He Dealt with Crisis—Whither the Trajectory He Left Us on?

a diamond jubilee remembrance of FDR’s passing

Easter Sunday of this month was the 75th anniversary of the death of FDR (Franklin Delano Roosevelt).

That death (coming only three days before the 80th anniversary of Abraham Lincoln’s death) ended his presidency of more than a dozen years.   The only US president to ever have been elected more than twice, he won four elections in a row, each time by an overwhelming landslide.

The first of these was in 1932, when he defeated the incumbent, Herbert Hoover, three years after Black Tuesday: October 29, 1929.   On this date, share prices on the New York Stock Exchange completely collapsed, which was a pivotal factor in causing the First Great Depression—when the global economy crumbled.

When the stock market crashed, President Hoover used conventional thinking and conventional mechanisms to try to fix this economic disaster.   By doing so, he proved unusually ineffective in dealing with the situation, because the fundamental analysis of the problem was inaccurate.   He therefore did not solve the problem, since the issue that they thought they had was not at all the one that they were really facing.

Creative solutions were needed, because conventional thinking wasn’t working.

President Roosevelt learned from economists, such as John Maynard Keynes, who provided analysis and solutions for understanding deflation and how the gold standard was causing it.   FDR’s economics team decided to outlaw private ownership of gold and to reset its value, which had been pegged at $20 per ounce, and revalue it at $35 per ounce.   They essentially took the US off the gold standard domestically in 1933.

MMT (modern monetary theory) was then brought into effect, whereby the monetary sovereign controls the creation of fiat money and can use fiscal policy to address social issues, allowing the government to create money for domestic purposes as needed, without the need for gold backing.   Though it took some years for this to be more fully understood, it was laid out clearly and succinctly by Beardsley Ruml, chairman of the Federal Reserve Bank of New York, in a paper entitled Taxes for Revenue Are Obsolete [*], which he read before the American Bar Association during the last year of World War II:

The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government.   Two changes of the greatest consequence have occurred in the last twenty-five years which have substantially altered the position of the national state with respect to the financing of its current requirements.

The first of these changes is the gaining of vast new experience in the management of central banks.

The second change is the elimination, for domestic purposes, of the convertibility of the currency into gold.

Roosevelt’s responses to serious issues were sober and levelheaded.   He understood that he couldn’t solve all the problems but that there were many people whom he could rally to address the issues.   He was not threatened by these experts.

He dealt with crisis.   He had been doing so for years, ever since he had caught polio.

His pain and tribulations from polio were long-lived and allowed him to develop empathy, compassion, and commonality with a wide range of people who were also polio sufferers, allowing him to feel the pain others were suffering.

He led the country through Great Depression I and then through World War II.

Many countries throughout the globe had been embroiled in the Second World War for well over a year, when in the first week of 1941, FDR delivered his annual State-of-the-Union address.   This was 11 months before the US was attacked at Pearl Harbor, bringing it into the war.   In this speech, he outlined the role that the United States had been taking on of helping its allies who were already engaged in warfare.   He summarized the values of free nations and said, “As men do not live by bread alone, they do not fight by armaments alone.”

He then delineated the goals of the nation, in what then came to be called the Four Freedoms speech:

In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

The first is freedom of speech and expression—everywhere in the world.

The second is freedom of every person to worship God in his own way—everywhere in the world.

The third is freedom from want—which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants—everywhere in the world.

The fourth is freedom from fear—which, translated into world terms, means a worldwide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor—anywhere in the world.

That is no vision of a distant millennium.

It is a definite basis for a kind of world attainable in our own time and generation.

That kind of world is the very antithesis of the so-called new order of tyranny which the dictators seek to create with the crash of a bomb.

    THE READER IS INVITED TO TAKE NOTE OF THIS MESSAGE

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In leading the country through the First Great Depression, President Roosevelt introduced what he called the New Deal.   It was a set of programs that included Social Security, financial reforms to ward off the practices that had led to the depression, the creation of housing for many unsheltered throughout the country, and providing millions of jobs in building some of the most prominent and famous public works that are still seen in cities and towns in all parts of America to this day.

In leading the country through the Second World War, he laid the groundwork for founding the United Nations at the war’s end.   And he outlined the principles and goals that, particularly through the tireless advocacy of his widow Eleanor Roosevelt in the immediate years after the war, led to the establishment of the UDHR (the Universal Declaration of Human Rights).   This gained such widespread adoption by nations around the world that in 1976 (coincidentally the bicentennial year of America’s birth), it gained the status of being universal in every corner of the globe and, by international law, enforceable in every country, regardless of whether it has been ratified in that country or not.

This is the direction that FDR led us in.   And now, three quarters of a century since he died, we may ask what we Americans have done with that and what has become of the trajectory he set us upon.

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