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In 1932, his two weighty friends, McHale & Elder, ran interference for Paul McNutt in Indiana's State election. He went across as Governor by a plurality of 118.642 votes. Franklin Roosevelt was elected President that same day but could not take office until two months after Governor McNutt got going. What McNutt and his Beef Trust did to Indiana was a masterpiece compared to what Franklin Roosevelt and his Brain Trust were to do to the U. S.
"Action!" At five o'clock one morning in the Indianapolis Club they completed drafting a State reorganization plan. By noon that day, before a single legislator could have read it, it was law. They ripped out and streamlined expensive departments and bureaus, making many an office appointive. They wrote social security and labor laws a la New Deal, slammed on a "gross income" tax which, although tough on small retailers, eased taxes on farmers and homeowners, supported the schools, carried a lot of the Relief load. They backed up Indiana's fiscal year-end from August to June to avoid a first-year deficit. When he left office, they had piled up a $17,000,000 surplus. They let cities skip the election of 1934, to let Democrats get better entrenched. They put their political cards face up on the table, caused the Legislature to exempt from the corrupt practices act a Two Percent Club through which State employes paid that portion of their salaries into a McNutt war-chest.
"Action!" was the McNutt watchword. He gave so much of it that even in politically feverish, Klan-ridden Indiana some people called him a dictator. He quelled strikes with the militia. When the Legislature legalized bottled beer but forgot draft, Governor McNutt fixed things up instanter with a proclamation, let the Legislature approve his action more than a year later. Presumably brewers and others were duly grateful. The McNutt war-chest today is reputedly far greater than the Two Percent Club's collections, estimated at $75,000 to $200,000 a year.
Interregnum. No man can succeed himself as Indiana's Governor. In 1936 it became necessary for Paul McNutt to have another, better job. The Philippines post, which Frank Murphy had just held, was ideal. It was out of the New Deal limelight. From it Taft and Henry Stimson and Frank Murphy had returned as candidates for greater glory. Frank Murphy was a help in securing it for Frank McHale's handsome friend. Before Paul McNutt went to the Philippines, McNutt & Co. elected as Governor (by way of contrast) Maurice Clifford Townsend, a homely, fish-catching farmer.
Many times in the months that followed the High Commissioner, breakfasting in Manila, picked up the telephone and talked business with Frank McHale who was having supper, the evening before, in Indianapolis. But they bided their time until January 1938, when Frank McHale stepped in for Tom Taggart Jr. as National Committeeman for Indiana. This was followed by the amazing McNutt boom dinner in Washington (TIME, March 7, 1938). So premature did this performance seem that a reporter asked Paul McNutt: "Have these friends put you out on a limb?"
"My friends never have placed me on a limb," smiled confident Paul McNutt.