FDRs Raw Deal Exposed 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 FDRs 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) FDRs 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. Roosevelts 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 didnt 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. Roosevelts 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 Feds dry cleaning code. The NRA was later ruled unconstitutional. To raise farm prices, Roosevelts 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 Steinbecks The Grapes of Wrath. New Deal relief programs were steered away from the South, the nations poorest region. A reported 15,654 people were forced from their homes to make way for dams, Powell writes. Farm owners received cash settlement 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.
Posted on: Sat, 26 Jul 2014 20:01:27 +0000
Trending Topics
Recently Viewed Topics
© 2015