Just came across this article about FDR and the New Deal.
The article goes on to describe the above events in greater detail. The gist of it is, that the Great Depression was not caused by a failure of markets, but exacerbated by actions of the Fed. That the New Deal did not save us from the Great Depression, but prolonged it.
An interesting read. Thoughts?
Where to begin, where to begin.
Well, let’s start at the end:
The Great Depression started with the Crash of October 1929. FDR took office in March of 1933, three and a half years later. So blame for that first part, if blame is to be apportioned, properly goes to the stereotypical American scapegoat of the Depression, deserved or not, Hoover.
FDIC insurance demonstrably stopped bank failures, also. FDIC insurance went into effect on January 1, 1934. There were 9 bank failures that year, compared to more than 9000 in the prior four years:
(above is yet another PDF, annoyingly.)
As for the rest, I’m not qualified to say much, and I won’t. But second-guessing the man 60 some odd years later, when the people who actually experienced the era were, in my experience, universally grateful to FDR, strikes me as carping taken to a new level. Given a nearly impossible situation, he quite literally saved the Republic. There could easily have been a communist revolution had things been mishandled, or just as easily a Fascist regime, I suppose. That neither of these things happened is prima facie evidence of enormous success, IMO. It’s the dog that didn’t bark.
Pantom does a fairly good job of making the case against the revisionist anti-Roosevelt argument. I’d observe the following:
[ul][li]It is not strictly kosher to make Hoover into a scapegoat, either. He was well aware that the Crash betokened serious economic problems. Due to social stratification and a pre-Roosevelt tendency for Presidents to remain somewhat isolated from the daily life of the country, he did not grasp the unprecedented impact of the Great Depression on the everyday lives of most Americans. But he was combatting the problem by the means available to him and in accord with Republican principles: shoring up American businesses and trying to restore confidence in them, with the idea that a bootstrap approach of businesses rebounding and hiring back workers, whose incomes would then be spent to put more money back into circulation, increasing business profits, which would then lead to hiring more workers… This approach might have worked on a less catastrophic economic collapse than the Depression, but did not come close to solving the near- and mid-term problems of everyday Americans without jobs or income, most of whom had little or no savings.[/li]
[li]The argument that Roosevelt’s assortment of programs did not cure the problem but merely masked it is both true and false. There is little doubt that the infusion of government money and regulations aimed at preventing further decline did help. Most importantly, they made money enough to eke out at least a bare living available to the poorer segment of America, who were largely in critical straits. That they treated symptoms rather than providing a cure may well be true – but in economics as in medicine, sometimes the necessary solution to an ailment is to provide such medicines as will ease suffering and the debilitating effects of an ailment, and give the body time and resources to cure itself. To a certain extent, this is true of the body politic and its economy as well – it will heal if it has the tools to heal itself with and is not engaged in hemorrhaging.[/li]
Revisionist historians downplay the extent of social disturbance in the 1930-33 period. People had quite frankly lost faith in the government’s ability and willingness to alleviate the quite real and radical problems facing the country, and were prepared to try anything that sounded like a solution. There were, for example, farmers in Iowa prepared to fight off police serving foreclosure papers at gunpoint. Almost everybody had a sure-fire solution to America’s economic ills, and was prepared to preach it at the drop of a hat – and many of them called for the overthrow of a government that was demonstrably ineffective in solving the problems. Whatever else he may have done, Roosevelt prevented that from turning into anything serious.[/ul]
As the OP pointed out, the 1930’s were a time of continuous depressions. There was a rather feeble revovery in 1933 and 1936, but the Great Depression did not end until the USA entered WWII…and (by default) the government itself became the largest employer.
I don’t think that most of the “New Deal” policies had much effect on the course of the depression…the main reason why the depression was so long and hard was the Federal Reserve. Because of fear of inflation, the Fed did not expand the money supply-which caused a massive DEFLATION. The evidence of this? In 1933 my grandfather bought a house for about $6000.00-the house had been built in 1924…when new it sold for >$25,000.00! Deflation caused shrinking payrolls, depressed profits, and general economic distress. Why nobody saw this? The economists of the time felt that the government should not intervene. In sum, had the USA decidedon a massive reamament program in 1932, the depression would have ended then.
It is interesting to think that WWII brought the US out of the world-wide economic depression of the 1930’s. And yet WWII was a time of maximum government interference with the “free” market.
As far as the economic system goes, it made no difference whether the war materials were shot up in battle or just parked on Sourth Pacific isles. The war, however, made it politically possible for the government to control the economy to an extent impossible in peacetime.
Sure, government control of resources led to black markets, but they were quite insignificant in the over all scheme of things. On the whole, WWII was a time of prosperity for the great majority of the population that wasn’t actually in the armed forces.