FDR - The Man, the Leader, the Legacy, Part 9 – The Future of Freedom Foundation

March 1933 proved to be a momentous time in the history of the 20th century.

On March 4th, in Königsberg, in eastern Germany, on the Polish border, Adolf Hitler climaxed weeks of frenzied campaigning. The next day, elections for the Reichstag would be held – the last relatively free elections for years to come. Hitler was already the appointed chancellor. But he needed a compliant Reichstag to surrender total power to his Nazi-dominated government. Now, before a great crowd, in a speech that was carried by radio, he urged his followers on to victory. Calling on God’s help, Hitler promised that Germans would once again be able to hold their heads high.

Yet, in the next day’s voting, even with control of most of the police in their hands, the Nazis could not muster a majority. Later in the month, Hitler addressed the new Reichstag. He depicted Germany’s desperate situation and the crying need to meet it by resolute action, and requested an “enabling act” from the assembly. Most of the other parties seconded the Nazi deputies. Hitler had become dictator of the Third Reich, which he promised would endure for a thousand years, but which ended in 1945, as did Hitler’s own life.

Meanwhile, in Washington, D.C., Saturday, March 4, a chilly, overcast day, saw another revolution taking place. As hordes of aspiring bureaucrats converged on the city, an open-air limousine carried a dour and taciturn Herbert Hoover and a smiling, self-assured Franklin Roosevelt to the porch of the Capitol building. A crowd estimated at 100,000 awaited the new president. Chief Justice Charles Evans Hughes administered the oath of office. Franklin solemnly swore to “preserve, protect, and defend the Constitution of the United States,” thereby launching his long term of office – which would also end in 1945 – on a suitably mendacious note.

Then he turned to the nation that had given him a landslide victory in the election. Throughout America, in homes and businesses and schools, in factories and churches and the last of the speakeasies, the people were gathered in front of their radios. It was the largest audience ever to hear a speaker to that time. Enthralled, the nation listened to their president.

FDR’s first inaugural address

His first inaugural address is one of Roosevelt’s most famous orations. Its fame derives primarily from a single sentence at the beginning: “So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself, – nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

These words, spoken in Franklin’s sunny, supremely confident voice, came as an instant balm to millions of suffering and anxious Americans. He was starting, as his idolaters today claim, “to give the people hope.” But what exactly was his analysis of the causes of the economic disaster? And what were his prescriptions for dealing with it? This first speech of his 12-year tenure deserves closer scrutiny.

According to Roosevelt, the country’s predicament was “primarily” the fault of the “rulers of the exchange of mankind’s goods.” These “unscrupulous money-changers” have adhered to “the rules of a generation of self-seekers”; they are blind to any “social values more noble than mere monetary profit.” Roosevelt hammered away at the men who let themselves be duped by “the falsity of material wealth as the standard of success,” as well as the leaders who sought public office motivated by nothing more than “pride of place and personal profit.” In other words, at the root of the nation’s plight was that old demon, Greed.

No one today thinks that Roosevelt was correct. Greed explains nothing in the debacle the nation was facing. And if Roosevelt’s analysis was foolish and empty, the remedies he proposed were nebulous and contradictory. He resurrected his peculiar notion of redressing “the overbalance of population in our industrial centers” by some kind of unspecified “redistribution” of the population to the countryside. This would somehow make farmers out of the unemployed. At the same time, though, there would be efforts “to raise the values of agricultural products.” Roosevelt referred to the need for “national planning for and supervision of all forms of transportation and communications,” as well as other “utilities.” What he might have had in mind by planning and supervising all forms of communications, and why this should at all be necessary, was not clarified.

Mixed in with the eccentric ideas for radical change were oddly conservative-sounding sentiments as well. At one point, FDR obliquely responded to a growing movement that is practically forgotten today. Historian David Beito has told its story, however, in his important work, Taxpayers in Revolt: Tax Resistance during the Great Depression. Such resistance was breaking out all over the country.

Clearly, nothing could be more dangerous in the eyes of Roosevelt and his fellow politicians than such a revolt by the folks who pay for it all, and the new president tried to defuse it. “Taxes have risen,” he complained, and the solution was for all levels of government to slash expenditures “drastically.” In particular, the federal government must put its own house in order, “making income balance outgo.” So, no deficit spending. Along the same conservative lines, Roosevelt insisted that a “sound currency” had to be maintained at all costs. This was reassuring, since in the America of that time that meant preserving the gold standard.

A military model for America

But what was most pronounced in his speech was the constant invocation of the military model. Here Roosevelt was adapting the rhetoric of his old boss Woodrow Wilson, in World War I. Putting people back to work must be treated “as we would treat the emergency of war.” Americans must “move as a trained and loyal army willing to sacrifice for the good of a common discipline.” They must be inspired by a sense of duty “hitherto evoked only in time of armed strife.” This “great army of our people” will launch “a disciplined attack” on the problems facing the nation.

Of course, in every army there are the common soldiers and there are the generals. FDR laid down, in no uncertain terms, who was going to be who:

“I shall ask Congress for the one remaining instrument to meet the crisis – broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were invaded by a foreign foe.”

But wouldn’t such a massive grant of power to the president run into constitutional restraints? Roosevelt disclosed the interpretation of the basic instrument of American government which he would maintain for the next 12 years: “Our Constitution is so simple and practical that it is possible always to meet extraordinary needs by changes in emphasis and arrangements without loss of essential form.”

This was the conception of the U.S. Constitution that progressive judges, justices, and law professors had been preaching for years – of a living Constitution, amenable to being stretched and wrenched and twisted to cover anything that power wished to inflict on society. Now it had become the announced, official policy of the federal government. And FDR sounded an ominous note, for those with ears to hear it. In the event that the Congress should fail to grant him the powers he felt were necessary, “I shall not evade the clear course of duty that will then confront me.”

A lack of resistance

But for anything Roosevelt might choose to do, there was no need to fear any resistance, either from the new Democrat-dominated Congress or from the citizens of the American Republic. A reporter, Finis Farr, who heard the speech as a young man, later became one of FDR’s very few skeptical biographers. In describing the reaction to this first inaugural address, Farr wrote of a troubling characteristic of his countrymen, namely, the American public’s canine desire to fawn on authority and crawl before the whip. This doglike aspect of our great nation is its least attractive and also perhaps most seldom-mentioned trait. In 1933 the pain of empty bellies and empty pocketbooks had the people on their knees, and Roosevelt gave them what they wanted to hear.

FDR immediately set to work, assembling his cabinet and framing bills to send to Congress, which he called into special session. That total confusion on how to end the Depression reigned in his mind is shown by the message he sent to the Hill six days later, requesting “authority to effect drastic economies in government.” Flaying the record of poor Herbert Hoover, FDR intoned: “For three long years the federal government has been on the road toward bankruptcy.” Deficits totaling $5 billion had contributed to the collapse of the banks and the soaring unemployment. Congress must join the president in pledging “to immediate economy,” for history shows that free governments have been “wrecked on rocks of loose fiscal policy.” Roosevelt asked for authority to cut government spending. If it was granted, then there was “a reasonable prospect” that within a year the budget would be balanced.

Here once more was FDR as frugal husbander of the people’s monies and scourge of the spendthrift Hoover. It was the last time Roosevelt would appear in that role.

But the first decision Roosevelt had to make was how to deal with the banking crisis. The tottering financial system – supposedly a Rock of Gibraltar governed by the all-wise Federal Reserve Board — had caused many people to try to withdraw their savings. Under the government-sanctioned fractional-reserve system, however, many of the banks, including some of the biggest, could not meet their liabilities. Some of the states had declared “bank holidays,” which just fueled the fears of depositors. They now thronged to get their hands on their money, which led to the proclamation of still more “bank holidays.”

By the time Roosevelt took office, all of the country’s banks were shut down. The president proceeded to declare all the banks closed until March 13th. Instead of allowing the unsound banks to fail, they were permitted to default on their contractual obligations. Along with this, foreclosures on homes and farms were suspended in many of the states. Greeted with hosannas from the public and later historians, these measures – which Murray Rothbard correctly characterized as blatant attacks on the rights of private property – were a foretaste of what was to follow.

Categories: Foreign Policy & War, Freedom Daily Archive, New Deal