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.
The US republic ended in 1913 with the passage of the 16th amendment.
Sorry you're both wrong. The Republic died in April 1865. Wilson and FDR both used the imaginary powers vested upon them by the unconstitutional actions of one man. When people start to face up to this fact and admit, then and only then will be able to start the return to a truly Constitutional Republic
Of course it's not! It's facts. Pure and simple.
The analysis of history may be an argument, but not history itself.
More reasons to discount what this author has to say.
Nobody really knows what caused the Great Depression to be so much worse than previous occurances. Nobody know or knows how to end them once they begin (except by war).
Roosevelt's contribution was as much psychological as anything else. He was a fresh face trying new things. Sometimes that's the best humanity can expect.
The analysis of history may be an argument, but not history itself.
Why do the libertarians so hate America? ;-)
Yes, I believe that's true, as well as most of the "New Deal Communist's" in FDR's administration. In some ways, the Korean War was a God send. Truman mucked it up so bad the Republicans could take the government away from the Democrats and keep the White House for 8 years.
They don't hate America. They just want to see America become a more pure republic.
The sad thing is, we now have a fair amount of "conservatives" who admire FDR and his socialistic policies.
Sure - just tear down all of our icons! Burn all of our traditions!
Our Founding Fathers weep when they read a column like this one. ;-)
Well, that's an overreaction.
Godless libertarianism! ;-)
More overreactions...you're on a roll here...;-)
- Roosevelt did his damndest to get us to prepare for war. It was conservative Republican isolationists who thwarted all his efforts.
- Nobody anywhere in the world was successful at ending the Great Depression. Even now - 70 years later - people are still arguing about it and what was the proper course of action.
- Roosevelt sent Jews back to Europe because that's what most of the public wanted - most prominent among them the same Conservative isolationists. Interestingly Jews in Stalin's Russia did much better than in most of Europe.
- Roosevelt rounded up the Japanese for one of three reasons; Either because they constituted a legitimate threat during wartime, because war-time prejudice endangered them, or because local California agricultural interests wanted their land. Take your choice.
There's some question in my mind how to properly judge Roosevelt as a President but no doubt at all that you're a disgusting human being.
The New Deal reflected the socialist theorists who descended upon Washington with the new Administration. It was doomed to failure for all of the reasons why Socialism always fails, everywhere. The sad thing is that Roosevelt actually ran on a platform clearly to the right of Hoover. The Platform was economically and Constitutionally sound. Roosevelt betrayed it, and should be condemned to infamy. The romance of his failed Statist policies with Academia arises not in anything Roosevelt accomplished, but in the increasingly socialist mindset in our Colleges and Universities.
William Flax Return Of The Gods Web Site
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