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.
Oh yes I do!
Ronald Reagan defeated the Soviet Union and brought down the Berlin Wall, without firing a shot.
What did Carter, or Clinton actually accomplish of any real lasting good.
Of course it's not! It's facts. Pure and simple.
The analysis of history may be an argument, but not history itself.
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I think it was Sir Francis Bacon who said something to the effect that history is like the planks of a sunken ship, and from these we try to visualize that ship; yet more is lost then will ever be recovered.
There's no doubt some of his depression era policies were socialist. He characterized them as pragmatic - correctly so I believe.
The Great Depression began in '29 and reached its peak in '33. Nothing the Republicans did under Hoover worked - making all discussion of what happened under Harding in '20 irrelevant.
The raison d'etre of democratic capitalism is that it delivers prosperity. When it doesn't, when it delivers misery and failure and its principal exponents can do nothing about it, then people question its worth. That's what was happening. When the troops fired on Hooverville you knew drastic measures were needed.
They don't hate America. They just want to see America become a more pure republic.
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At whose request? (I mean, besides their own.)
Oh. So now you're a Stalin apologist, too.
Do you know that Stalin killed 7 million people in the Ukraine during the Thirties and taught Hitler how to get away with mass murder. "No one will believe it, it's too horrible"...Joe Stalin.
Many people really do know what caused the great depression in the United States and more learn those reasons each year.
As with most things the cause of the great depression in the United States was a combination of events, all well intended and all wrong. Keep in mind that the world was in depression. The depression in the United States became the great depression with the enactment of the Hawley-Smoot Tariff Act of 1930 while marginal tax rates were increasing.
Eventually, Larry, the wise grow up. Reagan supported FDR, true. When he met the results of the communists that accompanied FDR while Reagan was president of the Screen Actors Guild, he matured and became a Conservative. Reagan's speech on behalf of Goldwater in '64, is remarkable for its prophecy. Maybe you'll grow up, politically, someday too, Larry. Maybe not.
These parallels were so obvious to anyone with his eyes open at the time, that German Intelligence actually believed at the start of World War II that the principal reason why FDR favored Britain over Germany was jealousy. Hitler, as indeed his principal European rival, Stalin, were both demonstrably smarter than FDR. (See The Rise & Fall Of The Third Reich, for the point about German Intelligence.)
Now I am not suggesting that Roosevelt even at his peak would have had the necessary support to establish a Nazi style monolith in Washington. There were still too many Americans with a long tradition of individual freedom, private arms, and the knowledge and will to use the latter to protect the former. My only point is that their approaches to the Depression were similar, with Hitler succeeding earlier, the same way Roosevelt finally succeeded, by a total war mobilization.
Anyone who understands basic Economics will tell you that it is virtually impossible for a Depression to last so long without the aid of stupid policies. Roosevelt, whether deliberately or out of ignorance, prolonged America's agony by interfering with the market's ability to adjust to the needs and conditions of the times. Instead of being innovative, he was merely forcing a statist regimentation that handcuffed those who really were innovative, throughout America.
William Flax Return Of The Gods Web Site
A very important fact to any discussion of the Depression.
There are two parts to this - what Roosevelt did and what the isolationists did. Lend-lease is a fine example of Roosevelt's efforts. His consistant support of Churchill another. His anti-Japanese measures a third. The isolationists weren't called that for nothing. I can't cite specific references in this time-frame but the writings of Churchill, William Shirer, and Barbara Tuchman should provide all the evidence.
2)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.
This is self-evident.
3)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.
I've done some research on this. (Can't remember the name of the ship at this time). I've read the justifications and explanations. People didn't want the country flooded with refugees - especially of non-Christian, non north-western European origin. Roosevelt felt he couldn't admit Jews without opening the flood-gates. Anti-semitism was quite common among Americans of the time - especially so among conservative Republic isolationists (see Father Coughlin, for example).
4)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.
This is common knowledge. I did some research on this in response to a thread on FR (because of the reparations issue). This is what I came up with. Roosevelt didn't just decide out of the blue to intern the Japanese. He was asked to do it by certain individuals who presented the first two reasons publicly. The third has been offered by various people at various times with various evidence.
Instead of being innovative, he.....handcuffed those who really were innovative, throughout America.
Amen to both. Excellent post.
Republicans were in the minority throughout the FDR administration; Americans as a whole were 80% against another war with Germany right up until Pearl Harbor, despite FDR's best efforts to synthesize a causus belli by harassing U-boats "throughout the summer of 1941" (The New Dealers' War, Thomas Flemming). When did "the summer of 1941" begin? On or about June 22, of course. And what else is June 22, 1941 known for? The start of the invasion of the Soviet Union by Hitler!Hitler didn't want to fight America and the USSR at the same time, so FDR's provocations failed. But FDR was able to push Japan into attacking us; Pearl Harbor represented the success of FDR foreign policy. Along with FDR's leaking of his plan to raise a huge army to fight Germany and Japan, that is what induced Hitler to declare war on the US. Of course when FDR's foreign policy succeeded, 400 merchantmen were promptly sunk off the US coast, and scores of thousands of G.I.s were killed or captured by the Japanese offensive in the Philipines and elsewhere in the Pacific--but hey, what is that compared to the need to save the Soviet Union from being crushed by Germany? If you're a Commie symp, nothing at all, is what.
Democrats fight a rearguard action against the understanding that high taxes stifle the economy, it's true. But they're true believers whose entire worldview depends on clinging to that delusion.The fact that other countries couldn't escape the Depression we were generating is unsurprising. But the point is that Democrats built up this entire myth about Hoover and the Depression--Hoover did help get it started with the Smoot-Hawley Tariff Act, but FDR had no idea what to do about the Depression, except to blame Hoover for it for the rest of his life.
That's right. They are. Disturbing, isn't it? None-the-less that was the favored approach to curing the ills of capitalism at that time.
that German Intelligence actually believed at the start of World War II that the principal reason why FDR favored Britain over Germany was jealousy
Intelligence was not Nazi Germany's strong suit. Arrogance and intelligence are not a good combination. :) By the way, Hitler credited Henry Ford with some of his ideas on anti-semitism. How far do you want to go with that?
Hitler, as indeed his principal European rival, Stalin, were both demonstrably smarter than FDR
A cheap shot, unsupported by the evidence, and disproved by the ultimate outcome of the war. Many questioned Roosevelt's "intelligence", none his political instincts and savvy.
Now I am not suggesting that Roosevelt even at his peak would have had the necessary support to establish a Nazi style monolith in Washington. There were still too many Americans with a long tradition of individual freedom, private arms, and the knowledge and will to use the latter to protect the former.
This is disgusting because you do suggest - by innuendo - that he would've if he could've...a suggestion which devalues all your legitimate points.
Anyone who understands basic Economics will tell you that it is virtually impossible for a Depression to last so long without the aid of stupid policies
You've simply made this up. As well, economics was and is largely propaganda. In my college days - the '60s - economists were still teaching that unemployment was an impossibility in a free-market economy. Things haven't improved much.
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