New Deal

programs put in place by FDR to "end" the Great Depression in the USA. We think of it being mostly about a Safety Net, but it heavily involved market control.

  • did it trigger the Roosevelt Recession of 1937-1939? Even drag out the Great Duration?

    • FDR resorted to trying to add 7 justices to the Supreme Court! Roosevelt and an overwhelmingly Democratic Congress faced a Court that had for 30 years been interpreting the Constitution as espousing the doctrine of "freedom of Contract," which proved hostile to New Deal legislation. That was in 1937, and thereafter the voting balance switched to support New Deal policies.

      • The "FourHorsemen" was the nickname given to four conservative members of the United States Supreme Court during the 1932-1937 terms, who opposed the New Deal agenda of President Franklin Roosevelt. They were Justices James Clark McReynolds, George Sutherland, Willis Van Devanter, and Pierce Butler. They were opposed by the liberal "Three Musketeers" - Louis Brandeis, Benjamin Cardozo, and Harlan Stone, with Chief Justice Charles Evans Hughes and Justice Owen J. Roberts controlling the balance. Hughes was more inclined to join the liberals, but Roberts was often swayed to the side of the conservatives.

      • West Coast Hotel Vs Parrish (Minimum Wage) case - Majority by: Hughes, Joined by: Brandeis, Stone, Roberts (who switched sides at last minute), Cardozo; Dissent by: Sutherland, Joined by: Van Devanter, McReynolds, Butler

      • NlrbVsJones case - Majority by: Hughes (Although) activities may be intrastate in character when separately considered, if they have such a close and substantial relation to Inter State commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, congress cannot be denied the power to exercise that control., Joined by: Brandeis, Stone, Roberts, Cardozo; Dissent by: McReynolds, Joined by: Van Devanter, Sutherland, Butler

      • By 1941, following the deaths of Justices Cardozo (1938) & Butler (1939), and the resignations of McReynolds (1941), Van Devanter (1937), Sutherland (1938), Brandeis (1939), & Hughes (1941), only two Justices (former Associate Justice, by then promoted to Chief Justice, Stone, and Associate Justice Roberts) remained from the Court Roosevelt inherited in 1933.

  • was the depression "really" ended by World War II?

Libertarian/Conservative critique

Amity Shlaes writes - Perverse monetary policy was the greatest cause of the Great Depression. But five non-monetary missteps were important in making the Depression great:... Giving in to protectionism... Blaming the messenger... Increasing taxes in a downturn... Assuming bigger government will bring back growth... Ignoring the cost of inconsistency.

Anthony Gregory says History has showed this to be the case. In a time when corporations were seen as too big and monopolistic, Roosevelt's National Recovery Administration forced them to merge. In a time when Americans were going hungry, Roosevelt's Agricultural Adjustment Administration spent hundreds of millions of dollars to encourage farmers to kill livestock and destroy crops, and it paid a sugar corporation not to produce sugar. His Civilian Conservation Corps paid good money to youth to dig holes and fill them up when they could have actually been producing something. The government jailed tailors who sold suits for less than the legal price... And in spite of conventional wisdom, the Standard Of Living in America didn't pick up because of World War II, but only afterwards, when politicians stopped trying to run everything.

Murray Rothbard wrote Only the few laissez-faire liberals saw the direct filiation between Hoover's cartelist program and the fascistic cartelization imposed by the New Deal's NRA and AAA, and few realized that the origin of these programs was specifically such BigBusiness collectivist plans as the famous Swope Plan, spawned by Gerard Swope, head of General Electric in late 1931, and adopted by most big business groups in the following year

  • His scheme proposed a national organization of modified cartels in which competition would be limited, overproduction governed, workers and investors vigorously protected. Overseer, referee and adviser of the program would be the Federal Trade Commission or "a bureau of the Department of Commerce or some Federal supervisory body specially constituted. . . . There is nothing new or original in what I am proposing," admitted President Swope. "I am merely bringing together well-considered propositions that have found support, including some that have been put into actual practice. . . . Legislation will be required to make such a plan possible, including the probable modification of some existing laws," notably the Sherman Anti-Trust law.

George Leef reviews Amity Shlaes' The Forgotten Man with Her lucid and highly readable book leaves the reader with the understanding that capitalism got a bum rap in the 1930s and that the New Deal, far from being brilliant, was a nightmare... The little-known truth (although painfully evident at the time) is that economic conditions had improved only slightly during Roosevelt's first term and took a nosedive in the latter half of 1937, giving the nation a depression within a depression. While the United States had suffered through recessions in the past (always, Murray Rothbard has shown, owing to monetary bungling by the government), not one had lasted more than two years. Instead of hastening the normal recovery, the efforts of Hoover and Roosevelt had managed only to deepen and lengthen the misery while transforming the nation in terrible ways... As an aside, one can't help wondering what the United States would be like today if, instead of turning to coercive, statist "remedies" for the Depression, Americans had drawn the correct conclusions and turned away from the bad policies they already had, especially high Tariff-s and Central Banking... A hallmark of modern politics in America is the use of cronies to shape public opinion by creating good news where there really isn't any and pinning the blame for bad news on scapegoats. Those tactics were perfected in Roosevelt's first term. Shlaes points out, for example, that the federal government hired lots of artists whose job it became to do everything they could to extol the New Deal. The Federal Theater Project, for example, dramatized the evils of electric power companies and suggested that governmental ownership along Tennessee Valley Authority lines would be the people's salvation. And photographers were paid to seek out scenes that would cast a favorable light on the New Deal. Bill Clinton didn't invent the "continuing campaign" - Roosevelt did.

While popular accounts hold that government corrective action did not begin until 1933, after the defeat of President Herbert Hoover by Franklin Delano Roosevelt, that is not the case. After the stock-market crash, Hoover signed the historic Smoot Hawley tariff increase, crippling U.S. exports and world trade generally; pressured businessmen to maintain high real wages despite falling prices and a declining demand for labor; supported increased government spending; raised taxes; engaged in deficit spending; and backed the creation of new interventionist programs and agencies, such as the Reconstruction Finance Corporation to funnel capital to favored failing banks, railroads, and state governments. This was hardly laissez faire. As historian William Appleman Williams wrote, Hoover was not the last of the old presidents but the first of the new. (That mini-essay is followed by many links to references.)

the birth of Social Security

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