Rexford Guy Tugwell

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Rexford Guy Tugwell was the most influential ideologue of economic planning in the administration of President Franklin D. Roosevelt and the New Deal.


Tugwell came from a New York State farm, went from high school to the Wharton School of Business and then began as a teacher at the University of Pennsylvania, the University of Washington and finally Columbia. Ray Moley, who knew him at Columbia, drafted him for Roosevelt's Brain Trust in 1932 and when Roosevelt was inaugurated Tugwell was made Assistant Secretary of Agriculture under Henry Wallace.

Tugwell wrote:

Planning will become a function of the federal government; either that or the planning agency will supersede the government, which is why, of course, such a scheme will be assimilated to the State.

Tugwell drew much inspiration from Thorstein Veblen.

Banking crisis of 1933

President Herbert Hoover tried to coordinate national policy with FDR to deal with the banking crisis during the long interregnum between the November election and the March 4 inauguration, but Roosevelt refused to cooperate. Tugwell communicated a message which said President Roosevelt was "fully aware of the bank situation and that it would undoubtedly collapse in a few days." Ray Moley explained years later Roosevelt refused to cooperate because "he preferred to have conditions deteriorate and gain for himself the entire credit for the rescue operation." [1]

Economic planning and the Second New Deal

The theory of economic planning envisions govnerment bureaus and planning boards mandating what goods will be produced, in what quantities, who the producers shall be, prices of pre-finished and finished goods, wage levels and compensation of workers, regulations, conditions, etc Cartels, such as were established in Germany under the Third Reich, would unite with foreign counterparts that would regulate the international flow of goods. The central planning agency would control the banks and the flow of all investment, deciding who will benefit and at what price. It is essentially a centralized command and control economy, or totalitarian regime, such as was comon throughout the world in the 1930s. James Burhnam refered to this as the Managerial Society, or rule by the 'experts' and technicians.

It was at this point in time that terms in the basic political lexicon of America were transformed -partly due to Tugwell's influence. The term 'liberal', which at one time was considered moderate and even mainstream, became a code word for 'radical', and 'socialism'. The idea's formerly associated with 'liberalism' became conservative, libertarian, or classical liberalism.

Crash of 1937

As hopes for the Second New Deal faded with the onset of the Recession of 1937, a book appeared in early 1938 entitled, An Economic Program for American Democracy which postulated, "The government must assume full responsibility for maintaining national income at a sufficiently high level to assure full utilization of our human and material resource...The notion that public spending can be safely resorted to as a temporary emergency device must be abandoned."

Tugwell and Leon Henderson claimed the first two incarnations of the New Deal failed because government intervention had been on a far too modest scale. Instead of spending three billion a year, for which Roosevelt was being criticized, Tugwell said FDR should have spent twelve billion a year. President Roosevelt was delighted with the advice.

Roosevelt told DNC Chairman Jim Farley on March 28, 1938 many WPA projects approved by the government were abandoned because the states and cities could not raise the money to support them. The one big thing the federal government can spend money on is the army and navy. FDR biographer John Flynn described the situation in the county, and the world, as Tugwell's and other Brain Trusters ideas were adopted:

The onset of fascist governments in Europe ...corresponded precisely with the schemes of the Tugwells and Hansens and Hendersons and Hillmans and Wallaces and Hopkinses which had now become the motif of the Third New Deal -not Communist, not fascist, but a common program on which for the moment Communists and fascists and various grades of pinks could unite under the great goal of the State Planned and Managed Capitalism for abundance....billions were flowing again, everything was going up wages, prices, sales and government debt. But it didn't matter because now we had learned from the Harvard and Tufts economists that government debt is a mere nothing - something we "owe to ourselves." We were all off on a grand crusade to save the liberties and the "democracy" of Europe, now caught in the great final disaster which marked the climax of all those crazy ideas that had bred fascism and Communism in Europe and which were now being introduced into America...


  1. Herbert Hoover, The Memoirs of Herbert Hoover: The Great Depression 1929-1941, The MacMillan Company, New York 1952, pp. 214-215.