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Guess who said the following: "We have tried spending money. We are spending more than we have ever spent before and it does not work." Was it Sarah Palin? Rush Limbaugh? Karl Rove?
Not even close. It was Henry Morgenthau, Secretary of the Treasury under Franklin D. Roosevelt and one of FDR's closest advisers. He added, "after eight years of this administration we have just as much unemployment as when we started ... and an enormous debt to boot!"
This is just one of the remarkable and eye-opening facts in a must-read book titled "New Deal or Raw Deal?" by Professor Burton W. Folsom, Jr., of Hillsdale College.
Ordinarily, what happened in the 1930s might be something to be left for historians to be concerned about. But the very same kinds of policies that were tried — and failed — during the 1930s are being carried out in Washington today, with the advocates of such policies often invoking FDR's New Deal as a model.
Franklin D. Roosevelt blamed the country's woes on the problems he inherited from his predecessor, much as Barack Obama does today. But unemployment was 20% in the spring of 1939, six long years after Herbert Hoover had left the White House.
Whole generations have been "educated" to believe the Roosevelt administration is what got this country out of the Great Depression. History text books by famous scholars such as Arthur M. Schlesinger Jr. of Harvard and Henry Steele Commager of Columbia have enshrined FDR as a historic savior of this country, and lesser lights in the media and elsewhere have perpetuated the legend.
Although Professor Schlesinger admitted that he had little interest in economics, that did not stop him from making sweeping statements about what a great economic achievement the New Deal was.
Professors Commager and Morris of Columbia likewise declared: "The character of the Republican ascendancy of the twenties had been pervasively negative; the character of the New Deal was overwhelmingly positive."
Anyone unfamiliar with the history of that era might never suspect from such statements that the 1920s were a decade of unprecedented prosperity and the 1930s were a decade of the deepest and longest-lasting depression in American history. But facts have taken a back seat to rhetoric.
In more recent years, there have been both academic studies and popular books debunking some of the myths about the New Deal. Nevertheless, Professor Folsom's book "New Deal or Raw Deal?" breaks new ground. Although written by an academic scholar and based on years of documented research, it is as readable as a newspaper — and a lot more informative than most.
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Posted By: Callidus_Asinus(145) on 11/2/2010 | 9:42 PM ET
Dr. Sowell, are you by chance familiar with Austrian economics?
Posted By: tabrussell(1020) on 11/2/2010 | 9:37 PM ET
Historically, WW2 (and the global rebuild) was the trigger to end the Great Depression, not the New Deal. Sowell is absolutely correct here. But, didn't the shift in focus from stimulus spending to deficit reduction in the late 1930's trigger a second and more severe downturn that built on the large and already-existing foundation for the build-up of WW2? Should we be concerned about history replaying itself again in that sense and perhaps subsequently leading to a WW3?
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