News & Views from 465 California Street

A Lesson from the Roosevelts

Clint Reilly
Jan
13
2009

As a young political consultant, two books about the eras of Theodore and Franklin Roosevelt profoundly shaped my core convictions about the role of government in a democratic society: The Age of Reform, by Richard Hofstadter, and The Coming of the New Deal, by Arthur Schlesinger, Jr.

Hofstadter was the foremost authority on the Progressive Era during and after Theodore Roosevelt. Schlesinger wrote the definitive account of Franklin Roosevelt’s presidency.

These two books are more important now than ever because they provide powerful lessons about how to address our current economic crisis.

In The Age of Reform, Hofstadter eloquently described the reform impulse that began in the early 20th century and endures in the spirit of the Obama presidential campaign today. “A great part of both the strength and weakness of our national existence is that Americans do not abide very quietly the evils of life,” he wrote in the introduction to his book.

“It has been the function of the liberal tradition in American politics from the time of Jeffersonian and Jacksonian democracy through Populism, Progressivism and the New Deal, to broaden the number of those who could benefit from the great American bonanza and then to humanize its workings and help heal its casualties.”

Hofstadter chronicled the role of government regulation as the only answer to the inevitable excesses of unchecked capitalism. Events at the end of the 19th century had proven that a powerful counterforce to corporate power was needed to protect the public interest.

The rape of public lands, pollution of waterways and plunder of natural resources by the private sector in the 1890s and early 1900s had become a national disgrace. In his first message to Congress, Teddy Roosevelt declared, “There is a widespread conviction in the minds of the people that the great corporations are, in certain of their features, hurtful to the general welfare…Corporations, and especially combinations of corporations, should be managed under public regulation.”

Theodore Roosevelt invented regulation and a powerful federal government, but it was Franklin Roosevelt who wielded its power in unprecedented ways to help cure the greatest economic crisis in American history.

The devastation of the Great Depression – with its 25-percent unemployment rate, palpable hunger, rationing, financial ruin and bleak outlook for the future – is hard for our affluent society to comprehend. Precipitated by a stock market crash and banking system collapse ominously similar to today’s meltdown, FDR mobilized the federal government to become the lender and employer of last resort.

Washington sponsored large public works projects to provide jobs and incomes to working families. Social Security for the elderly was initiated. Fueled by government borrowing, huge amounts of capital were injected into the economy before ill-advised budget balancing nearly destroyed the country all over again. New government agencies were created to oversee the banks and the stock market as Roosevelt cracked down on corporate greed and financial chicanery.

In The Coming of the New Deal, Schlesinger described the sense of urgency felt across the nation on the day FDR began his first term as president: “It was hard to understate the need for action. The national income was less than half of what it had been only four short years before. Nearly thirteen million Americans were desperately seeking jobs. The machinery for sheltering and feeding the unemployed was breaking down…And a few hours before…every bank in America had locked its doors.”

We know the New Deal had a happy ending because our country not only survived the Great Depression but then built prosperity for successive generations, including ourselves.

But today, nearly 80 years later, a hair-raising season of layoffs, home foreclosures, loan defaults, corporate meltdowns, high-profile suicides, forced takeovers and mega-frauds has overwhelmed our financial system and put our continued prosperity in doubt.

Some wonder in the back of their minds if what we are calling the Greatest Recession may become the Greatest Depression.
Unfortunately, our national leaders failed to heed the fundamental truth taught by the Progressive Era and the New Deal:

Unregulated capitalists cannot be trusted.

Comments (5)

  • People who went through the depression did not get handed checks and money and houses and free education!They had to work for it,which is not the case today!We also had a war that changed the way people thought about life in general.You don’t get anything for nothing!this is the opposite now government is now bigger then private enterprise!I think your giving Rosevelt too much credit!

    Posted by: Hal | January 13th, 2009 at 10:10 am

  • Granted that the regulators were asleep or hogtied when the financial markets got so far into blue sky. So what makes government any more responsible than the private sector? If our problems were caused by a failure of government regulators to act isn’t this a circular argument? Perhaps instead we should blame the culture of the money community that doesn’t identify with the majority of the population and thus sees no reason not to take advantage of us?

    Posted by: Jim House | January 13th, 2009 at 4:14 pm

  • What part of our system is not regulated?
    How much were you regulated when you made your fortune in real estate?

    Posted by: Andy | January 13th, 2009 at 10:52 pm

  • When you have a President that is more concerned about OIL and is so power hungry that he’d use deception to leverage the nation in two wars to pursue a “New World Order” ambition of his father’s, to ultimately serve and benefit his Neo-Conservative cronies and family dynasty forever into the future after his Power of the Presidency is long over, a nation (and the region afflicted) no doubt will be in flux even if he succeeds, or fails. Such has occurred.

    I’ve never observed a leader at the top with such limited vision. When you are the main man, head honcho, and/or big boss of such a powerful nation (or business or organization) and you are limited in vision, the people will suffer because you’ve charted the wrong course. You can actually lead many backwards. Recession. Depression. Destruction. (read Ho Chi Minh and Communism)

    Bill Clinton (“WJC”) had all the right stuff…Values and Vision. He also had the Colonel Sander’s-like recipe to cook the economy and to “Bill-ed” and foster quality relationships with other nations and their leaders. He must have learned this coming from humble and wooden spoon beginnings. You know, getting along with people. He understood and still does understand we are all part of a larger Global Human Family. He was such an inclusive President to his people and a Diplomat first to the rest of the World. Can we say FRIENDLY PROGRESS?

    King George Bush II has proven to be the opposite. An ineffective, uninspiring, inept, divisive President. Delusional. Unrepenting. Unrelenting. When the demos says you’ve charted the wrong course (70+%), the leader should take heed. Support can wane. Minds turned off. The result can be, but not limited to, bitterness and frustration by the majority constituency where power is derived. Lame duck is not the desirable description of any leader.

    Great leaders listen. Great leaders also have that uncanny ability to see things before they happen, to be flexible and change direction if they’ve erred, and this Prez had 8 years to do it. (for example, JFK was ready to switch course and direction in Vietnam after 3 years and definitely in my opinion 4 after re-election in ’64. Imagine all the grief, loss of human lives, wasting of earth’s resources, and unnecessary destruction that would have been averted!).

    Katrina…too slow…incompetent. War…wrong…No WMDs. Just breeding more unnecessary enemies. At least control that pipeline and get us some OIL for all the suffering and troubles. Just kidding, as i’m being sarcastically tongue-in-cheek here. Irish Catholic independent movie-maker Michael Moore was dead-on correct, from the beginning. Hindsight gives us this ability to see things much clearer…now. But wisdom and Vision are ultimately desired and expected from a leader before mistakes occur. Wall Street Credit Default Swappers, take heed!

    Ahhh, Wall Street. “Greed is good”? ONLY if it produces goods (and value-added services) and the facilitators have genuine, noble intentions. When you are in control of people’s 401Ks, IRAs, life savings, livelihood, think “unselfish” first. If there are no investors, there is no Wall Street. No “We” no, “I”.

    Thanks for the educational FDR links. FDR was truly the transformational visionary and practical transactionalist needed in that dire period of US history. His inaugural address must have been something remarkable to witness in person. So blunt, bold, courageous to say the least. Perhaps divine in many ways. Let’s hope Barack and US (the U.S.) are able to pull this one off given the lessons taken from the Great Depression Era. But i think a dramatic paradigm, and a revival of old school WWII Gen-ish values must be reinstilled in society if Recovery/Restoration is to be longlasting…or everlasting. The Green revolution might do it for us all…yes, even the BIG OIL and BIG CHEM barons will see that it’s for the greater good of all humanity. They are a part of US…humanity.

    Can’t wait to hear Barack’s Inaugural and compare it to FDR’s.

    Thanks for the links on FDR and Eisman. That was a funny read from Conde Nast!!! :)

    Posted by: Don Nguyen | January 13th, 2009 at 11:14 pm

  • If I make the grade and get to heaven, I suspect Fr. Boyle will be there with firm hand extended with a by-name greeting. I enjoyed his 50th year as priest celebration at St. Catherine, MH. Clint, Thank You for some good news. Your column was posted at St. Pat/MP. God Bless.

    Posted by: Hersh Brown | January 19th, 2009 at 9:52 pm

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