Can Government Actually Prolong a Depression?

This is not a political posting nor do the words here reflect a bias towards any party or ideology. However, from time to time I may comment on a book that I think deserves some attention, particularly if it is germane to the problems we face today. One such books is “New Deal or Raw Deal” by Burton W. Folsom, Jr. which describes the Roosevelt Administration and its action in coping with the worse economic depression in our history following the stock market crash of 1929.

The perception of the public has always been that the New Deal ended the Great Depression and, therefore, New Deal policies are needed to pull us out of our current crisis. Well, nothing could be further from the truth.

This book covers the years of FDR’s presidency from 1933 until his death in 1945 and describes the policies he instituted and the way he used them to control Congress and eventually attempted to stack the Supreme Court with judges who would support his “progressive” agenda. Many of his policies were eventually declared unconstitutional by this same court and were rescinded.

I think it is important to read this book because it provides a benchmark on how not to approach the dilemma we now face and how excessive government intervention can restrict a free economy and actually make matters worse. The United States was one of the last nations to recover from that depression; in fact, the unemployment rate in 1939 was over 20%, ten years after the great crash. This was greater than it was in 1933 when FDR first took office. Since FDR’s objective was to get the country working again; clearly he failed and the Great Depression continued long after his ascent to the presidency.

FDR has enjoyed a status among many presidential historians that puts him among the greats, at least in the top five. After reading this book you may change your mind. He just dropped to somewhere in the middle of my list. In fact, his policies actually worsened unemployment, prolonged the Depression, and introduced concepts that continue to divide us today. Maybe our politicians should review this period of our history before they push through any so-called “stimulus” package. What we need now is cool, calm, and prudent analysis followed by effective bipartisan action. Clearly, this is an issue that transcends Left versus Right or Democrat versus Republican.