CHAPTER NINETY EIGHT: FROM THE NEW DEAL TO THE NEW AGE IN A FEW SHORT HOURS - PART 1

CHAPTER NINETY EIGHT: FROM THE NEW DEAL TO THE NEW AGE IN A FEW SHORT HOURS -- PART 1

Here’s the deal on FDR’s Library and Museum at Hyde Park, New York: It is by far the coolest Presidential Library I have ever visited. I have been to Ike’s in Kansas, where Mamie’s jewelry was displayed on a rotating Ferris wheel type contraption under a glass case. Does anyone remember what kind of jewelry Mamie wore? Anyone? It was clunky, all the better to highlight her signature bangs. C’mon, Michelle, get an original idea now and then. Bangs are so ‘50’s. In addition to the circling jewels, there was a large map of Europe that had lights for every location where the Allied Troops engaged the evil Axis soldiers in World War Two. It was rudimentary and it may have been replaced by now. My Eisenhower Library tour was in the summer of 1967. I also toured the LBJ Library in Austin, Texas, when I visited my sister, Jean, in about 1990. This presidential library had a very interesting letter from Jackie Kennedy Onassis to LBJ thanking him for all his kindnesses after JFK was assassinated and the Camelot Crew had to leave the White House. Apparently, LBJ gave Jackie all the time she needed to move out, and she expressed her sincere gratitude with some very flattering phrases. Say what you will about how much she disliked LBJ, she was extremely cordial in this “thank you” letter. The girl was well bred.  LBJ’s Library also featured some great interactive exhibits on facets of the Great Society. His Presidency was a time of unprecedented legislative advancement for civil rights, with the passage of the Civil Rights Act of 1964 and the Voting Rights Act of 1965. At the November 27, 1963 Joint Session of Congress – 5 days after Kennedy was assassinated – LBJ told the representatives: "No memorial oration or eulogy could more eloquently honor President Kennedy's memory than the earliest possible passage of the civil rights bill for which he fought so long." Ironically, historians say that Kennedy alive did not have a prayer of ever getting these laws passed.

LBJ’s Library set the bar pretty high for my next presidential library visit. But the folks who brought us FDR’s Library had a lot more presidential years to present – nearly four terms – and they had the Great Depression, the New Deal, World War Two and Eleanor, to name a few major world events from 1932 to 1945. Yes, indeed, Eleanor was her own world event, much more than a First Lady had ever been before, the trailblazer for so many women in politics, who never shied away from the toughest subjects – like segregation in the United States in the 30’s and 40’s and the unspeakable internment of most of the Japanese population on the West Coast during World War II. There apparently used to be two libraries, one for FDR and one for Eleanor, but their political lives were so intertwined that wiser heads prevailed and both Roosevelts are presented in all their nobility at the Hyde Park Library and Museum. Before I forget, one of the most interesting facts about this place is that FDR himself not only founded the Library, but also had a working office inside it. He is the only sitting President to have actually used his Library while still in office. He started planning it in 1940 during the end of his second term, which many thought would be his last.

But before we get to 1940, let’s start with the condition of our society while Hoover was still President. Long before there was this modern day Republican wing that calls itself the Tea Party, most of their retread ideas had been espoused and enacted into law during Hoover’s less than successful administration. Hoover was VERY BIG on small government. His credo (before Ted Cruz, Rand Paul and that unctuous Mario Rubio) was that the less intervention the better into any major institution, like Wall Street, the banks and the companies that were running the country into the ground. The problem was that in 1932, when he was still President, the entire world was in a global depression, the worst known to history at that time. And so, millions were out of work. Unemployment was about 25%, having been a mere 3.2% when Hoover took office. The U.S. economy shrank by almost half. Factories were closed. Banks were failing. Nine thousand closed their doors. Nearly 100,000 businesses failed and corporate profits dropped 90 percent. Farms were abandoned, as farmers could not get loans and save them. Farm income dropped by over 50 percent.

This economic and social disaster had been going on for three years, Hoover’s entire term, and he had done NOTHING. What’s a conservative to do? Stand by and watch the economy fail? Well, yes. That’s the free market system at work – no government interference. Surprise! It wasn’t working. And the citizens looked to government for some help. They had no money to spend on consumer goods, so more factories closed and more people were out of work. A town like Youngstown, Ohio had 60 percent unemployment. The mighty U.S. Steel Corporation had 100,000 employees in 1929, and by late 1932, it had none. Hunger and homelessness increased. Duh. As there was no employment insurance, the jobless had nothing. Shack towns and cities – aptly called “Hoovervilles” – started appearing everywhere. Breadlines were a common occurrence.

President Hoover was straitjacketed by his belief in small government. His plan, if you can call it that, was to provide economic relief through private charity. He even refused to provide federal relief money to the unemployed. While he gave some federal credit assistance to those needy, greedy banks and businesses, he refused to fund public works projects or other measures that would stimulate the economy. Sound like déjà vu all over again, Republican-controlled House of Representatives? Could you go back to your history books and read the chapter on the Hoover presidential years and realize how unsuccessful your limited government ideology was back then? Does the American populace have to suffer again, because the Paul Ryans of today have gone back to Hoover’s wrongheaded belief that an inactive federal government – or no government – is a viable way to get out of a depression? It’s not. Read your history. Go to the FDR Library for a refresher course. Here’s another remarkable similarity between then and now. There was a grossly unequal distribution of wealth in Hoover’s years. During the 1920’s, even before he took office, the proportion of business profits going to the employees as wages was too small to allow them to buy the goods that the economy was producing. Of course, once they lost their jobs, the unequal distribution of wealth was exacerbated, as former workers had NO money.

Not surprisingly, FDR got elected in 1932, but it was almost too late. Before he was inaugurated in March, 1932, 4000 banks were forced out of business in January and February of that year. There was no such thing as government insurance for bank accounts – that would definitely have been government interference – so millions of citizens lost their entire life savings. This was even before FDR took the helm. There was a run on the rest of the banks to get the money out, before the banks lost the rest of the savings of Americans.

FDR entered office with a vengeance. His first hundred days as President were, in the words of the FDR Presidential Library, the “most action packed in American history. No new president had ever moved with such urgency on so many fronts so fast, issuing proclamations and executive orders and driving a torrent of legislation through Congress to stimulate recovery, relieve economic hardship and enact reforms.” Yowzah!

The first major action of FDR was to save the banks – sound familiar? We just keep repeating history, because we either choose not to study it or masochistically enjoy suffering through the same economic hard times in each generation. How did FDR save the banks? He declared a “bank holiday”, which closed all of the country’s banks temporarily. Then he called upon Congress to pass emergency legislation, called appropriately the Emergency Banking Act. Treasury officials wrote the bill, got it to Congress 4 days later and it was approved within hours. No gridlock? None. FDR had a far easier time getting bills approved by Congress, because when the voters elected him, they also elected Democrats in a landslide year for them, both in the Senate (a pickup of 12 seats) and in the House of Representatives (a pickup of 97 seats). There was a Democratic super-majority in both houses of Congress. Fifty nine of the 96 Senators were Democrats. And 313 of the 435 Representatives were Democrats. It’s easy-peasy to get major legislation passed in Congress with this kind of support.

The Emergency Bank Act authorized the federal government, for the first time, to examine bank finances and to provide capital to banks which the government decided were fit to re-open. You read that right. The government decided which banks were fit to re-open. There was no “too big to fail” mentality. The healthy banks were allowed to re-open March 13, 1933. Keep in mind that FDR was installed in office on March 4, 1933, so this revolutionary bank reform was really, really quick. On March 12, FDR spoke on nationwide radio to reassure Americans that the banks would be trustworthy once more. And his reassurances worked. When the banks re-opened the next morning, citizens lined up to put their money back into the banks. The run on the banks ceased. This victory for the American people was monumental. If FDR had done only that, his place in history would be secured. But he did so much more.

Still in the financial vein, FDR eliminated the gold standard. Announcing that he was following the lead of Great Britain, he said that the dollar’s value would no longer be tied to the price of gold. What this did was allow the Treasury to increase the supply of dollars in circulation by printing more currency. And the value of this money “floated”. This action was taken to end the debilitating inflationary spiral and stimulate economic growth. It did both, although not to the degree that FDR had anticipated. Still, it was action, a necessary action, to help get the country out of the Depression by putting money into the hands of the consumers, who were essential to buy products and get factories manufacturing again, while re-hiring workers and reducing unemployment.

And finally, back to the banks. The Glass-Steagall Banking Act was passed to stabilize the banking situation. With the passage and enforcement of this Act, the bank failures were reduced from 4000 in 1933 to 61 in 1934. The Federal Deposit Insurance Corporation was created by this Act, and this protected depositors by insurance their individual bank accounts. What a concept! The Federal Reserve System got greater control over bank credit. And get this, the Act ended risky stock speculation by commercial banks by separating commercial banking from investment banking. Yes, you’re way ahead of me. In 1999 Congress dismantled this part of the Glass-Steagall Act and we are still paying the price. Back to the separation of commercial banking and investment banking! Back to a stable financial future! Oh yeah, right. Gridlock – can’t even get the overseer of the banks or the protector of consumers confirmed in the Senate without a filibuster or threat of one. FDR was sooo lucky to have his super-majority. A lot of actions had to be taken quickly to get the country moving again – déjà vu? – and the President and Congress WORKED TOGETHER to do it. I’m not one who usually longs for the “good old days”, but gee, it sure would be nice to have a majority in Congress who have the historical perspective and the gray matter to understand the need for government action to stimulate the economy.

Prior to his election FDR promised action. This is what he said in his Mary 22, 1932 speech at Oglethorpe University: “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.” We’ve covered the major actions in the financial sector, but oh, there was so much more. Stay tuned, my historian friends, or return to your Fox News and MSNBC News and let the talking heads try to “spin” a story about how the current crises are “unprecedented” and about how big government is very bad for the people, but unfettered capitalism will save us all, or about how the current president, with no super-majority in either House of Congress, has been a complete, dithering failure for not “making” them pass laws to get us out of the Great Recession.