I. Making Ethics Supreme: M. L. Wilson, Richard T. Ely and the German Historical School of Economics in America

On June 23, 1932, the Second Conference on Economic Policy for American Agriculture convened at the University of Chicago. Like its predecessor, the Second Conference was principally organized by Milburn Lincoln Wilson, an agricultural economist from Montana Agricultural College.Footnote ⁴ M. L., as he was known, had a notably radical diagnosis of and prescription for the plight of American agriculture. Like many, Wilson was keenly interested in relieving the urgent financial distress of farmers by finding some way of raising their income; more boldly than most, in order to accomplish this, he was willing to explore ways of controlling how much farmers produced. But Wilson was not merely seeking to relieve farmers’ immediate distress. He also favored taking far more radical steps—steps enabling the government to classify, plan, and control how land could be used—to prevent that distress from ever re-occurring. Prevention, not mere palliation, was his objective. As bold as Wilson’s position in this regard was, his diagnosis of the plight of American farmers, and his fuller prescription for reform, was not limited to consideration of present or future farm income. Wilson, as H. R. Tolley, his long-time associate and fellow agricultural economist observed, was a man “intensely interested not only in improving farm income, but also in the needs of farm families and communities that were ‘more than material in nature.’” He “emphasized a type of thinking that went beyond statistics and asked questions about the quality of American rural life…[.]”Footnote ⁵ Wilson’s thinking in this regard would not only help catalyze the most radical experiment in social planning ever undertaken by the government of the United States, but it was also the hallmark of the self-consciously “new” historical (or “ethical”) school of economics, the principles of which Wilson had learned from Richard T. Ely and from Ely’s many former students at the University of Wisconsin, Madison.

M. L. Wilson was born in Iowa in 1885. After studying agriculture at Iowa State College, he took up farming in Nebraska and then Montana. In Montana he went to work for the new Extension Service, which spurred his desire to understand the problems of farmers better. In 1919 he began graduate work in economics with Richard T. Ely at the University of Wisconsin, Madison. Ely, by this time, had been teaching for nearly thirty years and was a veteran of progressive reform. Like many Americans in the post-Civil War period, Ely, after graduating from Columbia College, had gone abroad in pursuit of a higher education, originally intending to study philosophy before switching to economics. He attended the Universities of Halle, Heidelberg, and Berlin, where he studied with leading members of the German Historical School of Economics, including Johannes Conrad, Adolf Wagner, and especially Karl Knies—a man whom Ely refers to as “My Master.”Footnote ⁶ Ely’s voluminous writings are laden with German references, and attest to the particular influence of Knies, Adolph Wagner, and Gustav Schmoller.Footnote ⁷ After completing a Ph.D. at the University of Heidelberg in 1879, Ely returned home and began teaching in 1881 at Johns Hopkins University. In 1885, Ely, along with other young historical school-trained economists, most notably Simon N. Patten and E. J. James, founded the American Economic Association (AEA) in express imitation of the. The Verein für Socialpolitik—or Union for Social Politics—was the reform-minded association organized in 1871–1872 by the younger members of the German Historical School of Economics, particularly Adolph Wagner, Gustav Schmoller, and Lujo Brentano. The Verein’s members, who quickly accepted the sobriquet of the “socialism of the chair,” advocated a frankly social (or anti-liberal) conception of the State that was, simultaneously, not as radical as the “scientific socialism” espoused by the Marxist German Social Democratic Party.Footnote ⁸ Compared to the Marxists, the “socialism of the chair” was less radical because, among other things, its members believed it was possible to implement social reform by working through Germany’s existing political institutions rather than by violently overthrowing them. Their socialism, accordingly, also became known as “state socialism.”Footnote ⁹ The Verein’s members, their young American students believed, had exerted great influence over the development of Imperial German policy. “[T]he idea of the A.E.A.,” as Ely explained in a letter to E. R. A. Seligman, another German-trained American, “is to accomplish in America what the Verein für Socialpolitik has done in Germany[.]”Footnote ¹⁰ The draft platform Ely composed, which, in modified form became the founding charter of the A.E.A., underscored how essential its new ethical conception of the state was to the Association’s approach to the study of economics, as well as its prescriptions for reform: “We regard the state as an educational and ethical agency whose positive aid is an indispensable condition of human progress.”Footnote ¹¹ In 1892, Ely left Johns Hopkins to chair a new department of economics, political science, and history at the University of Wisconsin, Madison.Footnote ¹² Ely had high hopes for this new department—hopes that would, in time, be realized in spades: “‘In developing my plans in my own mind,” he wrote in a January 25, 1892, letter to his former student, Albert Shaw, “I have thought of a civil academy to do somewhat for the civil service that which West Point and Annapolis do for the military and naval services respectively … You see I have very ambitious plans.”Footnote ¹³

Wilson’s career was an important fruit of Ely’s ambitions. Upon arriving at the University of Wisconsin in 1919, Wilson took classes with Ely and a bevy of his former students who had become his colleagues. “The things that fundamentally affected my thinking,” he recounted, “were these institutional ideas from Professor [John R.] Commons’s courses, social psychology and social behavior from [Edward Alsworth] Ross’s course, and Ely’s philosophy, which was to quite an extent this historical-institutional type.”Footnote ¹⁴ Commons, like Ross, had been a graduate student of Ely’s at Johns Hopkins University. In 1904, Ely had appointed Commons as a permanent member of the faculty of the University of Wisconsin, Madison.Footnote ¹⁵ In this new position, Commons would not only play a leading role in crafting and administering Governor Robert M. La Follette’s fabled progressive reforms, but would also serve as the first secretary of the American Association for Labor Legislation (AALL)—a group Ely and other AEA members helped organize in 1905–1906 and for which he also served as the first president.Footnote ¹⁶ Initially the AALL concentrated on researching and promoting protective labor legislation. But, by 1914, it had become, in Rodgers’ estimate, “the most active and important social insurance lobby in the United States.”Footnote ¹⁷ So considerable was Commons’ influence that some credit him personally with being “the intellectual origin of the New Deal, of labor legislation, of social security, of the whole movement in this country towards a welfare state.”Footnote ¹⁸ From Commons, in any case, Wilson appears to have learned what Commons himself learned from Ely, namely, as Gilbert and Baker put it, “that the economy was not governed by fixed, absolute laws, but instead was always in flux, always changing,” and, crucially, that “ethics should guide the social scientist in evaluating and understanding the transactions that took place in the economy.”Footnote ¹⁹

This last point warrants far closer attention than it has typically received. Ely was, to be sure, a vigorous advocate of intensive, empirical investigations—of what he called the “look and see” method. But his empiricism was ever guided, both in diagnosis and prescription, by the requirements of ethics. This is hardly surprising as Ely was a self-described “idealist.” “I have always been an idealist in the philosophical sense,” he writes in his autobiography, “firm in my belief that ideas govern the world.”Footnote ²⁰ This idealism was the hallmark of the “historical school” of economics with which he had studied in Germany. “The expression historical school meant, and still means,” he explains,

For the historical school the “ethical aim comes first.” In assessing existing social circumstances, accordingly, the economist should be guided by what “the ethical aim” requires. The historical school

Ely’s conception of ethics is an integral part of what he thinks history actually is. In his view, a society’s institutions did not merely grow and change over the course of time, as opposed to being fixed in nature one way or the other, but, rather, grew and changed in ways that both reflected—and then promoted—the society’s ethical development or progress. Reflecting a strong Hegelian influence, Ely regarded history as the developmental process through which men progressively actualize the ethical potential inherent in their nature. Thus, the most fundamental principle of his self-consciously “new” and “social conception of ethics” was a teleological conception of human nature that he refers to as the “ethical aim” or “ethical ideal”:

The starting point of Ely’s conception of ethics, and thereby his approach to economics, was the idea that human beings as human beings possess certain latent “faculties” whose “perfect” or “complete” development defines the very “end and purpose” of their existence. These faculties include not only physical capacities, like strength and health, but also “all the higher faculties—faculties of love, of knowledge, of aesthetic perception, and the like[.]” History, in turn, was the process through which this in-born potential was progressively actualized, and the gap between the ideal and the actual thereby progressively diminished. Ely believed that in an advanced stage of human development the most ethically advanced members of society would consciously seek to accelerate the realization of the “ethical ideal.” This, in fact, was the very purpose of social reform—to, in Ely’s striking phrase, “aboli[sh]” the gap between how men ought to live and how they really do live.Footnote ²⁴

Importantly, Ely’s conception of the “ethical ideal” goes hand-in-hand with a self-consciously “new conception of the state.” This “new” and “organic” conception of the state was frankly social, was ordered toward the collective realization of the “ethical ideal,” and emphasized its members’ interdependence upon each other to achieve their “material and moral well-being.”Footnote ²⁵ As Ely well understood, this “new conception of the state” profoundly reversed the traditional American understanding of the proper relationship between the individual and his government:

Like many progressives, Ely flatly dismissed the social compact theory of the American founding as “individualistic” and wholly unscientific.Footnote ²⁷ The Founders’ theory was “individualistic” in the sense that individuals are by nature morally prior to the authority of government. The moral priority of the individual is evident both in the idea that the authority of government can only be derived from the consent of its individual members, and that its power is limited by the obligation to secure the natural rights of its members—thus securing a wide swath for individual choice. In contrast, the “new” conception of the state reverses this relationship:

Ely’s “new conception of the state” is a frankly “social” conception of the state in the sense that the state’s authority is by nature morally prior to the desires of its individual members. The state neither derives its authority from its members’ consent, nor is limited in its right to interfere with its members’ lives by an obligation to secure their so-called natural rights. On the contrary, as Ely was wont to observe, “[i]t is seen in general that there is no limit to the right of the State, the sovereign power, save its ability to do good.”Footnote ²⁹ In the new understanding, in other words, government was entitled to intrude in its members’ lives in whatever ways and to whatever degree proved “useful” or “expedient” to achieving the end of the state.Footnote ³⁰ For Ely, then, the proper disposition of the individual toward the state was not a vigilant and prickly self-assertion, but, rather, one of “subordinat[ion]” or “sacrifice.”Footnote ³¹

It is striking how frequently Ely refers to Aristotle, and his conception of the polis, in order to explain why the state has moral priority over its individual members and their preferences. In Socialism: An Examination of its Nature, its Strength and its Weakness, With Suggestions for Social Reform, Ely seeks to distinguish what he calls “socialism in a more general sense” from socialism in a “narrower” or more technical sense (by which he means Marx and Engels’ “scientific socialism”). Ely prominently cites Adolph Wagner, among others, as an exponent of “socialism in a more general sense,” but harkens to Aristotle—not Marx—as its founder:

In support of his claim that social questions ought to be addressed from “the standpoint of society,” rather than the standpoint of the individual (and his rights), Ely quotes Book I, Chapter 2, of Aristotle’s Politics:

Just as Aristotle famously argues that man is by nature political in the sense that he cannot live well or happily outside of the polis, so Ely argues that the state, far from being a manmade instrument, is, in fact, the natural state of man:

In short, the moral primacy of the state is the direct consequence of the individual’s dependence upon the state to achieve the excellence of his nature. Because the state supplies what individuals living in isolation cannot supply themselves but nonetheless need in order to become “perfect,” the state is the natural condition of man.

Understanding the “new conception of the State” is essential for grasping just how radically Ely and the Historical School-influenced progressives conceived the task of social reform. Confident that the United States had developed to the point that “self-conscious social action” was now possible, and that such action would accelerate the developmental process of history, the reformers set out to intensively survey, assess, and re-engineer America’s inherited way of living.Footnote ³⁴ As Albion Small, who trained with the leaders of the Historical School in Germany and America, summed up their approach:

The Historical School—in Germany as in the United States—aspired to “controlling the present with a view to causing the future.”Footnote ³⁶ (Ely refers to such planning—or “change self-consciously guided by society with reference to desired ends”—as “socio-teleological” change.Footnote ³⁷) Unrestricted by an obligation to secure natural rights, earnestly seeking not merely to avoid social “degeneration” but to facilitate an increasingly higher collective actualization of the “ethical ideal,” and favoring, therefore, reforms designed to prevent evils from ever occurring rather than merely palliating their destructive effects after they had occurred, the reformers conceived the scope of social reform as encompassing both the hereditary and broad environmental determinants of human character. “There is no remedy known,” as Ely’s protégé John R. Commons concisely sums up their approach,

The task of social reform, in short, was to extend state control over the reproductive stock of the future, as well as to re-engineer existing social arrangements to enhance the nurture of the improved stock. Economic objectives certainly formed an important part of this agenda, and would, in the New Deal, lead to surprisingly radical attempts to shift the ownership and control over property from private to public hands. But even these economic reforms were valuable only as means of raising the average level of ethical growth in the United States.

II. The Historical School and the Development of New Deal Planning

In 1920, Wilson completed a Master of Science degree at the University of Wisconsin and returned to Montana.Footnote ³⁹ But his association with Ely and Ely’s growing cadre of former students was only beginning. In 1924, Wilson became the managing director of the Fairway Farms Corporation of Montana. This project, which has been aptly described as a “social experiment disguised as a scientific experiment,” was the brainchild of Henry C. Taylor, another of Ely’s students-turned-colleagues at the University of Wisconsin, Madison. Taylor is frequently described as the “father” of agricultural economics in the United States. Like Wilson, Taylor was from Iowa. At the University of Wisconsin, Madison in 1898, Taylor, having already encountered some of Ely’s writings, set out to gain a better understanding of farmers’ economic problems. There, Ely encouraged Taylor to specialize in a topic related to the land. After studying for two years at Madison, Taylor went abroad to study, first, at the London School of Economics, where he took courses with the prominent Fabians, Sidney and Beatrice Webb, among others, and then to Germany, to study agricultural economics at the University of Halle, with Johannes Conrad—a leading member of the German Historical School of Economics—and Max Sering at the University of Berlin. Upon returning to the United States in 1901, Taylor began teaching economics at the University of Wisconsin, Madison. In 1908, Taylor persuaded the University to allow him to organize a new department of Agricultural Economics—the first of its kind in the nation.Footnote ⁴⁰ The idea for Fairway Farms, in any case, was Taylor’s, and he and Ely, in addition to Wilson, served on the corporation’s board, supplying advice and helping to arrange funding. The purpose of the experiment was to discover the optimal combination of crops, acreage, type of tenant, methods of equipping farms, and other practices needed to farm successfully on the high, arid plains of Montana.Footnote ⁴¹

Wilson’s work on the Fairway Farms project would inform his work, during the New Deal, at the Division of Subsistence Homesteads.Footnote ⁴² It was also the reason why, in 1928, the Soviet Union, which had recently begun violently consolidating its peasant population onto large, collective farms, sought him out for advice; one of Wilson’s experimental farms, the Lone Warrior farm, entailed sowing wheat on a large, mechanized farm. The Soviets sent a number of visitors to observe Wilson’s work, including Harold Ware. Ware was the American-born son of Ella Reeve Bloor, a member of the left-wing faction of the Socialist Party of America (SPA) that split off in 1919 to form a group that before long would become the Communist Party of America. Ware would later gain notoriety as the Soviet operative who organized the first espionage cell in the federal government in 1934 at the Agricultural Adjustment Administration.Footnote ⁴³ In October 1928, Ware visited Wilson and asked if he would accompany him to the Soviet Union to help organize a gigantic, state-owned wheat farm of over a hundred thousand acres. After some hesitation, Wilson agreed, and thus spent most of the second half of 1929 in the Soviet Union. Wilson, as Gilbert notes, found his work in the Soviet Union “both exhilarating and disappointing.” The Soviets were keen to buy and use American machinery, as Wilson advised, but they also insisted on controlling every decision concerning the farm from the center. Their refusal to allow their farm managers to exercise the smallest discretion led to the failure of the farm’s winter wheat crop in its second year. (The farm manager with whom Wilson had worked, as Wessel understatedly notes, was subsequently “transferred to a small farm in Siberia.”) Remarkably, although the Soviets refused to follow all of Wilson’s recommendations, they nonetheless continued to use his “basic system of operation … well into the 1950s.”Footnote ⁴⁴

In 1924, around the time Wilson was embarking upon the Fairway Farms experiment, Henry C. Taylor also asked Wilson to lead the Division of Farm Management and Costs in the Bureau of Agricultural Economics (BAE). The BAE was a new bureau within the United States Department of Agriculture that Taylor, principally, had organized in 1922, to give agricultural economists greater influence in shaping national farm policies. Wilson, in turn, was merely one of a growing list of Wisconsin graduates who already did—or would come to—work there.Footnote ⁴⁵ Importantly, as Rowley observes, it was in the BAE where “bold new thinking about the problem of limited markets and increasing production occurred.”Footnote ⁴⁶ Wilson was an essential part of this “bold new thinking.” Not long after returning from Russia, he gave a remarkable interview in which he suggested that large-scale, mechanized wheat farming, like that the Soviets were undertaking, was, in one form or another, the wave of the future. If this was so, the interviewer asked, what would become of our “pioneer ideal of a free-hold agriculture?” “’I don’t know,” Wilson replied. “If it delivers our farmers over as laborers to the mercies of Capital, then all our progress, all our mechanization, will have failed.” He explained that his Fairway Farms experiment had shown that family wheat farms, given persistently low wheat prices, had to cultivate ever-increasing acreage “between 1,200 and 3,000 acres, maybe even more” just to stay afloat. “The fellow who’s farming simply to have a home out in the country can’t stand the pace.” But even if he could stand the pace, Wilson continued, he had come to doubt the value of single-family farming anyway:

But large-scale mechanized farming, due to its greater efficiency, held out the prospect of dramatically reducing the labor farmers needed to invest in order to achieve and maintain a decent standard of living. When asked what farmers would do with greater leisure, Wilson, echoing Ely, responded:

What Wilson was seeking, and what he believed was perfectly possible, was some way of re-organizing American agricultural production and living arrangements more generally that was “midway between excessive communism and excessive capitalism.” “Next to Russia,” he explained,

By concentrating their homes together and sharing much of the work, the families were able to achieve a standard of living that was at least comparable to the old independent family farm, but one which also made greater “leisure”—and thus the cultivation of higher capacities—more accessible to its residents.Footnote ⁴⁷ What the Mormons had achieved freely, Wilson believed could be effected more broadly through public policy.

Wilson’s aspiration in this regard was no mere dreaming, but would actually inform the long-range land utilization program he was then developing. By early 1930, Wilson—though no longer officially working at the BAE but still closely collaborating with some of its long-time employees, especially Mordecai Ezekiel—believed the time was ripe for “breaking something loose” in the way the United States approached agricultural production.Footnote ⁴⁸ He thus launched an energetic campaign to persuade farm leaders, business leaders, and the American people generally to adopt the domestic allotment system of production control as the most urgent part of a far wider, longer-term and even more radical plan for land utilization.Footnote ⁴⁹ Or, as Hamilton more pointedly observes, Wilson “saw the allotment plan as a ‘smokescreen’ for preparing the way for a ‘bunch of heavy artillery on agricultural planning.’”Footnote ⁵⁰

Although Wilson’s land utilization proposal stopped well short of calling for the outright “abolition of property,” he did take surprisingly bold steps in this direction. On April 16, 1932, Wilson gave a radio address on “Land Utilization,” in which he outlined six steps essential to land planning: First, Congress should repeal the Homestead Act and replace it with a “new national land-policy bill.” This step, as Rowley notes, would end “the epoch of free land and limitless agricultural expansion.” It would end, in other words, the federal government’s several decades long reversal of its traditional policy of turning publicly owned lands over to private ownership and enterprise.Footnote ⁵¹ Henceforward publicly owned lands should remain publicly owned. “‘Second, each state should immediately classify its land, develop a state land-use plan, and institute a program of action,’” much as New York Governor Franklin Roosevelt was already doing in New York. This proposal plainly raised a host of questions about how expert-drawn land classification plans would affect land held in private hands. But Wilson only clarified somewhat how it would affect owners of land deemed submarginal for agricultural production. Thus, third, Wilson urged the federal government to remove from agricultural production, privately owned land deemed insufficiently profitable for agricultural production. Wilson was probably thinking about public purchase of privately owned land, but Ely, at least, was willing to countenance compulsory removal in some circumstances.Footnote ⁵² Fourth, taxes on the land should be reduced and, where necessary, local governments reorganized. Fifth, on privately owned lands deemed sufficiently profitable for agricultural production, Wilson urged the federal government to prevent surplus production by enacting the domestic allotment system of production control—the system developed by William J. Spilman, Beardsley Ruml, and Mordecai Ezekiel.Footnote ⁵³ Finally, because Wilson anticipated that many families previously farming submarginal land removed from production would need new homes, he advocated a program of “part-time farming and industrial decentralization.” This initiative was the aspect of the program in which his ideas about how economic production, and living arrangements more generally, might be reorganized to provide farmers with greater opportunity to realize their higher capacities. The basic idea was that farmers displaced due to submarginal land, and other causes, could be resettled in expert-planned communities whose economies would rely on some combination of subsistence farming and industrial work, thereby ensuring a decent and secure standard of living and living arrangements that were otherwise crafted to foster higher development of its residents’ mental, aesthetic, and social capacities.Footnote ⁵⁴ In 1933, when this proposal became, in its first administrative incarnation, the Division of Subsistence Homesteads (DSH), Wilson himself would be tapped to direct it. The program he did so much to develop, as Paul Conkin perceptively observes, affected “one of the most open breaks with the individualistic tradition in American history.”Footnote ⁵⁵

In 1931–1932, as part of his public campaign for land utilization, Wilson organized two conferences on the subject of Economic Policy for American Agriculture. The first convened in September 1931, the second in late June 1932. Columbia economist Rexford G. Tugwell, along with Henry A. Wallace and an aging John R. Commons, among others, attended the first conference.Footnote ⁵⁶ Wilson was especially keen to secure Tugwell’s participation in the Second Conference and his effort to do so would prove to be a critical step in his campaign to translate his vision of social planning into political reality. After the conference concluded, three participants—John D. Black (who helped formulate the domestic allotment system of production control), J. S. Davis and H. R. Tolley—drafted a preliminary report summarizing the conference’s proceedings entitled “Report on Economic Planning for Agriculture.” This report is a fascinating window into the thinking of the men who would play the leading roles in shaping the New Deal’s bold planning initiatives.

Despite its title—“Economic Planning for Agriculture”—the report makes plain that the planning under discussion was not narrowly focused on agricultural production nor even economic planning more generally, but envisioned a far wider conception of social planning: “‘Economic planning, conceived in a broad sense, constitutes a large part of social planning, but by no means the whole.’”Footnote ⁵⁷ “Social planning,” in contrast with economic planning, is concerned with “human activities” generally:

Social planning aspired to guide and coordinate an indefinite swath of “human activities,” not only with a view to achieving certain material objectives, but with a view to “enhancing” or improving Americans’ “well-being.” The “objectives” of planning, the report explains, were:

1. 1) A higher and more adequate content of living, including

   1. (a) certain minimum essentials for all, at all times, and

   2. (b) an increased amount and variety of non-essentials making for fuller living for the many rather than a few

2. 2) Smoothing the course of progress and improving the balance of society

   1. (a) minimizing extremes of economic fluctuations, up and down;

   2. (b) mitigating the consequences of inevitable depressions by the aid of reserves built up in times of prosperity; and

   3. (c) promoting economical readjustments in labor and capital necessitated by progress.

3. 3) Raising standards of quality of the people and their culture.

4. 4) The maximum opportunity for individual freedom of choice, advancement, and movement, for all, that is consistent with the foregoing.

Social planning would thus entail achieving various material objectives—guaranteeing “certain minimum essentials for all,” increasing the amount and variety of nonessentials for the many, striving to minimize fluctuations of economic growth, palliating the consequences of depressions, and so forth; but, these goals were themselves only means of achieving a far broader conception of human “well-being.” The ultimate object of social planning, in other words, was to “[r]aise standards of quality of the people and their culture,” or, put differently, to improve both the nature and broader environmental (or cultural) nurture of the American people.Footnote ⁵⁸ Plainly, the planners subordinated “individual freedom of choice” to the indefinite control necessary to achieve these objectives.

After laying out this broader conception of social planning, the report turns to consider “industry planning” more narrowly. Strikingly, it credits Soviet-style centralized planning with inspiring wide interest in planning in America: the “current impulse toward social and economic planning” in America is due not only to the Depression and the “display of weakness in grappling with its pressing problems,” but also “the example of Soviet Russia with her Five-Year Plan.” When the conferees began discussing whether industrial planning was possible, and how it might be done, both Communist and Fascist approaches were discussed as possible models. Mordecai Ezekiel—the BAE economist with whom Wilson was closely collaborating in developing and promoting the domestic allotment initiative—“called attention to the Italian syndicates as a type of planning and control organization … contrasted with that of Soviet Russia.”Footnote ⁵⁹ Rexford Tugwell’s proposal, though incorporating Fascist elements, moved further in the direction of Soviet-style centralized planning.Footnote ⁶⁰ Tugwell was a professor of economics at Columbia University. Like many American progressives who were keenly interested in the Soviet experiment, Tugwell had visited the Soviet Union in the summer of 1927. After his return, he wrote an optimistic review of the Soviet reorganization of agricultural production. In this and other articles over the next several years, Tugwell would commend various aspects of the Soviet experiment.Footnote ⁶¹

While thus radical in his views, Tugwell’s radicalism was not exactly Marxist in origin. Tugwell was a proud product, as an undergraduate and graduate student, of the Wharton School of Business at the University of Pennsylvania. Whereas M. L. Wilson’s approach to reform had been profoundly shaped by Richard T. Ely, Tugwell had been at least as profoundly affected by Simon N. Patten and Scott Nearing (one of Patten’s older students turned colleague). Like Ely, Patten had studied with leading members of the German Historical School of economics and earned a Ph.D. in 1878 at the University of Halle.Footnote ⁶² He returned home, as Rodgers notes, “eager to ‘help in the transformation of American civilization from an English to a German basis.’”Footnote ⁶³ In 1885, Patten and E. J. James, another German-trained economist, having heard Johannes Conrad exhort his American students to imitate the Verein für Socialpolitik, circulated a proposal to organize a “Society for the Study of National Economy” in the United States; it was shortly thereafter that Ely, as previously mentioned, circulated his own draft proposal, which became, in a somewhat watered down form, the founding charter of the AEA.Footnote ⁶⁴ In 1887, at any rate, James hired Patten to teach economics at the University of Pennsylvania’s Wharton School of Business.Footnote ⁶⁵ Over the next thirty years, Patten and James built up a department that included “many young Progressive faculty members,” including Nearing.Footnote ⁶⁶ Both Nearing and Tugwell praised Patten as a seminal influence on their thinking.Footnote ⁶⁷ Tugwell, further, credits Nearing with “defin[ing]” the “social philosophy” he was developing in his early years at the Wharton School.

Tugwell first encountered Nearing as an undergraduate at the University of Pennsylvania. Nearing began teaching elementary economics while working on his Ph.D. under Patten’s direction.Footnote ⁶⁸ Between 1908 and 1915 he taught economics and sociology, until the university refused to renew his contract because of growing concern over his radical economic views. From 1917 to 1923, Nearing was a member of the Socialist Party of America (SPA); in 1927 he became a member of the Workers Party—the party that, subsequently, became the Communist Party of America. In 1930, he resigned from the party in a dispute over Moscow’s refusal to approve publication of his manuscript on imperialism because it departed from Lenin’s canonical views on the topic.Footnote ⁶⁹ Tugwell, in any case, credits Nearing’s 1912 book, The Super Race, with “defin[ing]” his emerging “social philosophy”:

Tugwell’s conception of social reform was thus oriented toward the realization of an unusually bold or ambitious aim—that is, the development of “a Super Race.” The aim was not to form the occasional “super man,” but, picking up where ancient Greece and Rome had left off, to form an entire “Super Race” of Americans.Footnote ⁷¹ Doing so would necessitate expanding public control over marriage and reproduction, through a program of negative and positive eugenics, as well as by improving the broader social conditions in which these new and improved Americans would be raised. Americans like this, Nearing and Tugwell hoped, would not only exceed the quality of any earlier generation of Americans but would also “set a standard for the world”:

How we felt at that time is expressed in one of his [Nearing’s] closing paragraphs:

It was Nearing’s philosophy, this soaring “vision of human nobleness,” Tugwell writes, that inspired his younger self to pen “the verses that would be so often quoted, containing the line ‘I shall roll up my sleeves, make America over.’ Making America over was what I thought we were supposed to do.”Footnote ⁷²

By June, 1932, when Tugwell attended Wilson’s Second Conference on Economic Policy on American Agriculture, he had already become an influential member of FDR’s “brains trust.” Tugwell’s desire to move in the direction of Soviet-style centralized planning was manifest in the conference report:

Plainly, Tugwell does not advocate the outright nationalization of all productive enterprise, as did Marx. But he does urge incremental steps that, though paralleling Mussolini’s corporatism at the outset, would move even further in the direction of Soviet-style centralized planning. The first steps would entail organizing an industrial council in every existing industry, including agriculture, while at the same time building up the administrative capacity of the federal government to formulate a comprehensive plan by establishing a new National Economic Council. Although the Council, initially, would serve only in an advisory capacity to the president, and would thus possess no power to compel compliance with the plan it would formulate, Tugwell also suggested that “[w]ith experience, it would be possible to go further.”Footnote ⁷⁴

Tugwell’s proposal, though less radical than Soviet-style central planning, would nonetheless radically reorganize America’s economic and political institutions. In an article published earlier that spring, Tugwell stressed this fact. The “disasters of recent years,” as well as “the interest of the liberals among us in the institutions of the new Russia of the Soviets, spreading gradually among puzzled business men,” he observes, “has created wide popular interest in ‘planning’ as a possible refuge from persistent insecurity … [.]” Although plainly sharing their interest, Tugwell worried that many who professed support for planning did not understand just how radically it would transform our existing economic and political institutions. Economically speaking, planning would mean that “business will logically be required to disappear.” “This,” he emphasized, was no exaggeration but was “literally meant.”

The political changes planning would entail were no less radical. Just as it is “a logical impossibility to have a planned economy and to have businesses operating its industries,” Tugwell writes, “it is also impossible to have one within our present constitutional structure. Modifications in both, so serious as to mean destruction and rebeginning, are required.”Footnote ⁷⁶

In Tugwell’s estimate, then, planning would indeed necessitate “making America over.”

Yet, as the report of the Second Conference on Economic Planning for Agriculture” rightly points out, as radical as industrial planning would be, such an approach was, nevertheless, less radical than the Soviet variety:

Echoing the “state socialism” of their forebears in the German Historical School, America’s progressive planners sounded a more conservative note in relation to the Soviets by denying that “a complete transformation” of America’s existing economic and political structure was a prerequisite of effective social planning. Whatever degree of change would ultimately be necessary could be achieved in an evolutionary or incremental way through existing institutions rather than violent revolution. The report also sounds a more conservative note in denying that “social planning” would necessarily entail “comprehensive planning combined with comprehensive control and execution.” As radical as Tugwell’s proposal for economic planning was, as indefinitely as it would expand public control, it did not call for the immediate nationalization of all private property.Footnote ⁷⁷

Tugwell’s support for Wilson’s land utilization campaign, in any case, would prove key to its political realization. Wilson, remember, was especially keen to ensure Tugwell’s participation in the Second Conference on Economic Planning for Agriculture. During the conference, he and Henry A. Wallace—whom FDR would select the following February to be his Secretary of Agriculture—gave Tugwell a detailed description of the domestic allotment production control plan, as well as the politics surrounding its consideration. Tugwell, after considering it, called FDR and asked him “to put the principle of domestic allotment into the speech” he was crafting for the Democratic National Convention. (The convention convened in Chicago just two days after the Second Conference concluded.) FDR, after listening to Tugwell explain it, agreed and asked him to telegram two or three hundred words that might be included in the speech. (FDR did subsequently work in a shorter version.)Footnote ⁷⁸ In early July, just days after FDR was nominated, Wilson, who, like many progressives, had been a long-time Republican, was invited to Albany to discuss the domestic allotment plan. In his conversation with FDR, Wilson took the opportunity to explain other aspects of his larger plan for land utilization—such as withdrawing submarginal land from agricultural production, his industrial decentralization initiative, and so on. FDR, recognizing the parallels between his own land planning initiative and Wilson’s proposal, was pleased. Thereafter, as Hamilton notes, “Wilson became the campaign’s principle adviser on agricultural issues.”Footnote ⁷⁹ He submitted memoranda to the campaign, and FDR followed both the substance and rhetorical tack he advised in crafting his major campaign address on agriculture in Topeka. “I don’t need to tell you how pleased I was about the Topeka speech,” Tugwell later wrote to Wilson. “You—not I—deserve the credit.”Footnote ⁸⁰ By mid-December, as FDR began to organize his new administration, Tugwell, Ezekiel, Wilson and many others helped draft a bill which, with some modification, would become the Agricultural Adjustment Act of 1933. On March 12, 1933, FDR sent the bill to Congress along with a message stating frankly that it marked “a new and untrod path.”Footnote ⁸¹ On May 12, President Roosevelt signed the act into law, thereby effecting what Van L. Perkins calls, in a close study of the bill’s origins, enactment, and implementation, a “revolution in agricultural policy.” The Act was revolutionary, he writes,

Revolutionary compared to past practice, the Act was, nonetheless, in its authors’ minds just one incremental step toward far more radical change. In February 1933, FDR nominated Henry A. Wallace to be his Agricultural Secretary and Tugwell to be his Assistant Secretary of Agriculture. Although Wilson was being discussed for a higher-ranking USDA position, Tugwell wanted him to direct the development and implementation of the domestic allotment plan as the Head of the Wheat Section of the Agricultural Adjustment Administration (AAA), the new administrative entity created to implement the Act’s provisions. (The AAA was not an independent agency but part of the USDA.) As Rowley observes, Tugwell believed that the domestic allotment plan “eventually would lead to a national land-planning project that Wilson could direct. In connection with this, Wallace wrote Wilson in February 1933, ‘Don’t take under secretary of agriculture. We want you for something more important—Lord of the Land.’”Footnote ⁸³ For the first several months of FDR’s administration, then, Wilson oversaw the development of the domestic allotment program in wheat farming. As previously mentioned, however, by August 1933, he was consulting with Harold Ickes, FDR’s Interior Secretary, who invited him to direct the development of his part-time farming and industrial decentralization initiative, which was called, in its initial administrative form, the Division of Subsistence Homesteads (DSH).Footnote ⁸⁴

Wilson’s Division of Subsistence Homesteads is a little remembered but surprisingly radical venture into Ely’s “socio-teleological” planning. Aggressively interpreting the rather sparse authorization contained in Title II of the National Industrial Recovery Act, Wilson initiated public purchase of land and the construction of what were, in many cases, entirely new communities built from the ground up—communities that would ultimately number around a hundred nationwide.Footnote ⁸⁵ In sharp contrast to the Soviet Union’s collective farms, no one was compelled to live in these communities. Rather, the planners utilized a somewhat rigorous screening process to populate communities whose purposes were far more ambitious than mere “subsistence.” These communities, Wilson explained, were designed to provide a “mode of living” that had significant “physical or economic advantages,” but also important “esthetic” or “cultural” advantages. Thus, although the communities were planned to enable their residents to enjoy healthier diets, a supplemental source of income, a place to retire and a cushion against unemployment, they were also designed to enable them to raise children away from “urban crowding and urban community slum conditions,” to be in a closer association with nature, to be less tempted to “keep up with the Joneses,” and, “most important of all … a chance to utilize their increasing leisure time in more uplifting and cultural activities.” In other words, the aim of the social planners at the Division of Subsistence Homesteads was to pre-engineer a comprehensive social environment that would form or cultivate better Americans.Footnote ⁸⁶

Providing these advantages would, of course, entail a sharp break with the freedom of its residents. Although the planners favored leasing homesteads, rather than allowing their residents to buy them, they were forced to work out a long-term lease-to-purchase agreement as a compromise. Moreover, all of the communities relied heavily, some exclusively, on cooperative economic production as a replacement for free enterprise. Indeed, as Conkin notes, “No more concerted public effort was ever made in the United States to develop co-operatives of all kinds.” The planners believed cooperative enterprise would not only be more economically efficient, but would also help erode its residents’ residual “individualistic” or “‘competitive-conditioned behavior patterns.’”Footnote ⁸⁷ The communities were not only planned in advance, but also relied heavily upon ongoing expert instruction to ensure their residents made the decisions necessary to achieve the promised “economic and cultural advantages.” On some projects, for example, the homesteaders had joint bank accounts with their project manager and were unable to spend any money without their manager’s prior approval and signature; in other cases, the planners provided community centers that went unused and prescribed edifying music that the residents were supposed to—but didn’t—want. “To many,” Conkin writes, “the close supervision and rigid limitations on individual initiative were galling. The endless investigations and inspections were also resented.”Footnote ⁸⁸ Nevertheless, Wilson and his fellow planners believed the communities fostered a higher moral grade of life for their residents than they believed was possible in the older “individualistic” America and would thereby serve as models for all those living outside of them. “[A]lways on exhibit,” Conkin concludes, these new experimental communities “were to demonstrate and advertise the new society to the rest of mankind. Planned by social scientists, financed by the vast resources of the government, they were to be visual signposts pointing to the future.”Footnote ⁸⁹

As ambitious as the Division of Subsistence Homesteads was, Wilson and other Ely students, were taking other steps to engraft their “socio-teleological” conception of planning within the burgeoning federal bureaucracy. Perhaps most importantly, by mid-1934 Wilson, and especially Lewis C. Gray, were playing leading roles in the development of what was ostensibly a land planning initiative within the new National Resources Board (NRB)—the nation’s first ever agency for developing a sweeping conception of national planning. Gray was yet another “protégé” of Richard T. Ely and Henry C. Taylor.Footnote ⁹⁰ After completing his Ph.D. at the University of Wisconsin, Madison, Gray taught land economics in Ely’s Political Economy Department as well as Henry C. Taylor’s Agricultural Economics Department. During the teens, as Gilbert notes, “Gray pioneered the economics of natural resources by extending Ely’s work on conservation.”Footnote ⁹¹ In 1918, Gray went to work for the USDA becoming, in July 1919, the director of a newly created Division of Land Economics—a division whose creation was urged by a special advisory committee including Taylor, Ely, and other Wisconsin graduates like O. E. Baker.Footnote ⁹² Ely was not only involved in the Division’s creation, but its original vision closely followed the “National Policy for Land Utilization” he had been developing. In its original conception, Gray’s new division would focus on five areas of research: land classification and utilization; land values; land ownership and tenancy; land settlement and colonization; and land policies, all of which were integral parts of Ely’s model policy.Footnote ⁹³ In 1931, Gray persuaded Nils Olsen, the Chief of the BAE (another Wisconsin graduate), and President Hoover’s Secretary of Agriculture, Arthur M. Hyde, to convene a National Conference on Land Utilization in Chicago.Footnote ⁹⁴ This conference, as Conkin observes, “represented the first great fruition of Ely’s work in land economics.” Many of the conference presenters were Wisconsin graduates, including Wilson and Gray. Ely, now in the twilight of his career, gave a paper in which he underscored the significance of the USDA sponsoring a conference such as this in American history—and his own pivotal role in bringing it about:

The conference concluded by calling for, among other things, the creation of a new National Land Use Planning Committee. The purpose of this new interagency committee was to develop “adequate machinery” for furthering the development and implementation of land planning policies.Footnote ⁹⁶ Gray became the executive secretary of this committee.

In June 1934, President Roosevelt created the National Resources Board (NRB) to replace his short-lived National Planning Board (NPB), and gave it five months to prepare a report on the land and water resources of the nation. The Board would be assisted in this task by two technical committees: a Land Section and a Water Section. Gray, then the head of the Land Policy Section at the AAA, was appointed Director of the NRB’s Land Section, and his interagency Land Use Planning Committee effectively became the NRB’s Land Planning Committee. Wilson chaired this committee; Gray and Ezekiel were among its several members.Footnote ⁹⁷ Gray prepared the Land Planning Committee’s report, which was reviewed and revised by Wilson and the other members of the Land Planning Committee.Footnote ⁹⁸ The Land Report, which situates itself as the culmination of a policy reversal begun during the Progressive Era, delivers a surprisingly scathing indictment of private property: “The traditional American attitude toward land has been to develop and exploit it as rapidly as possible, with little regard for the consequences.” While this “doctrine of laissez-faire” “contributed to a rapid expansion and development,” it also “produced a planless, crazy-quilt pattern of land use, destroyed or impaired a large proportion of the Nation’s irreplaceable resources, and wrecked the hopes, aspirations, and the very lives of untold thousands of people.” Nowhere was this doctrine “given freer rein than in the use of our agricultural lands.” For a “generation or more,” however, “a gradual change in this traditional attitude has been under way … [which] has been somewhat reflected in land policies, particularly those relating to forests[.]” The report then underscores just how radically the NRB’s land planning departs from the traditional attitude:

The Land Report, and the planning policies for which it calls, represent a “complete reversal” of the “doctrine of laissez-faire” because it proceeds from the premise that the State, not the individual, is the real owner of the land: “[A]bsolute ownership,” the Report subsequently and pointedly declares, “still resides in the State (either individual commonwealth or Nation), and under the police power the State may constrain the private use of land within the bounds set by the public interest.”Footnote ¹⁰⁰ Guided by their substantive conception of the “general welfare,” the Report calls for planners to predict or forecast Americans’ future needs of the land; inventory the land available, both public and private, to satisfy those needs; and then devise policies to correct the “maladjustments” between how the planners believed the lands should be used and how they actually were being used by private landowners. Planning would thus entail a radical reorganization, if not the outright abolition, of the legal institution of private property, as “most of the serious maladjustments apply to land in private ownership and grow out of the virtually unlimited powers of use and abuse which we have permitted in our system of private property in land.”Footnote ¹⁰¹

The Report subdivides the land into several categories—for example, agricultural, range, forest, recreational, and so on—and then indicates some of the major lines of policy needed to address only the most “glaring” maladjustments in each area. The “maladjustments” plaguing agricultural land, for example, would necessitate a massive expansion of public ownership accompanied by greater regulation of privately-owned land. In keeping with Wilson’s earlier land utilization plan, the Report underscores the problem of submarginal land. Submarginal lands are those which, when farmed, only give rise to “incredibly low standards of living.” The Report thus proposes a “program of land purchase and removal” to convert 75 million acres of privately held land back into publicly-owned land.Footnote ¹⁰² Relatedly, the Report identifies “soil deterioration,” through erosion, farming, and other causes, as an “acute” problem. Though claiming that “it should be the aim to avoid imposition of legal restrictions to control erosion wherever possible,” the Report also insisted that “public assistance and control may be necessary in some instances.” Because of the “interstate” character of erosion, it recommended that the federal government take the lead in coordinating erosion-control measures on the local, state, and federal levels, encouraging control measures on the lower levels by offering financial assistance, and promoting public acquisition—federal and state—of “the most highly erosive areas on which control measures under private ownership do not appear feasible.”Footnote ¹⁰³ In its treatment of other lands, the Report also recommends sweeping expansions of public ownership of the land through acquisition of 244 million acres for timber production and an additional 114 million acres for recreational purposes, wildlife conservation, and other purposes.Footnote ¹⁰⁴

As stunning as this was, the Report’s conception of national planning was more ambitious than this. First, in accord with Ely’s 1917 definition of “conservation,” the Report emphasizes that “development,” not mere avoidance of waste, is the real object of conservation.Footnote ¹⁰⁵ This Report, the NRB thus writes,

Second, the optimal development of our natural resources, the Report continues, cannot be achieved unless our natural resources were planned in relation to a far wider range of human activities:

Natural resources cannot be planned in “isolation,” in other words, but must be planned in relation to labor, transportation, communication, health, education, and so forth.Footnote ¹⁰⁷ As indefinitely broad as this would be, the Report further declares that the ultimate object of resource planning isn’t simply to “enrich and enlarge” our natural resources, but to facilitate a higher development of our “human resources.” Echoing Ely’s 1917 essay “Conservation and Economic Theory,” which simply recapitulates his understanding of the “new conception of the State,” the Report declares:

The ultimate purpose of national planning, in other words, was to reorganize the legal ownership and use of our natural resources, in relation to a host of other human activities, in ways the planners believed would reduce work (and thereby create greater leisure), raise the standard of living and enhance the overall “well-being of the masses of the people.” Ely’s “promised land,” such as it was, was at hand.