In 1928, the Socialist Party returned as an independent electoral entity under the leadership of Norman Thomas, a radical Protestant minister from New York City. This reentry into the electoral fray behind the dynamic Thomas fueled major growth of the SP during the first years of Great Depression, primarily among youth. A skilled orator and advocate of the step by step solution of social problems, Thomas had excellent access to churches, colleges, and civic institutions. Thomas also had, as New York social democrat Louis Waldman later noted, "those qualities of mind and character which appealed to the intelligent and educated young people of the country and which drew them into the ranks of the party in unprecedented numbers."
The 1928 convention voted to reduce membership dues to just $1 per year, with only half of that sum going to the use of the National Office, the balance being retained by state and local organizations. This level of funding proved insufficient for anything beyond the bare minimum of operations by the National Office in Chicago; no official party publication was made available to the members of the organization, with several privately held socialist newspapers fulfilling the function as fonts of party information.
The dues rate cut did prove helpful in helping to reduce the party's membership slide. After nearly a decade of steady decline, the Socialist Party again began to grow, advancing from a low of under 8,000 dues payers in 1928 to a membership of almost 17,000 by 1932. This growth came at a price however, as deep factional divisions developed between the youthful newcomers (radicalized and drawn to militant Marxism by the world economic crisis) and the "Old Guard" headed by Morris Hillquit, James Oneal, and Waldman.
The generational battle first erupted at the May 1932 Milwaukee Convention. Participant Anna Bercowitz noted four primary factions at this gathering: an "Old Guard" defending the current course of the party and the position of National Chairman Morris Hillquit, practical Socialists of the Milwaukee type, the young Marxist "Militants", and liberal pacifist "Thomasites" such as Devere Allen who followed the lead of the charismatic Thomas:
The groups which represented the so-called 'New Blood' at the convention, the Militants and the Liberals and which at this convention merged for the sole purpose of deposing the present leadership [of the party] had little in common. Many members of the most aggressive, although numerically weakest of these groups, the Militants, had little in common with the so-called Thomasites.... And as for the so-called Mid-western group, although they cast their vote with the opposition, on fundamentals they too are opposed ot much of the liberalizing tendencies manifest in the party in recent years. Yet they voted, contrary to their usual procedure in their respective communities, with the opposition. That trades had been made there can be no doubt, and that some groups had been used as innocent dupes can also hardly be doubted...
Fundamentally there is much more in common between the Militants and the so-called 'Old Guard' than between the Militants and the [religious pacifist] Thomasites and surely than between the frank practical 'mid-western' type of Socialists, yet when it was a question of vote on the Russian resolution, on the TU [Trade Union] resolution and on the question of the National Chairman and the Executive Committee votes were not cast on the basis of principles but apparently on the basis of 'trades'. The real difference between the Militants and the 'Old Guard' seems to be based on lack of sufficient activity and on tempo rather than on principle.
Hillquit was challenged at the 1932 convention by Daniel Hoan of Milwaukee, with the Militants and the Thomas group voting for Hoan with the Midwesterners. Hillquit was reelected National Chairman by a vote of 105-86, representing paid memberships of 7526 to 6984. Six members of the newly elected NEC were adherents of the Hillquit-"Old Guard" faction. It is clear that to some large extent the controversy between the young newcomers of the Militant faction and that of the so-called Old Guard can be reduced to this struggle for practical control of the party apparatus. Historian Frank Warren notes that "one cannot understand the Old Guard's actions unless one recognizes its intense desire to maintain its place in the party hierarchy; the drives of the young were a threat to the power of the New York Old Guard." He also adds that "clearly one would falsely idealize the Militants if one failed to recognize that their ambitions were not always selfless."
But in addition to the raw struggle for control of the party apparatus, there was also a divergence of visions about the role of the SP in the then-current crisis of capitalism, with mass unemployment at home and the growth of fascism and militarism abroad. The alternative vision of the Militants would be expressed at the subsequent convention of the party, held in Detroit in June 1934, at which it was Norman Thomas and his tactical allies of the Militant faction which would emerge triumphant. It was this gathering which adopted a new Declaration of Principles which inflamed the "Old Guard" faction on a number of different levels.
The ideological differences between the radical pacifist Thomas and his allies of the Militant faction, on the one hand, and the Old Guard faction, on the other have been succinctly summarized as follows:
The Old Guard was convinced that the 1934 Declaration of Principles was an open declaration in favor of armed insurrection; Thomas believed it was a necessary statement to indicate that Socialists would not lie down in the face of fascism. The Old Guard believed that the anti-war sections of the Declaration of Principles placed the party under the threat of legal prosecution for advocating unlawful actions to oppose war; again Thomas believed that a strong statement was necessary to put capitalism on warning that if it engaged in imperialist war there would be opposition. The Old Guard believed that a united front with the Communists was immoral and would be disastrous for the Socialists, that even limited united action on specific causes should be banned, and even that exploratory discussions about a united front were going too far. Thomas opposed a united front on a general level, including any joint actions in political contests, but he thought that carefully planned united action on specific cases could, and should, take place. And he believed that it was worth while to conduct exploratory talks, even though he felt they would likely lead to nothing. The Old Guard felt that the Socialists' invitation to unaffiliated radicals and the Party's acceptance of former Communists, Lovestoneites, and Trotskyists was turning the party away from democratic socialism and to Communism. Thomas, though he disagreed with the ideology of these anti-Stalinist Communists, was willing to try to work with a party that included them, if they were willing to accept party discipline and not try to take over the Party. The Old Guard considered the Revolutionary Policy Committee, a far-left group within the Socialist Party, a Communist and anarchist group that had no place in a democratic socialist party. Thomas disagreed with the 'romantic revolutionists' in the Revolutionary Policy Committee (as he disagreed with the 'romantic parliamentarians' of the Old Guard), but still felt it was useful to try to salvage some of the enthusiasm and dedication that went into the Revolutionary Policy Committee by permitting its members to remain in the Party if, again, they followed party policy and party discipline.
In addition to the generational and ideological differences between the young Militant faction and the Old Guard, and their divergence over tempo of activity and party personnel, was great disagreement about matters of symbolism and style. Many of the young radicals dressed and acted in marked contrast to their staid, buttoned-down elders, as New York Old Guard leader Louis Waldman recounted in a 1944 memoir:
Symptoms of a new and dangerous spirit among the Socialist youth began to become manifest on all sides. The youngsters appeared at meetings of the party in blue shirts and red ties. At first this attracted no special attention, for oddity in dress is no novelty among radicals. But gradually their number increased and we now could see that this was a uniform. The Socialist youth of America, like the fascist youth in Europe, had succumbed to the shirt mania.
The shirt tendency was followed by the salute mania. In Europe, the Nazi salute was the outstretched arm; here in America the United Front was symbolized by the adoption of the Communist clenched fist salute. This greeting, a raised arm at a slightly different angle from the Nazi or Communist salute, now became routine at all our meetings.... Some of the older members of the party were truly horrified at this totalitarian tendency, but others couldn't resist the trend and fell into line. Among these, I painfully record, was Norman Thomas.
Along with the blue shirts, the red ties, the clenched fists, the raised arm salute, came the banners, the slogans, the demonstrations; all the trappings that make for totalitarian, unthinking mass fervor. These now became regular features at party gatherings. I can still recall the howl of triumph that rose from these young people at one of our meetings when for the first time Norman Thomas returned the clenched fist salute to them. As I stood at his side, my arms deliberately folded to indicate that I would have no part of this, their cheers for Thomas rose to almost uncontrollable frenzy.
Following its loss on the floor of the Detroit Convention, the Old Guard then took its case to the rank and file of the party, which had been called upon to either approve or defeat the new Declaration of Principles in referendum vote. A "Committee for the Preservation of the Socialist Party" was established and an agitational pamphlet published. New York State Assemblyman Charles Solomon was the author of the group's first polemical piece urging defeat of the 1934 Declaration of Principles by the membership at referendum, entitled Detroit and the Party. In this pamphlet, Solomon decried the Detroit Declaration of Principles as "reckless," observing pointedly that "furious phrases cannot take the place of organized mass power." Solomon noted that over "the past three or four years" there had arisen "certain definite groups" in the ranks of the Socialist Party. He continued:
The Declaration does not stand by itself, in a vacuum, as it were. Important as it is, it does not alone account for the vital struggle that is now being waged in the party. It represents the culminating point of a deep seated antagonism. It is like the straw that breaks or threatens to break the camel's back.
The Declaration of Principles has brought to the surface divergences which are deep, antagonisms which make of our party not a coherent political organization working harmoniously for a common objective but a battle ground of internecine strife.
Solomon charged that the "so-called 'left'" was "making its position clear" with the Declaration of Principles. "There was no mistaking the flag it had unfurled," he declared, "It was the banner of thinly veiled communism." While he declared that "the Declaration of Principles must be decisively rejected in the referendum," he nevertheless strongly hinted that a factional split was in the offing. Merely defeating the proposed Declaration of Principles was "not enough," he concluded, "The Socialist Party must be made safe for Socialism, for social democracy."
American Socialist Quarterly editor Haim Kantorovitch made the case for the Militant faction in a pamphlet urging approval of the Declaration of Principles at referendum. He observed that
The declaration of principles does not call for insurrection or violence. It simply states that if capitalism should collapse, the Socialist Party will not shrink from the responsibility of taking power. In case of a collapse of capitalism, if the socialists refuse to take power, the fascists will. To say beforehand that in time of a general collapse of capitalism...the socialists will not dare take power before they have a clear mandate from the majority through a democratic vote, is the same as saying that in case of a general collapse of capitalism the Socialist Party will voluntarily, in the name of democracy, turn over the power to the fascists or other reactionary elements, and continue their democratic propaganda from concentration camps.
The membership of the Socialist Party approved the 1934 Declaration of Principles in its referendum vote, a victory which moved the Old Guard towards the exits — although factional fighting into 1936. The leaders of the Old Guard formed a new rival organization to the Socialist Party, the Social Democratic Federation in 1936 and somewhat reluctantly endorsed Franklin Roosevelt for President in the election of that year. They also worked to establish the American Labor Party (ALP) a labor-oriented umbrella organization that included both socialist and non-socialist elements, putting forward both its own candidates as well as endorsing those of the Democratic and Republican parties.