Great Depression Policies

I am very tired of hearing that FDR and the New Deal helped America get out of the Great depression after Hoover put us in it. In history classes I remember being taught that the depression was Hoover’s fault and that Franklin Delano Roosevelt bravely pulled the plane out of its collision course with his New Deal. FDR and Hoover have always been set at odds with each other in my mind, but something has never seemed right with this set up.

As I started to take more of an interest in history, I learned about the period of time that saw the largest dive in U.S. price level that it had ever seen. A 24% drop in GNP was a definite sign of the painful times that were ahead. The president at the time decided that he should dismantle some government bureaucracies that had been established during WW1. This leader of the nation also had deep concern over the $25 billion in debt that had been run up on the tab and the whole time his mantra was, “less government in business”. This president was quoted as saying, “We need vastly more freedom than we do regulation.” This period of time brought about a lot of charity and soup kitchen work for those looking to help fellow citizens who had fallen on hard times. The unemployment rate reached 11.9%. As the problem seemed to worsen, the president pulled back and removed many government pieces from the puzzle. Congress wanted to come to the rescue but the president told them to hold back. Even the president’s own secretary of commerce pleaded and argued with him to get involved to rescue the economy, but he wasn’t having it. The big reveal that you may have built up in your minds is that the president was Herbert Hoover and his policies made the Great Depression happen. This is part of what has never quite felt right about the story that I have been told in history classes. I was indeed told that Hoover did not want government intervention. But I was then given a lesson about the Smoot-Hawley Tariff which made things in the Depression worse after the crash in 1929. I have also read about wage freezes that were ordered during this time, which again, did not help. Those seem like government intervention to me. Now is the moment when I bring out the actual big reveal that the president I spoke about earlier was Warren G. Harding and the year was 1921. All the products in the country dropped half of their value in 1921 and Warren G. just cut taxes and waited it out. His secretary of commerce that was so antsy to intervene (prepare for another big reveal) was Herbert Hoover. The U.S. pulled out of this disaster quickly, with unemployment pulling back to 6.7% by 1922 and by 1923 the roaring twenties were well underway. When they crashed down Herbert Hoover was in charge and free to intervene all he wanted.

At this point the history classes have told us that Hoover did so much damage that it took at least 3 terms of FDR to fix it with the right kind of intervention. This is where I say bullcrap. With the 20/20 vision of hindsight Harold L. Cole and Lee E. Ohanian of UCLA looked over Great Depression policies and found that Roosevelt actually hurt more than he helped. In addition to prolonging the Great Depression FDR also trampled all over the Constitution of the United States. He was called on it a few times with the reversal of some policies. A huge unconstitutional dream of his was to have a second bill of rights (which I guess would have been constitutional if it had been amended in). The principles behind this second bill of rights are enough to make anyone who doesn’t like being forced to do anything sick to their stomachs. Included in his wishlist were the right to food, the right to a house, the right the a job, the right to medical care. As I will further demonstrate in an impending post none of these things can be claimed as rights by anyone. Claiming those as rights for people and forcing citizens to provide such things for others goes against the purpose of our established government and is a violation of any official’s oath of office.

In case you missed it I would have been very frustrated with people who kept voting for FDR as he was holding them down. To drive that point home a bit more I will leave it to the great Thomas Sowell:

To me FDR and Hoover are not at odds with each other, but rather had only slight disagreements about which ways government should overstep its bounds and make things worse. Protect rights and enforce laws. And do it in that order, that is all government should do.