Election of 1932
ELECTION OF 1932
The presidential election of 1932 marked a turning point in United States political and economic history. The Democratic Party, reduced to minority status following the Civil War and particularly after the financial panic of 1893, emerged as the nation's majority party with the ushering in of the New Deal. The transition from the Herbert Hoover administration to the Franklin D. Roosevelt administration also witnessed the appearance of a peacetime activist central government in response to the crisis brought on by the Great Depression.
A successful mining engineer, Herbert Hoover had made his reputation as a humanitarian when he served as head of Belgian relief during World War I, and later as food administrator for President Woodrow Wilson after the United States entered the war. At war's end, both major parties considered him a presidential prospect. Hoover identified himself as a Republican and served as secretary of commerce from 1921 to 1929 during the Warren Harding and Calvin Coolidge administrations. Hoover turned the Department of Commerce into a force for rationalizing the nation's economy through standardization and the elimination of waste, as well as by the promotion of cooperative activity among corporations, farmers, and trade associations.
Hoover's success as an administrator won him the Republican presidential nomination and victory over Alfred E. Smith in 1928 in a decade that valued business acumen; yet, Hoover's earlier accomplishments condemned him to criticism as president in light of his inability to counter the economic collapse. By the winter of 1932 to 1933, at least 25 percent of the nation's workforce was unemployed. The causes of the Depression were complex. Trade was stifled by a high tariff system and other protectionist mechanisms designed by European powers in order to hoard gold and hard currencies and to foster domestic employment. The Hawley-Smoot tariff, signed by Hoover in 1930, further curbed international trade. On the domestic front, expressed in later (Keynesian) terms, the economy was crippled by demand deficiency, indicating the inability of consumers' income to absorb the output of industry. Once the Depression struck, a misguided effort by the Hoover administration and the Federal Reserve System to maintain the dollar based on its gold value led to the final and most devastating stage of the economic collapse—a massive deflation that weakened a fragile banking system.
Revisionist historians and economists since the 1960s have attempted to credit Hoover with paving the way for the interventionist state, but such a view is debatable. Hoover's response to the domestic Depression was circumscribed by his limited view of the presidency, his opposition to intrusion by the federal government in the economy, and his insistence on community responsibility for the relief of distress. As an example, the Reconstruction Finance Corporation (RFC), legislated early in 1932, limited its activities to loans made for self-liquidating public works; designed to pump liquidity into the banking system, RFC lending absorbed the soundest assets of banks, weakening their capital structures. When public revenues fell and deficits grew during the 1931 to 1932 period, Hoover and his treasury secretary, Ogden L. Mills, sought cuts in expenditures and secured passage of the 1932 Revenue Act, which increased tax levels virtually to wartime rates, a move that had a negative impact on both consumption and investment.
THE NOMINATION OF ROOSEVELT
Reelection to a second term as governor of New York in 1930 put Franklin D. Roosevelt in the position of front-runner for the Democratic Party nomination. He had established himself as a progressive, and there was "magic" in the Roosevelt name. In his quest for the nomination, Roosevelt put together a political team made up of Louis M. Howe, a one-time journalist who devoted much of his life to securing the White House for Roosevelt, and James A. Farley, an affable Catholic who could appeal to the party's Smith faction. Farley's principal task was recruiting delegates for the nomination, especially in the western states, and managing the Roosevelt fortunes at the Chicago nominating convention.
But there were obstacles en route to the nomination. Roosevelt had been crippled by polio, and rumors circulated regarding his physical and mental capacities. Party conservatives, led by the financier Bernard Baruch, viewed Roosevelt as a lightweight, susceptible to control by radicals, a view widely circulated by the newspaper columnist Walter Lippmann. A Roosevelt nomination was opposed as well by the Du Pont family of Delaware, anti-statists who funded and controlled the party machinery through the national chairman, John J. Raskob, and its executive director, Jouett Shouse, and feared federal intrusion into their business empire.
In the early stages of the Chicago convention, dark-horse hopefuls banded together in a stop-Roosevelt coalition managed by Baruch. The Du Pont group looked to Al Smith, who believed he was entitled to a second chance at the White House, and to Newton D. Baker, Woodrow Wilson's secretary of war. In addition, William Gibbs McAdoo, Wilson's son-in-law and wartime administrator of the railroads, enjoyed considerable support in the Bible belt. The coalition's hopes depended on the two-thirds rule, which required that a candidate receive a two-thirds proportion of delegates to secure the nomination; the anti-Roosevelt coalition believed that a stalemate would produce a compromise (conservative) candidate, likely Baker. These aspirations were dashed when McAdoo abandoned the coalition, and John Nance Garner of Texas, speaker of the House of Representatives, relinquished his favorite son status and shifted that state's delegation to Roosevelt. Garner was determined to avoid repetition of the 1924 convention deadlock that nearly destroyed the party. Roosevelt was nominated on the fourth ballot and chose Garner as his running mate.
In his acceptance speech, Roosevelt pledged "a new deal for the American people." The term initially signified a shift away from the party's domination by big businessmen in the 1920s and towards farmers, labor, and small entrepreneurs. The expression, popularized in the press, came to encompass Roosevelt's domestic program.
In the spring of 1932, Roosevelt had been persuaded by a long-time political adviser, Judge Samuel I. Rosenman, that his experience as governor had not prepared him or the Albany team for meeting the Depression crisis. The result was recruitment of the Brains Trust, headed by Raymond Moley, a Columbia University political scientist. Gifted at speech drafting, Moley proved capable as well of assimilating memoranda on economic and social issues. During the primary campaign, Roosevelt and Moley collaborated in key addresses beginning with the "forgotten man" speech, in which they pointed to massive urban unemployment and the impoverishment of rural Americans and claimed that no nation could endure half boom, half broke. In Saint Paul, Minnesota, they challenged party conservatives by affirming a "concert of interests," or the interdependence of society's components.
Catch-phrases and generalizations, while politically appealing, were no substitute for a substantive program designed to tackle the Depression's causes and consequences. Thus, the Moley memorandum of May 15, 1932, delineated a program requiring expanded federal functions. Excess corporate profits, a result of improved machinery, management, and labor productivity, needed to be taxed and diverted to labor. A proposed public-works relief package of $2.6 billion went well beyond Hoover's estimate of some $1.1 billion. Public works would be funded in part by an emergency budget, which Roosevelt later used as a fig leaf to claim budget balance for ordinary expenditures. Provision of unemployment and old-age insurance would cushion the economy and individuals against future downturns. Furthermore, the collapse of security values, market manipulation by pools, and the issuance of worthless paper required the divorce of commercial banking from investment banking and the regulation of securities issues and exchanges.
Given the range of expertise involved in these and other problems, Moley recruited two colleagues, Rexford Guy Tugwell and Adolf A. Berle, Jr., to form the original Brains Trust. Tugwell, an expert in agrarian issues, entered the picture on the basis of Roosevelt's conviction that the farm depression of the 1920s left farmers unable to meet their debts and thus unable to consume the output of industry. Roosevelt was also aware that a permanent Democratic Party majority required that the depressed Midwest be persuaded to detach itself from its traditional Republican Party moorings. Tugwell urged the candidate to consider acreage controls or the tailoring of farm output to meet market demand. Once farmers voted for acreage allotment, subvention would be provided by a tax levied on processors, superseded later by direct government payments. Berle, author of the classic Modern Corporation and Private Property (1932), suggested use of the credit of the United States to salvage farm and urban mortgages, a principle soon applied to the banking system. His main thesis, that of business accountability, found expression in the Commonwealth Club Speech, delivered by Roosevelt in San Francisco during the campaign.
On September 12, 1932, one of history's most formidable political campaigners boarded the Roosevelt Special for a rail tour of the Midwest and Pacific Coast states. Roosevelt's love of the hustings and approbation of the crowds aside, the Democratic candidate wanted to demonstrate his physical capacity for the nation's highest office. In the process, he planned to enunciate a broad outline of his plans for meeting the Depression and to offer hope for the future. At a small Missouri town, a tiny elderly woman wearing a faded black dress, a bouquet of flowers in hand, pressed towards Roosevelt: "Pound Hoover," she shouted as she presented her gift, "Pound him hard!"
At Topeka, Kansas, based on the input of Tugwell and Milburn L. Wilson, an agrarian economist, Roosevelt proclaimed the need for a better economic balance between rural and industrial incomes, which would require federal planning for control of the farm surplus. At Portland, Oregon, Roosevelt expressed approval of the development of the public power potential of the nation's great river valleys, a program favored by Republican progressives who had sought federal development of Muscle Shoals, Alabama, a scheme Hoover had rejected because of his opposition to public ownership of generating facilities and the sale of electricity in competition with private utilities. Roosevelt also proposed the use of Muscle Shoals as a yardstick for measuring rates levied by holding companies, which he regarded as too high, and the regulation of capital issues and interstate rates by the Federal Power Commission. In time, he hoped, the Tennessee Valley model would be applied to the Columbia River Valley and other watershed areas.
Roosevelt's Commonwealth Club Address in San Francisco constituted his most important statement on business-government relations. Just as the Declaration of Independence called for restraint on the excesses of government, Roosevelt argued that the time had arrived to impose similar restraints on business. Private economic power, he asserted, had become a public trust. This development necessitated a new constitutional order consisting of a better economic balance, better distribution of purchasing power, restored wages, and the end of unemployment. He hoped that business would put its house in order; otherwise government would intervene to attain these ends.
On October 19th in Pittsburgh, Ohio, Roosevelt pledged, on the insistence of party conservatives led by Baruch, to restore a balanced federal budget. Fiscal prudence was widely regarded as necessary to sustain business confidence in the pre-Keynesian era. In reality, the Roosevelt peacetime budgets were never balanced as a result of declining revenues and the demands of relief and public works.
The Hoover campaign proved ineffective; the incumbent was unpopular, overworked, and a poor public speaker. The president believed he was engaged in a nonpartisan effort to salvage the American system, which, in his view, was embodied in limited government, voluntarism, and freedom from federal economic interference in the marketplace. In his August 11 speech accepting the nomination in Washington, D.C., Hoover expressed his view that the Depression originated in Europe and was beyond his control. He did not gloss over his fundamental conviction that the powers of the federal government should be limited even during times of Depression. He opposed "haphazard experimentation" or reliance on a state-directed social and economic system, which he equated with tyranny.
At New York's Madison Square Garden on October 31, with defeat at the polls imminent, Hoover claimed that his opponent's program would undermine the nation's basic institutions because it proposed the enlargement of the federal bureaucracy, which would extend its reach into every corner of American society. Roosevelt, he believed, promised a radical departure from the nation's foundations, threatening suffocation of free speech and free enterprise. Short-term, Hoover underestimated the depth and persistence of the Depression; long-term, he warned of the potential excesses of a bureaucratic welfare state.
Voters had a clear choice between two approaches for resolving the economic crisis. Hoover preferred reliance on individual effort, buttressed by private charities and local and state government. Roosevelt pledged that the federal government would assume responsibility for recovery and social sustenance. On election day, November 8, 1932, voters chose the latter option, expressing their acceptance of the interventionist state. Roosevelt won 472 electoral votes (42 states); Hoover won 59 electoral votes (6 states). The popular vote for Roosevelt was 22,809,638 (57.4%), for Hoover 15,758,901 (39.7%).
Roosevelt's sizable victory represented a sea change in American politics, for Hoover had won 60.4 percent of the popular vote only four years earlier. While Democratic candidates for the presidency could usually rely on the South, Alfred E. Smith's unsuccessful effort in 1928 nevertheless brought first-time immigrant, Catholic, and urban workers into the fold. As a result, Roosevelt bested Hoover in all but one of the nation's major urban centers, establishing the basis for a long-term New Deal majority. The farm depression cut into traditional Republican majorities in the western states. Roosevelt's buoyant personality also determined the final outcome. Hoover's voting strength was concentrated in the New England states, a Republican bastion, where he won 48.4 percent of the vote, and in the middle Atlantic region, where he won 45.4 percent of the vote. The Democratic Party won 310 seats in the House of Representatives, as opposed to 117 for the Republicans and 5 for minority parties. The Senate vote gave the Democrats a clear majority—sixty Democratic seats to thirty-five Republican and one Farmer-Laborite.
Third party hopefuls offered no effective challenge to the major party candidates, winning only 1,163,181 votes, or 3 percent of the total cast. The largest proportion by far, 872,840 ballots, went to Norman Thomas, the Socialist Party candidate. Thomas was a minister and one-time settlement house worker who exemplified the party's departure from its radical working-class origins. By 1932, the Socialists depended for their support on intellectuals, reform-minded ministers, well-educated middle-class liberals, the Jewish leadership of the major garment workers' unions, and a sprinkling of auto workers. While vague on the issue of public ownership of basic industries, Thomas ran on a platform of massive federal funding for relief and public works, old-age pensions and unemployment insurance, government aid to farmers and homeowners, and minimum wage legislation, a program that was soon subsumed by the New Deal.
The Communist Party candidate, William Z. Foster, secured only 103,000 votes, hardly more than the Prohibition Party candidate. Riven by factionalism, unwilling to compromise with "social fascists" (meaning democratic socialists and those who held that capitalism was susceptible of reform), the Communist Party's chief support came from foreign-born workers in New York City and Chicago and exploited southern textile workers seeking unionization of the mills. Foster's campaign, based on the overthrow of capitalism as an exploitative system, pictured Hoover and Roosevelt as Tweedledum and Tweedledee. A centrist society opted for capitalism's reform.
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