It's hard for me to see Smith not running in 1928--true, the odds were against him in November, but this was equally true in 1920 and 1924, and his chances of winning the nomination were obviously better in 1928. If he doesn't, one question is who the conservative, wet, Northeastern wing of the party will back. In 1924 their backup choice if Smith failed was Oscar Underwood of Alabama (of whom William Jennings Bryan said, "He is not a Southern candidate; he is a New York candidate living in the South"
https://books.google.com/books?id=tt67UmTL8MwC&pg=PA299). But by 1928 Underwood had lost his Alabama base and retired from the Senate and would be unlikely to run even if his health permitted it. Albert Ritchie
https://en.wikipedia.org/wiki/Albert_Ritchie was the kind of candidate the conservatives wanted, but I doubt that he would have Smith's popular appeal. Newton Baker's single-minded advocacy of the League of Nations earned him the hatred of William Randolph Hearst and was regarded as something of an obsession by many other Democrats; also, his defense of the open shop as President of the Cleveland Chamber of Commerce angered organized labor. (Yet he wasn't exactly a conservative, either, and denounced the "me tooism" of the 1928 Houston platform, especially its embrace of the protective tariff. )
With respect to the western "agrarian" wing of the party, McAdoo, their obvious candidate, had made himself very controversial for his role in the 1924 deadlock , especially for his failure to denounce the Klan. A possible compromise candidate would be Thomas Walsh of Montana--a Catholic, but a westerner, a progressive, a "dry," and untied to urban machines.
As I wrote here a couple of years ago (sorry for any links that may no longer work):
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All in all, I have a hard time seeing the Democrats winning in 1928:
(1) Prosperity was a difficult issue for the Democrats to overcome, but one should not oversimplify here. The prosperity of the late 1920's was hardly universal; there were "sick" industries like textiles (that may be one reason MA and RI voted for Smith, though probably his Catholicism was more important) and above all agriculture. However, as Allen Lichtman noted in
Prejudice and the Old Politics: The Presidential Election of 1928 one must look not only at the reality but at the ideology of prosperity. The ideology, propagated through the press (especially the small-town press) and by Republican campaigners for decades was that America was a land of limitless opportunity, and if prosperity had not yet reached everyone, it soon would, if sound economic policies were followed (meaning a protective tariff and government friendship toward business). That the remaining islands of poverty would be swept away by the tide of prosperity--especially under the "sound" leadership of the "great engineer" Hoover--seemed plausible to many people who did not in fact share (or at least share proportionately) in the general prosperity. As Will Rogers put it, "Prosperity-—millions never had it under Coolidge, never had it under anybody, but expect it under Hoover."
https://books.google.com/books?id=Kd_dDAAAQBAJ&pg=PA119
"Not simply economics, but a combination of the reality and mythology of prosperity made the Republicans formidable in 1928. Perhaps a more progressive campaign by Al Smith would have sacrificed few votes while cutting into working-class support for the GOP and motivating more working-class Americans to vote in the election. Yet the data suggest that the Democrats would have been hard pressed to overcome the ideology of prosperity in a single presidential campaign. Although economic developments did not make the Republicans invincible in 1928, the Democrats' past failure to challenge Republican ideology created difficulties for any Democratic nominee. As Democratic leader E. H. Casterlin confided to FDR, the party needed to reeducate the American public in favor of progressive reform:
"'I am thoroughly convinced that no candidate can be sold to the public, outside of his immediate locality, without a campaign of education. . . . The Democratic party . . . should be in the hands of its friends constantly, with publicity that is constructive in character. Since the days of the "Full Dinner Pail," "Infant Industries," and "Republican Prosperity," the Republican Party has been constantly hammering into the minds of the voters, not the educated and well-read voter, necessarily, these slogans, backed up with constant reference in the press to "good times," until many, many people really believe that they are living in an age of prosperity excelling all expectations, whether or not they have in the bank their per capita portion of hard money fixed by statisticians.'
"Beginning in late 1928 [is this a misprint for 1929?--DT], the Great Depression and the superb propaganda efforts of the Democratic National Committee reeducated the public more quickly than Casterlin or Roosevelt would have dreamed possible...
https://books.google.com/books?id=KbGiJpDk6pwC&pg=PA187
(2) Would the Democrats have done much better had they nominated a Protestant? I doubt it. According to Lichtman, "Compared to the combined votes of Davis and Lafollette, the vote for Smith declined by approximately 11 percentage points among Protestants and increased by approximately 28 percentage points among Catholics. Catholics as well as Protestants voted their religion in 1928."
http://books.google.com/books?id=KbGiJpDk6pwC&pg=PA42 Since there were many more Protestants than Catholics, these numbers are not really favorable for Smith, but they do show that nominating a Protestant would have costs as well as benefits--especially if Catholics were convinced the Democrats had rejected Smith because of his religion. (In particular, Hoover might have done well among Polish-Americans against a Protestant Democrat; his record as administrator of war relief was highly respected by them, and was cited by the Polish National Alliance in its endorsement of Hoover.)
(3) What if the Democrats had nominated a different Catholic? Lichtman writes: "As a counterargument to the assertion that Protestants spurned Smith because he was Catholic, both contemporary observers and historians have claimed that Thomas J. Walsh of Montana, a rural, western, dry Catholic, would have been perfectly acceptable to Protestant voters. Yet Senator Walsh himself privately cast doubt on this idea after his experience with the nominating process. 'I am very sincerely appreciative of the opinion you express of my merits, and wish I were altogether worthy of what you say of me. The view that I would have carried every southern state in 1928, had I been the nominee instead of Governor Smith, has often been expressed and it may be that I would. At the same time when I would, as I thought, have made an excellent foil against the onrushing Smith flood in 1928, no southern state exhibited any disposition to send delegates to the convention instructed for me.'"
http://books.google.com/books?id=KbGiJpDk6pwC&pg=PA56
(4) No doubt Prohibition was a heatedly discussed issue, and some "dry" Democrats were angered at Smith's proposals to modify the Volstead Act. But Lichtman is probably right to call the election a "phony referendum" on Prohibition, noting that a number of states voted for Hoover that had indicated their disapproval of Prohibition in referendums. (He suggests that Prohibition was used as an excuse by some people who really objected to Smith on religious grounds.)
An example I like to give: In 1928 Montana voted against a state prohibition enforcement law, 54.09-45.91.
https://ballotpedia.org/Montana_Adopt_the_Federal_Prohibition_Laws,_I-32_(1928) On the same day, it also voted for Herbert Hoover over Al Smith 58.4-40.5.
http://psephos.adam-carr.net/countries/u/usa/pres/1928.txt
