♪ ♪ ♪ (theme music playing) ♪ RUBENSTEIN: I'm David Rubenstein, and I'm going to be in conversation today with Benn Steil, who's a Senior Fellow and Director of International Economics at the Council on Foreign Relations.

We're going to talk about his 10th book, "The World That Wasn't: Henry Wallace and The Fate of the American Century."

Thank you very much for coming here.

STEIL: Thank you for having me, David.

RUBENSTEIN: And we're coming to you from the New York Historical, the Robert H. Smith Auditorium.

So why should anybody care about Henry Wallace?

Why is he a big deal?

(laughter) STEIL: Um, he is the most fascinating, um, biographical character for what I would call counterfactual history.

What if history?

What if Henry Wallace, rather than Harry Truman, um, had become FDR's Vice Presidential nominee in 1944?

Um, he would've become President on FDR's death.

And since he supported policies that were very, very different from Harry Truman's, particularly as regards to the Soviet Union; he was against policy of containment; he was against military aid for Greece and Turkey; he was against the creation of NATO; he was against the creation of West Germany; he was against the Berlin Airlift; he was against the Marshall Plan.

It would have been a very different world that we live in today.

RUBENSTEIN: So, he was picked as Vice President under Roosevelt's third term.

STEIL: Right.

RUBENSTEIN: And then presumably, uh, Roosevelt liked him.

Why did he not like him in 1944?

STEIL: Right.

So, uh, just a little bit of background on, on who he was.

He grew up in a well-regarded farm family in Iowa.

His, uh, grandfather was the creator of, um, a very prominent farm journal.

His father was, uh, Agriculture Secretary under two Republican Presidents, Harding and Coolidge.

Wallace, himself, was a very accomplished, innovative, pioneering, uh, agricultural geneticist.

The corn we eat today derived from Wallace's, um, uh, hybridization experiments in the 1920s.

He broke with the Republican Party in the 1920s over, of all things, tariffs.

And uh, FDR, tapped him to be his first Agriculture Secretary.

So, he was Agriculture Secretary in the first two administrations.

Uh, the Agriculture Department was actually the largest, by far, in the U.S.

Government at the time.

So, it was extremely important.

In 1940, uh, FDR, very controversially, replaced his Vice President, uh, conservative Texan, John Nance Garner, with Wallace, um, who was considered to be on the extreme liberal wing of the party.

And he was so controversial, that the Convention Chairman, Jimmy Burns, a Senator from South Carolina, refused to allow Wallace to make an acceptance speech because he didn't want him drowned out in boos.

Um, but by the time we get to 1944, he is so controversial within the DNC leadership because they can tell from Roosevelt's gaunt, gray face that he's not going to survive a fourth term.

And so, they're very concerned about who's going to be Vice President because they were convinced that whoever was Vice President was going to be President in short order.

RUBENSTEIN: Henry Wallace, as you said, is born in... STEIL: Iowa.

RUBENSTEIN: ... Iowa.

STEIL: Outside of Orient, Iowa.

RUBENSTEIN: Goes to university, to Iowa State.

STEIL: Mm-hmm.

RUBENSTEIN: Gets his college degree.

STEIL: Mm-hmm.

RUBENSTEIN: He graduates, and he doesn't got to something important like law school or business school.

Um, doesn't wanna be a lawyer, private equity, nothing.

He wants to do agriculture, right?

STEIL: Yes.

He take, he takes over, um, his father's business.

He becomes editor of "Wallace's Farmer," which is a very prominent publication at, at the time.

And he begins his, um, experiments in genetic engineering.

RUBENSTEIN: So how did he come to the attention of FDR?

FDR is elected President in, uh, 1932, and all of a sudden, he's got to fill a cabinet out.

STEIL: Right.

RUBENSTEIN: Uh, how does he hear of this Republican journalist, really, from Iowa?

STEIL: Well, by the late-1920s, um, Wallace, who was editor of a farm journal, so his opinions were out there, and about a quarter of the American population worked in farming.

And FDR was looking for someone who would pursue radical policies in the farm belt.

His, his policies as, uh, Agriculture Secretary were very controversial.

Um, he basically bribed, farm owners, um, with massive subsidies from Washington to rip up... RUBENSTEIN: Right.

STEIL: ... millions of acres of planted con-, cotton in order to boost prices.

Um, had them kill, prematurely, 6 million hogs, again, to boost prices.

Most economists wouldn't think this is a good way to boost prices, because it also reduces the stock of material that you're selling.

So, over his eight years, um, at the helm in Agriculture, he distributed $55 billion in agricultural subsidies, which in today's dollars is 1.2 trillion.

So, in the farm belt, they were not pursuing his policies because he thought, they thought they were particularly brilliant.

In most cases, they thought they were insane, but because they were being literally bribed.

RUBENSTEIN: Okay.

So when Roosevelt, uh, gets the nomination the first time around, uh, his Vice President, as you mentioned earlier, is John Nance Gardner, who I think had been the Speaker of the House of Representatives for a while.

STEIL: Conservative Texan.

RUBENSTEIN: And he served eight years.

And FDR, more or less surprised everybody, and said, "The unofficial tradition of serving only two terms," well, that was good for George Washington and Thomas Jefferson, and other people, but, you know, "I got to keep us out of the war.

And so he runs in, '40, saying, "I kept this out of the war.

I can keep us out of the war."

STEIL: But he insisted that he had to be drafted... RUBENSTEIN: Right.

STEIL: ... by the convention.

RUBENSTEIN: Explain, explain what that meant.

STEIL: Right.

He, he insisted that he was not, in fact, running.

That if the convention came to him and demanded that he be their candidate, he would then run, but only under the condition that Henry Wallace was his running mate.

And that caused enormous contention at the convention.

RUBENSTEIN: Now, why he'd want Henry, he had a cabinet of other people.

He knew other people better than he had known Henry Wallace.

STEIL: Uh, yes.

RUBENSTEIN: Why did he bond with Henry Wallace so much?

STEIL: Um, the evidence suggests Wallace was his third choice.

His first choice was Cordell Hull, his Secretary of State.

FDR, his primary criterion at the time was that whoever is Vice President must be an internationalist, because FDR was preparing to mobilize the, the country for conflict, possibly going into war.

Cordell Hull had absolutely no interest.

Uh, Jimmy Burns from South Carolina, another conservative, um, uh, politician, he was considered too controversial because he was Catholic, but he married, um, uh, a Protestant, and that was considered an offense to the... RUBENSTEIN: He converted.

STEIL: Catholic voters.

So, um, Henry Wallace, um, checked a number of boxes.

Again, he would help in the farm belt.

He was a, a convinced internationalist.

He was the staunchest supporter of the New Deal, at a time when the President really couldn't pay attention to the home front, um, uh... RUBENSTEIN: Okay.

STEIL: ...anymore.

And the two bonded over rather strange things.

As you know, from reading the book, they were both Masons.

Um, Henry Wallace was very much into, um, mysticism.

Uh, if you look at your $1 bill, uh, in your wallets or pocket books, you'll see the Masonic Eye of Providence.

Um, that was a product of, uh, Henry Wallace collaborating with FDR.

They were both, uh, Masons in 1934.

Wallace believed that it represented, um, the, the New Deal, writ global.

RUBENSTEIN: So he was a follower of a Russian-born, uh, mystic, I guess you would call him.

STEIL: Yes.

Um, so Nicholas Roerich is, um, uh, what you call a White Russian.

He was for most of his, uh, career anti-Bolshevik.

Um, who moved to New York in the 1920s.

Um, he and his wife, um, had developed a branch of what's called Theosophy, it's a, a form of mysticism.

And they had, um, uh, a wide following in New York.

Henry Wallace became absolutely, um, uh, obsessed with the mission.

Fast-forward, he becomes Agriculture Secretary in 1933.

RUBENSTEIN: Right.

STEIL: And by that time, he is effectively part of what is a religious cult.

RUBENSTEIN: And... STEIL: And the Roerichs use Wallace to get closer to FDR to pursue their geopolitical aims.

RUBENSTEIN: Okay.

So, uh, he's selected as Vice President.

People on the party are telling Roosevelt, maybe he's not the best person.

He may be too liberal.

And Roosevelt says, "This is my guy.

If you want me, you have to have take him," right?

STEIL: That's right.

RUBENSTEIN: All right, so he gets elected.

They beat, uh, Wendell Willkie... STEIL: Mm-hmm.

RUBENSTEIN: ...fairly overwhelmingly.

Let's go forward.

Uh, ultimately, uh, Wallace becomes reasonably close to, to Roosevelt.

STEIL: Yes.

RUBENSTEIN: But when it comes time for 1944 election, people around Roosevelt are a little nervous.

They could see he's not as healthy... STEIL: More than a little.

RUBENSTEIN: ... they worried about it.

So did they just say to him, "Look, uh, you know, Wallace might not be the best person."

Or... STEIL: Just, just to be clear, even Roosevelt didn't know his diagnosis of advanced, um, congestive heart failure, which only came for the first time in, in March of, um, 1944, shortly before the convention.

But by late 1943, that the people around Roosevelt, um, could see from his face that he was deteriorating very rapidly.

Um, they didn't want to obviously, discuss the President's mortality in his presence, so they emphasized, um, the fact that they believed that Wallace was going to be a major vote loser in some, uh, key swing states because he began making speeches on foreign policy, praising what he called, um, Soviet Economic Democracy.

Um, so he was seen as being overly close to the Soviet Union at a time when the public was, at best, skeptical towards the Soviet Union.

They were, of course, allies of, of ours during the Second World War.

But unlike the British, they were allies of necessity.

RUBENSTEIN: So, from reading our book, it seems as if Roosevelt wanted four different people to be his next Vice President in '44, who were the four people he wanted?

STEIL: So, um, Roosevelt... RUBENSTEIN: Including Wallace.

STEIL: ... caused complete chaos at the '44 Convention by refusing, this time, refusing to name anyone.

He privately agreed with the DNC leaders that Wallace should be pushed off the ticket.

But he refused to look Wallace in the face and say, "I'm sorry, you have to go."

So FDR endorsed Wallace in a very backhanded way.

He also endorsed, in writing, in different ways, Harry Truman, of course, who, uh... RUBENSTEIN: Did he know Truman very well?

STEIL: Not well.

Um, and that was... RUBENSTEIN: Who pushed Truman?

Who was pushing him?

STEIL: So, uh, um, Bob Hannigan, as you know, was, a supporter of Truman, but he had wide support among the, the centrists within the Democratic Party.

Not so much because, um, he was well-connected, but because he checked a lot of, of boxes.

He wasn't offensive to either the conservative or liberal wings of the party.

He had good relations with union leaders; he had good relations with, um, uh, civil rights leaders.

He was seen as someone who was in the South, but not of the South.

He did make a strong name for himself in the Senate as, um, head of what was called the Truman Commission, to root out waste and corruption in, in wartime spending.

And FDR did come to admire him for the, the, the role he played there.

RUBENSTEIN: Okay.

Uh, okay, so then you have a couple of other... STEIL: And so the other two were Jimmy Burns and William Douglas.

RUBENSTEIN: Okay, so you get to the convention, um, Roosevelt is nominated, I assume, by acclamation.

Then what happens, uh, on the vote for Vice President?

STEIL: So this, this is where it becomes wild.

Wallace makes, um, a seconding speech for, um, uh, Roosevelt.

It's by far the best speech he ever gives in his, um, career.

And his basic subliminal argument in the, the speech is that, you know, "FDR, right now, clearly has to be a war leader, but we're fighting this war for an underlying reason, because we want to promote the cause of liberalism.

So when you are electing, um, a President and a Vice President, you are not just voting for a war leader.

You are voting for a new program."

And of course, the message was, if you support liberalism, you want me on the ticket.

RUBENSTEIN: Right, and that got people excited.

STEIL: So the DNC leaders thought they had everything under control.

They basically made a deal with the, um, um, various state delegation chairmen.

They knew that most of them were against Wallace.

So they said, "In the first round, just vote as, vote as you, like."

You know, "Take your hometown boy, what, what, what, whatever you like.

But on the second round, you back the President."

Um, and that's basically what, what happened, but before we get to that first round, Claude Pepper, known as Red Pepper, uh, a left-wing, um, Senator from Florida, rushed to the podium to try to nominate Henry Wallace right then and there, while the, while the crowd was, uh, yelling, "We want Wallace, we want Wallace."

And the Convention Chairman wrapped his, um, uh, gavel and closed the convention so there couldn't be a vote then and there... The mythology that, well, if the vote had been held then and there, of course, Wallace would've been elected.

I believe nothing of the sort.

In fact, when Wallace ran for President in '48, he, as an Independent Progressive Party Candidate, he had a Campaign Chairman named Beanie Baldwin, um, who had done an oral history of the '44 Convention seven years later.

And he argued that Wallace would've lost that night.

And indeed, if you read the accounts from the journalists who were on the floor at the convention, the delegates were furious about what was going on in the peanut gallery.

You had people rushing onto the floor, grabbing the state banners, pushing the delegates off their seats.

So Baldwin was actually very happy that the Wallace vote wasn't until the next day.

And I do believe that Wallace would've lost on the first round if the vote had been held.

RUBENSTEIN: Right.

The next day, they convene again, and who are the candidates?

STEIL: So, by this time, the two serious candidates are Henry Wallace and Harry Truman.

And after the first round, Wallace is winning.

Uh, but he does not have, uh, a majority.

So, then we moved to the second round... and at that point, um, the DNC leaders got, got their wish.

The, um, delegations all coalesced, and he won by a large margin.

RUBENSTEIN: Does Roosevelt call Wallace and say, "I'm sorry you lost.

I would've, if I was a delegate, I would've voted for you, but I'm sorry you lost.

Um, but I'll take care of you."

STEIL: Before Wallace left their last meeting in, um, in the White House before the convention, um, FDR told him, you know, "I'm really sorry.

They're going to beat you out in Chicago.

But don't worry, we will have a job for you in world economic affairs."

Now, FDR wanted him off the ticket at this point, but definitely wanted him inside the tent.

He was a dangerous, dangerous man at this point, because he basically controlled the liberal wing of the party, and FDR needed him to be, uh, on board.

So he was very clever.

He knew that Wallace wanted to be Secretary of State.

So he told Wallace, "You can have any position in the cabinet except one."

He said, "Cordell Hull is such a dear."

He couldn't bring himself to look Cordell Hull in the eye and say, 'I'm sorry, I'm giving you a job to Henry Wallace."

RUBENSTEIN: He'd been the Secretary of State for seven years or eight years?

STEIL: Right.

Well, Hull actually resigned a few months later, and so the position was open, so he didn't have to worry about the dear.

But, um, FDR still wouldn't appoint Wallace.

RUBENSTEIN: Right.

STEIL: He appointed Edward Stettinius.

But what he told Wallace was very clever.

He said, "This is a way for you to get back at your old enemy," Jesse Jones, the Commerce Secretary.

And this was a brilliant way to get Wallace on board in a cabinet position that really had no clearly-defined powers.

And then Truman, of course, didn't want to have Wallace in the cabinet, but needed for the same reasons as FDR, to keep him on.

So he survives for a year-and-a-half as Commerce Secretary.

RUBENSTEIN: So does he do any traveling or anything at that point?

STEIL: N-, not much traveling.

He foments a lot of strikes, um, under the influence of his, um, various communist agents and Soviet assets who are, uh, under him.

He infuriates, um, Truman.

RUBENSTEIN: Right.

STEIL: Um, but Truman still tolerates it until Wallace starts making, in '46, um, speeches attacking his foreign policy.

Wallace had written, um, Truman a long 4,000-word letter in July of '46, or I should say Harry Magdoff, the Soviet agent who advised him, wrote it, attacking U.S.

nuclear policy.

Um, most of what had been written in this letter came directly from Pravda, completely misrepresenting what U.S.

policy was, and arguing that Soviet policy, which was designed entirely to delay negotiations until Stalin finished his, his bomb, um, arguing that Soviet policy was dedicated towards peace.

Now, this, um, uh, letter leaked out in September of 1946, roughly at the same time that Wallace made his, um, uh, speech.

At this point, Jimmy Burns contacts, Truman from, Paris, and says, "It's me or him."

I mean, "You can't have, um, more than one Secretary of State.

You have to make a decision."

And at that point, Truman demands Wallace's resignation.

RUBENSTEIN: Now, at that time, it was considered unusual for American politicians to really like the Soviet Union that much, but he seemed to like the Soviet Union.

You have found that many of his speeches were written by Soviet officials, and including Joseph Stalin at one point, and that many people working for him were agents of the Soviet Union.

STEIL: Yeah.

Um, in his two terms as Agriculture Secretary, that wasn't really his fault.

Um, meaning by, by the time he became Agriculture Secretary, there were already quite a few major Soviet assets or Soviet agents, like Alger Hiss, in the Agriculture Department.

But, when he becomes Commerce Secretary, all the top people under him in the department were under surveillance by the FBI.

So you can read in the online FBI archives today, everything that they were saying about Wallace and how they were trying to use Wallace on a day-to-day basis.

RUBENSTEIN: Now, Wallace, there's no evidence that Wallace knew these people at the time were Soviet agents, right?

STEIL: That's correct.

He certainly knew that Harry Magdoff, um, had, uh, had a left-wing background.

He was open about his, um, uh, communist sympathies, but Wallace had no idea, um, that he was actually a Soviet agent.

RUBENSTEIN: All right.

So after he steps down as Commerce Secretary, what does he do?

STEIL: Okay, he becomes editor of the, of the Liberal publication, "The New Republic."

Um, and throughout 1946 and 1947, he basically uses "The New Republic" as his political megaphone.

He refuses to allow any of the journalists to write anything that was even vaguely critical of the Soviet Union.

Was all attacking Truman policy.

RUBENSTEIN: But ultimately, he seeks the nomination of President of the Progressive Party, right?

STEIL: So, throughout 1947, we don't know quite which way Wallace is going to go.

He prefers to attack, um, uh, Truman from inside the party.

It's clearly the easiest path to the White House if it's open to him.

But once he becomes convinced that that's not possible, um, he agrees to be the, um, uh, Presidential candidate of a newly-created Progressive... RUBENSTEIN: Right.

STEIL: ... Party.

RUBENSTEIN: Okay.

So he campaigns?

STEIL: Yeah, I, I think we could, uh, perhaps, probably say a little bit about what he tried to do to get himself elected during the campaign.

RUBENSTEIN: Okay.

STEIL: In March of '44, he secretly approaches the Soviet UN Ambassador, Andrei Gromyko.

He uses an intermediary, um, Vladimir Hudak, the, um, Czech UN Ambassador, um, to arrange meetings with Gromyko.

At these meetings, he proposes going to Moscow to negotiate, basically, a peace treaty with Joseph, um, Stalin.

And Gromyko, being a good USSR diplomat, says, "Well, what do you want?"

Gromyko is not in a position to offer him anything.

And Wallace says, "I don't want anything.

Uh, Generalissimo Stalin can indicate all of the issues that he wants in the, um, uh, agreement."

This goes up to Stalin.

Stalin turns out to be more politically astute than Wallace.

Writes back saying, "It would be dangerous politically for Wallace to come to Moscow.

Much more sensible for Wallace to write a statement.

And Stalin..." he talks about himself in the third person.

"Stalin will say, 'I agree with this.'"

But Stalin actually hand-edits versions of Wallace's speech, which I print in the book.

RUBENSTEIN: But at what point does, does Wallace, uh, get informed that these people around him were Soviet agents?

STEIL: Oh, he was informed throughout the campaign, and his re-, response was, "Well, no, um, they're certainly not disloyal."

Um, he welcomed, uh, Communist, um, uh, support, but he refused to believe that these people were working on behalf of a foreign power.

RUBENSTEIN: So, in the 1948 election, what happens?

STEIL: So, in the 1948, um, uh, election, Wallace is in, in theory, representing a, a split-off liberal wing of the Democratic Party, the liberal split between those who, are, essentially anti-Soviet and stay in the Democratic Party, these are people like Arthur Schlesinger, Eleanor Roosevelt; and then those on the liberal wing who support a, a peace policy with the... um, Soviet Union.

But what happens over the course of 1948 is that the CPUSA, the Communist Party of the USA, basically takes over, um, all the, um, institutional control of the Progressive Party.

Their platform is entirely dictated by the CPUSA.

The CPUSA organizes rallies for Wallace, um... RUBENSTEIN: Right.

STEIL: ... uh, around the United States.

RUBENSTEIN: All right, the election in '48, uh, Truman is initially supposed to lose, he wins, bit of an upset, some people would say.

Uh, how many votes does the Progressive Party get?

STEIL: Uh, the Progressive Party gets very few votes.

Wallace, in fact, winds up being the fourth-party candidate rather than the third-party candidate.

He comes in fourth to, um, uh... RUBENSTEIN: Strom Thurmond.

STEIL: ...Strom Thurmond.

The Dixiecrat Segregationist candidate.

Wallace gets, um, a little more than 2% of the vote.

This is 1.15, um, uh, million votes.

Um, 37% of his total national vote comes from New York City alone.

He, it's really quite remarkable, the evolution of this man's career.

He grows up as an Iowa farmer.

Um, he ends his political career getting barely 1%... RUBENSTEIN: Right.

STEIL: ... of the vote in Iowa.

And becomes, in essence, the, um, the, the candidate of... RUBENSTEIN: Right.

STEIL: ... New York Jewish Communists.

RUBENSTEIN: But he ultimately goes back to his agricultural business?

STEIL: Yes.

RUBENSTEIN: And then at the age of, uh, I guess, 76, he comes down with what disease?

STEIL: With ALS, Lou Gehrig's disease, really quite tragic.

RUBENSTEIN: He died.

STEIL: By that time, of course, as you know, his politics had radically, um, changed.

RUBENSTEIN: Look, it's a really interesting book because, um, I didn't really know much about Henry Wallace.

Thank you very, very much for a great conversation.

STEIL: Thank you.

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