Meet FDR

Yesterday, in the wake of AIG's bonuses to its bailed-out bankers, we took a look at history's robber barons. Today, we want to jump forward a few decades, and meet the man who last faced a financial crisis this big: FDR.

When Franklin Delano Roosevelt took office as U.S. president in March 1933, the nation was in shambles. More than 13 million people were without jobs--a quarter of the workforce. Hundreds of thousands were sleeping in shanty towns. Most of the country's banks were closed. The Great Depression had sunk America into despair.

No Fear But Fear Itself

Despite it all, FDR took over confidently and optimistically. His first countermeasure was to attack the wave of panic threatening to push the nation into further crisis. In his first inaugural address, he said:

"This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself--nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."

Immediately after his address, Roosevelt instituted a communications campaign professing hope and calm. Exploiting the new media of his day--radio--he conducted frequent "fireside chats." Nearly 60 million people listened to his first chat in March 1933. He addressed the banking crisis, and strove to balance frank talk about the grave problems facing the nation with optimism and confidence.

Dr. New Deal

Rallying the nation's hopes was one thing. Fighting the actual Depression was another. FDR's first move: declaring a "bank holiday" to prevent any more runs on what banks were left open, and calling a special "100 Days" session of Congress.

In those first 100 days, he pushed through vast amounts of legislation, providing relief for farms and businesses, bank reform, and industry regulation, as well as cash for the poor, unemployed, and those in danger of losing their homes. He formed the Federal Deposit Insurance Corporation to guarantee the savings put in banks. And he instituted massive public works programs to provide jobs.

FDR wasn't sure what would work, but he figured that at least one of his sweeping programs would have some effect. He said, "Take a method and try it. If it fails, admit it frankly, and try another. But by all means, try something."

By 1935, the nation had made some progress--though not without staunch opposition to FDR's plans. He responded by enacting a new series of programs, including Social Security, more taxes on the wealthy, new labor laws, and additional work relief programs. Along the way, he practically invented the welfare state in America and radically expanded the power of the federal government. Conservatives hated him for it. They called him "that man in the White House," refusing even to pronounce his name.

Dr. Win the War

By the end of the decade, however, domestic policy began to look less important than foreign policy, as World War II heated up ominously in Europe and the Pacific. In 1938 and 1939, industrial production and manufacturing for defense began to lift the country into an economic recovery, and an initially reluctant Roosevelt realized that Hitler could threaten America as well as Europe.

FDR had tried to convince Americans to fight the Depression as if it were an invading foreign army. Now, they would have to fight an actual foreign army. FDR drummed up support the same way he had rallied the nation's hopes for the end of the Depression--with direct communication. In 1941, he encouraged Americans to envision a prosperous, peaceful world founded on "Four Freedoms":

"We look forward to a world founded upon four essential human freedoms. . . . freedom of speech and expression . . . freedom of every person to worship God in his own way . . . freedom from want . . . freedom from fear."

After America entered World War II in December 1941, Roosevelt's focus shifted completely. At a press conference in 1943, he noted that "Dr. New Deal" had been replaced by "Dr. Win the War." The next year, Americans elected him to an unprecedented fourth term as president. He died in office in 1945 of a cerebral hemorrhage, before the war's end.