FDR and Obama: Interview with Jonathan Alter

[ProgressiveBookClub]

Q. Describe the state of the nation in the winter of 1932-33?

A. Well, they called it “the interregnum of despair.” In those days the president wasn’t sworn in until March 4, and it was a very long period of time as the country slipped lower and lower. The crash had taken place of course in 1929, but it had taken a while before we were mired in the Depression. And at its bottom, which it was in this period, unemployment was 25 percent, but that actually underestimated it. You had the stock market down about 90 percent at the bottom. You had farm foreclosures and home foreclosures all over the country. Most of all you had a banking crisis, which had built slowly and then erupted after the first of the year, 1933. Pretty much every day when you picked up the newspaper banks were folding and closing their doors. About 10,000 banks went out of business. Many of these were small banks, but people depended on them, and there was no deposit insurance, so you were wiped out if you happened to put your money in the wrong bank.

There was a mental depression that was every bit as bad as the economic one. I think we’re starting to understand now what that feels like—this sense of tremendous fear and uncertainty about the future. Without food stamps, there was also rampant fear about putting food on the table. So in some ways, when Roosevelt said “The only thing we have to fear is fear itself,” it wasn’t quite right. It was a wonderful line, but it wasn’t right because if you were worried about putting food on the table, that was a real fear, not an imaginary one.

By the time Roosevelt took office, the banking crisis, which had really taken a serious turn for the worse in Michigan (the first big state to close all the banks), started spreading around the country. And so by the time Roosevelt took office, actually about three-fifths of all banks were already closed, even before he signed the bank holiday bill.

Q. What was Herbert Hoover, the defeated sitting president, doing during this period?

A. Hoover was a very bright guy who was completely incapable of communicating effectively with the American public. He also had a rather cramped view of what the government’s role was. He wasn’t entirely hands-off; he wasn’t like Calvin Coolidge, just sitting in the White House doing nothing. But his idea of action was mostly to try to rally voluntary efforts, to bring business leaders together and bankers together to try to ask them to change their behavior.

Hoover didn’t use the government much to bring about any real change except in pilot program form. The reason why that is important is that some of what he started was greatly expanded by FDR. He also did some public works, but basically he didn’t believe in using the power of government to intervene in any big way in the economy.

[Hoover:] had a much higher IQ than Roosevelt, but Roosevelt was a political genius and he also had a different idea of what the American social contract required of us. I find it interesting that Herbert Hoover and George W. Bush basically believe that if your home is about to be foreclosed upon, it’s none of the government’s concern. Franklin Roosevelt and Barack Obama take a very different view, that it is the government’s responsibility to come to the aid of people who are in real distress. Hoover was in some ways an activist president, but he was in the grip of a failed ideology.

Q. And so Roosevelt came in to fill the void. But there were plenty of people who questioned whether he was really up to the job.

A. At first, Roosevelt dodged Hoover because he knew that Hoover was trying to drag him into sharing responsibility for the crisis without any authority to do anything about it, which is something that the Obama people were also concerned about. And some of those who have read my book said that in this particular area they used Roosevelt as an object lesson. They said, We can’t be like FDR in terms of his hands-off view of what to do during the interregnum. Roosevelt went out on Vincent Astor’s yacht for twelve days and he selected a lot of his cabinet by ship-to-shore radio.

After he gets back, President Hoover essentially through the Secret Service serves him with a subpoena almost, nothing legal about it, but a letter saying the financial system of the United States is melting down, and you must come and join me to take action against a crisis. Roosevelt didn’t want to, so he stalled for time and when he finally did get back in touch with Hoover (they had met a couple of times, previously, but Roosevelt didn’t want to meet about this), he sent a letter saying, Sorry about that earlier letter, my secretary lost it. This was an old gambit Roosevelt used—blame the secretary for losing a letter.

I argue that Roosevelt was essentially right to have avoided Hoover. Hoover confided to a friend that if Roosevelt joined him, he would be “repudiating” 90 percent of the so-called New Deal, because what Hoover wanted him to do was pledge loyalty to the old-time religion—balanced budgets, gold standard—all these hoary old ideas that had failed. It also let him enter stage left on March 4, 1933, with a much greater sense of drama by having allowed the economy to sink lower. If Roosevelt had uttered some platitudes with Hoover they might have kept some banks from closing, but it would have been at the expense of the great changes to come.

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