4—Every Man a Capitalist? Fascist Ideology of Businessmen in 1920s America

HISTORIANS HAVE LONG RECOGNIZED how the development of advertising helped to sustain the booming economy in the United States during the mid- to late 1920s. Millions of Americans who lived in urban areas now routinely enjoyed the pleasures of a lifestyle that had only existed for a short time. But it took the genius of advertising to continuously rekindle their desire and acquisitiveness. To this end, advertising surely played an increasingly important role, its ballyhoo constantly rising to penetrate and sway the jaded consumer. To meet the challenge, the world of advertising became an intertwined network of businessmen and ad men whose ties to owners and managers aimed to make business the dominant force in American political and social life. As hundreds of prophets in academe and the media trumpeted the promise of uninterrupted prosperity to the masses, the owners of capital and their highly skilled attendants were surreptitiously shaping a political agenda that guaranteed nothing would change their hold on wealth and power—and their growing influence over society.

In the mix of all these proponents of the so-called capitalist revolution of the New Era, or what some called the New Capitalism, are the roots of a national form of fascist ideology. Within its genesis were two main currents that differed profoundly, to the point of being contradictory. One loudly promoted greater democratization of American capitalism; the other, a quiet but more powerful force, aimed to curtail democracy itself. The former represented the aspirations of the growing middle classes; the latter strengthened the political power of anti-democratic forces among business elites who made up America’s ruling class. If we concur with those in the 1930s who defined fascism as the power of finance capital, the merger of the two currents—the failed dreams of the aspiring middle classes from below and the cynicism of the ruling-class modernizers from above—generated a particular, national form of fascist ideology in the United States in the 1920s.

We see this clearly in a close reading of three key texts that help us to grasp the similarities and differences between the two currents, but both generating a capitalist ideology that is inherently fascist.

THE CAPITALIST REVOLUTION IN AMERICA AND THE PROMISE OF EVERLASTING PROSPERITY

In his campaign for the presidency, Warren Harding had promised to put America first. Five years later, Thomas Nixon Carver declared that the United States was already leading the rest of the world. Carver, a Harvard economics professor and author of The Present Economic Revolution in the United States, contended that America was unique in the world because a capitalist revolution was turning its laborers into capitalists:

The only economic revolution now under way is going on in the United States. It is a revolution that is to wipe out the distinction between laborers and capitalists by making laborers their own capitalists and by compelling most capitalists to become laborers of one kind or another, because not many of them will be able to live on the returns from capital alone. This is something new in the history of the world.1

Admonishing capitalists to avoid absentee ownership and European luxuries and even assume some tasks normally done by laborers, Carver gave most of the credit for the economic revolution to the power of the laborers—never calling them workers. He applauded the labor movement for abandoning the “antiquated methods” of its European counterparts, which were still guided “by a psychology … built up in a primitive and fighting stage of social development.” Instead, labor leaders in the United States were “beginning to think in constructive terms” by formulating a “higher strategy of labor.” Instead of fighting capital, they were now attuned to the “permanent economic forces” that could be used “as an implement for their own improvement.”²

Carver was certain the future looked even better. As more laborers earned higher wages, saved prudently, and acted responsibly in all their endeavors, they were putting themselves on the path to capitalist ownership. Of course, there would always be some conflict between employers and employees. But in his homespun approach to complex economic questions, Carver said the conflict was like that between husband and wife. In both cases, each needed the other and whatever differences existed between the two there were also “many elements of harmony” not to be forgotten. Carver reduced it all to a simple matter of choice:

Whether they live in peace and harmony or in a state of antagonisms depends upon which aspect of their relationship they permit themselves to think about most frequently. If they permit themselves to forget their need of one another and the many questions on which their interests harmonize, and to think only of the questions on which there is a conflict of interest, they are not likely to live a very harmonious life. But if, on the other hand, those questions on which there is a unity of interests occupy their minds, they may expect nothing but peace and harmony.3

For the first time in its long history, capitalism in its distinctively American form had proved why boom/bust cycles were a thing of the past. As more workers became capitalists, so would prosperity continue and the promise of progress under capitalism finally realized:

Wealth is not only increasing at a rapid rate, but the wages of those we formerly pitied are rising, laborers are becoming capitalists, and prosperity is being more and more widely diffused. We are approaching equality of prosperity more rapidly than most people realize. What is equally important, we are working out this diffusion of prosperity for all classes without surrendering the principle of liberty which is embodied in modern democratic institutions.⁴

Carver regarded the coming of universal wealth and uninterrupted progress as the fulfillment of capitalist utopia. And it would be utterly democratic! Regardless of where one stood on the class ladder, the economic revolution was leveling the pyramid of capitalist wealth. Labor leaders were playing a key role in this process by staying clear of an antiquated European radicalism based on class warfare. Fortunately, American labor leaders understood that the solution to the labor problem was higher wages, which would quell any discontent that might fuel class consciousness. Thanks to their efforts, America could look ahead to a future “when we shall no longer speak of the laboring ‘classes.’”⁵ With more laborers becoming capitalists, Carver claimed, the latter were finding it more difficult to hire workers and were thus having to do more of the work themselves. This was a sure sign that the “actual blending of the two so-called classes means that there will be no more classes in this country. Fraternity has never been very clearly defined,” Carver added, “but this condition, when there is no class consciousness, comes as near being fraternity as we are ever likely to get, if it be not fraternity itself.”6

Carver devoted a chapter of his book to the growing financial power of laborers, basing his claim on statistics cherry-picked from savings deposits, assets of building and loan associations, and the premiums paid to insurance companies by laborers. He also considered “incomplete but rather striking figures regarding the investment of laboring people in the stocks and bonds of corporations.” He brought attention as well to what he called “the new phenomenon of the labor bank.” According to figures from the American Bankers Association, Carver said that total savings deposits had more than doubled between 1914 and 1924, and the total number of depositors “had increased more than three-fold.” Moreover, a study of life insurance policies in 1924 showed that more than two-thirds were held by wage workers. He also provided statistics that he used to argue that more laborers were investing in the stock market.⁷ As for the rise of labor banks, his entire case was made on the basis of the Brotherhood of Locomotive Engineers, which opened its bank in 1920. This case alone, he claimed, proved that the capitalist revolution developing in America was another great example of the prospect of universal wealth and prosperity now in the making.⁸ The inequalities that had always been present in capitalism were being eliminated, proving that they “were not essential to the capitalistic system.” Instead, the revolutionary advance of American capitalism was proving that free enterprise worked. “In fact,” Carver said, “where capitalism is given a chance to develop freely, unhampered by social and political obstacles, it tends to eliminate its own inequalities and secure … great abundance for everybody,” more than any other system has ever achieved.⁹

On this basis, the economic revolution presented the greatest opportunity ever to achieve what Carver believed was “the most revolutionary idea” in all economic discussion, “that of a balanced economic system … in which all factors of production are combined in such proportions as will yield the most satisfactory results, and yield them automatically.” Again reducing complex matters to the simplest terms, Carver served up a case for the dietician who can recommend a balanced diet to an individual simply by knowing “all the elements.” Businessmen did this as a matter of course. They always had to know when to apply basic principles on a routine basis; they had to put together combinations to create a desirable balance by establishing “satisfactory ratios” among all competing elements. This same approach held true in more complex situations where the primary objective was to achieve equilibrium. Balance was always the key factor. The idea of a balanced economy could be carried out systematically across the entire industrial system, “balancing every industry against every other, and every element or factor in every industry against every other.” This, Carver said, should be the common work of the statesman and the economist.10

Carver’s book, when it was published in 1925, contributed to the ballyhoo about capitalist progress. Although there were still problems to overcome, they were not, he claimed, “essential to the capitalistic system.” The worst that could be said about the capitalist system was that it had yet to abolish the inequality of wealth. On this he was defiant. As long as American capitalism continued on its present course free of obstacles or interference, it would eventually “distribute the best things of life more evenly” than any other system in history.¹¹

The main obstacle to this progress was the lack of a solid understanding among most people of what capitalism is and what it does. Without this knowledge, it was easy to draw bad conclusions by judging the system superficially on the basis of its “temporary aspects.” This was a mistake, as Carver explained in the most direct and startling terms:

Strictly speaking, capitalism is not a system at all. It is merely a fact that grows out of the suppression of violence. Wherever violence is repressed, capital comes automatically into existence. Where violence is repressed, the man who has made a thing, or found it before anyone else has gained possession of it, cannot be dispossessed without his consent. No government can repress violence without automatically creating property as a result.12

Carver focused on the importance of “rightful possession” and the role of government to protect those who had possessions from those who possessed nothing. This was the danger posed by socialism and class warfare, he argued, that fueled violence in society. So long as the possessor could not be dispossessed and remained free to do what he wanted with his possession, capitalism would continue to thrive. For Carver, the “germ” of the capitalist system based on private property was in the workings of simple exchange between those who possessed and had something to sell. This, Carver insisted, was what made capitalism natural. There was simply no other way to explain the matter. “Exchange, therefore,” he wrote, “grows up automatically and unavoidably along with property, whenever and wherever violence is repressed.” The purpose of government, therefore, was to make sure that exchange between those who had rightful possession were unhampered by violence. In the process, government protection transformed simple possession into property.¹³

Carver argued that envy threatened prosperity based on the idea of rightful possession. The envious draw sympathizers, or worse, those who “invent apologies and excuses for them.” There are consequences. When envy peaks, it is “likely to lead to acts of violence either by individuals or classes.” The ensuing “class war,” he said, can destroy civilization if it leads to a government that violently dispossesses the possessors.¹⁴ To prevent this from happening in America, government had to restrict immigrant laborers from countries where capitalism was less developed. They arrived seeking better wages and living conditions, but their presence meant a growing number of “thoughtless and thriftless people.” The result would be in all probability a rising propertyless class that could grow large and dangerous. The outcome was ominous:

If it should be able to outvote the class of savers and accumulators, it may gain control of the government and use it as an engine for the dispossession of those who have managed to accumulate. The safety of modern civilization requires that these non-accumulating classes shall be kept few in number.15

Carver was sure that class struggle in America was a thing of the past. American laborers were now plotting “a higher strategy” that corresponded to the great leap forward in production and the trend he saw to their eventual ownership of it! This higher strategy was based on peace and harmony with employers, not struggle and class war. “Labor has got all it can get by violence.” It was time to get things done “by head-work, not fist-work.” In a vague reference to the great strike wave of 1919–1920 and the alleged Red Menace, Carver declared that labor previously had brought great fear to the nation. The time had come to impress the country with its wisdom. Labor had to confidently cultivate its identity as “a preserver and developer” in order to increase production for greater prosperity.¹⁶

As a work of capitalist propaganda, Carver’s book said all the things that Big Business would enjoy hearing in public. His main points resonated without threatening its hold over society. His central message—the revolutionary advance in American capitalism will eliminate inequality—was a notable contribution to the ballyhoo of endless prosperity during the New Era. Carver’s rapturous view about the great promise of capitalist progress certainly was music to the ears of the working and middle classes who longed to be capitalists themselves, as well as to those who already were and had the most to gain from it. But the latter—Big Business—had no intention of leveling the capitalist pyramid of wealth. What it sought was to remain strong and secure at the top.

THE ADVENT OF BUSINESS THEORY

Businessmen, politicians, and pundits like Carver lent a great deal of weight to the mantra of prosperity that grew in intensity until the Wall Street crash. But the clamor about endless prosperity and progress for all served as an unwitting foil for the owners and managers of big capital, who now recognized that their responsibilities to sustain growth and prosperity required their active involvement in politics in order to protect and enhance their economic interests. What evolved from their efforts was a loosely defined political theory of American business that pressed forward central tenets, among them: the notion that a business hierarchy was necessary to preserve the basic functions of democracy as opposed to mob rule; the promotion of True Americanism as an ideal from which to formulate principles and policies binding labor to capital; a defense of selfishness as the key to advancing the public good; and encouraging businessmen to serve their communities and their nation by entering the political arena, especially at the local level, to eradicate the pernicious influence of radicals, organized labor, and the mob.

In 1954, historian James Warren Prothro recognized these efforts in his comprehensive study of capitalist elites in the 1920s who generated what he called a “business theory.” As an offering “to systematize and analyze the political theory of American business as it unfolded during that most revealing era in American politics,” Prothro saw this theory developing within the concerted efforts of leading trade associations and their efforts to represent a unified front in the name of all business.17 Accordingly, he relied on the National Association of Manufacturers (NAM) and the United States Chamber of Commerce, the two leading business organizations in the United States, which saw their declared purpose to speak for American business as a whole.

Among the business leaders discussed by Prothro is Charles Norman Fay, who made his fortune from the Remington-Scholes typewriter company, a pioneer in that industry, and was a chief executive for public utilities. Fay served as vice president of the NAM and was a prominent member of the Chamber of Commerce. His Business in Politics was published in 1926, a year after Carver’s work appeared. Carver and Fay saw even greater prosperity ahead as American capitalism soared to new heights. But they differed sharply about how it would be achieved and who would achieve it. Carver believed it was the laborer who was becoming a capitalist; for Fay it was the big businessman. This mattered a great deal. Unlike Carver who proclaimed an open path for ordinary Americans to wealth and equality, Fay offered “suggestions” to established business leaders about their need to secure a greater hold over the market, society, and government. Carver’s vision was a capitalist utopia that was truly democratic. Fay was certain that democracy could only survive if governed by business elites.

Fay dedicated his book to Chamber members “and the great Business Associations throughout the United States.” In it, he called on them to recognize that the future of democracy now lay in their hands. No others were suited for the challenging work. The “intense individualism” they demonstrated in their personal success in business must now benefit the public good. “The two are absolutely inseparable,” he wrote, and this great attribute was what the masses lacked. “I do not believe in government by average men, any more than in management of any other big business by average men,” Fay wrote. “Average men are not big enough to govern!” And since “government is the biggest of all big business” and requires “the ablest management,” there was no better training for success in these endeavors than what they had learned in business.18

History proved this. “Every student knows that representative government, as planned by our New England and Virginia ancestors, did not contemplate representation by average or underaverage men, but by the foremost men, carefully chosen by free election.” Of course, this was done more readily in earlier times when social life operated on a much smaller scale. Things were different now. Vast modern communities made it more difficult to determine who were “the foremost men, and how best to pick them.” The fate of modern democracy was now in peril, and Fay sounded the alarm. The principles of local self-government and individual liberty worked earlier, but its “primitive machinery” had been breaking down from its own weight more steadily. Present conditions required “better political engineering … applied to the reduction and simplification of our mess of governments.” Fay implored his readers to take action. “Competent men” were needed to plan and sponsor how to do it. This could only be done by “big-business men and bankers” assisted by their “leading technical associates and advisers.”19

Here was the political message that successful businessmen needed to embrace:

You are, moreover, the men who personally have most at stake in the general welfare of city, state and nation; and you are of the few whose large means and high standing raise you farthest above that old, old temptation—to govern for your own private profit—which has cursed politics ever since history began. … It should be, as it seems to me, the legitimate ambition of every such man to crown his private fortune and career with public service—a consummation which is not only desirable, but practicable, by way of your great business organizations.²⁰

Govern for your own profit and save the nation, he implored. This is why successful businessmen were ideally suited for political office. The great corporations they built and served were “like the city, state or nation … democratically governed by a few directors, voluntarily chosen” by qualified electors. Those chosen had many attributes, first and foremost, as large owners of their corporation’s shares, which ensured the vital interests of the whole business. They could “command the confidence of fellow-owners” and were “generally so well off and prominent that they cannot afford to be ‘crooked’ in their dealings for or with the corporation.” Given such exceptional character, there was no question they could be counted on to govern just as efficiently and effectively. They had learned how to determine primary objectives and then simplified and reduced them to the fewest number possible. All had recognized the importance of entrusting success to “a single executive head, usually to one strong man, carefully chosen,” giving him “a free hand, and fullest power” to get the desired results. This was the way to increase company profits and earn his “ample share.”21

All of this was especially critical at a time like theirs. Only the corporate leader could peer through the turmoil of trade unionism and see “the human-nature of a crowd of workers” and then determine how best to handle them. He alone could assess “the temper and skill of workers” just as much as he needed to know the qualities of the materials used in production. He had learned the importance of establishing an effective and efficient routine under the best of conditions in production guided by the most skilled managers. He had the vision to know when the moment had come to extend employee ownership in corporate stock or to induce workers “to buy into the capitalization of their own job” with their own savings, all aimed at unifying labor with capital.²² Above all, these were the individuals who, says Fay, “first, last and all of the time,

determine the nature and scope of the company’s operation and finance by the decisive test of profit and loss—always rating the ability, the success and the reward of the management and all concerned mainly, not without due allowance for the public welfare, by the growth of its business and profits. If the corporation earns dividends, and enough more for its own development, it lives and grows great. If not, before long it dies, and is forgotten.²³

America needed these men. They, not the common man, were fit to govern the nation:

The great majority of American voters have not, and in the nature of things, never can have, enough experience in large and efficient organization, of any kind, to compare for themselves what government does with what it ought to do, or its cost with what it ought to cost. They know neither what they ought to demand of government, nor what they should refuse it—nor how to go to work with any prospect of success to get what they should for their taxes.24

Unlike Carver, Fay’s conception of capitalism was strictly hierarchical:

There are but very few of our multimillions of good, patriotic Americans, who are able enough and experienced enough to map out a successful reorganization of the blundering business of our governments, or to plan the least costly and most efficient way to carry it on. How then to convert our own government, which is itself the most gigantic of our trusts and monopolies, into not only the least hurtful of our institutions to our liberties, but the most helpful to our needs—this is indeed a problem for the ablest moral, economical and political engineers.²⁵

For Fay, inequality also inhered in the workings of nature. He was convinced that even the masses could accept this as fact. “Nature,” he wrote, “creates very few men of exceptional brain and energy; men able to do big things in war or government or even in sport; men who do more, deserve more, and invariably get more, of the good things of life, than the rest of us average or common folk.” Most people “instinctively recognize big men, and cheerfully take the orders of our betters, seldom grudging them their bigger reward for greater achievement.”²⁶

Feeling justified in taking these positions, Fay urged his intended readers, the NAM, Chamber of Commerce, and other trade association members, to run for nonpartisan local and state races. There was much at stake:

Would it be at all hard to put one or two trained and successful men, out of your own number, into every American state and local legislative body—provided only that public opinion among yourselves could but make it the fashion for your strongest men to do such public duty?

These men would have to use the same patience as business leaders in order to appeal to the public in ways that would prevent “a stupid and demagogic majority” from passing “foolish and needless laws, and waste taxes, for political effect.”27 Fay had the answer. Put one good, big man in every race, even in the smallest cities and towns and watch what happens:

I have no doubt whatever that if leading members of the great business associations throughout the country, men conspicuous each in his own town for wealth, ability, integrity and public spirit, were to offer themselves, as their residence permits, as candidates for city and county councils, state legislatures, etc., against such cheap politicians as now monopolize nomination, they could be elected, with your help; if not the first time, then the next time, and thereafter.²⁸

Fay recognized there were a limited number of business elites. “First-class men are perhaps too few and far between to constitute standing majorities in such [state and local legislative] bodies.” The solution was “plenty of good second-class men,” who could “bore from within” the economic and political system to help the elites work their political agenda. This, after all, Fay said, was what the socialists and trade union leaders had done before them and were still trying to do, first in Europe and now in America. The second-class men would be supported by the great trade associations and the public press. Fay saw “a lasting advantage” in the powers of the associations at work in nonpartisan political action. This was all very “natural” given the daily contact that employers and employees had in their towns and cities.²⁹

Fay argued that this was necessary to stop the pernicious threat of organized labor and politicians who represented their interests. Organized labor, though it had bended to business, was still a threat. Leaving any election, even at the local level, to politicians in its service was a green light for unions to coerce employers, even to the point of stopping production. Then there were strikes, walkouts, or legal actions that prevented those who wanted to work from working. Who was behind it? After all, hadn’t the socialists backed the AFL’s attack on the judiciary for its “autocratic power” and “governing by injunction,” calling it capitalistic tyranny? For Fay, this was nonsense:

No one knows better than yourselves that neither autocracy nor tyranny has ever been furthered by use of the injunction in labor disputes. No worker has ever been ordered to work, or has gone to work for fear of punishment by the courts. Nothing has ever been enjoined except unlawful union action, such as violence, intimidation, sabotage, boycotting, interfering with free use of public streets, violation of contracts, and contract right, or combination to restrain production and fix prices. Not one lawful activity of union labor has been delayed.30

Agitators were responsible for these sweeping and groundless accusations. They were troublemakers bent on confusing uneducated voters with lies. Our courts, they claimed, “are fortresses of individual liberty and property right only for the rich; and that in the future an unlimited and collective tyranny and monopoly of power and wealth by the state, instead of the rich, is the only hope of the poor.”³¹ The agitators were enemies of democracy. Businessmen in their respective communities knew who they were and it was their responsibility, Fay said, to educate the voters about the evils being perpetrated. Citizens needed to understand the coercive methods used by unions to deny nonunion men the right to work, which went against the interests of workers and employers alike. The public must be protected against organized labor for electing misleaders—their political protectors who once in office would pass legislation responsible for the “the steady, constant and unnecessary high prices of goods and service, due to crippling production and slacking work.” The latter, Fay insisted, was normal behavior for unions that robbed the public daily of incredible sums.³²

Fay hoped that businessmen would enter politics and create legislation furthering economic growth while realizing Harding’s idea of putting more business in government and more government in business. Just as corporate leaders had reaped success by increasing productivity and efficiency in their businesses, they should now apply the same principles to the operation of government. Reduce costs and then cut taxes! For Fay, there was no mystery about what to do, nor was there any time to waste: “The very simple principle of Least Government, with its companion principle of Least Taxation, seems to me pretty nearly all that this country needs, if put in practice, to make it entirely safe for democracy.”33 Upon entering government successful business leaders would know what to do. Based on their previous success, they understood how

large expansion of private business compels constant struggle to simplify; the bigger it grows, the harder becomes the struggle, and the greater the burden of “overhead” or unproductive cost. You know that expansion cannot go on indefinitely. A time arrives, in spite of railways, telephones, motors, etc., when efficiency and economy enforce simplification and decentralization.³⁴

Economic expansion had necessitated a great leap forward in the functions of national, state and local government. The cost of bureaucracy and government services—“unavoidable public activities”—had become too vast for any one organization to handle successfully. Even in earlier times, when small and manageable government put too much strain on the individual, businessmen had learned enough to know that a similar mindset was the key to success in larger and more complicated forms of business. Yet they always knew how to handle these matters because businessmen were strong and morally bound to whatever course the nation required:

It is an old maxim of good engineering not to put too great a strain on the material employed. The same rule applies to good government, whose material is the human being—not to put too great a strain either on the mind or the conscience that governs. The simple and logical way to minimize American discontent with the shortcomings of American government most obviously is to minimize government itself.35

Fay boasted about the efficiency of the U.S. Steel Corporation governed by fifteen directors, “the first business men of the country,” who were paid “nothing but a nominal directors fee” by its 150,000 stockholders for attending monthly meetings. He pitted that against “the desultory work of our 435 congressmen and 96 senators, 533 Solons in all, who play politics before the nation, in almost continuous session, with endless fuss and feathers, sound and fury, devoting most of the two-year term of each Congress to defeating each other’s largely useless bills.”³⁶ Again, Fay urged his fellow businessmen to grasp the moment. “Everywhere we turn,” he reminded them, “we see the same contrast between the small, quiet, efficient, and usually honest board of directors of our great corporations … and the big, pretentious, noisy and often dishonest mobs of time and money wasters, forced by our political system into our local legislative halls.”

Fay called his readers to task:

Now, gentlemen, might we not break away, at least in local government, from a political plan that does not work very well to a business plan that does? Just as we elect, for a great corporation, a very small compact board of directors, of very able men—and stop right there—leaving it to the few men chosen to organize and manage everything for the company until next election—might we not elect, for each new consolidated unit of local government, a small compact board of trustees or commissioners (nine would be plenty) chosen at large—and stop right there, electing no other officers for the unit, either executive or judicial? Might we not trust those so chosen to make the laws, and to appoint a chief executive, with power to carry them out?³⁷

Once this happened on the municipal level, it would then be possible to send out the most experienced organizers “to educate the voters to talk politics in terms of consolidated units of (let us say) 25 miles radius instead of 2.” To simplify local politics even further and “promote economy,” larger municipalities could be governed by a small compact of directors who would do away with all county officers and elections, “and turn over their oldtime functions to proper bureaus of the consolidated municipalities.” But that was not all: “In due time, when enough simplified local units are on the map, might we not follow up on like lines with simplification of state government? That is to say,

might we not plan for eventually a very small and compact single-chambered legislative body, say a senate of but 15 members—which would be large enough—empowered to make laws, to lay taxes and to appoint permanent executive and judicial officers, who should carry on the business and administer the justice of the state?

Fay insisted that the “the principles of efficient government” at the local and state level were “precisely the same as for efficient business organization.” Here he makes two main points. First, businessmen will be eager to serve once they recognize how important it is to concentrate power in the hands of a few qualified men chosen by the people to “make laws and lay taxes [raise money]” so government would become less costly and more efficient. Second, ending elections of executives and judges by popular vote and instead appointed by the legislature—“safeguarded, of course, by carefully drawn provisions for removal, by impeachment or otherwise, of unworthy appointees”—would free them “from all fear and danger of political pressure brought to bear on either—as they should be free!” After all, these men were not in office “to ignore or twist the law at the behest of politicians, but faithfully to be bound by it and the Constitution.” And they should not feel threatened. As long as they performed their tasks without fear of consequence, “they should be entirely immune from vengeance of any disgruntled faction at the polls. Legislators should there be held responsible, and they alone.”38

For Fay, it was all very simple. Educated businessmen would eventually control local and state governments and from there begin to change the political landscape of America. Leading businessmen would win elections and transform government by turning it into a business. The whole effort was hierarchical: government by those who knew best from their success in Big Business. If ballyhoo about the common businessman made him something of a hero or even Christ-like, Fay’s business executive was elevated to a small number of the elect whom the saintly Calvin Coolidge believed were America’s anointed leaders.

PROPAGANDA AND THE “INVISIBLE GOVERNMENT” IN THE MAKING OF AMERICAN FASCISM

The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country.³⁹

This is how Edward Bernays, known as the father of public relations and a mastermind of American propaganda, opened his 1928 book on the subject. Bernays held that modern democracy could only work if shaped and regimented by “the relatively small number of persons—a trifling fraction of our hundred and twenty million—who understand the mental processes and social patterns of the masses.”⁴⁰ As he wrote:

The minority has discovered a powerful help in influencing majorities. It has been found possible so to mold the mind of the masses that they will throw their newly gained strength in the desired direction. In the present structure of society, this practice is inevitable. Whatever of social importance is done today, whether in politics, finance, manufacture, agriculture, charity, education, or other fields, must be done with the help of propaganda. Propaganda is the executive arm of the invisible government.41

Like Charles Norman Fay, Bernays had no use for democracy unless it was directed by the few who understood and learned how to benefit from it. He was convinced that the majority of Americans had squandered great opportunities granted to them by democracy, especially “universal literacy.” Once the common man learned how to read and write, he then could have learned how to take control of his environment and become its master. But here is where he stopped, making him nothing more than

a rubber stamp inked with advertising slogans, with editorials, with published scientific data, with the trivialities of the tabloids and the platitudes of history, but quite innocent of original thought. Each man’s rubber stamps are the duplicates of millions of others, so that when those millions are exposed to the same stimuli, all received identical imprints. It may seem an exaggeration to say that the American public gets most of its ideas in this wholesale fashion. The mechanism by which ideas are disseminated on a large scale is propaganda, in the broad sense of an organized effort to spread a particular belief or doctrine.⁴²

The powers of propaganda could then be unleashed in an enduring effort to create or shape events by means of persuasion and manipulation to influence the public—a common practice in American culture. To this end, propaganda aimed at “regimenting the public mind every bit as much as an army regiments the bodies of its soldiers.”⁴³

His military analogy came perhaps from the huge success of propaganda during the First World War, which opened the eyes of “the intelligent few in all departments of life to the possibilities of regimenting the public mind.” Both the government and patriotic agencies that supported the war discovered a new technique of bidding for public acceptance, one that “appealed to the individual by means of every approach—visual, graphic, and auditory—to support the national endeavor.” The agencies depended on securing the cooperation of key men in fraternal, religious, commercial, patriotic, social, and local groups, or from the publications much of the public read and believed. Simultaneously, “the manipulators of patriotic opinion made use of the mental clichés and the emotional habits of the public to produce mass reactions against the alleged atrocities, the terror, and the tyranny of the enemy.” When the war ended, it made sense to these “intelligent few” that the same technique could be applied to peacetime needs.44

Thus “new propagandists” emerged in peacetime in a quest to understand the anatomy of society and to grasp the importance of recognizing the individual as a cell of the social organism. According to Bernays, business enterprise showed this better than any other organized human endeavor. He agreed with business leaders like Fay that the nation’s destiny lay in the hands of a small number of elites, except they were not leading businessmen but molders of public opinion. American society had many powerbrokers during the New Era: the president and congressional leaders, Wall Street financiers, corporate directors, trade association leaders, and organized labor. Nevertheless, it was well known among them that they themselves were being led by “invisible wirepullers” whose expertise was hidden from the public.⁴⁵ For Bernays, this was the “propaganda specialist” who knew how to manipulate society through public relations and advertising. He specialized in learning how to control the opinions and habits of the masses by active engagement with the public and then interpreting its actions for the “promulgators of new enterprises and ideas.” The specialist was a “public relations counsel.” He and others like him constituted the real invisible government in America. He alone could comprehend the mental processes and social habits of the masses, which were becoming ever more challenging given “the increasing complexity of modern life and the consequent necessity for making the actions of one part of the public understandable to other sectors of the public.”46

The public relations counsel had become a partner with business. A successful business needed more than just knowledge of manufacturing and selling a product. It had to know how to sell itself to the public. For Bernays, public relations counsels were becoming the real rulers of America. They alone knew—and were constantly learning—how to control public opinion for the sole purpose of keeping the economy moving:

Mass production is profitable only if its rhythm can be maintained—that is, if it can continue to sell its product in steady or increasing quantity. The result is that while, under the handicraft of small-unit system of production that was typical a century ago, demand created the supply, today supply must actively seek to create its corresponding demand. A single factory, potentially capable of supplying a whole continent with its particular product, cannot afford to wait until the public asks for its product; it must maintain constant touch, through advertising and propaganda, with the vast public in order to assure itself the continuous demand which alone will make its costly plant profitable. This entails a vastly more complex system of distribution than formerly. To make customers is the new problem. One must understand not only his own business—the manufacture of a particular product—but also the structure, the personality, the prejudices, of a potentially universal public.⁴⁷

Competition among the giants and the growth of the stock market only made Big Business even more dependent on public opinion. Its leaders had to present the existence of their respective corporations in a most favorable light. “It must dramatize its personality and interpret its objectives in every particular in which it comes into contact with the community (or the nation) of which it is a part.” The work of the public relations counsel was just as important as someone in charge of production. It was necessary for the public relations counsel to familiarize himself with “the structure, the prejudices, and the whims of the general public.” The effective counsel might be able to “modify” these public traits but could not “run counter” to them. “The public is not an amorphous mass which can be molded at will, or dictated to,” Bernays wrote. “Both business and the public have their own personalities which must somehow be brought into friendly agreement.” Just as the public needed to appreciate the great benefits of mass production that business offers, business must also appreciate the public’s “increasingly discriminative” attitudes and tastes. “It is this condition and necessity,” he wrote, “which has created the need for a specialized field of public relations. Business now calls in the public relations counsel to advise it, to interpret its purpose to the public, and to suggest those modifications which may make it conform to the public demand.”48

The capitalist aspects of business propaganda naturally brought Bernays to conclude that the politician needed to become more like a businessman. “The successful businessman today apes the politician. He has adopted the glitter and the ballyhoo of the campaign. He has set up all the sideshows.” He attends dinners and gives countless speeches that stand for so much “pseudo-democracy slightly tinged with paternalism.” But all these activities are nothing more than a sideshow by which he builds an image of public service. These are the methods by which businessmen project what is necessary to stimulate enthusiasm and loyalty between directors, workers, stockholders, and the consumer public and to which business performs its function of making products and then selling them to the public. “The real work and campaign of business,” he says, “consists of intensive study of the public, the manufacture of products based on this study, and exhaustive use of every means of reaching the public.”⁴⁹

Bernays also insisted that the successful politician could not do without the public relations counsel, who alone recognized the importance of strategy in building a campaign, devising platforms, or envisaging policies. A politician might understand the public and know what it wanted and what it would accept. But he could not be expected to know how to put it out for mass distribution. Only a public relations counsel, through study and preparation, could do this. Platforms, planks, budgets, and other vital matters needed to be carefully studied before implemented. Studying the public took precedence over all. A public relations counsel knew how to play to the emotions and habits of the public so he could mold consciousness and determine how to exploit them.50

LIKE THOMAS NIXON CARVER and Charles Norman Fay, Edward Bernays believed that capitalism represented the natural order of society. The drive to compete and excel in creating a world of winners and losers defined man as an individual whose selfish instinct was to build, defend, and preserve whatever he deemed necessary to satisfy his own interests. While Carver saw this individual as a laborer who was becoming a capitalist, Fay recognized him as a gifted elite whose success in business justified his lofty position over all others. Bernays went further than Fay by conferring seemingly magical powers on an even smaller group, of public relations counsels, whose specialized knowledge enabled them to cast spells over the entire realm. The public relations counsel was the wisest of all capitalist gurus. His capacity as an invisible wirepuller of the great capitalist elites was what made him a penultimate force in the making of American fascism in the 1920s.

Carver, Fay, and Bernays are equally important as prophets of capitalist progress in the New Era. Carver anointed the laborer as a budding capitalist and architect of the economic revolution in the United States. At the same time, he was unwittingly leading his main audience, the aspiring middle classes, toward political reaction since the elites championed by Fay and Bernays were already undermining the economic basis of Carver’s rosy forecast for the future. Carver’s supreme belief that every “true” American could become a capitalist was, on the basis of class analysis alone, an extension of the “phantasmagoria” of petty-bourgeois ideology rooted in the mid-nineteenth century.51 For Carver, capitalism was founded on the possession of property open to all who labored hard and sought to reconcile contradictions between capital and labor through voluntary association with one another. The role of the state lay chiefly in protecting the possessors from non-possessors who would dare seize it through violence or other means. This made Carver as much an anti-communist and proponent of state power as Fay or Bernays. All agreed that government should never be controlled by property-less workers or their political representatives who would sweep away the capitalist order in the name of socialism.

For Fay, the future of capitalist progress within the framework of American democracy lay not with the average man or “everyman” but instead in gifted individuals who had already earned their way to the top as businessmen and who now needed to show the same mettle in governing the country. The man who governed best was the one who had made more money than most. He alone knew how to govern his city, state, or the nation. His real service to the rest of America was to safeguard the political system so the greater wealth he continued to amass would create a greater trickle descending to the rest of society. Fay wanted more hierarchy to preserve American democracy. Yet even he could not succeed without Bernays’s public relations counsel whose magical powers could penetrate the minds of others and manipulate their thinking. Such abstract powers generated in capitalist society reflected the laws of motion in capitalist accumulation. Here was another element that made the germ of fascism inherent in monopoly-finance capitalism.

In the ideology of these three men, we find that the nativist dimension in the making of American fascism is the most overt in Carver. He was certain that the American worker had to be protected from his European counterpart, whose alien ideas about class warfare posed a constant threat to the capitalist order and the dream of universal prosperity through harmony. The immigrant was as dangerous as the communist—in his thinking, they were one and the same. For Fay, True Americanism was a subtle undercurrent in many of his “suggestions” to elite American businessmen. Nativism was not at all present in Bernays’s characterization of the public relations counsel. Yet he alone was the “invisible wirepuller” among all the powerbrokers fueling the rise of the American empire in the 1920s as, surprisingly enough, an architect of non-terrorist fascist processes.

In Carver, Fay, and Bernays we see three currents of fascist ideology: the champion of the middle class; the lust for political power by the hungry capitalist elite; and the architect of persuasion and manipulation—all harbingers of American fascism.