"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot."
--Henry Morgenthau, Secretary of Treasury under FDR, as written in his personal diary in May 1939
7 comments:
Most historians now agree that FDR didn't do much for the economy, and that it was WWII which got us out of the depression. This is an interesting document which helps prove this.
Speaking of bad presidents, Happy Lincoln's birthday!
John---I don't know what you have been reading that the diary entry was purportedly taken from, but I found this on Amazon.com, a review of "The Forgotten Man":
-----"CHECK THE ECONOMIC NUMBERS! This book does not match the facts. The actual economic stats show this book to be inaccurate. Why does this book not include even the most important economic statistics, like GDP? This is not an accurate book. Check the stats! What were the actual effects of the New Deal? As Ronald Reagan said, "Trust, but verify."
If you look up the the economic statistics online (do that now) you will find that, from the time FDR took office in early 1933 to 1937, GDP grew a staggering 63%. In 1933, GDP dropped only 4% to 56.4 billion as FDR stopped the worst of the crisis. The country had been in depression for three years. In 1934 under FDR, GDP grew a robust 17% to 66 billion. WOW! In 1935, GDP grew 11% to 73.3 billion. In 1936, GDP grew 14% to 83.8 billion. In 1937, GDP grew 10% to 91.9 billion. CHECK THE NUMBERS! That is the strongest economic record in American history - that is a fact!
Personal income (money in the hands of consumers after taxes) increased a staggering 45.5% from the beginning of 1933 through 1937. That is a fact! It's no surprise that in 1936 the American people reelected FDR to the biggest electoral landslide in the 20th Century. CHECK THE NUMBERS!
According to Federal Reserve Chairman Ben Bernanke, America's top economist, in his excellent economics book "Essays on the Great Depression" (on page 248), "Between 1933 and 1937, employment in U.S. manufacturing rose by 3.4 percent per QUARTER, and output by 5.0 percent per QUARTER." The economic statistics show, in summary (on page 248), that "the New Deal era, 1933-41, was a period of general economic growth." Real wages, productivity, and employment grew strongly during the New Deal, the statistics show. CHECK THE NUMBERS.
FDR was able to cut the unemployment rate by around two-thirds to only 12% by 1937, which is impressive. What is especially troubling is that the unemployment numbers cited in "The Forgotten" man do not match the unemployment statistics! Check the numbers. Furthermore, if you include government jobs to build tens of thousands of infrastructure structures in the economy, which are not included in the employment stats, the unemployment rate drops even further to around 4%.
Examples of these investments include the Norris Dam, Humboldt River Aqueduct, Los Angeles Aqueduct, Bonneville Navigation Dam, Grand Coulee Dam, Pocatello Reservoir, All American Irrigation Canal, Wyoming Drought Canal, Houston Ship Canal, Denver Water Tunnel, Nebraska Power Project, Fort Peck Dam, Mississippi erosion Mattress, and 26 Dams and Locks on the St. Louis-Minneapolis Waterway. Thousands of schools, bridges and tunnels were also built - too many to list. FDR's massive public investments in energy, water, and credit greatly developed the infrastructure of the Southwest (especially), Northwest, South and to a lesser extent other areas. The investments made the Southwest region viable for private economic investment. L.A. gets its water from an FDR-built aquaduct. These investments helped fuel the decades of booming economic expansion that followed - the great post-war boom. Check the numbers."----- The review goes on.----
Also, besides all the improvements to the infrastructure that aided private enterprise later, FDR helped create America's middle class with the GI Bill of Rights that sent returning soldiers to college, helped with down payments on new homes, etc.
This demeaning of the long dead is disturbing --- we should allow spirits to rest.
The fact is unemployment lines are getting longer, and in those dire circumstances, people could care less about the freedom of markets.
Emilie
Port Orchard, WA
Emilie,
That particular reviewer manipulates statistics in an impressive way. He/she is no doubt a radical progressive intent on ignoring history. While it’s true that unemployment declined slightly in FDR’s first term, things got much worse after his re-election. This person says that by 1937 unemployment was down from 24% to 14%, but fails to mention that in 1938 it was 19% and >20% in 1939. This is a full 6 years after FDR’s policies were implemented and over a decade after the stock market crash. Never in the 30s did unemployment dip below 14%. How on earth can anyone say the New Deal was a success?
This person says that GDP increased during the 30s. So what? That means nothing when the gov’t consumes 40% of the GDP and 20% of the people are unemployed.
FDR tripled federal taxes, ordered the breakup of America’s strongest banks (those with the lowest failure rates), destroyed food – some 10 million acres of crops and 6 million farm animals – in the name of price controls. Even Keynes himself criticized some of the policies as a hindrance to recovery. Now that’s saying something!
Shortly after WWI, the economy dipped into a recession. Harding responded with fiscal conservatism, dropping taxes and riding it out. The recession was over within a year and what followed was the roaring 20s. In 1929, Hoover responded to the stock market crash with an opposite approach, one of big spending and high taxes, and FDR expanded it greatly. As a result, the recession of 1929 quickly became what we now call the Great Depression.
Since then, we have endured multiple recessions and every time the government responded with drastic tax cuts these recessions were short lived. Kennedy did it, Reagan did it, Bush II did it. Without exception, these policies halted economic decline and led to recovery. Without exception.
In contrast, the two major examples of big government spending in response to a recession – the New Deal and 1990s Japan – led to a worsening of the economic situation. History doesn’t lie, even when people try to manipulate it for their own agenda.
Regardless, Obama will follow FDR’s model. As a result, we will see the economy get worse. By 2010, inflation will begin to rise sharply, interest rates will follow, unemployment may improve slightly followed by another sharp increase, and the GDP will begin to shrink. Maybe, just maybe, a GOP majority at that time will be able to reverse it before it’s too late. I don’t know. Either way, Obama has sealed his fate as a one-term president.
Hopefully, the debate between fiscal conservatism and Keynesian economics will finally be brought to an end. Once Obama’s plan fails, hopefully we will finally be able to acknowledge that Keynes was wrong and that tax cuts are the best response to a recession. But somehow I doubt that will happen. The Obama Deal failure will certainly be blamed on Bush and the GOP.
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Dr Washburn,
I've shared your concern with Creeping Socialism that has been tried numerous times in Europe with only marginal success, but this time...it's really different!
With Uncle George Soros "Open Borders", Eric (pardon the big cats for Clinton) Holder as the new Att General heading up the U.S. Department of Justice, Robert Malley off to Syria, and Joseph Onek, another Soros flunky as Sr Advisor to Nancy Pelosi, Barney Frank & Chris Dodd in charge of House & Senate Banking breaking the big Lending Institutions, combining with the Trillion Dollar Stimulus Package providing the big bucks to ACORN to register all of those poor-folks in "disenfranchized" high-crime neighborhoods kept busy Registering Voters & Stuffing Ballot Boxes in 13 key states... and with a new Democratic Appointment to the Federal Communications Commission (FCC) to harness in those nasty 'Vast Right-Wing Conspirators' on Talk-Radio, & the glib TV Commentators like Bill OReilly & Laura Inghram restricted, it looks like a serious effort to re-establish the so-called Fairness Doctrine.
It appears to be The End-Game For The Two-Party System We've All Learned To Love & Trust ~ Obama-Mania wins ALL of the marbles, and the Blue-Haired, Bingo-Playin' Grassroots-Celeb-Worshipers WIN, and they don't have a clue how it was done!
We've all been Suckered; tell me I'm wrong.
>>
Aunty Em: Your "Yankee Commentary" is back w/ a Rick-The-Blogger tag, and a new template.
Tired & a bit weary with my rant at 1:20 AM Eastern...goodnight all. reb
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www.lazyonebenn.blogspot.com
Emilie:
Nice selective use of statistics. No mention that in 1937-38 GNP contracted as much as it did in any year of the period 1929-33. Unemployment never fell below 12% during the 1930s, which means the best of the 1930s was still worse than the darkest days of 1981-82. By 1938 unemployment was back up to 20% and the GOP won an amazing 80 seats in the House that year.
In the "depression" of 1919-21 GNP contracted as much as in any one year between 1929-33. But by 1922, the economy began growing rapidly once again and by 1923 unemployment which had been well over 10% in 1921 was back down to 3-4%
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