Franklin D. Roosevelt

F

Stock Market Crash

In October 1929 the economic prosperity that the United States had enjoyed for most of the 1920s came to an abrupt end. During this period many people had put their savings and earnings in risky investments, particularly the buying of stocks on margin. In these cases, the buyer put up as little as 3 percent of a stock’s price in cash and borrowed the remainder from the broker. The growing demand for stocks and the prosperous state of the nation as a whole caused stock prices to rise, which in turn encouraged more stock purchases.

Stock prices reached their height in the so-called “Hoover bull market” during the first six months of the Hoover administration. People invested billions of dollars in the stock market, obtaining money by borrowing from banks, mortgaging their homes, and selling lower-risk government securities, such as Liberty Bonds.

Buying stock on margin was a risky bet that the price of that stock would continue to increase. In August 1929 approximately 300 million shares of stock had been purchased on margin. During normal business periods a share of stock had been purchased mostly for the dividend it paid, but during the Hoover bull market stocks were purchased increasingly to sell at a higher price. Unfortunately, industry sales had begun to slow down, indicating that stock prices were likely to fall because industries would pay smaller dividends. In September 1929 some investors began selling stocks, believing prices had reached their highest level and would fall in the near future. Other investors began selling, too, and as they sold the price to buy those stocks began to fall more quickly. The decline in prices especially threatened those who had purchased on margin, because they owed their broker the amount of the original price of the stock—even if that stock was now worth only half as much.

As a result, by October 1929 the feverish buying had stopped and had given way to desperate selling. Prices dropped rapidly, and thousands of people lost all they had invested. Many were completely ruined financially. On October 29 the New York Stock Exchange, the largest in the world, had its worst day of panic selling. By the end of the day stock values had declined by $10 billion to $15 billion.

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Following the stock market crash of October 1929 Roosevelt found himself a depression governor, with new problems to face. In 1930 he was reelected by the unprecedented number of 725,000 votes.

IV

Road to the Presidency

As an energetic governor and a leading progressive reformer who was also head of the nation’s most populous state, Roosevelt was automatically a leading contender for the Democratic presidential nomination in 1932.His inability to walk unaided had proved to be no political problem; indeed, many New Yorkers were unaware that their governor used a wheelchair. Roosevelt and Howe planned the campaign carefully. As the front-runner, Roosevelt was in some danger of becoming the man against whom the other candidates might combine. This could be fatal to his chances, since at that time it was necessary that a candidate secure two-thirds of the convention vote in order to win the nomination. Due to the growing unpopularity of the depression-ridden Hoover administration, 1932 looked like a Democratic year, and thus the Democratic nomination was pursued more aggressively than it had been for years.

New York Democratic chairman James Aloysius Farley traveled across the country in the summer of 1931 and made friends for Roosevelt and himself in each state he visited. He reported on his return that prospects were excellent for Roosevelt in all of these states except California, where newspaper publisher William Randolph Hearst had great power and where the Democratic Party was a shambles. Hearst’s newspapers, bitter in their attacks on Hoover, gave their support to Speaker of the House John Nance Garner of Texas, whose isolationist views were more congenial to Hearst than were the views of a man still identified with former President Wilson’s campaign for the League of Nations. Roosevelt, in an effort to ensure that Hearst would not lead a fight against him, announced that he no longer favored U.S. entry into the League of Nations. This position angered many supporters of Wilson, who felt that Roosevelt had turned his back on Wilson’s memory.

A

Democratic National Convention

Fortunately for Roosevelt his opponents for the nomination, including the now-embittered Al Smith, were never able to organize against him and keep him from getting the necessary two-thirds vote. The strongest opposition to Roosevelt came from city leaders in the Northeast. His chief strength came from the South and West. He was nominated on the fourth ballot, after Garner agreed to accept the vice-presidential nomination. In part to demonstrate his physical capability and in part to show that he was ready to break with tradition, Roosevelt flew to Chicago, Illinois, to accept the nomination in person rather than wait weeks to reply to a formal notice of his nomination. In a dramatic speech to the convention, Roosevelt pledged a New Deal for the American people. The term New Deal came to describe Roosevelt’s domestic policies, under which the government became much more directly involved in national social and economic affairs than ever before.

B

1932 Presidential Election

Roosevelt had more difficulty in winning the Democratic nomination in 1932 than he had in defeating President Hoover. In spite of Hoover’s unprecedented efforts to use the power of the federal government to overcome the Great Depression, he was completely identified with the policies of former U.S. presidents Warren Harding (1921-1923) and of Calvin Coolidge (1923-1929), since he had served as secretary of commerce in both administrations. Roosevelt’s task was essentially a simple one: to convince the American people that because the Republicans had claimed full credit for the prosperity of the 1920s, they should receive full blame for the depression. Roosevelt was spectacularly successful. He had an exuberance as a campaigner, a glowing confidence, and a warmth that was transmitted to his listeners. He toured widely by train, making brief appearances to cheering crowds and delivering carefully prepared speeches nearly every night. He promised to a despondent people a New Deal in manner and in spirit. Roosevelt won a resounding victory, losing only six states out of a total of 48. Of the six, four were in traditionally Republican New England.

V

President of the United States

When Roosevelt became president, on March 4, 1933, the Great Depression was at its worst. Sixteen million or more people were unemployed, and many had been out of work for a year or even longer. The American banking system had collapsed. Many states had declared so-called bank holidays, or enforced closings to prevent banks from being ruined when depositors withdrew all their money. Although the American depression had been touched off by the stock market crash in New York City in October 1929, it had since become part of a worldwide economic collapse. Whether Americans would be satisfied with the new leadership depended on Roosevelt’s success in bringing aid to those in distress and in achieving some measure of economic improvement.

Roosevelt’s first inaugural address, with its pledge to make war upon the depression and its ringing phrase, “the only thing we have to fear is fear itself,” brought a new style to the U.S. presidency. Roosevelt was confident, both in himself as a leader and in the American people. His liking for people came through to them over the radio and in the press. Out of his general bewilderment with the failure of the U.S. economy came few specific promises, but Americans probably felt more comfortable under the leadership of a man pledged to experiment than they had under Hoover’s leadership, which had seemed inflexible. At least the prospect of change offered hope to the millions of people trapped in the depression.

A

Domestic Programs 1933-1941

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