The panic on Wall Street and in the financial markets has reversed this year's fickle political trends once again, strongly and perhaps decisively in favor of Barack Obama. Sinking in the polls three weeks ago, Senator Obama's leading supporters fretted that their favorite's campaign magic may have faded, but Obama's polling figures have surged since the financial crisis broke and in turn caused panic among Republicans. All of this is in line with well-established patterns in American political history, which should encourage Democrats about their chances of winning the White House in November. But in other respects, the panics of the past offer the Democrats a more daunting and looming challenge—one Obama has yet to meet.

To close the deal, Obama will need to promote, as the Roosevelts did, a plan of action, which might well include federal investigations of possible criminal wrongdoing.

The recent turnabout is, ironically, a bit awkward for some of Obama's backers in the political press. Back before the financial crisis hit, when Obama was slipping, pro-Obama pundits blamed his underachieving in the polls on white racism, pure and simple. The supposedly tried-and-true explanation that Democrats lose because the heartland's voters are hoodwinked and sheepish had long since given way to an all-purpose explanation for Obama's electoral failures—covert, sneaky, but devastating bigotry about the color of Obama's skin. One commentator, Jacob Weisberg, of Slate.com, went so far as to state flatly that if Obama lost, it would be solely because of Americans' crazy irrationality over race. Has the financial crisis caused all of that stubborn crazy Americans bigotry suddenly to evaporate? Have those whom self-styled progressives disparage as the racist Reagan Democrats-turned-Clinton Democrats suddenly snapped to their senses (even though, historically, hard times and economic anxieties often worsen racial and other social animosities rather than curb them)? Or have the more fervent Obama supporters allowed their own class prejudices to misjudge the voters of, say, Michigan, where McCain's campaign has just abandoned ship? Might class, and concerns related to class, now trump race in American politics, or at least for the moment?

The answer to that final question appears to lie chiefly with Senator Obama himself, and not the voters. For the political outcomes of financial panics depends largely on political leadership—not just in winning election but in actually governing effectively thereafter. And the historical record on these outcomes is decidedly mixed. In 1837 and 1857, incumbent Democratic presidents Martin Van Buren and James Buchanan proved unable to recognize, let alone address, the underlying causes of the nation's financial and economic woes. As a result, Van Buren lost to pro-bank Whigs; and Buchanan's Democrats lost a vital economic issue to the infant Republican Party, which deftly exploited it in key swing states, above all Pennsylvania, in 1860.

By contrast, the two Roosevelts, Theodore and Franklin, talked and acted decisively in the face of financial disaster. In particular, F.D.R.—sometimes wrongly portrayed by historians as a balanced-budget conservative in 1932—not only called for a New Deal for the American people but also backed it up with specific proposals that he effectively explained would counteract Hoover's. It was not enough, Roosevelt knew, to blame Hoover and past Republican policies; instead he proposed cures ranging from unemployment assistance to pro-labor laws, and explained how they would aid not just the down-and-out but the entire nation. Then, as president, he followed thorough, pragmatically but resolutely.

PANICS THROUGH HISTORY

The first major American financial panic occurred in 1819, before the rise of modern political parties, occasioned partly by mismanagement of the enormously powerful, privately run Second Bank of the United States. Although power did not change hands—the incumbent president, James Monroe, ran virtually unopposed in 1820 - public outrage helped prepare the way for the rise of Andrew Jackson later in the decade, and Jackson duly destroyed the bank in the 1830s. (Author's note: A previous version of this article read "James Madison" where it now, correctly, reads "James Monroe." We historians take posterity very, very seriously.)

Thereafter in the nineteenth century, panics, in which plentiful money and overextended credit led to sudden contraction and ruin, hit the American economy roughly every twenty years, in 1837, 1857, 1873, and 1893. The political costs for the parties in power were considerable and often disastrous. In three out of the four cases, the incumbent party - which in all three, as it happened, was the Democrats—lost the presidency at the next national election. Only after the panic of 1873 did the Republicans hang on. But in the 1876 election, the sitting president, the Republican Ulysses S. Grant, did not run, and the G.O.P. candidate, Rutherford B. Hayes, who decisively lost the popular vote, prevailed only because of disputed state results, suspected fraud, bribery, and high-level back-room deal-making.

In 1907, the failed efforts of some New York City tycoons to corner the copper market sparked a panic brought both the nation's banks and the stock market to the brink of total devastation, staved off only by the intervention of the preeminent financier, J.P. Morgan, with the agreement of the erstwhile trust-buster, President Theodore Roosevelt. Blaming the distress on certain malefactors of great wealth who wanted to undermine his policies, T.R. described the panic as a contest to determine who shall rule in this free country—the people through their governmental agents, or a few ruthless and domineering men whose wealth makes them peculiarly formidable. The following year, Roosevelt's handpicked successor, William Howard Taft, duly won the presidency. But two decades later, Herbert Hoover's inability to cope with the more grievous panic that followed the stock crash of 1929 led to a soaring victory for T.R.'s Democratic cousin, Franklin, and the beginnings of the New Deal. The removal of certain New Deal-era regulatory protections and the growth of newly unregulated sectors of finance, vastly compounded by the incompetence of the George W. Bush administration, has brought about the current panic, the worst in over two generations—just in time for the elections. The historical record suggests it should cinch the contest for the Democrats. And the flailing performance of the Republican nominee, Senator John McCain, reinforces the impression that the old Reaganite shibboleths about tax cuts and government spending no longer serve as a propaganda cure-all for the G.O.P. Yet Obama must also rise to the occasion and complete political tasks of his own. Since his campaign ended its rock star phase after the excess of his Berlin mass rally, he has run basically as the anti-Republican, the antidote to supply-side dogma, the cure for the failed Reaganite anti-government theories of the past (though he carefully avoids mentioning Reagan, whom he praised in the primaries as a way of disparaging Bill Clinton). That Senator McCain and his running mate, Governor Sarah Palin, have returned to those bromides as if it were 1984 enhances the Democrats' historic opportunities this year all the more. But to close the deal, Obama will need to get beyond telling curious voters to go look at his website or to offer a laundry list of new government programs he will support. He will need to support and promote, as the Roosevelts did, a plan of action, which might well include federal investigations of possible criminal wrongdoing. Then, should he win, Obama will need to be decisive and steadfast. As history also suggests, hard times may help guarantee a presidential electoral victory, but they do not guarantee a successful presidency or even re-election. Any doubters should remember the Whigs who won in 1840 - only to fall into political confusion at the death of their new president, William Henry Harrison, and lose the White House four years later. And in recent times, Democrats might recall Jimmy Carter, whose failed presidency ended before today's voters under 30 years old were either not born or still infants. Carter faced no financial panic, but he did inherit an economy hamstrung by stagflation, which he mishandled—and wound up getting defeated by it at the hands of Ronald Reagan. Economic panics may be prologue in politics, but the conclusion is not completely determined even by elections. It depends on the actions of presidents.

Please also read: What Obama and McCain Can Learn From FDR by Harold Evans