Andrew Mellon,
the Pittsburgh multimillionaire and aluminium magnate,
believed that all the state had to do
to tackle tax fraud was to lower taxes.
In 1921, he was named Secretary of the Treasury,
putting him in charge of taxes.
A case of the fox being let into the henhouse.
For ten years
Andrew Mellon slashed taxes for the wealthiest
and big businesses.
A policy which he justified
using the trickle-down theory.
TRICKLE-DOWN THEORY
If the rich are allowed to get as rich as possible,
then their wealth will eventually trickle down
to the rest of society.
ROCKEFELLER JUNIOR AND HIS FIVE SONS
Business dynasties
would not relinquish their place at the top of the social ladder.
J. P. MORGAN JR JUNIUS MORGAN
Believing that what was good for them was good for America,
they were proud to have made it the richest country in the world.
As they waited for the wealth to trickle down,
Americans went about their daily grind.
24 October 1929
saw a stock market crash of unprecedented severity.
America had never known such levels of mass unemployment.
Things were so bad that those lucky enough to find work
were willing to accept lower salaries.
Forced to tighten their belts,
Americans were buying less and less.
And the companies that were unable to sell their goods
had no choice but to lay off staff.
But given the mystery
which surrounded an industrial economy at the time,
no one had a proper grasp
of this vicious cycle.
Some believed that ignoring the crisis was the best option.
"Instead of complaining, Americans should be rolling up their sleeves.
There's plenty of work for those who want to work."
Henry Ford March 1931.
A few weeks later Ford laid off 75,000 workers.
The elites saw the laws of the market as an unstoppable force,
and believed that the economy would eventually right itself.
Convinced that looking after their own interests
could only speed up the recovery, they were gifted
further tax cuts by Andrew Mellon.
This will be the fifth reduction in taxes
which the federal government has made
within less than nine years.
But after four years of depression,
things still hadn't picked up.
Demonstrations by angry workers
were still quashed by the army.
But members of the ruling class began wondering
if simply cutting taxes was the only solution.
One of them, a Harvard graduate
and the wealthy descendant of one of New York's oldest families,
was the Democrat governor of New York, Franklin Roosevelt.
A wily politician and poker player,
he belonged to the progressive wing of the Democrat party,
which had always condemned the stranglehold of the super-rich
over American democracy.
He firmly believed that capitalism
was the best system in the world,
but was critical of its excesses, hated tax cheats
and condemned the irresponsible greed
of his own social class.
Like his contemporaries, he did not fully understand the crisis,
but he did not believe that the economy obeyed supernatural laws.
For Roosevelt, the economy was a human creation,
meaning it could be controlled.
CHICAGO 2 JULY 1932
This was the crux of his campaign
for the presidency in 1932.
I pledge myself
to a new deal for the American people.
23 million voters in favour of the New Deal.
Roosevelt wins in 42 states.
The New York Times 13 November 1932.
This great nation will endure
as it has endured,
will revive and will prosper.
Yes, the money changers have fled
from their high seats in the temple of our civilisation.
We may now restore that temple
to the ancient truths.
Like Jesus chasing the money changers out of the temple,
Roosevelt promised to clean up the world of finance,
which was universally hated after the stock market crash.
But his priority was to heal America's suffering.
This nation is asking for action
and action now!
A Roosevelt victory would depend
on the support of the industries which drove the economy:
oil and petrochemicals,
steel, electricity,
and the automobile manufacturers Ford and General Motors.
These were private concerns controlled by the industrial elite,
which had as its spokesperson
the old steel magnate Charles Schwab.
I believe
that all of the important business people of this country
are in hearty sympathy and cooperation
with the president to bring about better conditions.
The first measures of the New Deal enjoyed unanimous support.
To tackle unemployment
the government began a mass recruitment campaign
and launched a range of public projects.
One example was the Tennessee Valley Authority,
a giant, federally-owned corporation
that was active across the eight states of the Mississippi Basin.
The company built 29 dams
for the production of cheap and plentiful electricity.
Thanks to this public programme, General Electric and Westinghouse,
the largest private companies in the sector,
were able to return to business.
It was also a New Deal programme which financed
the construction of the world's longest suspension bridge,
the Golden Gate Bridge, which opened up San Francisco
and stimulated business.
This 2 km long bridge required 75,000 tonnes of steel,
thereby supporting
steel mills in New Jersey, Maryland and Pennsylvania.
But the measure which best summed up the spirit of the New Deal
was the creation of the National Recovery Administration
or NRA.
Through the NRA, the government was able, for the first time,
to encourage businesses and their employees
to reach agreements on wages,
ensuring a fairer redistribution of profits
and making sure all workers were able to earn a decent living.
But the NRA wasn't able to enforce anything.
Those employers who signed up to it
simply put a blue eagle on their products
to let consumers know that their companies were part of the New Deal.
This programme was supported by the biggest employers,
including the most influential man in US industry,
Alfred Sloan of General Motors.
An engineer from an ordinary background,
Sloan was typical of a new generation of bosses
whose skills had taken them
all the way to the top.
When General Motors' shareholders turned to him in 1923,
he found a company on the verge of bankruptcy,
with a confusing mix of car brands
bought without any clear strategy,
and engaged in fierce competition.
Alfred Sloan allocated each model
to a specific type of consumer,
using a pricing structure which he called 'the ladder of success'.
Beginning with a Chevrolet,
young customers could now access the American dream on the cheap.
As their spending power increased,
they would let their neighbours know by upgrading to a Pontiac,
before moving on to an Oldsmobile
and then a Buick.
Meanwhile, they could dream
of one day owning GM's most expensive car,
a Cadillac.
Through its visionary marketing strategy, General Motors' cars
now shaped the imaginations of American consumers.
Sloan was also behind
the introduction of annual changes in style,
which kept consumers coming back for more
and wore out his competitors.
And so, in just seven years, Alfred Sloan turned General Motors
into the world's second biggest automobile manufacturer,
just behind Ford.
Keen for solvent customers
in order to keep the pace with Ford,
Alfred Sloan supported Roosevelt
and the wage increases put forward by the NRA.
Personalities of the day,
John D. Rockefeller, enjoying his 94th year with three holes of golf.
He left business and his multimillion dollar philanthropies
to younger hands.
Senate investigations were making headlines.
It was J. P. Morgan on the grill, telling senators
his banking house had a quarter of a billion dollars in the till,
and that he had not paid income tax in the last two years.
Morgan Junior, America's most famous banker,
was forced to appear before a Senate inquiry for the first time.
Americans wanted to shed some light
on the 1929 stock market crash,
and the press raged against the financiers,
which they dubbed 'banksters',
a portmanteau of bankers and gangsters.
Accustomed to hiding behind business secrecy,
Roosevelt's 'money changers in the temple'
were staggered at having to answer to anyone.
The inquiry revealed that small shareholders
had been treated like mugs, paying over the odds for shares
that the wealthiest got for a knockdown price.
These predatory methods benefited the upper echelons of the elite,
including former president Calvin Coolidge,
and the Honorable Owen J. Roberts,
a US Supreme Court Judge.
Following the inquiry, Congress put an end to bankers' impunity
by forming the Securities Exchange Commission,
a markets watchdog
overseen by businessman and loyal supporter of Roosevelt,
Joseph Kennedy,
whose dynasty was beginning its ascent
within American society.
Sensing a shift in public opinion,
Congress launched a further inquiry on the enormous profits
made by American industry during the First World War.
Roosevelt, fearful of losing the support of the industrial world,
believed this was ill-timed.
But DuPont, the country's leading petrochemicals company,
was also ordered to submit to the inquiry,
sending shock waves throughout the country.
The Du Ponts were one of America's most powerful
and most secretive families.
The Du Ponts specialised
in the myriad ways of making money out of petrochemicals,
using this to build a sprawling empire.
They were behind Nylon,
an invention which revolutionised the textile industry,
while DuPont cellophane
was used for food packaging in supermarkets.
The entire automobile industry used DuPont paints,
which were what gave American cars their sheen.
DuPont was also responsible for adding lead to petrol,
the sole purpose of which
was to generate a new source of profit.
KING KONG BY EDGAR WALLACE AND MERIAN COOPER
DuPont cellulose
was used to produce camera film.
This same cellulose was also used to make explosives,
which enabled the firm
to increase its profits by 400% during the war.
Uncovered by the inquiry,
this money was stained with the blood of American soldiers.
Now hated by the public,
the brothers Irénée, Lammot and Pierre Du Pont
retorted that
America needed more patriots like them,
and that they had also reinvested their war profits
to help save General Motors from bankruptcy,
before putting the talented Alfred Sloan in charge,
which as we saw was a huge success.
But for the Du Ponts the damage had been done.
Their carefully curated brand image
was destroyed for years.
A tired and irritated Morgan Junior, who was also accused
of war profiteering, spoke out against what he called
a scandalous and degrading attack.
"How is it possible in America", lamented one industrialist,
"That people could aim
so much mud and vitriol at our businessmen?"
This public humiliation was being felt throughout the upper class.
And they held Roosevelt responsible.
For many of them he had become
"that man",
a traitor whose name must never be spoken.
This was the beginning of the split between industry and Roosevelt,
which the NRA, the cornerstone of the New Deal,
would help to speed up.
The wage negotiations recommended by the NRA
were blocked in most major industries.
In Minneapolis
the teamsters' strike effectively paralyses the city,
and class war threatens as the Yale Club of Minneapolis
leads an anti-labour march
in which two strikers are killed.
The situation got ugly
outside General Motors factories.
The company refused to recognise as a negotiator
a union from the American Federation of Labor,
the country's biggest federation.
Alfred Sloan, with other industrialists following suit,
would only deal with company unions, which were far more docile.
Meanwhile, industrialists spoke out angrily
against the labelling of products with the NRA's blue eagle.
Intended as a way of telling consumers
that companies were doing the right thing,
they saw it as a covert way
for the unions to get to impose their will.
They felt that the New Deal
was going beyond its legitimate remit as an emergency intervention,
and that what Roosevelt really wanted
was long-term control over American capitalism.
And that was no longer progressivism.
That was socialism.
Ogden Mills, former secretary of the treasury,
told elected Republicans
that the New Deal was a cover for implementing a planned economy,
state control over industry
and subjugating the American people.
He concluded by saying that the New Deal will lead to tyranny.
The New York Times 20 May 1934.
The Liberty League is set up to oversee the New Deal.
The New York Times 23 August 1934.
The Liberty League was made up of 36 businessmen
who wanted to oppose the New Deal.
The White House immediately dubbed the organisation
'the millionaires' union'.
It was financed by the creme de la creme of American business,
including Pierre Du Pont,
under investigation for tax fraud,
and who felt he was being persecuted by Roosevelt,
and Alfred Sloan who, after withdrawing his support for FDR,
lectured him on economics.
Our improvement may be accelerated or retarded
by injecting into the picture abnormal influences.
In other words, the government and the unions.
But the general trend will not be affected
for the reason that an industrial recovery,
like an industrial depression,
is, in the practical sense of the word, an irresistible force.
Sloan believed the New Deal was slowing down the recovery
by violating the natural laws of the market.
Not only was it an aberration, it was a conspiracy against freedom.
The Liberty League produced pamphlets and radio programmes
to speak out against what they saw as a threat to freedom in America.
Roosevelt's reply was that there can be no freedom
when people are starving to death,
and that he was the only true guardian of liberty.
Supporters of the New Deal
started referring to themselves as 'liberals',
and liberalism became synonymous with state intervention in the USA.
Those who believed that the freedom to accumulate wealth
was America's most important value
became known as 'conservatives'.
In one of the most important decisions of the decade
the Supreme Court of the United States has unanimously ruled
that the NRA Act and all of its codes are void.
The Supreme Court's decision to put an end to the NRA
marked the beginning of the conflict between liberals and conservatives
over what form capitalism should take in America,
and it was first blood to the conservatives.
I propose to discuss with you the cost of the New Deal.
The New Deal was expensive, and the secretary of the treasury,
Henry Morgenthau, desperately needed to find money,
but he was hemmed in by tax law.
Only the 5% richest Americans
were liable to pay income tax.
Extending income tax to ordinary Americans
would be beyond the pale.
Soaking the rich
became the White House's new target.
Roosevelt, who enjoyed an enormous majority in Congress,
had no difficulty raising taxes on the rich,
with the top rate rising from 25% to 79%.
The liberals had equalised.
And two more points were coming their way.
On 6 July 1935
Roosevelt passed the Wagner Act,
which forced companies to negotiate with unions
chosen by employees.
On 14 August 1935
he introduced America's first social security system,
partly funded by employers.
The next step, within a reasonable time,
you will receive a card from the Social Security Board.
This card certifies that an account number has been opened for you,
and shows the number of this account.
For the industrialists,
social security was the straw that broke the camel's back.
For a long time, most of them had been granting employees privileges
as a means of buying social peace and ensuring their loyalty.
They couldn't tolerate the idea
of the government meddling in their affairs and giving these
disproportionate, mandatory advantages
with merit playing no part.
To their alarm, communist ideas were gaining traction among liberals,
and they were even persuaded that America's most beloved artist
was an agent for Moscow.
MODERN TIMES BY CHARLIE CHAPLIN (1936)
As 1936 went on
there were encouraging signs of an economic recovery,
and Americans began to hope
that the worst of the depression was behind them.
In an election year, conservatives did everything they could
to prevent Roosevelt from being re-elected.
New agencies, new departments, new bureaus,
more and more job holders to run these agencies.
The number of civil employees of the federal government
has increased by almost 400,000,
and many of them receiving salaries far above
that paid to the average man and woman in this country.
You are taxed to pay the salaries of men like this bureaucrat,
symbolic of the mailed fist of centralised bureaucracy
that knocks at democracy's doors.
We forget that the waste of this administration
is waste of the people's money,
our money.
To beat Roosevelt
the Republican Party chose the governor of Kansas,
Al Landon.
A candidate whose lack of charisma was a concern to industrialists.
The New York Times 10 September 1936.
A group of wealthy men
led by the Du Pont brothers, the Rockefellers,
J. P. Morgan and Alfred Sloan
is generously funding Senator Landon's campaign.
Following a strategy that had always worked in the past,
the leading industrialists organised the rallies
for the Republican candidate
and kept up a stream of money.
When questioned about this support, Alfred Sloan was evasive:
"General Motors doesn't do politics.
As for me, I won't even tell you who I'm going to vote for.
But I'm sure you can guess."
The largest victory in history.
Roosevelt is re-elected with the biggest popular majority
since the United States was founded,
receiving 11 million more votes
and winning 523 out of 531 seats in the electoral college.
The New York Times 5 November 1936.
And things were to get worse for the industrialists.
Roosevelt's landslide victory
persuaded the unions
that the time had come to take the fight to Alfred Sloan,
having identified a weak link:
the Chevrolet plant in Flint, Michigan,
where the moulds used to produce
all of the different General Motors models were kept.
The trade unionists managed to barricade themselves inside,
and forced all 40 of the company's plants to shut down production.
Alfred Sloan refuses to negotiate with workplace dictators.
General Motors boss says his company will never give in
to trade union blackmail.
The New York Times 5 January 1937.
General Motors was soon losing
millions of dollars a day.
Fearing he might damage the precious moulds,
which were unique and irreplaceable,
Alfred Sloan ruled out any violent intervention
to dislodge the occupants.
All they could do was wait.
After 44 days Sloan had no choice but to give in
and agree to deal exclusively
with United Auto Workers.
Sent by Roosevelt to oversee the agreement,
Secretary of Labor Frances Perkins
accused Sloan of,
"having behaved like a neurotic teenager."
"You can't talk like that to me!", he replied,
"I'm worth 70 million dollars,
you're nothing."
Following Sloan's capitulation, it was only a matter of weeks
before other industrialists followed suit.
The industrial elites realised
to what extent they had lost control over the country.
The Liberty League had been a fiasco,
and the Republican Party, embarrassed at the last election,
were no longer of any use to them.
With unions now calling the shots in America,
they decided to form their own union,
made up of the country's 5,000 biggest manufacturers:
the National Association of Manufacturers or NAM.
The NAM, which had never expressed any political opinion before,
set red lines for the Roosevelt administration
on behalf of industry as a whole.
Private enterprise
and the preservation of the American system
are dependent on four primary policies, namely,
one: the maintenance of constitutional guarantees.
Two: the preservation of freedom of enterprise.
Three: the seeking of security through economic progress.
Four: the maintenance of sound tax and financial policy.
The NAM launched an advertising campaign
across the country presenting capitalism
as the bedrock of American democracy.
Selling capitalism was the same as selling any other product.
You had to sell a dream.
And hammer the message home.
Without ever explicitly criticising the New Deal,
the NAM deployed the most effective counterpropaganda
that had been seen since Roosevelt came to power.
The association also produced many films
to remind people that enterprising spirit
had always been fundamental to America.
You are descendants of pioneers,
but you are also pioneers.
Opportunities still rise from every smoke stack,
every test tube, every laboratory,
every workshop in the land.
You have come a long way from the drudgery of the blacksmith shop
and the hand labour of that day.
But your journey forward has just started
because this is America!
Where do we go from here?
Straight ahead and don't spare the horses.
Horses? Your grandfather!
There aren't any more horses.
My grandfather...
I wonder what our grandparents
would say if they could see the world as it is now.
"Great work, kids, carry on."
Carry on what?
The heritage they handed us:
freedom, individual initiative,
opportunity.
Let's go, America!
Tax increases weren't bringing enough money in,
and Roosevelt had to slash New Deal expenditure.
America was struck once again by an economic depression.
Millions of Americans were forced back into poverty.
The White House accused the big industrialists
of deliberately torpedoing the New Deal
by threatening to pull investment.
Meanwhile, the industrialists argued
that Roosevelt was playing God,
but was surrounded by incompetents.
Miss Ethel Du Pont marries Franklin Roosevelt Junior,
watched on by the president's family
and the Du Pont family.
The New York Times 24 May 1937
Roosevelt stayed true to his upbringing
and buried the hatchet with the Du Ponts
for long enough to celebrate the marriage of the eldest son
of America's most powerful politician
and one of its wealthiest heirs.
Roosevelt enjoyed overwhelming popular legitimacy,
controlling all the levers of American democracy,
but he was powerless against his own social class,
which retained control over all the levers of the economy.
The New York Times 30 June 1937.
Rockefeller dies aged 97.
The founder of the giant Standard Oil,
and once dubbed 'the richest man in the world',
Mr Rockefeller earned the right to be called
'the greatest philanthropist in the world.'
A ruthless and ferocious businessman,
Rockefeller was seen as an icon by the wealthiest
for so cleverly exploiting the lack of any laws in his 'glory days',
and then for having forced his own will on the government
by making sure philanthropic endeavours were exempt from tax,
to the great benefit of America's upper class.
Philanthropy index up.
A record 148 million dollars in donations
in 1937.
The New York Times 31 December 1937.
By raising taxes on the wealthy,
all the Roosevelt administration had done
was to supply their favourite tax niche,
without bringing any extra money
into the government's coffers.
The rich could not be soaked.
Oh, Ellen, darling, we're all so proud of you!
This is a great day for me,
having my daughter graduate an honour student.
Oh, Daddy!
Ellen, just a moment. Look over here.
Well, how do you like it?
You don't mean Daddy that it's really mine?
It's all yours, and here are the keys.
Oh, Daddy!
Come on, girls, let's go for a ride! Here, mother.
Oh, a new Ford!
And what a lovely colour!
And such a roomy seat!
Ten years after the crash,
the economy still hadn't returned to its 1929 levels,
and only a tiny minority of Americans could buy a new Ford.
In May 1940, the Secretary of the Treasury, Henry Morgenthau
accepted that the New Deal had failed.
I want to see this country prosperous.
I want to see people get a job.
We have tried everything and it doesn't work.
We have never begun to tax the people in this country
the way they should be.
I don't pay what I should.
People in my class don't. People who have it should pay.
PEARL HARBOR 7 DECEMBER 1941
On 7 December 1941
the Japanese air force launched a surprise attack
on the US base at Pearl Harbor.
I ask
that the Congress declare
that since the unprovoked and dastardly attack
by Japan
on Sunday December 7th, 1941,
a state of war
has existed between the United States
and the Japanese Empire.
Three days later Nazi Germany also declared war on the USA,
sucking the Americans into the Second World War
across a front which stretched from the Pacific to Europe.
This was a human, material and logistical challenge
on a scale that the US economy was in no position to finance.
And so the historic decision was taken
to extend income tax
to the entire US population.
From now on 133 million Americans
would need to pay this tax in accordance with their means.
The rate of tax ranged from 19% for the poorest off
to 88% for the very wealthiest.
This tax revolution, approved by all as a patriotic responsibility,
funded the US military for the duration of the war.
The man put in charge of War Production Management
was Donald Nelson, a cold and methodical businessman
with a background in department stores.
Our hardest battle trials are still to come.
When they come
our armies must advance behind an avalanche of steel.
The biggest conversion task confronts the automotive industries.
Even while they're replacing machinery which only two months ago
was assembling automobiles,
other workmen turn out tanks, guns, airplanes.
750 leading manufacturers of automobiles
and parts are pledged to help keep war production in high gear.
It's the biggest industrial programme in the world,
the productive might of a nation unified
for freedom's battle.
Within eight weeks all of civil industry
was turned over to war production.
The super profits which had tarnished the First World War
were strictly prohibited.
For each military contract there was a standard low rate of profit,
and federal agents were ruthless in their pursuit of fraudsters,
who were liable for gigantic fines
and immediate nationalisation.
Factories were running day and night, seven days a week.
But it still wasn't enough.
America's entire production capacity was only enough to cover
one quarter of military orders.
And so the federal government financed the construction
of hundreds of new factories,
which were entrusted to manufacturers,
in order to make up the remaining three quarters.
In 1943
America's defence budget was responsible
for 90% of the country's gross domestic product,
with factories producing: 26,000 tanks,
400,000 trucks,
and 85,000 planes.
Even aircraft carriers were mass produced.
San Francisco Bay became the world's largest shipyard,
and its 300,000 workers produced an aircraft carrier every five days.
Unemployment was a thing of the past.
All Americans were now paid a decent wage
and could feed themselves.
We're the dollars of the nation on parade.
We're the biggest batch of dollars ever made.
For we used to march by millions,
but now we march by billions,
and maybe we'll be trillions before you're dead.
We're the dollars of the nation on parade.
We're the money all of you are getting paid.
In the fiscal year before us
there'll be 194 billion more of us, dollars of the nation
marching on parade.
Yes, America's national income gets bigger and bigger.
In 1943, it was 142 billion dollars.
That was double the 1939 figure,
triple the figure for 1933.
America entering the Second World War
brought about the biggest economic recovery of all time.
We're going to pay taxes.
We're about 15% of the total.
We're what people normally save,
put into life insurance, savings accounts and the like.
Hey, wait a minute, where do you think you're all going?
Where do you think? We're going to get spent.
What else is money for?
Government propaganda
was full of praise for the patriotism of workers,
particularly female workers,
who were doing a significant amount of the work.
But industrialists were annoyed that the government never mentioned
their own patriotism.
They were also concerned by the fact that trade union membership
had risen from 5 to 14 million since the start of the war.
At this rate, bosses would no longer be the ones in charge
once peace returned.
And amidst the sprawling machinery
that war production had become,
something else was worrying them even more.
No economy in the world
was more effectively financed, planned,
run and coordinated by federal government
than America's war economy.
Overwhelmed by public spending,
private industry had completely lost control of the economy,
and it looked as though it might never get it back.
According to a survey carried out in 1943 by Forbes magazine,
three quarters of bosses believed
that the government was exploiting the war
to create a vast public industrial sector.
"If, after the war, the government decides to take on private industry"
said Alfred Sloan,
"then we're finished."
To prevent this, they had to win back the hearts of Americans
and rally them to the cause of the private sector.
"This war is an historic opportunity",
declared Charles Wilson, the boss of General Electric,
"and now let us glorify free enterprise
as much as we can."
We are American industry.
We are in the Navy too.
They asked us to perform miracles and that's what we've done.
'Miracle' was the word that featured most often
in the propaganda pumped out by the big industrialists.
But what they didn't mention
was that this miracle was 100% financed
by American taxes.
But the advantage of a miracle is that it needs no explanation.
Just watch and marvel at it.
Such a task was a challenge
to the men who, over the years, had been spurred on
by our competitive American system
of incentive and initiative
to invent, to build, to achieve,
to compete in producing better products.
These and many other Chrysler corporation activities
are examples of how the wheels of the automobile industry,
symbolic of all private competitive enterprise,
turn together in unison to supply the nation's requirements.
Behind locked doors
at almost 100 General Motors plants throughout the country
lie thousands of secrets.
Missouri Senator Harry Truman
was furious at this shameless appropriation
of the collective efforts of Americans.
A devoted New Dealer, he had become the scourge of the industrialists
for his ruthless pursuit of those making illegal profits.
But come 1944,
he found himself being inundated with letters
demanding that he stop harassing the industrialists.
Truman realised to what extent
their advertising bombardment had shifted opinion,
with people now convinced that free enterprise
had singlehandedly saved democracy.
He was then given a promotion by the president,
who won another comfortable election victory in November 1944.
Truman was now vice-president
at a time when Roosevelt was consumed by the war,
and had no time for big business and their scheming.
The New York Times 13 April 1945.
President Roosevelt is dead.
Loved by millions,
hated, admired and feared by countless adversaries,
he did more than anyone
to shape the future of the nation he ruled
and the world in which he lived.
Nazi Germany would capitulate in a few days' time,
but victory over Japan was not expected until late 1946.
Not long after being sworn in,
Harry Truman learned that America had secretly been manufacturing
the world's first ever atomic bomb.
Launched at the beginning of the war, this technological endeavour
involved some of the country's leading manufacturers.
At Oak Ridge, Tennessee, at Hanford, Washington,
mammoth plants were built
for the production of fissionable materials and atomic bombs.
The Hanford site, run by DuPont,
produced plutonium for the 'Fat Man' atomic bomb.
Keen for their brand image not to be tarnished again,
the three brothers included a clause in the money-spinning contract
that their company would not make any profit out of the operation.
At Oak Ridge two production sites -
one run by Union Carbide and the other by Kodak -
produced the enriched uranium needed to produce 'Little Boy',
a second type of bomb.
Within a few months a town was built
to house the scientists and the civil and military personnel,
as well as their families.
The town had everything,
from its own schools to cinemas and shopping centres.
In secret the federal government took out unlimited credit,
and in addition to Union Carbide, Kodak and Dupont,
the project involved 900 private companies of all shapes and sizes.
More than cooperation, this was a case of symbiosis -
coordinated by the government -
between scientists, the military and manufacturers.
This unprecedented grouping
enabled technological innovations to be made in record time.
On 6 August 1945
a Little Boy bomb obliterated the city of Hiroshima,
instantly killing 70,000 people.
Tens of thousands more would die from their injuries or radiation.
With this bomb,
we have now added a new and revolutionary increase
in destruction.
In their present form
these bombs are now in production
and even more powerful forms are in development.
Few Americans realised the awful implications of the event.
They were mostly just relieved
that the war would soon be over.
As for the industrialists, they had discovered the awesome potential
of close collaboration between the government and the private sector.
We have spent more than 2 billion dollars
on the greatest scientific gamble in history
and we have won.
Three days later
a Fat Man bomb destroyed Nagasaki.
Japan surrendered, putting an end to the Second World War.
The entire population felt
they had come through a transcendent ordeal together,
and that things would never be the same again.
With a contagious sense of energy and optimism,
Americans believed that they were now masters of their own destiny.
But the industrialists had not planned
for the war to be over so soon,
and were caught off guard by the sudden halt to military orders.
To finance the shift back,
they got the government to agree to pay generous compensation
for all cancelled orders.
As for the hundreds of factories owned by the government,
they were divided up among the 40 biggest industrialists.
In return, regular wage increases
and paying a 50% tax on profits
were concessions they had no problem taking.
By the end of the 1940s,
America was producing more than half of the world's wealth.
Now an increasingly powerful machine,
the federal government opened up foreign markets,
delivered economic stability
and each year
placed billions of dollars' worth of orders with private companies.
The cake had become so huge
that the top rate of income tax,
which had risen to 91%,
didn't have much of an effect.
The industrial elite had lost its absolute power,
and the reign of the uber-rich was over.
But the conservatives weren't finished yet.
END OF PART TWO
SUBTITLES BY PAUL MULLANEY