What was the Case for FDR’s re-election?

By Gary Berg-Cross

One hears FDR and his run for re-election in 1936 being referenced during the 2012 campaign. President Obama's Re-election does mirror FDR's situation in some ways.  FDR took office following a disastrous administration and the economy in crisis.  In 1932 Hoover was still promising better days ahead, but mostly without  specific details on programs or policies that would be different from what had lead to collapse. FDR was more activist and was able to stabilize things and reduce unemployment substantially. The economy was characteristically sluggish and 8 million Americans still were unemployed . As in 2008 the New Deal fiscal stimulus was partially successful and mitigated things. Would people understand and re-elect FDR? It wasn't a sure thing.

US GDP went up as shown in the diagram below, but these are abstract stats. Monthly data for industrial production show a near 3-year collapse under Hoover and conservative economic policies. Things turning around when FDR took office in March 1933. Production rose by 44 percent in the 1st 3 months of the New Deal.  Just after re-election in Nov. 1936, the production had completely recovered to surpass its 1929 peak. Gee, Keynesian economics seems to work unlike trickle down!

And it is interesting to note that New Deal job intervention also provided environmental conservation, highway infrastructure, and rural electrification. Unlike now, the New deal spurred  the union movent with long-range benefits to workers reaching well into the 50s and 60s.

What about campaigns then and now?  Somewhat different but FDR did face criticism & hostility from various points on the political spectrum. There were religio-conservatives like Father Coughlin and Dr. Francis Townsend who had spent 34 and 35 years attacking FDR. They supported Representative William Lemke of the newly formed Union Party in the 1936 election.

Most of us don't remembers something called the American Liberty League (ALL). Prominent Democrats and Republicans joined together to form the ALL. Here is how one history source describes ALL:

 The organization, according to the founders, exists “to combat radicalism, preserve property rights, uphold and preserve the Constitution.” ALL spokesman Jouett Shouse says ALL will fight to preserve “traditional American political values.” According to the Encyclopedia of the Great Depression, ALL was organized by “disgruntled business conservatives, Wall Street financiers, right-wing opponents of Franklin D. Roosevelt’s New Deal, and defeated rivals within Roosevelt’s Democratic Party.” ALL is financed by, among others, industrialists Pierre, Irenee, and Lammot du Pont; former Democratic Party chairman John J. Raskob; financier E.F. Hutton; and executive Sewell Avery of the department store chain Montgomery Ward. Most of the politicians in the organization are Republicans, but these are joined by anti-Roosevelt Democrats such as Alfred E. Smith, who ran for president in 1928. Many ALL members were once part of the Association against the Prohibition Amendment, which fought to re-legalize the US liquor industry. ALL unsuccessfully fights to block federal regulations and additional taxes on business, the creation of public power utilities, pro-labor barganing rights, agricultural production controls and subsidies, New Deal relief and public jobs programs, the Works Progress Administration (WPA), Social Security, and other Roosevelt-era programs and initiatives. According to the Encyclopedia, “critics effectively lampooned league members as champions of privilege, ungrateful critics of an administration that had saved capitalism, and vindictive and selfish individuals seeking revenge on a president for betraying his social class.” 
ALL worked diligently, but unsuccessfully, to unseat Roosevelt in 1936, backing Republican contender Alfred M. Landon.

So  by 1936 FDR had lost most of the backing he once held in the business community in part because of his support for the Wagner Act and the Social Security Act.

How did it react? In some of his 1936 campaign speeches FDR’s includes proudly spoke of his accomplishments  and crafted arguments remain powerful today. There are several things in his Madison Sq. garden speech on the eve of the 1936 election that framed what was at stake:

“In 1932 the issue was the restoration of American democracy; and the American people were in a mood to win. They did win. In 1936 the issue is the preservation of their victory. Again they are in a mood to win. Again they will win.”

Win what?  Win what was accomplished the social net established in his 100 days.

Win against whom?  FDR  defended the New Deal. Sure he provided a help to the banking system, but he also imposed  new regulations on them. There was direct aid for the poor, the disabled, the elderly. 

And he seemed to relish the opportunity to take on conservative Republican positions. A central argument was that his New Deal programs had protected the average American against predatory elite – AKA the 1%. FDR was glad to talk about the need for government to serve as a check on Wall Street. Beyond this the New Deal demonstrated a new way of thinking about the role of government, and what US citizens could expect from it. Here are his fighting words on forces that opposed this role:

"Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred."

Here’s another one that might be appropriate for a campaign argument on the role of government in tough times:

We have not come this far without a struggle and I assure you we cannot go further without a struggle.

For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.

For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

Perhaps thoughts that are still relevant today and perhaps we will hear some of this before the campaign ends.

More quotes from the speech are available at a Thom Hartmann site.

Image Credit

GDP: http://www.ourfuture.org/blog-entry/2009020603/fdr-failed-myth

Chicago/Conservative Views of Economics

by Don Wharton                 

Milton Friedman

Economic theories are to a great extent ethical claims. They assert that shared outcomes will be better if we engage in certain policies of governance, taxation and fiscal policy. The outcomes for people living under those laws will be vastly different depending upon which theories and which laws we adopt. Economics is asserted to be a science and in theory we should be able to compare the theoretical claims with the empirical data.

Milton Friedman was one of the central figures creating the conservative Chicago school of economics. A prime feature of this variety of economics is a belief in largely unrestricted free markets. This can be very effective in increasing or decreasing commodities, manufactured goods and services in response to changes in relative demand by our society. If there is a shortage of corn the price will rise. There will then be more land, labor, fertilizer and machinery allocated to corn production, satisfying the demand.

Friedman wanted an extremely minimal government and disliked things such as permits and licenses as a matter of almost quasi-religious belief. He was opposed to licensing medical doctors. Of course, this would have opened up the market for medical services to a vast variety of medical fraud and quackery. To be fair, there are laws against fraud and in principle Friedman would argue that these laws would limit misbehavior.

Alan Greenspan was a supporter of Friedman's views. He saw no problem with the proliferation of sub prime, low documentation loans for real estate or the slicing and dicing of bundled mortgages to finance the recent housing bubble. This fraud was endorsed by rating agencies that seemed willing to give AAA ratings to repackaged mortgage instruments sold to credulous buyers. The ratings agencies were in effect bribed by the financial institutions that were requesting the ratings. Once again laws against fraud in theory apply. A few people have been prosecuted under such laws but only a very tiny percentage of the army of people who built the housing bubble that destroyed many trillions in American assets. The fear of prosecution was almost totally absent during the building of the housing bubble. The very minimal current levels of prosecution suggests there would be no fear of consequences when future markets become similarly disconnected from reality.