FDR Spied on Leonard Read

Last night I was reading a book entitled The Emergency State: America’s Pursuit of Absolute Security at All Costs by David Unger. My eyes bulged out when I came across the following sentence: “In 1941 Attorney General Francis Biddle, following Roosevelt’s new guidelines, approved FBI wiretapping of the Los Angeles Chamber of Commerce.”

Why did that particular sentence grab my attention?

Because I knew that the founder of The Foundation for Economic Education (FEE), Leonard E. Read, had served as head of the Los Angeles Chamber of Commerce before he founded FEE in 1946.

I did a bit of research and found that Read took the helm of the L.A. Chamber in 1939 and stayed for five years.

That means that it’s a virtual certainty that at least some of those wiretaps were on Read’s telephone conversations.

Why would FDR and his goons want to spy on the Los Angeles Chamber of Commerce? The Emergency State: A... David C. Unger Best Price: $1.97 Buy New $3.80 (as of 11:15 EDT - Details)

There can be only one reason: They believed that Read was a potential “subversive” and that the Los Angeles Chamber constituted a potential threat to “national security.” According to a footnote in a book entitled J. Edgar Hoover: The Man and the Secrets by Curt Gentry, when Biddle approved the wiretap on the Chamber, he noted that the organization had “no record of espionage at this time.” (Emphasis added.)

First of all, consider what FDR was doing. Unger writes:

Beginning in 1936, Roosevelt, relying solely on his executive authority and not on any congressional statute, directed [FBI Director J. Edgar] Hoover to conduct domestic intelligence operations. These operations had no clear relationship to law enforcement, or to the FBI’s counterespionage responsibilities. As Hoover understood it, Roosevelt wanted the bureau to supply “executive officials with information believed of value for making policy decisions” and also to collect information about “subversive activities,” a term never precisely defined….

Bending the letter and the spirit of the Fourth Amendment, Roosevelt also authorized covert “national security” wiretaps, mail openings, and telegram intercepts of American citizens, the same kind of practices later made notorious by the George W. Bush Administration….

The Communications Act of 1934 made it a crime to “intercept and divulge” communications. In a 1937 case, the Court ruled that agents of the federal government were not exempt from this prohibition on intercepting and divulging.

FBI wiretaps continued, but in March 1940 Attorney General Robert Jackson ordered them ended. Three months later Roosevelt personally overturned Jackson’s ban. Under FDR’s Three New Deals Wolfgang Schivelbusch Best Price: $4.18 Buy New $11.89 (as of 03:40 EDT - Details) strained interpretation of the Constitution and the law, unwarranted wiretaps and other forms of unwarranted search were still permitted so long as the evidence they uncovered was used for investigative purposes only and not used in court…. Roosevelt also decided that neither the Communications Act prohibitions nor the Fourth Amendment applied at all in “grave matters involving the defense of the nation,” or what we today would call national security cases.

Unger points out that that then led to the wiretapping of the Los Angeles Chamber.

An article entitled “Leonard Read: A Portrait,” written for The Freeman by Edmund Opitz, who worked at FEE alongside Read for many years, points out that when Read was in his 20s, he was hired to run the Chamber of Commerce in Palo Alto, California. That was followed by a stint as assistant manager of the Chamber of Commerce for the Western Division of the United States. Then he was made manager of the Western Division.

Opitz points out that while Chamber policies opposed communism and socialism, they did favor FDR’s New Deal “national recovery” programs, which included federal aid to businesses and farmers. Opitz pointed out that if “the Chamber favored some New Deal policies, so did Read!”

There was one big problem, however, one that Chamber executives like Read, just like many Americans today, didn’t realize: That FDR’s welfare-state/regulated-economy policies were, in fact, revolutionizing America’s economic system through a combination of socialism and fascism. See, for example, the book Three New Deals: Reflections on Roosevelt’s America, Mussolini’s Italy, and Hitler’s Germany, 1933-1939 by Wolfgang Schivelbusch which showed that “in the 1930s, before World War II, the regimes of Roosevelt, Mussolini, and Hitler bore fundamental similarities.” (See a review of Schivelbusch’s book entitled “Hitler, Mussolini, Roosevelt: What FDR Had in Common with the Other Charismatic Collectivists of the 30s” by David Boaz which appeared in Reason magazine.)

With its Social Security program, which originated among German socialists, FDR’s New Deal set the foundation for Medicare, Medicaid, and the entire welfare-state way of life in the United States. His National Industrial Recovery Act, which regulated American industries and which the Supreme Court declared in violation of the Constitution, could have been taken straight out of Benito Mussolini’s fascist playbook.

But Read, like most Americans today, had bought into the notion that the New Deal was “saving” free enterprise, not abandoning it.

And then Read encountered Bill Mullendore, a California businessman who was critical of FDR’s New Deal philosophy and programs. Read went to Mullendore’s office to straighten him out. After Read made his case for the New Deal, Opitz describes what happened next:

Mullendore took over, ripped the Chamber’s position to shreds, and went on to demonstrate that the New Deal was riddled with fallacies and fantasies. Money is unjustly taxed away from those who earn it and unjustly given to those who lobby for it. And in effecting these transfers government itself becomes rich and powerful while the country at large suffers a drop in productivity, as well as an impairment of personal freedom.

The effect on Read? It was a Road to Damascus experience for Read. Opitz writes: “Whatever the words uttered by Mr. Mullendore, they had an overwhelming effect on Read; they changed his life by altering his thinking.”

With the prodding of Mullendore and other libertarian businessmen in California, the policy of the L.A. Chamber began changing toward libertarian economic policies, which necessarily meant criticizing FDR’s New Deal policies.

In 1939, the Los Angeles Chamber, which was the largest in the country, chose Read, now 41 years old, to be its general manager. Given Read’s personal friendship with R.C. Hoiles, a hard-core, uncompromising libertarian who owned the Freedom Newspaper chain, Read had a major media outlet for the libertarian perspectives being published by the Chamber. According to Opitz, the Los Angeles Times, which at that time was fairly conservative, was also friendly to Read.

By 1941, when FDR was secretly trying to get America involved in World War II, the libertarian economic perspectives being published by the L.A. Chamber of Commerce under Read had obviously caught the attention of federal officials who were on the lookout for “subversives” and threats to “national security.”

Unger points out why FDR’s wiretaps on the L.A. Chamber of Commerce and others are relevant today:

There is a direct line connecting these early federal snooping programs to the FBI’s later bugging of Martin Luther King, Jr.’s hotel rooms and civil rights strategy sessions during the 1964 Democratic Convention. That line leads on to the Nixon White House’s bugging of its own national security aids, reporters and political opponents — and more recently to the sweeping, unwarranted “national security” wiretaps on the George W. Bush administration.

In fact, it can easily be argued that Roosevelt not only gave us the welfare-state revolution but also built the foundation for the Cold War era national-security apparatus — i.e., the Pentagon, CIA, and NSA — that has become a permanent part of America’s governmental structure.

Note: I met Leonard Read and later served as program director at The Foundation for Economic Education from 1987-1989. The September 1988 issue of The Freeman published my article “Leonard Read Changed My Life.”

Reprinted with permission from The Futurue of Freedom Foundation.