The Second New Deal

Due to the tremendous progressive record that Franklin Roosevelt left behind, most people assume that he was very liberal from the beginning of his Presidential career. This is not, in fact, the case. Roosevelt, of course, came from a patrician background of considerable wealth, and his initial inclinations were far more conservative than his legacy would suggest.

I would like to quote here at some length from The Great Depression- America 1929-1941, by Robert McElvaine, a generally available book that I recommend as a good place to start if you would like to know more about this period. These remarks are in pretty close agreement with all of the other material I have seen.

McElvaine says: “The way he handled the banking crisis was indicative of his basic approach to the economic catastrophe. Given the magnitude of the problem and his unprecedented support, Roosevelt could have done whatever he pleased with the unpopular “money changers” and their institutions. Had he wanted, as later critics so frequently charged, to lead the country toward socialism, he could have taken an important step by nationalizing the banking system. He did nothing of the sort. Instead, he submitted to Congress a distinctly unradical Emergency Banking bill drawn up largely by bankers and Hoover appointees in the Treasury Department.

…..The act provided assistance to private bankers and gave them a government stamp of approval….On the very morning of his inauguration, he agreed to consult with leading “money changers” on how to solve the banking crisis.

….In addition to aiding bankers, cutting budgets and legalizing beer…..the new President called for reorganization of the federal government to bring about greater efficiency, reduce waste, cut bureaucracy, and eliminate duplication.

One of the great ironies of the New Deal was that its principal program for achieving economic recovery amounted to little more than a larger effort in what Hoover had been trying all along….”

Roosevelt was more fortunate than Obama in this regard: the economic collapse had happened entirely on the Republicans’ watch, and the public was clearly aware of the fact. This gave him the kind of deep popular support that translated into years, not months, of maneuvering time. Today, unfortunately, the Republicans managed to time their thieving of our national resources so that their sole responsibility for the problem, while no less clear, is more easily obscured. Even so, as the election of 1936 loomed, and as these economic half-measures failed to achieve their goal, Roosevelt was forced to make a choice.

Again, from McElvaine: “The fundamental reason for Roosevelt’s shift to the left in 1935 is clear….In 1934 and 1935 (the political) wind was building up into a gale that no political leader could long ignore. It forced Roosevelt to tack desperately to the leeward in order to keep afloat. The luxury of consensus government was one of the many privileges that President Roosevelt enjoyed, but he finally had to give it up…..One reason was that businessmen deserted him before he gave up on them….Opponents portrayed (the new-dealers) as power –hungry bureaucrats, carrying the country down a high-speed route to totalitarianism…..Such radical spirits as Lincoln Steffens expressed amusement at the spectacle of businessmen attacking Roosevelt while he was trying desperately to save their system.”

The result of this change of heart came to be known as the "second new deal", which included the Social Security Act, the Civilian Conservation Corps, and so much of what we think of when we remember the New Deal.

Now, I am hardly going to suggest that President Obama is not aware of this history, or that he doesn’t know more about Roosevelt than I ever will. Still, I believe that he is destined, like it or not, to follow in Roosevelt’s footsteps. Businessmen and their political tools are proving, as they did in the thirties, to be the most treacherous of allies, and we can already see, in the AIG affair a thunderstorm of public outrage brewing. Obama has hoped that he could operate for a time, given the danger we face, with support from both ends of the political spectrum; we can already see how vain that hope is.

Soon, like Roosevelt, he is going to be forced to forsake his association with one side, in order to save the other, vastly larger, if less powerful side. Let us hope he has Roosevelt’s success when he makes the choice- all of our futures depend on it.