Here he was with a depression on his hands eleven million men out of work, the whole fabric of his policy in tatters, his promise only a few months old to balance the budget still fresh in the minds of the people and yet pressing the necessity, as he put it himself, of spending two or three billion a year of deficit money and, most serious of all, as he told Jim Farley, no way to spend it.
Here now was a gift from the gods and from the gods of war at that. Here was the chance to spend. Here now was something the federal government could really spend money on military and naval preparations.
Obviously, in the disturbed state of the world, something could be said for this. But Roosevelt in 1932 had denounced Hoover for spending so much on the army and navy. Now he promptly set off on an immense program of military and naval expenditures which was proper and in which Congress concurred but without making any retrenchment in the enormous outlays he was putting out on all the other New Deal departments of spending, all with borrowed money and more government debt. He simply increased his government borrowing. He was now committed allout to the theory which the Planners and the Spenders had sold him, that government debt means nothing. He could now spread his wings for a grand flight under the influence of this new theory without troubling his soul about the economic consequences.
In January, 1938, I talked with one of the President's most intimate advisers. I asked him if the President knew we were in a depression. He said that of course he did. I asked what the President proposed to do. He answered:
"Resume spending." I then suggested he would find difficulty in getting objects on which the federal government could spend. He said he knew that. What, then, I asked, will the President spend on? He laughed and replied in a single word:
"Battleships." I asked why. He said: "You know we are going to have a war." And when I asked whom we were going to fight he said "Japan" and when I asked where and what about, he said "in South America." "Well," I said, "you are moving logically there. If your only hope is spending and the only thing you have to spend on is national defense, then you have got to have an enemy to defend against and a war in prospect."
Apparently the best hope of a war at that moment for popular consumption was with the Japanese, who had just sunk the Panay, and as there was little chance of arousing the American people to fight around Japan, South America seemed a more likely battleground to stimulate our fears and emotions. There is nothing new about this. Kings and ministers have toyed with this device for ages and convinced themselves they were acting wisely and nobly.