President Al Smith sought to retain his office, facing a challenge from Democrat Robert Taft. Republican Wendell Willkie also ran, but the Republican Party's continuing irrelevance ensured his defeat.
Smith arrived in office in 1937 with a series of issues, domestic and foreign, that had mounted since the end of the Great War, and that none of his predecessors had successfully resolved. These included Mormon unrest, the ongoing economic depression, and tensions with the newly militant Confederacy under President Jake Featherston. Territories taken from the C.S. at the end of the Great War had grown increasingly restive as Featherston and the Freedom Party took hold in the C.S.
Deciding the substantial costs of continued occupation were no longer worth paying, Smith reintegrated Utah. In 1939, Smith met with Featherston and hammered out the Richmond Agreement, which called for plebiscites in Kentucky, Houston, and Sequoyah. The agreement in place, although dependent upon Smith's victory the following year, Smith launched a campaign based on the premise that he'd kept the country out of war.
Democrat Robert Taft campaigned against the plebiscites, arguing that the U.S. had paid too much blood and treasure for the conquered states, and that to give them up would invite further Confederate aggression and territorial demands. Taft also promised a much harder line on Featherston and the C.S.
As in previous elections, the Republican Party did run a token candidate in the form of Wendell Willkie, who proved inconsequential outside of a few Midwestern states. Ironically, Willkie's slogan was "Win With Wendell".
Smith won re-election in a close race. Republican candidate Wendell Willkie won the electoral votes from his home state of Indiana.
Months after Smith was inaugurated, the Confederate States reneged on its agreement to make no further territorial demands, with C.S. President Jake Featherston making a speech calling for the return of occupied sections of northern Virginia, northwestern Sonora, and southeastern Arkansas declaring the results of the plebiscite in Sequoyah (which had kept that state in the U.S.A.) illegitimate.
The extremely popular Franklin D. Roosevelt made the controversial decision to seek a third term, in defiance of long-standing Presidential tradition. John Nance Garner had apparently expected Roosevelt to step aside and endorse Garner's candidacy for president. When Roosevelt did not do so, Garner mounted a primary challenge. He was handily defeated and Roosevelt replaced him on his ticket with Henry Wallace. The Roosevelt-Wallace ticket defeated the Republican ticket of Wendell Willkie and Charles McNary in a landslide.
Robert Taft was an early contender for the Republican nomination before ultimately coming in second at the 1940 National Convention.
While Al Smith had been a mentor and ally to Franklin Roosevelt, Smith's opposition to the New Deal had led to a rift between the two men not long after Roosevelt first became president. Smith publicly supported Willkie in 1940, but didn't otherwise seek the nomination or the presidency.