Fear Itself

The original Constitution stipulated March 4th as the starting date for presidential terms.  That meant four months elapsed between election and the swearing-in of the new president.  They were the four worst months of the Depression.  With his defeat in November, President Hoover felt he could do nothing else to improve the domestic economic situation.  He tried to convince the incoming administration of the depth and global nature of the economic catastrophe.  Hoover correctly understood the international origins of the downturn, particularly as it related to World War I and the debt incurred by belligerent nations.  He urged his successor to support American debt forgiveness to rejuvenate European economies and international trade.  Roosevelt remained noncommittal, knowing such a course would be politically unpopular.

Americans generally focused upon their own dire straits.  Nearly a third of the nation’s workforce was unemployed.  Men, women and children went to bed hungry.  Millions of teens and young adults hopped trains bound for wherever food or work could be found.  Families broke-up as breadwinners sought work in distant locales.  Long lines snaked through American cities as people queued for soup and bread distributed by charities, whose own resources teetered on the edge of failure.  Industrial production was at a near standstill as was consumer demand.  Agricultural prices had reached rock-bottom.  Food riots had punctuated news dispatches from the cities, and farmers in some rural areas took up arms to stop foreclosure sales.  The nation’s social fabric seemed close to unraveling.

Waves of bank runs had punctuated the years since 1929.  Between the Crash and the inauguration, 5,000 banks succumbed.  The deflationary cycle triggered by the collapse of the stock market, personal loan defaults, and unsound banking practices spread across the country at intervals.  A bank run might begin based upon rumor.  Crowds gathered to withdraw their deposits.  Tensions rose, tempers flared and fears increased as the bank gave out cash until it ran out.  Many, sometimes most, went away empty handed or with just pennies on the dollar.  The most intense wave of bank failures crested in February, 1932.  By March 4, banks in thirty-two states had shut down, as had the New York Stock Exchange and the Chicago Board of Trade.  People waited intently to see what the new administration would do, even as Roosevelt and his advisors remained silent about their intentions.

The New Deal was not a master-planned response to the Depression.  Rather, it stemmed from Franklin Roosevelt’s pragmatic, action-oriented approach to governing.  Roosevelt had no philosophy, let alone ideology.  When a reporter asked his philosophy of government, he responded: “Philosophy?  Philosophy?  I am a Christian and a Democrat—that’s all.”  He wanted programs and ideas that produced results, able to move successfully through the American legislative process.  He had little patience for abstractions, theory. or intellectual consistency.  Still two clearly identifiable tenets of Roosevelt’s approach to government were visible from the outset.  FDR believed in balanced budgets—though he remained willing to sacrifice fiscal discipline to results for the short term—and he also intended to save American capitalism.

Early in 1932 while governor of New York, Roosevelt gathered men and women to advise on his emerging campaign.  Eventually, this group of academics, lawyers, businessmen and financiers became known as the “Brain Trust.”  The Brain (or Brains) Trust contained persons of a variety of ideologies.  Some advocated a more carefully coordinated and planned industrial economy to even out the business cycle.  Others believed strongly in Wilsonian-style trust-busting.  Some conservative Brain Trusters wanted balanced budgets and sound money; more daring advisors advocated inflation to boost incomes and consumer spending.  As candidate, president-elect, and president, FDR encouraged his advisors to air proposals and spar over their effectiveness, and then he chose from the alternatives presented him.  He likened himself to a quarterback, who called new plays until he found ones that worked.

On March 4, 1933, at the lowest depths of the Great Depression, Roosevelt took the oath of office in Washington, D.C.  Military forces stood on alert in the event of unrest.  Huge crowds pressed on the Capitol.  Millions listened by radio.  Eleanor Roosevelt described the crowds and scene as overwhelming and unnerving.  After taking the oath, President Roosevelt urged calm determination and action in the face of the economic crisis.  “The only thing we have to fear is fear itself,” he intoned.  In truth, there was plenty to fear.