Introduction
Although William McAdoo is well known to historians for his bitter struggle with Al Smith for the 1924 Democratic presidential nomination at the New York national convention, we know little about the platform and electoral strategy on which he ran.Footnote 1 This article shows the ways in which McAdoo used his term as director general of the United States Railroad Administration (USRRA) in 1918 as an important part of his nomination campaign in 1924. At the USRRA McAdoo used federal control of the nation's railroads to create a constituency for his future presidential ambitions. In so doing he attempted to harness the electoral rewards that were made possible through government activism when it was directed not only at a perceived national interest but also to the demands of powerful interest groups. McAdoo ultimately failed in this endeavour, but his desire to harness the power of the assertive and increasingly competent state for electoral gain presaged those of other national politicians in the next great episode of state activism during the Great Depression.
Despite its importance to the United States’ mobilization during World War I, the USRRA has received little sustained attention from historians. Walker D. Hines, its second director general, published his memoir in 1928. Hines's work was a defence of the USRRA, and of his conduct of it, in the face of criticism of his agency as an example of federal overreach that failed to deliver benefits commensurate to its cost.Footnote 2
Forty years later, in 1968, K. Austin Kerr published what is so far the only extended analysis of the USRRA by a disinterested historian. Kerr framed his study as an example of interest-group politics at work, highlighting the role (and exclusion) of shippers and the increasing prominence of labour concerns within the USRRA.Footnote 3
Kerr argued that the USRRA's origins, operation, and fate challenged the orthodoxy that early twentieth-century American history could be neatly demarcated between a ‘Progressive Era’ and then a conservative epoch, with World War I as the pivot. His claim, however, has been largely ignored. In 1980 David M. Kennedy called federal operation of the railroads “without doubt the most drastic mobilization measure of the war,” but then pigeonholed it as a measure of limited resonance within a political culture that rushed into war and then quickly retreated into normalcy. “Suspended in an inchoate state,” Stephen Skowronek concluded in 1982, the USRRA “sustained the government through a major crisis of authority but failed to resolve the dilemma of reconstituting authority.”Footnote 4 Beyond such brief mentions, however, no historian has since explored the USRRA's meanings for the political culture of its day.
This article examines a particular resonance of the USRRA as it worked upon the political thinking and aspirations of William G. McAdoo, who served as its first director general. McAdoo was certainly alive to the implications of the USRRA, both for the economic life of the nation at war and peace and as a vehicle for his own presidential ambitions. From both perspectives McAdoo's hopes for the USRRA came to nothing, but they reveal not only his own political strategy in the first half of the 1920s but also the implications of the USRRA's experiment in faux nationalization and genuine state activism for democratic electoral politics.
William McAdoo and the USRRA during World War I
Pressures of the war between 1914 and 1918 obliged its combatants to improve the efficiency of their rail systems. German railways had long been government-owned, and the French network partly so. British railways came under government control in 1914, and some American administrators formed an unlikely alliance with former Populists and some hopeful Progressives to push for a similar policy, at first as a wartime expedient but perhaps also as a permanent change. The Army Appropriations Act of 1916 authorized the President to “take possession and assume control of any system or systems of transportation” to facilitate a war effort. After the declaration of war in April 1917 President Woodrow Wilson first chose to encourage rather than force coordination through bodies within the Department of War, and through the railroads’ voluntary efforts, but these were hampered by logistical pressure and the railroads’ reluctance to cede their autonomy.Footnote 5
The United States’ hothouse mobilization in 1917 pushed the Wilson administration to revisit the emergency powers over transport that it had received in 1916. In the last quarter of 1917 the American rail system struggled to cope with shipping delays, a shortage of rolling stock, insufficient coordination of carriers, and bad weather. In December 1917 the Interstate Commerce Commission (ICC) came out in favour of unified operation of the railroads, either through voluntary integration or through the President's powers under the Army Appropriations Act.Footnote 6
By then Wilson had been persuaded, but he was uncertain about whom to appoint to run the nation's railroads. Secretary of the Treasury William G. McAdoo made it clear that he wanted the job. McAdoo had already founded and run a railroad (the Hudson and Manhattan, now the PATH system) in the years before Wilson's election in 1912, and he was famously ambitious.Footnote 7 In 1914 he had married Wilson's youngest daughter, Eleanor, and so was not only the President's Secretary of the Treasury but also his son-in-law. Wilson, however, was dubious – not through lack of faith in McAdoo but because he thought that he already had too much to do. Overseeing the financial needs of a nation at war, and ensuring funding for the Allies as they exhausted their own resources, seemed work enough. Wilson's secretary Joe Tumulty, however, reminded him of the adage that “if you want to get a thing done, the best man to apply to is to a busy man, and this maxim applies to Mr McAdoo most conspicuously.”Footnote 8
Wilson's announcement of the creation of the USRRA, and his appointment of McAdoo to run it, met widespread but not universal praise. Prominent bankers welcomed the USRRA as the best solution to the railroad industry's problem of raising capital in an overheated financial climate, railroad brotherhoods hailed it as a means to improve their wages and conditions, and railroad shareholders were pleased at the prospect of a guaranteed return on their investment. Even the railroad owners gave their conditional approval to wartime federal control of their industry.Footnote 9
Some Republicans were less sure about the selection of McAdoo to lead the USRRA. Congressman Frederick Gillett of Massachusetts noted McAdoo's status as Wilson's son-in-law and as the “great dispenser of patronage and the political advisor to the President … He is already the Pooh-Bah of this administration, and there are other members of the Cabinet who would have excited less distrust.” The prominent advertising executive Bruce Barton wrote that “a man in my office said to me today, ‘did it ever occur to you that Mr McAdoo now has concentrated in his hands more power than any man in the world?’”Footnote 10
McAdoo assumed his new powers with characteristic vigour. Under the terms of the Federal Control Act of 1918, as director general of the USRRA he was now master of 300,000 miles of track, fifty-seven canals, thousands of miles of inland waterways, over two thousand railroad corporations, and more than one and a half million employees. From the outset the USRRA focussed on railroads over the nation's rivers and lakes. That did not change during the war or for the remainder of the USRRA's existence, because McAdoo and his successor found that the railroads were “a run-down, confused, chaotic mess; an entire industry that was sliding rapidly downhill. It was anemic, undernourished, and subject to alarming attacks of heart failure.”Footnote 11
McAdoo worked hard to force operational integration upon the atomized railroads. He forbade solicitation of traffic by individual railroads and consolidated their ticket offices and freight depots. Shippers’ rights to specify carriers and schedules were abrogated so that the USRRA could determine those issues itself. Passenger services were also rationalized to eradicate duplication and expand capacity to transport matériel and soldiers.Footnote 12 McAdoo worked closely with those railroad executives who promised him quick improvements in efficiency, and sidelined shippers and railroad regulators within the ICC. This policy paid him and the USRRA quick dividends as they confronted the transportation crisis of 1917–18, but it lost him and his agency the support of shippers and regulators, who resented their exclusion from the inner workings of the USRRA. Shippers also feared that the USRRA had been captured by the same railroad operators whom it was supposed to supplant and that it was too amenable to railroad labour groups.Footnote 13
At the beginning of 1918 the Allies faced a severe shortage of cereals, and American wheat was held up in silos because of railroad congestion, a shortage of cars and coal, and exceptionally severe weather. McAdoo responded by transferring all available freight cars to transport wheat and other grains to eastern ports.Footnote 14 He also directed that rolling stock be standardized, freight yards shared, and less-than-carload shipments forbidden. The USRRA also imposed high demurrage charges on shipment delays and idle trains, and cancelled transportation-priority orders established by other agencies in favor of its own. The result was that eastward freight movements rose markedly during the first six months of federal operation, and at the same time the railroads transported 4·3 million soldiers and sailors, and millions more civilians, to their destinations.Footnote 15
McAdoo was in his element at the USRRA. Now he could return to the industry in which he had first become famous, this time on a truly national scale and with direct impact on the war effort. The USRRA also offered him more personal benefits. By 1918 his presidential ambitions had been awakened, and controlling an industry that employed nearly two million potential voters promised him great political rewards.Footnote 16
Nowhere was this more evident than in McAdoo's USRRA wage policies. Railroad wages had failed to keep pace with the cost of living after 1910, and worsening inflation after the outbreak of war in Europe in 1914 had left them even further behind. By the end of 1917 railroad employees, led by their well-organized brotherhoods, were restless.Footnote 17
In response, McAdoo enacted wage increases through USRRA General Order No. 27 at the end of May 1918. These raises were generous and comprehensive, and gave the lowest-paid railroad workers the highest-percentage increases. Flagmen's wages jumped 50 percent to nearly sixty dollars per month, railroad engineers received raises of 42 percent, freight train firemen received 35 percent, and freight conductors’ wages rose 20 percent. Only those who earned more than $250 per month, a tiny minority of the railroads’ workforce, missed out altogether.Footnote 18
General Order No. 27 also mandated equal pay for equal work for all railroad employees, including women and African Americans, and provided time-and-a-half wages to those who worked more than eight hours per day or on Sundays and public holidays.Footnote 19 McAdoo was a committed segregationist, but he did accord African Americans this basic form of wage justice.Footnote 20 An African American fireman on the Missouri and Ohio Railroad later told him that equal pay for black employees had “enabled me to secure me a little home with a tract of ground thereon and after which a boy child was born unto us, and we christened him with the name of John McAdoo Gordon.”Footnote 21
The total cost in 1918 of General Order No. 27 was more than $784 million.Footnote 22 General Order No. 28, promulgated soon after No. 27, lifted freight and passenger rates by 25 percent to partially recoup the costs of General Order No. 27.Footnote 23 Shipping interests were horrified, but labour leaders were delighted, and even the railroads, secure in their guaranteed rental payments and comforted by General Order No. 28, reacted with equanimity.Footnote 24
As Bernard Baruch did within the War Industries Board, McAdoo used high prices, this time for labour, to elicit maximum production during the Great War.Footnote 25 Purchasing industrial peace on the railroads was not only an exercise in industrial justice but also an attempt to win labour support for the war effort within an industry that was the nation's largest employer. McAdoo also suggested that railroad workers be eligible for war-risk insurance in the same way as soldiers and sailors. Railroad employees were as essential to the war effort as men in uniform, he thought, and should therefore be afforded similar protections and privileges to the nation's warriors. McAdoo was even prepared to extend that logic to the whole of the federal civilian workforce, and to transform war-risk insurance into superannuation so that government workers could insure themselves against retirement as well as injury and death. Nothing came of these schemes, but they showed McAdoo's willingness to embrace the needs of civilian workers in wartime and to envisage a more assertive role for the federal government in the welfare of its employees.Footnote 26 In return, McAdoo and the administration expected industrial peace on the railroads for the duration of the war.Footnote 27
There was also another deal in the making. Nearly two million employees were an attractive constituency for someone with presidential dreams, and McAdoo worked hard to cultivate it. Employees of railroads run by the USRRA were deemed by General Order No. 42 to be federal employees, and so were banned from partisan activism or fund-raising.Footnote 28 But this did not mean that they could not vote as they chose, and many USRRA employees were aware of the electoral favors they could bestow. A fortnight before the promulgation of General Order No. 27, some clerks from the Northern Pacific Railroad sent McAdoo this doggerel:
McAdoo and the USRRA after World War I
Although he announced his resignation as director general of the USRRA on 22 November 1918, McAdoo remained in office until 11 January 1919. By then debate over the railroads had focussed upon the postwar future of the USRRA. With the signing of the peace in June 1919 the railroads were due to return to their owners on or before March 1921.
McAdoo warned Wilson in November 1918 that this situation was politically explosive. The Republicans, who had just won majorities in both houses of Congress, were determined to return the railroads to their owners and so had a vested interest in undermining the USRRA. The administration would be harmed and the railroads made inefficient at great cost to the public purse and to postwar economic readjustment. Twenty-one months was too short a time to invest the sums needed to improve the railroads – estimated by Walker Hines to be $780 million for 1919–20 alone – but too long for Democrats to suffer Republican politicking on them.Footnote 30
Even while the war was still under way some railroad owners and their investors had grown restive at the prospect of years more of government operation of their property, and they demanded that the date of the hand-back be brought forward.Footnote 31 In September 1919, less than a year after the Armistice, McAdoo's political ally Robert Woolley noted that “the average railroad man has acted as if his allegiance was due to the railroad corporation [rather] than to the Director General” of the USRRA, and that further delay would only worsen that situation.Footnote 32
McAdoo agreed, and urged Wilson to support a five-year extension of the USRRA, to allow time for necessary investment into the railroad system and time for Congress to decide upon a permanent railroad policy, and to take the issue out of play for the 1920 elections.Footnote 33 This extension would also allow the federal government to achieve closer integration of inland waterway and railroad transportation. “All the leading port cities on the Atlantic, the Gulf and the Pacific and the inland cities on the great waterways connecting with these ports,” McAdoo wrote to a St. Louis editor early in 1919, “are more vitally involved in the proposal for a five-year extension than they seem to realize.”Footnote 34 If Congress did not agree to an extension, McAdoo thought, Wilson should return the railroads on 4 March 1919 to force Congress to finalize railroad policy well before the elections in 1920.Footnote 35
McAdoo denied that his proposed extension was a Trojan horse for nationalization of the railroads. Its point was to give the USRRA a chance to bring order and efficiency to the railroads while Congress investigated permanent arrangements for them. McAdoo's personal preference for those arrangements was for strong federal regulation, but not outright ownership, of the railroads.Footnote 36
McAdoo's proposal sparked much debate. Some reform and labour groups, led by the brotherhoods that had done so well from the USRRA, put forward the Plumb Plan to nationalize the railroads. Under this scheme the railroads would be bought by the nation and run through a Railroad Board made up of government, management, and employee representatives. McAdoo opposed the Plumb Plan as ruinously expensive, because the total capitalization of the railroads was almost $20 billion in 1918. It would be better, he argued, to save the public the cost of buying the railroads and instead force their operators to submit to robust federal regulation. It was also inconceivable that Congress, so recently turned Republican, would countenance nationalization of any industry, let alone one as large and important as the railroads.Footnote 37
McAdoo's opponents noted that five more years of government control of the railroads, and continuation of the generous wage policies instituted by General Order No. 27, would create a huge constituency of railroad employees, shippers, and passengers that would surely force Congress to make federal control permanent.Footnote 38 McAdoo dismissed this argument as a ploy to discredit the whole notion of federal control. By then it was clear that the Republican majority in Congress would not act on McAdoo's proposal, and Wilson had given up hope that Congress would extend federal control beyond the original deadline of March 1921. Acting on Hines's and McAdoo's advice, the President announced in May 1919 that he would return the railroads on 1 January 1920, fourteen months ahead of schedule.Footnote 39
In its final form the Transportation Act of 1920 returned the railroads to their owners, guaranteed their losses for the next six months, provided an extra “rental” payment of $453 million, and directed the ICC to ensure a return of 5·5 percent on railroads’ invested capital for two years.Footnote 40
Now back in private life but still very interested in politics, McAdoo decried the Transportation Act as a gift to the same railroad interests that had worked so hard to undermine the USRRA.Footnote 41 In his voluminous correspondence and frequent public appearances he maintained a spirited defence of his actions as director general of the USRRA in 1918 in the face of the operators’ charges that his tenure had been marked by extravagant favouritism towards railroad workers.Footnote 42 “Mr McAdoo, evidently,” a Georgia newspaper editorialized in November 1923, “is making a bid for the labor vote, as he never fails on any occasion to pat the railroad boys on the back and sympathize with them on their starvation wages they receive, and leaving the impression that they are oppressed by a ‘hard-boiled’ railroad Czar.”Footnote 43
The USRRA went out with a whimper. The President, at first preoccupied with the peace treaty and then incapacitated by a massive stroke, paid only fleeting attention to it. Many of the reformers who had welcomed the USRRA in 1918 as the thin end of the government-ownership wedge had turned against it by 1920. Dismayed by McAdoo's conduct of the USRRA, Senator Hiram Johnson of California accused him of bribing workers with General Order No. 27, and then failing to increase rates sufficiently to save taxpayers from funding the USRRA's deficits. “God pity the forgotten middle class who foot the bill!” Johnson declared. McAdoo, Johnson thought, had set the cause of government ownership back fifty years.Footnote 44
The USRRA and McAdoo's presidential ambitions
McAdoo used his defense of the USRRA to further his own political fortunes in the first half of the 1920s, and criticism of the USRRA became part of a political attack upon him and his presidential plans. His courtship of the labour vote in 1920 and 1924 by frequent references to General Order No. 27 gave rise to accusations that McAdoo had used the public purse to his personal political advantage.Footnote 45
There is no doubt that McAdoo tried to capitalize on his work with the USRRA. In 1920 he had been an undeclared candidate, but still the front-runner, for the Democratic presidential nomination, and he quietly sought brotherhood and employee support for his campaign.Footnote 46 McAdoo also tacitly approved the formation of state campaign organizations on his behalf, which were funded by his wealthy friend Bernard Baruch. McAdoo used interviews and speeches to outline his putative platform, which included promises to reduce taxes, support female suffrage, and build on his labour record with the USRRA to provide every American worker with sufficient wages to “maintain himself and his family in comfort.”Footnote 47
As Wilson's best-known Cabinet member who had been at the forefront of the civilian war effort through his work in the Treasury and the USRRA, McAdoo was convinced in 1920 that he was the best-qualified and the most electable candidate to hold the Democratic standard in what promised to be a very difficult election for the party. In this he was encouraged in May of that year by a Literary Digest poll of possible Democratic nominees, in which he won first place and 100,000 votes.Footnote 48 “You would be surprised if you could hear what people say to me everywhere I go,” McAdoo wrote to his wife Eleanor, “– that I am the only hope for the party & that I can be elected if I will run … Railroad people everywhere are simply bully to me.”Footnote 49 By then he had declared that he would not seek the nomination but would accept it if the San Francisco convention decided to offer it to him.
McAdoo's unannounced campaign for the nomination came to nothing because of Wilson's opposition to it. Still harbouring hopes of his own for a third term, and increasingly wary of his ambitious son-in-law, Wilson steadfastly refused to endorse McAdoo as his successor and in fact worked actively, but secretly, against him.Footnote 50 Even so, McAdoo's name remained before the delegates for forty-three ballots before they chose Governor James M. Cox from Ohio on the forty-forth.Footnote 51 McAdoo's delegate support then, as it would again in 1924, came overwhelmingly from the South and West, with conspicuously little from the Northeast.
McAdoo did not hesitate to enter the race for the 1924 Democratic presidential nomination early and formally. He did so on the basis of his record in office during the Wilson administration, with emphasis upon his activities as director general of the USRRA. Passage of the Transportation Act of 1920 had put paid to McAdoo's hopes to extend federal control of railroads and waterways, so now he argued for much tighter regulation of transportation systems and rates through the ICC in the interests of efficiency and industrial justice to railroad employees.Footnote 52
As he sought the 1924 presidential nomination McAdoo went again to railroad employees for support, this time on a platform that combined his work in the USRRA with policies aimed at labour in general and at other large constituencies. Prominent among these planks was his support of the Soldiers’ Bonus, which promised veterans an extra dollar a day for their service at home, and $1.25 per day for their overseas duty, during America's Great War.Footnote 53
McAdoo supported the Bonus as compensation to veterans who had missed out on the high wages that those who had stayed at home during the war had received. In answer to the Bonus's critics that it demeaned the veterans’ service by placing a cash value on it, and to economists who argued against its enormous cost, McAdoo stuck to his redistributionist guns.Footnote 54 The Bonus, he told Herbert Croly at the end of 1923, was a legitimate exercise in income redistribution in light of the enormous profits that American corporations and their investors had enjoyed in 1917 and 1918.Footnote 55 McAdoo suggested that the Bonus's cost (more than $3 billion in 1924 values) be met from British and French loan repayments and from taxation of those industries that had benefited from the Republicans’ Fordney-McCumber tariff of 1922. American servicemen had been underpaid to save the world for democracy while others had enjoyed the wartime boom, and now it was time to make amends. “We ought not to be unwilling to do justice because it will cost money.”Footnote 56
Five million veterans and nearly two million railroad workers were alluring bases for McAdoo's presidential ambitions, but other factors were also at work. He had used the USRRA to redistribute wealth, and saw the Bonus as another opportunity to do so. “Of course, my enemies are trying to make it appear … that I was too kind to labor when I was Director General of the Railroads,” he wrote in July 1922. “I was not of course … The trouble is that in our democratic form of Government, the greatest difficulty we have always encountered is to get justice to the common man and woman, and to see that they get their just share of the benefit of Government.”Footnote 57 Even so, McAdoo was not averse to reminding workers, and particularly railroad workers, that he had been their friend:
When I became Director General of Railroads, I found one million eight hundred thousand underpaid employees, discontented and rightly so because railroad executives had consistently failed to carry out their promises to raise their wages to a level with the wages being paid in war industries and other competitive industries … I gave those employees decent and just working conditions. I removed the discrimination which had been consistently practiced against women under private management, namely, paying them less than men for precisely the same work performed. I ordered also that colored employees who were discriminated against in like manner should be given equal pay with others for faithful and efficient work performed. This was the application of the fundamental principle of Democracy, namely, justice and equal opportunity for all.Footnote 58
McAdoo outlined the themes of his campaign for the 1924 presidential nomination in a radio speech in January of that year and then in speeches and pamphlets in most of the fifteen states, such as California, Georgia, Missouri, Nebraska, Ohio and Tennessee, that ran presidential primary elections in 1924. In Tennessee, where McAdoo had attended university and begun his business career, McAdoo reminded Democrats of his ties to their state and told them of his Ten Point Plan for the future. He would extirpate corruption from the federal government, seek world peace through a conference of all nations, “take the grip of Wall Street off the Treasury Department and off the Federal Reserve System,” reduce tariffs, provide aid to farmers, enforce prohibition, reduce taxes, and set up a labour code that would set minimum wages and create tribunals to settle industrial disputes. Number five of McAdoo's ten planks was to “settle the railroad problem so transportation shall be furnished at reduced freight and passenger rates and ‘to bring justice to rail labor and investors.’”Footnote 59
In his primary contests McAdoo reminded audiences of his crusade for wage justice in the USRRA, supported the Bonus, promised to reduce income taxes but not surtaxes on incomes over $50,000 per year, offered farmers relief from high freight charges, and promised consumers tariff reform to reduce their cost of living.Footnote 60 Also prominent in McAdoo's nomination campaign were pledges to abolish child labour and to enact minimum-wage laws.Footnote 61
In keeping with his slogan of “His Record Is His Platform,” McAdoo relied heavily on his biography as a socially responsible and labour-friendly builder and operator of the Hudson and Manhattan Railroad before 1912 and then as a champion of reformist governmental activism during the Wilson administration. In Cabinet McAdoo had inaugurated the Federal Reserve System, funded the war effort, assisted farmers with Federal Farm loans, provided soldiers with cheap life insurance, and brought order to the nation's railroads and justice to their employees.Footnote 62
McAdoo was the clear victor of the 1924 Democratic primary season, winning more than 456,000 votes, or 59·7 percent of all votes cast. Those votes won him a large number of instructed and uninstructed delegates to the New York convention and established him as the favourite for the presidential nomination.
McAdoo's redistributive agenda and its electoral possibilities were not lost on his critics. “It cost the country many millions of tax money paid for unearned railway wages to enroll the railway vote under the McAdoo banner,” the New York Times grumbled, “and it would only cost $1,600,000,000 to make the soldier vote solid for him.” The Times also questioned the practicability of McAdoo's proposal for a “living wage” for every worker to “maintain himself and family in reasonable comfort, educate his children and save something against emergency and old age.” This plan, the Times noted, aimed to broaden McAdoo's appeal beyond railroad workers and veterans.Footnote 63
McAdoo's platform, built around his conduct of the USRRA, his support of the bonus, and his opposition to Secretary of the Treasury Andrew Mellon's tax policies as gifts to the rich at the expense of “the great army of toilers and workers,” made business groups very nervous. Mellon's proposals in 1923 included reductions, on a sliding scale skewed towards higher incomes, in federal tax rates on all incomes, much lower federal inheritance taxes, and a flat tax of 25 percent on annual incomes over $100,000.Footnote 64 Under this plan, McAdoo pointed out, the wealthiest 170,000 American taxpayers would save an amount equal to that saved by the 6·5 million Americans who reported incomes of less than $10,000.Footnote 65
Wall Street did not like McAdoo, the New York World reported in March 1924. It was unhappy when he had financed the war at low interest rates, and “it positively abhorred him” after General Order No. 27.Footnote 66 McAdoo's boosters were well aware of this hostility. Thomas Chadbourne warned that McAdoo's past and present railroad policies meant that he could expect well-funded opposition from railroad owners; Breckinridge Long reported from St. Louis that he knew of only one businessman there who supported McAdoo and that the others saw him as “unsafe, Socialistic, radical”; and Edward House warned that “intense antagonism” from business might unleash almost as big a reaction against McAdoo in 1924 as William Jennings Bryan had suffered in 1896.Footnote 67
McAdoo was unrepentant. “I am, of course, against predatory business and predatory interests in any form,” he told a supporter in September 1923. Yet “my whole record is [also] conclusive refutation of any suggestion that I am opposed to legitimate business, and especially to the small business man.” His railroad policy might worry owners and their wealthy investors, but more rigorous regulation and further integration of the railroads would serve both the national interest and that of their employees.Footnote 68
Business hostility to McAdoo was never fully offset by support from Wall Street's enemies. Railroad reformers found his policy inadequate compared to Robert M. La Follette's nationalization plan that featured in his own campaign for the presidency in 1924. Railroad shippers, a powerful lobby group that had worked closely with the ICC before the creation of the USRRA, now repaid McAdoo's perceived neglect of their interests and his partiality to railroad labour by refusing to support him.Footnote 69 Nor did McAdoo's support of the bonus attract the support of all veterans, who were divided over the issue.Footnote 70
In March 1922 the New York Central System Federation, representing 22,000 railroad workers, endorsed McAdoo for President in 1924 because of his work in the USRRA and his support of the Bonus.Footnote 71 But in 1924 McAdoo was disappointed that more railroad workers did not flock to him because of his generosity to them in 1918. Even during the primary season he found that railroad brotherhoods in Wisconsin and Illinois remained either aloof or Republican in their attitude to his campaign for the nomination. “I have always heard that labor is the most unstable of all political sources of help,” McAdoo's supporter George Fort Milton wrote from Chicago in April 1924. “It has certainly proven itself to be so in Wisconsin and Illinois.” There McAdoo's strong support of prohibition, and railroad employees’ reluctance to vote en bloc for him, combined to deliver those states to his archrival Al Smith.Footnote 72
Swayed by La Follette's pledge to nationalize the railroads, the railroad brotherhoods later backed him for the presidency. This, McAdoo told the editor of Labor in 1931, “deprived me immediately of the organized support of the railroad workers, and consequently, left me to battle, single-handed and alone, with the powerful interests which had been antagonized by my support of the railroad workers.”Footnote 73
Conclusion
McAdoo's hopes for the 1924 nomination imploded in spectacular fashion at the Democratic convention in New York, which deadlocked between McAdoo and Alfred E. Smith.Footnote 74 McAdoo arrived in New York with the largest number of instructed and uninstructed delegates, and he led the balloting for the presidential nomination for eighty ballots. His zenith came on the sixty-ninth ballot, in which he won 580 votes and 48·3 percent of the delegates. Thereafter McAdoo's support faded as his delegates realized that he could not win the two-thirds majority required for the nomination, and he withdrew from the contest after the ninety-ninth roll call.Footnote 75 “We were defeated by a combination of corrupt bosses and other sinister influences in American life,” McAdoo told a supporter after the New York convention nominated John W. Davis for President on its 103rd ballot, “which were determined from the outset to destroy me.”Footnote 76
McAdoo's defeat was not immediately caused by his failure to translate his policy and practice with the USRRA into millions of votes – his alleged (but never proven) connections to the Ku Klux Klan, his fervent support for national prohibition, and his professional connections to Edward L. Doheny, who was at the centre of the Teapot Dome scandal, were more directly responsible for that.Footnote 77 Against the Catholic Smith, McAdoo's taint as the Klan's candidate brought him unwelcome publicity and made him unacceptable to many urban Democrats in the Northeast and Mid-west, and his connections to Doheny risked the party's ability to run on Teapot Dome and Republican corruption in a year that otherwise promised few votewinners to it. Yet McAdoo's failure to win the railroad brotherhoods over was notable, and his unsuccessful wooing of the railroad vote in 1924 showed that the USRRA's electoral dividends were more ephemeral and more fickle than he had expected.
Yet the USRRA's later political ramifications deserve more significance than that summation allows. As Robert Higgs has argued, federal control of the railroads involved a new and expansive conception of governmental competence to run the nation's largest industry, as well as an apportionment of the costs of the USRRA across the whole of society. McAdoo's generosity in General Order No. 27 represented more than a down payment on his presidential ambitions; by lifting wages faster than freight rates he shifted a proportion of the costs of wage justice and railroad integration into USRRA operating deficits and then onto taxpayers. This reliance on taxation revenue to achieve industrial reorganization was not unprecedented, but the scale and the cost of the USRRA were. Acting under the pressure of war, McAdoo used the USRRA to undertake wealth-redistributive policies on a significant scale. The New Deal, borrowing what William E. Leuchtenburg once called the “analogue of war,” undertook a massive expansion of federal competence and authority that owed much to the experience of the USRRA. As William McAdoo had been at the forefront of the USRRA in 1918, so too was he a prominent cheerleader for the much greater revival of its spirit fifteen years later.Footnote 78