked how old he was. When the answer was sixteen, the head, Rexford Tugwell replied, “A man who is sixteen years old can accomplish anything in life he wants to” and enrolled Keyserling in the class. During his undergraduate years Keyserling took other courses and a seminar with Tugwell and “got to know him very well.”13 Keyserling graduated with a BA in economics in 1928. Keyserling entered the Harvard School of Law immediately after his graduation. The experience bored him. By his own account he cut half of his classes. As he sardonically recalled, “Trusts, contracts, sales and bills and notes struck me as such a bore/ That when I did not stay awake, the prof could hear me snore.”14 Apparently, Harvard Law School was still using the case study method and not the current intellectual rage of legal realism employed at Yale. At Harvard the course of study was rigid. Constitutional law was not a required course. A revised curriculum was agreed upon, but it required no instruction in public law. The professors’ rigidity matched that of the curriculum. Keyserling did, however, graduate with a Harvard Law Degree in 1931, or as he expressed the experience years later, “when I got out of law school.” The fantastic accidents were not over. Because of the Depression, jobs were few but Keyserling had an offer to be a clerk for $1,800 per year for Chadbourne, Stanchfield & Levy. One of the Guggenheims was a major client of the firm and since William Keyserling had sold one of his farms to the Guggenheim interests, Leon had a job.15 He was to report on Monday but on Sunday his friend suggested seeing Tugwell about a job in the Department of Economics. The next day Tugwell offered Keyserling three minor jobs while he studied economics. Lecturing, taking students on field trips, and working on research

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assignments, Keyserling became one of Tugwell’s close friends. Tugwell was instrumental in Keyserling’s doing special assignments for the General Education Board of the Rockefeller Foundation. He was paid one hundred dollars a month.16 Keyserling expressed his intellectual displeasure with his law school experience when he wrote “Objectives of Legal Education” for the General Education Board of the Rockefeller Foundation. Revealing an orientation toward legal realism, Keyserling claimed that instruction in the nation’s law schools was not helpful in understanding the changing conditions in America. His use of legal realism was similar in spirit and methodology to institutionalism in economic theory and analysis. The assumed starting point of understanding was to observe the actual practice of law in the world. After a few critical opening remarks, Keyserling’s analysis of legal education explored the differences between sociological and analytical jurisprudence. The distinction and consequences were clear. Sociological jurisprudence “has to do with the relation of legal rules to our whole modern scheme of social justice, and is practically neglected.” The reason for the neglect was in the definition of analytical jurisprudence, “formulating general legal ‘first principles’ in order to rationalize decisions and to provide handy categories under which to docket new sets of facts.” The result was a conservative defense of the status quo. Keyserling noted that “after the reading of cases,” the preservation of this approach “is the chief concern at Harvard.”17 In light of his later career, this brief report clearly indicates that Keyserling was a committed reformer before his New Deal experience. In large respect his life followed the Jewish and reform attitudes of his childhood. The same spirit of reform was expressed in his progressive recasting of American legal education. The Harvard-trained lawyer had not been “encouraged to grasp the larger social implications” of his study, according to the young graduate.18 Aside from his personal attitude, Keyserling favored the cause of legal realism and the effort to go beyond assumed “first principles” that only defended the status quo and special privilege. Social science was the answer. “The study of case law alone is the method of analytical jurisprudence. It can never lead students to evaluate the law except in terms of its inner consistency.”19 In the spirit of legal realism, Keyserling asserted that the law was life not logic; hard-earned experience in an industrial society with vastly different institutions shaped the law of the past, not the present. Apparently the Harvard Law School did not recognize the transformation. “While practically the whole class elects Constitutional Law, not more than 30 percent elect Public Utilities, and seldom do more than 10 percent find their way into Labor Law or Restraint of Trade.”20

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He wrote two other reports for the Rockefeller Foundation on the “Objectives of the American Liberal Arts College” and “Objectives of Medical Education.” In these documents Keyserling advocated solutions based on his institutional analysis acquired during his graduate study with Tugwell and the general reformist atmospheres of Columbia University and the New York intellectual scene.21 In his report on medical education, he criticized the condition of medical education as being scientifically narrow and geared to curing patients rather than supporting preventive medicine. In other words, Keyserling was critical of “heroic” medicine when it distracted the public from issues regarding preventive medicine and public health issues.22 The solution was clear. “What society needs, as we have shown, are doctors trained to conserve health and remedy common illnesses.” The current situation was inadequate. Society “gets instead physicians whose urge to specialize is a natural result of a misplaced emphasis in their education.”23 In fact, social science was what the medical doctors needed to increase their effectiveness as physicians and members of society. They must not become “narrow technicians. This means that training in the social sciences must go on within the medical schools. For nowhere else may the specific questions relating to the profession be raised.”24 It was not the science of medicine that attracted Keyserling’s criticism but the social context within which the science or knowledge was provided. In a Veblenian sense the situation was a bit too ceremonial for young Keyserling. In the light of his later career, these reports indicated that the once and future New Dealers, such as Keyserling, were progressives in political exile, waiting for a meaningful return to power. Meanwhile his report on the liberal arts college revealed the same combination of idealism and instrumentalism that marked his life work, a combination of the ideas of John Dewey and Rexford Tugwell. Regarding liberal arts education, Keyserling’s analysis was a part of an ideological dispute over the nature of knowledge and its relationship, if any, to the larger society. From the end of the Great War to the eve of World War II, a scholarly dispute raged over the issues of the objectivity and purpose of social science in America.25 Its political sharpness was evident by the progressive trust in the expert, the person whose specialized knowledge provided solutions to problems of an industrial and urban America. This trust in the expert combined with an assumption that direct democracy, removal of institutional restraints from the people’s ability to act collectively, improved their common and private lives. This progressive synthesis of the expert and direct democracy was the basis for integrative liberalism, the major force in Keyserling’s intellectual devel-

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opment. By 1987, this integrative liberalism was a defensive political and cultural force. First led by George Wallace, and later by Richard Nixon and Ronald Reagan, the conservative counterattack damaged progressive efforts to use governmental means for the end of social justice. Ironically, the polis, a term used historically by conservatives to defend the status quo, became the “property” of the integrative liberals who believed that the market (of commercial republicanism) had failed in solving the twin issues of alienation and exploitation.26 Keyserling’s reports mirrored the intellectual concerns of the day and revealed the thinking of a young progressive desirous of reform and institutional renewal. The market had failed. “It can not guard against the two great menaces of the age—poverty and war. Cooperation in a real sense is necessary to solve these pressing problems.”27 Rejecting rugged individualism as dated and misinformed, Keyserling’s argument took a potentially dangerous turn, in light of later experiences in the twentieth century. “The artificial dichotomy between education and politics is the central barrier to educational reconstruction.”28 Keyserling was not embracing fascism or some similar creed present in the early 1930s. Rather, his solution drew on the instrumentalism of John Dewey and the institutionalism that dates from Thorstein Veblen. At the same time, Keyserling assumed that the “Wisconsin idea” in which the state called upon the university for expert guidance in shaping scientifically based legislation was the norm for all properly informed citizens.29 “The school is merely an instrument of society, education is but one of many functions, and our broader aims are social rather than educational.”30 This was Keyserling’s contribution to a debate that raged between advocates of a scientific method and defenders of a natural law tradition.31 Given the influence of Tugwell, Keyserling’s view was understandable. Rejecting charges of indoctrination or propaganda, Keyserling claimed a harmony existed between education and citizenship. “As teachers, they must play their part in achieving what society wants. As citizens, they should help to influence the nature of those wants.”32 Continuing his institutional analysis, Keyserling insisted that “from the social rather than the individualistic point of view, what one thinks about is tremendously important.”33 In dealing with the major issue regarding social science and values, Keyserling praised the work of Louis Brandeis for combining the progressive ideal with social realism. “For unlike the physical sciences, the social sciences are concerned with volitional conduct, not merely with causal relationships. They deal largely with organisms which exist only because men established them and which will disappear when men cease to regard them as good.”34 This institutional approach was quite clear in Keyserling’s discussion of economics and education. To defend or advance his theory of education in

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economics, Keyserling dealt first with the issue of history’s nature and its meaning for the United States in the early 1930s. Man had needs and wants; society dealt with both. “Man can be scientific about what he desires by inspecting why he longs for it and what values it holds for him, and it is at this point that prejudice and the dead hand of custom must be thrown aside.”35 In his analysis Keyserling revealed his reformist desire to substitute economics for history as the foundation for the contemporary liberal arts curriculum. Questioning history’s relevance and its romantic legacy from the nineteenth century, Keyserling rejected history’s capacity to explain the present in terms of past events. The new history of Harry Elmer Barnes, James Harvey Robinson, or Charles A. Beard might enlighten the concerned citizen; but its twin claims of understanding the origins of the present and planning for the future were dubious, according to the Columbia University student of economics. The predictive powers of history were non-existent, since a meaningful cause and effect could not be established for the past.36 As a policy science, history was limited. Continuity was not innately good. Preserving some thing or some law on the basis of its age was poor public policy and poor educational practice. When the inductive method can deal with historical issues, history has merit as a social science. Otherwise, “history as a study of the past, without regard to the extent to which that past has implications for the present, or with an overestimation of the importance of those implications, must decline from its prime importance in American education. . . . Once it is clear that education must be made present minded, the superior importance of the other social science comes to light.”37 Economics with an institutional emphasis was the major discipline to replace history, given its innate concern with present policies and problems. It was not just any school of economics that captured Keyserling’s support. He divided the dismal science into the old and the new. The old was the legacy of Adam Smith and the classical tradition. Theological in character, argued from fixed principles, the laissez-faire system was hopelessly out of touch with the modern world. The old economics was static; institutionalism was dynamic and its operational paradigm was really political economy, not just economics. The state or government had a role to play. The liberal arts college education must explore that role, according to Keyserling. The introductory course must start with a description of contemporary problems. Keyserling also co-authored an economics textbook. He and Tugwell published Redirecting Education in 1934. Columbia University Press was the publisher. Rexford G. Tugwell, the Columbia University professor of economics, played a large role in Keyserling’s later intellectual development. As Keyserling later wrote, “You are one of the three men to whom I have always said I owe the most: In time sequence, to my father for an example

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of social responsibility; to you for an example of intellectual integrity; and to Senator Wagner for an example of political courage. I have not come up to the examples, but that has not reduced the values I attach to them.” In fact Keyserling’s intellectual allegiance to Tugwell shaped the major attitudes that Keyserling held on a far-ranging number of topics and issues. Tugwell’s influence on Keyserling was life-long. In Chapter Five the Keynes and Keyserling relationship is analyzed. Clearly Tugwell’s intellectual presence was significant to their ideological relationship. Tugwell was an influential member of the institutionalist school. His intellectual ancestors were Simon Patten and Thorstein Veblen. Institutional economics significantly contributed to progressivism. For example, Richard Ely’s (1854–1943) Outline of Economics and Socialism and Social Reform were widely read. These institutional economists advocated the elimination of “waste” in a full-employment economy where decent working conditions were the norm.38 It was one source for integrative liberalism. These men claimed that the issue was not scarcity and how well the market allocated limited resources but how poorly the market dealt with abundance. Willful human behavior, labeled human institutions (systematic concerns with scarcity), stymied the natural expression of abundance in the economy. This intellectual orientation toward abundance meant a policy commitment in favor of the demand side in the supply/demand model. During the Great Depression and for years later, the policy debates and ideological fears about a mature economy continued until the late 1970s and the rise of supply side economics which stressed “production” over “consumption” in a cultural politics adaptation of Say’s Law. This policy and ideological conflict over purchasing power had a considerable presence before John Maynard Keynes’s ideas drew attention from economists in the academy and in the Roosevelt Administration. Carroll Wright (1840–1909) first advocated a minimum wage in 1875. The Roman Catholic Church with Pope Leo XIII’s statement and Father John Ryan’s book in 1906 contributed to agitation for a minimum wage law. Massachusetts was the first state to pass such a law in 1912. Gradually the political parties used some version of the minimum wage in their platforms. The Republican platform included a minimum wage plank in 1920. In the academy, Simon Patten and George Gunton wrote that the problem was the inequitable distribution of the abundance generated by industrial order. Similar to Simon Patten’s work, George Gunton’s Wealth and Progress (1887) argued that a higher standard of living based on increased consumer demands from workers would result in a higher civilization for all citizens. In 1909 Robert C. Chapin’s The Standard of Living Among Working Families in New York provided a social science vindication of the philosophical urge for a

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better life for the laboring man and woman. By 1920 the cost of living argument was becoming standard in reform and labor union groups.39 Keyserling continued in this particular tradition of institutionalism. In 1934, Keyserling’s contribution to Redirecting Education was entitled “Social Objectives in the American College.” The essay was a vintage combination of John Dewey’s instrumentalism and the critical wit found in Veblenian institutional economics. Claiming the school as a mirror of society, Keyserling argued that the elective system was a rational and a scientific alternative to the current system which neglected the policy insights of contemporary social science. This new social science rejected any direction from laissez-faire economics. Grounded in contemporary policy concerns, this historical inquiry allowed citizens via the national state to direct politics toward democratic objectives. “Training in the social sciences would become present minded, the future would supplant the past in interest and felt importance, and the social significance of education would be impressed upon the student.”40 Having completed all requirements for the Ph.D. degree except his dissertation, Keyserling joined Tugwell at the Department of Agriculture in 1933. This lack of a dissertation was a very sensitive point with Keyserling. Without appealing to some crude form of psychoanalysis, Keyserling believed that his educational training and experience made him as qualified as any completed Ph.D. in economics. Years later when he was Chairman of the Council of Economic Advisers some critics carped that Keyserling was not a “professional economist.” In his retirement, Keyserling was still bitter regarding the way the economics profession (academic economists with the Ph.D.) treated him. “I think they’re bankrupt. I don’t think they deal with problems. That’s how I became interested in the economic aspects of the Wagner Act.”41 His disdain of the professional economist had an interesting bearing on his attitude toward Keynesianism and related topics. Unfortunately for Keyserling, personality often overwhelms policy positions in politics. A remarkable incident brought him to Washington, D.C. William Keyserling, Leon’s father, was a political friend of Cotton Ed Smith, Senator from South Carolina. In 1933, Jerome Frank, General Counsel for the Department of Agriculture, and Leon Keyserling visited Smith about a legislative problem. Smith had threatened to vote against Frank’s appointment as General Counsel of the Department of Agriculture. During the meeting Keyserling convinced Smith to vote for the Agricultural Adjustment Administration and approved Frank’s appointment.42 During the taxi ride to Frank’s office, Frank offered Keyserling a job for $4,000 a year. At the time Keyserling was earning one hundred dollars a month as an economics instructor at Columbia and holding a couple of other small jobs. Keyserling’s life was about to change in a dramatic fashion. He later remarked,

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“I gazed over the Washington Monument and said, I think that would be all right as a starter but in the meantime please lend me twenty dollars to go back to New York to get my clothes.”43 Keyserling was in government service for the next twenty years and lived in the nation’s capitol for the remainder of his life.

NOTES 1. See the Keyserling Family Papers, Jewish Heritage Collection, [Hereafter cited as JHC] College of Charleston, Charleston, South Carolina, mss. 1049, Box 1, 2, 3. Consisting of twenty-nine boxes this collections traces the activities of several generations of the Keyserling family. William and his wife Jennie were the twin pillars of the family. 2. JHC, Boxes 20–23 contain the records of William’s business activities. 3. Ibid., Box 5/12. 4. Ibid., Box 19/9. William was particularly concerned about the problems of African-Americans on the Sea Island and their need for educational assistance. 5. As quoted in the New York Times, October 29, 1951. 6. Peter Novick, The Holocaust in American Life (New York: Houghton Mifflin, 1999), 146. The scholarship on the holocaust is vast and constantly developing. For two different methods of inquiry into the deeply emotional sub-text of the systematic mass murder and the reaction to it see the following items. Tim Cole, Selling the Holocaust (New York: Routledge, 1999) and Michael Shermer and Alex Grobman, Denying History, Who Says the Holocaust Never Happened and Why Do They Say It? (Berkeley: University of California Press, 2000). 7. Theodore Lowi, “Southern Jews: The Two Communities,” The Jewish Journal of Sociology 6 (July 1964), 115. See also Marc Dollinger, Quest for Inclusion: Jews and Liberalism in Modern America (Princeton, NJ: Princeton University Press, 2000). For context see Stuart Svonkin, Jews Against Prejudice: American Jews and the Fight for Civil Liberties (New York: Columbia University Press, 1997). 8. From a poem entitled “Ode Long Before Achieving Immortality But On My 70th Birthday, Nonetheless.” It is amusing doggerel verse, filled with autobiographical information and attitudes. A copy of the poem is attached to a letter to Rexford G. Tugwell, January 30, 1978, Tugwell Papers, FDR Library. Information in this chapter that is not documented comes from varied sources including informal interviews and standard biographical accounts. 9. See The Beaufort Gazette, November 1, 1951, and the article in the New York Times, October 29, 1951. See also Irving Kristol, “The Liberal Tradition of American Jews” American Pluralism and the Jewish Community. Seymour Martin Lipset, ed. (New Brunswick, NJ: Transaction Publishers, 1990), 109–116. In a particular sense Keyserling was part of a larger historical trend; for the context of that process see Marc Dollinger, Quest for Inclusion, Jews and Liberalism in Modern America (Princeton, NJ: Princeton University Press, 2000). Unfortunately Keyserling is not discussed in this narrative but, as this essay argues, he was a vital part in creating integrative liberalism.

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10. Despite her health problems Jennie was active in rearing her children and in civic activities. JHC, Boxes 3, 14. 11. A long narrative letter from Herbert Keyserling, MD, April 8, 1989, to the author provided much of the information about Keyserling’s early years. Dr. and Mrs. Keyserling have been most helpful in the research for this biography. Harriet, Herbert’s wife, had a successful career serving in the South Carolina House of Representatives. She told her interesting story in Against the Tide, One Woman’s Political Struggle (Columbia: University of South Carolina Press, 1998). Chapter Two, “The Keyserlings,” 20–25 is her story of her in-laws, filled with wonderfully human details. For example, Leon “was never truly recognized by his beloved Beaufort or South Carolina, which because of its deep poverty, benefited from his legislation more than any other part of the country. And when he came for visits he was always bemused to hear criticism of ‘those liberals in Washington,’ because he knew that the bankers, the farmers, the poor of Beaufort had all been rescued by New Deal legislation.” 23–24. Such is the fate of a prophet, for among his many strong qualities, Keyserling was a son of the South. 12 Ibid. See also “The Jews of Beaufort: Recollections of Herbert Keyserling,” March 28, 1994. Keyserling Family Papers, Jewish Heritage Collection, College of Charleston Library, Charleston, South Carolina. 13. Kenneth M. Casebeer, “Holder of the Pen: An Interview with Leon Keyserling on Drafting of the Wagner Act,” University of Miami Law Review 42 (November 1987), 314. This interview was published after Keyserling’s death on August 9, 1987. 14. Keyserling’s autobiographical poem. Letter from Leon Keyserling to Robert Sobel, March 13, 1981. I wish to thank Professor Lynn Turgeon, Department of Economics, Hofstra University for sharing this letter with me. Laura Kalman, Legal Realism at Yale, 1927–1960 (Chapel Hill: The University of North Carolina Press, 1986), 63–64 discusses the status of legal education at Harvard during Keyserling’s years as a student. 15. JHC, Box 15/20. 16. Casebeer, “Holder of the Pen,” 315. 17. Leon Keyserling, “Objectives in Legal Education” 11–12. A copy of this report is in the Rockefeller Archive Center, New York City. 18. Ibid. 19. Ibid., 25. 20. Ibid., 31. Peter Irons offered a different perspective in his book, The New Deal Lawyers (Princeton, NJ: Princeton University Press, 1982). 21. For context see Thomas Bender’s two insightful books New York Intellect (New York: Knopf, 1987) and Intellect and Public Life: Essays on the Social History of Academic Intellectuals in the United States (Baltimore: Johns Hopkins University Press, 1993). For background and to measure the changes at Columbia see Frank Rozwadowski, “From Recitation to Research Seminar: Political Economy at Columbia University,” Breaking the Academic Mold: Economists and American Higher Education in the Nineteenth Century. William J. Barber, ed. (Middletown, CT: Wesleyan University Press, 1988), 193, 199. For two recent treatments of changing liberalism

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see Michael McGerr, A Fierce Discontent, The Rise and Fall of the Progressive Movement in America, 1870–1920 (New York: Free Press, 2003) and John Lewis Recchiuti, Civic Engagement, Social Science, and the Progressive-Era Reform in New York City (Philadelphia: University of Pennsylvania Press, 2007). 22. Keyserling, “Objectives of Medical Education,” 1. 23. Ibid., 15. 24. Ibid., 23. 25. For context to these developments see Mark C. Smith, Social Science in the Crucible (Durham, NC: Duke University Press, 1994) and Dorothy Ross, The Origins of American Social Science (Cambridge: Cambridge University Press, 1991). 26. For a rich discussion of this development see James T. Kloppenberg, Uncertain Victory, Social Democracy and Progressivism in European and American Thought, 1870–1920 (New York: Oxford University Press, 1986). 27. Keyserling, “Objectives of the American Liberal Arts College,” 6–7. 28. Ibid., 14. 29. For background see the chapter “Defining the People: The Wisconsin School of Labor History and the Creation of the American Worker,” in Leon Fink, Progressive Intellectuals and the Dilemma of Democratic Commitment (Cambridge, MA: Harvard University Press, 1997). In many respects integrative liberalism expressed in a national context what had developed in Wisconsin in the late nineteenth century. See David P. Thelan, The New Citizenship; Origins of Progressivism in Wisconsin, 1885–1900 (Columbia: University of Missouri Press, 1972) and John P. Henderson, “Political Economy and the Service of the State: The University of Wisconsin,” Breaking the Academic Mold, 318–339. For an informed analysis of the scope, role and changing nature of institutional economics see Geoffrey M. Hodgson, “From Veblen to Galbraith: What Is the Essence of Institutional Economics?,” Economist With a Public Purpose: Essays in Honor of John Kenneth Galbraith. Michael Keaney, ed. (New York: Routledge, 2001), 95–114. 30. Ibid., 16. 31. See Edward A. Purcell, Jr. The Crisis of Democratic Theory: Scientific Naturalism and the Problem of Value (Lexington: University of Kentucky Press, 1973). 32. Keyserling, “Objectives of the American Liberal Arts College,” 16. 33. Ibid., 17–18. 34. Ibid., 25. 35. Ibid., 27. 36. Ibid., 27–35. For Keyserling the citizen did his duty when he was informed and actively engaged in the political and reform processes. For background to the changing concept of citizenship see Michael Schudson, The Good Citizen, A History of American Civic Life (Cambridge: Harvard University Press, 1998). 37. Ibid., 38. 38. James T. Kloppenberg, The Virtues of Liberalism (New York: Oxford University Press, 1998), 126. 39. Fink, Progressive Intellectuals and the Dilemma of Democratic Commitment, 217–218. See also Daniel M. Fox, The Discovery of Abundance, Simon N. Patten and the Transformation of Social Theory (Ithaca: Cornell University Press, 1967).

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40. Keyserling, Redirecting Education, 150. 41. Casebeer, “Holder of the Pen,” 315. 42. For Jerome Frank’s significant contributions see Robert Jerome Glennon’s entry on him in the American National Biography, Volume 8, 362–364 and Robert Jerome Glennon, The Iconoclast as Reformer: Jerome Frank’s Impact on American Law (Ithaca: Cornell University Press, 1985). Jack Irby Hayes, Jr., South Carolina and the New Deal (Columbia: University of South Carolina Press, 2001), 19 discusses Smith’s general hostility to the New Deal and the book is a first-rate analysis of the New Deal’s impact on the state. 43. Oral history interview with Keyserling in Katie Louchheim, ed. The Making of the New Deal (Cambridge, MA: Harvard University Press, 1983), 196. Casebeer, “Holder of the Pen,” 298 has a fuller discussion of this event.

2 Keyserling, Wagner, and the New Deal’s Integrative Liberalism

Arriving in Washington, D.C., Keyserling became one of the “Boys With Their Hair Ablaze.”1 They were a part of a unique moment in American politics and life. The Great Depression had swept the Republicans out of power and significantly had reduced the prestige of Congress. Despite the noteworthy efforts of liberals like Senator Robert Wagner, Congress, reflecting the leadership of a confused President Herbert Hoover, dealt ineffectively with the national crisis. In fact it took nearly three years to recognize that a deep economic decline existed. Until late in his presidency, Herbert Hoover subscribed to the “business belief that depressions were endemic to capitalism” and in the long run they improved all segments of the economy.2 It was not until the late 1930s that Congress replaced the federal courts as the center of the political and policy-making action. Republican presidents appointed judges, who defended states-rights politics and laissez-faire economic theory. They battled young lawyers who were creatures of the twentieth century. Most of these young lawyers had urban backgrounds, were Roman Catholic or Jewish in religious heritage, progressive in politics and inclined toward legal realism, and graduates of elite law schools.3 Keyserling fit this profile. As a small town boy, he had experienced urban America. A Jew with a progressive heritage, Keyserling graduated from the Harvard Law School. Keyserling was never Felix Frankfurter’s “Happy Hot Dog.”4 While Frankfurter became a talent scout for the New Deal, Keyserling came, as previously noted, to Washington by a slightly different route and spent most of the New Deal working for Senator Robert Wagner (Democrat, New York). Nevertheless, Keyserling’s hair was ablaze. 39

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Keyserling found the Harvard Law School to be uninteresting, mired in the day’s conventional wisdom. Undoubtedly, his graduate school experience with Rexford Tugwell and his other life experiences contributed significantly to Keyserling’s style of administration and political behavior. A later friendship with Thurman Arnold increased Keyserling’s awareness of legal realism. In time legal realism influenced federal judges who came from a different intellectual tradition and social background.5 By the end of the twentieth century critics of legal realism urged a return to the original intent of the federal constitution. This intellectual development affected Keyserling’s career. Jerome Frank, St. Jerome to many of the young lawyers, was known as a liberal’s liberal. A good example of how integrative liberalism became a part of the New Deal and later political culture, Frank rejected all forms of discrimination. “A proudly assimilated Jew, Frank took his Americanism seriously and wore his Jewishness lightly. He believed America’s strength was its diversity.” In the ideological infighting, Frank allied with Rexford Tugwell and Adolph Berle. As the author of Law and the Modern Mind, a classic text of legal realism, Frank also believed in economic growth.6 The first New Deal was a “revolution” led by lawyers. Keyserling contributed to the cause. He lived in a house on 34th Street with five young lawyers and a journalist. Sharing expenses and a cook hired to prepare breakfast and dinner, the men had sporadic parties of conversation if time permitted.7 Since many of them were Jews, there was some concern about prejudice. Himself a Jew, Frank worried about hiring too many “Palestinian wet backs” (Frank’s expression) at the Agricultural Adjustment Administration, fearing a charge of favoritism from his bosses. Nevertheless, given the secular humanism and meritocracy of the New Deal, most of the New Dealers were indifferent about the issue.8 This expression of cultural pluralism was also significant in the evolution of integrative liberalism. Jerome Frank, Leon Keyserling and other New Dealers combined legal realism and the electoral politics of the New Deal. As legal realists, they applied insights of jurisprudence to legal education. In the spirit of Keyserling’s essay on legal education as discussed in Chapter One, they recognized the role of human perception, the idiosyncratic, in the development of the law. The social sciences, particularly economics and anthropology, were critical to their stated goal to realize results over process. Seeing the law as the great engine of social change, New Dealers such as Keyserling and Abe Fortas were really conservative or preservative in their advocacy of liberalism. Reducing the possibility of revolution that the depression might encourage, they saw a new world emerging from the assumed inactivity of the previous administration. Ideal and reality might be one. Their

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work would be judged by the election of 1936. On balance, Roosevelt’s first term was a creation of the experts whose victories and defeats were defended and explained by later politicians and historians. Apparently, while Fortas and Keyserling lived in the same house, they did not discuss the New Deal and public policy. At the time Keyserling was writing the Wagner Act, a major element of the New Deal, and Fortas never inquired about Keyserling’s efforts. Rarely at home, Fortas was self-absorbed, according to his biographer. Other members of the household were more interested.9 Leon Keyserling’s prospects changed when he met Robert Wagner. In 1984, three years before his death, Keyserling observed that, “the New Deal was not the creation of Franklin Roosevelt. The New Deal was the creation of many unsung people, and it was as much the creation of Congress as of Franklin Roosevelt.”10 It was a sharp remark from Keyserling, generated out of his personal and intellectual experience. Of course, Keyserling had Senator Robert Wagner in mind. And Keyserling was right. Wagner was a key influence on Keyserling’s career as a public servant and as a thinker about public policy. Born in Germany on June 8, 1877, Wagner migrated with his family to the United States in 1885. Wagner was a dedicated and hard working young man. He worked as a bellhop while attending City College of New York. After graduation Wagner went on to New York University Law School. As a young lawyer he was a gifted speaker. Tammany Hall recognized his gift for oratory and helped him win a seat in the New York State Assembly. He was never a part of their corrupt practices; he always returned campaign funds that were not spent and his lifestyle was modest.11 Wagner’s chairmanship of a committee investigating the infamous fire at the Triangle Shirtwaist Factory resulted in fifty-six industrial safety laws.12 He served briefly as a Judge in New York and by 1926 he was in the United States Senate. He was a champion of urban reform. As an advocate of integrative liberalism, Wagner was an early defender of governmental intervention in the economy and a defender of civil liberties. For example, as a Senator in 1926 Wagner was concerned about unemployment and related issues of the business cycle. As a progressive in New York politics, Wagner championed the cause of blue-collar workers who were often recent immigrants. Where old time machine politics used an informal system marked by scandal and personal corruption, Wagner (whose personal behavior was above criticism) saw a role for the national government in providing some means of economic security while defending individual civil rights, the essence of integrative liberalism. On the other hand, New York Governor Al Smith, Wagner’s friend and fellow reformer, became intellectually disenchanted with the course of the

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New Deal, undoubtedly enforced by his personal dislike of Franklin Roosevelt. Smith’s political fortunes declined in the 1930s. Smith in time became a spokesman for the American Liberty League, a reactionary voice of the Du Pont family and General Motors interests.13 Wagner’s career had continuity rarely seen in American politics. Before the onset of the Great Depression, Wagner believed that significant increases in mass purchasing power permitted economic security and social improvement for all citizens.14 Upholding the rights of workers for collective bargaining and some form of social and medical insurance, Wagner saw a need for a full employment bill after World War II. Where the nineteenth-century reformer saw the “farm,” or land policy, as the central reform (resulting in the Homestead Act and similar legislation), Wagner, the twentieth-century reformer, made a “job” the center of his ideological efforts. His Federal Employment Stabilization Act of 1931 provided the precedent for the Full Employment Bill of 1945 which finally resulted in the Employment Act of 1946. The heart of the 1931 act was that “whenever the indexes of economic activity fell below a certain point the government would step in with compensatory public spending in the form of public works.”15 Wagner, other politicians, economists in the academic and the federal government, saw the desirability of increasing effective demand via deficit spending. Fighting World War II and the later Cold War contributed to the de facto acceptance of that policy. By 1945, “an Americanized version of Keynesian macroeconomics framed the agenda at the highest level of economic policy making. Its conceptual categories had not been available when the first course of the New Deal had been charted in 1933. Even if they had been at hand, the temper at that moment would have precluded their use.”16 We see again that Keynesianism was a way of political thinking that would emerge over the years. With his effective legislative skills and pleasant personality, Senator Wagner wrote, sponsored and pushed more Federal bills than any other senator in United States history. His career was a tireless crusade. The Wagner Act was a significant labor policy development as articulated by the senator, a strong champion of organized labor. Fittingly his last speech in the Senate in 1947 was defense of his legislation and a criticism of the Taft-Hartley Bill for rolling back the achievements of organized labor and the Wagner Act in postwar America.17 Ill health forced Wagner’s resignation from the Senate in 1949.18 He died in 1953. Keyserling continued the senator’s philosophy and vision in his own career; he was an enduring advocate of integrative liberalism. Wagner found a strong supporter and helper when he met young Keyserling. Having worked about two weeks for Jerome Frank on the legal staff of the Department of Agriculture, Keyserling attended a meeting led by Wagner

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in 1933. The National Industrial Recovery Act was the focus of the meeting which dealt with any possible benefits of suspending federal antitrust laws. After two hours of discussion Wagner was tired and began closing the meeting. Having not spoken, Keyserling disagreed with the suspension of antitrust legislation unless we “do something about purchasing power . . . collective bargaining . . . and wages and hours.” Wagner agreed with Keyserling’s advocacy for increased purchasing power, a national policy on wages and working conditions and a federally endorsed right for collective bargaining for organized labor. Keyserling also urged a $3.3 billion spending program that Senators Wagner, Robert La Follette of Wisconsin, and Edward Costigan of Colorado had advocated since 1930. Keyserling argued “we have got to do something about purchasing power.” Two days later the Senator offered Keyserling the job of legislative assistant replacing Simon H. Rifkind who had returned to his private law practice in New York City. “We were then called clerks. I was clerk of the Patent Committee, of which he [Wagner] was chairman. The committee was never active.”19 And so “clerk” Keyserling joined forces with the Congressional godfather of the New Deal. As one biographer put it, Wagner’s childhood and early experiences in New York City supported his creed of state intervention in the economy, “providing opportunities for youth to rise above the level of poverty.”20 In a 1935 speech, Wagner explained the political justification and social necessity for integrative liberalism. The machine age had replaced the oxcart age. Economic recovery was thwarted by an out-of-date creed that stressed “extreme individualism at a time when the individual had become the helpless victim of forces too big and too powerful for him to control.” The national economy had developed far beyond any limits suggested by state lines. The greatest danger Wagner saw was that this extreme individualism “scoffed at the possibilities of Nation-wide cooperation although cooperation was the only safeguard against social disintegration on the one hand or the radical overthrow on the other.”21 Insisting that the moral law underwrote his legislative ideas, Wagner believed that just social legislation prevented revolution. Hence “the very hub of social security is the right to have a job” and in that manner preserve the institutions of society.22 Wagner’s religious pilgrimage was one indication of how urban liberalism eventually became integrative liberalism. His religious cultural pluralism often gave his contemporaries the impression that he was a member of a particular denomination. A German immigrant and a Lutheran, he became a Methodist during his college days in the 1890s. He remained a Protestant

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until 1946 when he converted to Roman Catholicism. His concern about the moral order, his secular politics and his grief for his wife who died in 1919 guided his decision to join the Roman Catholic church.23 Many of his contemporaries thought that Wagner was a Jew. The assumption was understandable. For one who was active in class-oriented issues as expressed in the New Deal, and given his biography and political experience, Wagner was “closely linked with the urban, immigrant-derived Jewish and Catholic population groups that have done so much to shape the contours of modern American life.” As his biographer noted, “he shared in common too, their hopes, frustrations, and aspirations.”24 A similar misreading of Keyserling happened when he was Chairman of the Council of Economic Advisers. Many of his enemies thought of him as a pushy New Yorker with an Ivy League education, a real New Deal “crack pot.” Keyserling was more than what that derisive classification meant. He was a Jew whose roots were firmly planted in the soil of South Carolina. Both Wagner and Keyserling generated and reacted to the formulation of integrative liberalism as developed in their lifetime. The immediate and pressing issue of the moment was the Congressional response to the Great Depression. Wagner had a policy. A long-time friend of organized labor, Judge Wagner had handed down from the bench of the New York State Supreme Court several decisions protecting the rights of unions to strike and picket. A “minimum bargaining position for labor” the Senator “considered his Labor and Social Security Legislation as essential parts of his program against depression.”25 Wagner drew on the legacy of progressivism, particularly the recommendations of Frank P. Walsh’s Commission on Industrial Relations, 1911–1915. And much of the New Deal legislation originated from the agencies that fought the Great War.26 Similar to the wartime conditions of 1916–1920, once the economic emergency was over after 1940, organized labor faced a hostile or indifferent public. After World War II, the major political consequence was the Taft-Hartley Act. Senator Wagner found a strong supporter in young Keyserling. “He made me work for the first time, he was no fancy Dan/ we wrote a staggering number of the famous New Deal laws/ And this enlisted me forever in the liberal-slanted cause,” Keyserling wrote in his autobiographical poem. Keyserling was a cyclone of activity, preparing studies, writing speeches and giving congressional testimony.27 From 1933 to 1940, Keyserling “practically” wrote all of the Senator’s legislative proposals. At the same time, Keyserling wrote the important speeches and was active in Wagner’s political campaigns. For example, Wagner used Keyserling’s words in attacking John L. Lewis’s support of Thomas Dewey.28

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Wagner and Keyserling clearly saw a profound crisis in the Great Depression. The American experiment required an economically independent middle class if the United States’ destiny as the last best hope of mankind was to be realized. This idealism, combined with the argument of more purchasing power, formed the policy framework for integrative liberalism. According to the New Deal analysis the end of the frontier contributed to the Great Depression.29 As Wagner argued, “In the days of Jackson, competition may have been the life of trade. In the days of Roosevelt, cooperation is the way of life.” Modern America was different. “Economic liberty [the free market] should not be destroyed. But it should be modified to meet social needs. Cooperation and social control must supplant conflict.” It was the cry from the ideological heart of progressivism, integrative liberalism. “Economic stabilization is desirable; social justice is important.”30 A genuine wide-spread fear of economic maturity troubled the future of the American economy. The long-term economic changes complicated any prospect of immediate recovery. While economically the close of the frontier was problematic, it provided a dramatic image or icon for New Dealers seeking market-place reforms. Although, to some degree, advocates of Keynes were in the New Deal Administration and war-time Washington the integration of Keynesian analysis into public policy did not happen until the 1960s. After 1945, the American economy had a growth explosion unmatched in history. In the meantime Wall Street’s collapse caught this century-long, emerging highincome spending frenzy in a credit crunch. The results varied over the next half century and Keyserling’s career. For many intellectuals and political officeholders a mature capitalism created institutional decay and personal corruption. For men like Robert Wagner and Leon Keyserling the best policy was combining economic growth and social justice that appealed to America as a middle-class utopia. This policy as a means to a desired end meant a profound modification of the laissez-faire ideal. If the republican self-government ideal required an economically independent middle class, as Aristotle, James Harrington, Thomas Jefferson and many other thinkers believed throughout history, the Great Depression in America was a major crisis.31 The repudiated President Herbert Hoover, of course, rejected this analysis. He believed that the New Deal modification of laissez-faire was misplaced. The laissez-faire social policy had died fifty years earlier, Hoover argued. “The visible proof of it was the enactment of the Sherman Act for the regulation of all business, the transportation and public utility regulation, the Federal Reserve System, the Eighteenth Amendment, the establishment of the Farm Loan Bank, the Home Loan Banks.”32 The European origins of the Great Depression and assumed constitutional restrictions limited any systematic response by the federal government, according to Hoover.

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Critics of the status quo in the depression decade and their analyses were numerous. Wagner and Keyserling represented a progressive point of view. Other voices were raised. At least four groups within the Democratic party, mainly from a rural context, argued for “easy money” and a balanced budget with limited government spending. They did not represent the future.33 In certain ideological and historical contexts Wagner and Keyserling were first and foremost New Dealers. The future meant a sharp curtailment of laissez-faire policy and a closer regulation of the market. Later events such as World War II, the Cold War, and domestic reform programs limited the appeal of budget balancing. Rapidly the ideal and the possible clashed. It was not clear until the ideological struggle over the Supreme Court that Roosevelt and the New Dealers had an effective means of realizing their goals of economic growth and social security with civil liberties. Keyserling and Wagner helped to harmonize the two.34 Another group of advisers, the Brain Trust caught the fancy of the nation’s newspaper readers. Since they were Columbia University professors, they were good copy. Influential in the beginning, as the years passed the Brain Trust’s influence faded. For a time, however, they were a presence in policy matters. Adolf Berle, a member of the Brain Trust, along with Gardiner Means in 1932 published The Modern Corporation and Private Property which argued that some two hundred corporations run by a professional managerial class controlled the economy. This institutional analysis supported careful governmental planning and greater equalization of wealth via economic growth. For Berle and Means this economic process meant creative statecraft, a concert of interests. Rexford Tugwell articulated the same institutional analysis. Historically, Wagner and Keyserling expressed this integrative liberalism in their struggle for New Deal legislation.35 The contemporary function and the historical significance of the Brain Trust have enchanted both contemporaries and historians. The varied needs, psychological and ideological, of both groups have shaped the resultant historiography of the depression decade. Undoubtedly, the impact of the Brain Trust waned in rather quick order in the 1930s; Raymond Moley resigned before the 1936 election. Adolph Berle’s intellectual presence declined into a series of minor governmental appointments. And Rexford Tugwell’s quest for a managed economy made him “a powerless outsider” whose “stimulating impact on Roosevelt’s and Moley’s thought” had brief and limited influence. In August 1932, Berle and Roosevelt rejected Tugwell’s vision “of a stringently regulated, organic economy.” Over time Tugwell migrated to the far bureaucratic edges of the New Deal. By World War II he was governor of Puerto Rico. A total dismissal of the Brain Trust’s contributions to Roosevelt’s policy matters and to the changing political culture of the 1930s is wrong. Reacting to the

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farm depression and the under-consumption theories of John A. Hobson, Moley and Roosevelt along with Tugwell saw the need for an economic stimulus in the form of increased public spending. “The Brain Trust had ventured new ideas in a conservative age, and these ideas became part of our permanent past. This was their lasting contribution.”36 In his career and policy recommendations Leon Keyserling maintained continuity with Tugwell’s theories while he filled an active and critical role as Wagner’s assistant and later as Chairman of the Council of Economic Advisers in the Truman White House. Meanwhile, the issues of the 1930s were at hand. Only the depression itself was a greater problem than the pathetic plight of organized labor. Disenchanted with its experiences with the Left, challenged by a hostile legal system, restricted by its own adherence to bread-and-butter unionism, organized labor was in crisis. The National Labor Relations Act of 1935 (the Wagner Act) was the centerpiece of the legislative New Deal. It was also Keyserling’s major contribution to Wagner’s reputation as reformer, and as a major element of integrative liberalism. Workers’ self-organization was the ideal. Modified by later events, unions surrendered some organizational weapons for some guarantees by the federal authority. At the same time Wagner and Keyserling saw unions as an essential expression of democracy. Collective bargaining would achieve social justice,37 particularly by focusing on increased purchasing power. The act strengthened the labor movement’s relationship to the Democratic party and wedded labor to the entire range of New Deal laws and political aspirations. Keyserling wrote most of the bill, including the famous section 7a. He worked hard for successful legislation. The event was significant for both the political success of the New Deal and the evolution of integrative liberalism. In retrospect, as a political settlement, the New Deal brought many disaffected interest groups into the American political culture, an important goal of integrative liberalism. Given the multi-ethnic nature of American labor, it was a remarkable achievement. “The Wagner Act was clearly the longest stride of all on the road to power for labor but also to a Keynesian economy,”38 as the governing style slowly moved from class confrontation to policy consensus. The Wagner Act also encouraged new organizations. The Congress of Industrial Organizations whose membership was drawn from the anti-unionism of the steel and automotive industries was one such organization. The New Deal built on the Wagner Act. Government programs such as unemployment insurance, social security and housing assistance lessened ethnic and racial discord. The United Auto Workers and other militant unions were in the vanguard of the crusade for an integrated liberal United States. Politically, FDR and the Democratic Party forged a labor/corporate alliance mediated by the Federal government.39

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Enduring until the late 1960s, the Roosevelt Coalition made the Democratic Party a vital part of integrative liberalism’s history. Roosevelt and later Democratic Presidents and politicians “legitimated the attention to their own interests given by farmers, the elderly, the blacks, and the others hit especially hard by the depression.”40 The task was not easy. The Wagner Act, the first element in an historic process, changed the relationship between organized labor and the state. Contemporaries and historians debated the consequences of the “labor question.” Labor became a vital part of integrative liberalism and the social-political power of the Roosevelt Coalition in the national Democratic Party. Keyserling provided intellectual and policy support for this metamorphosis in both his governmental career and as an adviser to organized labor after 1953. Wagner instilled in Keyserling a firm belief that social justice could be realized with mass purchasing power guaranteed by an enlightened federal policy, including health insurance, social security and full employment. The Wagner Act, the essence of the legacy, emphasized efficiency, order and fairness that encouraged social stability and economic growth.41 These assumptions were a “road map” for Keyserling. The ideological landscape changed during Keyserling’s life. The antimonopoly movement lost its electoral appeal along with its emphasis on productive labor ideology as the rise of the CIO repudiated third- or labor-party activities. The Democratic Party was labor’s new home as industrial unionism found protection under federal law with its emphasis on administrative procedures. Changes in language indicated this transformation; “security” and “consumption” replaced the metaphors of “rights” and “powers.” Full employment overshadowed workers” control as a central ideal from 1937 until the century’s end. Indicative of this emphasis on full employment which eventually became a sub-text of the Employment Act of 1946 was the significance of two books published in 1938 by John Kenneth Galbraith and Henry S. Dennison, Modern Competition and Business Policy and Toward Full Employment.42 The ultimate vision for organized labor was not some expression of socialism but a global New Deal. The Cold War after World War II gave historic emphasis to these developments.43 The National Industrial Recovery Act (1933) was the immediate and major New Deal response to the depression. The act had something for business—codes of fair competition and industrial self government based on the trade association ideal—and for labor—free collective bargaining. No employee would be required to join any company union or be denied the right of joining, organizing or assisting his own labor union. The struggle was just beginning. Tied to the personality and policies of Hugh Johnson, the National Recovery Administration (NRA) faced many challenges. Johnson was not

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an effective administrator, but his personal fate is not germane here. In time Secretary of the Interior Harold Ickes, directed a $3.3 billion budget for the Public Works Administration. Since a very agitated labor force distrusted the equity of the codes of fair competition, Hugh Johnson created a National Labor Board with Senator Wagner as Chairman. Three representatives from labor and management completed the Board. Applying section 7a nationally, the Board endorsed the “Reading Formula.” It allowed the reinstatement of strikers and a secret ballot to determine union representation by majority rule. Led by Henry Ford, other large employers rejected the Reading Formula in 1934. The industrial violence continued. Senator Wagner sought his own solution to the labor problems under the NRA.44 In 1935, to reduce the influence of company unions, Wagner introduced the National Labor Relations Act. President Roosevelt and Secretary of Labor Frances Perkins were indifferent to the bill. As was often the case, FDR carefully gave modest support for legislation unless he saw a political reason for action. On May 16, the Senate passed the bill, 63 to 12. Roosevelt’s interest increased. The legislative struggle had been difficult but Wagner and Keyserling kept control over the drafting of the legislation, another example of the Senator’s legislative and political skills. The process of implementing the Wagner Bill caused several problems for Keyserling which affected his later career and his reputation as a “pushy” individual. His language in the bill dealt with the issue of economic recovery; equity for labor would defeat the depression. Roosevelt kept his distance from the legislative struggle. He supported the bill after it passed the Senate. Other critics have not been as gracious. Disputes over administrative enforcement style either as an independent agency or within the Department of Labor merged with issues of constitutionality and national labor policy. These concerns became a flash point over the issue of authority between Keyserling and Charles Wyzanski, aide to Senator Thomas J. Walsh, Democrat from Montana. Thomas H. Eliot wrote years later, “vehement, almost chemical, ill-feelings that existed between Charlie and Wagner’s abrasive secretary, Leon Keyserling. (I disliked Keyserling too, but not with Wyzanski’s lifelong bitter scorn; at eighty, Charlie was still seizing an opportunity to write a scathing letter to Keyserling!)”45 And the two men were in the same political party! Keyserling provoked strong and lingering emotions over his style in fighting for his policy objectives. The real issue was not personalities. Senator Walsh gave Wagner the opportunity to break from a restrictive 1934 report, written by Wyzanski. Wagner’s text, written by Keyserling, urged governmental support of collective bargaining.46

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On May 27, 1935, the Supreme Court ruled the National Recovery Administration unconstitutional in the case of Schecter Poultry Corp. v. United States. The Roosevelt Administration argued that the Brooklyn company had slaughtered kosher chickens, assumed to be sick, in violation of the NRA’s codes of fair competition. The weight of the Court’s decision was on two points: Congress had unconstitutionally delegated authority to the executive branch and the interstate commerce clause did not apply to the manufacturing of chicken parts. Coupled with the narrow interpretation of the commerce power expressed in the Railroad Retirement Board case, the future for New Deal legislation was not encouraging. Many opponents of the Wagner legislation believed that it was unconstitutional and that they should not spend any more political capital toward its defeat. Keyserling rewrote the bill’s declaration of policy giving emphasis to the bill’s solving labor disputes in interstate commerce. He understood the economic effects of the bill. With weak support from William Green of the American Federation of Labor and after the creation of the NLRB as an independent agency, the bill passed the House. By July the Wagner Bill was law. Through their own unions, workers had the right of collective bargaining. By secret ballot the majority determined the organizational representation for the entire plant. A three member board administered the legislation, preventing employers from engaging in “unfair labor practices.” Keyserling was a major presence in the writing of the Wagner Act. His creation, Section 7a was the heart of the law. It stressed that workers were free to join a union and for many recent immigrants it was their patriotic duty to join. A natural-rights claim for union membership was coupled with a social imperative. “Society was organized to enlarge the scope of that right and to increase the fruits of its exercise.” In this context, the two main intellectual traditions of natural rights and historicism, were united; however, on other occasions they were torn asunder. Meanwhile the workers in the basic industries moved into the Congress of Industrial Organizations, voting with the Democratic Party for at least a generation. The politics of productivity stabilized as an emphasis on expanded mass consumption was realized after 1940. It was an historical development apart from the later rise of Keynesianism. And it was the basis on which Keyserling based his life-long claim that he was not a Keynesian. Possibly Keyserling worried too much about the label; but, by the time he became a member of the Council of Economic Advisers, the label of being “Keynesian” had political disadvantages. Since the complex elements in Keynesianism were reduced to “deficit spending” and the causes of the Great Depression were European in origin and Keynes was an Englishman, ergo Keynesianism was un-American in the

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morality play of American cultural politics. Keyserling was sensitive about how critics of the New and Fair Deals treated the images of Keynesian policy. Meanwhile this politics of productivity signified an end to any direct contest over the distribution of income. Under a general rubric of de facto Keynesianism labor strikes became industrial relations by the 1960s. Government became the third party in these disputes while racial and gender issues increased in the job market. Industrial pluralism became the rallying cry late in the twentieth century.47 The significant result was Keyserling’s creative interpretation of the interstate commerce clause, the basis of the welfare state. Robert T. Stern’s article, “That Commerce Which Concerns More States Than One,” in the Harvard Law Review (1934) and Supreme Court decisions were indicative that the clause was more dynamic in a truly integrated economy. Local practices should not restrict the national economy. (The origin of this assertion can be found in the opinions of John Marshall.) In a speech written by Keyserling, Wagner repeatedly sounded this theme. Wagner and Keyserling were aware of the Supreme Court’s destruction of the first New Deal. They knew that the Wagner Act would appear before the high court. The intent of the Wagner Act was industrial peace, drawing on the mediation policies and concepts developed by New York, Massachusetts, and other states in the late nineteenth century. It was still a fundamental reform of industrial policy.48 The legislation sought fairness, efficiency, social stability, and economic growth as well as democratic political norms.49 Adjusting to the Schecter decision, Keyserling revised the bill. Legislative timing and constitutional context were critical. Until the Roosevelt Presidency the Supreme Court had never found a law delegating legislative power to the White House unconstitutional. The Supreme Court ruled against the practice three times in little more than a year.50 The constitutional fate of the Wagner Act was gentler. Based on the power of Congress to regulate national commerce, the Supreme Court ruled in National Labor Relations Board v. Jones and Laughlin Steel Corp. (1937) that the “local” labor practices at the company’s plant at Aliquippa, Pennsylvania, were unfair and restrictive to the flow of commerce. The Supreme Court gave broad authority to Congress and the Presidency to insure the national economy. Dual federalism was limited. Roosevelt might have lost the battle to “pack” the Supreme Court; but he won the war of reform. In tandem with other decisions such as the National Labor Relations Board v. Fainblatt (1939) and United States v. Darby (1941), the federal presence in industrial relations was assumed; but it could be modified, as post-World War II history revealed.51 While Keyserling’s efforts for the Wagner Act earned him a place in New Deal history, he was destined for a larger role in future public

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policy. As for the Wagner Act, it was a successful completion of organized labor as a legitimate part of the political process without a socialist outcome.52 After 1936, Keyserling changed jobs. His advocacy of public housing would bring him limited immediate success but his efforts added to his resume of reform. NOTES 1. See the Introduction of Peter H. Irons, The New Deal Lawyers (NJ: Princeton University Press, 1982). 2. Jordan A. Schwarz, The Interregnum of Despair, Hoover, Congress, and the Depression (Urbana: University of Illinois Press, 1970), 15. 3. Irons, The New Deal Lawyers, 6. 4. See Michael E. Parrish, Felix Frankfurter and His Times (New York: Collier Macmillan, 1982). 5. Ibid., 13. 6. Jordan A. Schwarz, The New Dealers, Power Politics in the Age of Roosevelt (New York: Knopf, 1993), 181. See also Robert Jerome Glennon, The Iconoclast as Reformer: Jerome Frank’s Impact on American Law (Ithaca: Cornell University Press, 1985). 7. On occasion, Keyserling and his housemates socialized with influential people in the legal system. For example, in 1934, they dined with Judge Benjamin Cardozo (1870–1938). One of the young men had been a clerk for Judge Cardozo. Kenneth M. Casebeer, “Holder of the Pen: An Interview with Leon Keyserling on Drafting the Wagner Act” University of Miami Law Review 42 (November 1987), 300. 8. This paragraph and the next have drawn freely from Laura Kalman’s excellent biography, Abe Fortas, A Biography (New Haven: Yale University Press, 1990), 27–29. An amusing incident about this ethnic concern was when Frank later hired a blue-eyed blond Bostonian lawyer whom Frank assumed was an Irish Catholic. When the lawyer inquired about having to work on Yon Kippur and Rosh Hashanah, Frank discovered he was Jewish. Ibid., 68–69. For a serious context see Myron I. Scholnick, The New Deal and Anti-Semitism in America (New York: Garland, 1990). 9. Ibid., 43. 10. Keyserling’s remarks as recorded in Wilbur Cohen, ed. The New Deal, Fifty Years After (Austin, TX: LBJ Library, 1984), 26. 11. Thomas R. Byrne, “The Social Thought of Robert F. Wagner,” PhD dissertation. Georgetown University (June 1951), 23. An uneven study of Wagner’s thought and achievements, this work has a great deal of information and insight about the senator. “There is little doubt that his lifelong reputation for political purity accounted for much of his legislative power on Capitol Hill.” Ibid., 24.Wagner was concerned about the social consequences of the business cycle years before the Great Depression. His efforts were ignored. Udo Sautter, Three Cheers for the Unemployed: Government and Unemployment Before the New Deal (New York: Cambridge University Press, 1999), 248, 257.

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12. For a fuller discussion see Dave Von Drehle, Triangle: The Fire That Changed America (New York: Atlantic Monthly Press, 2003). 13. See Donald K. Pickens, “Polis or Market?: The American Conservatives’ Search for Continuity,” Quarterly Journal of Ideology 21 (1999), 65–93 and George Wolfskill, The Revolt of the Conservatives, A History of the American Liberty League (Boston: Houghton-Mifflin, 1962). 14. William J. Barber, Designs Within Disorder: Franklin D. Roosevelt, the Economists, and The Shaping of American Economic Policy, 1933–1945 (New York: Cambridge University Press, 1996), 31. 15. Casebeer, “Holder of the Pen,” 317. 16. Barber, Designs Within Disorder, 3. 17. Anthony J. Badger, The New Deal, The Depression Years, 1933–1939 (New York: Hill & Wang, 1989), 51, 79, 128. See also Schwarz, The Interregnum of Despair, 35–36 and his The New Dealers, 48–49. David Plotke rightly argues in Building a Democratic Political Order, Reshaping American Liberalism in the 1930s and 1940s (New York: Cambridge University Press, 1996) that organized labor was the critical element in this new order in which Keyserling was a major contributor. 18. J. Joseph Huthmacher, Senator Robert F. Wagner and The Rise of Urban Liberalism (New York: Athenaeum, 1971) is the standard biography. The Leon H. Keyserling Papers, a part of the Robert F. Wagner Collection, at Georgetown University in Washington, D.C., contains abundant examples of their close personal and legislative relationship. 19. Casebeer, “Holder of the Pen,” 299. 20. Byrne, “The Social Thought of Robert F. Wagner,” 519. For Wagner’s defense of state intervention see his article, “Scholars’ Place in Public Life,” The American Scholar (March 1932), 144–147. 21. 79 Congressional Record. 9417–18 (1935) as cited in Casebeer, “Holder of the Pen,” 316–317. 22. As quoted by Byrne, “The Social Thought of Robert F. Wagner,” 227. See also 115 which was an early expression of a philosophy that led to the Employment Act of 1946. 23. See Wagner’s autobiographical account in John A. O’Brien, S. J., The Road to Damascus (New York: Doubleday, 1944), 149–160. 24. J. Joseph Hutchmacher, “Senator Robert F. Wagner and the Rise of Urban Liberalism,” American Jewish Historical Quarterly 58 (March 1969), 333. 25. Ibid., 200. 26. Melvyn Dubofsky, The State and Labor in Modern America (Chapel Hill: University of North Carolina Press, 1994), 166. Fink, Progressive Intellectuals places the institutional developments in a context that clearly defines the progressive origins of the New Deal and integrative liberalism. 27. See Keyserling’s long reflective letter on his activities during this period, his time with Wagner, to Peter H. Irons, April 4, 1981, in the Keyserling Papers, a part of the Robert F. Wagner Papers at the Georgetown University Library, Washington, D.C.

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28. A memo written by Keyserling entitled “New Deal and Related Record of Leon H. Keyserling” was originally prepared in June 1975 with additions to 1982. Mary Keyserling gave a copy of this valuable document to the author. 29. David M. Wrobel, The End of American Exceptionalism, Frontier Anxiety From the Old West to the New Deal (Lawrence: University Press of Kansas, 1993). 30. A Speech of 10/10/33 before the National Conference of Catholic Charities. Wagner Papers Box 335. Georgetown University. The frontier image is from a speech entitled “The Problem of Social Legislation” for 9/29/34 in the Keyserling Papers, Box 3. Georgetown University. Keyserling wrote this speech. 31. John A. Wettergreen, “The Regulatory Policy of the New Deal,” The New Deal and Its Legacy, Critique and Reappraisal, Robert Eden, ed. (New York: Greenwood Press, 1989), 201. See also Michael A. Bernstein, “Why the Great Depression Was Great,” The Rise and Fall of the New Deal Order, Steve Fraser & Gary Gerstle, eds. (Princeton, NJ: Princeton University Press, 1989), 34. 32. As quoted in Hugh S. Norton, The Employment Act and The Council of Economic Advisers, 1946–1976 (Columbia, SC: University of South Carolina Press, 1977), 41. Hoover was writing a letter to his friend Arch W. Shaw in 1933. 33. Norton, The Employment Act and the Council of Economic Advisers, 1946– 1976, 82. 34. Joseph P. Lash, Dreamers and Dealers, A New Look at the New Deal (New York: Doubleday, 1988), 317–318. 35. Alan Lawson, “The Cultural Legacy of the New Deal” Fifty Years Later: The New Deal Evaluated, Harvard Sitkoff, ed. (Philadelphia: Temple University Press, 1985), 158–159. For Beale’s contributions see Jordan Schwarz, Liberal, Adolf A. Berle and the Vision of an American Era (New York: The Free Press, 1987) and for Means see Warren J. Samuels and Steven G. Medema, Gardiner G. Means, Institutionalist and Post Keynesian (Armonk, NY: M.E. Sharpe, 1990). 36. See Elliot A. Rosen, “Roosevelt and the Brain Trust: An Historiographical Overview,” Political Science Quarterly (December 1972), 78. The quotes in this paragraph are from 541, 540, 545, and 557. 37. James A. Gross, Broken Promise, The Subversion of U.S. Labor Relations Policy, 1947–1994 (Philadelphia: Temple University Press, 1995). Gross’s revisionism is matched by several other historians. See Christopher L. Tomlins, The State and the Unions, Labor Relations, Law, and the Organized Labor Movement in America, 1880–1960 (Cambridge: Cambridge University Press, 1985) and Cletus E. Daniel, The ACLU and the Wagner Act: An Enquiry into the Depression Era Crisis of American Liberalism (Ithaca, NY: Cornell University Press, 1980) are recent examples of this school of thought. 38. Patrick Renshaw, “Organized Labor and the Keynesian Revolution,” Nothing Else to Fear, New Perspectives on America in the Thirties, Stephen W. Baskerville, ed. (Manchester, UK: Manchester University Press, 1985), 225. 39. Richard J. Krickus, Pursuing the American Dream: White Ethnics and the New Populism (Bloomington: Indiana University Press, 1976), 195, 338. 40. Thomas K. McCraw, “The New Deal and the Mixed Economy,” The New Deal Fifty Years Later, 64.

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41. David Plotke, “The Wagner Act: Politics and Labor, 1935–37,” Studies in American Political Development, An Annual, Karren Orren, ed. III (New Haven: Yale University Press, 1989), 127–128. 42. Kyle Bruce, “The Making of a Heterodox Economist: The Impact of Henry S. Dennison on the Economic Thought of John Kenneth Galbraith,” Economist With a Public Purpose: Essays in Honour of John Kenneth Galbraith, Michael Keaney, ed. (New York: Routledge, 2001), 25. 43. Steve Fraser, “The Labor Question,” The Rise and Fall of the New Deal Order, 56–57. Badger, The New Deal, 128. See David Montgomery, Workers’ Control in America: Studies in the History of Work, Technology, and Labor Struggles (Cambridge: Cambridge University Press, 1979) as the source for this school of interpretation. 44. John L. Lewis served on this committee for a brief time. His adviser, W. Jett Lauck, advocated an increased purchasing power among his other ideas. His life and thought are competently discussed in Fink, Progressive Intellectuals in a chapter entitled “The People’s Strategist: W. Jett Lauck and the Panacea of Plenty.” 45. Thomas H. Eliot, Recollections of the New Deal, When the People Mattered (Boston: Northeastern University Press, 1992), 70. Milton Handler oral history interview of April 15, 1970, Labor Management Document Center at Cornell University has an interesting observation about the authorship. Handler served on the National Labor Board. 46. James Gross, The Making of the National Labor Relations Board, A Study in Economics, Politics, and the Law (Albany: State University of New York Press, 1974) 136, 139. 47. Dubofsky, The State and Labor in Modern America, 144. 48. Peter J. Coleman, “The World of Intervention, 1880–1940,” The New Deal and Its Legacy, 75. 49. Plotke, “The Wagner Act: Politics and Labor, 1935–1937,” Studies in American Political Development, 128. Tomlins, The State and the Unions, 282. 50. Irving Bernstein, The New Deal Collective Bargaining Policy (Berkeley: University of California Press, 1950), 112. William Leuchtenberg, The Supreme Court Reborn, The Constitutional Revolution in the Age of Roosevelt (New York: Oxford, 1995), 215. Gross, The Making of the NLRB, 144–145. 51. Byrne, “The Social Thought of Robert F. Wagner,” 367–369, 382. 52. Morton Keller, Regulating a New Economy, Public Policy and Economic Change in America, 1900–1933 (Cambridge, MA: Harvard University Press, 1990), 145–147.

3 Housing, World War II, and Integrative Liberalism

KEYSERLING AND HOUSING “It seems politically impossible for a capitalist democracy to organize expenditures on a scale necessary to make the grand experiment which would prove my case, except in war conditions.”1 Keynes’s 1940 quote indicated that despite the political, the cultural and nation-building successes of the New Deal, economic success was lacking. Unemployment was still high; after the 1936 election Roosevelt’s disastrous fight over the Supreme Court curtailed his political successes. As heirs to the progressive legacy of a regulatory order governed by experts, Roosevelt and the New Dealers moved toward a new centralized bureaucracy grounded in a “conceived notion of national well-being.”2 Their objective was security both economically (jobs) and intellectually (defending American democracy against the evil European expressions of totalitarianism).3 It was a defense of the “American Way of Life” which in the long run had both positive and negative meanings. Haunted by unemployment, New Dealers were nevertheless optimistic about the role of the federal government in affecting a better tomorrow. Indeed, FDR promised deliverance from fear by stressing national social unity. The nation’s citizens shared in advancing the common, greater good. Considering the shock of the Great Depression and later World War II, Roosevelt’s most significant contribution was his advocation of the ideal of integrative liberalism. While he never used the expression, the idea was presented in the life and policy of the New Deal.4 In addition, America’s collectivist intellectuals were a significant element in the creation of integrative liberalism. Economic hardship and military 57

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challenges after 1945 tempered this emergent social type. This group was not Marxist; economic management not class warfare was the basic belief of the collectivist intellectual. Discounting laissez-faire policy and critical of economic individualism, these thinker-activists scorned natural rights if the term meant “objective laws of economy.” Rexford Tugwell was such an intellectual and so was his student Leon Keyserling. Both men were indebted to the institutional tradition of Thorstein Veblen and Simon Patten. National planning was the means to their policy objectives.5 Meanwhile, in the last half of the depression decade, Keyserling made a change in his life. As the European war approached and the political battles over New Deal legislation continued, Keyserling moved from Senator Wagner’s office to various positions in government housing agencies. Keyserling was pleased with his new job but the historical record is silent as to why he left Wagner’s staff. They remained close friends for the remainder of Senator Wagner’s life; perhaps Keyserling thought a new job would open later political possibilities. It did not happen that way. In time his friendship with Wagner helped him get appointed to the Council of Economic Advisers. For now his job was fighting for a stronger housing policy; but successes were few in number. As Senator Wagner’s aide, Keyserling had worked on housing legislation. It was a thankless job. While Americans celebrated home ownership and a man’s home is his castle, etc., strong and organized interests prevented a fuller realization of the public housing ideal. Private builders, landlords, private owners all worked against the “socialism” of public housing. For example, before 1933 some local governments passed housing acts dealing with clearance of decaying buildings. “Federal involvement was limited to a survey of slum conditions in large cities in 1893, the creation of the Federal Land Bank System in 1916, and the construction of munitions and arms workers’ housing during World War I.”6 In fact, a major distinction between European Social Democracy and the left wing of the New Deal was the pathetic policy achievements in American public housing. The Great Depression signaled a fundamental shift toward federal intervention into the housing fields. The economic chaos was massive and appeared to be enduring.7 As usual President Roosevelt was politically cautious and not particularly interested in the topic. He only supported legislation when passage was certain. To Senator Robert Wagner, housing was not a minor issue. Despite legislative setbacks, he urged a systematic program dealing with housing issues. President Herbert Hoover had urged single-family dwelling at his housing conference, but the onset of the Great Depression retarded any achievements in that area. Early in the Roosevelt Presidency, Wagner urged a housing pro-

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gram based on four objectives. While the final result was limited, the resultant debate spurred public awareness and interest. The first objective was long-run reform of the mortgage system. New laws helped in this area. Helping distressed homeowners was the second objective, resulting in the Home Owners Loan Corporation Act of 1933. The third objective was realized in the 1934 act creating the Federal Housing Administration which “sought to stimulate new private construction and modernization on a remunerative basis.” The last objective was the subsidizing of projects for slum clearance and low-cost public housing. This would receive federal subsidies. The Wagner-Steagall Act of 1937 was the legislative result. Ironically, after World War II, slum clearance meant the destruction of ethnic neighbors, and the displacement of many people in the private housing market as “slum clearance” cleared the way for the interstate highway system and the growth of the suburbs.8 Wagner’s philosophy about public housing was similar to Keyserling’s thoughts. The men worked closely together and, as the senator’s speech writer, Keyserling knew Wagner’s ideas on the subject.9 In the early days of the New Deal, Wagner saw public housing as vital to a larger project of public works programs. Keyserling returned to this theme on several later occasions. Many factors hampered Wagner’s and Keyserling’s efforts. FDR’s wanderings of mind and often lack of political will complicated the issue. On the other hand, Secretary of the Interior Harold Ickes constantly sought control over any and all government projects including public housing. An honest man and a good-hearted reformer, Ickes never met a government program that he could not administer better than anyone else.10 Ickes believed that public housing should be under his direction. For more than two years, Keyserling worked on housing legislation. Writing, going to meetings, visiting with housing experts, and lobbying, Keyserling used “his best judgment after final consultation with the senator himself.” What Keyserling desired was “a system of annual contributions that gave the Federal government a continuing control over the local program, thus insuring that the low-rent character of the projects would be preserved.”11 Keyserling’s activities consisted of working with Congress and increasing public awareness about the public housing issue. As with the other elements of his public career, housing was just a part of the larger vision of integrative liberalism. Typical of this perspective were Keyserling’s remarks in 1939 as the clouds of war rolled out of Europe. It was a clear statement of his philosophy of reform. For Keyserling, public housing combined unity and progress because good housing was a concern of all, “inseparable from the cause of social and economic democracy.” Helping labor, business and the public, the issue combined “economic desirability with political feasibility and these two

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must be combined if practical progressives are to save democracy from the forces which threaten it throughout the world.”12 Keyserling’s position was not just for public consumption. He deeply believed in the “contract” or “agreement” or “understanding” between the governed and the governors. Essential in war and peace, this relationship was particularly critical in the difficult times before December 7, 1941. It meant both material security and intellectual trust. In terms of the Wilsonian concern of making the world safe for democracy, Keyserling argued that it was possible and essential. “By making democracy serve its true purposes of functioning for the benefit of all the people who are needed to defend Democracy. If they lose faith or become discontented, and they cannot be fooled as they used to be years ago we shall become pretty weak no matter how many battleships we christen.”13 In both hot and cold wars, Keyserling sounded this theme of integrative liberalism time and time again. Years later when Keyserling was twenty years from government service, he expressed the sentiment in a publication of his think tank, The Conference of Economic Progress. He noted the many achievements in the federal housing policy since 1933; but tokenism had become the policy norm, “It has tended to make ‘poor house’ of the public projects. It has permitted the slums to remain in full force.” And in the greatest challenge to integrative liberalism, “it has perpetrated one of the most dangerous of all social errors to offer promises rather than performance.”14 A tragic irony existed. Federally subsidized housing was a local voluntary action where racial segregation was the law and the social value. Keyserling did not approve of segregation and red-lining of housing loans; although, both practices were followed in the federal housing agencies. The result was a damaged integrative liberalism, the vision of viable urban communities within the heart of the city. Urban renewal after World War II and the Housing Act of 1949 became the removal of the poor from prime real estate locations for commercial development.15 Meanwhile, Keyserling pressed forward with the housing bill. After defeats in 1935 and 1936, the following year with a tepid endorsement from Roosevelt whose lack of earlier support had proved fatal to the legislation, a bill was passed—the Wagner-Steagall Act. It created the United States Housing Authority which extended sixty-year loans at 3 percent to local housing agencies for construction and maintenance of public housing. On the eve of World War II, over 130,000 public housing units existed across the nation. Meager funds and poor administration from Nathan Straus, head of the United States Housing Authority, hampered a limited federal commitment. Straus needlessly provoked Congress which refused any further monies to the USHA and generally ignored it until Straus’s

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resignation on January 5, 1942. Straus even quarreled with friends such as Keyserling.16 Years later Straus discussed this situation. He had a plausible explanation for his administrative difficulties. By his own admission he was not diplomatic. He “was not well-equipped to handle Congressmen and, above all, I was not wellequipped to handle their insistent demand for patronage—jobs in the USHA.” He also irritated people like Jesse Jones and Harold Ickes whose friend Drew Pearson criticized Straus in his columns. His Deputy was Keyserling “who was also undiplomatic.” Straus asked for Keyserling to join him at the housing agency. Keyserling “knew housing as nobody else did” and he was “unbelievably brilliant in his thought processes and in his analytical ability, but he was, then, very young and often undiplomatic.” With hindsight Straus concluded that, “Had I had an experienced businessman as Deputy or Assistant Administrator, I would have gotten in less hot water on the Hill.”17 It was a private disappointment. Keyserling never commented on the public housing situation or the politics of it. It must have been a sad realization that so much effort resulted in very little achievement. He had worked closely with Catherine Bauer and other housing experts and supporters. In fact, Bauer and Keyserling contributed to the Wagner-Ellenbogen Bill of 1936 which became the successful Wagner-Steagall Act of 1937.18 By 1941 housing issues became a part of the war effort for the duration. In the years between the passage of the Wagner Housing Act of 1937 and the onset of World War II, the political winds had shifted. In terms of achievement and energy, the New Deal became defensive as the Roosevelt Administration dealt with the world situation and faced renewed conservative congressional opposition, encouraged by the Supreme Court battle and the election results of 1938.19 In fact, the first major political achievement for the conservative coalition in the Senate was the evisceration of the 1937 legislation. The legislative objectives were three-fold—improve housing conditions, promote economic growth, and strengthen the electoral base of the Democratic Party. Successes were meager. The war effort dominated all aspects of the Roosevelt Administration and dictated in some not-so-subtle ways changes in public policy.20 By December 1937, Keyserling was named General Counsel to the United States Housing Authority. His duties included working with local authorities in establishing housing agencies and working on the many details of financial regulations. Within five years Roosevelt nominated him for Deputy Administrator of the agency. When Straus resigned, Keyserling became acting administrator. He continued a busy round of speeches and writing for the cause of public housing.21 His activities did not go unnoticed. Until he joined the Council of Economic Advisers he was endorsed

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for various positions as they became open and as the public housing situation changed during the war.22 In his housing activities, Keyserling never abandoned his lifetime concerns about economic maturity and social justice. In his speeches and in his political activities they were constant themes. Governmental housing policy was always a part of a larger vision. “By common consent, a large-scale housing program when the defense period is over can be the most important single factor in maintaining our economic equilibrium, our social stability, and our democratic habits which depend on both.” The backdrop for this concern was the mature economy thesis. “The symptoms of a mature economy have long since worked their way into business psychology.” The challenge now was transforming those savings into investments, an “almost new tradition.”23 Keyserling combined his fear of a postwar economic recession or depression with his abiding concern for social justice. He phrased his suggestion in the context of a partnership between the federal government and the private real estate developer. Speaking at a luncheon meeting of the Municipal Forum of New York, Keyserling urged the government to concentrate on research and to provide information to the housing industry. War restrictions and “regulations should be abated systemically when the war situation permits.” With cooperation between the private housing industry and the federal government a maximum utilization of men, money and material might be realized. “In this way this basic industry may make its full contribution toward full employment for our economy as a whole.”24 Keyserling kept this message, in one form or other, for the remainder of his public life. Like many other Americans, integrative liberals or not, Keyserling soon faced a radically changing world situation which would test all Americans. THE COMING OF WORLD WAR II As important as housing issues were to Keyserling’s reformism, the terrible events unfolding in the last years of the 1930s challenged and complicated the integrative liberal vision. With the European situation collapsing under the weight of both the left and right, the United States would have to abandon its “traditional” advocacy of isolationism and deal with the world in a more realistic manner. President Roosevelt was his usual cautious self; but, he grew bolder in his diplomatic moves after September 1, 1939.25 While various forms of isolationism had supporters, the advocates of Wilsonian internationalism were not quiet; indeed, they took full advantage of the situation and were eventually able to create the United Nations.26 The situation was not promising for internationalism on the eve of 1940.

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The passage of the Smith Act mandating the fingerprinting and registration of all aliens was hostile to cultural pluralism, a vital part of integrative liberalism. Supporters of the act saw it as a goal of national uniformity. Although FDR had signed the act without public criticism, the Roosevelt Administration, by various meetings and programs, encouraged people of all ethnic backgrounds to support national defense. “One result was a government public relations campaign—directed, significantly, by ethnic employees of the Justice Department, rather than by the WASPs who commonly ran its affairs—that emphasized themes like the Nazis’ tactic of divide and conquer, and portrayed the aliens as good citizens of America.”27 To fight the racism of the Nazis successfully the United States had to reform its domestic expressions of segregation and racial bigotry. It would be a major task for integrative liberals such as Senator Wagner and Leon Keyserling. Two speeches by Senator Robert Wagner illustrated the changes and the constancy of these years. On December 23, 1940, Wagner spoke on the NBC radio network about “Social Gains and National Defense.” The speech provided the intellectual justification for New Dealers to continue the good fight on behalf of their reforming ideals. Because of the personal and intellectual closeness of the two men, Keyserling had a creative hand in the composition of the 1940 speech (as well as the speech six years later). Opening with a quick comparison of Hitler’s Germany and the United States, Wagner rejected Hitler’s claim of national unity. The senator affirmed that “unity rests upon the spontaneous cooperation of a free people—a people firm in their democratic faith, and convinced that human progress and happiness has no bounds in a land where liberty prevails.” Wagner then argued that the New Deal domestic programs contributed to national defense by providing social security, mutual trust between the governors and the governed. It was a desirable and necessary process given the total war nature of future conflicts, he claimed. The future battlefield included the home front and the hearts and minds of its citizens. Social gains meant a united nation. Wagner cited American war policies during the Great War as his historical text. All of these matters were basic to the major policy concern—full employment. “Full employment of those able to work is a test second to none, as to whether democracy is strong and efficient.” The last characteristic—efficiency—was a key concept in American progressive reform. In large measure full employment was only a means to the larger end of industrial harmony that supported workers’ trust. While later historians and politicians might grow nervous about the senator’s next point—the relationship between the welfare state ideal (domestic reform) and the warfare state (national defense at a time when free security was challenged)28—he believed it to be a natural and defensible policy. “In fact, at almost every point, the

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facilities of peaceful progress and the facilities of defense are being fused into one. How could it be otherwise, when what we seek to defend is our peaceful progress?” It was a well articulated statement of integrative liberalism and of Keyserling’s contribution to its defense. The task was two-fold. The first objective was to create a first-rate defense system. Then, the experience gained in “producing the means of military defense must be held ready to apply toward our well-being and general prosperity when peace comes to the world.” Wagner linked an aggressive but defensive foreign policy to domestic reform (the New Deal) under the rubric of integrative liberalism.29 Six years later at a political dinner in honor of Franklin D. Roosevelt’s memory, Senator Wagner outlined the future of American reform and, as expected, it contained both the seeds of the Fair Deal and the continuing ideal of integrative liberalism. While he noted the changing times and the need for new departures in reform, his emphasis was on the continuity of reform. Not so much in legislative particulars but in the spirit of FDR’s achievements, the task was therefore maintaining the eternal verities, of FDR’s “subordination of every other consideration to the welfare of humanity.” In domestic politics these eternal verities meant social security, public housing and full employment policies. “They will be a beacon light for the next century.” Not only for American citizens but for the entire world population these reforms were both desirable and necessary for world peace. The continuity between domestic and foreign policies was essential. The latter “in most cases is a by-product of the domestic economy.” Hence Sir William Beveridge’s report has importance for reform in the United States and world peace. The years from 1946 to 1950 were critical for a just and equitable future. “We must fight the war against social injustice and against want in a land of plenty, as relentlessly as Roosevelt led us in the war against Fascism between 1941 and 1945,” according to Senator Wagner. It was Roosevelt’s heritage to the American nation. “We must live with that heritage and multiply its fruits.”30 The Cold War shaped American politics, policies and culture in the next fifty years, causing difficult decisions for citizens. If the truth be known, war and the preparation for war undoubtedly have been the greatest impact on the history of the United States. Hegel’s “slaughter bench of history” is a constant reminder that history’s “logic” has qualities that are sometimes difficult or unpleasant to grasp. World War II did help in the advancement of integrative liberalism. While some revisionists mock the idea of World War II as the last good war, the conflict did bring some positive changes to American life and society. The price was extremely costly and the accounting imagery is grossly inadequate in describing the heroic efforts of a gallant generation.31 Democratic values were defended and advanced in the fighting of the war.

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The defense of the United States was not easy. Roosevelt, Keyserling, and many others knew that military mobilization and war came with a tragic cost; but, large scale sacrifice might be necessary to save the polis. Mobilization for the Great War emphasized the problem. While the experience of “fighting” the Great Depression had modified the situation in the late 1930s, mobilization drew on the same ideological currents as integrative liberalism. The Wilsonian war effort (and later Roosevelt’s) “encouraged a romantic impulse for community among the American people.” It meant fashioning “stable administrative networks and hierarchical public controls” in a cultural context that was anti-bureaucratic. As an integrative liberal, Keyserling drew on his progressive inheritance. What was hoped for in the war effort regarding World War I was present in the days and years before and during World War II. “The romantic cultural element in Wilsonian mobilization encouraged the social pursuit of an integrated, organic social order, the spontaneous development of a free people, in the language of the day, something beyond formal organization itself.”32 This something was integrative liberalism in the twentieth century. Keyserling was no war lover; but he recognized the revolutionary significance of the approaching conflict. He saw an old order passing away and the nature of its replacement being contested around the world. Both Wagner and Keyserling understood the relationship between domestic and foreign policies. For the remainder of their lives, they advocated linkage in both areas. The later Cold War only strengthened attitudes and values that Keyserling expressed all of his adult life. World War II was the end of many things and the beginning of many other things. While the expression was banal and trite, it was still true: the war years, 1939–1945, changed the United States.33 Politics and motion pictures expressed the articulation of integrative liberalism, growing out of the New Deal experience and challenged by the end of free security. Just as the New Deal created institutions of cooperation among conflicting ethnic groups, the majority of wartime movies linked the mobilization for war and the fighting of World War II with New Deal goals and aims.34 One of the goals inherited from the New Deal was the creation of a vigorous and successful organized labor movement dedicated to social justice and greater workers’ benefits. A vital part of the Roosevelt Coalition, the rise and gradual decline of organized labor, reflected the same process as the arc of integrative liberalism. The Wagner Act was vital in the triumph of the integrative liberal vision. Some scholarship has argued that organized labor failed to benefit its members economically or achieve organizational strength from the wartime situation. Revisionists would later claim that “security” replaced “power” as an organized labor goal. Workers, particularly those with an immediate ethnic

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heritage, accepted the basic justice of America, a good nation, fighting a just war. They were patriotic. It helped European immigrants “feel fully at home in America while simultaneously frustrating the ambition of those who sought to extend popular control over the nation’s economic institutions.”35 Even as the war approached the United States, some policy makers were thinking about the war’s impact and its future consequences.36 President Roosevelt’s political struggle against the isolationists attracted a great deal of contemporary and historical interest.37 In the later years of the New Deal FDR faced a two-front policy struggle. The approach of another European conflict in the last years of the 1930s meant that Roosevelt had to rally the international elements in American life around the concept of collective security and at the same time maintain the domestic reforming edge of the New Deal. Even for Franklin D. Roosevelt the task was too great on many occasions. Wealthy businessmen in the Roosevelt Administration began to chip away at social programs while the President concentrated on the war itself.38 In some instances, circumstances dictated to Roosevelt. Some historians and politicians have charged that rearmament was the key to the New Deal’s economic recovery. Did FDR plan it? Military spending had fallen to an historic low early in the depression decade. “Defense spending rose 50 percent between fiscal 1936 and fiscal 1940, but not until 1940 did it increase enough to drive the economy. Only if in 1938 he foresaw the far larger budgets of 1940–1941—for which there is little evidence—could he have calculated great advantage to rearmament.”39 Roosevelt was a great political leader, but his powers of control and prophecy were strictly mortal. When the war came, Roosevelt constantly held out the higher vision of “America’s tomorrow,” stressing economic security and social reform. Wartime priorities and liberal domestic ambitions were mutually re-enforcing. During the war, the United States economy did an outstanding job in providing for both civilian and military needs. While Keyserling and other New Dealers worried about guns and butter and the prospect of a postwar recession or depression, apparently their concerns were misplaced. On average the American consumer apparently suffered little. “By this measure the war on the home front was relatively comfortable.”40 While this historical judgment was true, it has limited significance. The war effort included civilian rationing and other sacrifices. After all, American men and women were in harm’s way around the world. How the United States fought wars meant some form of civilian sacrifice. The number of the missing, the wounded and the dead meant a human cost. Democracy meant sacrifice in war time.41 At the same time World War II “accelerated and crystallized the definitive establishment of the U.S. mixed economy, a historical process inaugurated by the Great Depression and the New Deal.”42

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Roosevelt did not achieve all he desired; actual events and other people created other agendas. For example, the war brought a special welfare state for veterans. Of course no rational politicians denied the several benefits that the G.I. Bill and other programs provided for returning military service personnel; however, by directing the social reformism associated with the New Deal legacy only to veterans made it unlikely “that establishment of a national welfare state could be completed along lines envisaged by the Committee on Economic Security or by the National Resources Planning Board committee.”43 Despite being limited by political circumstances and his physical strength, Roosevelt contributed to integrative liberalism.44 Faced with an increasingly hostile Congress and a political system predicated on divided authority, Roosevelt had a difficult task. He still wanted a reformed America based on the idealism of New Deal equity but as the war years passed both his personal and political strength waned. New Dealers in the Democratic Party were losing numbers with each election. Publicly Roosevelt focused on winning the war. In private correspondence from 1939 to 1943, FDR charged the National Resources Planning Board with postwar planning albeit in a quiet fashion. Its termination in 1943 was indicative of the revenge that the Republican-Southern Democrats visited on the New Deal. The NRPB was a lightning rod for Congressional anger at the reforming impulse inherited from the 1930s. Roosevelt believed that the task of the planning agency should be in the areas of public works, security, and full employment. Despite the demise of the NRPB these concerns in addition to civil liberties for African-Americans and women became the postwar expression of integrative liberalism. Behind these reforms rested the fear of a mature economy; the war brought increased economic activity which the peace might end. In its brief lifetime the NRPB contributed a new economic bill of rights articulated in FDR’s public addresses as early as 1939 and as late as his 1944 State of the Union message. In all of these matters Roosevelt kept the Keynesian implications of these issues to a minimum. On the political front, Roosevelt did not contest the Congressional destruction of the Civilian Conservation Corps. His energies were directed at the war effort grounded in political unity. As Roosevelt quietly supported postwar planning and domestic reform, he encouraged a “Postwar Manpower Conference” whose report a year later laid significant foundations for the GI Bill of Rights.45 For example, the report revealed poor physical and psychological health of the soldiers because of the Great Depression and the general social-class experience. War and the welfare state were closely related.46 In typical American reform fashion, moral uplift combined with patriotism saved the nation for its true destiny. “Eleanor Roosevelt hoped that the conditions revealed

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by the draft would spur a national health program, and Franklin took up the cause, once again fusing social welfare and national defense.” The same sentiments contributed to the later American interest in the Beveridge Report, which was a British version passed at the war’s end.47 The Great Depression and World War II did bring an increased presence of the federal government in American life. The public supported a modified capitalist ethos.48 The totality of the Roosevelt years was larger than its parts, successful or not. The name for that totality was integrative liberalism.49 Ironically, many of the policy struggles during the war continued after the conflict; at times only the labels were changed. Keyserling never abandoned his concern with the mature economy idea and he was not alone in that regard. For many people the issue was the future of the postwar economy. Just as President Hoover and the Republicans argued that the Great Depression had European origins and that the New Deal was an imported left-wing heresy, so the postwar rhetoric of the Republicans and conservative Democrats warned of socialism, communist take-overs and political treason .The uses and abuses of the Red Menace thesis echoed in American politics and culture.50 Despite this rhetorical celebration of the market ideal, public policy in the United States and western Europe was toward the mixed-economy ideal. It was close to being an imperative. Calling for sacrifice on the home front and with American men and women around the globe, on some level people expected democracy to “pay off.”51 Keyserling and the integrative liberals envisioned such a future. During the war, debate in and outside of the government led to a full-employment ideal. A job was basic to the reformers. The development of the British welfare state contributed to the American debate.52 The National Resources Planning Board’s very existence grieved critics of the Roosevelt Administration. Institutionally it represented the historiographic notion of Frederick Jackson Turner’s closing of the frontier, suggestive of a mature economy and the need for planning for the market’s uncertain future. In 1943, the National Resources Planning Board published Security, Work, and Relief Policies. Its contents and policy recommendations were similar to the Beveridge Report published a year earlier. The stage was set for the conflict between polis and market advocates. In the cultural and policy politics during the war, Congress terminated the NRPB but could not contain the debate in its own halls or in the country.53 The fate of Security, Work, and Relief Policies when compared with the Beveridge Report is instructive in light of Keyserling’s later career and the eclipse of integrative liberalism at the end of the twentieth century. Within the political culture of Great Britain the Beveridge Report was the latest expression of “previously well developed social insurance measures.”

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The NRPB lacked that legacy. In the spirit of New Deal reformism, the planners sought an expansion of New Deal employment and public assistance programs as the wartime economy expanded. The fear of a postwar recession was foremost in the minds of New Dealers such as Leon Keyserling. In fact, the NRPB contributed to the dialogue that ended with the Employment Act of 1946.54 The Veterans Administration and the Social Security Board meanwhile “promoted their visions of social policy at the expense of key NRPB plans; hence Security, Work, and Relief Policies lacked public enthusiasm and bureaucratic backing.55 The NRPB’s records quickly revealed why congressional conservatives wanted to terminate the agency. Many of the NRPB’s policy suggestions influenced Keyserling’s writings and his tenure in the Council of Economic Advisers. Alvin Hansen’s “After the War—Full Employment—Post-War Planning” was Keynesian in description and prescription; but, it addressed an abiding concern for Keyserling about the future economy. Government must insure sustained demand in the economy. With progressive income tax, estate tax, decreases in consumption taxes and increases in public works projects such as express highways and urban transportation, the federal government must include a “Housing Research Laboratory designed to reduce construction costs and thus enlarge the scope of private housing construction.” The critics of the Roosevelt administration hated the National Resources Board, the very icon of New Deal reformism. The agency institutionally expressed the New Deal philosophy of security, material and psychological, aided by a governmental program directed by experts. In the struggle between legal realism (as an update of the polis ideal in republicanism) and the natural rights advocates (when natural rights expressed laissez-faire capitalist market values), the agency represented the institutionalism of Veblen, Patten, Tugwell and Keyserling. Later in FDR’s State of the Union message in 1944 and during the presidential campaign, this philosophy represented the integrative promise of American liberal reform.56 As the American war effort raged around the world, different battles over domestic politics and the future of integrative liberalism occurred. The demands of the war effort limited Roosevelt. His public words from the Atlantic Charter to his death provided inspiration and guidance to postwar reformers such as Keyserling. Integrative liberals saw a new America in a liberated and new world order.57 In this analysis of future domestic needs, foreign policy concerns were included. “International collaboration to pursue internal policies designed to promote active employment; to explore developmental projects in backward countries; and to implement ways and means to open outlets for foreign investment, promote world trade and the effective world-wide use of productive

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resources.”58 The Americans for Democratic Action document expressed the historic origins of Wilsonian idealism, of integrative liberalism and of the shared vision of Senator Wagner and Leon Keyserling. It was the essence of Keyserling’s politics and public value system. The legacy of the NRPB influenced Keyserling. In the course of time, the Council of Economic Advisers acquired the board’s economic analysis and reporting function. The National Science Foundation encouraged organized scientific research far beyond the dreams of the New Dealers in the 1930s. In addition to these particular examples, the board contributed to economics, resource planning, social research, and the role of governmental action in national affairs. Despite “conservative” market opposition these activities improved American society over the years.59 The issue at the close of the twentieth century was clear. What happened to the New Deal and its legacy of reform? The issue is critical in understanding Leon Keyserling, his career and his relationship to the fate of integrative liberalism. Despite the liberal aspirations of Keyserling and others after World War II, the nation’s political culture moved toward market conservatism, as Eisenhower’s victory in 1953 and Keyserling’s retirement from government service indicated. The Cold War changed the liberal agenda. In his post-1953 years Keyserling recognized the scope of that transformation. During the war, Congress was dedicated to destroying the New Deal, to return to some “weak” nation before the days of FDR. At the same time the war effort and the Cold War (created out of the complex origins of “Munich,” “Pearl Harbor,” and the new Atomic Age) meant a “strong” United States. The age of free security was after all coming to a close. It was a difficult time for an integrative liberal such as Keyserling as the remainder of his life would demonstrate. The New Deal was dismantled, at least in symbolic ways, and the new structure of the national security state was placed on its institutional foundations.60 From this perspective, the New Deal’s greatest legacy was not reform (a questionable assertion) but state-building with “the centralization of power within the executive branch, and the state’s growing capacity to shape economic activity.”61 If that historical interpretation has merit, fortunately Keyserling made his greatest contributions to integrative liberalism as Chairman of the Council of Economic Advisers in the Truman Administration. Meanwhile in his wartime work in the various housing agencies, Keyserling drew on a New Deal sentiment of reform. As a part of his larger vision, public housing provided a vital means for realizing economic security and abundance in the United States. During the war, sixteen housing agencies existed, often generating policy confusion, the result of bureaucratic infighting and political posturing. Keyserling wanted unification. It was, to a degree, achieved in the National Housing Act of 1949; but that legislation came only

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after a long and bitter struggle in Congress and among the housing and real estate lobbies. Keyserling’s concept of integrative liberalism was clear. “I think that this unification will afford the chance to think through and work out a meaningful program of housing, particularly for the post-war period.” Housing was an inclusive word. It included “all those issues of urban living and fiscal practice and land use and general social policy which cluster in some way around the enterprise of sheltering people,” in both rural and urban areas. “In my new job as General Counsel to the National Housing Agency, which is primarily policy work with legislation as a subsidiary, I hope to be implicated quite largely in this challenging task.”62 Keyserling always stressed political connections and policy relationships and housing was no exception. Wartime and peacetime housing shared the same goal, “a bright rather than a depressing home environment.” To be sure, the war brought special problems and concerns; but a key element was decent housing for “full factory efficiency.”And again he returned to the larger picture—the future and the mature economy. “We must fit the wartime housing program into this pattern now, in order that we may forge a sound and sensible instrument to be held in readiness for the vast home construction which must come at the end of the war to avoid a major economic catastrophe at that time.”63 The theme was familiar. Housing was critical and governmental assistance was necessary. Within this familiar rhetoric were the origins of the varied developments that integrative liberalism would experience in the next half century. For example, Keyserling saw housing for veterans as an entitlement (a word that Keyserling did not use, but he agitated for the concept years before the Great Society). The federal government’s responsibility in smoothing out the business cycle and maintenance of high employment was the foundation for public housing. Public housing was always for Keyserling a means to a greater end, an end called integrative liberalism. To that end Keyserling saw FDR’s “Economic Bill of Rights” as the basis for both decent housing and full employment. As he observed near the end of the war, “This brings specific housing measures directly within the context of the current interest in the Full Employment Bill, along with other proposals for utilization of our manpower and resources when the war is over.”64 Eventually this issue became the Wagner-Ellender Bill much of which was included in the National Housing Act of 1949. Provisions for the federal government as lender of last resort and tax benefits for the construction industry would become hallmarks of public housing on a minor scale in the next fifty years.65 In February 1946 Keyserling developed his argument regarding public housing. It was his last major statement before his appointment to the Council

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of Economic Advisers. Publicly he worried that the lack of a government program, such as supported in the Wagner-Ellender-Taft Bill, would contribute to a boom and bust cycle suggestive of 1922–1929. In addition the housing program must be directed toward a wide market, fitting the needs of lowerincome families, especially veterans. Keyserling rejected the scarcity-of-the-classic-market ideology. He was an American institutional economist whose basic assumption was the real possibility of abundance. This abundance was a “part of the birthright of every American family.” For Keyserling, public housing (and full employment) represented something larger than mere interest-group liberalism, of a crass arrangement about who gets what and why. He had a larger vision. “Full employment in a free society is not just about jobs. Hitler provided jobs—while he lasted.” Rather Keyserling saw in terms of political theory and his reforming heritage of progressivism, the desire for a democratic polis. “Full employment in a democracy means supplying the kind of jobs that add most to meeting a people’s physical needs—plus the kind of leisure that adds most to their cultural advancement.”66 In brief, Keyserling’s words were a summary of integrative liberalism. World War II did advance the cause of liberalism. From the Atlantic Charter to the Employment Act of 1946, New Dealers saw a vision emerging from the carnage of the global conflict. To be sure, a conservative Congress and on occasion an indifferent public had other objectives but from the perspective of century’s end, this vision of integrative liberalism endured through the election of 1948 and then began its slow decline. Historians differ over the meaning of Roosevelt’s words and actions in the last years of his presidency. Whatever Roosevelt’s legacy—and integrative liberalism was one expression of it—the United States was a different nation in 1946 from the one of 1940.67 KEYSERLING AND “TOMORROW” Leon Keyserling and many other Rooseveltian liberals dreamed of a better “future beyond the war.” It was Archibald MacLish’s “The Un-imagined America.”68 It was the same America of the 1930s but it was moving in an unknown direction. As African Americans moved from the South to the North, as women of all kinds moved into the workplace, these two social trends indicated a demand for inclusion and an end to various forms of discrimination. Ethnic relations would change in the near future. At the same time, economic growth, possibly sparked by governmental spending, solved the issue of unemployment; but was it only temporary? Was a postwar depression similar to the

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disaster of 1929 possible? The mature economy thesis was still on the minds of the public and the policy makers as the war came to a close. Fear of a mature economy was not the only concern in American life. A fear of the state and a fear of the people were also present at war’s end. The popularity of Frederick A. Hayek’s The Road to Serfdom (1944) indicated fear that some sort of totalitarian collectivism was descending on Great Britain and the United States. The emergence of “Red Fascism” in the Cold War culture was one manifestation of this fear. Keyserling disagreed with this thesis.69 The fear of the public’s irrationality was more complex. A tension existed in progressivism between the people and the experts, individuals with special knowledge and skills usually housed in governmental bureaucracy, who were often philosophical democrats providing services and protection to the public.70 The historical result was the welfare state. Another result was an uneasiness about ideology as “one of the purposes of politics was to defend the state against popular movements and their potentially dangerous effects.”71 As the events of the next fifty-five years unfolded, politicians like George Wallace, Richard Nixon, and Ronald Reagan exploited this distrust between the federal government and the American public. Because of it, integrative liberalism, despite its heritage in progressivism and the New Deal, was a spent force by 1999. Usually Americans were (and are) optimistic, and they were as the guns and airplanes grew silent at war’s end. From Henry Wallace to Henry Luce, many concerned citizens saw a Century of the Common Man or the American Century ahead. While differences existed over the details, they saw a postwar consensus. The United States was the exception to the historic misuse of power and world leadership. Once again the assertion was that this country, the Great Republic, was the last and best hope of mankind, “an anointed nation.”72 In large measure Randolph Bourne’s Trans-National America was closer to realization. It proved “ethnic diversity enriched rather than weakened” the country.73 At the war’s end, the United States still had racist notions about many ethnic groups; however, compared to the situation before, during and after the Great War, considerable improvement had been achieved. The views of progressive intellectuals and social scientists had entered into the public mind in a significant fashion.74 Despite examples to the contrary, integrative liberals, such as Keyserling, with their emphasis on cultural pluralism and nationalism looked toward a promising tomorrow. DEFINING EVENTS IN KEYSERLING’S PRIVATE LIFE On October 4, 1940, Leon Keyserling married Mary Dublin. She was an economist and had taught at Sarah Lawrence. At the time she was a leader

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in the National Consumer League which lobbied and educated for a wide range of reform legislation. They had first met in 1934. Two or three years later Leon and Mary were having dinner dates in New York. As Mary later recalled, “We became good friends after 1938 when I had to come to Washington for the National Consumer League, to testify before congressional committees.”75 She called him and their friendship changed into a courtship. It included going to congressional hearings and being dedicated to the New Deal. Mary was already an integrative liberal, drawing on her secular politics and religious faith. After a brief honeymoon, they lived the remainder of their lives, devoted to each other, in Washington, D.C. They were childless. They did have one offspring—Leon’s second-place finish in the Pabst Blue Ribbon Essay Contest dealing with the future of the postwar economy and increased unemployment, a major recession. In early 1944, the Pabst Company contest drew 35,767 entries. The Department of Economics at Columbia was the first to evaluate the papers. Limited to 2,000 words, the essays were finally judged by Clarence Dykstra, Wesley C. Mitchell, Beardsley Ruml, and Alexander F. Whitney, a distinguished panel. First prize was $25,000, in government bonds, second was $10,000 and ten $1,000 consolation awards. On a Sunday night before the contest’s deadline on the following Tuesday, Mary planned to enter the contest. An injured wrist prevented her and she prevailed upon Leon to write the essay in her place. Undoubtedly, they had discussed this topic many times and they were fully aware of the wide interest in both governmental circles and in the general public. The result was an essay entitled, “The American Economic Goal, A Practical Start Toward Postwar Full Employment.” In optimistic tones, Keyserling mapped out a plan based on the advice of “An American Economic Committee” of public and private experts whose advice created plans for the future. With essential public works, and low interest rates, the collective effect was high consumer demand. Using the rhetoric of progressive unity, Keyserling urged action, private and public, across a wide range of policies. For example, “Public works should be planned to enrich our environment instead of just making jobs and to avoid new manpower maladjustment by sporadic over-expansion of construction.”76 Herbert Stein, who later served as Chairman of the Council of Economic Advisers in the Nixon Presidency, won first prize. As with Keyserling, Stein worried about the business cycle. He advocated tax reforms and price stability, supported by improved unemployment insurance and tariff reduction. In the years ahead, Stein and Keyserling disagreed over policies and politics. The experience left some unpleasant memories. “I have some thoughts about Keyserling, but I don’t think I will put them on paper.”77

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In a larger context, the point of contention between Keyserling and Stein was over analysis and resultant policy. Stein’s orientation was toward the market and greater tolerance for the business cycle; Keyserling constantly urged economic growth to challenge both the business cycle and the market. Their positions were also dictated by political party commitments. Honest and concerned, the economists’ opinions represented the viable alternatives in postwar economic policy. Keyserling’s advocacy of a special governmental agency that focused on the economy and smoothing out the business cycle was part of his progressivism and integrative liberalism. A major depression was his greatest concern, closely followed by a stagnant economy held back by underemployment. The situation at the Pabst awards banquet was repeated often in Keyserling’s experience. He was often attacked in public. Generally hostile to Keyserling’s point of view, John M. Hancock claimed that, “I do not believe that Government should take on the responsibility of providing jobs.” The crux of his criticism was clear. “I am sure that the Government cannot compel men to become employees, and I think it is about time that we made the attempt to lead the natural leaders of men to become employers.”78 Within two years of the Employment Act of 1946, an important shift was underway. In 1939, the first official expression of governmental responsibility, a full utilization of resources and employment was advanced in optimistic tones, rejecting the pessimistic pitch of the mature economy thesis.79 Employment was one of the main concerns of the Truman Administration in the years following FDR’s death and the end of World War II. In summary, the task of evaluating the impact of depression, reform and war on Americans is difficult. The material legacies can be found in the statistics generated by state and society. Their message was clear; much in the nation had changed. “The most long-lasting legacy may have been intellectual and institutional: a new macroeconomic regime which reshaped monetary and fiscal policy and profoundly influenced employment and inflation for decades afterwards.” That legacy contained the twin legacies of integrative liberalism and Leon Keyserling’s achievement as member and chairman of the Council of Economic Advisers.80 NOTES 1. John Maynard Keynes, “The United States and the Keynes Plan,” The New Republic, 103 (July 29, 1940), 158. 2. As noted in Chapter Two, building the new order or the New Deal was not a one-way process. Inspired by events and their own abilities, people took

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some control of their lives in the market place in the spirit of social unity. See Lizabeth Cohen, Making a New Deal (Cambridge, UK: Cambridge University Press, 1990). As early as a speech in 1912, FDR celebrated “liberty of the community” which once again suggested that much of the New Deal had progressive origins in the early wave of reform. Frank Ninkovich, Modernity and Power, A History of the Domino Theory in the Twentieth Century (Chicago: the University of Chicago Press, 1994), 101. 3. David M. Kennedy, Freedom From Fear, The American People in Depression and War, 1929–1945 (New York: Oxford, 1999) is a detailed narrative of this search for security in its varied aspects. For an example of how domestic and foreign policy concerns came together under this rubric see Michael Sherry, In the Shadow of War (New Haven: Yale University Press, 1995). 4. Raymond, S. Franklin, “The Paradox of the New Deal: Political Success and Economic Failure,” Franklin D. Roosevelt: The Man, The Myth, The Era, D. Rosenbaum, ed. (Westport, CT: Greenwood Press, 1987), 124–125. 5. Stuart Kidd, “Collectivist Intellectuals and the Ideal of National Economic Planning, 1929–1933,” Nothing Else to Fear, 20. A. Scott Henderson, Housing and the Democratic Ideal: The Life and Thought of Charles Abrams (New York: Columbia University Press, 2000) provides an intellectual context for these developments. Patrick D. Reagan, “Creating the Organizational Nexus for New Deal National Planning,” Voluntarism, Planning, and the State: The American Planning Experience, 1914–1946, Jerold E. Brown and Patrick D. Reagan, eds. (New York: Greenwood Press, 1988), 96. 6. Kenneth T. Jackson, Crabgrass Frontier: The Suburbanization of the United States (New York: Oxford University Press, 1985), 191. 7. Ibid., 193. Gwendolyn Wright, Building the Dream, a Social History of Housing in America (New York: Pantheon Books, 1959) provides background on this topic. 8. A key source for this topic is Timothy L. McDonnell, S. J., “The New Deal Makes a Public Housing Law,” Ph.D. Dissertation, St. Louis University, 1953, 276–277. For a broader historical context see Jackson, Crabgrass Frontier, 223–225. Robert Moore Fisher, Twenty Years of Public Housing (New York: Harper & Brothers, 1959) gauges the economic impact of the policy. 9. Ibid., 137. 10. Ibid., 108. Jeanne Nienaber Clarke, Roosevelt’s Warrior: Harold L. Ickes and the New Deal (Baltimore: Johns Hopkins University Press, 1996) is a recent biography. For an insight to Ickes’ style, see Michael B. Stoff, “Managing the ‘Official Family’: Franklin D. Roosevelt, His Cabinet, and the Case of Harold Ickes,” Power and Responsibility, David M. Kennedy and Michel E. Parrish, eds. (New York: Harcourt Brace Jovanovich, 1986), 1–29. 11. Ibid., 256, 278.

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12. Address at Harvard Summer School, July 21, 1939, Keyserling Papers, Box 59, HSTL. 13. Letter from Keyserling to Senator Wagner, March 17, 1941, Keyserling Papers, Box 2, Georgetown University. 14. Leon H. Keyserling, The Coming Crisis in Housing (Washington, D.C: Conference on Economic Progress, 1972), 42. 15. Jackson, Crabgrass Frontier, 272. 16. See Roger Biles, A New Deal for the American People, 215–217; and his “Nathan Straus and the Failure of U.S. Public Housing, 1937–1942,” The Historian, 53 (Autumn 1990), 33–46. New York Times, February 6, 1942. The next month Herbert Emmerich became Administrator of the United States Housing Authority and Keyserling remained general counsel of National Housing Authority, the capstone agency for governmental housing programs. New York Times, March 18, 1942. 17. The quotations in this paragraph are from the Oral History Interview with Nathan Straus, Columbia University. 18. See Mary Susan Cole, “Catherine Bauer and the Public Housing Movement, 1926–1937,” Ph.D. Dissertation 1975, The George Washington University. For the contribution of another woman reformer in housing see Roy Lubove, “Edith Elmer Wood (1871–1945)” in National Biographical Dictionary of American Women, Edward T. James, ed. (Boston: Harvard University Press, 1971), 644–645. 19. James T. Patterson, Congressional Conservatism and the New Deal: The Growth of the Coalition in Congress, 1933–1939 (Lexington: University of Kentucky Press, 1967) is the basic history on this development. 20. Gail Radford, Modern Housing for America (Chicago: University of Chicago Press, 1996), 189, 199. Sean Cashman, America in the Twenties and Thirties (New York: New York University Press, 1989), 211. For the legislative struggle see Timothy L. McDonnell, The Wagner Housing Act (Chicago: Loyola University Press, 1959), 153–155. 21. See Boxes 59 and 60 for evidence of Keyserling’s work. Keyserling Papers. HSTL. News story in The New York Times, April 5, 1940. 22. See FDR Official File 4816–4843 and OF 2694a at the FDRL. 23. See Box 17, Keyserling Papers that contain ample evidence of his concern for and solution to the housing issues. 24. New York Times, December 9, 1943. 25. For an interesting and revisionist account of issues of isolationism and FDR’s diplomacy see Chapter Seven, “Containment” in Walter A. McDougall, Promised Land, Crusader State (Boston: Houghton Mifflin, 1997). Of particular interest is McDougall’s linking the isolationists of the 1930s with the anti-Vietnam War protesters of the 1960s. See pages 149–151.

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26. Robert A. Divine is the authority. See his The Illusion of Neutrality (Chicago: University of Chicago Press, 1962); The Reluctant Belligerent (New York: Wiley, 1965). 27. Richard W. Steele, “The War on Intolerance: The Reformation of American Nationalism, 1939–1941,” The Journal of Ethnic History 9 (Fall 1989), 13. For a slightly different analysis see Steven Casey, Cautious Crusade, Franklin D. Roosevelt, American Public Opinion and the War Against Nazi Germany (New York: Oxford University Press, 2001). Other people worried about truth in an emerging total-war context. See Brett Gary, The Nervous Liberals: Propaganda Anxieties From World War I to the Cold War (New York: Columbia University Press, 1999). 28. After Wagner’s death and the onset of the Cold War with its complicating influences in American culture and politics, many historians such as Sherry and McDougall worried about the creation of a welfare/warfare state ultimately fueled by a reactionary Keynesianism. It was a realistic and fearful concern as Keyserling’s career demonstrated. The interpretation is contested terrain. Bartholomew H. Sparrow has a different analysis. “The intra national American state, thought to be the legacy of the New Deal, was systematically affected by the extra national factors of World War II and its aftermath; the American state was built from the outside in.” See his From the Outside In, World War II and the American State (Princeton, NJ: Princeton University Press, 1989), 4. See also Brian Waddell, The War Against the New Deal: World War II and American Democracy (DeKalb, IL: Northern Illinois University Press, 2001). 29. In recent scholarship the division between isolationists and internationalists has been questioned as being too simplistic in its characterizations of the varied positions. The “exemplarists” argued the United States must concentrate on improving its own society. “While not denying America’s imperfections,” the vindicators “held that the imperfections of the rest of the world were far greater—so much greater, in fact, as to necessitate forcible American efforts to close the imperfection gap.” H. W. Brands, What America Owes the World: The Struggle for the Soul of Foreign Policy (New York: Cambridge University Press, 1998), viii. Accordingly the vindicators were internationalist and examplarists were isolationists. An engaging intellectual history of foreign policy, What America Owes the World does not discuss the issue of the end of free security in terms that policy makers of Keyserling’s generation would have recognized. It does demonstrate, however, that in American historical scholarship, issues are always open for further analysis and debate. 30. The speeches are in the Wagner Papers, Georgetown University. Michael J. Hogan, ed., America in the World, The Historiography of American

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Foreign Relations Since 1941 (Cambridge, UK: Cambridge University Press, 1995) provides a means to understand the historic significance of these documents. While the results were mixed, some official attempts were made to attack the tragic conditions of civil rights for many Americans. Richard W. Steele, “The War on Intolerance: The Reformation of American Nationalism, 1939–1941,” The Journal of Ethnic History 9 (Fall 1989), 10–35. For a contemporary evaluation of the Beveridge Report see Eveline Burns, “The Beveridge Report,” American Economic Review 33 (1943), 512–533. 31. For a popular history of this theme see Tom Brokaw, The Greatest Generation (New York: Random House, 1998). 32. Robert Cuff, “American Mobilization for War 1917–45: Political Culture vs. Bureaucratic Administration,” Mobilization for Total War: The Canadian, American, and British Experience, 1914–1918, 1939–1945 (Waterloo, Ont.: Wilfrid Laurier University Press, 1981), 79, 78, 81. 33. An indication of this was the transformation of the nation’s capitol. See David Brinkley, Washington Goes to War (New York: Ballantine Books, 1988). 34. Lary May, “Making the American Consensus: The Narrative of Conversion and Subversion in World War II Films,” The War in American Culture, Society and Consciousness During World War II, Lewis A. Erenberg and Susan E. Hirsch, eds. (Chicago: University of Chicago Press, 1996), 94–96. This collection of essays is excellent. The essays were influential in understanding the changes in American life during the war years. 35. Gary Gerstle, “Interpreting the ‘American Way,’ The Working Class Goes to War,” Ibid., 121. The cultural and public policy ramifications of this widespread and deep patriotism is discussed in the balance of this essay. It was manipulated often in a cynical fashion during the Cold War, the Vietnam War and in cultural and presidential politics as demonstrated in the career of Richard M. Nixon. 36. An ideology of national preparedness emerged in those years which indicated an administrative recognition of the end of free security and the need for a responsible program. Such was the legacy of Pearl Harbor and its contribution to the complex origins of the Cold War. See Michael S. Sherry, Preparing for the Next War, America Plans for Postwar Defense, 1941–1945 (New Haven, CT: Yale University Press, 1977). 37. See Wayne S. Cole, Roosevelt and the Isolationists (Lincoln: University of Nebraska Press, 1983). One consequence of this struggle was the New Deal “contribution” to the creation of the later Red Scare. Using the President’s powers in First War Powers Act, 1941, the Administration established the Interdepartmental Committee to Consider Cases of Subversive Activity on the Part of Federal Employees. Aimed at fascism, the committee proved to be a straw

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in the wind of the later storm over the issue of national security. See Executive Order, February 5, 1943, OF5008, FDR Papers, Roosevelt Library. 38. Gerstle, “Interpreting the ‘American Way,’ The Working Class Goes to War,” 120. Alan Brinkley, The End of Reform: New Deal Liberalism in Recession and War (New York: Knopf, 1995). 39. Sherry, In the Shadow of War, 31. 40. Harold Vatter, “The Material Status of the U.S. Civilian Consumer in World War II: The Question of Guns and Butter,” The Sinews of War: Essays on the Economic History of World War II, Geofrey T. Mills and Hugh Rockoff, eds. (Ames: Iowa State University Press, 1993), 222. For a larger perspective see Hugh Rockoff, “The United States: From Ploughshares to Swords,” The Economics of World War II: Six Great Powers in International Comparison, Mark Harrison, ed. (Cambridge, UK: Cambridge University Press, 1998). 41. Among the many later problems with the Vietnam War and the Cold War fusion of constitutional status of war and peace was the widespread assumption that the conflict was a television event and no one, except possibly the military, had to experience any uncomfortable consequences. The United States is still paying the cost of that assumption. During World War II, regardless of later judgment of historians about the miracle of production creating both guns and butter, a sense of sacrifice was present and desirable for the successful conclusion of the war. See Mark Leff, “The Politics of Sacrifice on the Home Front in World War II,” Journal of American History, 77 (March 1991), 1296–1318. 42. Harold G. Vatter, The U.S. Economy in World War II (New York: Columbia University Press, 1985), x. 43. Edwin Amenta and Theda Skocpol, “Redefining the New Deal: World War II and the Development of Social Provision in the United States,” The Politics of Social Policy in the United States. Margaret Weir, Ann Shola Orloff, and Theda Skocpol, eds. (Princeton, NJ: Princeton University Press, 1998), 94. Alan Brinkley, Liberalism and Its Discontents (Cambridge: Harvard University Press, 1998) and his The End of Reform: New Deal Liberalism. For the economic consequences of the Servicemen’s Readjustment Act of June 22, 1944 see Vatter, The U.S. Economy in World War II, 136–138. Some historians have stressed the conservative or occasionally reactionary, particularly in civil rights and race relations. See Richard H. Pells, The Liberal Mind in a Conservative Age: American Intellectuals in the 1940s and 1950s (New York: Harper & Row, 1985). 44. John W. Jeffries, “Franklin D. Roosevelt and the America of Tomorrow,” Power and Responsibility, 47. 45. Ibid., 33–36. In private, Roosevelt endorsed an American version of the Beveridge Report. Ibid., 39.

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46. Theda Skocpol, Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United States (Cambridge: Harvard University Press, 1992) and Seth Koven and Sonya Mitchell, eds., Mothers of a New World: Maternal Politics and the Origin of Welfare States (New York: Routledge, 1993) are informative about this topic. 47. Sherry, In the Shadow of War, 49; Daniel Yergin, The Commanding Heights (New York: Simon & Schuster, 1988), 24. 48. Alan Brinkley, “The Late New Deal and the Idea of the State,” in Liberalism and Its Discontents (Cambridge: Harvard University Press, 1998) is instructive on this topic as is Harold G. Vatter, The Inevitability of Government Growth (New York: Columbia University Press, 1990). For analysis by James Delano, FDR’s uncle, see Patrick D. Reagan, Designing a New America: The Origins of the New Deal Planning, 1890–1943 (Amherst: University of Massachusetts Press, 1999), 52. 49. In his Liberalism and Its Discontents, 36–37, Alan Brinkley recognized the situation but did not use the integrative liberal label. 50. John Kenneth White, Still Seeing Red, How the Cold War Shapes the New American Politics (New York: Westview Press, 1997). In the origins of the red scare the Roosevelt Administration made a small contribution to its development. Sherry, In the Shadow of War, 51. 51. It was not an easy task; the situation contained many political and policy problems. Mark H. Leff, “The Politics of Sacrifice on the American Home Front in World War II,” The Journal of American History, 77 (March 1991), 1296–1318. 52. For background see Daniel T. Rodgers, Atlantic Crossings, Social Politics in a Progressive Age (Cambridge: Harvard University Press, 1998). 53. Yergin, The Commanding Heights, 57. For an account of the agency’s end see Marion Clawson, New Deal Planning: the National Resources Planning Board (Baltimore: Johns Hopkins Press, 1981), 11–15. For a brief and insightful account of the agency and FDR’s “distant” relationship to it see Jeffries, “Franklin D. Roosevelt and the America of Tomorrow,” 33–36. Philip W. Warken, A History of the National Resources Planning Board, 1933–1943 (New York: Garland, 1979) is an informative history of the agency. 54. Vatter, The U.S. Economy in World War II, 150. 55. Edwin Amenta and Theda Skocpol, “Redefining the New Deal: World War II and the Development of Social Provision in the United States,” The Politics of Social Policy in the United States, Ann Shola Orloff and Theda Skocpol, eds. (Princeton, NJ: Princeton University Press, 1988), 108. 56. Smith, Social Science in the Crucible, 259. 57. Both the illustrations and the text of Kennedy, Freedom From Fear, provide evidence for this assertion. Among the many historical and interpre-

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tative achievements of Gerald L. Weinberg, A World at Arms: A Global History of World War II (New York: Cambridge University Press, 1994) was the belief that indeed a new world awaited both the victors and the defeated. 58. Americans for Democratic Action Papers, 3/1 Box 29, Folder 238, Wisconsin Historical Society, Madison. 59. Ibid., 14–15. 60. Gregory M. Hooks, Forging the Military-Industrial Complex: World War II’s Battle of the Potomac (Urbana: University of Illinois Press, 1991), 11, 123. For Congress’s anti-New Deal efforts see pages 88–89. The details of this transformation are explored later in this essay. Suffice it to say, it was complex and it was ideologically nasty with one’s patriotism being attacked along with the potential of the curtailment of intellectual freedom in this national security state. See Aaron L. Friedberg, In the Shadow of the Garrison State, America’s Anti-Statism and Its Cold War Grand Strategy (Princeton, NJ: Princeton University Press, 2000) and Jackson Lears, “The Iron Gage and Its Alternatives in Twentieth-Century Thought,” Perspectives on Modern America, Harvard Sitkoff, ed. (New York: Oxford University Press, 2000), 307. 61. Ibid., 83. 62. Letter from Keyserling to Rexford Tugwell, April 16, 1942. Tugwell Papers, Container 12, FDRL. 63. Speech, January 26, 1942, Box 17, Keyserling Papers, HSTL. 64. Keyserling Speech, May–June, 1945, “Progress Toward ‘The Right of Every Family to a Decent Home’ from FDR’s Economic Bill of Rights” Box 17, Keyserling Papers, HSTL. This speech was printed in the Lawyers Guild Review, 5 (May–June 1945), 1–9. 65. New York Times, October 25, 1945, for Keyserling’s comments on the bill. 66. Leon H. Keyserling, “Homes For All and How,” Survey Graphic (February 1946), 41, 63. 67. David M. Kennedy, Freedom From Fear, The American People in Depression and War, 1929–1945 (New York: Oxford University Press, 1999) is a brilliant synthesis of the scholarship and richly detailed narrative of these years. 68. Alan Brinkley, “World War II and American Liberalism,” The War in American Culture, Society and Consciousness During World War II, Lewis A. Erenberg and Susan E. Hirsch, eds. (Chicago: University of Chicago Press, 1996), 313–330. Professor Brinkley’s scholarship contributed significantly to the formulation of the integrative liberalism concept. 69. Les Adler and Thomas Patterson, “Red Fascism: The Merger of Nazi Germany and the Soviet Union in the American Image of Totalitarianism, 1930s–1950s,” American Historical Review, 75 (April 1970), 1046–1064.

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70. See Thomas Haskell, ed., The Authority of Experts: Studies in History and Theory (Bloomington: Indiana University Press, 1984) for historical context. 71. Brinkley, “World War II and American Liberalism,” 322. In this manner populism and populists took on a right-wing and reactionary tone in the writings of historians such as Richard Hofstadter in opposition to the reformist expression found in the scholarship of John Hicks and C. Vann Woodward. 72. Ibid., 323. This attitude was not unique to postwar Americans. The mission of America has a fascinating history. The United States is truly a city on a hill. This attitude found expression among theorists of modernization. Nils Gilman, Mandarins of the Future: Modernization Theory in Cold War America (Baltimore: Johns Hopkins Univerity Press, 2003), 229. 73. William L. O’Neill, A Democracy At War, America’s Fight at Home and Abroad in World War II (New York: The Free Press, 1993), 434. 74. Steele, “The War on Intolerance,” 30–31; for the Great War situation see Horace C. Peterson, Opponents of War, 1917–1918 (Norman: University of Oklahoma Press, 1957). 75. Oral History Interview of Mary Keyserling, 87, 100, 108. 76. The Winning Plans in the Pabst Postwar Employment Awards (booklet), 14. Many of the facts in these paragraphs came from this source given to the author by the late Herbert Stein for which I am eternally grateful. 77. Letter from Herbert Stein to Donald K. Pickens, March 30, 1990. 78. New York Times, May 25, 1944. See also the issue for May 18, 1944. The news story in The American City, June, 1944, 93. Leon Keyserling’s letter to Rexford G. Tugwell, May 20, 1944, includes a copy of Keyserling’s plan. Tugwell Papers, Container 12, FDRL. 79. Richard V. Gilbert, Annual Report of the Secretary of Commerce for the Fiscal Year, 1939 (Washington, D.C.: General Printing Office, 1939). For background see Walter S. Salant, “The Spread of Keynesian Doctrines and Practices in the United States,” The Political Powers of Economic Ideas: Keynesianism Across Nations. Peter A. Hall, ed. (Princeton, NJ: Princeton University Press, 1989) and his “Harvard’s Fiscal Policy Seminar: The Early Years,” Keynesianism and the Keynesian Revolution in America. O. F. Hamouda and B. B. Price, eds. (Northampton, MA: Edward Egar, 1998), 32–42. 80. Hugh Rockoff, “The United States: From Ploughshares to Swords,” The Economics of World War II: Six Great Powers in International Comparison, Mark Harrison, ed. (Cambridge, UK: Cambridge University Press, 1998), 118.

4 Integrative Liberalism and the Council of Economic Advisers, 1946–1953

THE CHALLENGES TO THE TRUMAN ADMINISTRATION After Franklin D. Roosevelt’s death, President Harry S Truman faced the three problems of perception, politics and ideology. Perception was two fold—who was Truman but Tom Pendergraf’s crony? And because of that connection could Truman successfully lead the nation into a potentially troublesome future? Secondly, where was the Democratic Party going? Its long-time leader was dead and the many issues of war, peace and economy pressed in from all sides. The third problem—ideology—provided the bridge to the other two concerns. President Truman claimed the New Deal’s mantle; at the same time he sought an ideological identity for himself and his administration. Fortunately advisers such as Keyserling helped Truman with the complex tasks ahead. Two historical events loomed over the Truman Administration and the second half of the twentieth century. They were “Munich” and “Pearl Harbor.” The former became a symbol of appeasement, a loss of political and military will to resist foreign aggression. Expressed in many forms, the idea remained constant—the United States must stand tall against all foes, both actual and potential. From the containment policy of the Truman Administration to John F. Kennedy’s ramparts of democracy to Ronald Reagan’s verbal attacks on the evil empire, the message was clear: no appeasement. In similar fashion “Pearl Harbor” became a basic reference point for the next half-century as the Cold War grew in American culture and politics. The next major war, when and if it comes, will be like the attack on Pearl Harbor, a quick and destructive event made sharper and more terrible by atomic weapons. Free security had come to an end; possibly frontiers of freedom had closed.1 85

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The result was the creation of the national security state. Its origins, evolution and historical significance have been debated by Truman’s contemporaries and by historians. As with numerous other examples in United States history, some scholars accepted the conventional interpretation while other writers sought a more revisionist approach. The passage of time contributed to this inevitable process of reinterpretation. The knowledge that by the end of the twentieth century the United States had won the Cold War, while the Soviet Union fell into the dustbin of history contributed to the revisionist interpretation.2 The mature economy thesis provided the background for these historical and contemporary concerns. Arising in the 1930s and hotly debated during World War II, the thesis was that America’s future, with the close of the frontier, consisted of chronic under consumption and unemployment.3 In time, the political economy of the Cold War provided something of a solution, but in the immediate years after Roosevelt’s death, the policy imperative was meeting the voters’ expectations, including a “natural right” of all citizens to have a job. Since the Great Depression, the business cycle was central in American politics. Was the policy means to the cultural end of full employment the market or the polis? Every president since Truman has been concerned with wage-price policy, the fear of inflation. In addition the Truman Presidency faced a third source for inflation, that of excess demand, world market shortages of raw materials and food. The issue of economic growth was central to these policy concerns. As the years and presidential administrations came and went, the idea that full employment might overheat the economy into inflation became a fear. “All administrations reached the conclusion that, other things being equal, a level of economic activity near to full capacity but not quite at it was most conductive to price stability.”4 Of course other things are not equal and that was why Keyserling was a political economist and ultimately Keynesianism was a political way of thinking. New Dealers and Keynesians believed that government intervention was essential. Their common goal was full employment.5 The market people worried that a full employment public policy generated inflation. Since the Great Depression, “whereas the stability problem has seemed to mean mainly the unemployment problem, experience has shown that it had a serious inflation aspect as well.”6 The Truman Administration wanted “in a matter of years to double the standard of living of the average man.”7 Other people including liberals of New Deal heritage shared such optimism. Alvin Hansen’s writings and the hearings held by the Temporary National Economic Committee furnished a legacy and a focus for the issue. Many economists were bearish about the future.8 Nevertheless, political re-

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alities dictated action from the Truman Administration. Despite weaknesses in the area of technical knowledge and a lack of intellectual commitment to the full employment ideal by some policy makers, the Truman Administration was committed to warding off a postwar depression. People who feared economic maturity and who believed that employment was a civil right of citizenship provided a potent political force.9 A polite academic echo of these concerns came from a symposium held by the American Economic Association in 1947.10 After World War II, New Dealers and internationalists sought control of United States foreign policy. And now they had the additional argument that world prosperity and future American well-being were one.11 “We cannot have a high level economy in this country without a stable world economy.”12 During the war various people argued for a global economy in which all nations would share fairly. Senator Robert F. Wagner and Leon Keyserling were not alone in arguing that the future success of the United States depended on an expanding global economy. New Left revisionists have argued that the Truman Administration’s main concern was opening the world to American business domination and a systematic attack on the Left. The claim was too simple. The Truman Presidency used foreign aid and overseas trade to realize certain political objectives; but behind the political objectives was a desire to prevent a deadly return to the economic and foreign policies of the inter-war years. Fearful of both Left and Right versions of economic nationalism, Keyserling and the other Truman policy makers wanted an interconnected world economy with stable governments which meant the reconstruction of western Europe.13 To that end, from the United States perspective, the relatively stable period in Europe from 1815 to 1914 with its free trade, stable currencies, and a minimum presence of governments in the national economics, was the model. Of course the emerging tensions between the United States and the Soviet Union added difficulties to this diplomatic objective. Critics claimed that the Bretton Wood agreement (by which the American dollar was pegged to a particular price) was just an international New Deal with all its assumed faults displayed in a larger forum.14 Claiming the New Deal domestic legacy, President Truman responded to this troublesome future by adding his own agenda items, his own Fair Deal. In his message to Congress, September 1945, Truman accepted the Rooseveltian inheritance. Drawing on Roosevelt’s 1944 State of the Union message—an Economic Bill of Rights—he called for a fair employment practice commission, increases in the minimum wage and unemployment benefits and a full-employment bill. During his presidency, Truman added other reform items to this agenda.

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The Fair Deal served several purposes. The program connected Truman with the reforming legacies of Roosevelt; at the same time, President Truman placed his personal mark on the politics and policies of the day. It helped Truman politically. He migrated from an early accommodating position (1945–1946) to his fighting candidacy for the White House in 1948. Later, foreign events and domestic politics pushed the Fair Deal into the background as cultural contentment and Cold War fears developed. Two other factors shaped the Truman years. Truman accepted American leadership of the free world as a sacred mission dictated by divine Providence and history. Developments in the twentieth century strengthened his determination to fight for Democracy. Truman was heir to Progressivism, the New Deal programs of a powerful administrative state and the institutional experience of conducting two major wars. In partnership with the private sector this legacy held out the possibility of economic planning.15 The result was integrative liberalism. Leon Keyserling’s influential role in the Truman White House expanded and with it a fuller realization of integrative liberalism. The evidence suggests that Keyserling was not the first choice to be on the Council of Economic Advisers or later to be its chairman. With professional economists (ones with a Ph.D.) having an increasing presence in government and American life, Keyserling might on occasion be a bit defensive. His personality and the sharpness of politics of the time jointly created difficulties. Keyserling urged economic growth as the goal. He stressed integrative liberalism, urging elements of the Roosevelt Coalition and other interest groups to share a national perspective in mutuality. “The Fair Deal, while based solidly upon the New Deal tradition, differed from its predecessor in significant aspects of mood and detail. It reflected not only Truman’s own aspirations but also a style of liberalism that had begun to move beyond the New Deal during World War II and had come to maturity during the early years of the Cold War, “the vital center”16 as an expression of integrative liberalism. For example, in response to the brief recession in 1949, Keyserling urged the formation of a Committee on Business and Government Relations chaired by the Secretary of Commerce. The committee included the Attorney General and the chairmen of the Federal Trade Commission and the Council of Economic Advisers. During 1950 the committee sought means to managerial responsibilities, anti-trust enforcement and federal regulation on a cooperative basis. Both the New Deal and the Fair Deal evolved, contributing to the growth of integrative liberalism. They were genuine expressions of reform and social justice. Fear of economic depression and war increased the number of governmental programs beyond the reform agenda. Together the growth of

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governmental programs and the reform movement meant security in the very fragmented and dangerous world of the twentieth century.17 Meanwhile the Truman Administration fashioned a Fair Deal out of the New Deal legacy of activist government. Congressional conservatives were shocked.18 Their conservative reaction was an exercise in ideological hypocrisy. Since the late 1930s, as war loomed in Europe, the Roosevelt Administration had sought a coalition with the business community. During the war a new type of mercantilism, reactionary Keynesianism, emerged and was fully developed during the Cold War.19 To clever business elements the New Deal became the conventional wisdom; they saw it as subsidy, as the search for foreign markets and government support for industry. At the same time, true believers such as Keyserling held fast to the New Deal legacy as an instrument for social justice. The wartime experience meant that the Roosevelt administration involved successful businessmen in the management of the federal government’s economic policy. The businessmen, known as the “dollar-a-year men,” debated the eternal issues of debt management, budget priorities and taxation. Domestic reform and an internationalist foreign policy became the norms. The policy was “guns and butter,” as the Truman Administration dealt with the many complex issues of a war-torn world on the edge of something called the Cold War.20 For Keyserling and the New Dealers full employment was bedrock to integrative liberalism. On this foundation a policy of Wilsonian collective security, properly constructed, and domestic reform prevented capitalism’s collapse. Senator Robert Taft, the Republican party leader, and other critics claimed there would be a “worldwide New Deal.” In a certain sense Taft was correct because the age of free security had ended.21 The rationale for this “international New Deal” would be an ongoing element in integrative liberalism and the Cold War culture until the end of the Vietnam conflict. Its most outlandish expression was President Lyndon B. Johnson’s idea of changing the Mekong Delta into a TVA for Vietnam after the war. In a speech on April 7, 1965, President Johnson combined his Cold War containment policy with Global Meliorism. “The task is nothing less than to enrich the hopes and existence of more than a hundred million people.” He observed that the Mekong River can provide food, water, and power on a scale to “dwarf even our own Tennessee Valley Authority. We dream of a world where all are fed and charged with hope. And we will help make it so,” he concluded.22 Meanwhile, for many Americans, the policy issues turned on personalities. It was Harry Truman against Henry Wallace for FDR’s fallen torch. Removed from the Democratic ticket in 1944, and unhappy as Secretary of Agriculture, Wallace decided that Truman’s foreign policy was too critical of the Soviet

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Union. On one level, as a mystic and champion of the common man, Wallace was the logical replacement for FDR in the hearts of some liberals. It was not to be. While some liberals were dwelling on personalities, American liberalism, tempered by the legacies of progressivism, the New Deal, and the uncertainty of the immediate future, entered its clearest integrative phase. Both Truman’s and Keyserling’s career turned on the electoral success of American Liberalism in 1948. Several small organizations merged in December 1946 to establish the Progressive Citizens of America as a reaction to the political successes of the Republican Party in November. With a light voter turnout, the Republicans gained a six vote margin in the Senate and a fifty-eight seat majority in the House of Representatives. For the first time since 1928, the Republicans had control of Congress. In his keynote address to the PAC convention, Henry Wallace warned against division by lukewarm liberals over the issue of defining who were acceptable liberals. The test for tolerance was an open acceptance of people who sympathized with the Soviet Union’s foreign policy. Other liberals, including Keyserling, were not so tolerant of fellow travelers. Early in 1947, with the aid of Eleanor Roosevelt, the Americans for Democratic Action restored authentic liberalism, rescued the New Deal and created a reform program “unblemished by foreign ideologies and sympathies.”23 The origins, development and demise of the Americans for Democratic Action followed the same historic arc as integrative liberalism. In fact, the ADA was in large part an institutional expression of integrative liberalism, particularly when Keyserling was active in the organization. In May 1941, expressing support for England, the Union for Democratic Action was established with Reinhold Niebuhr as chairman. Six years later encouraged by Eleanor Roosevelt, the organization became Americans for Democratic Action with an emphasis on maintaining the New Deal legacy and interventionism in foreign policy. Caught between an assumption that Henry Wallace was a dupe of the Stalinists and that Truman was abandoning the New Deal, the ADA sought a new political leader—maybe Eisenhower?—in the election of 1948. None of those fears came to fruition. Keyserling’s major contribution to the ADA and integrative liberalism was his emphasis on economic growth. In the long run, of course, a vigorous economy was paramount in the complex struggle of the Cold War where foreign and domestic affairs were inseparable. Economic growth and the unity of foreign policy and domestic reform were characteristic of middle-twentiethcentury reform, the essence of integrative liberalism.24 By 1947, the Americans for Democratic Action accepted the Marshall Plan and the containment policy while holding fast to the globalism created during

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World War II. The Wilsonian desire to make the world safe for democracy overlapped the Global Meliorist’s vision of making the world democratic. The Truman containment policy was a strategic, military and ideological response to a revolutionary world. Global Meliorism expressed the political, economic, and cultural aspects of this policy that the Truman Administration inherited.25 Keyserling was a significant contributor to this new expression of “old” ideological policies. Wallace’s cooperative foreign policy with the Soviet Union chilled many New Dealers including Keyserling. In the process of new postwar policies Americans held to the Rooseveltian legacy. However, the immediate postwar political culture turned toward the right in the Congressional elections of 1946. The rhetoric, idealism, and values of the Century of the Common Man merged with Henry Luce’s The American Century.26 Two books published during this period indicated the role of the New Deal in America’s future. In 1948, Seymour Harris edited a volume, Saving American Capitalism (New York: Knopf), which argued that the federal government must increase economic demand with a strong fiscal policy. It was an academic updating of the mature economy concern. Two years later, Arthur M. Schlesinger, Jr. published The Vital Center (Boston: Little Brown) which outlined how domestic reform from the New Deal, combined with collective security, formed a new and necessary consensus for the postwar world. It required “toughness and cool realism.”27 Businessmen must become enlightened internationalists with a passion for progressive reform. Committed to individualism, rejecting the totalitarianism of both the Left and Right, and despite the varied problems of industrial life, the United States was still a free society dedicated to a just way of life. Schlesinger never used the expression, but his book endorsed integrative liberalism. The consensus of the center must hold for the future as it had inspired people and policy makers in the past. Concern over full employment matched the interest in internationalism. Truman’s advisers pressed for legislative action.28 In the beginning, in his brief “conservative phase,” Truman was cool to the idea. He did little during the legislative struggle over the Full Employment Bill.29 Political reality took hold of him after the Republican victories in the 1946 election. Some liberals discussed the possibilities of dropping Truman from the ticket in 1948. Economic stagnation with chronic unemployment and underemployment had haunted Keyserling and other liberals since the New Deal. The mature economy thesis provided a dreaded uncertainty for postwar America. Given the New Deal, the fighting of war and the sacrifices at home and abroad, the idea of employment as a right or entitlement had arrived in American domestic reform. An economic depression would be a disaster for America’s

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foreign policy with its increased diplomatic obligations due to the Cold War. As usual, compromise and verbal evasion marked the public debate. Conservatives, critics upholding the free-market ideal, did not want the government guaranteeing a job to everyone. Keyserling believed it was critical to bring businessmen into the policycreating process. He spoke of a growth of public investment, developmental fiscalism, which would deflect the hard political issues of income distribution and related issues that existed just beneath the surface of American politics. And in one form or another, the federal government would have a presence in public policy. “War-created supports for the economy are still massive, and it is when these begin to dwindle that we shall be confronted with a far greater problem than that of 1949.”30 Urging educating the public about fiscal policy, and instilling in the public a faith that government can manage the economy, Keyserling campaigned for a “Full Employment Bill of 1945” sponsored by Senators Wagner, Elbert Thomas, and Joseph C. Mahoney. With a national budget for production and employment, the highest standard of living was within the reach of the working people. With full employment and maintaining purchasing power through unemployment insurance, there would be an “organic social security policy.”31 The maintenance of prosperity was essential for a number of reasons. In 1944, Senator Truman and other members wrote a full-employment bill. While Congress was debating the bill, Henry Wallace’s book Sixty Million Jobs (1945) posed a threat from the left with its employment guarantees. From the beginning the bill was filled with Keynesian assumptions and analysis. It provided for a job for every citizen. This emphasis on a full employment was one vital point that divided left Keynesians such as Keyserling from mainstream Keynesians. Tax cuts became a more popular policy position in the 1960s and later.32 After political compromise and radical verbal reconstruction, the bill became the Employment Act of 1946. As President of the United States Truman apparently had mixed feelings and motives about the legislation. He accepted the concept of an active employment policy and lobbied hard for it, creating a cabinet committee to guide the legislation through Congress where conservative Democrats rewrote the act. Gone were the provisions affirming the right to a job and the federal support for full employment. The House of Representatives only affirmed the goal of maximum employment and added a requirement that the president submit an annual economic report to Congress. The Council of Economic Advisers would assist the president and work with a Joint Congressional Committee on the Economic Report. Any policy goals or objectives were missing as well as any means to achieve “maximum employment.”33

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The final vote on the Employment Act of 1946 was 320–84 in the House and approved without opposition in the Senate; but it was a pale version of what liberals had sought. Compared, however, to the conventional economic wisdom of 1929, the 1946 law was truly remarkable and possibly revolutionary in its future implications. The possibility of economic maturity was de facto recognized in the legislation, and the establishment of the CEA meant that social science experts had an institutional home in the White House.34 Keyserling and other liberals drew on the New Deal, the Economic Bill of Rights of 1944 and the Four Freedoms in the Atlantic Charter for their policy. They wanted a federal obligation along with a mechanism for spending and taxing—a comprehensive national budget—for creating a full employment policy. Critics saw only deficit spending and high taxation.35 Keyserling urged the middle way of integrative liberalism. Compromise carried the day. Senate conservatives accepted a federal mechanism for studying the economy; but they rejected “full employment” with its assurance of jobs for all.36 Employment and analysis were the key words in the law. In his essay for the Pabst contest, Keyserling had urged the creation of a body of experts to deal with future economic problems and policies. It was an article of progressive faith and reform to call upon experts.37 Praising the free enterprise ideal, the law accepted federal concern over the business cycle and the future of the economy’s health, “a new economic frontier.”38 At the signing President Truman observed, “The people do expect the government to create and maintain conditions in which the individual businessman and job seeker have a chance to succeed by their own efforts.”39 Historically the 1946 law represented the limits of policy and political legitimacy. The business cycle was still central in the politics of men like Keyserling; however, there was only a limited number of policy alternatives in American politics. In their struggle for integrative liberalism, Keyserling and other members of the Truman presidential team recognized that domestic economic prosperity and a successful foreign policy were indivisible. The White House staff debated the appropriate limit to deficit budgets. Soon military build-up for the Korean Conflict and other events led to policy makers’ accepting increased deficit spending. Politically, Harry Truman was damned in any case. Like a crowd of Achilles sulking in a circus tent, liberals moaned the blues about the glorious but dead days of the New Deal while conservatives in and outside the Republican Party anticipated that their hour of revenge on Truman (and the New Deal legacy) was at hand, balanced budget or not. Political success for Truman apparently was impossible and Keyserling’s governmental career apparently was ending. He had traveled a long way from the shady streets of Beaufort.

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THE COUNCIL OF ECONOMIC ADVISERS AND THE PRESIDENTIAL ELECTION OF 1948 The roughest part of the trip occurred during his early years as vice chairman of the Council of Economic Advisers. Created by the Employment Act of 1946, the Council of Economic Advisers was a three-member group.40 Its task was to suggest policy alternatives for anticipated violent swings in the business cycle. Intellectually the CEA represented an institutional fear about the mature economy thesis and support for the argument that a “job” or full employment was an entitlement of every American citizen. The personality clashes and arguments over the Employment Act constituted the Truman Administration’s efforts for integrative liberalism. From his appointment to the CEA until 1953 when he left office, Keyserling was at his political and intellectual best. In his finest hour, Keyserling made the most of the opportunity. Within the emerging political culture and economy of the post-war years, Edwin G. Nourse and Leon H. Keyserling were destined to disagree. In an interesting clash of attitudes, the disagreements between Keyserling and Nourse were indicative of a conflict within the Truman Administration. The CEA was both a bureau for technical assistance to the President and an advocate for particular policies and programs. Nourse saw himself as a nonpartisan technician and Keyserling was the policy advocate. It soon became clear that Truman needed practical politicians in his corner not a disinterested administrator. Nourse had a Ph.D. in economics and a long career in academic teaching. After a tour with the Brookings Institution he joined the Truman White House as Chairman of the Council of Economic Advisers. Several people had rejected the Chairmanship of the CEA when Nourse accepted the post. For political and ideological reasons Truman wanted a known and respectable economist.41 The press reaction was positive.42 Nourse’s writings revealed a non-dogmatic market conservative who, however, argued that experts could not administer the economy because politics and the economy were two separate realms of experience. President Truman could have anticipated future trouble with his new chairman. Nourse did not approve of government’s guaranteeing “full employment” but believed that the federal government should provide “conditions” for “useful” employment.43 He argued that members of the council should not appear at Congressional hearings nor take a public stance on the economic issues of the day. Of course Keyserling disagreed with both positions. Always fearful of inflation, Nourse soon proclaimed that the American economy could not maintain both guns and butter. In fact Nourse’s first public statement was clear on that point. “The immediate task in maintaining the economic health of the nation is to hold down inflationary forces so that we do not get into

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a runaway boom.”44 One policy or the other, the United States must choose. The Truman Administration and particularly Keyserling rejected that narrow band of policy options. If integrative liberalism were to have a viable historical existence, a healthy economy was essential. Nourse questioned the possibility of a healthy economy given the many demands upon it coming from domestic politics and foreign events. Years later, on various occasions, Nourse and Keyserling were diplomatic about their rivalry; however, in the White House, they gave way to their human feelings. With ironical approval Nourse quoted Charles Ross’s letter to him regarding appointments to the council. “I can assure you there is no politics in Council appointments—except, of course, that Mr. Keyserling was named in response to Senator Wagner’s wishes.”45 Indeed Keyserling was Senator Wagner’s friend. Their friendship was critical in the historical evolution of integrative liberalism. Understandably, Wagner and other liberals supported Keyserling’s candidacy. The disputes over policy and procedures between Keyserling and Nourse were deeper than their political circumstances. The idea of an expanding economy was their battlefield. The “war” raged over the possibilities of providing both guns and butter for the American people. Nourse believed science and truth were apart from the maddening crowd of politics. Despite his reputation among conservative (i.e., market-oriented) journalists, Keyserling instinctively moved toward consensus, the middle ground, the vital center of political economy. He knew the Washington bureaucracy and its ways; an agency created a place for itself by vigorous activity and Congress could end its existence very quickly if the political situation was right. Keyserling recognized the shortcomings of the New Deal, chronic unemployment until World War II. As an institutional economist, Keyserling saw technology dictating changes in American anti-trust policy. Guided by “our unlimited possibilities,” in an ever-expanding capitalism, Keyserling had kept the faith. Both guns and butter were possible and the Truman Administration must meet the challenges, domestic and foreign. Nourse and Keyserling bitterly disputed whether the economy could provide both guns and butter. Nourse saw limits. “But just as the private consumer will have to forego some hoped for raising of his real purchasing power so long as we have to carry an enlarged burden of defense, so states and municipalities will have to defer or scale down the expenditures which they otherwise would be making for raising the productivity, convenience, health and beauty of their communities.”46 In the White House and later out of the government Nourse linked his criticism of economic expansion to his fear of inflation.

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By 1948, Nourse and Keyserling constantly clashed over policy. Keyserling anxiously advanced and defended Truman’s policies before Congress. Nourse was not present. A rumor at the time suggested that Nourse was seeking a position in the future Dewey Administration. When Truman allowed individual members of the CEA to give testimony, Keyserling appeared before the Senate Banking and Currency Committee; Nourse was absent.47 The battle lines were drawn. Supported by John Snyder and John Steelman, Nourse urged a ceiling on both domestic and foreign spending. Keyserling and Clark Clifford wanted increases for the domestic budget and restricted military costs.48 By December Nourse submitted his resignation. When the White House asked him to remain, he stayed; but it was only a temporary decision. “I must have a colleague who subscribes to the non-political and nonlegislative interpretation of the Council’s work so that we can get back into the area which we should cultivate and that I can be relieved of the intracouncil tension which has existed from the start. I set November 1 as the latest date for making a change in personnel,”49 Nourse darkly concluded. On September 9, he submitted a letter of resignation, accepted by the 26th and Nourse departed before election day.50 In the weeks before his resignation, Nourse’s behavior damaged his cause. Publicly rejecting Keyserling’s advocacy of an increased budget, Nourse claimed that 15 billion dollars was the limit; any amount above that figure meant that inflation would destroy the economy.51 After his resignation, he continued his message, warning and worrying about inflation. Continuing criticism of Keyserling’s ideas was Nourse’s other major activity. This included a cover memo when he donated his papers to the Truman Library, July 24, 1964. What was Keyserling advocating that so upset Nourse? Actually Keyserling took a historically moderate position. Stressing growth and economic balance, his message was optimistic in tone. “The people of America need to be electrified by our limitless possibilities, not frightened into action by prophets of disaster,” he often remarked.52 Adopting a position of political realism, Keyserling urged government and business to cooperate for which, of course, the business conservatives scorned him. Undoubtedly, Keyserling’s reputation as a “New Dealer” and his aggressive style damaged his cause in some quarters. Nevertheless in the Truman Administration his message found its audience. The later Kennedy and Johnson Administrations would heed the message but ignore the messenger. As vice-chair and as chairman, Keyserling always used the term “stable growth” in discussing the cyclical behavior of the economy. Growth was the central concern. “While economic growth was not analyzed and its policy implica-

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tions were not elaborated with the sophistication of the 1960s, the central idea was constantly reiterated by Keyserling even before it became, first a fashionable, and then a standard subject in academic economics.”53 By September 29, 1949, Truman used Keyserling’s statistics in a speech and more importantly endorsed his expansive view of the future. Truman argued that with vigorous governmental programs of conservation, education, and public health, a fifty percent increase in the national income would move more Americans into the middle class.54 Keyserling’s greatest influence came when Truman needed liberal advice. From 1945 to 1947, Truman believed he could share power with Congress and maintain a balanced budget. He failed on both counts. The Republicans wanted victory; they wanted the White House. Ironically, the seeds of victory in 1948 were planted in the ashes of the congressional defeats of 1946. Some of Truman’s advisers, later referred to as the “Wardman Park” group, anticipated the struggle ahead in 1948 and, to Truman’s good fortune, formulated cogent strategy for the campaign. The group became legendary; Clark Clifford believed it was the cornerstone of his political education and contributed significantly to the victory in November 1948. While Clifford saw the group in an ideological and policy struggle with the conservatives within the Truman White House, Alonzo Hamby, Truman’s best biographer, is not so sure. Truman “would follow its strategic course for the most part, but this amounted to little more than staying on a path he already had taken.”55 Clifford’s account, however, gave support to the perception of administrative liberals, many at the sub-Cabinet level, that something should be done about the Truman Administration’s drift toward conservatism. The basic ideals of the New Deal were not to be abandoned but adapted to postwar America. The Chairman of the Democratic National Committee and later head of the Federal Security Agency, Oscar Ewing, wanted an informal network of administrative liberals to meet and discuss issues and policy. He chose the members of the group. The membership grew. Clark Clifford, the most prominent liberal in the White House, soon joined. Keyserling was a member, along with C. Girard Davidson, Assistant Secretary of the Interior; Charles F. Brannan, Assistant Secretary of Agriculture (at the time); David A Morse, Assistant Secretary of Labor; and J. Donald Kingsley, Ewing’s deputy at the Federal Security Agency. “Keyserling was the intellectual of our circle, a respected but refreshingly controversial economist; he was already in a constant warfare with Snyder, Anderson, Steelman, and others over economic policy, and he welcomed the opportunity to build support for his views with the rest of us.”56 While Truman knew of the group’s existence, he never attended their meetings.

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Because of the people involved and the success of their collective effort, a certain nostalgia covers the group’s existence. Clark Clifford recalled a twenty-fifth reunion dinner party at the Keyserling home. All were present except one deceased member and for the occasion Keyserling had written a doggerel poem about the members. Entitled “Ode to Wardman Park Monday Night Steak Club,” each wife read the verse about the man next to her. As poetry it was not much but it was quite emotional because of their shared vision and the knowledge that the end was near. Keyserling characterized Clifford as The glamorous Clifford was much besides tall, So his merit soon made him leader of us all; Clark’s key to successes with Harry S Truman Was simply that both were so very human.

Clifford called it a farewell “from my old friend, who had taught us so much.”57 The format was simple. By January 1947, on every second Monday by six p.m., the group gathered at Ewing’s Wardman Park home for a drink and a steak dinner. Lasting several hours the conversations dealt with policy and politics, meat and drink to Keyserling. Their aim was to influence President Truman. Since he was in close contact with Truman, Clifford became “the conduit for our ideas. We felt outnumbered by the conservatives within the Administration and misunderstood by most of the old New Dealers and ideological liberals on the outside. In consensus we saw strength, and we tried to work toward unified positions on key issues.”58 The group’s formulation of ideas was helped by an interesting set of circumstances. In September 1947, James Rowe, former political adviser to FDR, gave a strategy memo to Clifford. With amazing anticipation of future developments, the memo provided the means to electoral victory in 1948. A month later, Clifford, without major changes, passed the memo to the president. There was only one major change. The result was that for years people believed that Clifford was the author of the memo. He was not; however, he was the vital conduit to the inner circles of the White House. And here personality influenced the flow of events and the future of integrative liberalism. After Roosevelt’s death, James Rowe, the author of the now-famous memo, became a partner in the law firm headed by Thomas Corcoran. The problem was simple. Harry Truman disliked and did not trust Corcoran. Truman saw him as a lobbyist of dubious character who used his connection to the New Deal legacy as means of furthering his own economic welfare. (Years later, Keyserling expressed a similar belief.) Apparently this negative assessment

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extended to James Rowe; therefore, in 1946 Clifford quietly asked for some advice from Rowe in dealing with policy and political problems. Rowe became a key prophet. In two critical memos he outlined how Truman must deal with the Republican-controlled Eightieth Congress. The second memo, “The Politics of 1948,” provided Clifford with the winning strategy for the fall campaign. This second memo with Rowe’s signature on it had been given to President Truman by James Webb, Rowe’s friend. Without reading it, President Truman passed it to Clifford who took it to the Wardman Park group. They agreed with the analysis and after a few minor changes the memo was retyped and returned to Truman with Clifford’s signature. The Rowe, now the Clifford, report was insightful: Thomas Dewey would win the Republican nomination and Henry Wallace would run as a third party candidate. Gathered from news reporters, labor leaders, and politicians, Rowe’s information suggested a changed United States. Rowe’s analysis urged that organized labor be courted by the White House. In addition to the labor elements of the Roosevelt Coalition, vital to the Democratic Party since the 1930s, African-Americans must be included in any possibly winning effort. They had a key position in critical states. Truman had to balance the just concerns of African Americans with holding the southern racists in the Democratic Party, according to Rowe. Domestic issues would include high prices and housing and Truman must act on those issues. He must articulate a program for these voters and when the Congressional Republicans rejected them, use those rejections in the fall campaign. In domestic politics, Truman had to move to the left and he did. Focusing on a coalition of organized labor, northern urban/ethnic groups, African-Americans, and liberals, the Wardman group’s ideas carried the day. President Truman was comfortable with these plans. “As a non ideological man with a fierce attachment to his party, Truman was an inclusionist rather than an exclusionist. He wanted the Democratic Party to embrace as many diverse groups as possible and hoped to reconcile even northern blacks and southern whites.”59 He was an integrative liberal in this situation without being aware of the label. Foreign policy considerations also contributed to the political situation and Truman’s pilgrimage toward integrative liberalism. It involved Henry Wallace. Believing that Wallace would be a third-party candidate, Rowe and later the Wardman group made a distinction between liberals and progressives. The Americans for Democratic Action represented liberals who endorsed the collective security of Wilsonian idealism tempered by a growing mistrust of the Soviet Union. The “progressives,” drawn to Wallace, were naive about Soviet intentions and so “liberals” (Rowe’s labels) must attack the Wallace

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candidacy as wrong-headed and dangerous. In hindsight, the emerging Cold War culture was used for domestic political advantage; and as the Korean War and McCarthyism later demonstrated, the tactic provided Republican victories. Meanwhile, the support for the diplomatic recognition of Israel, early beginnings of the containment policy, had appeal among voters who had recently moved into the Democratic Party. In like manner liberals such as Keyserling were essential for victory. Small in number but large in intellectual and ideological influence, liberals in the media and key organizations carried the message of domestic reform and a strong foreign policy. It was the vital center, an expression of integrative liberalism. At this juncture, the Wardman group recognized an important but subtle point. New Deal liberalism remained close to the heart of many voters. Truman had to claim the New Deal legacies and at the same time establish his own reform agenda, the Fair Deal. The Wardman group appealed to a new and powerful middle class by urging the more equitable distribution of a new abundance, despite the talk of economic maturity. Truman’s Fair Deal adapted the New Deal to postwar America and did not abandon it.60 A detailed account of the 1948 presidential race is not needed here. Keyserling did contribute to Truman’s campaign speeches. Since the President often had seven or eight drafts of a speech available and he spoke with simplicity, it was often a bit hazy about a particular person’s contribution, but the economic data and text of many speeches came from Keyserling.61 The year of 1948 was critical. It was a foundation year for both foreign policy and the future shape of domestic politics. When Truman called a special session of Congress after the Democratic National Convention, Keyserling was ready. Maintaining that policy flowed from analysis, Keyserling saw growth as the means to policy success. After the election, Truman kept the military budget at eighteen billion dollars. As Chairman of the Council of Economic Advisers, Keyserling became a close adviser to President Truman. From Keyserling’s perspective, his appointment did not come about in a professional manner. For nearly eighteen months after Nourse’s resignation, Keyserling was left dangling in the journalistic wind of political speculation. It was unfair; however, for whatever reason, the White House was slow to announce the appointment. Apparently several people were approached about the position but rejected it. Finally it was Keyserling’s turn. He had worked hard at soliciting endorsements and lobbying key political figures. He deserved the chairmanship. The Americans for Democratic Action organization was a key presence in the nominating process. Several well-known economists publicly endorsed Keyserling’s candidacy “because he has fought courageously for the Fair

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Deal program.”62 From attending cabinet meetings to writing special reports and publicly advocating and defending the Truman agenda, Keyserling was a creative asset. In public and in private Keyserling urged growth as a means of limiting an unbalanced budget. Given the deepening Cold War, economic growth was a policy imperative; and given the domestic changes in American life, such a policy advanced integrative liberalism. Two closely related major events gave weight to Keyserling’s policy recommendations. NSC68 and the Korean War provided a conceptual breakthrough for the fuller development of a Cold War America. KEYSERLING AND NSC68 Like so much of public policy since 1945, the origins of NSC68 were in the theory of economic stagnation. Military planners wondered about the budgetary limits to national security. On January 31, 1950, faced with increased Soviet atomic hostility and expansionist rhetoric, Truman created an ad hoc State-Defense Department joint committee to review the country’s military situation. The committee reported in April. It called for increasing the military budget from $12.9 billion to more than $50 billion. Truman was appalled. When the Defense and State Departments endorsed the report, it was passed to the National Security Council where Keyserling played a major role. His first achievement and possibly the most significant of his career was his insistence that increased defense spending coupled with increased domestic spending would not damage the economy. Seeing both Red China and Soviet Union as provoking varied crises around the globe, Keyserling proclaimed that the international situation demanded a strong defense posture.63 As a member of the ad hoc committee Keyserling significantly contributed to the report with data and text. The report drew together the several assumptions about the conflict with the Soviet Union. Drawing on legacies of World War II, Munich and Pearl Harbor, this national security concern contributed to the militarization of the containment policy, much to irritation of George Kennan, the creator of the policy. With the possibility of an economic depression, the issue meant an exploration of limits, be it the military budget or the political will of the policy makers. The implication was a new world order that had its origins in the immediate experiences of the Great Depression, the New Deal, and World War II.64 In the process the document became the basic American policy of the Cold War, the best known secret document of the conflict. Globalism, as policy, complemented the previous programs of the Truman Doctrine, the Marshall

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Plan, and the containment of Soviet expansionism. To avoid creating inflation and related ills in the civilian economy, containment had to be limited to 20 percent of the gross national product. A “crisis year concept” (maybe 1954) suggested a year when total war might break out between the U.S. and the USSR. NSC68 provided a diplomatic means for a quick American response to any military adventurism from the Russian communists. By April 1950 Truman had accepted and approved the report. The document provided the basis for the Cold War world order until the military withdrew from Vietnam during the Nixon Presidency. There are two essential points about NSC68 as a part of integrative liberalism. First, the document was secret. The document was released to the public in 1975; hence, its immediate audience were the policy makers in the Truman Administration. Secondly, the document was not will-of-the-wisp rhetoric; rather NSC68 was a key document in the intellectually rich American tradition of integrative liberalism. The basic assumption was clear; the Soviet Union was an expansionist threat to the security of the United States. What was the proper response to the Soviet challenge? NSC68 offered four options. The first was to continue the current policy of containment. It did not provide proper military power behind the rhetoric. The second suggestion was a preventive nuclear war. (The objections to that option were quite apparent.) “Isolationism” was the third policy suggestion, but it was not clearly defined. The word and the concept had lost credibility in the aftermath of the Great Depression and World War II. The last suggestion, one dictated by later events and developments, stressed a rapid military build-up of the free world. The report was a philosophical document as well as a military plan. The United States was an open society where the individual was an end in himself; the Soviet Union was a closed system based on the Communist Party’s being the apex of Russian society and culture. NSC68 viewed the peoples of the Soviet Union as potential allies in the fight against the Communist vision, but did not offer the Russian true believer a detailed or complete alternative to the Soviet scheme. To the committed Communist the Soviet system was “God,” but the American alternative was subject to every human foible. Ironically this “philosophical” weakness was a policy strength. The United States’ cause was the preservation of decency, justice, and tolerance “against which individuals themselves always fall short.”65 In its own way the statement was the core of integrative liberalism and Keyserling’s role in the policy drama. Later critics and historians have noted shortcomings in the document. “NSC68 assumed that containment consisted of body-building and the striking of impressive muscular poses when in fact it held in store a series of freestyle wrestling matches for which rules had yet to be formulated.” To a degree the image has merit but Pearl Harbor was still in the minds of the Truman ad-

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visers. “The document said little about dealing with smaller symbolic crises whose management would become the central problem of the cold war.” At the time the prospect for a hot war was perceived to be close. In 1953, Dean Acheson, “admitted ruefully that NSC68 had missed the point entirely by gearing itself primarily to reversing a perceived trend toward general war.”66 Ultimate victory over the Soviet Union only came decades later and it was never to be considered an automatic result or something “written in the stars.” Three historians have succinctly noted the problems and challenges that NSC68 represented. “Simply put the central dilemma in NSC68 is how to advocate freedom by greatly enlarging the state’s capacity for coercion.” This constitutional and cultural concern could be eased by appealing to American intellectual values. The American heritage in Puritanism and the Enlightenment of James Madison and Thomas Jefferson offered an alternative to military conflict. The American policy could project material and moral strength “into the Soviet system and internally transform that system.” In the long view that was exactly what happened to the Soviet Union. Meanwhile President Truman faced a serious political and policy issue. “NSC68 as a whole raised the specter of a militarized economy with a conspicuously malnourished civilian sector” which could thwart middle-class aspirations and damage the Truman Presidency and legacy.67 Given the assumptions of NSC68 future events followed its analysis. The Korean War

When the Korean War began in June 1950, the NSC68 policy became the military and diplomatic rationale for American participation in the conflict. Despite his concern about inflation Truman did not ask for price controls and rationing; Congress gave him standby authority in those areas. Instead, President Truman endorsed Keyserling’s plan of monetary and fiscal policies to meet both military and civilian demands. Without any significant growth in the governmental bureaucracy, the Truman Administration fought the war; but the military budget went from 6 percent of the GNP in 1950 to 14 percent in 1953. All in all the Keyserling Council was effective. This period of emergency and possible World War II mobilization meant that economic growth had viability and gave the Council a measure of policy influence and leadership. Unfortunately trouble lay ahead. In the history of the military-industrial complex, the Korean War was a significant development. The reason was tragically clear. It meant that the Cold War could turn hot at any time and that military preparation was essential. While war and defense spending were hardly the best answers to any future depression over the next forty years, the emerging reactionary Keynesianism

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was the only possible policy in the political culture created by the Cold War. One thing was clear—the argument over the issue of guns or butter was drawing to a close. A new political economy based on some form of Keynesianism would emerge in the near future.68 Although never pleased by the development of a bastard or a militarized Keynesianism, Keyserling, as a good soldier, continued working for his vision of integrative liberalism. The impact of NSC68 and the Korean War, of course, was significant beyond any impact on Keyserling’s career. The establishment responded. Consisting of leading academics, Wall Street lawyers and players, businessmen, the establishment existed as an informal “old boy” connection that moved people between government service and the private sector. With its immediate origin in the dollar-a-year men in World War II, this social type gained influence with the development of the Cold War culture of the military-industrial complex. Secretary of Defense James Forrestal was a classic example of the establishment.69 Their creed was Wilsonian universalism that stressed a long struggle between good and evil on the globe.70 Paul Nitze represented all of these historical developments. As a Wall Street investor, Nitze was well-connected and moved with ease in the highest political and financial circles and he was an early cold war warrior. He and Keyserling worked closely together; they shared many of the same assumptions about politics and foreign policy concerns. The Soviet Union was the aggressor. The American response was to support anti-communism governments around the world. Aided by Keyserling, Nitze was a major contributor to this historic document.71 Once again Truman called on Keyserling for data. Keyserling advocated economic growth. With proper tax and fiscal policies the economy could easily support guns and butter “without serious threat to our standards of living” and without large deficits and excessive inflation.72 Keyserling maintained that this “emphasis upon production is even more important than during World War II, because of the indefinite duration of the problem now confronting us.” For him it was a test of personal and national will. He anticipated the New Frontier rhetoric of President John Kennedy. “The problem is above all a test of our moral fiber. Instead of bewailing the hardness of the times, we should recognize the greatness of our times. Instead of shrinking from the difficulties ahead, we should rise to the challenge ahead. Instead of talking about sacrifices, we should dedicate ourselves to service. If we act in this way, nothing within sight is beyond our reach.”73 The ideology was integrative liberalism and the sentiment was genuine. It was “pure” Keyserling. Keyserling was a realist and his insights and values, dedicated by his status as a service intellectual, meant he functioned in a world of policy possibili-

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ties. He wrote in the Council’s Fifth Annual Report, the “defense program cannot be carried forward without slowing down on many other things.”74 He therefore accepted price controls in 1951 with reluctance, but he still believed that economic growth cured inflation in the long run. President Truman and Chairman Keyserling agreed about economic growth. In an economy increasingly dominated by defense and national security policies, inflationary pressures would endure. Keyserling clearly understood the situation regarding the emergence of reactionary Keynesianism. He also knew that the Cold War was a long and often confused situation. He also recognized that the defense effort was often a “pump priming” policy that appealed to some liberals and conservatives in the emerging industrial-military complex. The term “pump priming” has a history and is explored in Chapter Five where the Keynes and Keyserling connection is further analyzed. However, he was also optimistic—always seeking the integrative liberal ideal despite the institutional development of reactionary Keynesianism. Keyserling’s policies became the policy norms for the Truman Presidency. Building on the New Deal ideal, Truman and his advisers recognized that the United States must lead toward a global order based on Wilsonian internationalism with a large place for American business. While his ideas were not Keynesian in essence, Keyserling realized that economic expansion was not an automatic process. Because Keynesianism and related words were politically dirty words used by anti-New Deal Republicans to describe the Truman Presidency and all of its works, Keyserling avoided the label. By the time of the Kennedy, Johnson, and Nixon presidencies, Keynesian policies and concepts were American. Four years before his death, Keyserling noted the relevance of Keynesianism in the issues of aggregate demand and the issue of the mal-distribution of national income. In his own way, Keyserling was a “rather iconoclastic Keynesian.”75 Business and government cooperation were means to stimulate the economy. According to Keyserling the Employment Act of 1946 meant a political definition of planning “for the economy as a whole” that went beyond the New Deal, because the domestic and world situations had changed. The 1946 law was “the most important basis that has ever been laid in this country for a liberal economic program.”76 In a certain sense the Truman Administration engaged in a rear-guard action or a holding pattern from the military stalemate in Korea to the political defeats of the Fair Deal in Congress. As usual, Keyserling generated many ideas and actions for the Truman White House. The Congressional elections of 1950 were suggestive of the end game to be conducted by President Truman. The GOP picked up twenty-eight seats in the House and five in the Senate. The immediate prospect was McCarthyism, not the triumph of the Fair Deal.77

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Meanwhile, Keyserling continued his message of economic growth and optimistic rhetoric about the future while receiving cutting remarks as a “New Dealer” from the press.78 Keyserling ignored such remarks, but he knew that they existed. He busied himself with policies, providing economic data support for the containment policy and European recovery.79 Using his liberal connections, Keyserling defended the Truman program of an integrated economy with a recovering western Europe and a domestic economy of prosperity.80 As always, Keyserling expressed ideas about a prosperity index when he engaged in a radio debate over the effect a Republican victory in November 1948 would have on policy and the economy.81 Fighting fears of inflation and recession, Keyserling maintained an optimistic view. He stood for the vital center. All of this activity was conducted against a backdrop of political name-calling about the rise of socialism.82 Typical of this name-calling was the treatment Keyserling received from the press. Articles always reviewed his New Deal background and his activism as if they were some sort of social or ideological disease for the body politic. The sum of the criticism argued that the Fair Deal was just a cynical left-over from the Roosevelt Era. John Davenport put a conservative or probusiness spin on the Fair Deal in his “Socialism By Default,” and of course Keyserling was the heavy-handed partisan dealing collectivist misery to the American businessman.83 In all this activity, Keyserling continued his life-long debate with professional economists. Echoing many of the same concerns as Edwin Nourse, Jacob Viner attacked the Keyserling-Truman program. After exchanging personal barbs with Keyserling at a public meeting, Viner argued that the Truman policies were politically motivated, created out of an atmosphere of some sort of global town meeting. Keyserling sought to speak “to a sharp mind rather than a sharp tongue.” And Keyserling rejected Viner’s efforts to be the “keeper of my conscience.” Incidents similar to this one were repeated on numerous occasions during Keyserling’s public career.84 Continually characterized as a New Dealer, “running on a full head of steam of conviction,” the result was to “bring conservative lightning down on his head—and indeed he already has done so.”85 Between his speeches before the Americans for Democratic Action and his vision for a depression-proof economy of the future Keyserling indeed drew lightning from conservatives.86 Keyserling’s political skill undoubtedly generated hostility in and outside the White House. His personal and political friendship with Clark Clifford created a “natural rapport” much to the irritation of other advisers such as Nourse.87 Keyserling’s presence only increased after Nourse’s resignation. Keyserling agitated for full employment, and answered his critics.88

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As Chairman of the CEA, Keyserling gained more notice in the press, although he was never hesitant about stating his views and opinions. Featured on the cover of Business Week Keyserling was now Truman’s primary economic adviser.89 He was criticized from the Left for failing to maintain a reform edge against the status quo. An article in Nation magazine attacked the CEA annual report as a toady gesture to business and laissez-faire public policy, for the country now had the “solid institutional structure to realize the full promise of America.” The author saw mere political posturing while Keyserling campaigned for the chairmanship. The critic charged him with rejecting the New Deal in his quest to please business!90 Quickly, Keyserling replied. In so doing he gave a good working definition of integrative liberalism. His views had not changed at all. After defending the standard policy issues, Keyserling defended the “Business and Government” section of the report that had drawn the heated criticism. “It represents an effort, long overdue, to find common ground on which groups and persons within the American economy can increasingly work together for stability and growth.” After all, “business as well as government has a responsible and vital role in the kind of economy we want to preserve and improve, and that the contribution which an enlightened business community can make is inestimably high.”91 By May 11, 1950, Keyserling was Chairman of the Council of Economic Advisers and Roy Blough joined the council. Blough was a good choice with his expertise in tax policy. Of course, the political sniping continued as Keyserling the “chief bat-boy of the Administration’s Fair Deal program” continued as chairman. The article asserted that Blough, “tried and true Fair Dealer” would become a “yes man.”92 Keyserling continued his optimistic forecasts about the economy despite the Korean conflict. He was consistent. Production was the answer. Late in 1950 after the start of the Korean conflict, Keyserling urged that production was the nation’s greatest non-secret weapon. In his advocacy he echoed themes that he articulated all of his political career. Seeking social unity and economic balance among military, government, and public programs, Keyserling fought for the public good despite an uncertain future. While guns and butter were important, he stressed guns and peace because the Cold War was a test “of our moral fiber.” The ultimate issue for all three areas of American life was not sacrifice but service. In that fashion “nothing within sight is beyond our reach.”93 For the balance of his tenure as Chairman of the Council of Economic Advisers, Keyserling continued his basic message. In the first years of the Korean War, Keyserling urged a stronger military budget and a public acceptance of a greater burden of sacrifice. He had not

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abandoned his basic optimism about the future but he had tempered his remarks with a stress on foreign policy and global economic conditions. Expansion would ease the burden for all citizens.94 Prophetically, foreign policy and issues of military preparedness were distracting from domestic reform in the years that followed. As Korea dominated Keyserling’s immediate policy concerns, his critics continued their attack. Claiming that Keyserling was the only true New Dealer remaining in the Truman Presidency, one writer questioned the newness of Keyserling’s ideas, particularly that new circumstances such as the world condition of Cold War and economic danger merited new solutions. And, of course, Keyserling’s stand for unity rather than division was ironic. His chief critics believed that the New Dealers waged class war against innocent businessmen.95 Despite such treatment, Keyserling continued his overtures to business groups, pushing programs of mutual benefit for the uncertain years ahead.96 Rarely did Keyserling express any uncertainty regarding the economy and presidential policies. Usually his analysis emphasized concerns over guns and butter, inflation, and full employment. “Inflation is not our greatest danger, but failing to build up our national defense for the preservation of peace and security is.”97 To that goal, Keyserling stressed a long-range plan that included affirmative efforts in an enterprise of public unity. Symptomatic of his vision was his suggestion that the economy of the 1930s—scarcity—was a part of the past. The redistribution of wealth was not necessary or desirable. “This nation still stands first in the world to make further production gains.” Harmony among the elements of the modern economy was essential to progress and critical to attaining of social justice.98 Rejecting prophets of doom and budget cutters, Keyserling defended the administration’s spending program. McCARTHYISM AND THE END OF THE TRUMAN PRESIDENCY Keyserling engaged in a bitter dispute with Senator Joe McCarthy. He charged that Keyserling and Mary, his wife, were Communists. On February 10, 1952, McCarthy claimed that Keyserling was a Communist. The next day Keyserling denied the charge. The Senator from Wisconsin argued that from the days when Keyserling “was a rather obscure clerk in a Senator’s office” he was active for the Communist cause. (Such an expression was typical of the alcoholic senator’s rhetoric and if anything Keyserling was not in any sense obscure in Senator Wagner’s office!) Joe McCarthy leveled the same charge of disloyalty at Mary Keyserling who resigned her job in the Department of Commerce. Within three months Mrs. Keyserling was reinstated to

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her position in the federal government. On one level the incident was just McCarthyism operating at its distasteful best; on the other hand, the situation indicated how easy it was for many people to equate the New Deal with the Communist menace of the Soviet Union.99 As the Truman Administration came to an end, Keyserling remained his combative self. Typical of his attitude and action was a speech before the Americans for Democratic Action, May 18, 1951. He insisted that liberals had a role to play not only in domestic programs but also in the defense program. Problems could be solved. Liberalism and democracy were one. Cooperation was essential; “a maxim for liberals is that they should seek to unite rather than to divide the people of the United States.”100 In a generous exchange of letters, Keyserling and Truman praised each other’s efforts. Harry Truman saw real merit in Keyserling’s contribution. “You know how much I have relied on the recommendations of the Council in deciding the many major issues of economic policy that faced our country since the end of World War II.” Keyserling’s influence extended beyond domestic policies. “Your energy and vigor in urging that we approach the world crisis created by the Kremlin in a way that will result in steadily increasing economic strength for the United States and for the free world I regard as a major contribution to the long-range success of our national policy.”101 Despite the achievements of the Truman Administration problems still existed. One big problem was the economy. Was it possible to maintain guns and butter into an infinite future? What were the long-range consequences of NSC68? And finally, Nathan Straus’s concern indicated a major issue that would endure until the century’s end. On December 12, 1940, Straus wrote to Eleanor Roosevelt about his fears regarding the mature economy. His words anticipated the political economy of the Cold War. “William James said that there was need for finding the ‘moral equivalent of war.’ I believe that there is need today for finding the ‘economic equivalent of war.’”102 Within the limits of his position Keyserling fought for the ideal of integrative liberalism; unfortunately, reactionary Keynesianism compromised the policy possibilities in the second half of the twentieth century. The tragedy was not Keyserling’s message but how different audiences heard his words. Various groups turned his policy of cooperation into a strong military presence in the economy. Security concerns turned foreign policy into the first objective of American public policy and not economic and social justice for all citizens. Ideologically, the rise of postwar market conservatism challenged integrative liberalism as Dwight Eisenhower and the Republicans claimed the White House in the election of 1952.

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NOTES 1. For a liberal analysis see C. Vann Woodward, “The Age of Reinterpretation,” The American Historical Review, 116 (October 1960). For understanding the historical reality of these symbols see Wayne S. Cole, Roosevelt and the Isolationists (Lincoln: University of Nebraska Press, 1983). For a critical evaluation see Bruce D. Porter, War and the Rise of the State: The Military Foundations of Modern Politics (New York: Free Press, 1994). To measure the end of free security see Roger W. Lotchin, Fortress California, 1910–1961 (New York: Oxford University Press, 1992), a state study and for a larger perspective, Aaron L. Friedberg, In the Shadow of the Garrison State, America’s AntiStatism and Its Cold War Grand Strategy (Princeton, NJ: Princeton University Press, 2000). The events of 9/11 and the flow of events and policies from them provide an interesting perspective in historical judgment; however, to explore those relationships would take a vary large book indeed 2. See John Lewis Gaddis, We Now Know, Rethinking Cold War History (Oxford, UK: Clarendon Press, 1997). Michael J. Hogan, A Cross of Iron, Harry S. Truman and the Origins of the National Security State, 1945–1954. (Cambridge, UK: Cambridge University Press, 1998) is a recent account, well balanced and fair. The book is most instructive about the Truman years; however Professor Hogan is unfair and a bit catty in his judgment about Keyserling. I hope to moderate that judgment in this chapter. 3. For the historical significance of how the closing of the frontier influenced New Deal thought see Steven Kesselman, “The Frontier Thesis and the Great Depression,” Journal of the History of Ideas 29 (April/June 1968) and David M. Wrobel, The End of American Exceptionalism, Frontier Anxiety From the Old West to the New Deal (Lawrence: University Press of Kansas, 1993). For a contemporary concern see “Outline for TNEC Report” 1939 Walter Salant Papers, HSTL. 4. Crauford D. Goodwin, ed., Exhortation and Controls, The Search for a Wage-Price Policy, 1945–1971 (Washington, D.C.: The Brookings Institution 1975), 4, 1, vii. 5. John Kenneth Galbraith, “Came the Revolution,” The New York Times Book Review (May 16, 1965) tells how for some New Deal economists Keynes became a guiding light. As discussed in Chapter Five the real shift toward Keynesianism came after Truman left the White House. See Herbert Stein, Fiscal Revolution in America (Chicago: University of Chicago Press, 1969). 6. W. Elliott Brownlee, ed., Funding the Modern American State, 1941–1995: The Rise and Fall of the Era of Easy Finance (Cambridge, UK: Cambridge University Press, 1996), 285. Goodwin, Exhortation and Controls, 6, 21.

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7. “Message to Congress, September 6, 1945,” Samuel I. Roseman Papers. Truman Library. 8. George Terborgh, The Bogey of Economic Maturity (Chicago: The University of Chicago Press, 1945) has a bibliography on the subject for the years 1939 to 1945. 9. Milo Perkins, Commencement Address at Swarthmore College, May 25, 1942. Box 81 Wallace Papers FDR Library. Benjamin Higgins, “Doctrine of Economic Maturity,” American Economic Review 36 (March, 1946), 134, 138. For the context of this concern see Robert M. Collins, More: The Politics of Economic Growth in Postwar America (New York: Oxford University Press, 2000), 6. 10. For an example of the organization’s concerns see C. Reinhold Noyes, “The Prospect for Economic Growth,” American Economic Review 37 (March 1947), 13–33. 11. For the context of this shift see Wayne S. Cole, Roosevelt and the Isolationists (Lincoln: University of Nebraska Press, 1983). 12. Speech by Fred Vinson, January 9, 1946. OF 21 Box 127 (1945– 1947), HSTL. See also his statement before the Senate Committee on Banking and Currency, March 1946 and his speech of April 16, 1946. Both documents are in Box 127. 13. Robert A. Pollard, Economic Security and the Origins of the Cold War, 1945–1950 (New York: Columbia University, 1985), 3–5. 14. Ibid., 5, 15. This conservative claim that the Democratic record during the Great Depression and later was an exercise in leftism was to be the cornerstone of the conservative revival in the last fifty years of the twentieth century. 15. Hogan, A Cross of Iron, 15, 28. 16. Alonzo L. Hamby, “The Vital Center, the Fair Deal, and the Quest for a Liberal Political Economy,” The American Historical Review, 77 (June 1972), 653. 17. From one perspective, the Truman era was heir to a Forged Consensus, Science, Technology, and Economic Policy in the United States, 1921–1953 (Princeton, NJ: Princeton University Press, 1998). The author is David M. Hart. This historical development is basis for the later scholarship of C. Wright Mills and the power elite and the corporate liberalism thesis of the New Left. For the origin of the corporate liberalism see Kim McQuaid, “Corporate Liberalism in the American Business Community, 1920–1940,” Business History Review 52 (Autumn 1978), 342–368. 18. Stein, Fiscal Revolution in America, 174. J. L. Mosah, “National Budgets and National Policy,” American Economic Review, 36 (March 1946), 20–43 supported a full employment policy. Richard O. Davies, “So-

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cial Welfare Policies,” The Truman Period as a Research Field (Columbia: University of Missouri Press, 1967) has an excellent context for Truman’s message. 19. Alan Brinkley is both clear and persuasive on this development. See his The End of Reform: New Deal Liberalism in Recession and War (New York: Knopf, 1995) and Liberalism and Its Discontents (Cambridge, MA: Harvard University Press, 1998) for ills facing reform after 1945. For the argument that the New Deal was the source for this development see Robert M. Collins, “Positive Business Response to the New Deal: The Roots of the Committee for Economic Development, 1933–1942,” Business History Review 52 (Autumn 1978), 369–391. 20. See the chapter, “The High Price of Peace, Guns-and-Butter Politics in the Early Cold War” in Hogan, A Cross of Iron, 69–118. 21. For background see C. Vann Woodward, “The Age of Reinterpretation,” The American Historical Review 116 (October, 1960), and Donald K. Pickens, “Westward Expansion and the End of American Exceptionalism: Sumner, Turner, and Webb,” Western Historical Quarterly 12 (October 1981). 22. As quoted in Walter McDougall, Promised Land, Crusader State: The American Encounter Since 1776 (Boston: Houghton Mifflin, 1997), 172. This book is intellectually engaging. It tempers New Deal rhetoric and achievements from a questioning perspective. 23. Harold I. Gullan, The Upset That Wasn’t: Harry S. Truman and the Crucial Election of 1948 (Chicago: Ivan R. Dee, 1998), 44, 50, 52. 24. See the Oral History transcript of Joseph L. Rauh, Jr., January 31, 1978 and November 7, 1979 in the FDRL and Adam Clymer, “The Union for Democratic Action,” (Harvard Senior Thesis, 1958), a copy is in the Wisconsin Historical Society in Madison. 25. McDougall, Promised Land, 174. 26. The historical implications of this merger are explored in this essay. Donald W. White, The American Century (New Haven, CT: Yale University Press, 1996) and Olivier Zunz, Why the American Century? (Chicago: University of Chicago Press, 1998) were excellent guides in the exploration. 27. Michael Sherry, In the Shadow of War, The United States Since the 1930s (New Haven, CT: Yale University Press, 1995), 165. 28. For an interesting group of letters on the issue of jobs see OF 264Misc. (1946–1948), Box 889, Truman Papers, HSTL. 29. Stephen K. Bailey, Congress Makes a Law (New York: Columbia University Press, 1950), 45, 161. 30. Leon Keyserling, “A Policy for Full Employment.” New Republic, 121 (October 24, 1949), 14.

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31. Leon Keyserling, “From Patchwork to Purpose,” Survey Graphic (March 1945). See File Three for a sample of Keyserling’s journalistic efforts in the cause of full employment. Keyserling Papers, HSTL. 32. O. F. Hamouda and B. B. Price, eds., Keynesianism and the Keynesian Revolution in America (Northampton, MA; Edward Elgar, 1998), xxxi. 33. Hamby, Man of the People, 366–367; Patterson, Grand Expectations, 143. 34. Thomas K. McCraw, “The New Deal and the Mixed Economy,” 50 Years Later, Sitkoff, ed., 44–47; Smith, Social Science in the Crucible, 256; Collins, The Business Response to Keynes, 1929–1964, 108. For a contemporary document dealing with the right to a job, see Stuart Chase, For This We Fought (New York: Twentieth Century Fund, 1946). 35. “Message to Congress, September 6, 1945” (Folder 3), Box 2, Rosenman Papers, HSTL. Bailey, Congress Makes a Law, 14, 28, 50, 51. Edward S. Flash, Economic Advice and Presidential Leadership (New York: Columbia University Press, 1965), 13–14, 285. Keyserling, “The New Truman Administration: Will Its Policies and Planning Lead Us Toward State Socialism?” January 18, 1949. Keyserling Papers, Box 18, HSTL. 36. “Assuming Full Employment in a Free Competitive Economy,” Minority Views from the Senate Committee on Banking and Currency, September 24, 1945, Senate Report #583, Part 2, Session 1, 79th Congress. A counter argument is in “Message to Congress,” September 9, 1945. Box 2 Rosenman Papers, HSTL. 37. For the historical origin and development of this idea see Leon Fink, Progressive Intellectuals and the Dilemmas of Democratic Commitment (Cambridge, MA: Harvard University Press, 1997). Keyserling was an heir to their values and vision as argued in the Introduction. 38. March 4, 1946. Zimmermann Papers, HSTL. For a critical evaluation of the law see “Planning Maximum Employment: Men to Chart Nation’s Job Needs,” U.S. News & World Report (August 2, 1946), 24–25. 39. White House Bill File, February 13, 1946, Truman Papers, HSTL. For context see Richard H. Pells, The Liberal Mind in a Conservative Age, American Intellectuals in the 1940s and the 1950s (New York: Harper & Row, 1985). 40. Craufurd D. Goodwin and R. Stanley Herren, “The Truman Administration: Problems and Policies Unfold,” Exhortation and Controls, 36–37. 41. Both Edwin G. Nourse, Economics in the Public Service (New York: 1953), an autobiography, and Joseph G. Knapp, Edwin G. Nourse: Economist for the People (Danville, IL: 1979) are informative. Box 22 of the Caroline F. Ware Papers in the FDRL reveal how strongly Truman encouraged Nourse to join the CEA.

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42. John J. Corson, “Men Against Unemployment,” Nation (August 10, 1946), 151–152; Herbert Corey, “Three Helpmates of Destiny,” Nation’s Business (September 1946), 55–56, 89–93. New York Times, July 26, 1946. 43. Washington Post, July 30, 1946. For examples of Nourse’s earlier remarks before his appointment see Microfilm Roll #2, Nourse Papers, HSTL. 44. New York Times, August 10, 1946. Hogan, A Cross of Iron, 110. 45. Nourse, Economics in the Public Service, 104. Of course, Keyserling could counter-punch quite nicely; see his book review of Edwin G. Nourse, Economics in the Public Service (1953) in the American Academy of Political Science, 290 (November 1953), 143–144 which makes several nasty digs and references to Nourse’s experience as chairman. 46. Speech, May 20, 1948, Box 2, Nourse Papers, HSTL. 47. This administrative tempest may be found in the following sources. Nourse, Economics in the Public Service, 160, 180–181, 217–218. Speech by Nourse, May 19, 1948, Box 5 Nourse Papers, HSTL. Memorandum, May 27, 1948 from Keyserling to Nourse, Ibid. New York Times, January 23, 1948. Letter from Truman to Nourse, August 3, 1948, Box 21, Murphy Papers, HSTL. Benjamin O. Fordham, Building the Cold War Consensus: The Political Economy of the U.S. National Security Policy, 1949–1951 (Ann Arbor: University of Michigan Press, 1998), 35–37 is a summary of the disagreements between Nourse and Keyserling. 48. Warner R. Shilling, “The Politics of National Defense: Fiscal 1950,” Strategy, Politics, and Defense Budgets (New York: Columbia University Press, 1962), 47–48. Paul Y. Hammond, “NSC68: Prologue to Rearmament,” Ibid., 280. 49. Daily Diary, March 13, 1949, Nourse Papers, HSTL. This diary gives detailed accounts of Nourse’s disagreements with Keyserling. 50. New York Times, November 2, 1949. Fordham, Building the Cold War Consensus, 42. 51. “The Welfare State: Where is the Right Point of No Return?” December 3, 1949, Microfilm Roll #1 Nourse Papers, HSTL. This roll contains many of Nourse’s speeches for 1949–1951. A handy summary of Nourse’s attitude and behavior is in Hogan, A Cross of Iron, 174–176. 52. Leon Keyserling, “Production: America’s Great Non-Secret Weapon,” October 23, 1950, OF 985, Box 1564, Truman Papers, HSTL. 53. Walter S. Salant, “Some Intellectual Contributions of the Truman Council of Economic Advisers to Policy-Making,” History of Political Economy 5 (Spring 1973), 36–37, 38. As discussed later, the “simple” issue was full employment verus inflation. Melvin W. Reder, Economics: The Culture of a Controversial Science (Chicago: University of Chicago Press, 1999), 101.

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54. Alonzo Hamby, Man of the People (New York: Oxford University Press, 1995), 501. 55. Hamby, Man of the People, 431. Professor Hamby might be correct but the members of the group saw their behavior from a different perspective, particularly after victory and in the passing years as Truman gained an historical reputation for being a gutsy, no-nonsense President of the United States. Hamby’s book is the best biography of the man from Missouri. 56. Clark Clifford, Counsel to the President, A Memoir (New York: Random House, 1991), 85. Many of the details describing the Wardman Park group in this section are found on pages 84 to 86. Keyserling’s oral history interview, May 10, 1971, HSTL is informative regarding the group activities. 57. Ibid., 86. 58. Ibid., 84. 59. Alonzo L. Hamby, “The Mind and Character of Harry S Truman,” The Truman Presidency, Michael J. Lacey, ed. (Cambridge: Cambridge University Press, 1989), 47. 60. Gary Donaldson, Truman Defeats Dewey (Lexington: University Press of Kentucky, 1999), 20–24. For the latest evaluation of Truman’s achievements see Michael J. Lacey, ed. The Truman Presidency (Cambridge: Cambridge University Press, 1989). The presidential election of 1948 was critical in the history of U.S. foreign policy and its complex relationship to domestic reform. See Mary L. Dudziak, Cold War, Civil Rights: Race and the Image of American Democracy (Princeton, NJ: Princeton University Press, 2000) and Mark L. Kleinman, A World of Hope, A World of Fear: Henry A. Wallace, Reinhold Niebuhr and American Liberalism (Columbus: Ohio State University Press, 2000). 61. Gullan, The Upset That Wasn’t, 170. 62. See the papers of the Americans for Democratic Action, Boxes 31, 36, 55. Wisconsin Historical Society, Madison, Wisconsin, for the organization’s support of Keyserling. 63. For context see Alonzo L. Hamby, Man of the People, 512, 526–529; Donald R. McCoy, The Presidency of Harry S. Truman (Lawrence: University Press of Kansas, 1984), 215–217. 64. For an insightful account that combines domestic and foreign policy concerns see Melyvn P. Leffler, A Preponderance of Power, National Security, the Truman Administration, and the Cold War (Stanford, CA: Stanford University Press, 1992). Other scholars argue that “NSC68 is better explained in terms of domestic coalition building and maintenance than as a response to external threats to core values.” Fordham, Building the Cold War Consensus, 26. Maybe, but this essay presents a different analysis.

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65. McDougall, Promised Land, 168–169. McDougall’s book is a critical look at U.S. foreign policy but on balance a fair analysis. Robert D. English, Russia and the Idea of the West, Gorbachev, Intellectuals and the End of the Cold War (New York: Columbia University Press, 2000) explores Russian contribution to ending the Cold War. 66. Frank Ninovich, Modernity and Power, A History of the Domino Theory in the Twentieth Century (Chicago: University of Chicago Press, 1994), 149, 184–185. 67. The three quotes in this paragraph are from Bruce Kuklick, 158, Emily S. Rosenberg, 161, and Alonzo L. Hamby, 154 in American Cold War Strategy NSC68 (Boston: Bedford Books of St. Martin’s Press, 1993). Edited with an introduction by Ernest R. May, this book contains both the original document and supporting historical materials. Its chronology of the Cold War, 1944–1954 helps in understanding the rhythm of events and the sense that something quite significant was unfolding. “Where [George] Kennan’s strategy had focused on economic instruments of containment, the policy that came from NSC68 emphasized a military containment.” E. Timothy Smith, Opposition Beyond the Water’s Edge: Liberal Internationalists, Pacifists and Containment, 1945–1953 (Westport, CT: Greenwood Press, 1999), 114. 68. Lester H. Brune, “Guns and Butter: The Pre-Korean War Dispute Over Budget Allocations,” American Journal of Economics and Sociology, 48 (1989), 357–371. 69. Walter Isaacson, The Wise Men (New York: Simon & Schuster, 1986) is a good analysis of this social development. See also Jeffrey M. Dawart, Eberstadt and Forrestal: A National Security Partnership, 1909–1949 (College Station: Texas A&M University Press, 1991), 64–65. 70. Alan Brinkley explores these topics and developments in his Liberalism and Its Discontents (Cambridge: Harvard University Press, 1998). 71. Paul Nitze’s oral history interview at the U.S. Air Force Historical Research Center, Office of Air Force History, USAF, Maxwell Field, Montgomery, Alabama, is instructive. The call number is AL36112-6424. See also Paul Nitze, From Hiroshima to Glasnost (New York: Weidenfeld, 1989) is an interesting autobiography. For a wider view see David Callahan, Dangerous Capabilities: Paul Nitze and the Cold War (New York: Harper Collins, 1990). 72. As quoted by Robert A. Pollard, “The National Security State Reconsidered: Truman and Economic Containment,” Economic Security and the Origins of the Cold War, 1945–1950 (New York: Columbia University Press, 1985), 230. 73. Leon Keyserling, “Production: America’s Great Non-Secret Weapon,” October 23, 1950, OF 985, Box 1564, Truman Papers, HSTL.

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74. Council of Economic Advisers, Fifth Annual Report, 51. For background see Craufurd D. Goodwin and R. Stanley Herren, “The Truman Administration: Problems and Policies Unfold,” Exhortation and Control, 66–69. 75. Brazelton, Designing U.S. Economic Policy, 141. 76. Letter from Keyserling to Charles M. La Follette, National Director of the Americans for Democratic Action, August 15, 1949. Box 55 ADA Papers, Wisconsin Historical Society, Madison. 77. Hamby, Man of the People, 549–551. 78. Good examples of this situation are Leon H. Keyserling, “For A National Prosperity Budget,” New York Times, January 9, 1948, and the hostile remarks in U.S. News & World Report, January 30, 1948, 36–37. Often Keynesianism was linked to Keyserling’s ideas as a linguistic smear. 79. New York Times, February 14, 15, and April 4, 1948. 80. Leon H. Keyserling, “Can We Do It? Yes, In an Integrated Economy,” The Nation, May 19, 1948 and Keyserling, “The Economic Test: Will We Act in Time?” The New York Times Magazine, June 12, 1948. 81. New York Times, September 8 and October 8, 1948. 82. For the reaction to the CEA’s fourth report see New York Times, March 2, 1949. For an example of Keyserling’s reaching out to the opposition see “Avoiding a Recession, An Interview With Leon H. Keyserling,” U.S. News & World Report, March 4, 1949. As noted in Chapter Five it was easy for Keyserling to reject the Keynesian solution. “I am not one of those who believe that compensatory Government spending is a sure or efficient solution for a recession or depression.” Ibid. 83. John Davenport, “Socialism by Default,” Fortune (March 1949). “Economists in Politics,” Business Week, March 26, 1949. 84. New York Times, April 28, 1949. 85. C. Hartley Grattan, “Truman’s Wise Men,” Harper’s Magazine, June 1949, 56. 86. Joseph A. Loftus, “Full Employment Goal of ADA Plan,” New York Times, July 20, 1949 and Leon H. Keyserling, “Strategy for a DepressionProof America,” United Nations World (July 1949), 36–41. 87. Cabell Phillips, “The Men Around the President,” New York Times, September 11, 1949. 88. New York Times, October 18, 1949; Leon H. Keyserling, “A Policy For Full Employment,” New Republic, October 24, 1949, 13–15; “ Mr. Keyserling’s Position” Fortune (October 1949), 77–79. 89. Business Week (January 14, 1950), 6, 25; U.S. News & World Report, (January 13, 1950), 33. 90. Barr King, “Leon Keyserling’s New Look,” Nation (January 14, 1950), 33–34.

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91. Leon Keyserling, “No Retreat From Planning,” Nation (January 21, 1950), 59. 92. “Keyserling Named Top Economic Aide,” New York Times, May 11, 1950; Business Week (May 20, 1950), 25. 93. Leon H. Keyserling, “Production: America’s Great Non-Secret Weapon,” presented at the Herald Tribune Forum, October 23, 1950 in New York City. A copy of this speech is in the Papers of James K. Webb, Box 52, HSTL. 94. For examples see the articles in the New York Times, November 30, December 3 and 11, 1950, and Keyserling, “Planning for a $30 Billion Economy,” New York Times Magazine (June 18, 1950), 25–26. 95. See the criticism in “New Targets For New Dealers,” Business Week (June 2, 1951), 19–20. 96. See New York Times, October 3, and December 5, 1951. 97. New York Times, December 10, 1951. 98. Leon Keyserling, “New Challenges to the Economist,” New York Times, January 27, 1952. 99. The following news stories explain the situation. New York Times, February 10, 11; April 22; October 2, 1952; and January 10, 1953. Landon R. Y. Storrs, “Red Scare Politics and the Suppression Front Feminism: The Loyalty Investigation of Mary Dublin Keyserling,” The Journal of American History, 90 (September 2003), 491–524 is an insightful and detailed examination of the situation. 100. Keyserling, “The Role of Liberals in the Defense Program,” Americans for Democratic Action Conference, Washington, D.C., May 18, 1951. Keyserling Papers, Box 19, HSTL. 101. See the letters in Keyserling Papers, Box 20, HSTL. 102. Letter from Nathan Straus to Eleanor Roosevelt, December 12, 1940, FDR Papers, FDRL.

5 Keyserling and the “Defunct Economists”

[T]he 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 little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. John Maynard Keynes1

THE AMERICAN KEYNESIAN REVOLUTION Keyserling and John Maynard Keynes never met; but, they shared policy concerns. To be sure, they came from different political cultures but they drew from the twin legacies of Progressivism and Social Democracy.2 In his own fashion each man sought the vital center of politics and public policy. Keyserling and Keynes wanted the essence of integrative liberalism—domestic economic security and a just and peaceful foreign policy. Keyserling and Keynes sought the “conservative” end of social harmony. In a world still in the shadows of the Great Depression and World War II, the task was difficult. This concern about a mature economy provided the context for the Keyserling and Keynes relationship. It was not a fanciful problem. The Great Depression offered the dismal prospect of the business cycle’s stagnating with underemployment and a high level of unemployment as norms. The closing of the frontier, Frederick Jackson Turner’s thesis, caught the interest of FDR 119

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and the New Dealers.3 Their solution was massive purchasing power created by deficit spending and/or tax cuts. While the policy had economic merit, the political consequences were considerable. Nevertheless, the complex process of making that policy politically acceptable was underway. Given the institutional restraints of American government, “checks and balances, separation of powers, states rights,” the process was difficult and ultimately filled with irony at the end of the twentieth century. Conservatives argued for confidence in future improvement, optimism about a better tomorrow. Herbert Hoover and Alf Landon believed in such a thesis. Roosevelt’s “We have nothing to fear but fear itself” echoed that assertion. As the depression decade passed and the world moved closer to war, the sentiment of a mature economy grew. Both New Deal theorists and Keynesian economists argued that a deficit fiscal policy would reduce under consumption by moving the economy toward full employment. Despite the classical economists’ fears about inflation, by the 1940s many liberals, including Keyserling, dreamed of increasing the American standard of living by two fold. Meanwhile toward the end of the 1930s, the public discussion about economic maturity grew louder. Alvin Hansen advocated the Keynesian message at Harvard and beyond.4 The 75th Congress established the Temporary National Economic Committee whose very existence turned on the prospect of a continuing economic stagnation. “Under consumption by those with money to spend and the mal-distribution of income and wealth that left many consumers unable to spend (and thus unable to demand) brought the dream of New Era industrial capitalism crashing down into the deepest trough in business-cycle history.”5 In the realm of theory, Say’s Law was in trouble; in the realm of reality of American politics, the New Deal’s contributions to the history of integrative liberalism were well underway at the close of the depression. In the late 1930s Alvin Hansen argued for a higher consumption economy in which consumer demand drove production and investment. Pump more spending power into the economy by various governmental means was Hansen’s recommendation. “Consumption,” he argued, “is the frontier of the future.”6 Meanwhile, Milo Perkins’s 1942 speech about “the nightmare of underconsumption” as the “black plague of the pre-war era” was typical. Markets must be maintained and developed and that meant a world market. The United States was no longer an autonomous economy. “Industrial capitalism cannot survive without those markets.” Evolutionary progress not revolution “can provide an environment in which industrial capitalism can be strengthened enormously. We have to measure up to this job of maintaining full employment.”7 Perkins’s linkage of the mature economy thesis and the demand for

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a full-employment policy was commonplace among New Dealers.8 Senator Wagner and Keyserling and others stressed that the United States was only secure in an ethically just and productive world economy. This public debate also centered on the issues of a postwar slump, similar to the one the country experienced after the Great War. Active foreign markets were essential to prevent such a slump. According to Truman’s Secretary of the Treasury Fred Vinson, “our need for foreign markets will soon be greater than ever before.” The Cold War only increased economic uncertainty. Domestic and foreign policies were often one, flowing from shared institutional and ideological values.9 Significantly, in 1947, when Keyserling joined the Council of Economic Advisers, he stressed the virtues of production as America’s secret weapon. By that time, Keyserling had experienced the World War II fiscal policy and saw the necessity for guns and butter as the Cold War developed. During the Second World War, this concern with the domestic and world economies was especially present in Washington. The head of the Post-War Agenda Section of the U.S. Treasury, in 1943 Luther Gulick, wrote to Congressman Lyndon Baines Johnson in forceful terms about the interrelatedness of foreign and domestic policies. “In fact,” Gulick wrote, “I am convinced that we in the United States of America will not act sensibly outside our borders in world affairs unless we have full employment at home. If we don’t plan for and achieve full employment in the United States we will adopt all sorts of foolish and fallacious international policies and in the process help destroy the conditions of a peaceful world order. All of these things,” Gulick rightly concluded, “are complicated, interrelated, and hard to understand.”10 While Keyserling worked in the Federal Housing Authority during the war, intellectual and policy developments that set the agenda for postwar liberalism were emerging, assuming a third wave of New Deal reform. These developments were in line with Keyserling’s personal and political values. He carried them forward for the remainder of his life. After all, in addition to the two military fronts of the global conflict, a third front of ideology had developed—the shape of postwar American life and politics. At a meeting in Hyde Park in the summer of 1941, New Deal planners urged FDR to endorse an “Economic Bill of Rights” which he accepted; but, he wanted further refinement of the idea. The report was similar to the now famous 1943 NRPB’s report on the future of the American economy, Security, Work, and Relief Policies. It was the American counterpart to the British Beveridge Report which set the agenda for English postwar politics. The New Deal report represented “the ideology of modern American liberalism” or integrative liberalism “in the guise of postwar planning.” It was the domestic counterpart to the vision found in the Four Freedoms speech. This

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report “marked the zenith of both New Deal planning and modern American liberalism”11 which was true but only if the civil rights struggles and the Cold War are ignored and the story of integrative liberalism ended in 1945. World War II changed everything. It was both good and bad for the New Dealers and for their opponents. New Dealers dreamed of a full-employment economy with mass consumption grounded in a rights-based liberalism, the new citizenship of the earlier progressives. This approach owed a great deal to the concept of the polis in classical republicanism. The critics of the New Deal appealed to the nineteenth-century liberalism of the “market” and rejoiced in the Republican (and southern Democratic) Congressional victories of 1944 and 1946. Southern Democrats and Republicans aimed at further dismantling the New Deal.12 Congress shut down the National Resources Planning Board with much enthusiasm, acting to end domestic reform. It was a partial victory at best and one marked by historical irony; for one line of development led from the work of the NRPB to the Employment Act of 1946 and creation of the Council of Economic Advisers, the most prominent context for Keyserling’s contribution to the integrative liberal ideal. Private and public agencies revived an interest in postwar planning for America’s role as a leader in the new world order.13 The mixed economy ideal needed some government input to meet both domestic expectations, full employment, and a secure world order for the United States. Outside the federal government there was concern about the economy’s future. Aware of the public’s concern, the Pabst Brewing Company held an essay contest on American postwar employment and future economic growth. Fifty thousand dollars was the total amount awarded. Announced on December 1, 1943, the contest drew 35,767 entries. The panel of judges consisted of Clarence Dykstra, Wesley C. Mitchell, Beardsley Ruml and A. F. Whine. Herbert Stein, who later served on the CEA during the Nixon Presidency, won the first prize of $25,000 and Keyserling received $10,000 for second place in the contest.14 The important item about Keyserling’s essay was its advocacy of a council of economic experts, to anticipate the economy’s future and shape the proper policy. While many people contributed to the Employment Act of 1946, Keyserling’s suggestion of a Council of Economic Advisers was of singular importance and echoed the century-long progressive argument that experts could and should carry out the will of the people. From 1945 until the end of the Cold War, guns and butter was the policy imperative. Munich and Pearl Harbor were the emotional triggers for the next fifty years. In practical terms the meaning was clear: a strong foreign policy dedicated to a quick response to a sneak air attack of atomic weapons and a willingness and ability to defend American interests and freedom’s interests throughout the planet.

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In domestic politics, an expanded New Deal grounded in the Four Freedoms speech of 1944 meant economic security and personal happiness for all Americans. Although they differed on policy particulars and analysis, Hansen, Keyserling, and others believed that technological development increased economic growth.15 While growthmanship might have bemused some contemporaries and historians, for Hansen and Keyserling the prospect of economic maturity was unacceptable; stagnation meant politically unacceptable underemployment, destroying any hope for reform and the ideals of integrative liberalism. World War II brought significant changes to the American political order.16 Not the least was the Americanization of Keynesianism particularly in its commercial manifestation for the postwar nation. While Keyserling’s political rivals associated him with the social or “left” Keynesians, he always rejected the Keynesian label. Drawn from government service and the academy, social Keynesians were the left wing of the “Keynesian revolution,” often inclined toward significant redistribution of income in the economy. The commercial or military Keynesians carried the day and ultimately reaped the policy benefits. This group on the “right” sought tax breaks and government contracts, with an emphasis on national defense. Briefly, the left Keynesians sought full employment and more equitable distribution goods and services for Americans. The commercial or military Keynesians wanted tax cuts and government contract as the military-industrial complex developed during the Cold War. “The combination of the war’s direct effects on the institutions of government with its indirect effects on state-building, through changes in employment, business confidence, demography, and consumption directed American fiscal policy away from more comprehensive planning and income policies and towards a more limited, conservative public policy.”17 At the same time the military Keynesians denounced the progressive, New Deal tradition of reform calling it imported socialism. Keyserling looked toward Veblen and Tugwell for their particular strand of American institutionalist tradition for personal inspiration. Keynesian thought was “drafted” in the war effort. The induction began early in the twentieth century with the passage of the federal income tax amendment; however, until the war less than six percent of the American public had paid an income tax. The war changed the situation. The federal income tax became the cornerstone of federal revenue. As the long struggle toward free trade continued, a part of the Wilsonian tradition and integrative liberalism, the issues of balanced budgets, “corruption” and Jeffersonian wails about limited government became stage props for the political theater. The Progressive legacy for later reformers such as Keyserling was for the federal government to be a “stabilizing force in society, acting as

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in a neutral fashion to mediate social and political conflict between capital, labor, and rural America.”18 The Great Depression, the New Deal and World War II meant a transformation of the Democratic Party’s historic attitude toward the icon of the balanced budget and deficit fiscal policy.19 “The postwar fiscal discourse included a domesticated Keynesianism that was framed in terms of moderate government intervention to ensure the health and stability of the corporate capitalist economy.”20 Keyserling’s critics repeatedly blasted him as a mindless spender of federal dollars while they enjoyed the fruits of this new fiscal order. Such are the ironies of a life in American politics and public service. On this issue, “it is, perhaps, not going too far to say that Franklin Roosevelt and the Great Depression [and the Second World War] changed the country’s perception of the proper scope of the federal government’s responsibilities as much as Abraham Lincoln and the Civil War had changed the country’s perception of itself.”21 Meanwhile, Keyserling in his post-1953 life would be a liberal critic of this new economics brewed from a domesticated albeit commercial Keynesianism and the policy imperatives of the Cold War.22 Supported by the Roosevelt Coalition, this New Deal-World War II political order endured until the Vietnam War as the debate over the governmental budget deficit increased. The result was the political decline of integrative liberalism. This political cultural argument over deficit spending challenged the New Deal legacy and domestic reform’s future. It troubled Keyserling’s career. For example, Keyserling was a significant contributor to the policy of NSC68. Keyserling defended the economic possibilities in that document for future domestic reform. At the same time, he also recognized that NSC68 was a potential contribution to reactionary or commercial Keynesianism. Keyserling worried deeply about such a policy mutation. As a pragmatist, he was nevertheless proud of his work on the NSC68.23 Over the years of the Cold War this reactionary Keynesianism gained institutional and political support as national defense increased the federal deficit. Keyserling’s counter tactic argued that a liberal fiscal policy was correct and best for the American economy. The New Deal experience suggested that balanced growth was politically best. All social classes should share in economic growth. Keyserling rejected the American Keynesian analysis, the need for large and committed long-term deficit spending; it carried too much cultural and emotional baggage for him. From the issue of economic maturity to the range of necessary institutional change in American life, Keyserling took issue with the Keynesian prescription. For personal, political and ideological reasons Keyserling’s attitudes toward the legacy of Keynes were complex. Keyserling had supported Senator Robert Wagner’s demand for a massive

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government spending program; but, this “raw Keynesianism” did not result from Wagner’s and other senators’ reading The General Theory, published in 1936. In some form massive public works went back to ancient Rome.24 “So, I am not Keynesian, I am myself,” Keyserling concluded.25 Ironically Keyserling’s biggest concern was the popular argument that Keynesianism was foreign, un-American, indicative of the New Deal’s assumed European intellectual and ideological origins. Such right-wing organizations as the American Liberty League in the 1930s constantly claimed that the New Deal and all its works were totally un-American. After he left public office in 1953, Keyserling witnessed the demise of integrative liberalism. An ideological sea change occurred in American life. The rise of the New Left, the increase in anti-war sentiment, the social issues of civil rights and feminism (policies characterized by the opposition as un-American), and the rise of market conservatism led to the eclipse of the New Deal heritage. One noted result was Keyserling’s resignation from the Americans for Democratic Action in 1968 as that organization moved toward diplomatic isolationism and re-distributive domestic politics. The electoral result was the repeated defeat of the Democratic Party in presidential elections until the moderate, the “New Democrat,” William Jefferson Clinton, won in 1992. Despite a brief moment of legislative triumph, the passage of the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978, Keyserling and integrative liberalism were destined for defeat. As supply side economics and market place rhetoric carried the day, both Republican and Democratic presidents ignored the act. THE COMPLEX RELATIONSHIP BETWEEN KEYNES AND KEYSERLING The intellectual relationships between Keynes and Keyserling existed in various subtle ways, possibly personal and political. Keyserling did not approve of the American Keynesians. The fact that he never returned to government service after 1953 undoubtedly had some bearing on this opinion as did his life-long running battle with academic economists.26 In discussing Keynes and his legacy two points are significant. First, Keynes opposed the radical collectivism of totalitarian planning and secondly, the Keynesian policy was central in the United States “only from the 1960s onward.”27 John Maynard Keynes was born in a different time and place, far removed from Keyserling’s South Carolina. Keynes’s parents were solid middle-class Victorians.28 After a private school education, Keynes graduated from Cambridge University. His interests were artistic and dramatic; his social instincts

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and behavior were aristocratic. For a time, when he worked in the British Treasury, he was an active member of the Bloomsburg group.29 As did other members of this Edwardian generation, Keynes agonized throughout the Great War. Medically unable to serve in the military action, Keynes spent the war in London. As a member of the British delegation to the Versailles Treaty Conference, he was alarmed and disgusted by the swinish policies of the Allies. His pen and wit salvaged the Versailles Treaty. His criticism was generally ignored until the Great Crash of 1929. Meanwhile he wrote on current events, and successfully played the stock market. In time he was happily married and drifted away from the Bloomsburg group. He generously supported the arts from his profits in the stock market. In 1936, Keynes published The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace), his most famous and significant work, creating the field of macroeconomics. The debate over the book’s meaning has not decreased in the years since 1936; contemporaries and historians have argued over the text’s meaning for public policy and the economic future.30 Several facts are necessary to understanding Keyserling’s response to Keynes and Keynesianism. Keynes had an essentially aristocratic Victorian view of a good society, a happy society. A job constituted social happiness for it placed each person in his place in the ordered society. Little concerned about an individual’s social advancement with changes in status, Keynes did not think of social mobility as Americans did, “the self-made man,” etc. Injustice to Keynes “meant arbitrary changes in settled social arrangements, such as produced by changes in the value of money.”31 His viewpoint was a cultural paternalism created out of historic English feudalism and modest social adjustments to modern industrial life.32 Of course, Keynes believed that men of character and enterprise could and would rise in the ordered hierarchy of employments. Meanwhile high employment for all members of society would avoid the social misery associated with the business cycle. Unlike the post-World War II Keynesians (most of them being Americans) with their goal of economic growth, Keynes was of the opinion that a generation of capital accumulation would solve all future problems.33 The difference was clear. While he was a person of generous impulses and kindnesses, Keynes still had an aristocratic attitude regarding the lower orders. The American Keynesians, however, claimed a democratic concern for the material improvement of all citizens, particularly those below the economic salt. The Americans wanted an end to poverty. One can doubt that Keynes ever thought in such a utopian manner. Keynes believed that labor, organized and otherwise, would or should be thankful for full employment resulting from Keynesian policies and therefore

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not push for inflationary wage increases. In a word, the state co-opted organized labor during the New Deal. According to latest scholarship by labor historians, something similar happened in the history of the Wagner Act and later labor legislation. Keynes, Keyserling, FDR, and New Dealers often “talked past” each other. For many of Keyserling’s contemporaries, Keynes’s policies were unclear. On occasion necessity rather than intellectual choice impacted the historical narrative. The vague but kind words exchanged by Keynes and FDR while meeting in the White House on May 28, 1934, demonstrated how two great men could intellectually misunderstand each other. While no record exists of their conversation, their personal judgments of each other were pleasant and positive.34 The meeting’s significance faded as Roosevelt turned to foreign policy matters. As World War II successfully ended the Great Depression, Roosevelt never really understood Keynesian thought. Neither ideas nor the detailed elements of public policy held Roosevelt’s interest. Some of FDR’s advisers had read the General Theory but Roosevelt was never a book reader. “By 1938 Roosevelt was moving more or less in a Keynesian direction but while he may have grasped the idea that spending could be a good thing, he probably never grasped the counterintuitive conception that deficits were a good thing.”35 In the year that Keynes died and the Employment Act of 1946 was passed, the task was maintaining employment generated by the war effort. Thanks to the work of Alvin Hansen, Walter Heller, Paul Samuelson and other economists, the Keynesian prescription gradually gained in appeal. In the heady days of John Kennedy’s New Frontier, the Englishman’s analysis became politically acceptable. Eventually Richard M. Nixon claimed that all Americans were Keynesian in economic policy. It was, however, a hybrid creature, shaped by the interests of the power elite as described by C. Wright Mills.36 Powerful social-economic interests manipulated some elements of Keynesian thought in advancing their agenda for the fighting of the Cold War. Of course, Keyserling was unemployed after 1953. He was an outsider. The intellectual and ideological understanding of Keyserling’s and Keynes’s thought must stress origins. They came to economics from different experiences. For Keyserling, the major ideological influence was the institutionalism of Rexford Tugwell, Simon Patten, and Thorstein Veblen As Keyserling’s professor of economics at Columbia, Tugwell emulated Veblen. He was critical, cynical, sardonic, and distant. Having studied with Simon Patten, Tugwell argued that abundance was the natural condition of modern industrial order but that the “laissez faire” market engaged in limiting production.37 With planning and adjustment to their industrial environment, men and nations could establish an efficient and just economy that represented all

William Keyserling and son Leon in New York City, 1935.

Herbert Keyserling and brother Leon circa 1935. All photos courtesy of Keyserling family papers, gift of Herbert and Harriet Keyserling, Special Collections, College of Charleston Library, Charleston, SC.

Leon, his uncle Mark, father William, and brother Herbert, November 1936.

President Lyndon B. Johnson with all of the chairmen of the Council of Economic Advisers up to 1964. Keyserling is second from the left.

Leon Keyserling as college graduate 1928.

President Harry S Truman with his Council of Economic Advisers, (from left) Leon Keyserling, Edwin G. Nourse, and John D. Clark.

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interests. Their heroes were the engineer, the technician, and the consumer. They wanted economic balance, cooperation not class struggle and Marxian rhetoric.38 This orientation of institutionalism was a major source for Keyserling’s integrative liberalism. In that narrow sense, Keyserling could be considered a left-leaning Keynesian dedicated to some aspects of Keynesianism as the rationale “for broad social change whose primary objective was the reorganization of society to the advantage of the underprivileged.”39 Given the political context (New Deal, World War II, and the Cold War), Keyserling sought policy change with the rhetoric of production and economic growth. Tugwell appreciated the under-consumption theories of John Hobson, a British economist. For both Keynes and Keyserling, Hobson’s theories provided a justification for the central government to manage increased demand.40 New Deal policy makers on occasion drew on intellectual institutionalism. Tugwell’s institutionalism had limited appeal in the depression decade. It was pushed aside by the corporate emphasis of the first New Deal. After 1937 the issue of foreign policy further reduced its influence. “After all, perhaps postwar liberals celebrated the New Deal for having discovered solutions to the problems that required no alteration in the structure of capitalism; for having defined a role for the state that did not intrude it too far into the economy. In earlier years many liberals had considered the absence of significant institutional reform one of the New Deal’s failures.”41 After leaving the Columbia University faculty, Rexford Tugwell became a member of the Brain Trust, serving in various administrative posts during the Roosevelt years. The second term of the Roosevelt Administration marked Tugwell’s declining influence on FDR. On occasion, up to a point, Keyserling’s ideas, for all their Tugwellian origins, had a Keynesian flavor. After all, employment was the keystone of reform; a massive governmental public works program was the logical means to the desired end of increased public purchasing power. If that general policy position was the essence of Keynesianism, it remains a highly debatable point. For example the “pump priming” concept attracted the usual ideological disputes. The major point of The General Theory was clear. The market economy had no automatic means, such as Say’s Law, to ensure and sustain full employment, a significant political objective; therefore the state’s responsibility was the management of overall spending to realize full employment.42 Language, even the language of economics, employs figures of speech. As metaphor, pump priming suggested that a bit of water, i.e., government expenditure, would restore the economy toward full employment. Pump priming had appeal, the image of agricultural pumps drawing water. Beside that, government spending had a reckless ring to it. Deficit spending also had a negative connotation.43

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Both Tugwell and Keyserling wanted economic expansion achieved in cooperation with private business, expressed as institutional cooperation. Keyserling did not endorse the Keynesian policy of deficit governmental financing with minor institutional adjustments in the political economy. The policy was not the New Deal. The Keynesian presence was meager in the 1930s.44 As is well known, Keynesian policy precepts flourished in the 1960s. Keyserling did not walk in those halls of power. In later oral history interviews and scholarly conferences Keyserling maintained that “the economic policy grew basically not out of Keynesian economics, but out of the New Deal experience with what the federal government could do.” The New Deal was not static. “Between 1933 and 1939 FDR’s planners gradually expanded the scope and nature of national planning, eventually instituting what might be called a Third New Deal between 1937 and 1943 centered on fiscal economic policy and executive-branch reorganization that moved beyond the Second New Deal of 1935–1937, which emphasized social welfare and labor reform.”45 Keyserling remained committed to Tugwell’s vision of institutional reform. For many people, Keynesianism meant compensatory spending, offsetting the threat of underemployment; but, for Keyserling the mature economy thesis was always a possibility. He struggled against the concept all of his professional life. Keyserling wanted government/business cooperation, taming the business cycle. Keyserling’s quarrel with Keynes was over the best means to the mutually desired goal of full employment, the goal of all democratic and industrial nations in the post-1945 world. It also meant closer governmental supervision of the economy. Keyserling agreed that the New Deal combined progressivism, bits of Catholic social reformism and elements of Keynesian economics, creating a truly national politics and citizenship, labeled here as integrative liberalism.46 As progressive intellectuals Tugwell and Keyserling believed in economic management. Critical of wasteful competitive individualism, they endorsed a larger role for the expert in American life, as did other progressives. The public policy experiences of World War II supported their belief.47 After 1941, Keynesianism took on a reactionary aspect. Characterized by deficit spending in the name of national defense, the Cold War culture depended upon acquiring and maintaining government contracts. As a result of their war experiences, businessmen responded to this form of Keynesianism, politically sensitive to the social need for maintaining high aggregate demand.48 In and outside of Congress, “market” conservatives accepted and denounced these policies while they profited from them. For the business critics of the New Deal, the Cold War provided the best of all possible worlds—government contracts and government-sponsored research while denouncing the welfare state.

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Since 1932, conservative critics claimed that “Europe” spawned the ideas and agenda of the New Deal. Both the Great Depression and Keynesianism also came from the same “corrupt” source—Europe.49 All were equally un-American and all were equally influenced by Communism. Of course, Keyserling did not accept this analysis. The underlying assumption was that the United States was the exception to world history. At different times, both radicals on the Left and market reactionaries have celebrated as well as denounced exceptionalism.50 This emotional/ideological connection, in addition to the end of the freesecurity concept, explained the context of the Cold War and the ultimate fate of integrative liberalism. Since the hallmark of conservatism in the last fifty years was anti-communism,51 Keyserling stressed the “American” origins of reform in an effort to capture the patriotic center of American politics. Beginning early in the twentieth century, growing throughout the 1960s, and aided by the Vietnam conflict, the adversary culture developed mass appeal. The adversary culture rejected the middle-class ideals of the good society, integrative liberalism.52 The complicated cultural consequences were scattered across the ideological landscape. In this emotional/ideological context, the Keyserling/Keynes relationship was understandable. Over the years journalists such as Frank Kent and others wrote about the dark influence that Keynesianism had over the New Deal. Their criticism was out-of-joint time-wise. Keynesianism bloomed in the 1960s not twenty years earlier. The relationship between Keynesianism and the New Deal was less sinister and simpler than is usually understood. Keynes had a more moderate approach to reform than did Keyserling. Keynes wanted to “tame” the business cycle; but, he realized that it could not be stopped. Using interventionist fiscal policy, government experts made that objective possible. Markets could and would function under governmental regulations.53 The means of “deficit spending” to moderate the business cycle shocked and alarmed the “conservatives.” They saw the policy as reckless and immoral.54 As an institutional economist, Keyserling was more “radical.” He wanted significant changes in the economy and public policy. As a government employee, his remarks about his ideal economy were few. His task was more practical with a particular concern for public policy. As a service intellectual, he knew that elections were significant in one’s professional career. The next election could turn him out and so it did in 1953. In his retirement, as the head of his “think tank,” he wrote constantly about the formulation of his ideal economy.55 Keynes’s policy approach and governmental service were different; as a member of the Establishment, his income and status were secure. The nature of the British Parliamentary system and his role as adviser provided additional status protection. The British political culture was different from that of the United States.

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Despite the differing historical and social contexts, Keyserling and Keynes shared a world view. They were joined in Kant’s Kingdom of Ends but they disputed the means to that destination. The basic intellectual connection was their allegiance to progressivism and the ideal of integrative liberalism. It was a search for community using the state as the means for continuity. It was also support of a civil society buffered by the events of economic depression, war, and the uncertain future of traditional values. They did not share specific policy details. As the twentieth century unfolded, liberals in both England and the United States questioned the market’s automatic efficiency in the allocation of rewards and punishments. Were the individual members of an emerging industrial society generated by a democratic ethos truly served by a market mentality? Advocates of integrative liberalism such as Keyserling and Keynes rejected the Marxian analysis of exploitation and alienation, the domain of the Left. They sought the middle way. As integrative liberals they sought a middle way between socialism and laissez-faire policies. Their hopes were not fully realized. Government was more deeply involved in the economy for reasons of twentieth-century history. The state, the polis or the political culture, became a “level playing field” among the contending economic interests or, changing the image, a warlord among the industrial tribes. The New Deal reformed the relationship between the citizen and the State. This transformation originated in the Progressive Era with its moral intensity, scientific knowledge, and personal enterprise. Keynes became an adult in the Edwardian Era where a similar spirit existed. During Roosevelt’s Presidency the label “liberal” described this historic policy of progressive interventionism in the economy and social relationships.56 On March 3, 1926, in The New Republic Keynes wrote, “The political problem of mankind is to combine three things: Economic Efficiency, Social Justice, and individual Liberty. The first needs criticism, precaution, and technical knowledge; the second, an unselfish and enthusiastic spirit which loves the ordinary man; the third, tolerance, breadth, appreciation of the excellencies of variety and independence.” To this progressive statement about the vision of integrative liberalism, also expressive of the Edwardian British political culture, Leon Keyserling might well have replied, “Amen.” THE CONSERVATIVE CHALLENGE Since the essence of integrative liberalism was the search for the middle way, it is now necessary to discuss another defunct economist—Frederick August von Hayek (1899–1992). It was his The Road to Serfdom (1944) that provided

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critics of the New Deal with an intellectual respectability and philosophical depth while members of the earlier American Liberty League merely invoked pathetic and dated Jeffersonianism.57 Keyserling reviewed The Road to Serfdom. Hayek provided ideological support to the later American conservative movement—Reaganism. In writing his significant tract of the times the road for Hayek was long. His place in the history of political economy appears secure since his ideas have attracted “practical men” who invoke the economists’ theories as the basis for realistic policies. Born in Vienna, Austria, Hayek attended the University of Vienna where he studied with and was befriended by such advocates of the laissez-faire market ideal as Eugen von Bohm-Bawerk and Ludwig von Mises. Von Mises’s study of socialism, published in 1922, changed Hayek’s academic career. Socialism was impossible, claimed von Mises; it lacked a price system. By 1927, Hayek was director of the Institute for Business Cycle Research. Two years later he published Monetary Theory of the Trade Cycle which came to the attention of Lionel Robbins. As a result, Hayek served on the faculty at the London School of Economics from 1931 to 1951 when he joined the faculty at the University of Chicago, destined to become an intellectual source for free market thinking. The ideal was the cornerstone for postwar American conservatism. Meanwhile the Economic Calculation, as British press and policy makers named it, pitted Hayek and his allies against Keynes and his supporters. The debate raged across governmental bureaus, academic conferences, academic lecture halls, and journals. Both sides sought the same end; they strongly differed on means. The end was saving liberal democracy from the social and personal destruction of depression and unemployment. A fearful future of totalitarianism was a distinct possibility. In macro terms, the Keynes camp advocated a middle way between the market and state control of the economy. Taking his cue from his mentor, von Mises, Hayek argued that demand management led to socialism and the destruction of individual liberties. The result would be inflation and governmental regulations of the economy, eliminating social improvement. The Second World War helped the general Keynesian cause. For Hayek, the Beveridge Report of 1942, the Labor Party’s blueprint for postwar Great Britain, and the White Paper on Employment of 1944 were fearful indications of economic restrictions in the name of a higher social and cultural good. Hayek’s The Road to Serfdom placed economic collectivism at the center of the political debate. Over the next half-century, his effort paid policy dividends in Great Britain and the United States, providing one source for the conservative revival in both countries. Margaret Thatcher read the book as an Oxford undergraduate. In the United States an abridged edition in The

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Reader’s Digest greatly increased sales for the University of Chicago Press. The book also came to the attention of Leon Keyserling. Meanwhile, on his way to the Bretton Wood conference Keynes read Hayek’s book. Keynes feigned approval with a sharp qualification. While Keynes thought it a grand book, it lacked balance. “According to my ideas you greatly under-estimate the practicability of the middle course. What we want is not no planning, or even less planning, indeed I should say that we almost certainly want more.” Then adding a bit of personal advice, Keynes suggested that Hayek take up “the restoration of right moral thinking.” For “if only you could turn your crusade in that direction you would not feel quite so much like Don Quixote.”58 In 1951 Hayek joined the Committee on Social Thought at the University of Chicago. He had little to do with the Department of Economics. Apparently his personal life was not pleasant and in 1972 he took a position with the University of Freiburg and stayed there until he died in 1992.59 Following his death, his historic reputation grew. His writings, particularly The Road to Serfdom, provided intellectual respectability to the marketplace conservatism known in American politics as Reaganism. As is commonplace in the history of ideas and ideology, irony abounds. Hayek wrote his book in response to the British political situation. He challenged the Labor Party’s desire to create a socialist order after World War II. Hayek recognized the Left’s noble intention; but “the road to hell is paved with good intentions.” Human nature was not an expression of altruism. Governmental institutions eventually became tyrannical, particularly regarding the economy. The Road to Serfdom was an economic argument for nineteenth-century liberalism with its support of limited government, laissez-faire with its assumed free markets. Every page was a critique of twentieth-century history regarding reform and the changing role of the federal government in American life. The irony was that Hayek’s work, which was aimed at the English situation, received its greatest readership and usage in the United States. In no small part because the book’s thesis supported laissez faire, critics claimed that American reform was imported from decadent Europe. As a classic text for the American libertarian right, The Road to Serfdom continued to attract commentary from contemporaries and historians. In accordance with its dedication to “The Socialists of All Parties,” its repeated warning was that all economic planning leads to a totalitarian future; the text was (and is) a vigorous denial of integrative liberalism as developed during the twentieth century.60 For New Deal liberals such as Herman Finer in his The Road to Reaction (Boston: Little, Brown and Company, 1945) Hayek’s attack was wrong-

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headed and out of step with historical developments. Planning was essential in modern society and the State. Hayek rejected such an assertion. Planning “united almost all the single-minded idealists, all the men and women who have devoted their lives to a single task;” however, “from the saintly and singled-minded idealist to the fanatic is often but a step,”61 for political power curtailed economic institutions. Hayek’s book rejected the historic and philosophic basis for integrative liberalism. An analysis of it should clarify the many political, philosophical, policy concerns found in Keyserling’s integrative liberalism. Order was the basic idea. Hayek saw two orders: taxis and cosmos. The former comes from human effort and activities. The latter was a spontaneous order, not the product of a single human will. The taxis order might be potentially totalitarian; although natural human competition would negate the possibility.62 No single economic control such as in socialism and fascism was desirable or necessary. Agreeing with the Scottish moral philosophers such as Adam Smith, Hayek saw human nature as wasteful, lazy, and improvident, but he thought that capitalism had a moral order of freedom and responsibility that challenged people’s inclinations towards the irrational and short-sighted altruism. Hegel’s contributions to the modern world created mischief and misery for true advocates of liberty and freedom. Hegelian thought was critical in the development of integrative liberalism, from its presence in American progressivism to the New Deal and later reforms.63 After all Hegelian thought was the basis of American historicism. Seeing Hegel as the ultra-rationalist, ironically Hayek argued that the glorification of human emotions broke down the restraints of individual reason. “In Hayek’s conception of it, individual liberty is a creature of the law and does not exist outside of any civil society” but the “social order is and must always be a spontaneous order.”64 According to Hayek, the Hegelian notion that all people would be free under the rubric of civic and ethical nationalism was misguided idealism. The tragic twentieth century repeatedly demonstrated that the critical issue was the nature and fate of civil society. This civil society was integrative liberalism’s vital center. Philosophically the road returned to the Hegelian presence in American reform. People wanted universality, a sense of citizenship within the state. Civil society was particularity where one person’s relationship to another was based on self-interest or mutual realization of common needs. Civil society, particularly in modern industrial life, consisted of strangers. The business cycle and an uncertain future of alienation and fear of exploitation only added to the cultural instability. Adam Smith’s commercial spirit was not enough. Hence the interventionist state, created in the late nineteenth century, challenged the market’s social outcomes. Poverty was relative not absolute as

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in the pre-modern world. Economic growth became an ideal of the modern world view. At least since 1776 the end has been clear but the means have always been debated. In the emerging American democracy the poor were not abandoned. Alienation and exploitation were critical issues in United States history. Integrative liberalism offered reformers a vital center. The challenges in twentieth-century reform turned on the loyalty of ordinary citizens and intellectuals.65 Hegelian thought in American reform has found expression in the rhetoric of John Dewey’s progressive democracy and institutional economics. Dewey’s contributions to integrative liberalism were many and well known. He had a strong influence on Keyserling’s Columbia education. Until his death, Dewey served as a public philosopher of American liberalism, advocating integrated liberty and economic security, the welfare state. While a host of continental thinkers introduced their interpretations to America and the emerging conservative movement, Hayek’s work “tied” the New Deal and the welfare state with totalitarianism and the menace of Communism. Dewey was really a democrat in every sense of the word. His instrumental reason expressed a faith that humans in mutual concert could affect a better social order.66 Hayek charged Dewey, “the leading philosopher of American left wingism,” with confusing liberty and power. In a charge repeated countless times since, Hayek argued that in sharing the word “freedom,” liberals and socialists were combining ideological oil and water. “The demand for the new freedom was only another name for the old demand for an equal distribution of wealth.”67 Dewey responded sharply to Hayek’s vigorous support of laissez-faire individualism. Hayek should be ashamed. The Road to Serfdom was “convincing proof that all the evils and objectionable problems Hayek builds on are the products of necessity of social protections against a market economy, but taken piecemeal and rather blindly, because without repudiation of the basic tenets and practices of the market economy and without having a social system developed even in principle to replace the market economy.”68 Dewey was an early contributor to integrative liberalism. After the Great War Dewey argued that human beings were one with the universe (humanistic naturalism) and the right of every individual to have a job and a decent standard of living (basic tenets of integrative liberalism) were essential to American citizenship. Dewey was truly a major builder of the New Republic wherein experts such as Tugwell and Keyserling planned a new order predicated on the public interest.69 In this battle of “defunct” economists over the ideological formulation of liberalism Keyserling wrote a review of Hayek’s book and called it “The Road to Freedom.” Keyserling took a sharp issue with Hayek’s basic contention that all planning led to a totalitarian future. Planning was vital to modern

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life in and outside of government. “Yet, when anyone suggests that the Government as the instrumentality of the whole people should also participate in planning and preparing for postwar prosperity, the warning goes up that we are on the road to serfdom.” For Keyserling, no “fundamental antithesis between freedom and security” existed. All the great proponents of American freedom, Jefferson, Jackson, Lincoln, and Roosevelt also sought a role for government in securing “the economic welfare and security of the people, and none of them refrained from recognition of the need for some governmental participation in this task.” Keyserling interpreted Hayek as supporting a bare-bones welfare state providing a uniform minimum standard of services for all citizens. “The economic policy of Mr. Hayek seems to present to us, in modern dress, the same central problem in our democracy which Lincoln had in mind when he talked about a government strong enough to protect the interests of the people and yet not so strong as to invade their liberties.” Keyserling was generous to his ideological opponent. Two imaginary accounts about the economic future based on the degree of government intervention completed Keyserling’s review. Suffice to say the New Deal/integrative liberal view carried his argument.70 Regardless of Keyserling’s measured response to the publication of The Road to Serfdom, the issue engaged Keyserling’s energies for the balance of his life. In some form or other the community and health of the economy remained a concern during Keyserling’s life and career. Hayek rejected the progressive notion of community and thereby questioned Dewey’s and by extension Keyserling’s integrative liberalism.71 In his writings and his public service Keyserling’s support of integrative liberalism kept him close to some defunct economists. This was true as Keyserling turned to private life in 1953. NOTES 1. This famous quote is in the preface of William Breit and Roger L. Ransom, The Academic Scribblers, American Economists, American Economists in Collusion (New York: Holt, Rinehart and Winston, 1971), a wonderful introduction and guide to these arguments that rages down to this very hour. As previously noted by Barber and Davis, the issue turns on the word “revolution” and the historical lumping and splitting method discussed in the Introduction. The Keynesian revolution had a “three-part interrelated process: a policy revolution, a theoretical revolution and a textbook revolution.” David Colander and Harry Landreth, “Political Influence on the Textbook Revolution: God, Man and Lorie Tarshis at Yale,” Keynesianism and the Keynesian Revolution in America, O. F. Hamouda and B. B. Price, eds. (Northampton, MA: Edward Elgar, 1998), 59. For many scholars writing history and analysis, the word, revolution, has a great deal of appeal.

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2. James T. Kloppenberg, Uncertain Victory, Social Democracy and Progressivism in European and American Thought, 1870–1920 (New York: Oxford University Press, 1986) and Daniel T. Rodgers, Atlantic Crossings, Social Politics in a Progressive Age (Cambridge, MA: Harvard University Press, 1998) provide abundant evidence and analysis that intellectual continuity was present at the birth of integrative liberalism. 3. For context on the famous commonwealth club speech see David M. Wrobel, The End of American Exceptionalism, Frontier Anxiety From the Old West to the New Deal (Lawrence: University of Kansas Press, 1993), 132, 136. A variance on the theme of economic maturity was the fear of technological unemployment. See Amy Sue Bix, Inventing Ourselves Out of Jobs? America’s Debate Over Technological Unemployment, 1929–1981 (Baltimore: The Johns Hopkins University Press, 2000). For a criticism from the left see M. E. Bleaney, Under Consumption Theories: A History and Critical Analysis (New York: International Publishers, 1976). 4. William J. Barber, “The Career of Alvin H. Hansen in the 1920s and 1930s: A Study in Intellectual Transformation,” A History of Political Economy 19 (Summer 1987), 191–205 and W. Robert Brazelton, “Alvin Harvey Hansen: Economic Growth and a More Perfect Society: The Economist’s Role in Defining the Stagnation Thesis and Popularizing Keynesianism,” The American Journal of Economics and Sociology, 48 (October 1989), 427–440 are insightful regarding this development. 5. Patrick D. Reagan, Designing a New America: The Origins of New Deal Planning, 1890–1943 (Amherst: University of Massachusetts Press, 1999), 108. This book provides many examples of the evolution of integrative liberalism during the course of the twentieth century but Reagan does not use the expression. Designing America is a singularly impressive study. 6. As quoted in Alan Brinkley, Liberalism and Its Discontents (Cambridge, MA: Harvard University Press, 1998), 50. 7. Milo Perkins, Commencement Address at Swarthmore College, May 25, 1942. Wallace Papers, FDR Library, Box 81. 8. It was jobs and security. Stuart Chase, For This We Fought (New York: The Twentieth Century Fund, 1946), 16, 29–30. 9. Eldon J. Eisenach, “Progressive Internationalism,” Progressivism and the New Democracy, Sidney M. Milkis and Jerome M. Mileur, eds. (Amherst: University of Massachusetts Press, 1999), 226. 10. As quoted in Reagan, Building a New America, 218. Ideas do count. For example “Gulick’s proposal for an International Development Agency may have been a common influence on both the Keynes and the [Harry Dexter] White plans for postwar monetary institutions, leading eventually to the creation of the International Bank for Reconstruction and Development.” Robert Skidelsky, John Maynard Keynes, Fighting for Freedom, 1937–1946, Volume 3 (New York: Viking, 2001), 549. 11. Reagan, Building a New America, 222. 12. For ideological background see George H. Nash, The Conservative Intellectual Movement in America Since 1945 (New York: Basic Books, 1976) and Brian Waddell, The War Against the New Deal: World War II and American Democracy (DeKalb: Northern Illinois University Press, 2001), 3–4, 49–59, 117–118, 158.

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13. Nash, The Conservative Intellectual Movement, 227, 242. By the mid-1970s, market conservatives saw some merit in governmental planning and hints of mild Keynesian invention in the economy. See Craufurd D. Goodwin, et al, National Economic Planning (Washington, D.C.: The Chamber of Commerce of the United States, 1976). For an analysis of how this situation came to be see the chapter on the 1970s. 14. The Winning Plans in the Pabst Postwar Employment Awards, a booklet in the author’s possession contains information about the contest and seventeen of the top essays. 15. See Bix, Inventing Ourselves Out of Work? for context. 16. Bartholomew H. Sparrow, From the Outside In, World War II and the American State (Princeton, NJ: Princeton University Press), 314–315. 17. Ibid., 153. 18. James D. Savage, Balanced Budgets and American Politics (Ithaca, NY: Cornell University Press, 1988), 159. The Savage volume is an excellent guide to the twists and turns of cultural politics regarding fiscal policy. 19. See Chapter Six, Ibid. 20. Julian E. Zelizer, Taxing America: Wilbur D. Mills, Congress, and the State, 1945–1975 (Cambridge, UK: Cambridge University Press, 1998), 84, 149. In his insightful book, Zelizer, borrowing from Herbert Stein, described how Keynesianism “took hold on the home front in the United States by focusing on tax cuts instead of spending increases and preserving an emphasis on long-term balanced budgets.” Ibid., 149, footnote six. This volume is also a good guide to the bibliography on taxation, forms of Keynesianism, etc. For another view see Roger J. Sandilands, “The New Deal and Domesticated Keynesianism in America,” Economist With a Public Purpose: Essays in Honor of John Kenneth Galbraith. Michael Keaney, ed. (New York: Routledge, 2001), 220. 21. John Steele Gordon, Hamilton’s Blessing, The Extraordinary Life and Times of Our National Debt (Baltimore, MD: Penguin Books, 1998), 128. The political arguments over the deficit are eternal. 22. A typical position for his policies was Keyserling’s booklet entitled Key Policies for Full Employment (Washington, D.C.: Conference on Economic Progress, September, 1962). As noted in the chapter on the Kennedy years, Keyserling was much bolder in economic policies than the Kennedy Administration. 23. Lynn Turgeon, Bastard Keynesian, The Evolution of Economic Thinking and Policymaking Since World War II (Westport, CT: Greenwood Press, 1996), 126. Professor Turgeon is critical of Keyserling’s ideas and questions his motives and political style. 24. John A. Garraty, Unemployment in History, Economic Thought and Public Policy (New York: Harper Colophon Books, 1979) provides an insightful narrative to this issue by relating economic theory to public policy. 25. Oral History Interview with Stephen Goodell, 1/9/69, Page 30, Box 28 Keyserling Papers, HSTL. 26. See Keyserling’s oral history interview in David C. Colander and Harry Landreth, eds. The Coming of Keynesianism to America, Conversation With the Founders of Keynesian Economics (Cheltenham, UK: Edward Elgar, 1996), 215–233. Keyserling died in 1987. The Preface explains the publishing history of this book and why Key-

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serling was numbered among the Keynesians. Colander “interviewed Leon Keyserling both because he was a friend and because Leon’s strong views added some context from which to consider the policy aspects of the Keynesian revolution,” p vii. 27. Robert Skidelsky, The Road From Serfdom: The Economic and Political Consequences of the End of Communism (New York: Penguin Press, 1996), 83, 84. 28. Robert Skidelsky’s three volume biography has been of great benefit in understanding Keynes and his works. Skidelsky has written widely on Keynes and his legacy. The first two volumes are John Maynard Keynes: Hopes Betrayed, 1883–1920 (New York: Viking, 1986) and John Maynard Keynes: The Economist as Savior, 1920–1937 (New York: Viking Penguin, 1994). For the third volume see footnote ten. 29. Ibid., volume two, 10–18. 30. For example David Laidler, Fabricating the Keynesian Revolution, Studies of the Inter-War Literature on Money, the Cycle, and Unemployment (Cambridge, UK: Cambridge University Press, 1999) and Peter Clarke, The Keynesian Revolution in the Making, 1924–1936 (Cambridge, UK: Cambridge University, 1990), take opposite views concerning the uniqueness of Keynes and his revolution. 31. Robert Skidelsky, Keynes (New York: Oxford University Press, 1996), 44. 32. Liah Greenfeld, Nationalism: Five Roads to Modernity (Cambridge, MA: Harvard University Press, 1992), 1–88, provides an interesting context to this statement. “Keynes’s world had been that of the British Establishment at no time more than in the last six years of his life. He was tethered to it by upbringing, inclination, aptitude, language and, above all, by his Englishness.” Skidelsky, John Maynard Keynes Volume 3, 473. 33. Skidelsky, John Maynard Keynes Volume 2, 31–33. 34. This meeting took place during a whirlwind trip to Washington, D.C. Skidelsky, John Maynard Keynes, Volume 2, 504–509. Skidelsky’s observation of Keynes as “so radical in outlook in matters purely intellectual, in matters of culture he is a true Burkean conservative.” John Maynard Keynes Volume 3, 348 echoes the equally complex personality and policies of FDR. 35. William Leuchtenberg, The FDR Years, 226. See also James Tobin, “The United States in a Global Economy,” Franklin D. Roosevelt and the Future of Liberalism, John E. Sears, ed, (Hyde Park, NY: Franklin and Eleanor Roosevelt Institute, 1991), 56. “In fact, Roosevelt was suspicious of deficit spending; in the margins of a book that preceded Keynes’s arguments, he had written, “Too good to be true—you can’t get something for nothing.” As quoted in Daniel Yergin, The Commanding Heights (New York: Simon & Schuster, 1998), 55. 36. The Power Elite (New York: Oxford University Press, 1956) is the classic statement for this view. For a more detailed argument see Michael S. Sherry’s two insightful books, Preparing for the Next War, American Plans for Postwar Defense, 1941–1945 (New Haven, CT: Yale University Press, 1977) and In the Shadow of War, The United States Since the 1930s (New Haven, CT: Yale University Press, 1995). 37. Rexford Tugwell, “Notes on the Life and Work of Simon Nelson Patten,” Journal of Political Economy 31 (1923), 153–208. See also William Trufant Foster, The Road to Plenty (Boston: Houghton Mifflin, 1928) for historical context. 38. Reagan, Designing a New America, 16.

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39. Melvin W. Reder, “Lorie Tarshis: Left-Wing Keynesian,” Keynesianism and the Keynesian Revolution in America, O. F. Hamouda and B. B. Price, eds. (Northampton, MA: Edward Elgar, 1998), 75. 40. David E. W. Laidler, Fabricating the Keynesian Revolution: Studies of the Inter-War Literature on Money, The Cycle, and Unemployment (New York: Cambridge University Press, 1999), 206–208 traces the history of Hobson’s concept in the United States. As the title indicates, Laidler’s book questions many of the assumptions offered in this essay. See Lorie Tarshis, “Keynesian Revolution,” The New Palgrave: A Dictionary of Economics, John Eatwell, et al, eds (New York: Stockton Press, 1998), volume 3, 47–50 for a defense of Keynes’s ideas as a revolution in economic theory and policy. 41. Alan Brinkley, Liberalism and Its Discontents (Cambridge, MA: Harvard University Press, 1998), 60. Brinkley’s scholarship clearly examines the sometimes subtle and sometimes not-so-subtle changes in the New Deal resulting from the war. 42. John Eatwell, “Keynesianism,” The New Palgrave: A Dictionary of Economics, John Eatwell, et al. (New York: Stockton Press, 1998), volume 3, 46. 43. Mario Garcia, “Scientific Communities, Language and the Keynesian Revolution,” Keynes, Post-Keynesianism and Political Economy, Claudio Sardoni and Peter Kriesler, eds. (New York: Routledge, 1999), 237–243. See Leon H. Keyserling, “Pump Priming,” The New Palgrave: A Dictionary of Economics, John Eatwell, ed. (New York: Stockton Press, 1998), volume 3, 1074–1075 for his evaluation of the concept. 44. Theodore Rosenof has written widely on this topic. See his Dogma, Depression, and the New Deal, The Debate of Political Leaders over Economic Recovery (Port Washington, NY: Kennikat Press, 1975); Patterns of Political Economy, The Failure to Develop a Democratic Left Synthesis, 1933–1950 (New York: Garland, 1983); Economics in the Long Run, New Deal Theorists and Their Legacies, 1933– 1993 (Chapel Hill: University of North Carolina Press, 1997). 45. Reagan, Designing a New America, 12. 46. The essays on Progressivism and The New Democracy, Sidney M. Milkis and Jerome M. Mileur, eds. (Amherst: University of Massachusetts Press, 1999) demonstrate the continuity of progressivism with the century-long development of integrative liberalism. Keynes believed that differing rates of economic development among nations meant maintaining sufficient demand and new investment institutions. Skidelsky, John Maynard Keynes Volume 3, 309. 47. See Dan T. Carter, The Politics of Rage (New York: Simon & Schuster, 1995) and Godfrey Hodgson, The World Turned Right Side Up (Boston: Houghton Mifflin, 1996) for informed analysis. For a history of the economist as expert see Michael A. Bernstein, Perilous Progress, Economists and Public Purpose in Twentieth-Century America (Princeton, NJ: Princeton University Press, 2001). 48. See Robert M. Collins, The Business Response to Keynes, 1929–1964 (New York: Columbia University Press, 1981) and Allen Brinkley, The End of Reform. 49. Wayne Cole explored this connection. See his America First (Madison: The University of Wisconsin Press, 1953); Roosevelt and the Isolationists (Lincoln: University of Nebraska Press, 1983); Senator Gerald P. Nye and American Foreign Rela-

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tions (Minneapolis: University of Minnesota Press, 1962). For the ideological developments from the American Liberty League to the “Evil Empire” of the Soviet Union see Donald K. Pickens, “Polis or Market?: The American Conservatives’ Search For Continuity,” Quarterly Journal of Ideology, 21 (June 1998), 85–113. 50. For the shape of the argument see Dorothy Ross, “American Exceptionalism,” A Companion to American Thought, Richard Wightman Fox and James T. Kloppenberg, eds. (Oxford, UK: Blackwell, 1995), 23–25. This book is not the usual reference book; the articles are value laden and are engaging. 51. In an essay dealing with several recent books on American conservatism, Fareed Zakaria, “Whimper On the Right,” The New Yorker, June 5, 2000, 85–90, demonstrated a true understanding of the last half of the twentieth century. An analysis that claims that the Cold War was the source for the public support of governmental intervention and when the Cold War ended so did public support for an interventionist economy. H. W. Brands, The Strange Death of American Liberalism (New Haven, CT: Yale University Press, 2001), x, 18. His thesis is provocative but not convincing. 52. Donald K. Pickens, “The New Deal and the Evolution of Integrative Liberalism,” Canon, 3 (Fall 1995), 8–25. For the progressive origins of this development see Christine Stansell, American Moderns: Bohemian New York and the Creation of a New Century (New York: Metropolitan Books, 2000). 53. Peter A Hall, “Conclusion: The Politics of Keynesian Ideas,” The Political Power, Peter A. Hall, ed., 366. “He [Keynes] had denied that a market system has any automatic tendency to full employment. He had propounded his ‘paradox of thrift’: that in a depression the attempt to save money will make a community poorer, but that a community which invests enough will never be short of savings.” Skidelsky, John Maynard Keynes, Volume 3, 19. For both Keynes and Keyserling employment was more than just a “job.” See the chapter “Keynes’s Legacy” in Volume 3. 54. James D. Savage, Balanced Budgets and American Politics (Ithaca, NY: Cornell University Press, 1988) traces the politics and symbolism in this policy matter. For an earlier account of this historic process see Jonathan Kahn, Budgeting Democracy: State Building and Citizenship in America, 1890–1928 (Ithaca, NY: Cornell University Press, 1997). 55. Two examples were Full Employment Without Inflation (Washington, D.C.: Conference on Economic Progress, January 1975) and Toward Full Employment Within Three Years (Washington, D.C.: Conference on Economic Progress, January 1976). 56. In addition to the discussion in the Introduction, books such as Progressivism and the New Democracy and Designing a New America support James Malin’s contention that the progressive era created contemporary United States. Also FDR developed ideological patronage among the groups in the Roosevelt Coalition and in the process redefined citizenship toward integrative liberalism. Michael Schudson, The Good Citizen: A History of American Civic Life (Cambridge, MA: Harvard University Press, 1999), 182, 229. 57. Donald K. Pickens, “Polis or Market?: The American Conservative’s Search For Continuity,” Quarterly Journal of Ideology 21 (June 1998), 85–113. Given the “against the government” sentiment in American history from the anti-Federalists to

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contemporary rugged individualists, many Americans are de facto libertarians—up to a point. For a more intellectually oriented argument for this position of free market advocate as conservative see Stephen L. Newman, Liberalism at Wits’ End: The Libertarian Revolt Against the Modern State (Ithaca, NY: Cornell University Press, 1984). In Newman’s analysis, Hayek provides intellectual leadership. Over the course of American history, the “statism” of the Federalists made them carriers of integrative liberalism. See Michael Lind, ed. Hamilton’s Republic, Readings in the American Democratic Nationalist Tradition (New York: The Free Press, 1997). Lind’s Introduction is intellectually provocative. It appears he is discussing the evolution of integrative liberalism but he does not use that expression. 58. As quoted in Yergin, The Commanding Heights, 143–144. The Don Quixote bon mot is typical Keynesian wit. This book is an insightful narrative about this war of words, economists and politics. Richard Cockett, “The Road to Serfdom—Fifty Years On” History Today, 44 (May 1994), 11–13 is a good brief statement of the historic issues. Suffice to say, the scholarship on Hayek is massive and ever growing with web sites, conferences, think tanks, etc. Skidelsky, John Maynard Keynes, Volume 3, 168, 284–286, 343, 472 discusses the complex intellectual link between the two thinkers. “The debate between the two on how much governmental intervention is compatible with a free society was never properly joined, because Keynes died. It would have been a battle of giants,” 550. 59. John L. Simon, “Hayek’s Road Comes to an End,” An Internet Obituary, April 13, 1992, from The Independent Institute and Harry C. Veryser, “Friedrich August von Hayek: Requiescat in Pace,” The Intercollegiate Review 28 (Fall 1992), 57–59 are two sympathetic summaries of his life’s work. 60. The Fiftieth Anniversary Edition of The Road to Serfdom provided the quotes. With a new introduction and editing by Milton Friedman and the introductions from previous editions, this edition is a valuable historical document. Theodore Rosenof, “Freedom, Planning, and Totalitarianism: The Reception of F. A. Hayek’s The Road to Serfdom,” Canadian Review of American Studies 5 (1974), 149–165 analyzes contemporary reaction; a more sympathetic evaluation of the book on its fortieth anniversary was Norman Barry et al, Hayek’s “Serfdom” Revisited (London: Institute of Economic Affairs, 1984). Hayek’s book was “high powered intellectual ammunition.” Any position calling on the state to intervene in the economy meant America’s trip “down a slippery slope to slavery.” Aaron L. Friedberg, In the Shadow of the Garrison State, America’s Anti-Statism and Its Cold War Grand Strategy (Princeton, NJ: Princeton University Press, 2000), 51. 61. Hayek, The Road to Serfdom, 61–62. For another criticism of Hayek’s book see Barbara Wootton, Freedom Under Planning (Chapel Hill: The University of North Carolina Press, 1945). 62. Andrew Gamble, Hayek: The Iron Cage of Liberty (Boulder, CO: Westview Press, 1996), 36–37, 39. Norman P. Barry, “The Tradition of the Spontaneous Order,” The Literature of Liberty, 5 (1982), 7–58 is a kindly history of the concept. 63. See Donald K. Pickens, “The Hegelian Context for Progressivism and the Creation of Integrative Liberalism,” Paper presented to the Organization of American Historians, St. Louis, MO, March 30, 2000.

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64. John Gray, Hayek on Liberty, Second Edition, (London: Basil Blackwell, 1986), 61, 26. For brief summary of Hayek’s thought see Cass B. Sunstein, “The Road From Serfdom” The New Republic (October 20, 1997), 36–42 which was a review of Volume 10 of Hayek’s collected works published by the University of Chicago Press. 65. Hannes H. Gissurarson, Hayek’s Conservative Liberalism (New York: Garland, 1987), 81–85 has an insightful discussion about this issue and apparently Hegel questioned the effectiveness of Say’s Law which has been a belief value of market conservatives. See page 85. Schudson, The Good Citizen explains this development over the course of the nation’s history. 66. Ted McAllister, Revolt Against Modernity: Leo Strauss, Eric Voegelin and the Search for a Postliberal Order (Lawrence: University Press of Kansas, 1996), 272. 67. Hayek, The Road to Serfdom, 30. 68. As quoted in Robert Westbrook, John Dewey and American Democracy, (Ithaca, NY: Cornell University Press, 1991), 461. The quote was in a letter from Dewey to Sidney Hook now located in the Hook Papers. 69. Westbrook, John Dewey and American Democracy, 224, 182–183, 455. This issue is still current and choice. See John Gray’s, an admirer of Hayek’s thought, critical review of Alan Ryan, John Dewey and the High Tide of American Liberalism (1995) entitled “Liberal Meltdown,” National Review (June 26, 1995), 58–59. 70. Copies of “The Road to Freedom, A Postwar Approach For America” are located in Rexford Tugwell Papers, Container 12, FDR Library and the Keyserling Papers, Box 17, Truman Library. 71. Alfonso J. Damico, Individuality and Community, The Social and Political Thought of John Dewey (Gainesville: University Press of Florida, 1978), 89, 124 for a brief summary of the community issue as it connected power and liberty in Dewey’s writings.

6 A Liberal in Exile: Keyserling in Eisenhower’s America

Keyserling was actually exiled in three ways. First, and most clearly, Keyserling was “exiled” from Washington, D.C. When the Eisenhower Administration took control of the White House, Keyserling became unemployed for the first time in twenty years. As a result Keyserling established and directed the Conference on Economic Progress, a tax-exempt, non-profit foundation dealing with the economic aspects of public policy. Keyserling used his think tank as an outlet for his views, which he expressed at every opportunity. He also served as a lobbyist, sometimes paid and sometimes volunteered, on behalf of liberal causes that exemplified the New Deal and Fair Deal traditions. While the archives of these activities are not available, newspapers and similar sources lend some light to this aspect of Keyserling’s life. Organized labor played a significant role in his lobbying affairs.1 In the years after 1945, the declining strength of organized labor’s political muscle indicated the waning of integrative liberalism. In 1953 32.5 percent of the labor force belonged to labor unions; however, by 1990 only16 percent of non-farm labor was unionized.2 A second sense of exile for Keyserling came from his often stormy relationships with various Democratic politicians and policy pundits. He was often critical of their ideas and their lack of any alternative policy against the “hold-the-line” Republicans. On occasion, Keyserling exchanged sharp words with his friends such as Arthur M. Schlesinger, Jr. and John Kenneth Galbraith over the future of reform in the Democratic Party and integrative liberalism. Keyserling never held another governmental office. It was a savage blow to his self-image. A proud man, Keyserling never again had true political power. 145

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In a larger context, the first two aspects were parts of the third form of exile. The United States was changing. The long-term success of New Deal liberalism, of domestic reform, and a strong interventionist foreign policy contributed positively to social and cultural developments after 1960.3 This liberalism (more historically accurately called integrative liberalism) created some elements of the welfare state in American political culture. For his part, Keyserling fought the twin fears of economic depression and limited growth with all of his intellectual and ideological weapons. His message was the same for domestic and foreign policy audiences.4 Keyserling remained faithful to the vision of integrative liberalism. At the start of the Eisenhower decade Keyserling had allies in his cause. Events in the next forty years, however, reduced their numbers. As usual Keyserling kept busy. With heavy writing and speaking assignments, he was active until his death in 1987. Given the rapidity of events, the technological changes, and the social upheavals, Keyserling’s comments on Ike’s America were at times prophetic for the next half-century. In the 1950s the lines of combat were clear, the Democratic Party must hold fast to the integrative liberalism of domestic reform and a globalism inherited from Wilson and FDR, legacies from the New Deal and Fair Deal. Keyserling was confident that economic growth and internationalism would carry the day.5 Over the next half-century economic growth appealed to different ideological and political groups. Keyserling used the economic growth issue in an integrative way, appealing to the planned cooperation of government and private agencies, for the common good. In the context of a later historiographical development (the use of the eighteenth-century political theory of republicanism to explain the structure of United States history) he appealed to the classic notion of polis. The crises of economic depression, war and cold war in the twentieth century challenged the polis. The New Deal and its legacy were truly conservative while the so-called conservatives looked toward the market for equity and justice in society. Of course Keyserling drew on his progressive intellectual origins, his formal education, and his New and Fair Deal experiences. His rhetorical means to his policy ideal was an appeal to increase production and to all elements in the economy to work together in a planned and orderly fashion. In the years following 1952, the intellectual tide began running in another direction toward the market. After the disaster of the Vietnam conflict and creation of “entitlements” (a politically sensitive word, indeed), market conservatives with their popular-front allies, the libertarians, began their long march to capture the icon of economic growth for their own agenda. As a central issue economic growth provided the means for the United States to be a middle-class utopia.6

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By the 1990s conservatives were comfortably claiming that economic growth was a public good. They celebrated individual and corporate greed because they created new products and jobs.7 These market conservatives believed that economists such as Leon Keyserling, men and women in the institutionalist tradition with some relationship to the Keynesian orthodoxy, were really committed to reducing income inequality, truly a communist scheme. The truth, however, was a bit more complicated. Keyserling never, at least publicly, advocated any systematic redistribution of income. Few viable politicians or their advisers have taken such a tack. In Keyserling’s situation, this policy suggested a Keynesian assumption of economic maturity and denied the policy possibilities present during World War II and in the later Truman Presidency that in large part provided a blueprint for Keyserling’s vision of the future. His relationship with the Americans for Democratic Action illustrated his belief. While Keyserling and the ADA later split over the Vietnam War and related issues, during the Eisenhower years Keyserling “fashioned the grand design” of integrative liberalism for the organization.8 He was very comfortable in the organization. Liberals were “fighting for the welfare of the people of the United States and the world.”9 His message of economic growth and criticism of Republican policies of “penny-squeezing” was welcomed. He asserted the theme of integrative liberalism for the remainder of his life. In so doing he anticipated the future shape of American cultural politics. For example, the New Deal and Fair Deal legacies were “the main targets of the hate-government campaign, in this effort to undermine confidence in the people themselves, because the government is the people themselves, and in the long run they alone make it a better government.”10 When postwar conservatives claimed that government was the problem not the solution, integrative liberalism’s decline was understandable. Both the ADA leadership and its members believed that a large defense budget and increased domestic programs were both desirable and possible. As Keyserling told a convention of the United Auto Workers and the Congress of Industrial Organizations, “the thing that we should most emphasize in the years ahead is our productive ability as a free people.” He concluded that, “I believe that just as we have increased our productive output since 1950 by more than the total size of our security program, we have not begun to reach the frontier, and never will, of the productive power of the American economy.”11 Keyserling connected his analysis to the sociological change in America since the New Deal. He celebrated the achievements of groups such as Jews who earlier had been excluded from contributing to American life. “The Jew in the New World has been like a player in a great orchestra rendering his singular contribution to be sure, but seeking only the opportunity to blend his

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strain with others in making the American symphony fuller and more beautiful year by year.”12 The figure of speech and its idealism were indicative of his integrative liberalism. In his own fashion, Keyserling was using the themes and issues that marked his earlier career. He continued his endorsement of both guns and butter. The Republicans were operating from a position of bad faith, according to Keyserling. They supported the old notion of a mature economy haunted by the prospect of inflation. Keyserling rejected such negative criticism and thinking. He charged his opponents with hypocrisy. “They would seize a change for the worse in the economic situation as an excuse for not doing the things which they equally said we should not do when the economic system was better.”13 He hit hard at this theme of an economic loss of nerve. “If there is a slight softening in the economic picture next year, it will be brief and mild by any test and it will certainly be less than the prophets of doom have been expecting. I will not be surprised if next year generally is as good as this year.”14 According to Keyserling’s analysis, the Republican fear of inflation was largely self-serving. Keyserling believed that the Eisenhower Administration wanted an “economic slack to eliminate the inefficient farmer and small businessman and keep labor in its place.”15 Such rhetoric was his attempt to hold the Roosevelt Coalition together for the Democratic Party. Keyserling was a partisan but he was not vindictive in the manner of post-Watergate politics. Whatever policy merit Keyserling’s ideas contained, the political reality was clear. The Democrats could not capture the White House. Dwight David Eisenhower was a very popular man, beloved in many quarters, well beyond the ranks of the Republican faithful. His popularity withstood the blows of economic recessions during his second term. In macroeconomic terms Ike’s America was blessed. “In the twenty years following 1948, the American GNP adjusted for inflation grew at the average rate of 4 percent annually. This was the most awesome economic growth ever seen in human history.” The dialectical truth was that the economic and political successes of the Truman and Eisenhower Presidencies contributed to the many cultural shocks of the next forty years.16 The vital center had moved. Slowly during the 1950s and quickly in the next twenty years, a cultural reformation took place, changing rules of civility and social perceptions in its wake. Named by Lionel Trilling as the adversary culture, fueled by modernism and the traditional American distrust of authority, in time this adversary culture swept across the ideological landscape.17 In many respects, Ike’s America was the last best hope of integrative liberalism. To be sure, the United States had many problems in the areas of civil rights and economic justice but given time and courageous leadership that appealed to the better angels of Americans’ nature, the integrative liberal ideal would

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have been more successful. The result might have taken place with a little more social grace and political attention to institutional continuity if the center of the reforms had come from Congress and the state governments rather than the Supreme Court; but the mixed motives of politicians and people make cowards of us all. The middle-class norms of duty and the work ethic as expressed in integrative liberalism were not mere sounding brass.18 This middle-class idealistic reform ended in the last half of the twentieth century. Members of the Roosevelt Coalition moved to the suburbs, away from the city, the historic home of integrative liberalism. Because of this political fact of life, Keyserling often varied his analysis and policy. On occasion he moved from the short range to long-term analysis, claiming that the Eisenhower White House ignored the problems of key industries, such as steel and automobile, and discounted the social need for intra-structure development. While such a program, according to Keyserling, offered the Republicans short-term political gains, the long-term results would be depression and retarded economic growth.19 In an irony that only history can provide, the counter-culture, the adversary culture, did not liberate America but contributed to return of conservatism in presidential politics. In the last decade of the twentieth century no vision existed and it was very unlikely that one would emerge before century’s end. Meanwhile, despite Keyserling’s criticism, Eisenhower wisely worried about inflation and the cost of the Cold War. As expressed in his farewell address, Eisenhower distrusted the military-industrial power elite. In retrospect Eisenhower’s comments were in the same company as Washington’s remarks and Lincoln’s public utterances. Based on time and archival research, Eisenhower’s words revealed a long-held belief; they were not words uttered in a moment of political and personal irritation. Balancing military power with economic capacity, the word “balanced” appeared seven times in one sentence of his farewell address. Eisenhower saw “limited” resources; John Kennedy proclaimed “unlimited” resources, a New Frontier in the American political culture. Whatever its limitations in an actual crisis, the “New Look” in foreign policy, drawing on a greater dependence of tactical atomic weapons, emerged from reduced spending on the defense budget.20 Over the years the economic maturity concept became confused. Various politicians used different versions of the concept. In private Eisenhower told his associates about the dangerous potential of inflation. Eisenhower believed the institutional military establishment to be economically naive at best and selfish at worst. Eisenhower thought that much of defense spending was wasted effort, inflationary in the long run. “This country can choke itself to death piling up expenditures just as surely as it can defeat itself by not spending enough for protection.”21

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As reactionary or military Keynesianism (that is governmental spending for the military to stimulate the economy became the de facto policy of the American government), it was clear that Eisenhower’s insight had true merit. He observed that “someday there is going to be a man sitting in my present chair who has not been raised in the military services and who will have little understanding of where slashes in their estimates can be made with little or no damage.”22 And he was correct. Little wonder, in the larger context of twentieth-century history, Keyserling’s criticism appears mild and possibly at times overstated. Most of the time, Keyserling served as a policy John the Baptist, advocating policies that later would be known as the Great Society.23 Like many New Deal liberals at the time, Keyserling argued that Eisenhower was a captive hero, spouting the conventional wisdom of the big business wing of the Republican Party. The arc of American historiography now celebrates the major achievements of the Eisenhower Administration. As his biographer wrote, “Eisenhower was given far too much credit—or blame— for the character of the fifties.” It was “plain good luck.”24 At the same time a more realistic analysis of his life revealed a worldly wisdom. Well traveled, a professional soldier, author, leader of the crusade in Europe, Eisenhower was no innocent waif, a drifter in the stream of his time. To a remarkable degree he bent the times to his vision which ironically was a socially conservative version of integrative liberalism without the liberal concern about civil liberties and an ideological tolerance for deficit federal budgets. Inflation was Eisenhower’s biggest economic fear. High federal deficits scared him. They might push the nation into a depression. National security shaped his domestic reforms; “when there was no direct Cold War connection on a domestic issue, Eisenhower’s liberalism faded.” As repeatedly demonstrated, a symbiotic relationship between domestic and foreign policies existed around the concept of economic maturity (limits) and growth in the last half of the twentieth century. As President, Eisenhower wanted a sound economy. He was suspicious of excess federal spending by the military or any other interest group. He believed that limits existed in the national economy, an interesting return to the intellectual and political debates about America’s future during the New Deal and World War II. It was the mature economy thesis in new verbal dress. Neither the policy ideas of Kenynesianism nor American institutionalism interested Dwight Eisenhower. Of course, the political reality of the Cold War limited the Eisenhower Administration in its desire for fiscal caution. In a significant way, Eisenhower and his policy advisers were engaging in a Republican version of the debate that the Truman people had regarding the policy implications of NSC68. “The massive retaliation doctrine generated considerable controversy and criticism throughout Eisenhower’s tenure, but

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its budgetary appeal was found in the enormous economic advantage that nuclear weapons enjoyed over conventional forces.”25 The Eisenhower “new look” in foreign policy was also economical.26 Although Eisenhower’s 1958 budget was less than 18 percent of the Gross National Product, the lowest percentage since 1939, he knew that his basic policy, “a proper defense posture included a healthy economy and a balanced budget.” The political argument over a balanced budget expresses the highest form of political theater in American politics. Its origins were in the New Deal when the debate whirled around the issues of economic maturity and necessity of recognizing limits.27 As noted earlier this same issue emerged during the ideological struggle between Edwin G. Nourse and Keyserling in the Truman Administration. While President Eisenhower was personally unaware of Leon Keyserling, his White House staff knew him and his policies. Soon after the election in 1952, Allen H. Schwartz, lawyer and self-styled “amateur economist,” wrote to Eisenhower encouraging him to seek a wider range of economic advisers. Mr. Schwartz suggested that Arthur Burns, newly appointed Chairman of the Council of Economic Advisers, and the President have a talk with Keyserling and Robert Nathan about “keeping the economy high and strong.” In his reply, Administrative Assistant to the President, Gabriel Hough, was both tactful and coolly ironic. “The President wants you to know that in dealing with this tremendously complex and vital matter of economic stability and growth he wants to mobilize opinion of every useful kind.” He concluded that, “I am sure that the views of Mr. Keyserling and Mr. Nathan are known to Dr. Arthur F. Burns, Chairman of the President’s Council of Economic Advisers.”28 Indeed Burns and the Republican leadership knew Keyserling’s opinions and they were not impressed. In fact, before a joint meeting of the American Economic Association and the American Statistical Association, broadcast on both radio and television, Hough debated Keyserling about the Republican plan to create more jobs by lowering taxes. Keyserling argued that it was 1929 again regarding Republican economic policy.29 Years later, Sherman Adams wrote, “Among the Republican leaders in Congress the Council of Economic Advisers had fallen into disrepute as a guide for executive action.” In the transition from Truman to Eisenhower, there was strong speculation that the CEA would be abolished or reduced to a single member. As Adams recalled, “The unpalatable theories of Leon Keyserling were too fresh in their recollection to stimulate any enthusiasm for restaffing the agency.”30 Hough convinced Adams and the President to keep the three-member format. And Burns, a professor of economics from Columbia University, was named chairman.31

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Eisenhower’s advisers took Keyserling’s criticism seriously. Their policy was holding the line against any inflationary increase in government spending. Professor Neil Jacoby, the Dean of School of Business Administration at the University of California, Los Angeles, reported on a one day seminar/debate with Keyserling at Indiana University. According to Jacoby, Keyserling’s main issues were the “questions of proprieties in the composition of our gross national production. He [Keyserling] argued that full employment was not enough—the nation also needs the right composition of production.” Keyserling’s point was a familiar one. For years he had argued for balanced growth. On occasion Keyserling suggested that corporate profits could be too high for the long-range health of the economy. While Jacoby found the balanced growth idea extremely strange, it was not the major issue. The major contention was inflation versus full employment, the classic issue since 1945. Jacoby “suggested that during the decade the most important problem of economic stabilization might well be maintaining the purchasing power of the dollar.” Keyserling countered that “unemployment had been and would continue to be the major economic problem in the United States.” According to Jacoby’s account Keyserling thought that a little inflation helped the economy. Jacoby responded, “On this matter of inflation, I believe the audience was on my side.”32 Earlier, Arthur Burns thought that Keyserling’s published article on the Economic Report of 1953 was mild but that an administrative response was in order.33 While the Eisenhower Administration and Keyserling went their separate ways, the incident illustrated the basic position of macroeconomic policy for the remainder of the century. Keyserling was optimistic about the 1954 economy. He did suggest however that government housing projects be started at the first sign of economic down turn, which indicated his life-long concern with planning.34 Economic growth, his hallmark as an economist, remained his constant theme. Keyserling’s constant insistence on an expanding economy was important for providing guns and butter. The policy was equally attractive in a viable plan for racial integration in the United States. As economic growth provided continuity with the New and Fair Deals, it was also vital to an effective policy of racial desegregation. Both his governmental policies and social philosophy meant equality as due process, equality before the law, and as equality of opportunity. Unfortunately, the cultural wars of the next forty years discounted Keyserling’s form of economic class politics. Keyserling’s public disputes with Arthur M. Schlesinger, Jr., and John Kenneth Galbraith indicated intellectual and policy changes among liberals. In The New Republic, Keyserling and Schlesinger and Galbraith exchanged polite but differing concerns about the course of liberalism, past and future.

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The particular issue was the extent of America’s role in world politics. For Keyserling foreign economic policy was the “dominant concern of American liberalism.” Other concerns were civil rights and civil liberties, followed by improvements in citizens’ economic lives and upgrading of public services in American society. Schlesinger rejected the charge of any isolationism in his analysis or policy suggestions. As with the liberals of his generation Schlesinger (as well as Keyserling and Wagner) linked domestic and foreign concerns into one program. No integrative liberal such as Keyserling could take exception to Schlesinger’s comment that “the Eisenhower Administration has not earned the right to preach freedom and opportunity to the world because it has not fought for these things at home.” For, as Schlesinger concluded, “It was the New Freedom which validated the Fourteen Points, as it was the New Deal which validated the Four Freedoms.” It was an historical assertion that Keyserling fully supported.35 While Schlesinger and Galbraith held a special creative leadership role for most intellectuals, Keyserling was not so easily convinced. Keyserling pointed toward Senator Robert Wagner as a true Democratic reformer, combining intellectual abilities and political understanding, forging a successful political career in reform. Unlike Schlesinger and Galbraith during the 1950s, Keyserling believed that the political task was creating an effective means for reform and economic growth. The message was sound but the potential audience was not listening. The message was clear: civil rights and civil services. The general, widespread poverty made these issues difficult because the political will to attack the condition was missing. The “vast impoverishment of our public service” relative to the national wealth hampered effective reforming efforts. That large self-identified element called the middle class, heirs to the New Deal and Fair Deals were not interested in further reform. Unfortunately the Democrats did not have a candidate or leader with the stature of Dwight David Eisenhower. Keyserling turned his criticism about reformers being at ease in the “New Jerusalem” toward The Affluent Society, written by fellow Democrat and friend John Kenneth Galbraith. Keyserling believed that Galbraith ignored the nation’s severe and deep pockets of poverty that John F. Kennedy rhetorically exploited in the presidential election of 1960. Galbraith’s solutions were better public health and education programs; economic growth per se was not the complete answer. Since economic growth was vital in 1953, Keyserling believed that no event or policy had modified that imperative in the last five years—not even Galbraith’s fears that full employment might encourage inflation. Keyserling defended his support of economic growth because it would bring more resources into public use.

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Pressured by Galbraith’s criticism that Keyserling’s insistence on economic growth was an end in itself, Keyserling responded that the United States must not be “afraid to face the full economic and moral meaning of abundance for ourselves and for others.” This moral meaning of abundance was of course the basis for an integrative liberalism that held the hope that all citizens could prosper. Keyserling believed that low rates of growth were “injurious to public programs.”36 Galbraith also suggested that a national sales tax on goods and services such as food was the policy answer. Keyserling was shocked. “We can find better ways to expand our domestic public services than to take more pennies in sales taxes from the depleted pockets of the poor.” Without massive economic growth Galbraith’s policy was not operative from Keyserling’s point of view. “It is perfectly clear that an expansion of public services such as education and health, while urgently desirable, cannot—in the absence of economic growth—remedy the truly massive problems of private property.”37 In later editions of his book, Galbraith moderated his verbal cleverness about poverty’s origins and its minor status on the reform agenda. Regardless of Keyserling’s criticism, Galbraith did effectively note that two kinds of poverty existed. One came from lack of opportunity in health, education, or self discipline. The other existed as “whole islands of people living in rural or urban slums.” In both types of poverty a strong political will was needed to attack the complex issues.38 The later policies of the Great Society dealt with both kinds of poverty. Both Schlesinger and Galbraith believed that qualitative issues must form the liberal agenda. Keyserling was incensed. For him, a low growth rate had a regressive impact on many Americans by keeping an unjust income distribution pattern in place. “Furthermore, all historic experience shows that a low rate of economic growth has a regressive effect upon income distribution, while a high rate of economic growth has had a progressive effect.” Keyserling saw in new technology the means to affect a fairer and more efficient distribution of economic growth’s benefits.39 Keyserling was never specific about such things as the electronic and computer revolutions, his suggestion regarding technology indicated his basic support of the institutionalism of Tugwell, Veblen, and Patten. Keyserling, however, paid a price for his public criticism. As a member of the Democratic Advisory Council sub-committee on economic policy, Keyserling wrote a lengthy position paper endorsing greater government spending to spark economic growth. Galbraith prevented its release. He and Schlesinger worried that increased government spending would increase inflationary pressures. Both men were concerned about Kennedy’s image as a big spender.40 This issue was discussed during the election of 1960.

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While there is no documented explanation, Keyserling never returned to government when the Democrats took control of the White House. Keyserling’s personal thoughts about his political exile were equally vague since he rarely put his personal thoughts on paper. In a larger context, Keyserling’s dispute with Galbraith was a dress rehearsal for the politics of the next three decades: the nature and cause of poverty, the relationship between inflation and the public desire (and political will) for full employment. Meanwhile Keyserling and Schlesinger exchanged views on foreign policy. Keyserling disputed Schlesinger’s claim that under Khrushchev’s leadership the Soviet Union was changing for the better. Despite some positive signs of cooperation, for Keyserling the containment policy was sound because the NSC68 analysis was still valid. The globe’s future still turned on the military, diplomatic and political competition between the United States and the Soviet Union. Not until late in his life did Keyserling question the basic foundations of Cold War liberalism, the linking of domestic reform and interventionist foreign policy. The flow of historical events, as indicated in the general positions of the Democratic and Republican parties during the Cold War, allowed very little chance for new ideas for a politician and none for a service intellectual such as Keyserling. Uncomfortable with the reactionary (that is just governmental spending without any thought about social or policy considerations) Keynesianism that developed in American politics from the Eisenhower to the Reagan Presidencies, Keyserling believed some form of a political economy of growth was necessary if the integrative liberal ideal was realizable. Given the existing political culture, any significant departure was impossible, as hindsight demonstrated. The private Keyserling matched his public stance in criticizing policy positions not in harmony with the economic growth basis of integrative liberalism. In a not-submitted-for-publication note to The Progressive Keyserling reacted sharply to a comment by Fred Rodell. “While I agree to the need for an improved foreign policy and improved vindication of the Bill of Rights, it is in my opinion perfectly preposterous to define these two issues as in themselves a liberal problem.” The reason was clear. Keyserling argued Rodell’s analysis suffered from the same shortsightedness as the Galbraith and Schlesinger positions. “There are still domestic economic problems and issues of utmost importance, and further if these are not pressed forward, the country is certain to neglect also the two issues which Mr. Rodell states.”41 Time and time again Keyserling saw the need for bold action based on a desire for full employment public policy commitment. Future prospects were not promising. Nevertheless, he created a shadow budget, the “National Prosperity Budget” that held out the promise of full employment. This “National

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Prosperity Budget,” later called the “Freedom Budget,” became a favorite device in Keyserling’s crusade for a policy for economic growth. In the Eisenhower years, the concept appealed to the Americans for Democratic Action until the Vietnam conflict rearranged the dynamics of American politics and life. Citing his own statistics, Keyserling claimed that from 1947 to 1953 the GNP grew at an average rate of 4.7 percent but from 1953 to 1956 the average was 2.9 percent. The ADA argued that by 1965 an acceptance of Keyserling’s prescriptions would increase the American standard of living by 50 percent. Only the Republican tight money policy driven by their fear of inflation kept this vision from being realized, according to Keyserling. “Despite some superstitions about the national debt, this debt helps greatly to stabilize the national economy if it is well managed, and its size should be measured in terms of the size of the whole economy,” claimed Keyserling.42 Of course by the time of the Reagan Presidency, reactionary Keynesianism had pushed the national debt to such a number that a general paralysis of political will prevented liberals from advocating new or expanding old programs of reform. By that time the conservative (market) elements in the Republican Party set the public agenda. Keyserling spent the latter half of the Eisenhower years developing his arguments for a “National Prosperity Budget.” His efforts anticipated the next thirty years of political struggle over policy issues. Celebrating the wealth of the nation, Keyserling was a long-range optimist if the wealth was put to good use. Americans, he wrote, “tend to neglect the high priorities of human well being which alone can infuse material wealth with moral content.” He argued that four particular areas needed a renewed concern by the government and the public. These four areas were cornerstones of integrative liberalism. They were low income and poverty, equable farm policy, education, and housing. These commonplace issues were part of a larger vision. “Instead of doing just enough to avoid depression, we must do the best our free society and our unique economic system give us the unparalleled opportunity to do.” With positive commitment the United States could win the Cold War and increase the good life at home.43 The origins of his thoughts were in the Employment Act of 1946 and he anticipated the Humphrey-Hawkins Act of 1977. It was a philosophy that Keyserling developed all of his life from his early days in Beaufort to his final years in the nation’s capital. Unfortunately subsequent events did not turn in Keyserling’s direction, but his analysis is worth examining for the insights it provides on the course of integrative liberalism. As an institutional economist (my label not Keyserling’s), he appealed to the country’s better nature on non-economic grounds. Integrative liberalism was the glue he used in constructing his vision. “Living in a democracy, our

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economic achievements will never get far ahead of our common aspirations, understandings, and cooperation.” While rejecting an economy of equal results (the policy goal of the later New Left), Keyserling recognized inequality. “In a free society, some will always do better than others; but as a united people, we will never do well enough, unless the great goals [such as the idealism of New and Fair Deals] which can hold us together take precedence over the smaller differences which tend to hold us apart.”44 Keyserling urged increased consumption in the spirit and letter of the Employment Act of 1946. He wanted a national budget that would meet common needs and wants in a “full employment and full production program for all.” The economic and social events since 1945 meant that the economic tree must be nourished by increasing services and goods.45 One major interest group in the 1950s responded to Keyserling’s words in understandable fashion. From early in the 1950s until the Vietnam War, Keyserling was “the leading spokesman on economic matters for the ADA,” as the organization moved squarely behind his philosophy of growth economics. Issues over guns or butter were therefore solved.46 In his analysis written for his Conference on Economic Progress, “Toward Full Employment and Full Production,” Keyserling argued that a “National Prosperity Budget” must be on the agenda for the Democrats in 1960. Challenging Eisenhower supporters and fellow liberals such as Schlesinger and Galbraith, Keyserling constantly agitated for his ideas, blending agitation and analysis, with scholarly reflection and political speech making.47 He worked to return the Democratic Party to the White House; but he would not return. Larger and later developments in politics and personalities limited Keyserling’s effectiveness in advancing his ideas.48 Policy, philosophical considerations, and personalities were blended together. In March, 1955, a group of Senate Democrats pushed for a twentydollar tax cut for each taxpayer. The House of Representatives had passed the bill which included an additional twenty-dollar cut for each dependent. Secretary of the Treasury George Humphrey attacked the whole proposal as “phony.” The next day, Keyserling appeared before the Senate Finance Sub-committee on behalf of the tax reduction. Before his testimony, the partisan sparring took place among the committee members. When Keyserling testified, he was moderate in tone: not all the tax policies of the Truman Administration were correct nor were the Eisenhower tax polices always wrong. Keyserling’s immediate concern was the “severe slack—highly excessive idleness of our full productive capacity.” The suggested tax cut was “inadequate.” Unemployment, however, “much too high, has risen recently, and promises to rise further this year unless government exercises the appropriate role in helping to stimulate the economy.” With Senators Harry Byrd

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and Walter George voting with the seven Republican members, all tax relief amendments were rejected by a nine to six count.49 The issue was clear according to the New Republic. Secretary of the Treasury Humphrey rejected the idea as he claimed it would reverse the “successful trend of the Administration during the past two years in cutting the deficit and working toward a balanced budget.” Keyserling’s reply was sharp. “The central question of tax policy, therefore, is whether tax reduction should be used to stimulate consumption. In my belief, it most assuredly should.”50 In the same issue of the New Republic he suggested that a major recession was unlikely in the coming year. The issue was still a politically unacceptable level of unemployment. Keyserling’s solution was in line with the objectives of the Employment Act of 1946. His critics saw only deficits and inflation ahead if Keyserling’s ideas were accepted.51 He repeatedly predicted a stable economy.52 His concern always remained the political consequences of unemployment. As the press reported, the policy battles often demonstrated the issues of language. The cultural aspects of Say’s Law came to the foreground. Hence the National Association of Manufacturers advocated a program for full production and increased productivity not the creation of artificial purchasing power by the government as pushed by Walter Reuther and Leon Keyserling. To the NAM their ideas meant inflationary government spending. They were an “economic menace.” Full production and increased productivity would save American prosperity and the free enterprise system.53 This incident was typical of the public debate in the Eisenhower decade. The interesting point is how during the remainder of Keyserling’s life this “market” came to be politically acceptable while Keyserling’s “polis” solution became defensive. The reason, obviously, rested in the course of events from 1960 until Keyserling’s death. In this situation, Keyserling argued against an early manifestation of “supply-side” economics with its constant sub-text of inflation and governmental interventionism. Keyserling’s critics charged that his program resulted not in “full employment, as enjoyed in the last twenty years of the twentieth century, but in hyper-employment, where there are more jobs than people.”54 He disputed the Federal Reserve Board’s action in tightening credit as destructive of the housing industry.55 As the decade came to an end, it was clear that Eisenhower was still politically very popular. The question for Republicans was how to use his popularity for political gain without his presence. In any event, Democrats faced a difficult task of removing the Republicans from the White House. No longer engaging Keyserling in public debates and disputes, members of the Eisenhower White House privately discussed Keyserling’s ideas.56

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NOTES 1. For example, Keyserling was named economic consultant to the Farmers Union and he often spoke before union conventions such as the International Union of Electrical, Radio and Machine Workers, C.I.O. and the Canadian Confederation of Labor where he urged his message of economic growth. New York Times, September 13 and 19, 1953. For an insightful account of liberalism’s changing nature see Kent M. Beck, “What Was Liberalism in the 1950s?” Political Science Quarterly, 102 (Summer 1987), 233–258. 2. Michael Elliot, The Day Before Yesterday, Reconsidering America’s Past, Rediscovering the Present (New York: Simon & Schuster, 1996), 135. For an early and kindly evaluation of working-class Americans as something more than a group of “Joe Six Packs” see Richard Cracks, Pursuing the American Dream, White Ethics and the New Populism (Garden City, NY: Anchor Books, 1997). This defining of populism and its social membership became politically important as the idealism of integrative liberalism was challenged by the events after 1960. It is a theme explored in later chapters of this study as organized labor began losing political muscle particularly in presidential elections and politics. Michael P. Federici, The Challenge of Populism, The Rise of Right-Wing Democratism in Postwar America (New York: Praeger, 1991) explodes the historical and ideological roots of this political decline and frustration of an important element of the Roosevelt Coalition in the Democratic Party. 3. In office or out, Keyserling still believed that guns and butter were possible, really necessary for America. See his “The Economics of Survival,” The New Republic, November 2, 1953. For the remainder of his life it was a policy imperative for him. For an evaluation of this change in American life and public policy see Michael Bourne, Our Country, The Shaping of America From Roosevelt to Reagan (New York: The Free Press, 1990), 199–201. 4. His speech before the National Economic Conference for Israel was typical of this position. New York Times, September 28, 1953. 5. For an important contrast of how the forces of change and status quo were expressed see Charles Alexander, Holding the Line (Bloomington: Indiana University Press, 1967) and David Halberstam, The Fifties (New York: Villard Books, 1993). 6. See Daniel Yergin and Joseph Stanislaw, The Commanding Heights, The Battle Between Government and the Marketplace That is Remaking the Modern World (New York: Simon & Schuster, 1998) and Donald K. Pickens, “Polis or Market?: The American Conservatives’ Search for Continuity,” Quarterly Journal of Ideology, 21 (June 1998), 85–113. 7. For example see Paul Craig Roberts, “Who Did More for Mankind, Mother Teresa or Mike Milken?” Business Week (March 2, 1998), 28. The piece is fashioned from the legacies of the American Liberty League’s claim that the New Deal and its progeny were “at least” communist-inspired. 8. Steven Gillon, Politics and Vision, The ADA and American Liberalism, 1947–1985 (New York: Oxford University Press, 1987), 112. While its narrative only goes to 1960, Clifton Brock, Americans for Democratic Action: Its Role in National Politics (Washington, D.C.: Public Affairs Press, 1962) is informative.

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9. See Keyserling’s speech before the Roosevelt Day Dinner, January 26, 1952, The Progressive Inc. Record Microfilm Edition, 1977 Reel 9, P82-5418 Wisconsin State Historical Society. 10. Keyserling’s address to the UAW-CIO International Education Conference, April 4, 1952. Americans for Democratic Action Papers, 3/5 Box 36, Wisconsin Historical Society. 11. Ibid. 12. See his speech, “The New Frontiers of Human Progress,” before the Meeting of the Tercentenary Committee, New York City, April 12, 1953. Box 19 Leon H. Keyserling Papers, HSTL. 13. Keyserling’s address to the UAW-CIO International Education Conference, April 4, 1952. 14. New York Times, September 30 and November 8, 1953. 15. Wall Street Journal, August 9, 1956. 16. James T. Patterson, Grand Expectations, The United States, 1945–1974 (New York: Oxford University Press, 1996) and David Halberstam, The Fifties (New York: Villard Books, 1993). 17. David Burner, Making Peace With the Sixties (Princeton, NJ: Princeton University Press, 1996) has a very good bibliography. 18. Three excellent papers presented at the Ike’s America Conference, October 4–6, 1990, at the University of Kansas, were instructive on these points. They were “The Uneasy Alliance: Dwight D. Eisenhower and the Conservative Republicans,” “Domestic Liberalism and the Republicans: Eisenhower and the Public Welfare,” and “Wilbur J. Cohen and the Welfare State in Ike’s America.” 19. Leon Keyserling, “Good Times in ’54 but . . .” New Republic, January 4, 1954. 20. Michael Sherry, In the Shadow of War, The United States Since the 1930s (New Haven, CT: Yale University Press, 1995), 192, 235. 21. As quoted in Halberstam, The Fifties, 616. 22. Stephen Ambrose, Eisenhower, The President, Volume II, (New York: Simon & Schuster, 1984), 225. 23. See for example, “Eisenhower’s Program for America,” New Republic, February 8, 1954. 24. Ambrose, Eisenhower, The President, Volume II, 425. 25. Dennis S. Ippolito, Uncertain Legacies, Federal Budget Policy from Roosevelt Through Reagan (Charlottesville: University Press of Virginia, 1990), 105. From 103–109, Uncertain Legacies provides a good summary of how budgetary considerations contributed to policy positions which the Kennedy people exploited as a gap in the United States’ national defense in the election of 1960. 26. Michael J. Hogan, “Foreign Policy, Partisan Politics and the End of the Cold War,” The End of the Cold War, Its Meaning and Implications, Michael J. Hogan, ed. (Cambridge: Cambridge University Press, 1992), 240. James D. Savage, Balanced Budgets and American Politics (Ithaca: Cornell University Press, 1988) provides an historical context for the symbolism of balanced budget rhetoric. 27. Joan W. Sloan, Eisenhower and the Management of Prosperity (Lawrence: University Press of Kansas, 1991) is an excellent study of Eisenhower as an economic

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thinker and policy maker. Ambrose, Eisenhower, The President, Volume II, 115, 116, 389. 28. Date of letter is December 19, 1953, in General File 1173, Eisenhower Presidential Library, Abilene, Kansas. 29. See New York Times, December 28 and 29, 1953. 30. Sherman Adams, Firsthand Report, The Story of the Eisenhower Administration (New York: Harper & Brothers, 1961), 155. 31. For a contemporary summary of Burns’s success as Chairman of the CEA see the Wall Street Journal, November 14, 1956, at the time of his resignation. 32. See the correspondence between Neil H. Jacoby and Sherman Adams from June 30 to July 8, 1955, discussing Keyserling’s ideas. Eisenhower Papers, General File 126 I Eisenhower Library. 33. General files 149-C, Feb. 8, 1954. For an indication of this concern see the correspondence in OF 72-E, OF Box 356, and OF 414 of the Eisenhower Papers. 34. Joseph A. Loftus, “Washington Sharpens Anti-Depression Tool,” The New York Times, January 10, 1954. 35. The Keyserling quote is from his article, “Eggheads and Politics, New Republic, October, 27, 1958, 14, 15. Schlesinger’s quote is on page 19 of the November 10, 1958 issue. 36. “Leon Keyserling on Economic Expansion,” The New Republic, November 17, 1958, 16–17. 37. The quotes in this paragraph are from Gillon, Politics and Vision, 126. 38. For an indication of Galbraith’s presence in the academy and politics see Myron E. Sharpe, John Kenneth Galbraith and the Lower Economics (White Plains, NY: International Arts and Sciences Press, 1974) and Charles H. Hession, John Kenneth Galbraith and His Critics (New York: New American Library, 1972). 39. Keyserling’s final words on this incident were in the New Republic, November 10, 1958, 16–17. Bernard Sternsher, Rexford G. Tugwell and the New Deal (New Brunswick, NJ: Rutgers University Press, 1964), 495 has a bibliography of magazine articles that covered this incident. 40. Arlene Lazarowitz, Years of Exile: The Liberal Democrats, 1950–1959 (New York: Garland, 1988), 150–151. 41. For Keyserling’s relationship with the editorial staff of The Progressive see “The Progressive Papers, Inc.” Reel 32, P82-5440 and 35 P82-5444 in the Wisconsin Historical Society Library, Madison, Wisconsin. 42. Leon H. Keyserling, “The Gaps in Our Prosperity,” published by the Conference on Economic Progress, September, 1956, 84. 43. Leon H. Keyserling, “For A National Prosperity Budget,” The New York Times Magazine, March 25, 1956, 12–13. 44. Leon H. Keyserling, “The Gaps in Our Prosperity,” 87. 45. Leon H. Keyserling, “A National Prosperity Program for 1955,” February, 1955 published by the Conference for Economic Progress. 46. Gillon, Politics and Vision, 104, 116. 47. For examples see The Pittsburgh Press, January 29, 1954 and the New York Times, February 27, 1955.

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48. For accounts of his activities see The New York Times, May 28, August 9, September 8 and 9, 1956. 49. See the New York Times, March 1 and 2, 1955. Apparently Keyserling wrote the minority report for the Finance Committee Democrats who favored the tax relief. See Wall Street Journal, March 4, 1955. 50. New York Times, March 14, 1955 issue. 51. See Business Week, March 5, 1955, 28–29. 52. See the New York Times, April 23, 1955. 53. New York Times and the Wall Street Journal, May 25, 1955. 54. Business Week, March 12, 1955. The article critical of Keyserling’s program was entitled, “Boiling-Point Economics.” 55. Wall Street Journal, November 29, 1955. 56. For example, see Box 500, March 16, 1959, Office File 106 of the Eisenhower Papers and Box 107, January 27, 1956, of the Arthur Burns Papers in the Eisenhower Presidential library.

7 The Sixties: The New Deal Legacy and Integrative Liberalism’s Future

The sixties were a disaster for integrative liberalism and any chance that Keyserling would return to government service. The two subjects were related. The historical context was ripe with irony. As people worried about an atomic exchange between the United States and Soviet Union, the popular culture absorbed an adversary culture, the roots of which were in the early twentieth century and clearly visible by the late 1950s.1 In its inception, the adversary culture was restricted to intellectuals and writers, as Virginia Wolfe’s now familiar comment about 1910 indicated. By 1965 historical change made alienation a growth industry in American life. For most Americans, the Beat Generation, the Counter Culture and the Adversary Culture, as outlined in Lionel Trilling’s writings, melded into one project: outraging middle-class sensibilities and ideals. As the years passed widespread outrage became the norm at least on television, profoundly affecting all aspects of American life and government.2 From its progressive and New Deal origins, integrative liberalism meant a popular trust in the federal government, providing domestic security and protection from foreign foes. Non-government institutions also contributed to this middle-class ideal, a basic assumption throughout much of America’s past. As the welfare state expanded and American military and diplomatic presence increased throughout the globe, trust in American institutions declined.3 The distrust spread and by the end of the twentieth century it created a crisis in integrative liberalism. The civil rights movement was historically necessary for the realization of integrative liberalism, a major element in the nation’s highest ideals. Both the civil rights movement and the anti-Vietnam war protest hastened the women’s 163

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liberation movement which claimed an equal moral position in the emerging political culture. The New Left, part of the popular front, saw a basic flaw in American life and politics; the United States was really Amerika, Kafka’s nightmare.4 Keyserling and other supporters of integrative liberalism believed that guns and butter solved the basic issues of American politics because the essential structure of American life was good. Working-class youth suffered the highest casualty rate in Vietnam; meanwhile those who did not fight identified themselves as victims and believed that only they “truly understood it [that is the fatal flaw of middle-class America, elitism], and that they had an unlimited moral claim on the resources of the guilty majority.”5 Later after the Nixon, Ford, and Carter Presidencies the Reagan Administration projected a mirror image of that same fatal flaw. Regan said that an unethical minority of “welfare cheats and liberal sob sisters” directed foreign policy and frustrated the ethical righteousness of the American majority. The cultural changes of the 1960s ultimately contributed to the election of Ronald Reagan and a shift in political perception. Reacting to these complex historical and sociological trends, Keyserling’s loyal support of integrative liberalism came at a cost. For a decade that began with high hopes for Keyserling, the end was electoral and ideological despair. Richard Nixon assumed the presidency in 1969. The twilight of integrative liberalism was upon the land. By 1960, Keyserling’s public life had taken on a certain routine. As an expert he offered his advice about current government policies and the economy’s future. As a former Chairman of Council of Economic Advisers, his testimony before congressional committees was newsworthy. Speaking before several groups and organizations, he also was a lobbyist usually for groups historically identified with the Roosevelt Coalition and the Democratic Party. His Conference on Economic Progress kept his name and ideas before politicians and policy makers. Keyserling’s message was growth; but later events, personalities and policies raised the question of what kind of growth? And by what means? In some respect his growth policy was cautious for sound historical reasons. Few Americans envisioned a systematic redistribution of income toward the poor, although the distribution upward toward the wealthy in the later 1980s (and in the twenty-first century) was politically acceptable. Appealing to voluntary cooperation or a commonwealth of work, Keyserling’s term for integrative liberalism meant the significant reduction of poverty in the sixties. The newly elected Kennedy Administration was also committed to economic growth, “getting the country moving again.” Wilsonian globalism was in need of revision; foreign policy (often a projection of domestic issues) had to be

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updated to achieve economic growth.6 Calling on corporate America, the Kennedy policy sought unity in fighting the Cold War, in providing guns and butter. “The approach echoed Keyserling: more for everyone, with no significant redistribution of income.”7 Kennedy may have echoed Keyserling, but he never found a place for Keyserling in his Administration. The reasons were a mixture of personal preference, image making and policy differences. What began as a political courtship between Keyserling and Kennedy turned a bit harsh as the years passed and Keyserling remained outside the Administration. His disappointment was not just personal. It had an ideological edge, revealing the tension between them regarding their approach to Keynesianism. As early as 1952, Keyserling had contact with John Kennedy. Over the years Keyserling had sent his publications to the ambitious and politically attractive politician.8 During the 1960 presidential race Keyserling served on the Democratic Advisory Council and conducted the “Charleston Conference on Area Development” as a campaign event. In December after Kennedy’s narrow victory, Keyserling sent the President-elect a significant document in the context of integrative liberalism. The document put forth ideas that Keyserling had voiced in the past and would continue to defend until his life’s end. The title was instructive: “Full Economic Growth and How to Achieve It With Special Stress Upon the Role of National Leadership (Prepared for consideration by the President-elect).” In twenty-six pages of the confidential memo, Keyserling’s Committee of Economic Progress generated his statistics. Keyserling argued about the challenge of Soviet economic growth that meant “within reason, we [the U.S.] can grow at whatever rate we want to” (p.10). Citing the Employment Act of 1946 as his mandate for a bold program (p.14), he maintained, “We cannot come out first in this race by rationing scarcity instead of sharing abundance.” (p.10) These ideas and rhetoric were now standard in Keyserling’s agitation for policy changes. His approach to abundance in terms of his governmental experience and hopes for the future revealed some interesting assumptions. “The sensible enlargement of the work program of the Council of Economic Advisers as a staff arm of the President, does not mean that any part of this work should be available to the Congress or the general public except in accord with Presidential decision” (p.19). This suggestion came from a dispute between Keyserling and Nourse in the early years of the CEA. The memo assumed that a position for Keyserling in the Kennedy Administration was a distinct possibility. It was not to be. Regardless of this personal aspect, the document also indicated that Keyserling rejected a Keynesian fiscal policy for ideological reasons. And he urged “complementary private and public action,” the same message of cooperation

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he supported in the Truman years. Keyserling urged that the Kennedy CEA prepare a budget for Kennedy consideration.9 Keyserling’s advocacy was a contribution to the larger enterprise of defining the national purpose, a project originating during the last years of World War II. The publisher of Life Magazine, Henry Luce, claimed that the next hundred years was the American Century. While Luce and other moderate Republicans were generally unhappy with the New Deal and the Fair Deal, the Truman Administration had developed the basic policy for the Cold War; therefore moderate (or Eisenhower) Republicans joined a consensus of internationalism and collective security. On historical reflection, the domestic political culture determined political party position because of the Red Scare and the genuine fear of an atomic exchange with the Soviet Union. The Kennedy Administration was never truly committed to domestic reform; foreign policy was the glamor activity. Time and time again regarding the emerging civil rights movement and the renaissance of feminism, President Kennedy demonstrated caution regarding politics and policies. The reality check of the Cuban Missile Crisis called for a reassessment of American foreign policy. After the tragedy in Dallas, Johnson wanted a Great Society of domestic reform but the political situation provided sharp limits. Foreign policy imposed the limits on the issue of guns and butter.10 The Kennedy presidential campaign was successful but the close election revealed the political wisdom of putting Lyndon Johnson on the ticket. Both aspects were important in the evolution of integrative liberalism and the arc of Keyserling’s public life. This latter aspect was expressed in the public discussion of America’s national purpose. From the time of Henry Wallace’s The Century of the Common Man and Henry Luce’s The American Century, the debate transfixed intellectuals of all ideological shades. “Coming on top of the victories over the Axis and the Great Depression, American leadership in the United Nations, in postwar reconstruction, and in the containment of Communism gave a sense of success and confidence in keeping with the prospects of an American Century.”11 And after eight years of apparent inaction from the Eisenhower Administration, it was time to move the nation. But where? And how? Arising from the latter years of the Eisenhower Presidency was a vague public perception that the Soviet Union was leading in the struggle for the hearts and minds of the world’s population. The cultural politics of the Soviet Sputnik meant an unsettling mood regarding the effectiveness of American educational institutions.12 In November 1960 the Eisenhower Administration released Goals for Americans, a report from the President’s Commission on National Goals. While personalities and ideals differed (after all John F. Kennedy was not Richard M. Nixon); a certain unity existed.13

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The report contained many truisms of the Cold War era. “To identify freedom as the American mission, to construct the national purpose as international in scope, and to relate domestic goals to the primary global Cold War goal was simply to reassert what had been said and said again.”14 While some conservatives groused about too much governmental spending, some liberals endorsed it as a validation of Kennedy’s New Frontier and support for his ringing pledge to maintain the ramparts of democracy at any price. The national purpose was a global one. By the decade’s end, a sea shift had occurred. The major philosophical casualty was integrative liberalism and during the 1960s Keyserling continued to be exiled from government service. To be sure, some success was achieved in this decade, mainly in the critical area of civil rights. This change in the life and the institutions of the United States was both necessary and desirable; however, the Vietnam War added to the confused struggles for a just America. The decade was a Greek tragedy. As such it contained a large element of hubris among liberals that combined “overestimating one’s strength, overestimating public tolerance for change, and pushing too hard.”15 In behalf of the liberal cause, domestic reform and interventionist foreign policy, the Kennedy and Johnson Presidencies were responding to certain movements such as civil rights and women’s liberation that had been on the reform agenda for some time and came from outside Washington, D.C. The growing public mistrust of government meant a decline of integrative liberalism. It also meant Keyserling’s losing his audience for the economic growth message. Class and generational elements became more significant as government shifted from being the solution to being the problem, according to the later supporters of the Reagan Presidency. A key development was the “departure of the intellectuals, and with them the intellectual underpinnings of and elan of reform.”16 Their departure meant the rise of the neo-conservatives who were often reforming liberals disenchanted about how certain policies such as the Vietnam conflict and domestic reform had been resolved. In large measure it was another phase in the many-sided debate about the relative merits of government and the marketplace in realizing the just society that had been going on since the late nineteenth century. From the Great Depression to the end of the 1960s, the tide ran toward the governmental solution. After that time, the marketplace seemed to be the dominant presence as events “conspired” against integrative liberalism and its spokesman Leon Keyserling.17 By century’s end, heirs to the New Deal order were disappointed by the turn (or the dialectic) of history. The source of this disappointment was the rise of reactionary or military Keynesianism. A quiet but significant militarization of American life took place in the last fifty years of the twentieth century.18

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More than he ever knew, Keyserling was right not to identify himself as a Keynesian. Keyserling’s thought and analysis were brilliant and insightful but the fate of the American style of Keynesianism was not a beautiful destiny. In 1960 hopes ran high among those who identified with the Roosevelt legacy. Despite “gaps” in the national defense and a soft economy, Kennedy’s style suggested that America would move in a politically attractive fashion, holding fast to a legacy of progressive reform while seeking containment of the nation’s foreign enemies. In brief, integrative liberalism appeared poised to move beyond the new frontier. Long-range changes, however, contributed to integrative liberalism’s demise rather than its advancement. From 1960 to 1977, the Gross Domestic Product grew at an average rate of 3.2 percent. As the service economy grew, the political presence of organized labor declined and a startling new redistribution of wealth was underway. By the 1980s, one percent of the population owned about 35 percent of all assets, up from a century low of 23 percent in 1950.19 The Gross National Product percentage used for national defense increased sharply from 9 percent during the Eisenhower Presidency to 13 percent under Kennedy and Johnson.20 Keynesianism became an “American” ideal but not with Keyserling’s endorsement. “Ironically, the arms race brought about a level of public expenditure far exceeding that envisioned by the stagnationists, but for purposes of national defense considered by many to be more legitimate and less threatening than the social programs advocated by the liberals.”21 Nevertheless, until the reality check of the Vietnam War, Keynesianism provided the hope of economic growth (jobs). The first eight years of the decade “marked the high point of Keynesianism, offering proof that the economy could be fine-tuned through macroeconomic management and the fiscal tools of taxation and spending.”22 As usual, economic expansion solved or delayed many problems about the economy. “The tug between domestic programs and militarism would continue for the rest of the decade, but for now the contest was not too severe as the economy began to recover.”23 Keyserling continued his personal campaign to be a member of the Kennedy Administration. In a friendly letter to Clark Clifford, he complimented Kennedy on his economic wisdom regarding growth. Keyserling believed that several of his recent publications and the future president’s thinking were in harmony. “It has been very heartening to me personally, that Senator Kennedy has made the central theme of his campaign talks the theme of economic growth and the building of American power which I have been almost ‘agitating’ all over the country for so many years, through so many vehicles of reaching the public.”24 Typical of one such vehicle was Keyserling’s “National Prosperity Budget” that urged a policy of public welfare and private improvement. While the

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article was in general agreement with Kennedy’s campaign positions, there were hints of Keyserling’s future discord with the new Administration policies. “We can neither win admiration nor influence other peoples by conquering space while we neglect these problems on earth,” said Keyserling. And Keyserling rejected the image of a race in every military and political situation regarding the Soviet Union. “It would be far more mature for us to stop thinking that we are in a ‘race’ at all, and start being true to ourselves.”25 Keyserling meant these words. He worked hard for Kennedy in the campaign of 1960. Speaking, debating with various GOP economists, granting interviews, Keyserling was committed to the Democratic ticket. At the same time he maintained a heavy speaking schedule in the drive for the bonds for Israel.26 Publicly he dismissed any desire to return to governmental service with an observation that “Twenty years is enough.”27 Keyserling was too modest; for he really wanted a return to government. It did not happen. Clark Clifford and John Kenneth Galbraith apparently thought that the former Chairman of Truman’s Council of Economic Advisers was too much of a “spender.” No other factors and motives have surfaced in the historical record. Early in 1961 Kennedy’s economic policies disappointed Keyserling. Although well intentioned, the policies were too meager to realize full employment. Conservative and reactionary columnists such as Holmes Alexander argued that the economist and the president were two peas in the same ideological pod. This was inaccurate. Keyserling expressed disapproval of the president’s cautious treatment of the recession in 1961, for Kennedy had underestimated the extent of national unemployment. Arguing that the country had been in a recession since the end of the Korean War, Keyserling urged a consumption-oriented problem. The distinctions between Keyserling and the new Democratic Administration were clear in Keyserling’s analysis.28 By March Keyserling stated in a private letter to President Truman that “the new Administration is hardly distinguishable from the Eisenhower Administration.” The issue was the tight money policy. Using the history of Democratic presidents, Keyserling believed that Kennedy’s tight money program denied the president’s party identity.29 The real concern for Keyserling was 7 percent unemployment. It was unacceptable. The time for full recovery was politically too long, according to Keyserling.30 Encouraged by Walter Heller and his Council of Economic Advisers and supported by John Kenneth Galbraith, President Kennedy began a move toward an openly Keynesian solution to the sluggish economy. For nearly two years, Heller and company encouraged stimulation via a tax cut and a modest budget deficit. The political and therefore the symbolic quality of the issue was considerable. By the time of Kennedy’s speech to the New York Economic Club in 1962, the tax cuts expressed JFK’s Keynesian policy. “The

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best means of strengthening demand among consumers and business is to reduce the burden on private income and the deterrents to private investment which are imposed by our present tax system.”31 Kennedy’s program did favor the rich. According to Keyserling 45 percent of the tax reduction went to 12 percent of the richest taxpayers. To some liberals, the policy was reactionary; however, the corporate community strongly endorsed the plan.32 Kennedy’s emphasis on investment to the comparative disadvantage of consumption displeased Keyserling. Investment was not the issue; the “lack of markets for ultimate products” was the crux of the matter.33 In terms of macroeconomics, Keyserling’s criticism was over the means of presidential policy not the ends. Charging the Council of Economic Advisers with being “surcharged with timidity,” Keyserling saw more years of an economic slow down.34 Kennedy’s economic policy did not match his campaign rhetoric; on every side, Keyserling saw the need for bold government intervention. It was not forthcoming. “We are going to have a large amount of revenue for both domestic and overseas purposes and cutting of taxes in this situation is not the best form of economic policy.”35 For various reasons Kennedy was not fully committed to extending the ideological legacy of the New Deal to more Americans. As the Keynesian cloth was cut to fit the military model for the enhancement of the military-industrial complex, a tax cut was politically a more appealing solution than increased governmental expenditures for domestic programs. Increased public investment “would have required an ideological commitment to social welfare liberalism which was lacking in Kennedy and the New Frontier.”36 From early in 1961 until Kennedy’s assassination, Keyserling referred to Kennedy’s economic policy as “academic nonsense.” Press reports of his speeches illustrated his theme; the Administration’s policy was “too weak to restore anywhere near capacity production and full employment.” Privately Keyserling called for the Administration to direct “a study of the economics of disarmament to the Executive Committee of the ADA.” By February 1962, he believed that Eisenhower and Kennedy both ignored the lack of demand sparked by 10 percent unemployment and that the Administration’s proposal for an eight percent investment credit was a “tax bonanza” for business.37 Keyserling also argued that this renewed emphasis on a tax cut increased the imbalance between consumer demand and the potential output of the economy. The former Chairman of the Council of Economic Advisers in the Eisenhower Administration, Raymond J. Saulnier took issue with Keyserling’s criticism. For Saulnier, the trade deficit created future economic woes. Coupled with an increase in serving the debt created by the deficit, a squeeze on credit would restrict economic growth. Over the years Saulnier’s analysis and

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Keyserling’s advocacy became a familiar theme in testimony on the economy before congressional committees.38 Not all of Keyserling’s time and energy were spent in public debate over government policy. As head of his think tank, the Conference of Economic Progress, he brought an element of politics to all the group’s projects.39 Early in 1962, there was a public discussion over a wave of railroad mergers. Sides were quickly drawn. Advocates for the merger argued that market conditions were right and that the railroads were privately owned. Property owners should have the right to sell or merge, as they wished. On the other hand, Keyserling used arguments that revealed his support of integrative liberalism. While preserving competition was important, national needs, prosperity and national defense were more important and so was the maintenance of employment. Keyserling recognized that any industry might expand and decline but “public policy should not permit workers to be thrown out of jobs unless there were job opportunities elsewhere.” In the long run, Keyserling realized that mergers were a distinct possibility; in the short run, he offered a solution in harmony with the precepts of integrative liberalism. President Kennedy or the Interstate Commerce Commission or Congress should halt all mergers. Secondly, someone should appoint a commission to study and report on railroad and other transportation problems from a national policy perspective. “They need to be dealt with in the framework of our over-all national problems, in view of the unavoidable inter-relationships between these over-all economic problems and the important but segmental problems.”40 Although Keyserling never used the expression, his advocacy was “integrative liberalism” as defined by the course of twentieth-century history. To his critics, Keyserling’s approach was quaint and old fashioned; of course by century’s end the “market” was being championed over the “polis.” “Woefully short of our palpable and immediate needs as a nation” was how Keyserling characterized the Kennedy anti-slump plan. Speaking at a hearing of the House Public Works Committee about an Administration request for standby authority for a large public works program whenever a recession threatened, Keyserling advocated a “pro-prosperity program” which anticipated the ideas and policies found in the later Humphrey-Hawkins Act of 1977. By that date, the context for integrative liberalism had changed in significant ways.41 As he lobbied in behalf of organized labor, Keyserling also carried his quarrel with the Kennedy White House to the annual convention of the Americans for Democratic Action. Officially the organization observed that “increasingly we identify our best hopes with the promise of John Kennedy’s Presidency.” Keyserling, in opposition, questioned Kennedy’s abilities for leadership in economic policy. He also spoke to the Senate Finance

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Committee where he claimed the Administration tax plan “cannot stand the test of logic or survive the lessons of experience.” Saddened by the necessary public criticism from his friends in the White House, Keyserling saw only the squander of public revenues and a failure in the modernization of American industry. Senator Harry F. Byrd (Democrat, Virginia) agreed. Of course the Senator saw the program as a liberal “gimmick” while Keyserling’s critique came because of the perceived meagerness of the Kennedy plan, as he interpreted it.42 In his commencement address at Yale in June 1962, President Kennedy put greater ideological distance between his Administration and integrative liberals such as Keyserling whose hopes rested in the New Deal and the Fair Deal legacies. Rejecting increased domestic government spending, Kennedy pushed for lower tax rates. Established during World War II, the tax rate was defended as necessary for winning the war. Now the situation had changed. “Even as he was being attacked as a statist and a backer of parasitic unions in their class warfare against the productive forces of business, Kennedy was actually counseling restraint on the unions and was preparing to abandon the dream of liberals of Franklin Roosevelt’s Treasury Department, the dream of building a welfare state by quasi-confiscatory taxation of high incomes and great wealth.”43 The irony was real. The politics of economic redistribution was abandoned and fears of economic maturity were eased. Kennedy’s economic policy promised abundance not scarcity; but businessmen excoriated the tax cut; for they were attracted to the doctrine of balanced budgets. In the future their protests of unbalanced budgets became more symbol than substance when a reactionary Keynesianism, military spending as job creation, took center stage during the Vietnam War and later. During the remainder of the Kennedy Presidency, Keyserling continued his criticism. He returned to his “National Prosperity Budget” urging closer cooperation between the government and private employers. Unemployment and underemployment were the major enemies that damaged both domestic life and an effective foreign policy.44 Keyserling combined his recommendation for a seven billion dollar cut in personal taxes with a three billion dollar increase in federal spending. Otherwise the Kennedy plan was “a pygmy sent out to do a giant’s job.”45 In the fall of 1963 Keyserling wrote to President Truman about Kennedy’s fiscal policies. While not supporting all aspects of the Kennedy plan, Keyserling expressed concern over the political problems facing the Kennedy White House. Still tax cuts without a revision of Federal Reserve Board’s policy of tight money and rising interest rates would not ease unemployment according to Keyserling. Truman responded that he would not publicly comment until after the elections.46

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In the month before Kennedy’s death, Keyserling sharpened his arguments for a revised tax bill that stressed consumption while maintaining existing taxes on corporations. Tax cuts on individuals with incomes over $10,000, 12 percent of all tax revenue, was “wasteful on economic grounds and indefensible on social grounds”47 since most of the benefits would go into savings and not investment. Politically, of course, Keyserling was ignored. Kennedy’s assassination in Dallas was a major turning point in the fate of integrative liberalism. At first it appeared that President Johnson could invoke the image of integrative liberalism as the Great Society. The moment of its greatest appeal was also the hour of its decline into the cultural miseries of the 1970s and beyond. Three major interpretations of the Johnson Presidency and his Great Society have emerged. The first describes the Kennedy and Johnson years as a logical and continuing unfolding of the Democratic Party’s historic role as an instrument of reform since the early years of the twentieth century. Stressing the Roosevelt Coalition and increased presence of the federal government in the national economy, Johnson’s Great Society would overcome the divisions of regionalism, race, and class in American society to form “integrative liberalism.” Politicians and professors articulated this parentage for the Great Society. Keyserling sang in the choir as it were. The second analysis has elements that were foreign to Keyserling’s world. In this version, the Great Society was the result of policy intellectuals, a social class (“the new class” as labeled by later conservative critics in the 1980s) who moved in a subculture of governmental and educational institutions that would use social science to solve issues of race and class. To these people race and poverty were manageable since social science and policy analysis were the correct tools. This approach was foreign to Keyserling’s method of politicking and policy analysis. While Keyserling was at home in government and politics, his vision grew out of the legacy of integrative liberalism. His roots, ideological and personal, were in the first version of the Great Society. This second version represented the advisers around Kennedy, “the best and brightest,” many of whom had never run for political office. They were also the same people who advised LBJ that he had to intervene in Vietnam. Alas, they could not give him answers about leaving the area. The last version turned on the issues of race and civil liberties. With the internal migration of African Americans to the north and to the west coast after World War II, the civil rights issues moved around the principles of nonviolence and the ghetto rebellions of the last years of the decade. In this manner the Great Society expressed a profound racial revolution.48 While Keyserling never advocated violence, he was an early champion of civil rights, supporting the good fight long before it was popular with

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politicians and the voters. In fact, this third approach to the Great Society as an element in history does not do injury to the first interpretation. Keyserling spent the balance of his life advancing integrative liberalism generated in part out of a synthesis of the first and third elements of the Great Society. Keyserling’s resignation from the Americans for Democratic Action was in part the result of intellectuals and experts who captured the organization and rejected the integrative liberal vision. Lyndon Baines Johnson really wanted to be the political and ideological return of FDR and the New Deal. His Administration however was in the second half of the 1960s not the 1930s. Johnson wanted his programs paid for by expanding tax revenues. The New Deal stressed a “unity” of drawing the nation together around a renewal commitment to the ideals of the United States as a middle-class nation. A rotten economy had temporarily damaged the status and prospects of hard working members of American society. Programs such as unemployment insurance and old-age retirement fund meant that despite the depression all members of society contributed to the common good. While Johnson rightly claimed a parentage from the New Deal, the War on Poverty had major political and ideological problems. The War on Poverty assumed a culture of poverty that was reducible by social science exercised by policy intellectuals and experts. The physical side of poverty could be addressed to a large degree but the psychological aspect was difficult. A negative income tax might provide the same dignity for all. As later events demonstrated, the Great Society was viewed in the conservative popular mind as a handout to social and racial deadbeats. Johnson’s policies encountered the politics of rage.49 The idea of pointed-headed intellectuals’ giving away tax dollars to welfare deadbeats and cheats allowed George Wallace to develop the arguments that Richard Nixon and Ronald Reagan, with considerable working-class support, used later with nicer language. Integrative liberalism was the ideological victim. And Keyserling was increasingly distanced from any significant exercise of power and influence.50 The Johnson policy intellectuals often cited the Society Security Act of 1935 and the Employment Act of 1946 as the origins for their war on poverty. It was an illegitimate historical claim. Both ideologically and in temperament, the Kennedy people on the New Frontier and in the Great Society were different from Leon Keyserling. This was made painfully clear in the passing years. The situation was understandable when considering Keyserling’s opposition to tax reduction in the 1964 bill. In the simple morality play of congressional rhetoric, a tax cut was Keynesian, something to be desired while verbally defending the virtues of a balanced budget. Keyserling was consistent in his criticism. The tax cut in the form of capital gains exemptions benefited only the upper income classes. Worried about the distribution of income in the nation,

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Keyserling rejected this “orgy of tax reduction. Relatively too much income and other incentives have flowed to those who invest privately in the plant and equipment which add to our productive capabilities, and relatively too little has flowed toward the expansion of demand for ultimate products.”51 It was no surprise when Keyserling advocated more jobs. With increased unemployment, the Great Society might become a distributive program which carried great political liabilities. While economic growth was vital, it alone would not destroy poverty and Keyserling knew that truth. “A bigger and better pie is not feasible if too much sugar and not enough flour are used.”52 The sugar of tax cut for upper income groups was not a substitute for the flour of a comprehensive scheme that went beyond the Johnson program. A structural approach to the existence of national poverty was needed. Keyserling’s answer was national planning. The Johnson policies were inadequate; however, Keyserling did not reject the Great Society, his criticism was in spite of his general support of the Johnson Administration. In keeping with his style, John Kenneth Galbraith used a quality-of-life approach, one more conducive to understanding the second school of thought regarding the nature of the Great Society. Keyserling was chagrined. Later foreign policy events contributed to Keyserling’s ideological unhappiness. At the 1964 convention of the Americans for Democratic Action the policy resolution was a compromise between Galbraith’s analysis of the culture of poverty and Keyserling’s more comprehensive program.53 Like other fashionable intellectuals of the 1950s such as Richard Goodwin, Galbraith “began a new liberalism that would wrestle with the quality of life, now that the quantity of life had been largely attended to.”54 While Keyserling might have a case of hubris at different times in his life, he never accepted that particular ideological vanity. The process of Keyserling’s alienation from the ADA was underway; later events just increased the velocity of separation. The results were many and not the least was the savaging of the reputation, motivation, and idealism of the Great Society. Historical judgment and reputation are never final. Americans were really quite conservative in the last half of the twentieth century. They wanted the good life for themselves. The stresses of race (or ethnicity), class, and gender with the rhetoric of entitlement damaged the high idealism of integrative liberalism. Culture wars rather than arguments over policy issues became the norm in the 1960s. With an “explicit pro-market, anti-state platform with significant working-class support” the Great Society was limited by “the possibilities inherent in the political formula of the late 1940s to utilize the state as a counter point to markets.”55 In terms of the republican synthesis in current historical scholarship, the market has replaced the polis as the organizing ideal in American life. A tax cut was just reactionary Keynesianism.56

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With cultural politics becoming the norm, the fight over the 1964 tax cut revealed some interesting political combinations with Keyserling and the National Association of Manufacturers opposing the tax cut, for different reasons.57 From his position outside the Johnson White House, Keyserling continued his criticism of a tax cut and insisted on massive federal programs aimed at a range of social problems.58 Advocating economic planning in a similar fashion to fighting a war, Keyserling urged federal action. The overall national economy was doing well but for the richest country in the world the level of unemployment was culturally un-American. From a TVA type development for Appalachia to urban renewal, Keyserling pressed for legislation, but of course to no avail. By 1965 President Johnson had exhausted the ideas for his Great Society.59 Prior to the presidential election in 1964, Johnson “used” Keyserling and the Council of Economic Advisers in his campaign for re-election. Several months before the election, the White House staged a media event with the five previous chairmen of the agency. Carefully briefed by Walter Heller, President Johnson sought counsel with some of the best economic minds of the day. Masterfully staged, the economists’ reactions, including those of Keyserling, were positive. A forty-five minute session with photographers went smoothly until LBJ asked Heller to inform the reporters about the meeting. Heller argued that a consensus was emerging regarding the correctness of the Johnson policy. In later days divisions occurred among the economists along party lines. Whatever the real consequences of the event, the publicity and spin were vintage Johnson. Keyserling had played his role.60 In 1965 Keyserling was busy with his criticism of tax cuts and defending the interests of organized labor. The underlying goal of course was to advance Keyserling’s integrative liberalism; however, Keyserling’s audience was declining in number. His message was clear: if the tax reduction had been combined with increased public expenses, it “would have been more relevant to the war against poverty.”61 As usual the key was economic growth. Keyserling argued that 50 percent of the poor were poor because the economy did not produce enough jobs. Appealing to the legal mandate of the Employment Act of 1946 and high idealism of the early Great Society, Keyserling wanted a budget that anticipated the next decade in its assumptions. He wanted full employment and equity of sacrifice. The opponents of the Great Society rejected the ideas as some expression of the “leftist” New Deal.62 Defending the wage demands of transport workers and other unions in New York City was Keyserling’s other major activity. He was their hired lobbyist. Generating an eighty-one page report, Keyserling hammered on the need for increased wages and better working conditions. Never modest about his

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analysis, he also thought New York City should establish an income tax and raise taxes on everything but property. In time, the labor dispute was settled. In the longer development, Keyserling’s role with organized labor indicated the declining prospects of integrative liberalism. Labor became a “client” of the New Deal and the Democratic Party, put in an awkward position by the Cold War and foreign policy. The war in Vietnam dramatized their policy and sociological problems while patriotism (the question of which political party showed more of it) became a major cultural issue in the coming years. The economic issues shaping public policy were now the cultural politics of who were “true Americans.” At the heart of this change was a lie, destroying the trust between citizen and the State that had increased since the dark days of the Great Depression. Both Johnson and McNamara lied about the cost of the conflict in Southeast Asia. First, the CEA was misinformed and later so was the American public. Twelve billion dollars was the cost in January 1966. The time lag between the letting of a contract and its payment was considerable. The result was inflation which made the continuation and development of the Great Society impossible. By the end of 1965, both the CEA and the Bureau of the Budget wanted a tax increase to fight inflation but President Johnson rejected the idea. Integrative liberalism became a victim of the policy conflict, in the foreign rice paddies and in the streets of the United States.63 The legacy of the New Deal was now a burden.64 Despite Keyserling’s often critical remarks, he remained loyal to the Great Society’s vision. He was not a fair weather friend of reform. As the United States war effort increased in Vietnam, several factors came together, damaging integrative liberalism and any chance of Keyserling’s return to governmental service. By the late sixties, structural changes in the economy coupled with a cynical distrust of government and politicians meant a distrust of the military and its solutions. Keynesianism continued its military manifestation in a society that expressed radical changes regarding African-Americans and women. The adversary culture in the academy and in the popular culture began its conquest of American life.65 Historically it was the end game for the Johnson Administration but like a good soldier Keyserling endured. Returning again to his “Freedom Budget for All,” Keyserling urged the ADA to endorse it. He believed that the CEA had misled President Johnson about the problem of inflation. Many of the former chairmen of the Council of Economic Advisers joined him in that concern.66 While there was a strong continuity to Keyserling’s ideas and policy suggestions over the years, on occasion he was able to enlarge upon his philosophy. One such occasion was his book review of The Guaranteed Income (1966), edited by Robert Theobald. Keyserling supported the idea for a

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guaranteed income policy but he thought it could only be sustained by a fullemployment policy while compensating people who were unemployable. A key aspect for Keyserling was the issue of technological unemployment. As usual his economic policy was really a test of political will which was nonexistent in the politics of the hour. Keyserling’s main concern was with the working poor and the underemployed. In the context of the Employment Act of 1946, Keyserling wanted a national full employment and income policy not the “mincing steps” of the current policy makers. He held to the ideal of both guns and butter; however, “The 1967 Federal Budget makes it clear that we are willing, if need be, to cut back on nonessentials in order to finance an expanding war in Vietnam (I imply no dissent from that).”67 Of course, the issue did not disappear. Critics and defenders of the Great Society continued their debates in the lecture halls and in the streets, and at conferences such as one at the Brotherhood in Action building where Keyserling and Professor Seymour Melman, professor of engineering at Columbia, debated the meshing of domestic and foreign policy. Melman claimed that the twenty-four billion dollars a year for war prevented any meaningful realization of the Great Society. Keyserling answered that a lack of social and moral justice prevented the poor from being a part of the Great Society.68 When Keyserling linked his policies to a city income tax, his political effectiveness lessened. His continued role as an adviser to various labor unions and their dealings with New York City Hall contributed to his increased political isolation; although, one can doubt that Keyserling saw the situation in those terms. Keyserling rejected the new economics as warmed-over Keynesianism with its emphasis on the 1964 tax cuts. While he recognized some growth in the economy, stagnation was a real possibility.69 The historic importance of Keyserling’s concern was the fate of the reform spirit, integrative liberalism. It had sustained the Democratic Party since 1932. In fact, Keyserling’s commitments to these policy issues were just the means to the larger end of his vision of the decent society for all Americans. The decade of the sixties is difficult to define. Or is it? The immediate answer is that it was the end of integrative liberalism and all of its works. Despite his failures, Johnson enacted the post-World War II liberal agenda. As liberals searched for a new program, some people saw their creed as the abstract activity of the affluent. For the next twenty years the politics of rage marked their response to the rapidly changing America. The Vietnam War was the culprit. Americans were asked to fight an unemotional war overseas while constructing the new Jerusalem at home. Americans don’t fight wars in that fashion. The radical domestic changes ensured a crippled response. The virus of militarization invaded American

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life and government.70 In opposition to the ideal of unity upheld in integrative liberalism, managerialism was the ideology of the new class of experts. The Bundy brothers, Robert McNamara and others believed that the sheer production of war material would destroy the Viet Cong’s will to resist the American objective.71 The anti-war sentiment now made liberalism “a clamor of demands for special treatment in recompense for past victimization.”72 The task of the New Deal and its progeny was to reconstruct the nation under the rubric of the “commonwealth of work,” David Burner’s expression.73 It suffered greatly in the economic crisis, the international run on U.S. gold reserves, that drew the American Century to a close.74 The tragic story of the election of 1968 does not need retelling here. The results are well known. The emphasis is on the vast destruction of the liberal establishment with its ideological foundations in the reform movements of the twentieth century. The issues switched from the silly (hair length) to the profound (Vietnam policy) and back again. In the Chicago convention hall and in the streets, integrative liberalism was expiring, damaged by both its failures and successes. Hubert Humphrey was the classic and tragic figure in the unfolding political and cultural drama. Solidly New Deal with strong anti-communist sentiments, the vice president made several ill-timed remarks and deferred to Johnson too long. It cost him the election and injured integrative liberalism. The attacks came from more than the usual Republican and anti-New Deal sources. Ironically, the New Left, filled with moral and political self-righteousness, claimed that the New Deal and all its works were evil. They were writing the lyrics that the Reagan people sang with perfect electoral pitch. In truth, of course, something had happened. And it was here that the problems of integrative liberalism’s decline and Keyserling’s limited effectiveness were understandable. In the 1930s, the majority of the people had experienced a bad economy. The poor wanted a chance to become middle class with a mantle of economic security around them. And Americans wanted jobs. The right to earn a living and decent retirement as expressed in the Social Security Act of 1935 was the ideal. Celebrating the land, the cities and the people, a cooperative spirit existed. “Out of that time came programs and a spirit as close to economic and social democracy as the United States has ever attained.”75 It was integrative liberalism; the tragic omission was the civil rights movement and the struggle against racism. Unfortunately, the civil rights rhetoric was expressed in terms of entitlement not rights, creating an ill will in many quarters of American life. “The fading of that movement before it attacked the problem of the northern ghettos, and the decision to treat the black community as separate, privileged, and

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in fact condescended to, severed liberalism from the heritage that had been its distinctive contribution and its greatest political strength.”76 The Americans for Democratic Action meanwhile began its brief but fatal engagement with mangerialism as it took anti-Johnson policies to its institutional bosom. From a criticism of inadequate commitment to the Great Society, to a critical attitude toward the war, to a final desire to dump Johnson, the ADA began its final descent into political impotence. Indicative of this decline was Keyserling’s worsening relationship with the organization as the anti-Johnson hostility increased. The evidence suggested that John Kenneth Galbraith and Arthur M. Schlesinger, Jr. prevented Keyserling from publishing in the organization’s official magazine. The quarrel began in late 1967. By the end of January 1968 Keyserling wrote a thirty-page memo detailing his disputes with Galbraith and Schlesinger and other managerial types. Keyserling’s comments ranged from policies to personalities. His major concern was the abandonment of domestic reform by the ADA. The organization’s main emphasis became a dump Johnson policy. This policy was the result of undemocratic practices by a few insiders in the organization, according to Keyserling. He was appalled. The membership ignored his “Freedom Budget.” All efforts were directed to the anti-Johnson campaign. In a tough dig at his foes, Keyserling accused them of bad faith in the liberal cause. With their desire to reject Johnson’s Presidency they became latter-day activists in the ADA. Suddenly they were committed institutional liberals. The issues over Vietnam prevented the ADA from dealing with the tax issue. The “terribly regressive tax system in the United States, in relation to both economic performance and social justice, and altering it accordingly is one of the prime challenges confronting liberals.” The task, therefore, was not the advancement of “qualitative liberalism” in which the quality of life is judged of paramount interest. Keyserling endorsed abundance and other attributes of integrative liberalism. In his comments, Keyserling’s grievances echoed his concerns about Galbraith and Schlesinger in the 1950s. Finally, Keyserling lamented that the ADA had become a one-purpose organization, “distorting its perspective on vital domestic economic and social problems, and contributing to a dump Johnson movement which I regard to be both decisive and foolish.”77 The final breakup of the ADA was the national board’s support for Senator Eugene McCarthy as President of the United States. Within three days, John Roche, Leon Keyserling and others had resigned from the organization. Many of them joined the Coalition for a Democratic Majority which became a part of the neo-conservatism movement dedicated to saving the ideals of New Deal liberalism. As for the ADA, the organization soon supported “busing, gay rights, the equal rights amendment for women, and court-enforced

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affirmative action.” The new age of identity politics was underway. As for Keyserling it was a bitter experience, a betrayal of the ideals that shaped his public career.78 By 1968, the retreat of integrative liberalism was well underway. Keyserling continued his public disputes with Galbraith and Schlesinger.79 At the same time, Keyserling began defending his historic reputation which, of course, was closely a part of integrative liberalism. He had always been sensitive about criticism of his ideas and disputed with one and all until his death.80 Keyserling’s defense, however, was not just his place in the history books of the future but an explanation of the non-Keynesian reforming spirit. Late in 1969, Keyserling and Schlesinger mended their fence of disputes.81 While his words had an edge to them, Keyserling admired Schlesinger and for his part Schlesinger understood the anguish that Keyserling expressed. Keyserling’s friendship with Schlesinger and Galbraith were important to him, particularly with the passing years, when liberals were reduced in numbers. The other major event that year for Keyserling was his election as President of Labor Israel, the fund-raising arm of the Histadrut, Israel’s millionmember labor federation. Labor Israel worked to solve a wide range of educational and welfare problems for members and their families. Keyserling saw the organization contributing to a “unique program of economic accomplishment under free institutions and a humane sense of proprieties and moral values.”82 Unfortunately, by contrast, according to Keyserling, these items were low priorities in the United States. In the years before Keyserling’s death, Richard M. Nixon became President of the United States and integrative liberalism suffered. Keyserling’s worst fear was now a reality. No longer advancing, no longer the vital center, the dynamics of public policies now had a different agenda. Keyserling’s reaction to this new arrangement found a reduced audience. And in so many ways, politics, health, and respect did not materially improve in Keyserling’s remaining years. NOTES 1. David Halberstam, The Fifties (New York: Villard Books, 1993). Christine Stansell, American Moderns: Bohemian New York and the Creation of a New Century (New York: Metropolitan Books, 2000) is an excellent source for the origin of the adversary or modernist culture. 2. This chapter owes much to David Burner, Making Peace With the 60s (Princeton, NJ: Princeton University Press, 1996). 3. For a definition of the concept see Asa Briggs, The Collective Essays of Asa Briggs 3 vol. (Urbana: University of Illinois Press, 1985) and Theda Skocpol, Protect-

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ing Soldiers and Mothers: The Political Origins of Social Policy in the United States (Cambridge: Harvard University Press, 1995). 4. See the argument developed in Maurice Isserman, If I Had a Hammer: The Death of the Old Left and the Birth of the New Left (New York: Basic Books, 1987). See also Robert Mann, The Walls of Jericho: Lyndon Johnson, Hubert Humphrey, Richard Russell and the Struggle for Civil Rights (New York: Harcourt Brace, 1996), 307, 335. See also Carol A. Horton, Race and the Making of American Liberalism (New York: Oxford University Press, 2005). 5. Michael Barone, Our Country, The Shaping of America From Roosevelt to Reagan (New York: The Free Press, 1990). 6. See Robert Dallek, The American Style of Foreign Policy, Cultural Politics and Foreign Affairs (New York: Knopf, 1983) for context. Keyserling’s, Food and Freedom, Gearing U.S. Farm Production to World Plenty and Peace (Washington, D.C.: Conference on Economic Progress, October, 1960) captures the ideological assertion of this policy. 7. John J. Broesamle, Reform and Reaction in Twentieth-Century American Politics (New York: Greenwood Press, 1990), 190. 8. See the material in Box 80, Keyserling Papers, HSTL. 9. This document is in Ibid. Keyserling linked this document to his idea about an “American Economic Performance Budget” which established goals in certain vital areas of the economy. Under one label or another, Keyserling continued arguing for the idea. The Kennedy Administration was not excited about such a goal-setting agenda and neither were later Administrations. See Keyserling’s Jobs and Growth, An American Economic Performance Budget to Gear Our Potentials to Our Needs (Washington, D.C.: Conference on Economic Progress, May, 1961). “Subject to the watchful eye of an informed public, such a Performance Budget would carry us more surely and speedily toward fulfilment of a great purpose in our economic life.” See page 6. The great purpose was, of course, integrative liberalism. The quiet quest for a job in the Kennedy Presidency can be found in two letters to Clark M. Clifford, November 3 and December 9, 1960. Box 8, Keyserling Papers, HSTL. 10. Donald K. Pickens, “LBJ, the Council of Economic Advisers, and the Burden of New Deal Liberalism,” Lyndon Baines Johnson. Bernard J. Firestone and Robert C. Vogt, eds. (New York: Greenwood Press, 1988), 191–204. See also Irving Bernstein, Guns or Butter, The Presidency of Lyndon Johnson (New York: Oxford, 1996). As early as 1962, Keyserling publicly questioned the shape of Kennedy’s priorities. See his Key Policies For Full Employment, Expanded Consumption (Washington, D.C.: Conference on Economic Progress, September, 1962). 11. John W. Jeffries, “The Quest for the National Purpose of 1960,” American Quarterly 30 (1978), 468. 12. Ibid., 452. 13. This thesis is explored in Christopher Matthews, Kennedy and Nixon: The Rivalry That Shaped Postwar America (New York: Simon & Schuster, 1996). 14. Jeffries, “The Quest For the National Purpose,” 459. 15. Broesamle, Reform and Reaction, 269. 16. Broesamle, Reform and Reaction, 317.

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17. James Kloppenberg, The Virtues of Liberalism (New York: Oxford, 1998) presents the interventionist narrative and Daniel Yergin, The Commanding Heights, The Battle Between Government and the Marketplace That is Remaking the Modern World (New York: Simon & Schuster, 1998) provides the narrative regarding the return of the “market.” For the cultural side of this historical development see Mark Gerson, The Neo-Conservative Vision, From the Cold War to the Cultural Wars (New York: Madison Books, 1996). 18. Bruce D. Porter, War and the Rise of the State (New York: The Free Press, 1984) provides an overall view; Michael Sherry, In the Shadow of War, The United States Since the 1930s (New Haven: Yale University Press, 1995) focus directly on the American situation. 19. Robert Wuthnow, Between States and Markets: The Voluntary Sector in Comparative Analysis (Princeton, NJ: Princeton University Press, 1991), 252. 20. Sherry, In the Shadow of War, 241. 21. Robert Collins, The Business Response to Keynes, 1929–1964 (New York: Columbia University Press, 1981), 199. 22. Yergin, The Commanding Heights, 59. 23. Anthony S. Campagana, U.S. National Economic Policy, 1917–1985 (New York: Praeger, 1987), 284. 24. Letter to Clifford, Box 7, Keyserling Papers, HSTL; a similar attitude was expressed in The Progressive, Jan. 8, 1960. 25. See the press clippings in Box 68, Keyserling papers, HSTL. 26. Ibid. 27. Ibid., clipping is from the Journal Gazette, 11/11/60. 28. Box 68, Keyserling Papers, HSTL contains material on the situation. 29. Letter from Keyserling to Harry S Truman, March 5, 1960, Box 68, Keyserling papers, HSTL. 30. New York Times, April 11, 1961. 31. As quoted in John Morton Blum, Years of Discord, American Politics and Society, 1961–1974 (New York: Norton, 1991), 62. For context see 53–67. 32. Thomas C. Reeves, A Question of Character, A Life of John F. Kennedy (New York: The Free Press, 1991), 324. 33. The Progressive, July 18, 1961. 34. New York Times, August 18, 1961. 35. As quoted in Steven M. Gillon, Politics and Vision: The ADA and American Liberalism, 1947–1985 (New York: Oxford University Press, 1987), 148. 36. Collins, The Business Response to Keynes, 184. 37. See the Americans for Democratic Action papers and material in Box 74 and 80, Keyserling Papers, HSTL. 38. New York Times, Feb. 6, 1962. 39. For example, Keyserling never retreated from his belief that the “Federal Budget is the most important single instrument available to us as a free people to induce satisfactory economic performance, and to reduce poverty and deprivation.” See his Poverty and Deprivation in the U.S., The Plight of Two-Fifths of a Nation (Washington, D.C.: Conference on Economic Progress, April, 1962), 78.

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40. Ibid., Feb. 11, 1962. 41. Ibid., April 7, 1962. 42. The incident can be followed in the New York Times, April 18, 29 and May 1. 43. Michael Barone, Our Country, The Shaping of America from Roosevelt to Reagan (New York: The Free Press, 1990), 345. 44. New York Times, August 5, 1962. 45. Ibid., August 10 and 18, 1962. 46. The context for this letter was when the Special Counsel to President Kennedy asked Keyserling to write to President Truman regarding a public remark disapproving the budget deficit. In his letter, September 9, 1963, Keyserling reviewed the role of the tax rate during the business cycle and agreed that taxes should be cut. And Keyserling included other policy suggestions. In his September 19, 1963, reply President Truman observed, “While you are the greatest advocate I have ever had around me, I still think that tax reductions ought to come only after you have had enough money to pay your bills. That’s my theory when I was President and I still believe that.” In a hand-written post script the President asserted, “I’m old fashioned—if I don’t have a dollar in my pocket I can’t spend it!” Keyserling Papers, HSTL. The passing years had not mellowed the President. 47. Ibid., October 10, 1963. 48. Ira Katznelson, “Was the Great Society a Lost Opportunity?” The Rise and Fall of the New Deal Order, 1930–1980, Steve Fraser and Gary Gerstle, eds (Princeton, NJ: Princeton University Press, 1989), 188. 49. Dan T. Carter, The Politics of Rage (New York: Simon & Schuster, 1995). 50. David Burner, Making Peace With the 60s (Princeton, NJ: Princeton University Press, 1996), 171, 183. 51. Gillon, Politics and Vision, 164. 52. As quoted in Ibid., 166. 53. Ibid., 146. 54. Irwin Unger, The Best of Intentions, The Triumphs and Failures of the Great Society Under Kennedy, Johnson, and Nixon (New York: Doubleday, 1996), 17. 55. Katznelson, “Was the Great Society a Lost Opportunity?” 187, 203. 56. Laura Kalman, Abe Fortas, A Biography (New Haven: Yale University Press, 1990), 214. 57. New York Times, Feb. 9, 1964. 58. Ibid., April 23, 1964, May 10, 1964, August 18, 1964. 59. See the newspaper clippings on this topic in Box 68, Keyserling Papers, HSTL. 60. In two briefing memos, August 15 and 19, 1964, Walter Heller, outlined the agenda and the way to receive maximum coverage from the media. He also briefly noted the attitude of the four former chairmen of the CEA toward the Johnson policies. As for Keyserling, Heller noted, “He continues to criticize us for expecting too much of the tax cut and not spending enough. Just today, Keyserling sent me his brand new study, The Troll of Rising Interest Rates—you might want to express your interest in it. (I’ll bring it along to the meeting.)” Appointment File, August 19, 1964, Presidential Papers, LBJL, Austin, TX. The consequences of and the spin on this meeting are instructive about the ways of presidential politics. The article in the

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New York Times, August 20, 1964, claimed that all the economists were delighted with the health of the economy and predicted a fiscal dividend in a year or two. The same reporter, Edwin L. Dale, in an article published five days later wrote that they were at odds about the economy’s future. In a long letter Keyserling disputed Arthur Burns’s criticism of the meeting’s nature and purpose. Keyserling defended Heller’s account of the meeting and concluded that Burns, “while always piously proclaiming his objectivity above the political battle, nevertheless has managed with unerring consistency to come down on the side of Republican party interests narrowly conceived.” New York Times, August 31, 1964. 61. New York Times, Feb. 28, 1965. 62. See the material in Box 68, Keyserling Papers, HSTL. 63. Bernstein, Guns and Butter, 363, 323. 64. Donald K. Pickens, “LBJ, the Council of Economic Advisers and the Burden of New Deal Liberalism,” Lyndon Baines Johnson, Bernard J. Firestone and Robert C. Vogt, eds. (New York: Greenwood Press, 1989), 191–204. For the foreign policy consequences see David Kaiser, American Tragedy, Kennedy, Johnson, and the Origins of the Vietnam War (Cambridge, MA: Harvard University Press, 2000). 65. Gillon, Politics and Vision, 266; Anthony Campagna, U.S. National Economic Policy, 1917–1985 (New York: Praeger, 1987), 333, 335. 66. Box 68, Keyserling papers, HSTL; New York Times, October 27, 1966. 67. New York Times, Feb. 27, 1966. 68. Ibid., May 12, 1966. 69. See material in Box 75, Keyserling Papers, HSTL. 70. Sherry, In the Shadow of War, 263; Broesamel, Reform and Reaction, 382, 69. 71. Fred Inglis, The Cruel Peace, Everyday Life in the Cold War (New York: Basic Books, 1996), 221–222, 224. 72. Burner, Making Peace With the 60s, 219. 73. Ibid., 220. 74. Robert M. Collins, “The Economic Crisis of 1968 and the Waning of the American Century,” The American Historical Review, 101 (April 1996), 396–422. For greater evidence of this tragedy see Collins’s insightful analysis in More: The Politics of Economic Growth in Postwar America (New York: Oxford University Press, 2000), 72, 86. 75. Ibid., 188. 76. Ibid. 77. Box 28, Keyserling papers, HSTL contains material on this incident. 78. New York Times, February 11, 1968; Gillon, Politics and Vision traces the arc of Keyserling’s disappointment. 79. See Box 28, Keyserling papers, HSTL. 80. In office or out, Keyserling responded to what he thought was undue criticism or misinformation regarding an issue of politics and economics. For example, see the correspondence with Walter Lippman that ran from 1950 to 1966. Lippman Papers, Box 82, File 1218, Yale University Archives. 81. See Box 9 and 28. Ibid. 82. New York Times, November 30, 1969.

8 From Nixon to Reagan: The Age of Limits and the Eclipse of Integrative Liberalism

The years from Nixon’s Presidency to Ronald Reagan’s were neither politically nor intellectually rewarding for Leon Keyserling. Continuing as head of the Committee on Economic Progress, he lobbied in behalf of the Roosevelt Coalition. On the stage of public policy his efforts became more defensive while the rise of market conservatism challenged the New Deal’s legacies. By the early 1970s, intellectual and policy crises plagued liberalism. The situation did not improve during the remainder of Keyserling’s life. Integrative liberalism after 1945 stood for three major ideals. They were social reform driven by economic growth, a strong Presidency, and an anticommunist foreign policy based on the containment concept. Reacting to the backlash of the Vietnam War and the domestic disturbances of the 1960s, the voters increasingly looked elsewhere for public policy solutions. The politics of George Wallace and Richard Nixon expressed a rhetorical right-wing populism. Eventually, American voters agreed with Reagan about the federal government’s being the problem and not the solution. The Nixon, Ford, and Carter years put a deep chill on the integrative liberalism ideal. The sour economy of stagflation and energy dependence matched the decline of presidential prestige during the 1970s. In a twist of irony, Reagan used the liberal anti-communism theme plus a strong reactionary Keynesian—that is large deficits which meant increased military combined with reduction in domestic spending—in his drive to end the Cold War. Regardless of the political and cultural challenges to integrative liberalism, the economy was the major factor. It was the same foe that Keyserling had faced all of his public life—the mature economy thesis. The expression was rarely used in public discourse but the idea of limits was a part of the 187

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ideological landscape for post-Vietnam America. The prospect of a zero-sum economy damaged the ideal of the United States as a middle-class utopia. Interest-group liberalism attacked the integrative liberal ideal. The common good had disappeared. A rising chorus of conservative critics damned LBJ’s Great Society and by extension the New Deal. On the economic policy front and in cultural politics, the legacies of FDR, Truman, Kennedy and Johnson were under great political pressure. The result was neo-conservatism supported by capitalism’s cultural contradictions.1 Within this larger context of integrative liberalism’s decline from 1968 to Keyserling’s death in 1987, his public activities had three major aspects. First, he defined integrative liberalism more carefully and closely as the years passed. Secondly, he rejected post-Vietnam politics that claimed the full-employment policy meant increased inflation. Third, the argument that high unemployment tamed inflation was simply brutal to Keyserling. The evolution of his philosophy guided his work on what by 1978 became the Humphrey-Hawkins Act. Through letters to newspaper editors, publications by his Conference on Economic Progress, speeches and appearances before conferences and Congress, he continued his message of economic growth and optimism. Within these three aspects and in his methods of agitation he was defining and defending his own ideological origins and public life. The increased presence and influence of monetarism added to Keyserling’s concerns about policy and politics. Milton Friedman and the Chicago School argued that federal intervention in the money supply distorted markets. Their ideal was a predictable and steady growth in the money supply. They rejected the Keynesian notion that government should or could smooth out the business cycle.2 While Keyserling never claimed the mantle of Keynes, he did seek strong government action in the economy. Keyserling was really a political economist in the tradition of American institutionalism. Ideologically nervous about the reactionary Keynesian answer of more military expenses, he also rejected the “conservative” version of Keynesianism that wanted investment tax breaks at the expense of larger policy issues.3 Early in a 1970 speech before the American Jewish Congress, Keyserling combined autobiography and public policy in his defense of integrative liberalism. He accepted the organization’s “Man of the Year” award. Citing his father’s encouragement to read the history of Jews and his mother’s support of the New York Ethical Cultural Society, Keyserling linked his family heritage to New Deal liberalism and the philosophy of the Employment Act of 1946. Discounting monetarism, he believed that, “The motive of private profit cannot clear slums, clean up the Potomac, nor develop a universal health service.” The next month he presented the same message to the League of Industrial Democracy regarding “Inflation and Recession.”4

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Keyserling’s major concern was the Nixon Administration. While Keyserling might be faulted for his constant agitation for economic growth, the Nixon White House, during its tenure, was constantly shifting its policies.5 Undoubtedly, the scholarly debate regarding Nixon’s policies will continue. Economic conditions, domestic and global, were changing. Until 1968 economic growth and international competitiveness were givens in American political debate. The domestic “growth coalition” (the New Deal order), linked with an apparently eternal geopolitical position in the international order came under severe pressure in the 1970s, resulting in reduced economic capacities.6 Europe and Japan challenged America’s economic leadership in a global economy moving toward free trade. The Bretton Wood agreement, the dollar as the official measure of value in international trade, became very difficult to maintain. The Vietnam War and the Great Society programs generated excessive money supply while budget deficits added to future policy and political woes. Although caught short by these developments, President Nixon was only concerned with winning the next election by creating a New Moral Majority from the socially conservative elements of the Roosevelt Coalition. The adversary culture exploded into the mainstream of American life. Nixon had no guiding star of economic theory. In the course of his Presidency, Nixon wandered across the ideological landscape of economic theory without finding a solid plan.7 Keyserling and other economists urged Nixon to veto a restrictive trade bill in 1970. At the same time Keyserling lobbied the City of New York to increase the transport workers’ salary by thirty percent. He was also elected to his third term as president of the National Committee for Labor Israel, a fund-raising organization for Histadrut (Israel’s labor federation).8 He was busy on several fronts. In June 1971, Keyserling wrote a thirty-four-page letter to Professor Hugh S. Norton in reply to Norton’s attack on Keyserling’s career both in and out of government. Norton later published a book on the history of the Council of Economic Advisers and the Employment Act of 1946.9 Keyserling closed his long letter in defense of his achievements with a dismissal of the Nixon record. Linking the New Economics of the Kennedy-Johnson years with the Nixon program, Keyserling saw continuity in their inadequacies. While “the Nixon policies and their results should be given a much lower score than those during the Kennedy-Johnson years, I also feel that the fundamental errors committed during the earlier years must bear a large part of the responsibility for what has happened more recently.”10 Keyserling criticized the New Economics with its Keynesian assumptions as articulated by academic economists; the tax cuts of 1962, 1964, and 1969

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were directed at the wealthier segment of society. Increased public outlays were more effective in maintaining growth and employment than tax reduction. The desire for a balanced federal budget led to tight money and rising interest rates—“highly inflationary in the long run.” His advocacy for change was clear. “The fruitless quest for a balanced Federal Budget at the expense of the national economy and the unemployed must be abandoned.” A “progressive redistribution of the tax burden” was Keyserling’s solution. His reason expressed the essence of integrative liberalism, increasing “marginal rates on the income of the rich.”11 He wanted an income policy. “Even fiscal and monetary policies should be part of an income policy, for they greatly effect the income distribution which is the economic problem and social problem in the U.S.”12 The Nixon Administration might not consider policy consistency a virtue but Keyserling did. Jobs were always basic to his analysis. As an American institutional economist, he also included the strong presence of the political in his analysis. In macroeconomic terms, he rested on the “state” side over against the “market” side in the struggle over the commanding heights of the economy; but he was no friend of controls. On the other hand, “if it developed that the sensible use of other weapons would not provide viable trends in prices, wages, and profits, I would then have no ideological objection to direct selective control.”13 For Keyserling, a tradeoff between unemployment and inflation was not acceptable. The idea challenged every philosophical element of his life and thought. “The empirical evidence has by now become overwhelming that the tradeoff between unemployment and price inflation is a pipe dream.”14 Under the proper conditions a steady-state inflation might be politically tolerated. Keyserling had argued that for twenty years inflation was least when output was greatly increased. Unfortunately, Keyserling was “now a man not much listened to.”15 Keyserling and a wide range of people and organizations were ultimately shunned from public policies. The list included organized labor. The Nixon people played the culture and race cards. George Meany’s and Leon Keyserling’s criticism of the Nixon Administration’s price controls was strong; but, the political consequences were minor until Watergate and related scandals destroyed the Nixon White House. “Forget about wage-price controls, voluntary or direct” and return to “traditional powers upon restoring maximum employment and production as soon as possible,”16 Keyserling argued. In the hall of mirrors that economic policy became in the Nixon years, Nixon’s “Keynesianism” was just a rest stop in the Administration’s ideological and policy wanderings. For a while after the election of 1970, Nixon “and his economic advisers said they believed in the concept of full employment

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budget—one in which revenues would equal expenditures only if the economy were at full employment.” They stole the expression and possibly the concept from Leon H. Keyserling.17 The Nixon people were short-sighted; they were not students of irony. Always fighting the mature economy theory Keyserling urged a constant policy of economic stimulation for jobs. He consistently argued that recession and inflation came from the under-utilization of existing resources and vain efforts to balance the Federal budget.18 In reaction to Phase II of Nixon’s economic program, Keyserling pushed for integrative liberalism. Invoking the goal of economic growth, grounded in human values and social justice, he claimed that the Employment Act of 1946 mandated his policy.19 By the end of the decade he advocated an extension of the 1946 law. With a continuing criticism of academic economists, Keyserling cited a belief that the poverty of economic theory had damaged the economy. Nixon’s priorities were misguided. Keyserling was not shy about his primary objective—growth. The means for the growth were lower interest rates and expanded money supply supported by a more progressive income tax at existing rates. In addition, “Federal income supports should be initiated for the poor. Housing and urban renewal should be stimulated; so should programs for health services, antipollution and urban transportation.” To place the parts into a rational system, planning was necessary. “To plan adequately—but not too much—under freedom, we urgently need what I have often called a long-range American Economic and Social Performance Budget.”20 Keyserling maintained that economic growth could save the day. “Most of the allegedly horrendous deficit in the current federal budget is due to inadequate economic growth rather than to deficient tax roles in general.”21 As noted, Keyserling had a gruff personality and political style. During his professional life he stressed that economics was really political economy and that all economists were mortal. An ironic incident illustrated that thesis. Keyserling was damned for being too political and not being an economic scientist-statesman such as Edwin Nourse or Arthur Burns or Herbert Stein. Stein was tagged as the “most political chairman since Leon Keyserling.” Critics charged that Stein gave support to the Nixon program at the expense of economic analysis and forecasting as a scientific enterprise. Stein even made speeches for Nixon against McGovern in the 1972 campaign!22 Keyserling had received this type of criticism for years. Only the cast of characters had changed. Keyserling did not change. As the years went by, he remained committed to his vision of economic growth because it was the best means, he believed, to achieve social justice. He continued agitation for the full-employment ideal, the goal of integrative liberalism, no matter what was the group or occasion.23

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Keyserling’s ideological roots were in the institutional school of Thorstein Veblen, Simon Patten, and Rexford Tugwell. All three economists were skeptical about the market’s effectiveness in allocating resources in a disinterested manner; they drew on the concept of capitalist sabotage, the Veblen’s notion that the market’s pricing system restricted innate abundance. For Keyserling, the public interest existed, larger than the sum of individual interests. In the midst of the oil shortage, Keyserling asserted that America had “substituted deliberately contrived scarcities for the planned abundance which is well within our resources.” In numerous areas the results were scarcities, growing from political decisions, that revealed a lack of will and leadership. Nixon’s 1975 budget was “neutral in its economic effects: it should be highly stimulative.” Keyserling returned again to long-range planning which he must have known was politically impossible. His analysis tolled the lost opportunities for the economy. “The orgy of tax reductions, for a decade or longer, has helped the monetary policy to distribute income regressively, which is inimical to optimum growth, priorities and social justice; we have leaned toward bonanzas for the select few, and scarcity for the many.”24 Keyserling’s writings served at least two functions. He wanted Democratic control of Congress and the White House and vindication for the economic policy of the Truman Administration. Arguing that “empirical evidence since World War II shows a negative rather than a positive correlation between levels of employment and production and amount of inflation,” Keyserling continued his agitation. This economic lesson came from a “relevant past that remains vital.” The lesson was an expanded money supply, tax reduction for lower income groups based on a declared income policy.25 In large respect, independent of the merits of the ideas, his position was becoming less obtainable. Expressed as traditional politics or as cultural politics the situation for reform in the New Deal tradition had changed. Keyserling became increasingly aware of his age and the fading of the New Deal ideal. At a dinner honoring W. Averell Harriman, many New Dealers, including Keyserling, were present. Complete with an appearance by Mrs. Aristotle Onassis, the dinner was a success. In a sense, it was good to celebrate the past; because the future for the Democratic Party was not promising. In the congressional elections of 1974, in the wake of Watergate, the Democrats returned in growing numbers but claimed that “We are not a bunch of little Hubert Humphreys.” Meaning of course that the message of the New Deal order, integrative liberalism, was passé.26 Without a vision and with a declining electoral base, the Democratic Party turned on “competence” and not “ideology” by the time the 1988 presidential election took place. These Congressional Democrats were not supportive of the issues and programs of the past. Keyserling ignored the change. He would not change.

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Before the National Conference on Social Welfare, he repeated his criticism of regressive taxation and he called for more planning.27 Before experts or fellow Democrats, Keyserling’s message was the same: low unemployment was less inflationary.28 As Richard Nixon left the White House on August 9, 1974, stagflation gripped the economy. Most pundits and politicians, including liberals such as John Kenneth Galbraith, focused on inflation. The new Administration of Gerald Ford sent many proposals to Congress.29 With Ford’s presidential pardon of Nixon and congressional inactivity the political situation was not likely to improve. In twenty-eight pages of analysis with three charts, Keyserling replied to an inquiry from Senators Edmund S. Muskie and Peter H. Dominick. Keyserling recognized that his ideas were “at variance with those made manifest in current and immediately prospective national economic policies.” The context for his lengthy response was his rejection of the tradeoff theory that more unemployment would mean less inflation. He did not and never would believe it. In an interview, he argued that scarcity of moral leadership was the biggest expression of scarcity. Echoing themes deep in the history of American progressivism (integrative liberalism), he stated his guiding ideal. “Recognition of the obligation of the government to help the people, which so many disparage now, and the recognition of the fact that we are a society, rather than a group of competing and struggling individuals.” These words precisely represented both Keyserling’s life and doctrine but in the time of economic limits and civic unrest there was a small audience for his words. Nevertheless, “it is growth in our sense of public responsibility that represents the most important progress.”30 Although these words and sentiments were part and parcel of Keyserling’s integrative liberalism, he did not talk or write in a formal fashion about his philosophy. In some respects he put into economic terms and policies the ideas of Mary Follett, a neglected political theorist from the early twentieth century.31 Unfortunately, he never wrote a creedal statement for the express purpose of placing his life and thoughts in a larger historical context. By the late 1970s Keyserling’s influence on public policies had been reduced. Fearing a mature economy, Keyserling again noted that foreign policy had a major economic significance. The neo-isolationism of both George McGovern liberals and Pat Buchanan conservatives came from the same source: the economy had limits. An isolationist foreign policy was not desirable or possible. Echoing the sentiments of Senator Robert Wagner and President Harry Truman, Keyserling recognized the centrality of the economy for American security. “The successful conduct of U.S. foreign policy depends greatly upon the strength and purposefulness of the U.S. economy.” In addition to defense

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policy, “what we do or not do internationally is influenced profoundly by our evaluation of the condition and capabilities of the U.S. economy.”32 The economic policies of the Ford Presidency did not improve on Nixon’s efforts, according to Keyserling who argued for an expanded money supply. Democrats, he asserted, must not accept the offer to choose between a defense policy based on reactionary Keynesianism or on reduced domestic programs.33 Such an acceptance was an irresponsible support of the Ford Administration’s unjust economic policies.34 Joining a group of economists and social scientists, Keyserling contributed his efforts to The Economics Task Force of the National Committee for Full Employment. As chairman of a conference on full employment, Keyserling clearly stated the organization’s point of view. “The point to be made is not that full employment is more important than the control of inflation: the point to be made is that full employment is the best way to stop inflation.” The second point was ethical. “We are rich and strong enough in America, even in a time of recession, to meet the simple dictates of human conscience, even if it were not the most efficient thing economically to do.”35 Keyserling was truly a political economist committed to the integrative liberalism ideal. The surviving New Dealers gathered one last time to remember with awe and wonder the achievements of the Roosevelt era.36 Their last battle was The Full Employment and Balanced Growth Act of 1978 (the HumphreyHawkins Bill). Social and intellectual advocates of integrative liberalism rallied together for one final hurrah. In the last days of lobbying and compromise, Hubert Humphrey was ill. No piece of legislation so characterized his political ideology as the 1978 law. It was a great summary of his ideas. Keyserling and Humphrey shared these ideas and ideals under the rubric of integrative liberalism. A brief discussion of Humphrey’s ideas and career illustrates his contributions to integrative liberalism. In graduate school, Humphrey articulated a philosophy which guided his entire career. Rejecting the negative aspects of rugged individualism and unbridled capitalism, Humphrey stressed positive liberty in which the state existed for promotion of the good life, a good progressive position. The polis aided individuals to achieve goals that they could not reach separately. Society was not a mere aggregate of individuals but a community in which ethical concerns were paramount as John Dewey, Josiah Royce, and Mary Follett maintained. The experience of the Great Depression added a third characteristic of integrative liberalism: taming the business cycle without killing private property’s social and cultural benefits. The future senator wanted government planning and responsible use of private property. In the context of European politics Humphrey and Keyserling were social democrats.

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In his 1940 graduate school paper, Humphrey argued that six rights must be added to American politics. They were meaningful employment; an adequate standard of living; collective bargaining for labor; security against the “hazards of unemployment, accident, illness, and old age”; health insurance; and the creative use of leisure. These rights were not unique to Humphrey or Keyserling; they expressed the mainstream of American reform in the twentieth century. Defenders of the creed grew defensive in the twenty-first century. Both Humphrey and Keyserling supported the welfare state ideal based on an updated rights philosophy linked to positive liberty. They wanted equal opportunity for all Americans. Reacting against the diplomatic isolationism of the depression decade meant that a domestic program of reform must function in a secure and stable world, a theme from Senator Robert Wagner. For Humphrey and Keyserling, the Atlantic Charter was a living, meaningful document. All in all, this combination of domestic and foreign policy shaped American reform from its origins in the movements of the late nineteenth century until its eclipse in the last decade of the twentieth century.37 These intellectual developments provided the context for Keyserling’s remarks before the United States Catholic Bishops Conference. Speaking on “Toward Full Employment: The Moral Basis of Economic Policy,” he spoke the language of integrative liberalism; “because, in my view, our economic misfortunes are founded in social injustice, they are universal problems in that social morality is by definition universal.” His words were clear and unmistakable. They echoed the moral concerns of generations of American reformers. Failure in the economy was failure in ethical living. “This failure involves morality also because it is resulting in the worst hurt to those who need help the most and are powerless to help themselves, the least hurt to those who are better off and able to help themselves, and unconscionable benefits to many who are so strongly positioned that they are actually benefiting by some of the wrongful policies.”38 These sentiments were true and admirable; however, the problem remained: how to pass the effective legislation. The Ford Administration supported an early version of the Full Employment Bill known as the Humphry-Javits Bill. Javits was the Republican Senator from New York. As a liberal in the GOP Jacob Javits belonged to a disappearing group of politicians, practically extinct by century’s end—the liberal Republicans. In this earlier version of the full employment concept the emphasis was on an Economic Planning Board who submitted recommendations to the President who placed them before the Congress and the states for their comments. Data-gathering was a major element in the board’s duties. Keyserling was not pleased.39 The plan was counter-productive and duplicated existing efforts. He did, however, strongly approve of the stated goal of

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full employment, a subject with which he had been concerned his entire professional career. Keyserling was not alone in his criticism. The bill called for economic planning, a concept rich in ideological baggage. For some businessmen who had seen the possibilities in some sort of planning the idea had appeal as American experience during World War II revealed; for other segments of the business community the air was thick with The Road to Serfdom rhetoric. As the Humphrey-Javits Bill became the Humphrey-Hawkins, full employment, defined as three percent unemployment, was offered as a national goal. Both Congress and the Presidency shared responsibility for a full-employment Federal policy. Despite the pervasive laissez-faire rhetoric, the future law’s implications were significant. “Full employment is by itself mildly re-distributive and tax and other policies needed to achieve it are also likely to diminish inequality,” an objective close to Keyserling’s vision of economic growth and integrative liberalism.40 The reality of the situation was never close to the ideal; but the effort behind the legislation was historically noteworthy. It was the last expression of integrative liberalism in the twentieth century, drawing ideological nourishment from progressivism and the New Deal. Keyserling continued his broad attack on the Ford Administration and Congressional Democrats for doing “too little” for the economy and contributing to American railroads’ decline. The year 1975 was dedicated increasingly to the Humphrey-Hawkins Bill. It was the “best vehicle for these purposes and the most important legislative proposal in many a year.”41 Among the general agitation of the interested parties over this legislation, a very significant development occurred. It loomed large in the arc of integrative liberalism and the life of Leon Keyserling. From December 1975 until the bill became law in March of 1978, Keyserling and Rexford Tugwell exchanged ideas and opinions about the bill and its significance. In the course of the exchange, Keyserling revealed a great deal about himself. The future law represented a critical part of his life—the advancement of the integrative liberal ideal. It was not just the usual “shot and cannon” rhetoric of legislative agitation. The law really sounded the depths of Keyserling’s commitment to integrative liberalism. And in the process, Keyserling expressed his deep appreciation of Rexford Tugwell who, on occasion, was not as generous as Keyserling. While the Javits bill receded in importance, Keyserling reported that the Hawkins version had 112 sponsors in the House and seven sponsors in the Senate; he was optimistic that the bill would pass in 1976, placing a political burden on President Ford regardless of whether he vetoed the bill or not. He correctly asserted that “I am now working intently on the HumphreyHawkins Bill with the two main sponsors.”42 It was not just Keyserling shining up his contribution to the policy struggle. For example, Augustus F. Hawkins, Democrat from California’s Twenty-

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ninth District and Chairman of the Subcommittee on Equal Opportunities of the House Education and Labor Committee, wrote “Full Employment to Meet America’s Needs.” Keyserling’s ideological and rhetorical “fingerprints” were all over the document and article. While the Keyserling papers were silent on Congressman Hawkins’s document, its language and organization suggested Keyserling’s presence. In one sense, Keyserling’s authorship was not paramount. The broad-based agitation indicated that Keyserling was not alone in his desire for a policy change. Hawkins’s arguments were familiar. Americans must have full employment without inflation. Any new law must be built on the Employment Act of 1946. The article reviewed the history of the 1946 legislation, stressing that the Annual Economic Report by the President prepared by the Council of Economic Advisers working with the Joint Economic Committee of Congress should be strengthened in the long-range planning area. The objective of planning was “The National Purposes Budget” (the title was very suggestive of Keyserling’s authorship). Increased public (federal, state, and local) and private cooperation would be expressed in the Joint Congressional Committee’s National Conferences on Full Employment and National Purposes. A Standby Job Corps would aid in the government as a last resort employer. The role of the Federal Reserve System was the most significant aspect of this ideal plan before it underwent Congressional compromises. The bill required the agency to be “subjected to a statutory policy on full employment.” Concerned only with the banking system’s profitability, the Board of Governors raised interest rates which promoted inflation and unemployment at the same time. In its highly idealistic form, Keyserling’s version did not stop with a significant overhaul of the Federal Reserve System but all “the so-called independent federal commissions—to well-defined objectives of genuine full employment.” Regardless of Hawkins’s appeal to the humanistic capitalism as discussed in Laurence Rockefeller’s The Second American Revolution (1973), this version was not acceptable either to the gathering conservative coalition appearing on the political horizon or to the Carter Democrats.43 The legislative history of the Humphrey-Hawkins Bill showed Keyserling at his best or worst considering one’s own political values. At a one-day conference on full employment held at Hunter College in New York City, the usual policy divisions developed among the one hundred and fifty economists attending. Positions were based on previous beliefs and political alliances. Raymond J. Saulnier (Chairman of the Council of Economic Advisers, Eisenhower Administration) believed that recovery would be realized in 1976. Other economists endorsed larger public works projects and some questioned

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the idea that full employment should head any future policy agenda. Keyserling repeated that low unemployment would not bring inflation. Inconclusive debate followed. As Keyserling noted, “I always wish that there were less disagreement. It comes from the remoteness of economists from the real world. They are inheritors of a tradition of economic teaching and study that is outmoded.”44 His quote summed up a lifetime of agitation against academic economists. In Congress the AFL-CIO, the Congressional Black Caucus, and Senator Humphrey worked on full employment legislation. Introduced more than a year before by Humphrey and Hawkins, the bill was largely the work of “Leon Keyserling who stands to the left of most of the rest of the Democratic Party.” Keyserling, along with organized labor defended the bill’s wage flexibility while providing for employment for all persons wanting a job. The Federal Reserve Board’s proposed new status remained in this version as did goals set for employment and economic growth. The complex issue of containing inflation while moving toward full employment had not been solved.45 Arguing that America needed “mandated purposes and programs under a planned effort more than we need additional federal agencies,” Keyserling wanted advisory councils that were not limited to economists and that would hold public hearings on job training, employment and related areas. He claimed that the United States had retreated for twenty years from the fullemployment goal. The Humphrey-Hawkins Bill changed that process.46 With letters to the editor and by working with interested groups, Keyserling continued his labors on behalf of the Humphrey-Hawkins Bill. In addition to serving as an adviser to the House Education and Labor Committee, Keyserling was active in the Full Employment Action Council, a national coalition of labor and community groups. As heirs of the Roosevelt Coalition, Coretta Scott King and Murray H. Finley, the President of the Amalgamated Clothing Workers of America, were co-chairmen.47 Not everyone was happy with the Humphrey-Hawkins Bill. In fact just as there was an ideological sameness to the advocacy of the legislation so there was a policy consistency to the criticism of the bill. For example, Murray L. Weidenbaum, later Chairman of the Council of Economic Advisers in the Reagan Administration, claimed the bill was an “exercise in the triumph of the heart over the mind.” Dismissing it as an effort to “increase the federal job role,” he argued that the bill would “accelerate inflation via greater deficit spending.” His solution was a supply-side economic policy. Since the tax code encouraged consumption over saving, “the federal tax system should be reformed to increase the flow of private saving, in order to provide the investment funds needed to increase the availability of jobs.” This approach was anathema to Keyserling’s philosophy and politics.

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Indirectly Weidenbaum recognized Keyserling’s meritorious contention that high unemployment fought inflation. Weidenbaum believed it was necessary but politically unpopular. Disclaiming any deliberate conspiracy, “the present unemployment stems from the efforts in recent years to reduce an extremely high and damaging inflation rate.” He concluded, “Those efforts were both necessary and successful; the inflation rate has been cut by more than one-half.”48 Keyserling did not agree with the policy, but Ronald Reagan sold the idea to the American voters in the 1980 election. Meanwhile the coalition supporting the full employment bill retooled their concept into a “general economic policy bill, not just a jobs bill.” In that manner the planning function of Humphrey-Javits was combined with the full employment ideal. In response to skepticism about the bill’s ability to correct the economy, Senator Humphrey chided the intellectual and political leadership for a “loss of nerve and sense of creativity.” While recognizing the bill was not the final answer, the Senator from Minnesota believed the bill chartered a “new course for economic policy that challenges the currently accepted ideas.”49 When James Earl Carter became the President of the United States, a chorus of economists offered him advice. Generally two themes were offered with some points common to both themes. Economists associated with Democratic Administrations, including Keyserling, pushed for some expansionist spending policy. Herbert Stein, President Nixon’s chairman of the CEA and Alan Greenspan who held the same post in the Ford White House wanted a delay to judge the impact of Ford’s policies on the next year’s economy before further governmental intervention. Keyserling went further. In a ten-page draft entitled “My Economic Creed” Keyserling wrote an unsolicited letter to Carter. In 1977 the Carter Administration was not interested in the policies of an old New Dealer. The Carter White House treated the Humphrey-Hawkins Bill in its final days of passage and as law with a high degree of political and policy duplicity. Keyserling’s manuscript outlines what President Carter should do regarding economic policy.50 The speech was vintage Keyserling, a good summary of his ideas and ideals; it was not the path that the Carter Administration would follow. On November 11, 1976, Keyserling attended the Institute for Study of Civic Values in Dresher, Pennsylvania. “Certain Inalienable Rights” was the subject of the seminar sponsored by the United Automobile Workers. In his speech and in the question-and-answer session that followed, Keyserling blended autobiography with policy. He drew connections between the days of the New Deal and the Wagner Act and the need for passage of the Humphrey-Hawkins Bill. It was a masterful effort. Having recently retired from union activities, Keyserling recalled struggles for integrative liberalism and for the cause of full employment. His candor was refreshing. He was among friends.

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Keyserling immediately dismissed the conservative contention about the merits of states rights which on closer examination was an elevating of the “market” over the “polis.” As a “great believer in progressive legislation” and Federal leadership and legislation, Keyserling came to this realization based on a lifetime of experience. And because of that experience the HumphreyHawkins Bill (H.R. 50) was as “important legislation as any since the time when the Wagner Act was passed in 1935.” In passing, Keyserling noted that Senator Wagner “should be put in the class with Eugene Debs as one of the greatest benefactors of the American labor movement.” Keyserling’s agitation for H.B. 50 went beyond a jobs bill. The legislation provided standards for taxation, thereby changing the regressive tax code. It would also encourage private employment under a National Purposes Full Employment Budget. His final defense of the bill expressed integrative liberalism. “The Bill is the application of the idea of some kind of plan to unite the people and have them work together towards the great purposes within the potentials of the great American economy, instead of all our national policies flying blind, and each one canceling out the other one, and many of the policies really being dictated by the vested interests because the people really do not know what’s going on.” Despite the construction of the sentence, it stated a fundamental value of Keyserling’s life and career. In the question and answer session, Keyserling claimed that the HumphreyHawkins Bill represented “what we did in World War II and at times later on, with appropriate modifications.” Drawing on the political talents of Roosevelt and Truman, Keyserling believed that “the right to a job is not only a fundamental human right, it’s also a fundamental civil right. It’s a fundamental political right. It is just as important as the right to vote.” Keyserling was always candid.51 Early in 1977, the Carter economic program disappointed Keyserling. It did not include a twenty-five to thirty-nine million dollar stimulus package. While the Carter program included more spending than tax cuts (the choice of Republican advisers), the size of spending was “not as large as I would like it.”52 Senator Humphrey questioned if the amount was sufficient to stimulate the economy. Members of the Carter White House believed that it was the correct balance between something for the elements of traditional Democratic interest groups and business interests. Clearly President Carter rejected helping the working poor via the tax system. The ideological distance between the Carter Presidency and integrative liberalism was wider than Keyserling feared it was. Keyserling and Rexford Tugwell often exchanged letters. The letters were a mixture of politics and memories particularly those of Keyserling. Typical was Tugwell’s thanking Keyserling for a copy of Redirecting Education

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and questioning the potential of the Humphrey-Hawkins Bill to solve the economic crisis. In his letter in which he had included the book, Keyserling had complained about the recent Roosevelt dinner which apparently was a showcase for Tom Corcoran and Ben Cohen. Keyserling thought Tugwell’s having three minutes to speak about the New Deal was grossly inadequate and unkind. Keyserling continued his discussion of their differences about the achievements of the Truman Presidency. In 1975 Keyserling included his New Deal record in a letter to Tugwell. In a handwritten postscript Keyserling wrote, “I enclose this only in appreciation of the fact that, but for you, I would have entered a big N.Y. law office in 1931 instead of coming to Washington in 1933, and even if I had gotten here, I’d not have been with Sen. Wagner but for you [Tugwell].” He concluded his comments, “Allowing you only 3 minutes at the dinner was infamous but that’s the kind of affair it was.”53 This exchange revealed a sentimental side to Keyserling which was more apparent as he grew older and the glory days of integrative liberalism slipped away. Undoubtedly, Keyserling’s reflective mood was spurred by a realization at some level that his presence, his influence, was fading. Publicly, he continued the good fight, warning of inflation due to the inadequacy of the Carter economic program. Arthur Burns, worried about the future rate of inflation, argued no stimulus was needed; organized labor only demanded increased wages, driving inflation upward. As a presidential candidate, Carter courted organized labor; as President, he drew closer to Burns’s attitude toward inflation. Carter wanted inflation held under 5.6 percent for 1977.54 Invited by the Konrad Adenauer Foundation and the U.S. Embassy in Bonn, Germany, Keyserling spoke on “U.S. Economic Policy and the New World Economic Order” at the Conference on Responsibilities and Challenges in a Changing World. The issue was the direction of the world economy. Keyserling’s presentation drew together the policies and criticism that he had offered over the years. He tied them to the passage of the HumphreyHawkins Bill. By 1977, his comments were well known; however presented in this format, they merit some comment and analysis in the context of the history of integrative liberalism. He was generally optimistic about the future, and pleased with America’s achievements after 1933. Keyserling believed the economy could have preformed better. Following the Truman Presidency the U.S. economy had fallen short of its capabilities and needs. The immediate reason was well known. “Foremost among the erroneous policies has been the so-called trade-off, the Phillips curve theory that more unemployment means less inflation and vice versa.” As social policy for a representative government, the concept was indefensible.

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For Keyserling the reason was clear. “Most important, the empirical evidence in the U.S. is preponderantly to the effect that there has been a positive rather a negative correlation between the amount of unused resources and the amount of resources.” He pointed to the achievements of the Truman Presidency as the way for future policy. Price trends were only means to the real ends of economic policies. They should “optimize employment and real output, which is the only road to genuine economic progress; to meet priorities of national needs; and to do social justice.” The result would be integrative liberalism. Unpacking his analysis Keyserling noted the economy’s shortcomings. Balancing resources among private consumption, private investment, and public outlays depended upon “a more viable distribution of incomes and spending power.” The result was a reactionary form of Keynesian economics which Keyserling had rejected for his entire public career. “When the need has been to stimulate the economy, fiscal and monetary policies have been used in the aggregate, without due regard for their discriminating application among various economic sectors.” It was a situation of misapplied allocations and priorities. When Keyserling wrote about policies for optimum real economic growth and policies for high social priority needs, the two lists were really one. The reason was clear. “The economic problem in the U.S. is essentially a moral problem.” From Keyserling’s perspective, the Humphrey-Hawkins Bill recognized this. “It will help the U.S. to steer the difficult passage between the Scylla of excessive concentration of power through Government intervention, and the Charybdis of excessive nationwide aimlessness and crosspurposes.”55 All in all it was a masterful summary of Keyserling’s creed of integrative liberalism. As Keyserling observed to Tugwell, “The trouble is that the economists, instead of taking an institutional look at how the economy actually behaves, are still assuming that it behaves in accord with worn-out theories which are no longer relevant and probably never were.” The results were obvious to Keyserling. “They have not yet noted that stagnation and recession produce so much more price inflation and restrictive labor practices than a condition near full employment.”56 Keyserling faced skeptics everywhere. Characterized as a “serge-suited Buddha,” Keyserling denied that the legislation guaranteed anyone a job and he rejected the “Phillips curve” which argued high unemployment checked inflation. Despite the belated support from the Carter Administration, the consensus was that it was merely an exercise in political theater.57 It was not all posturing and politics. In a touching and sincere letter, Senator Humphrey thanked Keyserling for his efforts in the cause of full employment. “You have been the undaunted champion of the unemployed and I am delighted that you will continue to be in our corner as the fight for

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enactment of this landmark legislation gets underway in Congress.”58 And Keyserling did continue the good fight. Claiming that since 1964, too many tax cuts and concessions and not enough public investment had created the present problems. The main purpose of the Federal budget was not to “prime” the economy. The major duty and the essence of integrative liberalism was federal help in allocating resources and incomes by serving priority needs inadequately served by the private sector. Putting idle resources in the economy would reduce unemployment below three percent, the goal of full employment and a just society.59 Because of personality and ideology, the coalition behind the legislation became unraveled. Some liberals, such as Tugwell and his associates at the Center for the Study of Democratic Institutions in California, were displeased with the current economy. The Carter advisers were really conservative about possibilities of solving the economy’s ills. And privately, Keyserling thought the Administration was in “an awful muddle, not knowing where it is going or even where it ought to go.” For Keyserling the presence of Arthur Burns in the Carter Administration was evidence enough of indecision. Meanwhile Keyserling continued his revisions of the bill while Tugwell continued his strong criticism of the bill. The stress of this activity was taking its toll on Keyserling and his friendship with Tugwell. No sharp break or disruption occurred between the two men but a slight erosion of impatience emerged. Keyserling wrote letters, speeches and visited with people in and outside the Carter White House. He was tired. And displeased with what he considered unjust treatment by the national press on this issue.60 In a rare mood of personal reflection and autobiography, Keyserling expressed his displeasure at President Carter’s ignoring the New Deal heritage in the Democratic Party. Keyserling tied his career and political philosophy to the Humphrey-Hawkins Bill, despite its shortcomings. In the process, Keyserling recalled his sister Rosalyn who died of leukemia, his father “the most socially-minded man I ever knew,” and Tugwell’s visit to Beaufort in 1932. Tugwell was disinclined to stay with Keyserling in Washington, D.C. and he was explaining why Tugwell should stay with him in Beaufort, “for I have known you and cared for you for more than fifty-two years by now.” Despite his gruff public style, Keyserling was a sensitive man, whose advocacy was more than just a job or politics. His age and his health were now factors in his life. He was tired after working fifteen-hour days.61 Nevertheless he continued in his ways. Typical of his public efforts were his remarks at the Second New Deal Gathering in Washington on March 4, 1978. It was a vintage performance. Continuity was his theme and learning from the past was his message. Decrying the waste of unemployment and idle resources, Keyserling saw a nation given to “quiescent defeatism.” Bad

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polices and inadequate leadership had contributed the present ills. Americans in 1978 had forgotten the lesson of the New Deal, the rejection of the “artificial dichotomy between economic advance and social justice.” Hence the Humphrey-Hawkins Bill evolved from the New Deal through its application of material progress with improved social responsibility. In that manner it would not be necessary or desirable to “preserve the New Deal in the fading embers of our reminiscences.”62 The embers were indeed fading. Never a red-hot presence in the Carter White House, New Dealers had a formal relationship with the Carter Administration. Friendly, yes, but ideological closeness was out of the political question.63 Of course the Humphrey-Hawkins Bill had supporters in the Carter Administration—Walter Mondale and Ray Marshall—but their influence was offset by Bert Lance and Charles Schultz and by President Carter’s innate conservatism. Their courtship of the Black Congressional Caucus dictated the Administration’s support of the bill. While he gave modest support of the bill during the campaign, President Carter’s final support was merely symbolic in intent. His endorsement of the bill before the Full Employment Action Council pleased elements of the liberal group, but he did not oppose killer amendments to the act. With the death of Senator Humphrey, “the last great death of American liberalism,” the political and legislative dynamics changed. The bill became a memorial to the Happy Warrior. By September, the pressure was on President Carter. The House of Representatives had passed the legislation in March. The White House worked for a weakened bill, really providing “little beyond good intentions.” Passed on October 15, 1978, the law gave the President a wide range of discretion to modify both the workings and intent of the law. In the remaining Carter years and in historical memory, James Earl Carter omitted any notion of full-employment targets.64 In the long arc of the twentieth century—the American Century—President Carter lacked personal leadership and in the world situation, the American economy and military declined. Truly it was a time of limits.65 Meanwhile the Carter Presidency continued its moderate ways with a tax cut to offset an increase to the social security tax and the “largest arms procurement program in thirty years” which added to the national economic woes. His 1979 State of the Union Message returned to “competence and compassion” and a defacto recognition of limits.66 The military establishment, however, continued its reactionary Keynesian style. If Reagan was the GOP’s FDR, Jimmy Carter served as a new “Herbert Hoover,” preparing the way with “sustained more increases until the Defense Department spending exceeded $300 billion in 1986, and drove the share of GNP officially devoted to defense from 5.1 percent in 1979 to 6.6 percent in 1983.” Big weapon

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systems, research, and space defenses were included. Carter’s legacy was the wide range of choices in the defense area; but “what marked the Reagan Administration was the sheer scale of its spending on them and its refusal to make choices among them.”67 Indeed Congress was the home of reactionary Keynesianism. President Carter’s malaise was upon the land. As for Keyserling, the decade ended on a positive but limited note. At a dinner honoring Congressman Hawkins, sponsored by the Full Employment Action Council, Bayard Rustin praised Keyserling’s constancy from the early New Deal days until the passage of the 1978 law. His work on the Freedom Budget with A. Philip Randolph “has entered into almost the entirety of the pioneering economic and social legislation of the New Deal and the Fair Deal which has pointed the way to the Humphrey-Hawkins Act.”68 Personally satisfying, the event revealed again that the New Deal was an historic event rather than a totem for future reform. At a surprise party given by Congressman Hawkins, President Carter noted Keyserling’s contribution to the act’s passage. Critics of Keyserling and integrative liberalism were neither impressed nor silent regarding the Humphrey-Hawkins Act. They claimed it was just public service employment and it was philosophically flawed since it assumed that the market could not handle employment without government intervention, and the act died a non-administrative death in the coming years.69 By the next decade, the cult of victimology had spread throughout the society along with general disdain for all kinds of authority (except that of the market place). Greed became public good. Once the social spine of reform, the middle class expressed self-pitying outrage at being taxed. Liberalism became linked to a limp ethical and moral relativism. No one wanted to make any difficult ethical or moral or policy judgments. It became fashionable among the deconstructionist New Left in the academy and media to avoid drawing distinctions between the working and non-working poor: however, the ordinary folk, the working class poor and integrative liberals, did make that judgment call. The Republican anti-government “victims” carried the political day for the next twelve years.70

NOTES 1. John Dumbrell, The Carter Presidency, A Re-evaluation. (Manchester, UK: Manchester University Press, 1993), 17–18. Daniel Bell, The Cultural Contradictions of Capitalism (New York: Basic books, 1996). Mark Gerson, The Neoconservative Vision From the Cold War to the Culture Wars (New York: Madison Books, 1996), 190, 211.

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2. Daniel Yergin and Joseph Stanislaw, The Commanding Heights, The Battle Between Government and the Market Place That is Remaking the Modern World (New York: Simon & Schuster, 1998), 146. 3. Letter to the Editor, New York Times, April 11, 1969; Theodore Rosenof, Patterns of Political Economy, the Failure to Develop a Democratic Left Synthesis, 1933–1950 (New York: Garland, 1983), 241. 4. Speech of January 28, 1970, in Box 29 of the LHK Papers at the HSTL and “Inflation and Recession,” February 17, 1970, also in Box 29. 5. Allen J. Matusow, Nixon’s Economy: Booms, Busts, Dollars, and Votes (Lawrence: University Press of Kansas, 1998). The subtitle is indicative of Nixon’s lack of economic leadership. 6. Joel Krieger, Reagan, Thatcher, and the Politics of Decline (New York: Oxford University Press, 1986), 13, 27. 7. Ibid., 303–308. As part of his new majority, Nixon courted George Meany and the AFL-CIO against the de facto un-Americanism of war protesters and “hippies.” Nixon, after all, was the point man for the culture wars of the 1990s. 8. These activities are cited in The New York Times, December 20, 1969, September 19, 1970, October 8, 1970, November 30, 1970. Keyserling defended his friend Robert Nathan from the charge that Nathan was not a good liberal because he lobbied for various groups such as AT&T. Keyserling argued that, “the very essence includes that independence of mind and action which prompts an individual on an ad hoc basis to defend the cause he believes right and oppose the one he believes wrong, without being prejudiced by the general “categorization” of the principal exponent of that cause.” In a real sense Keyserling was defending his own activities. See his letter to the editor in The Washington Daily News, March 7, 1972. A copy is in Box 30 of the LHK Papers at the HSTL. 9. The book is Hugh S. Norton, The Quest for Economic Stability: Roosevelt to Bush. Second Edition (Columbia: University of South Carolina Press, 1991). 10. Letter to Hugh S. Norton, Professor of Economics, University of South Carolina from Keyserling, June 10, 1971. Box 30 Keyserling Papers, HSTL 11. John Steele Gordon, Hamilton’s Blessing, The Extraordinary Life and Times of our National Debt (New York: Penguin Books, 1998), 106. 12. “The Needed Revolution in Economic Policy: A New Approach to the Problem of Inflation,” manuscript written September 30, 1970, Box 30 Keyserling Papers, HSTL, 21–23. 13. Ibid., 24. 14. Letter to the Editor, The New York Times, July 15, 1970. See also Robert Kuttner, The Economic Illusion: False Choices Between Prosperity and Social Justice (Boston: Houghton Mifflin, 1984). 15. Edwin L. Dale, Jr., “Steady Inflation: Would It Be So Bad? The New York Times, August 8, 1971. 16. As quoted in Philip Shabecoff, “Meany Bids Congress Reassert Control of Economy,” The New York Times, October 5, 1971. 17. Leon Silk, Nixonomics (New York: Praeger, 1972), 14. Matusow, Nixon’s Economy provides a droll context for this turn of events. See 186–187.

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18. For example, see The New York Times, July 25, 1970. 19. Article by Keyserling, The Washington Post, January 16, 1972. 20. Keyserling, “The Economy in the Long Run,” The New York Times, September 29, 1973. 21. Keyserling “What’s Wrong With American Economics?” Challenge (May/ June, 1973), 21. A copy is also in Box 31, Keyserling Papers, HSTL. 22. See Eileen Shanahan, “The Economist’s Dilemma,” The New York Times, October 14, 1973 and Leonard Silk, “Peers Give Nixon’s Advisers Bad Reviews,” Ibid., October 17, 1973. 23. Boxes 31 and 75 of the Keyserling Papers, HSTL are filled with his activities in support of his advocacy of full employment. 24. Keyserling, “An Analysis of Scarcity Economics and Its Results,” The Washington Post, February 17, 1974, a copy is in Box 32 of Keyserling Papers, HSTL. 25. Keyserling, “Leon Keyserling on Economic Policy,” Washington Post, May 12, 1974. 26. The statement was from Gary Hart who apologized to Senator Humphrey. For an analysis of this sea change see William Schneider, “JFK’s Children: The Class of ’74,” The Atlantic Monthly (March 1989), 35. Linda Charlton, “Harriman, 82, Honored By 700 Democrats,” The New York Times, May 16, 1974, described the social event. 27. A reprint of this speech is in Box 32, Keyserling Papers, HSTL. See also the Washington Post, June 19, 1974. 28. The New York Times, July 14 and 28, 1974; Washington Post, July 17, 1974. 29. Campagna, U.S. National Economic Policy, 398–399. 30. Both the letter, September 19, 1974 and the interview are in Box 32, Keyserling Papers, HSTL. 31. Apparently Keyserling did not know of Mary Follett’s writings; for an insight to her contributions see James Hoopes, Community Denied, The Wrong Turn of Pragmatic Liberalism (Ithaca: Cornell University Press, 1998), 156. 32. “The Economic Consequences of Detente” given before the National Committee on American Foreign Policy, October 21, 1974, Box 32, Keyserling Papers, HSTL. For an insightful historical analysis of this topic see the essays in Craufurd D. Goodwin, ed., Economics and National Security, A History of Their Interaction (Durham, NC: Duke University Press, 1991). 33. Michael S. Sherry, In the Shadow of War, The United States Since the 1930s (New Haven: Yale University Press, 1995), 401–402. Examples of this policy were boundless in the second half of the twentieth century. 34. C.D.M. Notes January/February 1975, published by The Coalition For a Democratic Majority. A copy is in Box 32 Keyserling Papers, HSTL. 35. Material on this organization is in Box 33, Keyserling Papers, HSTL. 36. Bernard Weinraub, “New Deal Veterans, Gathered for Evening of Nostalgia, Commemorate Days of FDR,” The New York Times, March 6, 1977. 37. Carl Solberg, Hubert Humphrey, A Biography (New York: Norton, 1984), 6–77. For two helpful accounts of the intellectual and verbal content of reform and liberalism see, James T. Kloppenberg, Uncertain Victory, Social Democracy and Pro-

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gressivism in European Thought, 1870–1920 (New York: Oxford University Press, 1986) and David Green, Shaping Political Consciousness, The Language of Politics from McKinley to Reagan (Ithaca, NY: Cornell University Press, 1991). Robert Dallek, The American Style of Foreign Policy, Cultural Politics and Foreign Affairs (New York: Knopf, 1983) is helpful in understanding the relationship. 38. The speech is in Box 33, Keyserling Papers, HSTL. For historical background see Dorothy M. Brown and Elizabeth McKeown, The Poor Belong to Us, Catholic Charities and American Welfare (Cambridge, MA: Harvard University Press, 1997) especially Chapter Five, “Catholic Charities, the Great Depression, and the New Deal.” In their Introduction Brown and McKeown write, “By 1935 Catholics were in position to significantly shape new social legislation for families and children. As New Deal and Great Society programs enlarged state responsibility for welfare over succeeding decades, Catholic charities maintained a consistent, if complicated, course as both a partner in government programs and as an advocate for the poor. By 1990, “they concluded the umbrella organization, Catholic Charities, U.S.A., represented the largest system of private social provision in the nation.” See page 1. 39. Nancy Ross, “Inflation-Jobs Theory Scored by Economists,” Washington Post, June 13, 1975. 40. Robert Lekachman, “The Radical Keynes,” The End of the Keynesian Era, Robert Skidelsky, ed. (New York: Holmes & Meier, 1977), 65–66. For contemporary commentary and historical analysis of what eventually became the HumphreyHawkins Act see Craufurd D. Goodwin, “Changing Ideas of Planning in the United States,” National Economic Planning, Craufurd D. Goodwin, ed. (Washington, D.C.: The Chamber of Commerce of the United States, 1976), 23–25, 31–32. As this source indicates “planning” made a fashionable return but the issues remained what kind of planning and for what policy objectives. 41. Keyserling’s letter to the Washington Post, December 12, 1975; for his comments see February 17, and March 9, 1975 issues of the newspaper. 42. Letter from Keyserling to Tugwell, December 13, 1975, Tugwell Papers, Box 12, FDR Library. 43. Augustus F. Hawkins, “Full Employment to Meet America’s Needs,” Challenge (November/December 1975), 20–28. Keyserling was Congressman Hawkins’s adviser. Soma Golden, “Democrats Put Focus on Jobs,” The New York Times, May 22, 1976. Timothy N. Thurber, The Politics of Equality: Hubert H. Humphrey and the African American Freedom Struggle (New York: Columbia University Press, 1999), 235–243 is insightful regarding the ideologies and personalities in the legislative history of the act. 44. As quoted in Lee Dembart, “The Economists Are Confused, Too,” The New York Times, February 16, 1975. 45. Eileen Shanahan, “Democratic Factions Seek Accord on Jobs-for-All Bill,” The New York Times, February 16, 1976. 46. Leon H. Keyserling, “For a Full Employment Act by 1976,” Challenge (July/ August 1975), 22–25. For a detailed discussion see Leon H. Keyserling, Toward Full Employment Within Three Years (Washington, D.C.: Conference on Economic Progress, January, 1976). Robert M. Collins, More: The Politics of Economic Growth in

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Postwar America (New York: Oxford University Press, 2000) is a good overview of the legislative history. 47. See Keyserling’s letters to the Washington Post, April 11, 1976, and The New York Times, April 5, 1976. Robert E. Tomasson, “A Bill Spurring Jobs For All Is Endorsed,” The New York Times, May 8, 1976. 48. Murray L. Wedenbaum, “The Case Against the Humphrey-Hawkins Bill, Challenge (September/October 1976), 21–23. 49. See “The New Humphrey-Hawkins Bill” an interview with Hubert H. Humphrey, Challenge (May/June 1976), 21–29. The text of the revised bill is in this same issue. See pages 56–68. 50. For Keyserling’s fantasy ghost writing see Box 34, Keyserling Papers, HSTL. 51. See a transcript of the speech and the questions and answers in Box 33, Keyserling Papers, HSTL. 52. See two articles by Paul Lewis, “Economists Find Pause Ending: Growth Projections for ’77 Raised,” The New York Times, January 6, 1977 and “Carter Economic Plan Disappoints Some Businessmen and Scholars, Ibid., January 8, 1977. 53. Letter from Keyserling to Tugwell, March 14, 1977; Tugwell’s reply, March 1, 1977. Tugwell Papers, Box 12, FDRL. 54. Marquis Child, “Inflationary Danger Signals,” Washington Post, March 1, 1977. 55. Keyserling, “U.S. Economic Policy and The New World Economic Order,” June 16, 1977. A copy of this speech given to the author by Mrs. Mary Keyserling. 56. Letter from Keyserling to Tugwell, August 8, 1977. Box 12, Tugwell Papers, FDRL Attached to this letter is Keyserling, “National Policies for Optimum Economic Performance,” written August 1, 1977, which states again his call for balanced growth. 57. See the disapproving article, A.H. Raskin, “A Tougher Approach to Jobs,” The New York Times, November 20, 1977. 58. Letter from Hubert Humphrey to Leon Keyserling, November 29, 1977. A copy of this letter was provided by Professor Lynn Turgeon. 59. Keyserling’s letter to the editor, The New York Times, December 19, 1977. 60. See the letter from Keyserling to Tugwell, January 3, 1978, and related material in Box 12, Tugwell Papers, FDRL. 61. Letter from Keyserling to Tugwell, January 30, 1978, Box 12, Tugwell Papers, FDRL. 62. Keyserling, “What We Can Learn From The New Deal,” Speech before the Second New Deal Gathering, March 4, 1978. A copy is in Box 12, Tugwell Papers, FDRL. Keyserling’s letter to Tugwell, June 5, 1978, Ibid., continued this line of analysis. 63. For example, the Carter Presidential Library does not have any significant material from Keyserling and traces of his presence in the White House are very meager. Correspondence with the library, February 20, 1987. The Carter economic advisers were quietly hostile to the Humphrey-Hawkins Act. Only political necessity of party unity forced their acceptance of the legislation. Melvyn Dubofsky, “Jimmy Carter and the End of the Politics of Productivity,” The Carter Presidency: Policy Choices in the

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Post-New Deal Era, Gary M. Fink and Hugh Davis Graham, eds. (Lawrence: University Press of Kansas, 1998) and Bruce J. Schulman, “Slouching Toward the Supply Side: Jimmy Carter and the New American Political Economy,” Ibid., 51–71. 64. Dumbrell, The Carter Presidency, 100–101; Peter Carroll, It Seemed Like Nothing Happened (New York: Holt, Rinehart & Winston, 1982), 317–318; Burton Ira Kaufman, The Presidency of James Earl Carter, Jr. (Lawrence: University Press of Kansas, 1993), 111. For the failures of the Carter years see Gary M. Fink and Hugh Davis Graham, eds., The Carter Presidency: Policy Choices in the Post-New Deal Era (Lawrence: University Press of Kansas, 1998). 65. Michael A. Genovese, “Jimmy Carter and the Age of Limits: Presidential Power in a Time of Decline and Diffusion,” The Presidency and Domestic Policies of Jimmy Carter (Westport, CT: Greenwood Press, 1994), 187–219. 66. Kaufman, The Presidency of Carter, 76, 192; Dumbrell, The Carter Presidency, 3. 67. Sherry, In the Shadow of War, 401–402. 68. A copy of these remarks is in Box 37, Keyserling Papers, HSTL. Keyserling was optimistic. His Liberal and Conservative National Economic Policies and Their Consequences, 1919–1979 (Washington, D.C.: Conference on Economic Progress, September, 1979) demonstrated his belief that the act had a vital future. Keyserling defended the legislation with an analysis of twentieth-century fiscal policy. For an account of Randolph’s contributions see Paula F. Pfeffer, A. Philip Randolph, Pioneer of the Civil Rights Movement (Baton Rouge: Louisiana State University Press, 1990). 69. See Herbert Stein, “For Enlightened Compassion,” American Enterprise Institute Reprint #97 (May 1979), 3; Wayne Angell, “A Single Goal for the Fed,” The Wall Street Journal (November 16, 1994). There was something historically quaint about this last item; for after all these events and presidencies Mr. Angell, a governor of the Federal Reserve Board, felt moved to decry the law. Integrative liberalism’s political strength was quite weak at century’s end. 70. David Burner, Making Peace With the 1960s (Princeton, NJ: Princeton University Press. 1998), 184–185. For an insightful historical analysis of how this situation developed see Michael P. Federici, The Challenge of Populism, The Rise of RightWing Democratism in Postwar America (New York: Praeger, 1991). Similar to the thesis presented in this book, essentially the creative but socially tense allegiance between the expert and direct democracy came apart under great cultural and political pressure.

9 The End Game: Keyserling and Reaganism

Keyserling’s policies and politics were intellectually consistent. He did not change; however, the supply-side revolution changed the United States. After 1945, conservative economic policies, a coalition of traditional free-market rhetoric, monetarism, supply-side economics and rational expectations created Reaganism. As liberals distanced themselves from the New Deal legacy, the integrative liberal ideal, the seductive song of modernism in the popular culture continued mocking middle-class norms. The political effect was that there were fewer public and individual expectations regarding governmental services or entitlements. Appealing to a sense of urgency, advocates of Reaganism urged sharp reductions in transfer payments—the despised “entitlements”—and directed more money toward national defense (thereby strengthening reactionary Keynesianism, as demonstrated by Michael Sherry’s scholarship). “Tax rates were to be reduced substantially and government regulations reduced radically.” Behind these policy developments was a much larger philosophical and political agenda to destroy the New Deal along with integrative liberalism. The Reagan White House discredited social engineering as a viable policy. Their efforts were directed toward reducing government spending on domestic programs while increasing the military’s share in the federal budget.1 The idea of a national community, the essence of integrative liberalism, was missing. Heirs to the old Republican right, the ideological children of Senator Robert Taft, never accepted the New Deal’s community spirit. In the last half of the twentieth century the New Left and its progeny, the deconstructionist and academic left, agreed and argued that the New Deal was corporate or pragmatic liberalism at its hypocritical worst, the establishment. African-Americans and professional feminists followed their own, separate 211

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agendas. The result was a general bashing of the middle-class ideal by the adversary culture.2 Before his death in 1978, Senator Hubert H. Humphrey reaffirmed New Deal liberalism and integrative liberalism. “The moral test of government,” he believed, “is how it treats those who are in the dawn of life, the children; those who are in the twilight of life, the aged; and those who are in the shadows of life, the sick, the needy and the handicapped.”3 During his life, Keyserling kept to that philosophy; but the 1980s belonged to the politician who could blame the victims of economic and racial hardship while smiling and displaying Hollywood charm and sincerity. From Nixon to Clinton, decentralization, states rights, and related notions led to a “New Federalism.” In his genial and California-hip fashion Ronald Reagan led Reaganites across the Potomac River and into the center of the liberal establishment.4 While the politics of rage apparently declined, its electoral consequence, the Southernization of national politics, endured. As the Supreme Court moved away from the legacies of the Warren Court, legal liberalism declined. The New Deal order was in retreat. The basic reason was clear. “By bringing the brightest” (such as Keyserling) “to Washington to join Regulatory commissions, New Dealers and realists hoped to ensure that a politically liberal, meritocractic selected elite would resolve disputes relating to the public good and advance the public interest” in the name of integrative liberalism. Faced with a tension between liberty and equality, the Supreme Court held out the prospect that the judicial system could resolve all issues of social justice and equity. The economic conditions of the Reagan years prevented any effective appeal to the ideas and ideals that Keyserling expressed over a lifetime.5 Economic growth in the last decade of the twentieth century was different. It mocked Keyserling’s integrative idealism. After 1983, economic growth was impressive if compared to the dismal 1970s. From the end of World War II to the Carter Presidency, however, economic growth grew at a faster rate than in the 1980s. Unemployment was high in the Reagan years. Two-income families were misleading because the burden of poverty fell tragically on single women and children, whose numbers grew by 24 percent in the decade. The Reagan Administration ignored these problems and escaped any punishment from the voters. After all, “poverty won the war,” according to a typical conservative quip. “By 1989, the wealthiest two-fifths of American families received 67.8 percent of national income, while the bottom two-fifths earned a mere 15.4 percent—a larger spread than any time since 1945.”6 As expressed by Arthur Schlesinger, the vital center was lost in the swamp of multiculturalism.7 While reformers in the liberal tradition identified with the modernism of multiculturalism, market conservatives and social libertarians were organized under the Republican party.

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The unencumbered individualism of commercial republicanism found expression in both political elections and in the general culture. It denied the true conservative mission of integrative liberalism which was to provide continuity with the reforming tradition in particular and history generally. As historians debated the merits of the case, the cultural possibilities of classical republicanism (eighteenth-century political theory) were advanced in the hopes of a return to a true sense of community, restoring integrative liberalism to its rightful place among the civic virtues.8 The twin aspects of civilization were under great ideological pressure. They were a commitment to practicality as represented by the work ethic and a trust in other members of society. The adversary culture scorned such idealism. On every hand it appeared that integrative liberalism was a spent historical force.9 As the culture wars increased in American life, Keyserling continued his personal brand of agitation; but changes in American politics and his poor health limited his effectiveness. With the cultural abandonment of Puritanism and the Protestant ethic, capitalism had no ethic grounded in a transcendent or moral expression. American life was divided between the capital ideal of deferred gratification and the swinging norms from the counter culture of the 60s, as expressed in the popular culture of the 1980s. Using a debate over tax policy, liberals failed to increase the marginal rates on the very wealthy and in so doing diminished the legacy of FDR and the New Deal.10 Keyserling understood the importance of Keynesian theory. The cynical use of Keynesian thought upset Keyserling more than the analysis itself. Tax cuts for the wealthy and increased military spending were not the essential Keynesian creed according to Keyserling. The General Theory was for the Great Depression and not the 1980s. “Despite this, his finding that the maldistribution of income generated more saving than could be absorbed by investment, and that the government should draw down this excessive saving by public borrowing for purposes of public investment, is as pertinent today as it was during nineteen thirties.”11 His assertion might number Keyserling among the social Keynesians. In all areas of American life discussions and public policies became sharper and meaner, moving far from the integrative liberal ideal. Extreme rhetoric and policies replaced the centralist position of the New Deal legacies. Federal judiciary, a bloody battlefield of the culture wars, meant that if judges were individualist or egalitarian, the “entire ethos of government” was transformed. With religion as a private matter and consumer taste as standard for operational truth, capitalism and modernism had no limits in outraging the middle class, particularly if it sold itself as expressed by the explosion of rock and roll, drugs, and sex on television and in the popular culture.12 The security, political and cultural, of the le homme bourgeois, was over.13

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Knowing that his death was close at hand Keyserling, fought the problems of Reaganism and old age. Of course, Keyserling probably did not view the situation in such dire tones. Keyserling insisted that tax reductions increased income mal-distribution. More “popular” than increased public spending, the result was the popularity of supply-side economics, an exercise in watering the economic tree at the top. Academic economists were useless in providing policy alternatives according to Keyserling. The federal budget was the most powerful means to achieve economic goals; but, given the Reagan programs of tax cuts and increased military spending, reforms in terms of integrative liberalism were doomed. The Presidency offered the second most effective means of providing economic leadership. Political commitment was essential. President Reagan, however, had another program.14 Two events indicated that Keyserling was slowing down. Early in February of 1986, Keyserling wrote “Record of Leon H. Keyserling in Re Economic and Social Programs” a defacto public autobiography. It outlined his career in governmental service with quotes from various politicians praising him for his efforts. The document was informative. It showed a person summing up his life and works. He included in his memo marked “confidential” a bibliography of the pamphlets he wrote as Chairman of the Conference on Economic Progress, his think tank. In its style, the document was matter-of-fact but just below the surface was the private Keyserling. He was a man who felt deeply and honestly about the issues of the day. His philosophy was a classic example of integrative liberalism, the search for community in the twentieth century. He was also concerned about his historical reputation. The second event was the Presidential Conference on Truman at Hofstra University in April 1983 where I met Keyserling. His paper, “Harry S Truman, The Man and the President,” was an honest assessment of Truman. Of course, Keyserling defended and praised the achievements of the Truman years (and his contributions to them). Particularly Keyserling stressed Truman’s capacity for growth and for making timely and right decisions. FDR’s leadership during the Second World War was higher in achievement; but Truman’s fame and honor would increase in the future, Keyserling believed. Truman always trusted his personal experiences. As President he remembered his past. His thinking grew out of the development and history of the Democratic Party; a logical process unfolded from William Jennings Bryan to Harry S Truman. Two main ideas contributed to the historic linkage. “Its two main elements are, first, that the idea of watering the economic tree at the bottom, not at the top, is not merely a political slogan but is a profound and realistic appraisal of the workings of the American economy; second, that the responsibility of Government is different from that of business.”15 It was a clear definition of integrative liberalism.

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At this time Keyserling was dying. Diagnosed with cancer of the liver in September 1985, he continued his busy schedule. He received out-patient treatment. He also continued his defense of the Truman Presidency and joined the Committee for Constitutional Integrity, a group dedicated to rejecting the Reagan Administration’s support of the Balanced Budget Amendment to the Constitution. This organization was in response to the supply-side revolution which Keyserling believed was bad public policy. Death came quickly for Leon H. Keyserling. On August 7, 1987, he suffered a seizure; the next day in a Washington, D.C. hospital, he died. How is “history” to judge this man? He had several significant achievements. He did worry about his historical reputation and he wanted credit for his efforts but those feelings only revealed his humanity. He was argumentative; he was pushy. “But he really cared about the poor and the powerless and the future of the Republic.”16 Indeed Keyserling had contributed to both the New Deal and the civil rights crusade. In those two reconstructions of American liberalism, he performed his part in a “transfigured liberalism, celebrating the cohesion of a multi-ethnic people.” Unfortunately the success and agendas of the modernists, defenders of the adversary culture, greatly damaged the legacy of the Roosevelt Coalition and integrative liberalism. As the century came to a close, “cynicism has ravaged belief in an inclusive national community and in its reach for a better world.”17 It was a vision grounded in cultural pluralism. That vision, that ideal, is not ended; despite Republican electoral victories, the scandals of the Clinton White House, and the election of George W. Bush to the Presidency, reform in the integrative liberal tradition is still quite possible.18 Keyserling had done his part; he had run his race. As John Kenneth Galbraith observed at Keyserling’s memorial service on September 10, 1987, “We remember at this meeting this afternoon one of the truly committed and effective leaders in modern policy and beyond that in all compassionate economic action and reform. I decline to believe that men like Leon Keyserling are of the past. I believe or assuredly I hope they are also of the future.” This “Economist, Lawyer, Humanitarian, Innovator of Social Legislation, Adviser to Presidents, Native of Beaufort” now rests in the small Beth Israel Cemetery of Beaufort under the changing skies of his native South Carolina.19 NOTES 1. Michael J. Boskin, Reagan and the Economy: the Successes, Failures, and Unfinished Agenda (San Francisco: Institute for Contemporary Studies, 1987), 8, 85, 214, 256. Godfrey Hodgson, The World Turned Right Side Up, A History of the Conservative Ascendancy in America (Boston: Houghton Mifflin, 1996) places Reagan in a wider

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cultural and historical context. “The Reagan revolution has infused American political and social life with the counterrevolutionary ideology of the American right wing.” It was President Reagan’s enduring legacy. Jeffrey C. Goldfarb, The Cynical Society: The Culture of Politics and the Politics of Culture in American Life (Chicago: University of Chicago Press, 1991), 109. As a politician, Ronald Reagan had a keen sense of timing and opportunity. See Matthew Dallek, The Right Moment: Ronald Reagan’s First Victory and the Decisive Turning Point in American Politics (New York: Free Press, 2000). For a recent valuation of the historical opinions see Russell Baker, “Reconstructing Reagan,” The New York Review of Books (March 1, 2007), 4–7. 2. For an analysis of the ideological and historical kinship among the social elements of conservatism see Donald K. Pickens, “Reaganism: The Roots of Irony,” Journal of Unconventional History 8 (Fall 1996), 66–76. Pickens discusses the liberal development in this time frame, 1932–1980, in “The New Deal and the Evolution of Integrative Liberalism,” Canon 3 (Fall 1995), 8–25. 3. As quoted in Michael Schaller, Reckoning With Reagan: America and Its President in the 1980s (New York: Oxford University Press, 1992), 21–22. 4. Wilfred M. McClay, The Masterless Self and Society in Modern America (Chapel Hill: The University of North Carolina Press, 1994), 278. For a wide-ranging discussion of the culture war see John L. Nolan, Jr., ed., The American Culture Wars: Current Contests and Future Prospects (Charlottesville: University Press of Virginia, 1996). For a commentary on Reagan’s style see Robert Dallek, Ronald Reagan: The Politics of Symbolism (Cambridge, MA: Harvard University Press, 1984). The market conservatives were in the vanguard of the Reagan victory march. The Hippies were now cool and self was the true measurement. See Thomas C. Frank, The Conquest of Cool: Business Culture, Counterrevolution, and the Rise of Hip Consumerism (Chicago: University of Chicago Press, 1997). 5. Schaller, Reckoning With Reagan, 49. 6. Ibid., 77. For a general history see Robert M. Collins, More: The Politics of Economic Growth in Postwar America (New York: Oxford University Press, 2000). 7. For an intellectual argument against multiculturalism see Arthur M. Schlesinger, Jr., The Disuniting of America, Reflections on a Multicultural Society (Memphis: Whittle Direct Books, 1991) and Donald K. Pickens, “Multiculturalism or Cultural Pluralism: A Distinction That Makes a Difference in United States History,” Contemporary Philosophy 15 (September/October 1993), 7–9. 8. Laura Kalman, The Strange Career of Legal Realism (New Haven, CT: Yale University Press, 1996), 2, 14, 17, 43, 56, 144, 147, was most helpful in understanding the changing role of the legal system and its impact on integrative liberalism. For an optimistic assessment of this historic process in the first half of the twentieth century see Maxwell Bloomfield, Peaceful Revolution, Constitutional Change and Progressivism to the New Deal (Cambridge, MA: Harvard University Press, 2000). 9. For example of how far this process has developed in American life see Stephen L. Carter, Civility: Manners, Morals, and the Etiquette of Democracy (New York: Basic Books, 1998). 10. John Steele Gordon, Hamilton’s Blessings, The Extraordinary Life and Times of Our National Debt (New York: Penguin Books, 1998), 106, 128.

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11. Leon H. Keyserling, How to Cut Unemployment to 4 Per Cent and End Inflation and Deficits by 1987 (Washington, D.C.: Conference on Economic Progress, February, 1983), 18. 12. Daniel Bell, The Cultural Contradictions of Capitalism (New York: Basic Books, 1996), 71, 318–319. 13. Aaron Wildansky, “Resolved that Individualism and Egalitarianism Be Made Compatible in America,” Is America Different? A New Look at American Exceptionalism, Byron E. Shafer, ed. (Oxford, UK: Clarendon Press, 1991), 134. 14. Leon H. Keyserling, “The Roots of Our Economic Woes,” New Leader, 64 (February 9, 1981), 8–11 and his “Will It Be Progress or Poverty?” Challenge (May/ June 1987), 30–36. For an indication of the Reagan policy see Sherry, In the Shadow of War, 402. 15. Keyserling, “Harry S Truman, The Man and The President,” Presidential Conference on Truman, Hofstra University, April 14–16, 1983. A copy is in the author’s possession. 16. Letter from Arthur M. Schlesinger, Jr., to Donald K. Pickens, March 13, 1990. 17. John Higham, “America’s Three Reconstructions,” New York Review of Books, 44 (November 6, 1997). 18. See E. J. Dionne, Jr., They Only Look Dead, Why Progressives Will Dominate the Next Political Era (New York: Touchstone Books, 1997) and Robert Kuttner, The End of Laissez-Faire: National Purpose and the Global Economy After the Cold War (New York: Knopf, 1991). Conservatives worry about the cost of the GOP’s victories in the South in terms of electoral success in other regions of the nation. See Christopher Caldwell, “The Southern Captivity of the GOP,” The Atlantic Monthly (June 1998), 55–72. On the academic front, integrative liberalism now labeled “liberal nationalism” might be making a significant return to American life and scholarship. See David A. Hollinger, “National Solidarity at the End of the Twentieth Century: Reflections on the United States and Liberal Nationalism,” The Journal of American History 84 (September 1997), 559–569. 19. Ben wrote these words for his brother’s headstone. Galbraith’s words are in a booklet entitled “Memories of Leon H. Keyserling,” a copy is in the author’s possession.

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Index

Acheson, Dean, 103 Adams, Sherman, 151, 161n30, 161n32 Adversarial culture, 5, 11 Alexander, Holmes, 169 American Century, 73, 91, 112n26, 166, 179, 204 American Economic Association, 87, 151 American Federation of Labor, 50 American Jewish Congress, 188 American Liberty League, 42, 125, 132, 141n99, 159n7 Americans for Democratic Action: convention of 1964, 171; and Keyserling, 147; Keyserling’s resignation from, 125, 174–175; and liberals, 99, 106, 109, 118n100; origins of, 90; papers of, 70, 82n48; support of Keyserling, 100. See also National Prosperity Budget Aristotle, 45 Arnold, Thurman, 40 Atlantic Charter, 12, 69, 72, 93, 195 balanced budget, 46, 93, 97, 123– 124: and the ADA, 101; and the Democratic Party, 46, 124; and Eisenhower, 151; and Keynes, 138n20; theory of, 158, 160n26, 172,

174; and Truman, 93, 97; and war, 123 Balanced Budget Amendment, 215 Barnes, Harry Elmer, 31 Bauer, Catherine, 61, 77n18 Beard, Charles A., 31 Berle, Adolf, 46 Beveridge Report, 68, 79n30, 121, 132 Beveridge, William, 64 Blough, Roy, 107 Bohm-Bawerk, Eugen von, 132 Bourne, Randolph, 73 Brain Trust, 46–47, 54n36, 128 Brandeis, Louis, 30 Brannan, Charles F., 97 Bretton Wood Agreement, 87, 133, 189 Buchanan, Pat, 11, 193 Burns, Arthur F., 7, 151–152, 161n31, 162n56, 185n60, 191, 201–203 Bush, George Herbert Walker, 10, 20n46 Byrd, Harry M. 157, 172 Century of the Common Man, 73, 91, 166 Chapin, Robert C., 32 Civil Rights Movement, 163, 166, 179, 210n68 Clifford, Clark, 96–99, 106, 115n56, 168–169

241

242

Index

Columbia University, 46, 128, 151 Committee for Constitutional Integrity, 215 Committee on Economic Security, 67 Conference on Economic Progress, 60, 145, 157, 164, 171, 214 Congress of Industrial Organizations, 47, 50, 147 Corcoran, Thomas, 98 Costigan, Edward, 43 Davenport, John, 106 Davidson, C. Girard, 97 Dennison, Henry S., 48, 55n42 Dewey, Thomas, 44, 99 discovery of society, 4, 15 Dominick, Peter H., 193 Dykstra, Clarence, 74, 122 economic bill of rights, 67, 71, 87, 93, 121 economic calculation, 132 economic maturity, 8, 10, 45, 62, 87, 93 The Economic Task Force of the National Committee for Full Employment, 194 Eighteenth Amendment, 45 eighteenth-century political thought, 3, 10, 146, 213 Ely, Richard, 32 Ewing, Oscar, 97–98 Farm Loan Bank, 45 Federal Employment Stabilization Act, 42 Federal Reserve Board, 158, 172, 198, 210n69 Federal Reserve System, 45, 197 Finer, Herman, 133 Finley, Murray H., 198 Follett, Mary, 193–194 Ford, Gerald, 193 Forrestal, James, 104 Fortas, Abe, 40, 52n8 Frank, Jerome, 33, 37n42, 40, 42

Frankfurter, Felix, 39, 52n4 Freedom Budget, 156, 177, 180, 205 Friedman, Milton, 142n60, 188 The Full Employment and Balanced Growth Act of 1978, 125, 194 Galbraith, John Kenneth: full employment, 48; inflation, 193; influence on JFK, 169; and liberalism, 152–157, 175; reform and the Democratic Party, 145; relationship with Keyserling, 180–181 General Education Board of the Rockefeller Foundation, 28 GI Bill, 67 Global Meliorism, 89, 91 Goals for Americans, 166 Goodwin, Richard, 175 Great Society, 150, 154, 166, 173–178, 180, 188–189 Green, William, 50 Gulick, Luther, 121 Gunton, George, 32 Hamby, Alonzo, 97, 115n55 Hancock, John M., 75 Hansen, Alvin, 69, 86, 120, 123, 127 Harriman, W. Averell, 192 Harrington, James, 45 Harris, Seymour, 91 Harvard Law School, 27–28, 39–40 Hayek, Frederick A., 73, 131–136 Hegelian secret, 5, 17, 18n34 Hegelian thought, 134–135 Heller, Walter, 127, 169, 176, 184n60 Higham, John, 10 Histadrut, 181, 189 Hobson, John A., 47, 128, 140n40 Home Owners Loan Corporation, 59 Homestead Act, 42 Hoover, Herbert, 14, 39, 45, 58, 68, 120, 204 Hough, Gabriel, 151 Housing Act of 1949, 60, 70–71

Index

Humphrey, George, 157 Humphrey Hawkins Act, 156, 171, 188, 205, 209n63 Humphrey, Hubert, 179, 192, 194, 207n37 Humphrey-Javits Bill, 196, 199 Ickes, Harold, 49, 59, 61 inflation, fear of, 86, 95, 148, 156 Institute for Study of Civic Values, 199 institutional economics, 4, 7–8, 32–33, 135 Interstate Commerce Commission, 171 Jacoby, Neil, 152 Jefferson, Thomas, 45, 103 Johnson, Hugh, 48–49 Johnson, Lyndon B., 7, 89, 121, 166– 169, 173–180 Kennedy, John F., 10, 85, 153, 166 Kent, Frank, 130 Keynes, John Maynard, 9, 32, 119–143 Keyserling (nee Dublin), Mary, 73, 118n99, 54n28, 108 Keyserling (nee Hyman ), Jennie, 23, 25, 34n1, 35n10 Keyserling, Herbert, 25–26, 35n11, 35n12 Keyserling, Rosalyn, 203 Keyserling, William, 23–27, 33, 34n1 King, Coretta Scott, 198 King, Martin Luther, Jr., 13 Kingsley, J. Donald, 97 Konrad Adenauer Foundation, 201 Ku Klux Klan, 24 La Follette, Robert, 43 Lance, Bert, 204 League of Industrial Democracy, 188 Lewis, John L., 44, 55n44 Lincoln, Abraham, 13, 124, 136, 149 Locke, John, 12 Madison, James, 103 Mahoney, Joseph C., 92 Marshall, John, 51

243

Marshall Plan, 90 Marshall, Ray, 204 McCarthyism, 100, 105, 108–109 McNamara, Robert, 179 Means, Gardiner, 46 Meany, George, 190, 206n7 Melman, Seymour, 178 middle-class utopia, 5, 45, 146, 188 Mills, C. Wright, 14, 127 Mises, Ludwig von, 132 Mitchell, Wesley C., 74, 122 Moley, Raymond, 46 Mondale, Walter, 204 Morse, David A., 97 Munich, 70, 85, 101, 122 Muskie, Edmund S., 193 National Association of Manufacturers, 158, 176 National Industrial Recovery Act, 43, 48 National Labor Relations Act of 1935, 47, 49 National Labor Relations Board, 51 National Labor Relations Board v Fainblatt, 51 National Labor Relations Board v Jones and Laughlin Steel Corp., 51 National Prosperity Budget, 156, 159n8 National Recovery Administration, 48, 50 National Resources Planning Board, 67–68, 81n53, 122 National Security Council, 101 neo-conservatives, 167 New Left, 20n39, 182n4: and equality, 164; liberalism, 111n17, 125, 205; and New Deal, 157, 179, 211 New Left revisionists, 87 The New Republic, 131, 152, 158 New York Economic Club, 169 Nitze, Paul, 104, 116n71 Nixon, Richard, 10, 30, 73, 164, 174, 187, 193 Norton, Hugh S., 189, 206n10 Nourse, Edwin G., 94, 113n41, 151 NSC68, 101–104, 109, 124, 150, 155

244

Index

Pabst Blue Ribbon Beer Company, 74–75, 83n75, 93, 122 Patten, Simon, 8, 13, 32, 58, 127, 192 Pearl Harbor, 70, 79, 85, 101–102, 122 Pearson, Drew, 61 Perkins, Frances, 49 Perkins, Milo, 111n9, 120 Phillips Curve Theory, 201 Progressive Citizens of America, 90 Pump priming, 105, 128 Railroad Retirement Board Case, 50 Randolph, A. Philip, 205 Reading Formula, 49 Reagan, Ronald: Cold War, 85; and conservatism, 15, 30; economic policy, 199, 212; and Keyserling, 187; and politics, 73, 164, 216 Reuther, Walter, 158 Rifkind, Simon H., 43 The Road to Serfdom, 73, 131–136, 142 Robbins, Lionel, 132 Robinson, James Harvey, 31 Rockefeller, Laurence, 197 Rodell, Fred, 155 Rowe, James, 98–99 Royce, Josiah, 194 Ruml, Beardsley, 74, 122 Rustin, Bayard, 205 Samuelson, Paul, 127 Saulnier, Raymond J., 170, 197 Say’s Law, 8, 32, 130, 143n65, 158 Schecter Poultry Corp. v. United States, 50 Schlesinger, Arthur M. Jr., 12, 91, 145, 152–155, 157, 180–181, 212 Schultz, Charles, 204 Schwartz, Allen H., 151 Smith Act, 63 Smith, Al, 41 Smith, Cotton Ed, 33 Snyder, John, 96 Steelman, John, 96

Stein, Herbert, 74, 110n5, 122, 138n20, 191, 199 Stern, Robert T., 51 Straus, Nathan, 60, 109 Taft, Robert, 89, 211 Taft-Hartley Act, 44 Temporary National Economic Committee, 86, 120 Thatcher, Margaret, 132 Theobald, Robert, 177 Thomas, Elbert, 92 Trilling, Lionel, 148, 163 Turner, Frederick Jackson, 68, 119 Union for Democratic Action, 90 United Auto Workers, 47, 147 United States Catholic Bishops Conference, 195 United States Housing Authority, 60–61, 77n16 Veblen, Thorstein, 7, 13, 17, 30, 32, 58 Viner, Jacob, 106 Vinson, Fred, 111n12, 121 Wagner Act: and integrative liberalism 63, 65; Keyserling’s contribution to, 47, 50, 199; labor policy of, 42, 48, 51–52, 127, 200; and New Deal, 15, 33, 41, 47, 58, 124 Wagner Housing Act of 1937, 61 Wagner, Robert: integrative liberalism, contribution to, 3, 39, 41, 45; as a democratic reformer, 153, 195; as Keyerling’s mentor, 39, 41 Wagner-Steagall Act of 1937, 59–61 Wallace, George, 10, 30, 73, 174, 187 Wallace, Henry, 73, 89–90, 92, 99, 166 Walsh, Frank P., Commission on Industrial Relations, 44 Walsh, Thomas J., 49 Wardman Park Group, 97, 99, 115n56 Webb, James, 99 Weidenbaum, Murray L., 198

Index

Whitney, Alexander F., 74 Wilson, Woodrow, 7, 15 Wisconsin idea, 30

Wolfe, Virginia, 163 Wright, Carroll, 32 Wyzanski, Charles, 49

245