Corporate & Securities Law

WALL STREET LAW BLOG TIME MACHINE, March 1933...

Franklin D. Roosevelt was sworn in as President of The United States in March of 1933.  The nation was, of course, suffering through the greatest economic crisis in its history.  In his inaugural address, FDR actually used the word depression  to describe the crisis. Presumably, the depression became the Great Depression at some later date - maybe when it was finally over.   

FDR's first inaugural address is  remembered today for one line.  If you cannot figure out the most famous words Roosevelt spoke that day then we at Wall Street Law Blog have one word for you- Jeopardy!  (the exclamation point, courtesy of the late, great Merv Griffin, is part of the official title).  Watch it. Regularly.

Okay, okay - we'll fill in the blank.  It was in Roosevelt's first inaugural that he proclaimed:

"The only thing we have to fear is (pregnant pause), fear itself."

The rest of the speech is largely forgotten.  But, in honor of our current financial crisis, WSLB has cranked up the time machine for the first time in months.  

The priority of Roosevelt in his first inaugural address was to slam Wall Street as Americans gathered around their Wurlitzers (we are pretty sure that was a common kind of radio).  FDR used the bully pulpit. He challenged Congress. He even threatened Congress.  He wanted one issue addresses immediately. 

The new President insisted that Congress present him with legislation to clean up and regulate the financiers responsible, in Roosevelt's view - for wrecking the economy.   The results were the Securities Act of 1933 and the 1934 Exchange Act.  

Here are some excerpts from the address that caught our collective eye-

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"Plenty is at our doorstep, but a generous use of it languishes ... [p]rimarily this is because rulers of the exchange of mankind's goods have failed through their own stubbornness and their own incompetence... 

"Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

"Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. 

"They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

"The money changers have fled from their high seats in the temple of our civilization."

"[T]here must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. 

"Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live."

AND, finally:

"[T]here must be a strict supervision of all banking and credits and investments, so that there will be an end to speculation with other people's money..."