On policy matters, Woodin was cheerleader for the direct creation of public jobs and for the Glass-Steagall Act that created the wall around bank deposits and insured them. The deposit insurance portion (Rep. Henry B. Steagall’s half) of the law is still standing and the wall erected by Senator Carter Glass was regrettably taken down brick by brick by speculators seeking to borrow money to finance their bets.
The one policy matter where Woodin disagreed at first with FDR was on devaluation of the dollar. FDR early on advocated devaluation and prohibition of private ownership of gold. When FDR would suggest a devaluation, Woodin would say “Oh no, not that again,” according to grandson Miner. But when FDR made it clear he had decided in favor of it, Woodin worked on making it happen and took the inevitable criticism from his Republican friends and from Treasury staff. At least he extracted from FDR an exemption for rare gold coins.
Constant stress and sleep deprivation set Woodin up for an illness that persisted into December and he resigned as Secretary as of the end of 1933. He diedMarch 3, 1934; Miner says the cause of death would today be described as a strep throat, for which there was then no cure. His austere funeral service was held at Fifth Ave. Presbyterian, attended by the President, who was himself no stranger to the physical challenge of illness, called him “a martyr to public service.”
How did they do as a team, FDR and Woodin?
Neither FDR nor Will Woodin was an expert on bank liquidity or fiscal policy. But they both understood that the country had elected FDR to act, after a disastrous posture byHooverof inaction in the face of illiquidity. Both were creative people with instincts that were nurtured by years of executive decision-making.
Their decisions during the First Hundred Days crucial in setting the course for recovery over the first part of the Depression, through 1936. The anti-deficit hawks in 1937 pressed for budget reductions that reversed the progress that had been made.
The instincts of FDR and Woodin were better than those of the institutional experts, the Federal Reserve, which in fact created inflation and cycles, or the Treasury staff, which pursued the now-discredited “Treasury View” that fiscal policy is not an appropriate tool for tackling job creation or GDP growth.
The joint success of FDR and the man fromLily Pond Laneis a vindication of the American democratic system of putting elected non-experts and their trusted appointees in charge of the career experts. The non-experts are more likely in a crisis to keep their eye on the problem and its solution, rather than on battles for turf and departmental budgets.
Or as Woodin’s granddaughter Gerli put it:
Grandpa could deal with the bankers because he wasn’t one of them. He was a businessman. When J. P. Morgan lost his mink coat, Grandpa went shopping in second-hand stores for ratty old mink coats and sent several of them to Morgan with a note saying he thinks he “found” the man’s missing coat.