what they could do as an attack on capitalism.
Despite the resistance of some very powerful people, the three new laws passed. Better yet, they worked together to stabilize the financial industry, which proved to be good for everyone, rich and not so rich. And they were all built on one crucial idea: banking is special, and only if it is carefully governed can the rest of the economy flourish.
BREAK ’EM UP: ROUND TWO
Stabilizing the banking industry was just the start of Roosevelt’s effort to build a stronger, more stable economy. He also used the tools of antitrust law to roll back the concentration of corporate power in other industries. He was determined to block giant companies that were smothering their smaller competitors—not by offering better products or lower costs, but by using shady practices that stopped competition before it started.
After he got the banking laws in place and operational, Roosevelt brought in Thurman Arnold, a man often described as a maverick lawyer, to head the Justice Department’s Antitrust Division. Fiercely independent, Arnold was widely respected for the power of his intellect and the force of his character. The turnaround was immediate. In short order, the division grew from eighteen lawyers to five hundred, and investigations—and lawsuits—ramped up. In just five years under new leadership, those attorneys filed almost as many cases as there had been in the previous quarter century. Arnold said his approach was “to hit hard, hit everyone and hit them all at once.” From fertilizer to newspapers to motion pictures, from shoes to tobacco to petroleum, monopolies and collusive dealings had taken root in one industry after another—and now the government was breaking up these huge corporations and shutting down their predatory practices.
Industry CEOs were shocked—shocked—that a previously complacent government would call them out, and they responded with fury and fulmination when some mere government official tried to apply laws already on the books to halt aggressive and dangerous business practices. In fact, some of these CEOs were so outraged that they fought all the way to the Supreme Court of the United States, confident that those troublesome government officials would be slapped back.
This shift in approach—from markets where the rule of the day was pretty much “anything goes” to markets that had tough cops enforcing strict laws—reflected a tectonic shift in American law and the American economy. By the 1930s, the idea began to take root that without basic rules, markets won’t work. Government—the people working together—could pass strong laws and enforce those laws to level the playing field; this, in turn, would give consumers, investors, shopkeepers, and small farmers a fighting chance to build their own economic futures.
TAKING THE FIGHT DIRECTLY TO THE POWERFUL
This history may seem like a dusty tale about a time long past, but the economic battles of the 1930s were as intense as any attack launched during the over-the-top 2016 political season. And these early economic battles had a transformative effect on our country. They set the stage for the development of our economy and our financial laws—and for nearly half a century of stunning prosperity.
Even as the economy slowly began improving, the corporate big shots whose powers were being challenged did not like the direction in which the country was headed. Newspaper titan William Randolph Hearst referred to FDR as “Stalin Delano Roosevelt” and insisted that his reporters substitute “Raw Deal” for “New Deal” in news articles that were published throughout the country. Millionaires warned about Roosevelt’s “socialist government.” Time magazine reported that, “with few exceptions, members of the so-called Upper Class frankly hate Franklin Roosevelt.” One member of that class said ominously, “What that fellow Roosevelt needs is a thirty-eight-caliber revolver right at the back of his head.”
My grandmother might have believed that Roosevelt made the country safe, but among the rich and powerful, deep resentment was growing over the changes Roosevelt had brought about. Battle lines were forming.
In June 1936, Roosevelt went to Philadelphia to accept the Democratic nomination for his second term. One hundred thousand people crowded into the University of Pennsylvania’s sports stadium, Franklin Field. The cheers were deafening as the president entered the arena in a limousine and rode a long loop around the field.
It must have been a gratifying moment for Roosevelt, but it’s also likely that he was thinking about an immediate challenge: he needed to get out of his car and onto the stage. In the fifteen years since he had been stricken with polio, Roosevelt found walking—and even standing—a painful and precarious business, and he always went to great pains to hide his paralysis from public view. Now the task would be more hazardous: it had been raining, and the stadium’s grass was slick.
As the president slowly made his way to the speaking podium while leaning on the arm of his son, people jostled for a better view and to shout their good wishes. The president was bumped. When his metal leg brace sprang open, he fell heavily. As he went down, the papers of his speech flew out into the crowd. On the ground, Roosevelt was pale and shaken, his clothes smudged with dirt.
After a shocked moment, his aides quickly pulled him to his feet. Most people in the stadium couldn’t see what had happened, but his aides were panicked. Roosevelt immediately pushed ahead.
“Clean me up,” he ordered.
Within minutes he was standing on the platform, enduring grinding pain and staring into the bright stadium lights at a crowd of a hundred thousand people. As the cheering built to a roar, he waved and smiled. And then he went on the attack. Roosevelt called out the “privileged princes” and “economic royalty” running corporate America. The crowd went wild as FDR declared war—not just “war against want and destitution and economic demoralization,” but “a war for the survival of democracy.”
Four months later, as his campaign moved into its final week, Roosevelt was still on the attack. On the Saturday before Election Day, he kept his sights trained on those moneyed interests, declaring, “They are unanimous in their hate for me—and I welcome their hatred.”
Three days after that, he was reelected, winning a majority in every state in the union except Maine and Vermont.
In Philadelphia, one hundred thousand people heard Roosevelt declare war on the country’s “economic royalty.”
REGULATION WORKED
World War II demanded massive mobilization. The war effort put millions of people to work fighting for our country, while millions more worked to manufacture the equipment and supplies those soldiers and sailors needed. The war, for all its terrible carnage and destruction, pumped new spending into the economy.
But it was Roosevelt’s new vision of the role of
