DID FDR END THE DEPRESSION?
April 12, 2010
"He got us out of the Great Depression." That's probably the most frequent comment made about President Franklin Roosevelt, who died 65 years ago today. It's a myth. FDR did not get us out of the Great Depression -- not during the 1930s, and only in a limited sense during World War II, say Burton Folsom Jr., a professor of history at Hillsdale College, and Anita Folsom, director of Hillsdale College's annual Free Market Forum.
Let's start with the New Deal:
- Its various alphabet-soup agencies -- the WPA, AAA, NRA and even the TVA (Tennessee Valley Authority)--failed to create sustainable jobs.
- In May 1939, U.S. unemployment still exceeded 20 percent, while European countries, according to a League of Nations survey, averaged only about 12 percent in 1938.
- The New Deal, by forcing taxes up and discouraging entrepreneurs from investing, probably did more harm than good.
What about World War II? We need to understand that the near-full employment during the conflict was temporary, says the Folsoms:
- Ten million to 12 million soldiers overseas and another 10 million to 15 million people making tanks, bullets and war materiel do not a lasting recovery make.
- The country essentially traded temporary jobs for a skyrocketing national debt. Many of those jobs had little or no value after the war.
Roosevelt died before the war ended and before he could implement his New Deal revival. His successor, Harry Truman, in a 16,000 word message on Sept. 6, 1945, urged Congress to enact FDR's ideas as the best way to achieve full employment after the war.
Congress -- both chambers with Democratic majorities -- responded by just saying "no." No to the whole New Deal revival: No federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.
Instead, Congress reduced taxes, and the American economy recovered well, say the Folsoms. Unemployment, which had been in double digits throughout the 1930s, was only 3.9 percent in 1946 and, except for a couple of short recessions, remained in that range for the next decade.
Source: Burton Folsom Jr. and Anita Folsom, "Did FDR End the Depression?" Wall Street Journal, April 12, 2010.
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