2012: 1932 Redux?
If Congress continues to obstruct efforts to revive the economy, today’s incumbents may suffer the same fate as Herbert Hoover.
The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.
We need enthusiasm, imagination, and the ability to face facts, even unpleasant ones, bravely. We need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer.
-Franklin D. Roosevelt, May 22, 1932
Seventy-nine years ago today, on November 8, 1932, the people of the United States elected Franklin D. Roosevelt President of the United States. No one was absolutely sure what FDR would do as president, but everyone understood that the United States — and much of the rest of the world — was in deep trouble.
Since the start of the Great Depression three years earlier, unemployment had climbed above 20 percent, average annual family income had fallen by 40 percent, and thousands of banks had closed their doors, wiping out the savings of 9 million individual bank accounts. Roughly half of all the home mortgages in the United States were in default, with another 1,000 homes going under every day. American industry had all but collapsed. To take but one example, in 1929 United States Steel Corporation had 225,000 full-time employees; by the end of 1932 it had no full-time employees save its corporate officers and a mere handful of part-time workers. The same was true in the financial sector, where overall stock market values had declined by 85 percent since their high in September 1929.
The human side of this story is even more distressing. In its November 1932 issue, The Nation estimated that approximately 20 million Americans — one sixth the total population — were at risk of starvation during the coming winter. By the end of the year, more than 2 million homeless people were roaming the streets looking for work or relief, of which approximately 200,000 were children — mostly boys under the age of 14. In the coal mining regions of West Virginia and Kentucky, over 90 percent of the young were already suffering from malnutrition, as were more than 160,000 young people in New York City.
In the face of such a devastating crisis, FDR came to the conclusion that the forces of the market place had failed to deliver basic economic security to millions upon millions of Americans. He rejected the laissez-faire ideology that dominated the 1920s and understood that the forces of greed and avarice — led by what his cousin Theodore Roosevelt called “the malefactors of great wealth” — had created such an imbalance in our economic system that without immediate, significant reform, the U.S. might find itself in the throes of a revolution. This became all too clear with the rise of fascism and other forms of totalitarianism in parts of Europe and Asia.
In essence, FDR believed that for democracy to work, capitalism had to work — not for the few, but for all. He dedicated himself to the idea that against the forces of “economic tyranny” that had brought about this great crisis, “the American citizen could only turn to the organized power of government.”
It was out of this basic conviction that FDR launched the New Deal, not to destroy the free market system, but to save it. Under his guidance the American people embraced the notion that in a complex modern industrial society the government can and must serve as the primary instrument of social and economic justice. It was this simple philosophy that brought us Social Security, unemployment insurance, banking and financial reform, the minimum wage, the right of labor to organize, and a host of other reforms that fundamentally altered the relationship between the American people and their government. The New Deal also offered millions of unemployed the dignity of work — the chance for the laborers, architects, artists, and engineers of this great nation to build much of the economic, artistic, and environmental infrastructure that we still enjoy today.
Above all, FDR understood — as he said in his first inaugural — that “this nation asks for action and action now.” Thanks to the support he enjoyed among most congressional Democrats and a significant number of liberal Republicans, he was able to push through the most significant slate of legislative reforms in our nation’s history. In doing so, he not only helped alleviate a great deal of economic suffering but also restored the American people’s faith in democratic government.
There is no question that a good share of the support FDR received in his campaign for the White House in 1932 stemmed from his repeated calls for action and his criticism of the lack of initiative on the part the Hoover administration to meet the economic crisis. After more than two years of unemployment at or above 9 percent, the mood of the electorate today is not all that different than it was in 1932. Polls show a mixture of anxiety, despair, and frustration at Congress’s refusal to pass common sense measures — like President Obama’s jobs bill — that would offer some relief to the millions of unemployed Americans.
To date, the deficit hawks in Congress seem unconcerned about the cost of their obstructionism, but if 1932 is any guide, this may prove a risky strategy for the coming election. To paraphrase FDR, the American people may tire of a “hear-nothing, see-nothing, do-nothing government” — except that this time they may take out their frustration not on the president, but on Congress.
David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book on U.S.-UK economic relations in the 1930s, entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.
Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog
The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.