FDR's Raw Deal Exposed

Chicago Sun-Times ^ | 9.30.03 | Thomas Roeser

[Cathryn Crawford]

FDR's Raw Deal Exposed

August 30, 2003

BY THOMAS ROESER

For 70 years there has been a holy creed--spread by academia until accepted by media and most Americans--that Franklin D. Roosevelt cured the Great Depression. That belief spurred the growth of modern liberalism; conservatives are still on the defensive where modern historians are concerned.

Not so anymore when the facts are considered. Now a scholar at the libertarian Cato Institute has demonstrated that (a) not only did Roosevelt not end the Depression, but (b) by incompetent measures, he prolonged it. But FDR's myth has sold. Roosevelt, the master of the fireside chat, was powerful. His style has been equaled but not excelled.

Throughout the New Deal period, median unemployment was 17.2 percent. Joblessness never dipped below 14 percent, writes Jim Powell in a preview of his soon-to-be-published (by Crown Forum) FDR's Folly: How Franklin Roosevelt and His New Deal Prolonged the Great Depression. Powell argues that the major cause of the Depression was not stock market abuses but the Federal Reserve, which contracted the money supply by a third between 1929 and 1933. Then, the New Deal made it more expensive to hire people, adding to unemployment by concocting the National Industrial Recovery Act, which created some 700 cartels with codes mandating above-market wages. It made things worse, ''by doubling taxes, making it more expensive for employers to hire people, making it harder for entrepreneurs to raise capital, demonizing employers, destroying food . . . breaking up the strongest banks, forcing up the cost of living, channeling welfare away from the poorest people and enacting labor laws that hit poor African Americans especially hard,'' Powell writes.

Taxes spiraled (as a percentage of gross national product), jumping from 3.5 percent in 1933 to 6.9 percent in 1940. An undistributed profits tax was introduced. Securities laws made it harder for employers to raise capital. In ''an unprecedented crusade against big employers,'' the Justice Department hired 300 lawyers, who filed 150 antitrust lawsuits. Winning few prosecutions, the antitrust crusade not only flopped, but wracked an already reeling economy. At the same time, a retail price maintenance act allowed manufacturers to jack up retail prices of branded merchandise, which blocked chain stores from discounting prices, hitting consumers.

Roosevelt's central banking ''reform'' broke up the strongest banks, those engaged in commercial investment banking, ''because New Dealers imagined that securities underwriting was a factor in all bank failures,'' but didn't touch the cause of 90 percent of the bank failures: state and federal unit banking laws. Canada, which allowed nationwide branch banking, had not a single bank failure during the Depression. The New Deal Fed hiked banks' reserve requirement by 50 percent in July 1936, then increased it another 33.3 percent. This ''triggered a contraction of the money supply, which was one of the most important factors bringing on the Depression of 1938--the third most severe since World War I. Real GNP declined 18 percent and industrial production was down 32 percent.''

Roosevelt's National Recovery Administration hit the little guy worst of all, Powell writes. In 1934, Jacob Maged, a 49-year-old immigrant, was fined and jailed three months for charging 35 cents to press a suit rather rather than 40 cents mandated by the Fed's dry cleaning code. The NRA was later ruled unconstitutional. To raise farm prices, Roosevelt's farm policy plowed under 10 million acres of cultivated land, preventing wheat, corn and other crops from reaching the hungry. Hog farmers were paid to slaughter about 6 million young hogs, protested by John Steinbeck's The Grapes of Wrath. New Deal relief programs were steered away from the South, the nation's poorest region. ''A reported 15,654 people were forced from their homes to make way for dams,'' Powell writes. ''Farm owners received cash settlements for their condemned property, but the thousands of black tenant farmers got nothing.''

In contrast, the first Depression of the 20th century, in 1920, lasted only a year after Warren Harding cut taxes, slashed spending and returned to the poker table. But with the Great Depression, the myth has grown that unemployment and economic hardship were ended by magical New Deal fiat. The truth: The Depression ended with the buildup to World War II.

[ninenot]

So you've named ONE.

The upper reaches of the CP/USSR had its share of Jews who were turncoats to their faith. Same-o w/Russki Orthodox who were turncoats.

God grant us the strength not to emulate them.

[conservatism_IS_compassion]

That's heady stuff.

Sickening, some of it.

FDR actually planned to meet Stalin without Churchill, and Churchill informed FDR that he would have to answer questions about that in the House of Commons if it happened--a veiled threat to resign IMHO.

[u-89]

>He was also the conservative Republican who got us the Sixteenth Amendment.

I didn't want to be critical and therefore offensive...just trying to think happy ;^)

P.S. I won't mention that I am currently active on another thread this evening - regarding GOP corruption.

[eno_]

Paging Scenic Sounds... your prescription is ready to pick up.

[WOSG]

It's my belief that anti-semitism was a pretty stong current in both Catholic and Orthodox Church teachings during the Middle Ages. Is that wrong? YES. More than wrong.

Anti-semitism has invariably had political, not truly religious roots and "uses". That it continues to be a foil for atheistic Govts like Hitler's Germany, Stalin's USSR (he was about to kill the Jews in 1953, when he died), and the Left today adrift in anti-"Zionist" mentalities, and the "Arab street". To see that the discrimination is cultural/political, note the same kind of discrimination in Europe has existed towards Gypsies.

Likely this is just another excuse to bash and shame the religious.

As for Atl Monthly, I had to give it up when it become way too liberal, letting folks akin to Robt Reich hog all the essays. If you want to address this on FR, post the article.

Personally, I have problems with all three monotheistic faiths. As Cher said in Moonstruck: "Snap out of it!". Perhaps intolerance is a human characteristic - even of those who label others "intolerant" in knee jerk fashion. hmmm.

[u-89]

>Libertarianism, by definition, is atheist

Where do you get that from? I'm a Christian and so are a lot of other libertarians I know. Not to mention the Jewish ones.

[Scenic Sounds]

LOL.

Thanks for the exchange. ;-)

[Scenic Sounds]

Paging Scenic Sounds... your prescription is ready to pick up.

Cathryn, do you think you'd have time to pick up a prescription for me? ;-)

[eno_]

I urge you to read the Sedition Act...

And I suppose you think Washington's crushing of the Whiskey Rebellion was shining moment in our history too.

Oh, and once he'd turned the Army against U.S. citizens to shoot all those distillers, he became one himself. Very nice.

[Cathryn Crawford]

Cathryn, do you think you'd have time to pick up a prescription for me? ;-)

Yeah, I'll pick it up for you. Gladly. :-)

[Scenic Sounds]

And I suppose you think Washington's crushing of the Whiskey Rebellion was shining moment in our history too.

Oh, and once he'd turned the Army against U.S. citizens to shoot all those distillers, he became one himself. Very nice.

Oh, no. Now we're going to trash George Washington, the Father of our Country?

Is nothing sacred anymore? Have the terrorists put something in our water?

[Scenic Sounds]

Yeah, I'll pick it up for you. Gladly. :-)

Thanks, Cathryn. They're attacking George Washington now. I may need to take an enlarged dose tonight.

[Cathryn Crawford]

I may need to take an enlarged dose tonight.

Yeah, it's been a stressful night all around for you.

[Scenic Sounds]

Yeah, it's been a stressful night all around for you.

The word "unmanageable" somehow seems appropriate. ;-)

[WOSG]

This is WOW stuff.

"Having read the book I found those answers stunning. FDR was death warmed over and restricted to a 20-hour workweek during much of WWII."

Let's see if they actually let high school and College students know about this stuff.

In a similar vein, when will the Venona files and our knowledge that the Soviet spy network was even MORE extensive than even Joe McCarthy was saying, when will that lead to a revision in thinking about Cold War "hysteria" over spying?


http://www.unc.edu/depts/diplomat/AD_Issues/amdipl_15/platt_15.html

http://intellit.muskingum.edu/spycases_folder/venonaintro.html

http://intellit.muskingum.edu/spycases_folder/spycasesustoc.html

[quietolong]

FDR’s cabanet was infested with KGB agents!


Secrets, Lies, and Atomic Spies,.....Or... Joe McCarthy was more right than he ever knew
http://www.freerepublic.com/focus/news/622675/posts

[Dan from Michigan]

Oh yeah. I forgot to mention that Commie FDR packed the SCOTUS. Typical of the power hungry dictator.

[F.J. Mitchell]

Bump for the enlightenment of those who are willing to be enlightened and for deepening the denial of those of the"ignorance is bliss" school.

[Cathryn Crawford]

unmanageable

Hey! :-)

[WOSG]

"I'm arguing with Republicans who want to blame all the ills of the '30s and '40s on FDR."

I agree with you, that is unfair, certainly. On the domestic front, Republicans share the blame: The tariff increases were signed by Hoover, as were the tax increases of 1932. Hoover started the expansion of Govt 'aid programs' that were a band-aid, yet monetary policy was incorrectly excessively tight. The Republicans were great for defending businessmen but the party leaders were not economists and were simply lost. Hoover the engineer meant well but he kept taking all the wrong advice and ignoring the good advice.

"I believe that party politics more often than not cloud rather than clarify reality." True, and it was interesting indeed to note that Roosevelt ran in 1932 as a tax-cutting conservative!

"The reality is that humanity is often faced with problems it doesn't understand and can't solve. People are forced to improvise and take the blame if they're wrong." Now you slide into Liberal gobbledegook.

Many problems *are* solvable if the diagnosis is correct; the problem is the people to listen to were not heard or respected in the 1930s, because the socialists demonized the 'free market' as incapable of answering the question. Real economics became pidgeon-holed into "classical" economics, as if economic truths suddenly no longer applied. And it was pretended that classical economics "had no answer" or "couldnt account for" depressions. This is wrong as even in 1923, Von Mises had accounted for the business cycle from a free-market/Austrian school perspective. Hayek had an answer far better than Keynes. It's a simple fact that Socialism and Keynesian was "in vogue" and it became "the answer" because it appealed to politicians, *especially* those who didnt understand it and used it as a cover to expand Govt power (I put FDR in that category). The fact that Socialism didnt cure the economic ills of the 1930s is unsurprising, since it is a prescription for poverty and economic malaise and is wrong. Over time, the 'old' truth re-asserted themselves as "neo-classical" economics.

So dont take that to mean we "cant solve" those problems; actually a business cycle downturn is eminently survivable/solvable even after a credit bubble - we know because in 2001-2003 we just survived such a downturn! A policy that simply reversed the Smoot-Hawley tariffs and went and got trade deals with other countries, ignored any dire warnings about "trade deficits" and "budget deficits" and cut taxes in 1930 (instead of raising them) while keeping the monetary policy loose enough for business and debtors to stay solvent (ie when Greenspan did these past 2 years) --- THAT would have prevented the Great Depression and left it a recession only that was a mere corrective to speculative excesses of the late 1920s.