Both the Administration of President George W. Bush and the transition team of President-Elect Barack Obama seem to be striving to avoid a repetition of the ugly precedent of the power shift from Herbert Hoover to Franklin D. Roosevelt. That 'interregnum," lasting from November 8, 1932 to March 4, 1933, saw the Depression deepen while efforts to coordinate some statements or commitments between the outgoing and incoming administrations failed. (Ironically, the 20th Amendment to the Constitution, which moved up the Presidential Inauguration to January 20, was ratified that January but did not take effect until 1937.)
Then
Having been repudiated overwhelmingly after a campaign in which he and Roosevelt contended over who could best balance the budget, the lame duck President sought some understanding with the victror on two key issues which could retard domestic and international recovery. They were relief to Britiain and France on monthly payments for war debts and assistance to banks. Despite several conferences, FDR refused to commit himself on either point. He felt that Hoover was trying to associate him with a failing response before he had the authority to take actions.
Meanwhile, forces on the Democratic side further exacerbated the banking situation. One of the few anti-Depression steps that Hoover had taken, with Congressional approval, was the establishment of the Reconstruction Finance Corporation making the government the lender of last resort. Speaker of the House John Nance Garner, soon to be Vice President, pushed through a legislative requirement for the RFC to make public the names of banks that borrowed. Fearing that depositors would swiftly withdraw funds from institutions that identified themselves as in need of loans, banks simply stopped borrowing.
At the same time, Henry A. Wallace, newly designated as Secretary of Agriculture, suggested that going off the gold standard might be the best solution to the crisis. A run on the banks followed, with several states closing all their banks for periods up to twelve days. Unemployment continued to rise. Hoover was convinced, as he said in his memoirs, that Roosevelt wanted to let conditions worsen and then close the banks himself as a sign of taking charge.
Feelings between the outgoing and incoming Presidents were so bitter that scarcely a word was exchanged between them on the traditional ride from the White House to the Inaugural at the Capitol.
Now
The campaign of 2008, although generally regarded as a repudiation of his Administration, did not directly involve Bush as a candidate. Therefore, it was easier for him to meet with Obama less than a week after the election under visibly gracious and friendly circumstances. There, and in subsequent statements, both made it clear that there was only one President at a time and that Bush would be responsible for the response to the economic crisis until January 20.
However, Obama made the naming of his economic team the first order of business. His appointment of New York Federal Reserve Bank President Timothy Geithner as the next Secretary of the Treasury gave a signal of continuity and a good deal of unity, as Geithner worked closely with the current Treasury Secretary on measures to insure troubled assets and recapitalize financial institutions. For their part, the Bush Administration committed to keeping the incoming team informed of new plans.
Obama also outlined an economic relief program without going into great detail and urged the new Congress, which convenes two weeks before his inauguration, to work expeditiously on economic legislation that could be ready for him to sign immediately.
So far so good.
Reference: The World in Depression, 1929-1939 by Charles Poor Kindleberger
