American history is full of fractious political battles similar to those of the past decade. At the heart of most usually lies an organized special-interest group opposed to the White House and its policies.
Perhaps the most famous of them was the short-lived American Liberty League.
The league was officially founded in 1934, a year and a half into President Franklin Delano Roosevelt’s first term. Its predecessor organization, the Association Against the Prohibition Amendment, had successfully lobbied for repeal of Prohibition in 1933. Its personnel moved to the new league, ensuring a quick startup for its activities. On the surface, the two organizations appeared to have little in common, but it became clear that both were sophisticated lobby groups for business and Wall Street.
The AAPA wanted to end Prohibition as a maneuver to reduce income taxes on the wealthiest Americans. It reasoned that if spirits were legalized again, then the excise tax on liquor sales could reduce the liabilities on the wealthy.
‘Wall Street Model’
Members of the American Liberty League certainly were in that group. Among its noteworthy contributors were members of the DuPont family; Alfred Sloan of General Motors; Al Smith, a former governor of New York and Democratic presidential hopeful in 1932; a score of Wall Street figures; and two former chairmen of the Democratic National Committee, John Raskob and Jouett Shouse.
Former President Herbert Hoover refused to join, claiming that he had “no more confidence in the Wall Street model of human liberty, which this group so well represents, than I have in the Pennsylvania Avenue model upon which the country now rides.”
Despite the mix of Republicans and Democrats in the league, its members were very conservative and adamantly opposed to FDR’s policies, which they considered too radical. The enactment of banking and securities laws in the summer of 1933 infuriated many of them. In their view, the country was headed toward socialism and organized activity was needed to stop it.
The National Industrial Recovery Act became the focal point for this opposition to the New Deal. The American Liberty League mounted a public-relations effort to discredit the law, claiming that it created undue government meddling in business. The National Recovery Administration, the agency charged with carrying out the law, sought to eliminate ruinous competition in business by urging companies to form cooperative trade groups. It drew up codes dictating fair labor practices, among other things.
In 1935, the Supreme Court ruled the act unconstitutional, stating that the executive branch was usurping the powers of the legislature. The league claimed a major victory -- but it proved to be its only one.
The American Liberty League was out of touch with the country in the 1930s. In the 1936 election, it stood behind Alf Landon, the Republican candidate, only to watch him lose the Electoral College by 523 votes to 8. The group’s reputation for throwing lavish black-tie dinners at expensive venues and then bashing the administration in fiery speeches had little public appeal when unemployment exceeded 20 percent.
One of those speeches sealed the fate of the league as an ineffective organization. Before the 1936 election, at one of its famous dinners in Washington, Al Smith was the speaker. In an impassioned address, he equated the New Deal with communism, roaring that “There can be only one capital, Washington or Moscow. There can be only clear, pure fresh air of free America, or the foul breath of communistic Russia.”
Landon lost the election by 11 million votes and the American Liberty League quickly faded from view. But it had set an enduring political precedent, especially for times of economic hardship: Reformers were communists or socialists, while Wall Street and business represented the real America.
In 1936, voters didn’t make the connection. Later, they often would.
(Charles Geisst is the author of two forthcoming books, “Wall Street: A History,” in an updated edition, and “Beggar-Thy-Neighbor: A History of Usury and Debt.” The opinions expressed are his own.)
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