FDR and Wall Street: Words with Actual Action

The American government has always been corrupt, yet the levels of corruption have varied from time to time. There has always been an element of dark money and insider trading going on, though what is happening now in the 21st century is beyond anything that ever came before.

Everyone in power, or running to get some, seems to be cashing in. That one billion dollars has already been spent by corporate interests in order to influence where hundreds of billions of taxpayer’s money will be spent after this election speaks to this fact.

It is bittersweet then to read about the New Deal era in Taming the Street: the Old Guard, the New Deal, and FDR’s Fight to Regulate American Capitalism (Random House, 2023) by Diana B. Henriques, because there were economic corruption problems similar to those today, yet back then the politicians and the people conspired actually to fix those problems for the benefit of all.

This led to four decades of an economic golden age where working, and middle-class Americans could easily afford a home, cars, and retirement with only one income coming into a household. Those days are long gone.

This period starkly contrasts against the one today defined mostly by debt and insecurity for most, with it being a boom time for billionaires only. Corruption is prevalent in both political parties and seems to be the one thing they can all agree upon.

The three branches of government — executive, legislative, and judicial — have all been captured by corporate money and work in their own ways towards enriching those already rich at the expense of everyone else. In short, everyone is benefiting from the policies and spending of the US government except the American people themselves.

Taming the Street tells the story of a great leveling that occurred in the not-too-distant past, and perhaps could serve as a template for a similar occurrence of the government working for the vast majority of the people instead of just for those who can afford to own politicians in the future. At present nothing of the sort seems likely.

Henriques focuses on one of the important aspects of the New Deal’s most significant achievements:

“Clearing out the vicious jungle that was the nation’s financial landscape in the 1920s and replacing it with a well-tended terrain where ordinary Americans could save and invest with confidence. That this particular New Deal experiment largely succeeded is proven by the postwar flourishing of an American middle class that did not fear losing its savings to crooked banks or being swindled by dishonest brokers. Freed of those fears, millions of Americans could save, invest their savings, buy homes, pay tuition for their children, and retire in comfort.”

Of course, now those fears have returned as most Americans are only a few missed paychecks from homelessness if not unhoused already. In 2023, the number of people unhoused in the US reached a record high of over 650,000. Today Wall Street is more transparent in some ways compared to the 1920s, though its culture of profit at any cost has left most Americans with little to no money in which to invest securely.

The heart of the book revolves around the founding of the SEC and the challenges the new agency faced in the face of the corporate greed that brought the nation to its knees, starting with the crash of the market in 1929.

Henriques states: “Roosevelt’s primary tool for this transformation was the Securities and Exchange Commission, a watchdog agency initially considered so radical and threatening that the titans of Wall Street fought tooth and claw to kill it before it was born in 1934. The fight to set up the SEC, to make it work, and then make it work better in its early years is the heart of the story. My narrative opens on the eve of the great stock market crash of 1929, the prelude to the Great Depression. But to understand why FDR was so determined to reform Wall Street in the 1930s, let’s march quickly through the previous decade—the decade Roosevelt lived through before entering the White House, the decade that showed him what unregulated capitalism looked like.”

The 1920s was a time of rampant political corruption (except for Herbert Hoover who failed to take on the Great Depression but was not a corrupt president in stark contrast with his predecessors Warren Harding and Calvin Coolidge), coupled with unchecked poverty, with those on the top living on an ever-expanding decade long pyramid scheme which started to collapse towards the end of the decade.

It is not so different from our own time except Wall Street is no longer trying to evade government intervention as it now owns the government pretty much itself. If you can’t beat them then why not buy them?

To illustrate this point, in the present one only has to look at the federal response to the last two economic collapses: the 2008 mortgage collapse that led to the Great Recession and that of 2020 caused by the start of the pandemic. In both instances, Wall Street was bailed out at taxpayer expense.

That this happened again similar to 2008 in 2020 has been mostly overlooked because most were trying to survive a new disease, while the old disease of greed ran rampant. Time magazine was one of the few corporate media outlets to cover it at the time with the article “No Lessons Have Been Learned – Why the Trillion-Dollar Coronavirus Bailout Benefited the Rich.”

Well, I would argue a lesson had been learned on Wall Street in that the US government in the current 21st-century era of finance dominated by monopolies (corporations too big to fail), they could draw on US Treasury funds as needed. Wall Street, investment groups, and billionaires figured out that if you give millions to politicians you will be rewarded with a return in the billions with no need of ever having to worry about going bankrupt again. It is more than a solid investment if you look at it from their point of view.

Giving these large sums of money used to be illegal until the Supreme Court case Citizens United in 2010, a ruling that basically legalized corruption. The limit on contributions made by persons to candidates is $3,300 per election, and the limit on contributions made by persons to a political party is $41,300 per calendar year. You could at that level have some influence for sure with a politician or within a political party last century.

But what Citizens United did was open the door to super PACs, known officially as Independent-expenditure-only political committees, which may accept unlimited contributions, including from corporations (which are owned by billionaires). So far this election year super PACs have spent $1,143,948,376 and counting (from Open Secrets).

That is well over a billion dollars and puts the average citizen way outside the realm of having any influence on a politician and their policies once they are elected. To just pick a random PAC, one called AIPAC has given candidates from both parties over 100 million dollars this year. It has given Donald Trump over his political career just over one million dollars and Kamala Harris over five million (due to the length of Joe Biden’s time as a politician he received over eleven million from AIPAC).

That is just one example out of many concerning how these PACs buy politicians and how they hedge their bets by usually giving to candidates from both parties often running for the same office. If you can gamble and always win no matter who wins, I mean then why not? It is obviously corruption but legal. The only losers as usual are the American people.

What the book does well is deconstructing the myth of the Roaring Twenties as a time of struggle, rather than that of living in some sort of F. Scott Fitzgerald novel fantasy, most people were trying to get over the double trauma of the First World War and the Great Influenza Pandemic of 1918-1920 while living in poverty.

Henriques writes, “While millions of workers struggled, the wealthy grew more prosperous. Returns to industry as a whole increased 72 percent, and dividends in rail and industrials went up 285 percent, as one Hoover biographer has noted. By 1930, the richest 10 percent of Americans owned nearly 90 percent of the private property in the country.” Sounds pretty familiar and the author points that out as well:

“Meanwhile, America is again afflicted by the ills of the 1920s — stagnant working class income, a widening gap between rich and poor, a staggering enrichment of the top 1 percent — developments that would surprise no one who helped Roosevelt fight for his New Deal. As regulation has grown weaker and less wise, the economy has once again tilted strongly in favor of the richest and most powerful.”

Regulation of these massive monopolies that control and price most of what we use for services and consumption is challenging. The question may be who regulates the regulators. It seems more than unlikely that there will be any kind of campaign finance reform or any regulation of the insider trading that is rampant with politicians today.

Not many riding on the current gravy train between government and corporate America would vote or voluntarily decide to derail a system that enriches all involved. No change seems to be coming in that corrupt symbiosis between corporate interests and public servants anytime soon.

Whichever political party is in charge of the government, or wins this upcoming election, that gravy train fueled by taxpayer’s money will keep rolling on regardless. There is no New Deal for us at the moment on the horizon and no politician like FDR to take on the corporations that basically own us and our government.

As voters, we are regulated to vote on cultural issues only. Where government money is spent is beyond your vote, especially concerning defense, which those decisions are beyond even our elected officials. What we have now is more of a corporate democracy — and that is really stretching the word democracy perhaps beyond its limits.

Whether you agree with how FDR handled the Second World War or the Great Depression during his four terms in office, there always seemed to be action behind his words. Maybe not what everyone would have liked, yet his words were backed with actual things happening in the real world, some that improved millions of working people’s lives for generations up to the present.

I don’t think in my lifetime I have ever taken a president’s words as honest, and certainly not from any of them so far this century. What we hear today we know to be empty promises and that the words of politicians are for the most part different from their actions.

Henriques writes: “Roosevelt called for a prosperity that was widely shared and not funneled just to the favored few. ‘We have always known that heedless self-interest was bad morals,’ he said, ‘We know now that it is bad economics.’ He measured how far the nation was from achieving that fair society. ‘I see one-third of a nation ill-housed, ill-clad, ill-nourished,’ he said. He nevertheless was hopeful because he believed the nation was determined to address this injustice. ‘The test of our progress,’ he continued, ‘is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”

Not only did FDR say these things he actually achieved them. At present, no matter who wins the upcoming elections, the vast majority of Americans must navigate living in a nation that is in a state of decline, a dismal situation for working people, which may last well into the unforeseeable future.

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