Henry Wallace and the Fate of the American Century with Benn Steil | BRI Scholar Talks

0:05 In this episode of Scholar Talks, the guiding question is how did the economic, political, and foreign policy views of Henry Wallace fit into the idea of the American century? So Benn Steil is a Senior Fellow and Director of International Economics at the Council on Foreign Relations in New York. He’s the lead writer of the council’s geographic economics blog, and the creator

0:28 of nine web based interactives on tracking several international economic issues. He’s also he also writes a monthly column for Barron’s, and he’s the author of several prize winning books, including the definitive The Marshall Plan. Dawn of the Cold War, secondly, The Battle of Bretton Woods,

0:51 John Maynard Keynes, Harry Dexter White, and the making of a New World Order. And of course, today’s topic, his latest book that just came out, The World That Wasn’t Henry Wallace and the fate of the American Century. I am Tony Williams, senior fellow at the Bill of Rights Institute, and I am pleased to bring you another episode in the America to 50 series.

1:13 And I want to thank you very much for joining me. Thanks for having me, Tony. You know, I love this book on Wallace. You know, I thought I knew Henry Wallace, vice president, secretary of commerce, Secretary of agriculture, under under FDR and Truman, ran for president in 1948, but I did not know Henry Wallace.

1:35 So I’m really, eager to to talk with you and to start, learning about this very, very compelling figure. I wish we had a few hours to talk about him. He is a fascinating figure. And as you say, most people really don’t know very much about him, or to the extent

1:56 that they do, they think they know about him. But he’s and he’s actually a far more fascinating person than any of his most devoted fans. Generally realize, right? I mean, I’m eager to jump in. So so I don’t we so can you provide us with just a brief sketch of Henry Wallace?

2:17 Is political economic philosophy from his from his earlier life, prior to becoming vice president. Okay. So you go back to the 1920s, Wallace was, editor of, a prominent farm journal that was founded by his grandfather called Wallace Farmer.

2:39 And through a combination of that sort of public outreach and the work he was doing on, agricultural genetics, he was hybridizing corn. The corn wheat today is derived from his experiments, designed to produce superior strains of corn.

2:59 During that period, his economic and political philosophy began, congealing, as it were. In the mid 1920s. He could be described as being primarily an economic isolationist. He was fundamentally driven by what he thought was best for the farm belt.

3:23 And in the 1920s, he felt it was best for the farm belt. If the United States became economically self-sufficient and detached from Europe, which he considered to be, a moral quagmire. Wallace was, as you know, a very religious man, and somewhat eccentric was that time.

3:43 But he always felt a moral compulsion to take one, political position rather than another. But all that changed quite interestingly after passage of the Smoot-Hawley tariffs in 1930, which are very much in the news today. As you know, at that point, Wallace became convinced that,

4:04 that policy in the United States was driven fundamentally by the perceived need to protect manufacturing, which was, in his view, fatally harming agriculture. So at that point, he becomes an internationalist, and he imbues his internationalism with a sort of, moral basis

4:28 that is that he wants to integrate, the world that he believes as, Secretary of State Cordell Hull believed that free trade, gave rise to, peaceable interaction among, nations. So fast forward to 1933.

4:49 FDR is now president. Wallace is named agriculture secretary. He served in that role for, two terms. And for the most part during that period, his internationalism, develops. And actually, that’s what enamored him to, FDR having said that, quite interestingly, he is very anti-Soviet.

5:14 In 19, 33, he actually, argues vociferously with FDR that the United States should not grant diplomatic recognition to the Soviet Union. And the reason is, you know, having read the book, is that during that period, he had fallen under the sway of a White Russian anti-Bolshevik

5:38 artist mystic name, Nicholas Rarick. This is fascinating. So, I mean, without going too deeply into that story, it is one of the most fascinating episodes in the book. In 1934 35, he sends Rarick off on what’s allegedly a seed foraging expedition in Central Asia,

6:00 which is a cover for Rarick to try to create a new theocratic state in Central Asia that will take territory from Russia and Siberia, from Chinese Manchuria, which is under Japanese occupation at the time, and Mongolia. So this is one of the most dangerous,

6:21 places in the world. And, Wallace is trying to aid, Rarick in completely upsetting it politically when a series of damning articles come out about what Rarick is up to might be up to, Wallace disowns it entirely. And then his views on the Soviet Union begin evolving

6:42 in a much more positive direction. Right. Well, and that leads me to my next question. Although I wish we should talk about that off. So, so as vice president, how does Wallace involve himself in wartime planning? And, and foreign policy, including what I don’t think we can avoid calling

7:05 a pretty outrageous trip to, the Soviet Union and then on to China. Yeah. So Wallace was pretty unusual for a vice president at that time in that he did have, significant managerial administrative responsibility. FDR put him in charge of one of his many, many, many acronyms.

7:28 He was inventing them all the time. This one, went under, several guises, but ultimately it became known as the Bureau of Economic Warfare. So Wallace was head of this, bureau from 1941 until FDR abolished it in 1943.

7:50 And the reason is that throughout this period, when Wallace was, responsible for procurement abroad, wartime procurement abroad, he was competing against others in the government, in particular Cordell Hull, the secretary of state. And Jesse Jones is very,

8:12 powerful conservative. Commerce secretary. He was competing with them, to set policy on procurement. And Wallace was in constant public conflict with, Jesse Jones. FDR, generally liked these sort of conflicts

8:35 because he thought the competition brought out the best in people, having, you know, delved into that period. I can’t really say that it helped the war effort. But as I said, in July of 1943, FDR gets fed up with the squabbling, abolishes bw

8:55 and that was sort of the pinnacle of Wallace’s official participation. And in foreign policy, he tries to get back into that area, as you know, but never quite succeeded. So in March of 1944, Wallace goes to FDR,

9:15 and says he wants to visit Russia. Of course he wants to, Stalin. FDR, who had a few months earlier asked Wallace to take a trip to China, on a very narrow mission to assure Chiang Kai shek that the United States was indeed deeply interested in, China’s, welfare,

9:39 despite the fact that it wasn’t the main theater of fighting. And he wanted Yankee shek to stop fighting against the Chinese Communist and start directing his forces against the Japanese, who wanted Wallace to deliver that message. So FDR told Wallace, absolutely. No. You you you’re not going to Moscow.

10:00 But then, FDR thought twice about it, and he was well aware that, leaders of the, DNC Democratic National Committee wanted Wallace off the ticket in 44 because they could see that Roosevelt was deteriorating, and they knew whoever was vice president was going to be, president.

10:21 And they didn’t want this, pro-Soviet mystic becoming president. FDR had accepted this argument, but had not yet communicated anything to Wallace. He thought sending him to, Siberia might be a way to ease him off the ticket. So, FDR helpfully suggested that Wallace could go through

10:43 Siberia on his way to, China, and he actually, spent, four weeks traipsing through what was the Gulag Archipelago really quite remarkable. And the Soviets, as you know, from the the chapter, spent enormous

11:03 amounts of money and time construc in what was, in effect, a Potemkin continent, for Wallace, you know, inventing, fake shops that were of course, full of, goods, convincing him that all the, the phenomenal local theater performances he was seeing

11:25 were put on by native, Asian talent Soviet, Asian talent, when, in fact, these were general political prisoners brought in from from Moscow. Wallace falls for and eventually writes a travelog part Soviet Asia mission

11:48 which was mostly ghostwritten from his notes by an NKVD American journalist. Source named Andrew Steiger. And as you can imagine, in Wallace’s later political career, he had to disown,

12:09 This book and then, of course, blamed it mostly on Steiger. Wallace was very good at blaming his political problems. On others. He then goes off to China on his China mission. I thought that would be a short and uninteresting chapter because he really didn’t, achieve much of official notice. But I did discover from the Soviet archival material that,

12:32 the Soviets had been intensively spying on him while he was in, Chongqing, wartime capital in China. And they discovered that Wallace, apparently away from his State Department minder, he had a minder there who was supposed to make sure he never spoke to Chiang Kai shek a little Wallace of his own initiative,

12:54 prodded Chiang Kai shek to make enormous commercial and territorial concessions to the Soviets and, the postwar year, the Soviets got very excited about this and assumed, wrongly, that Wallace was speaking for FDR. And make a long story, a fascinating long story, but a long story, very short.

13:17 The Soviets began taking a much more hardline position with, Roosevelt on the price that they would demand for invading, Manchuria, after the European war. And succeeded. And that was, based entirely on Wallace’s

13:39 freelance diplomacy. So, you can make an, an argument that Wallace actually, without intending to, to do this, aided the CCP takeover of, China in the, Civil War. But because of the impetus he came, gave to the Soviets

14:04 for occupying Manchuria for a much more extensive period than they were supposed to, and eventually handing, much of that territory over to the Chinese Communists. Right. Well, I reluctantly go on to the next question, because there’s so much to dig around in that,

14:25 but, so how does Wallace react to being dumped as VP, which you sort of mentioned, in 1944 for, for FDR short term. And, and I don’t normally do this, but but I want to ask you as sort of a counter factual which you, I think you addressed in your introduction that, you know, what if he would have become president. Yeah. So, as you know, FDR

14:47 never quite came out and told Wallace you gone. He gave him enormous hints, and sent emissaries to tell him, look, it’s over. The the boss wants you gone. But he refused to. He refused to accept that. Insisted that he would only step off the ticket willingly.

15:09 FDR looked him in the face and told him, yeah, to do that, FDR wound up in a classic FDR style, endorsing four separate candidates in four separate ways. But the way he endorsed Wallace, it was pretty clear, that he expected him to be pushed off the ticket.

15:29 He sent a letter to the chairman of the convention, Democratic National Convention, saying that he liked Henry Wallace. If he were a delegate, he’d vote for Henry Wallace. But of course, he was not a delegate. And who am I, FDR, to dictate to the convention? Whereas in 1940, he insisted,

15:50 despite the convention overwhelmingly being against Wallace, that he, FDR, would not run for president again unless he got his choice as vice president. So there was a wild open convention and July of 44, in which Harry Truman beats out Henry Wallace on the on the second ballot.

16:13 Wallace is naturally pretty angry. At this point, mostly at the DNC leaders. The only comes to realize later that, you know, FDR had been part of this, conspiracy. But, FDR is, a wily guy. He knows he can’t afford to have Wallace outside the tent pissing in.

16:33 He needs him inside the tent to immediately sends him a telegram, inviting him to the white House. Where, FDR says you can have any cabinet position you want except Secretary of state, because Cordell Hall is, quote unquote, such an old dear FDR can’t possibly,

16:58 tell the old theory he’s got to step down. And it turns out that Hall does step down of his own volition because he’s he’s quite ill. And then FDR still doesn’t offer it to Wallace. He gives it to 20th. But FDR manipulates Wallace into accept accepting, Secretary of Commerce

17:19 because that was the position controlled by his old arch nemesis, Jesse Jones. FDR understands that in that position, he’ll be able to control Wallace. It’s not a position that has enormous power. That’s forward to April of 1945. FDR dies.

17:40 Wallace does not become president, of course, because he’s not vice president anymore. Harry Truman, becomes president. And you might say at that point, well, the the rest is history. But it could have been a very, very, very different history. Because, Truman keeps Wallace on as Secretary of Commerce

18:02 remark ably for a year and a half because Truman reasons he also needs Wallace to protect his left flank. But Wallace spends much of that time not helping in out in any way, to deal with problems related to American commerce and labor

18:22 relations is fact and blames all those, problems mostly, as you know, under the instigation of his advisors, most of whom are Soviet agents or hidden Sipa USA, members. But Wallace spends most of that time attacking Truman’s foreign policy. He doesn’t attack Truman personally,

18:46 but indirectly attacks Jimmy Byrnes. Secretary of state argues that the United States is, moving in an Imperial direction internationally and moving in a fascist direction, at home, in which the military, he argues, is basically taking over the country.

19:09 So what kind of policies? Does, Wallace support, policies of, intimate postwar collaboration with Soviet Union? He opposes the Truman Doctrine. He opposes the policy of containment. He opposes the Marshall Plan, or at least he does when Stalin comes out against it.

19:31 He opposes the creation of West Germany. He opposes the creation of NATO. So, as you can imagine, we would have had a very different suite of, policies, had Henry Wallace been president. Now, I argue in the book, and I think Wallace himself would, accept this based on his later reflections.

19:54 As you know, he eventually recounts and says that he, was mistaken in his views of Stalin in the Soviet Union. But, this Oliver Stone argument that there would have been no cold War if Henry Wallace had become president is clearly wrong. Because the Soviets,

20:16 were absolutely determined not only to expand their borders, but to expand their security buffers and, and, Central and Eastern Europe and, and Asia. Wallace acknowledges that he would have lost the election and, 48 and policy would have changed dramatically.

20:38 But if Wallace had been president, we would have been fighting the Cold War at a major disadvantage by that point. I think you can make a strong argument that the Soviets, would have perhaps stayed in Manchuria. That’s very possible. They would have controlled the whole Korean Peninsula.

20:59 They would likely have controlled the Turkish Straits. Possibly they would have, intervened much more heavily on behalf of the Greek communists in the Greek civil War. And of course, the you main battle in the early Cold War was for Germany.

21:20 And there’s a lot of evidence that the Soviets would have succeeded. And in taking over the entirety of the country of Wallace had been president because, again, he opposed all U.S. policies aimed at keeping western Germany firmly in the, democratic capitalist camp.

21:40 All right. So, there’s a lot there. Yeah, I know of, yeah. And it’s. Yeah. And it’s it’s a little shocking at times, but. Yeah. So, so what were what was his economic vision then as secretary of Commerce? And in terms of like national planning or other policies, as a progressive and, you know, why does Truman ask for his resignation, basically.

22:02 So, I mean, his formal responsibilities are naturally, as you know, commerce secretaries, today to pursue the interests of, U.S. commercial enterprises broadly domestically and internationally. He doesn’t do that.

22:22 He involves himself initially heavily in labor relations and and, very counterproductive way. As you know, the U.S. economy had operated under tight, price and wage controls during the war. Those are relaxed. And, the immediate post war,

22:44 period, naturally, is is going to be some labor strife because the unions, quite rightly, want wages to come up. But Wallace, supported rather extreme positions again, endorsed by his, advisors who actually wanted to create a national,

23:09 labor crisis in the United States. And they wanted the government to take over mines and railroads and so on. So Wallace came out, for example, for 25% across the board wage, rises with price rises being outlawed by the government. Eventually Truman becomes,

23:31 utterly infuriated by Wallace is unwilling to help tamp down, this crisis, takes control of it himself and does quite a good job. Ending the the the strikes and reviving the U.S. economy. I don’t think he gets quite enough credit

23:53 for how well he handled the very difficult position. But as I said, Wallace spent much of his time attacking Truman’s foreign policy, arguing that it was moving into, militaristic and imperialistic fascistic, direction and particularly attacking U.S.

24:14 atomic policy. The United States was trying to, through the United Nations, establish an atomic regulation regime in which the Soviets would, allow, and inspections so he could ensure that they were not developing, a weapon in return for which the United States would, be,

24:36 effectively put its, nuclear arsenal under un, control and then dismantle it. So it was quite sophisticated, phased program. Wallace entirely, mischaracterized U.S. policy, taking it directly, as I found from Pravda.

24:58 Again, under the influence of his advisors who were working for the Soviet Union. Truman put up with this for extremely long period, as I said, a year and a half. Wallace was in that position until finally in September of, 1946, Secretary of State Jimmy Burns threatened to resign.

25:22 Bernard Baruch, who is the US representative on the U.S. Atomic Energy Commission, is utterly infuriated at how Wallace is undermining him, and Truman finally decides enough is enough, tells Wallace he has to go right. And he runs for president, in 1948. And has something you’ve alluded to several times,

25:45 some pretty extensive pro-Soviet views on foreign policy, seems to blame the United States for the Cold War kind of excuse the Soviet actions. I assume I’m on the right, path here from from what you’ve said. Right. Can you maybe elaborate on that a little bit or so? I mean, yes, you’ve described it accurately.

26:05 He takes very pro-Soviet, positions. Anything that Stalin opposes, like the Marshall Plan. Wallace opposes. Certainly the most startling thing I discovered about the 48 campaign, when Wallace runs as, a Progressive Party, candidate for president. Is that in, March, April and early May,

26:29 he actually colluded with Stalin to undermine American foreign policy. He approaches the, Soviet UN ambassador, Andrei Gromyko, who only he knew personally. But he approaches him indirectly because he doesn’t want this being discovered through the Czech U.N.

26:49 ambassador Vladimir who? He delivers documents to him. Secret meetings are arranged between the two. Wallace Stuber amigos. Complete shock says that he wants to reach a complete agreement with, Stalin. And, coming sometime in the coming two months

27:12 to clear up all the problems, between them. Gromyko like a good Soviet diplomat, who has no wiggle room in terms of negotiating, agreements, which said, what do you want? Because he’s got to pass this information on to Moscow, and Wallace can says again and again, I don’t want anything.

27:33 Okay. The, the general election moonshine can, indicate what these issues, will be. And so what makes his most important election speech in, May of 1948, of Madison Square Garden in front of 20,000 people.

27:55 And I have Stalin’s, handwritten edits on Wallace’s draft for that speech. And we know that Stalin’s, edits actually went into the speech, because we can see how the speech changed after these communications.

28:16 The State Department, naturally suspected that Wallace was colluding with Moscow but didn’t have the evidence that I have. Today, putting FBI agents into the, coffee shop where Wallace had printed up his speech

28:38 before the, the the rally. They were able to to determine that Wallace knew certain things that he could not have known. Had he not been in contact with, the Kremlin at the time. He was. But fascinatingly, the Truman, administration decides not to do anything about it.

29:02 This is like, the clearest case of a violation of the Logan Act. The 1799 Logan Act in American history. But they do nothing. And why? Because it’s not helping. Wallace is plummeting in the polls. The closer he gets to the Soviets, the more he plummets. And, in the polls. So the Truman administration decides to let him hang himself.

29:25 He’s actually helping Harry Truman against Thomas Dewey, which was completely, the Republican, candidate. Unexpected because he’s making Truman look tougher than the the public perceives him to be it by this point, the public is to the right of Truman, containment policy.

29:45 So he actually helped. And as you know, Wallace did very poorly in the, election. He started out as a third party candidate. He ended as the fourth party candidate, coming in with barely over a million votes behind Dixiecrat segregationist Strom Thurmond, though he got no electoral

30:07 votes, whatsoever in his own home state of Iowa. He got barely 1% of the vote. So, you know, by this time in his career, he’s just persona non grata in the farm belt, which is quite remarkable story for someone who, started his career as an agricultural expert.

30:29 Right. All right. So final question is how did, the economic, political and foreign policy views of Henry? Well, stay or maybe, in light of our discussion, not fit into the idea of the American century? Well, this phrase, the American Century was, coined by, publishing magnate Henry Luce and a famous life

30:52 magazine article in February of 1941 of the American Century, in which Luce argued that was, really an obligation of the United States, to begin being. This was before the U.S. was in power. But Luce said, hey, for all intents and purposes, we’re in it now.

31:13 We’re going to be in it. We need to define it. What are we fighting for? And Luce argued, basically, we’re fighting for democracy. We’re fighting for freedom. We’re fighting for, free trade. Those are the things we stand for. Those are the values that we need to spread through the world, not militaristic, but through the establishment of new institutions

31:38 like the United Nations that would become FDR, his pet project, and was in 1942, sets himself as up as the anti Luce he and a speech that became known as the common man speech.

31:59 He coined the phrase the century of the the common man. He characterizes loose as being effectively an imperialist, and advocating a form of American imperialism. After the war. Where is he? Henry Wallace is advocating for international cooperation

32:20 based on the needs of the common man. Around the world. And and it’s at this point that Wallace, begins developing into the progressive icon that he’s widely known as today. Oh man. I want to thank you very much for joining us. Congratulations on a new book.

32:41 And, thanks for coming to talk about this really compelling figure and very interesting topic. Thanks for having me, Tony, I enjoyed it. Great. Thanks. And thank you all for joining us on this episode of Scholar Talks. Please check out the other interviews in our America 250 series on our channel and press subscribe.