Posted on 08/30/2003 11:59:46 AM PDT by 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.
It is definitely worth mentioning. I wonder, however, whether it is the opinion that is "inheritied" or the basic word view that then leads one to synthesize a simiar political opinion.
"As for your second question, to the best of my knowlege, there is no definitively known cause(s) of Depression, as Larry has already pointed out."
That is why it was addressed to Larry (sorry).
History may, after enough time has past, correctly refer to FDR as simply, "Little Joe".
My first political memory is of a radio announcer sobbing as he announced the death of Roosevelt. I looked over at my parents - who also broke down. That experience has rendered me incapable of looking at FDR as I do other presidents - even JFK.
Other people may not have such powerful single events in their past but childhood memories are different than all others.
I'm not sure where to go with this - but I know it's important.
What is nonsense ?
Just the TRUTH !!
Perhaps you would propose a current economic strategy for the U.S. that would result in a full-employment entrepreneurial society. I personally like this notion: "In the context of a free and civil society at work - to all according to their needs and to each according to His Will" (. . . pipus willabi). Adam Smith advised us about the importance of fair labor treatment as well as the need for entrepreneurial capitalism. They really go hand in hand - don't they. Economic extremes are somewhat disruptive to peoples lives. Perhaps you will describe an economic transition plan based on current realities that will facilitate agility and adaptability with an infrastructure that encourages work and stimulates investment.
And there we much more closely agree. But I'll bet we disagree still on a few issues. Like Reagan was, I'm for smaller government, but not zero government. He was a supply-sider of biblical proportions.
And it makes sense, doesn't it? Personal experience passed down from one generation to another is a powerful means for conveying history. If when the Depression struck and you were a child whose parents lost their jobs, as my parents both were, and when you looked around you to see families with nothing really not managing to scrape by, it would have been easy to see that the government programs literally saved lives.
My parents just laugh at some of the ideoologies being offered here: the notion that all of this was somehow wrong because it didn't fit someone's ideals for how government spending should be conducted. These are just theories. The government had the power to effect change both on a local and on a macro level, and it did. I'll buy that the macro level stuff didn't work out very well. However, to say that food subsidies and public service jobs that kept people working, or the program that got my mother her eye glasses so she could keep up in school were somehow evil and never should have been implemented -- that I refuse to acknowledge. No businesses were stepping forward to solve those problems. No individuals were. So it was a failure of Capitalism. (Yes I've heard all the stories about currency standards, etc...)
Are we spending too much now on entitlements and on corporate wellfare? You bet. I'm for slimming the government. Did my parents grow up not being wary enough of government power? Yes and no. They are patriots beyond compare in my opinion. My dad has a purple heart and gave many years of public service after the war, moving back and forth into the private sector and finally staying there.
Sure it's "in the family." But it's a family that saw the horrors of the Depression and survived it because the government rose to the challenge and did something about it.
I'm going to bet that most "zero government" advocates, even under the conditions of the depression, didn't have families who experienced the utter deprivations of the depression. Perhaps they owned land. Perhaps their families' businesses stayed solvent. Perhaps they lived on farms that weren't reposessed. But those of us who did survive because of the New Deal won't ever forget it. Capitalism needs certain conditions before it can work. Sometimes those conditions fail. When the failure is big enough, it sometimes takes government to smooth out the bumps and get a society back to work, at least until other forces straighten out things.
Today? I'm all for making government smaller.
From that nwo.html link in #64, i.e. http://www.weirdvideos.com/nwo.html:
"In the case of "the Jewish persecution in Germany I found that impartial presentation of the facts gradually gave way to so partisan a depictment that the truth was lost. ... The result showed in 1945, when, on the one hand, the persecution of Jews was made the subject of a formal indictment at Nuremberg, and on the other hand half of Europe, and all the people in it were abandoned to the selfsame persecution, in which the Jews had shared in their small proportion to populations everywhere."Anyone willing to stoop this low to diminish the specific attack on Jews throughout occupied Europe represented by the Holocaust under the secret auspices of the Final Solution is a virulent anti-Semite.
The Controversy of Zion, Douglas Reed, pp. 308, 309.
Missed you post first time around. It's a good one...and too true.
Does that mean you agree with the governor of Alabama who says Christians need to support high taxes to be true to their faith? That sounds like liberation theology i.e. Marxism.
One should recognize the difference between Christian prescription for living and governing the body of believers (the church) and civil society at large. Look first at the differences in the church itself. We could start with Paul's addressing the eating of discount meat once offered to pagan idols - strong dispute there - his solution - leave it to your own conscience. Today some believe drinking alcohol is a sin. Others do not. Some believe movies and TV are sinful. Others do not. Some think it is not right to eat in restaurants on Sundays because that requires others to violate the no work clause of the Sabbath. Others feel it is OK. No need to go further to make the point - it is quite clear that Christians would not like to have their lives dictated to by other Christians. How do you suppose non believers react?
Believers and non believers alike can agree that there should be laws against theft, fraud, assault and murder. What conservatives and liberals wish is that government should enforce their values on society through the central government. Under a system of localized government people could sort matters out for themselves. Conservatives do not like New York/Hollywood values jammed down their throat. It is central government that makes that possible. Government forces individuals into groups then pits groups against each other. Jefferson said forcing a man to subsidize something he does not believe in is tyranny. Take for example a senior community center for gays in Florida funded by tax dollars. Christians are up in arms about it. Now the community is divided. If left to the free market a business would flourish or fail according to popular demand and quality of service. There would not be a hot issue dividing the community without government action.
Since you bring up drugs I can only ask why people can learn nothing from history - alcohol prohibition was a failure. Alcohol was widely available during prohibition. Organized crime came into existence because of it and is with us to this day. Politicians, judges, police officials all were corrupted by the criminal activity. Gang warfare erupted, innocent civilians were caught in the crossfire. Then gun control laws came into existence which effected the law abiding but not the criminals one bit. In the end prohibition was deemed a failure and repealed.
As for the WOD it to is also a total failure. The cons far outweigh the pros. The cure does more harm than the ill. Drugs could not be more prevalent than they are now, including in the prisons. Organized crime grows. Gang warfare plagues the cities. Politicians, judges and police are corrupted. 3rd world countries are destabilized. We meddle in 3rd world countries where we'd otherwise have no business. The constitution is trampled. Police powers expanded. New police units and bureaucracies spring up constantly, all meaning higher taxes and more pigs feeding off the government tit. Prisons populations swell with drug dealers and users while violent criminals are freed to make room for them. All this and yet faced with failure in the present and the past drug warriors refuse to face reality cause some people would do things they disapprove of. That's a short list of the cons.
The government that governs least governs best. Nothing atheistic about that. Looks more like common sense derived from the school of hard knocks.
But those people had food to eat and a place to live. You can call that "counterproductive" all you like but you'll have a hard time persuading people who benefited from them that they were just a huge mistake that never should have been attempted.
Nero played violin while Rome burned, too.
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