Curtis Roosevelt on lessons from FDR

FORTUNE -- Franklin Delano Roosevelt's grandson, Curtis Roosevelt, recently gave this speech about the presidents at an event in Washington, DC.

This evening I would like to have as much time for discussion as we can. I want only to set the stage, pointing to the contrast -- the similarities and differences -- between what Franklin Roosevelt faced in the first two years of his Administration and what Barrack Obama has been experiencing in the first year and a half of his. Needless to say, looming in the background for both Presidents were and are the mid-term elections. Both -- 1934 and 2010 -- were and are predicted to be resounding defeats for the Democrats.

Writes one columnist recently: "Democratic strategists are beginning to accept the inevitability of big losses and a sort of gallows humour has settled over Congressional and political aides."

So let us review, just sketchily, the events leading up to Franklin Roosevelt's first mid-term election -- November of 1934. There are some striking similarities between then and now. In 1934's mid-term election, presidential leadership was central, indeed decisive. And note: FDR had as much hanging on that election as President Obama has with next November's vote.

Looming over Roosevelt's head was the Great Depression, already entrenched for several years when he became president.

It is hard to realize just how wide and deep across America the depression had spread. For several years nearly everyone was either directly or indirectly affected. We have forgotten what it was like to have a personal disaster of that magnitude -- for many Americans losing their homes, having no income, they simply couldn't feed their family. Look at the expressions on the faces of Americans so afflicted. About one-third were unemployed, with others working fewer hours, often at lower pay.

And a basic point, one in contrast. During the Great Depression there was only private charity -- the soup kitchen, the breadline and the occasional handout. That was all that was available. The despair and pain the depression generated were devastating; unemployment was a personal humiliation -- something we seem unable to identify with today.

Now, we expect, we assume, welfare safety nets will at least cushion the impact of being out of a job or losing your home. We have had these emergency provisions in place for more than a half-century. Our memories have faded -- the image of millions of people -- 13 million in 1933 -- being unemployed, and many of them for several years.

Widespread financial destruction

There were more than 5,000 bank failures between the 1929 crash and the New Deal's rescue operation in March of '33. It wiped out $7 billion in depositors money. These were not all wealthy Americans. These were mostly people of modest means, who had carefully put aside a little bit of money each month for "a rainy day", or retirement, a benefit that might yield an income of a couple of thousand a year. When their bank went bust they lost everything. (Indeed, they would have done better to have put the money under their mattress.)

Between just two years -- 1930 to 1932 -- 6000,000 homeowners lost their property, their shelter and life savings vanishing. Foreclosures on farms were particularly devastating. Particularly hard hit were small farmers, people who had an affinity with their land, their animals, their home, modest though it might be. Foreclosure meant years of work and personal identity wiped out. And the irony was having a bank acquire a farm they didn't know what to do with -- there was nobody around to buy it.

By the time FDR took office 38 states had virtually closed their banks. The other ten limited withdrawals -- Texas, for example, to $10 a day.

Today we cannot imagine the smell of revolution in the air -- marching in the street, farmers pouring their milk into the gutters, or the near lynching of a judge arriving to foreclose on a farm. But in the winter of 1932-33 that was the scene; fear of revolution was in the air. If this had been Europe there would have been serious rioting, and bloodshed. Lorena Hickock's reports to WPA head, Harry Hopkins vividly describe American's plight and their capacity to endure without rioting.

Statistics won't do; we need pictures and movies to make this part of our history come alive. You can see the effect of the Depression on people's faces. When I was a child one didn't mention someone being out of work. It was too embarrassing for them.

If you're as old as I am you may have some early memories. I do. My grandmother taking my sister and me around for her visitations. I knew first hand what a "Hooverville" was before I could say the alphabet. And there were plenty of people around me, Lorena Hickock for example, to give me the details.

"Let me tell you what it was like for Americans before your grandfather became president" was an introductory phrase I often heard. The stories of these individuals and their families made a strong impression on me.

How we got here

Over these last twenty years I have sometimes wondered -- have we lost our sense of just how important work and a home are? And how fundamental they both are for a person's identity?

In describing the magnitude of the Great Depression I don't mean to diminish the pain and grief of the present Great Recession. To the contrary, I mean to call your attention to it.

When Franklin Roosevelt took the oath of office on the 4th March 1933, there was a huge cry across America -- from the most down-and-out of Americans to the moguls of Wall Street -- Do something!!! FDR had a mandate unlike any of his predecessors.

The first task facing Roosevelt when he moved into the White House was indeed the banking crises. State and national banks were clamouring for action. The banking community would have given their new president dictatorial powers if he had asked for them. Wall Street figures sometimes mentioned Mussolini's name as a role model for the new man in the White House. Even they wanted the president to "Do Something!"

He did. With everyone working non-stop, the emergency banking bills were drafted in four days, New Deal appointees often working with their Hoover counterparts still in place. (The new Secretary of the Treasury, William Wooden, sat across the desk from his predecessor, Ogden Mills; they worked together.) The Congress acted with legendary haste. The final bill wasn't even printed when the Speaker waved a sheaf of papers at our representatives and they responded with a roaring "Aye!" Crowed Ray Moley from the White House, "We saved capitalism in six days!"

The New Deal was underway. I won't detail the legendary amount of legislation in the First Hundred Days. A great many of our nation's problems were addressed. That Roosevelt and his new administration cared about people -- were concerned with where they were hurting -- was apparent. By the summer unemployment had dropped. But it is true, even at FDR's Inauguration address at the beginning of his second term, he spoke plainly about "one third of the nation ill housed, ill clad, ill nourished." And, statistically speaking, we may not have been fully out of the Great Depression until rearmament put everybody to work preparing for WW II. But the Administration's bringing unemployment down substantially in its first year, by more than 10% -- a 6 million drop -- was a major achievement.

Passing the New Deal

Throughout this flood of legislation, both in those first hundred days and subsequently in FDR's first term, the Republican Party played their proper role as the party in opposition. As far as I can read of the scene there was little of the anti-government attitude that dominates the Republican leadership today.

Every New Deal bill was amended, and in spite of the large Democratic majority, just as it is today. There were close votes in the Congress. Compromises were often very substantial. Frances Perkins, the Secretary of Labor, remarked mournfully that the Social Security bill passed in 1935 was only about half of what had been submitted to the Congress. (Just in passing I should mention (déjà vu) the American Medical Association had quickly stepped in to quash its health care component.)

But except for the far right, the reactionaries who cried "socialism" (déjà vu again), there was general recognition in Congress -- by both parties -- of the need to focus on the nation's problems. That was not only Roosevelt's mandate from the 1932 election, it was a mandate for the Congress as well. As far as I can read the scene today, comparing the two time periods, there was little of the "anti-government" attitude that dominates the Republican leadership currently.

As one might expect in politics, the euphoria surrounding the legendary First Hundred Days diminished, supplanted in the autumn of 1933 by the hard slog of getting the rest of the New Deal program passed. It produced a new mood in the White House.

Criticism had steadily mounted, so much so that by winter Roosevelt and his advisors knew his legislative program had to change. The New Deal desperately needed to adjust its direction. In effect, the initial enthusiasm for the New Deal had run out of steam -- less than a year into FDR's first term.

Just as President Obama has been confronted in his first eighteen months, Roosevelt's administration had come under strong attacks, cries of outrage from both the left and the right. From the right it's not very interesting; mainly a brick labelled "socialism" -- heaved through a window while marching through the streets. As one could expect, the financial community fought banking reform legislation every inch of the way -- as we see today with the Administration's proposals -- but eventually the FDIC emerged, to be followed by the Security and Exchange Commission and then the Glass-Steagall bill.

On the other side of the spectrum there were a substantial number of Americans who harbored serious doubts about capitalism. They had suffered through the Great Depression for years with no government intervention, mainly because President Hoover and his cabinet had viewed capitalism as sacrosanct, never to be interfered with through government action.

Efforts made by President Hoover to address the problems were all voluntary. Bankers, when meeting with the president, would nod their assent, but then do nothing. Joining Hoover they acknowledged that feeling hunger or lacking shelter due to being out of work for months and years on end was debilitating, profoundly depressing. But that was the price to be endured for maintaining "free enterprise".

Blaming Wall Street

Many Americans blamed the rich people on Wall Street -- and the buccaneering capitalism they represented. The feeling was widespread. Even Herbert Hoover remarked, shortly before his exit from office, "You know, the only trouble with capitalism is capitalists, they're too damn greedy." Quite a change from his earlier statements!

By the winter of 1932-33 many Americans were sick of capitalism. They saw it as a failed system; they saw bankers and financiers as being responsible for their prolonged agony through the previous years of the Hoover administration, and right on into Roosevelt's tenure. Most people were not specific about the changes they wanted, but Ray Mosley's triumphant cry " we saved capitalism in six days" was quickly put into the closet. The greed Herbert Hoover referred to was apparent for all to see. Is it not today?

These were not just fringe groups; across the country there was a general disillusionment with an unfettered free market. As FDR expressed it: "Private enterprise, indeed, became too private. It became privileged enterprise, and not free enterprise."

The severest criticism came from those who felt that a golden opportunity had been lost -- for "sinking capitalism". They wanted government regulations and planning and intervention, particularly for the financial sector. But with the exception of Norman Thomas and the Socialist party, socialism of any sort was not in the minds of mainstream America.

Leading American intellectuals were outraged with the New Deal administration's boast of "saving capitalism." Philosopher John Dewey declared there should be "no such compromise with a decaying system,". Minnesota Governor Floyd Olson flatly declared, "American capitalism cannot be reformed."

But the feeling against capitalism was of such strength that America's Socialist Party, led by Norman Thomas, polled 884,000, or 2.23% of the popular vote in the 1932 presidential election. For a third party, one with an ideological agenda, that was a substantial expression of strength.

More moderate, yet no less acidic, voices from the left criticized FDR for "allowing" the series of substantial compromises in the Congress. They were deeply upset that every one of the New Deal's programs had been watered down. Even the bill abolishing child labour had a bumpy ride. The compromises Roosevelt felt compelled to make in order to get his New Deal legislation were simply not understood as part of our political process. Most of these critics considered it "weakness" on the part of the White House.

Then, and just as now, there was no recognition that our Founding Fathers intentionally divided our government into three branches, giving us a weak political system that, unlike a parliamentary government, would inevitably require negotiated compromises between the executive and the legislative branches, a tedious process that we could see being played-out with the recently passed health bill. But that is our system.

A vocal opposition

Adding to all these attacks were the demagogues of that time, haranguing the public in ways that beats any invective Sarah Palin might cast down today. Leading the pack against FDR was Senator Huey Long, "the Kingfish" of Baton Rouge, whose behaviour on the Senate floor drove his colleagues up the walls of that hallowed chamber.

Not far behind him was Fr. Charles Coughlin whose radio program attracted forty million listeners. Siding briefly with the New Deal, Coughlin broke with Roosevelt in 1934 over monetary policy and became as hateful as any of the other demagogues.

Aiding and abetting the slings and arrows of the demagogues there was the orchestrated hate campaign against FDR-organized mainly by well-known business figures -- widely disseminated and regularly covered in the major daily newspapers and magazines. It was mainly gossip, usually exchanged behind the hand in a conspiratorial voice, and so silly to read that one wonders how it could have been taken seriously. But it was. It focussed on a simple theme: Roosevelt had lost his mind and was hysterical. As one story went, the White House had barred its windows to block the president from throwing himself out. A reporter surveying the scene opined: "most of the stories are far too obscene to be printable."

Roosevelt biographer Arthur Schlesinger Jr., described FDR's dilemma during the few months before the 1934 mid-term elections. "Roosevelt, suddenly silent and irresolute, seemed to have lost his touch ... The administration appeared to lack coherence both in policy and in strategy." Schlesinger added, "these were hard days for the President. He knew that things were going badly ... Roosevelt faced the organised business community [and] its determination to halt the New Deal ...[He] faced the tumult of mass opinion, so ardently stirred by the radicals and demagogues ... Overhanging was the threat of judicial action against New Deal laws and programs."

The most influential historian of the day Charles A. Beard forecast doom for FDR in 1934. He wrote: "the disintegration of President Roosevelt's prestige proceeded with staggering rapidity during February and March."

FDR could not have felt his accustomed confidence, and was certainly not wearing his usual jaunty air. Secretary of the Interior Harold Ickes recorded in his diary that he found his old friend "distinctly dispirited. He looked tired ... and he seemed to lack the fighting vigour or the buoyancy that has always characterized him."

Reviewing the criticisms leveled against New Deal programs was apparently instructive for the president. Roosevelt listened to his advisors suggesting one or another alternative, one option against another. And then he pondered ... and pondered ... taking his time, much to his aides' frustration. "He knows nothing about economics!" was the usual charge exchanged among them.

Then, suddenly, FDR brightened and seemed to know how and where he wanted to move. His staff remained perplexed, but again Schlesinger gets it right.

"The basic reason for [FDR's] inaction was that he was simply unprepared to act ... [His] inscrutable processes of decision were moving all too slowly within." Concludes Schlesinger, "He could not lead until he knew where he wanted to go."

My grandfather's convoluted way of decision-making-from the stomach up to the heart, and then the head-was, as usual, right on. Later, historians would call it his natural intuition, or something like that.

Mid-term elections

In their next edition, Time magazine reported: "Franklin Roosevelt's mood suddenly changed." His whole legislative program was in the pot and boiling ...The Social Securities Bill, the Banking bill, the Utilities Bill, the Wagner Bill, the fate of the NRA ... Suddenly the irritability which had marked his recent actions dropped from him. Pronounced Time: "His 'winter peeve' was over."

Yes, the New Deal was rolling again. Referring to the autumn term of Congress in 1934, just at the time of the November elections, Charles A. Beard radically changed his tune from only a few months before. "Seldom, if ever, in the long history of Congress had so many striking and vital measures been spread upon the law books in a single session."

And the results of mid-term election of November 1934?

The Democrats increased their congressional seats in both houses, increased their governorships, and chalked up a higher proportion of the popular vote. So much for the pundits!

The Democrats' recovery, I think, continued to be dependent upon Franklin Roosevelt's very personal style. He seemed to sense his way through the political maze. Whatever, it remains an exceptional example of political leadership.

Of course the hatred spewed against the New Deal did not disappear. In the presidential campaign of 1936, the Republican candidate Alf Landon attacked the recently enacted Social Security Act as "unjust, unworkable, stupidly drafted and wastefully financed ... The Republican Party will have nothing to do with any plan that involves prying into the personal records of 26 million people." He then asked, "Are these 26 million going to be fingerprinted? Are their photographs going to be kept on file in a Washington office? Or are they going to have identification tags put around their necks?"

Don't hang these silly remarks around Governor Landon's neck; it was the Republican leadership that wrote the speech for him, stemming from a last ditch scheme they hatched in a desperate effort to stop Roosevelt. They joined the demogogues.

In the 1936 presidential election, the American voter, heeding FDR's inaugural summons to dismiss "nameless, unreasoning fear," ignored Republican fear mongering and responded at the polls by giving Franklin Roosevelt an overwhelming victory. In the Electoral College only Maine and Vermont appeared in the Republican column.

I have briefly reviewed FDR's political scene, especially when it is not unlike what President Obama has faced early on in his administration.

Comparisons to present-day Washington

But there are some profound contrasts compared with today. Ticking off but a few:

The extraordinary amount of money poured into lobbying the Congress -- in my view quite distorting our democratic system. And, not unrelated, the sum of money it takes to run for political office these days. I wonder how many millionaires there were in the Senate in 1933?

Television, and the intense media coverage of the last few decades is not something FDR ever encountered. It too has distorted our political system -- something the American public seems quite unconcerned with. Unaware? Nor has it seemed to cross our citizens' minds that marketing a candidate -- and that is the way we conduct our political campaigns now -- is an unhealthy change in our system. If Roosevelt stepped out of the grave to review this he would surely remark on the similarity between selling a shampoo, a new car, or an insurance policy, and now, selling the nominees for President of the United States. He would shake his head, perhaps smile to himself, and thank God his time had passed!

In closing, I would like to note that Franklin Roosevelt and Barrack Obama both entered the national political arena with visible handicaps-one, a black man, the other, a cripple. The cripple went on to be elected President of the United States four times.