U.S. PRESIDENT, NY GOVERNOR | One Weak, One Strong

March 30, 2020—The President denied the gravity of the crisis and stuck with his free-market message. The Governor of New York State understood the crisis and took action at once. The Governor was a stronger leader than the President, or any other Governor. The President tried to squash the New York Governor, and failed. Aghast at looking like a wimp, the President took decisive action against a vulnerable group that desperately needed help. The President's callousness backfired and from then on, the President's reelection prospects were doomed.

Hoover (L) and FDR, March 1933

The context, of course, was October 29, 1929. After dropping 5 percent the day before, the NYSE index dropped another 20 percent on what is called Black Tuesday. GOP President Herbert Hoover announced that this was a temporary blip and that the economy was “sound and prosperous.” 

However, the market persisted with its decline  and by mid-1932 it was a mere 17 percent of its September 1929 peak. By early 1933, 45 percent of all farm mortgages and 40 percent of home mortgages were in default. 

Hoover's excessive optimism and lack of action was noted in early 1930 by New York State's Labor Commissioner, Frances Perkins. When Hoover said the job market was rebounding, she observed that the Bureau of Labor Statistics data did not support this statement, and the January 1930 job numbers had deteriorated. Governor Franklin Roosevelt believed Perkins, and told her so, and in March 1930, he created the first state commission on employment in the country. He then became the first Governor to support the idea of unemployment insurance. Hoover said in May that the worst was over, but Governor Roosevelt told Democrats at their annual dinner at the Commodore Hotel (now the Grand Hyatt Hotel) that he disagreed and that Hoover's crowd just didn’t care about the impact of the crisis on vulnerable members of the public. The next speaker called for FDR's reelection as Governor.

Hoover (L) and FDR, March 1933

In 1930, the GOP put up racket-busting Charles Tuttle to oppose FDR's reelection as Governor (until the Constitution was revised in 1938, New York's Governors were elected every two years). Tuttle attacked FDR for not repudiating Tammany Hall. Hoover sent three Cabinet members—(1) the Oklahoman Secretary of State, (2) a New Yorker who was Secretary of War, and (3) the Undersecretary and later Secretary of the Treasury, New Yorker Ogden Mills—to support Tuttle and attack FDR. 

FDR ignored Tuttle's attacks and instead stuck with promoting his programs for unemployment insurance and old-age pensions. Not until three days before the election did he address Tuttle's attacks on him for being too close to Tammany Hall. He said he would address the charges in the courts, where they could be proven, and not in the newspapers. He attacked one of the visiting spokesmen for Hoover as a carpetbagging outsider and the other two as defeated candidates for Governor who had already been rejected by the State. “We of the Empire State can take care of ourselves,” said FDR. Tammany’s Jim Farley meanwhile delivered the most lopsided victory of any New York Governor.

So FDR had some momentum in 1932 when he took on Hoover, who botched his reelection effort by looking savage when he should have looked kind, and vice versa. Having shown himself as a ditherer on the economy, Hoover decided to look strong by sending in the U.S. Army to rout the unarmed veterans who were assembled to ask for early payment of World War I bonuses. At the order of Secretary of War Patrick Hurley, General Douglas MacArthur led cavalry and tanks to force with tear gas the decampment of unemployed World War I veterans. The troops burned the makeshift shelters. The Capitol's Republican newspaper said: “If the Army must be called out to make war on unarmed citizens, this is no longer America.”

Meanwhile, Hoover was gentle where he should have been tough. To calm the financial markets, he needed to reassure the financial community that his Treasury policies would continue whether or not Hoover himself was reelected. He therefore asked FDR to commit himself to certain free- market and sound-money principles, though he knew that such a commitment would be incompatible with FDR’s New Deal proposals. FDR waited more than a week to respond, and then coolly replied to Hoover that it was too late for “mere statements,” showing Hoover up as too weak to take needed action. FDR stuck to that line right up to the inauguration, despite Hoover's rising panic as banks folded, gold flowed out to Europe, and unemployment rose, making the runup to the election and inauguration as disruptive as it could be. A good administrator, but not a leader, Hoover was helpless as tragedy washed over the country.

FDR beat Hoover in a huge landslide in 1932. The day before the inauguration, Hoover  told FDR, who had suggested calling on someone, “You will learn that the President of the United States calls on nobody.” FDR and Hoover famously rode together to FDR's inauguration. Hoover asked a favor of the President, to keep on a member of his staff. FDR was mostly silent. The two of them never again met.

After his first press conference, FDR paid a call to the I Street home of retired Supreme Court Justice Oliver Wendell Holmes, whose birthday it was, and asked Holmes for advice, thereby ignoring Hoover's advice. FDR took the advice of Holmes, who said, as a veteran of the Union Army: “Mr. President, you are in a war. Form your battalions and fight.”

The Great Depression, but not poverty, ended within weeks of the arrival of FDR, as the nation recognized that someone was in charge and people started going back to work. Key elements were: (1) Treasury Secretary William H. Woodin’s commandeering of the Bureau of Engraving and Printing to produce greenbacks, pack them up for the banks, send off the trucks to the banks, and film the entire process for the newsreels in movie theaters during the following weeks, all across the country. (2) President Roosevelt’s Fireside Chats, which showed that someone competent was in charge and that people could be confident that the country would get through the crisis. 

FDR showed public relations genius as well as an acute understanding of the nature of the problem the country faced and how it could be. He put a Republican CEO in charge of implementing the practical steps to address the panic and then rebuild the country. He told Will Woodin to handle the task of getting money out to the banks, while he crafted his Fireside Chats. The financial system they created lasted for 70 years. FDR's social safety net is still with us.

The story resonates today, as we watch President Donald J. Trump interface with Governor Andrew Cuomo. History doesn't repeat itself, but it often rhymes. 

P.S. (May 16, 2020) ProPublica, a nonprofit investigative news source, argues that in crucial days in early March, Governor Andrew Cuomo and Mayor Bill de Blasio were slow to listen to their health experts. The story contrasts New York State with California, which had a friendlier relationship between Governor and Mayor (or San Francisco) and lost fewer lives to the coronavirus. The story is long and full of details. It succeeds most effectively at conveying the difficulty of trying to make the right decision about something unexpected when there are legitimate arguments on both sides about how best to proceed (the health experts did not always agree).  https://www.propublica.org/article/two-coasts-one-virus-how-new-york-suffered-nearly-10-times-the-number-of-deaths-as-california