The Mythology of Roosevelt and the New Deal

By Higgs, Robert | Freeman, September 1998 | Go to article overview

The Mythology of Roosevelt and the New Deal


Higgs, Robert, Freeman


The Great Depression was a watershed in American history. Soon after Herbert Hoover assumed the presidency in 1929, the economy began to decline, and between 1930 and 1933 the contraction assumed catastrophic proportions never experienced before or since in the United States. Disgusted by Hoover's inability to stem the collapse, in 1932 the voters elected Franklin Delano Roosevelt, along with a heavily Democratic Congress, and set in motion the radical restructuring of government's role in the economy known as the New Deal.

With few exceptions, historians have taken a positive view of the New Deal. They have generally praised such measures as the massive relief programs for the unemployed; the expanded federal regulation of agriculture, industry, finance, and labor relations; the establishment of a legal minimum wage; and the creation of Social Security with its oldage pensions, unemployment insurance, and income supplements for dependent children in single-parent families, the aged poor, the physically handicapped, and the blind. In the construction of the American regulatory and welfare state, no one looms larger than FDR.

For this accomplishment, along with his wartime leadership, historians and the general public alike rank Franklin D. Roosevelt among the greatest of American presidents.

Roosevelt, it is said repeatedly, restored hope to the American people when they had fallen into despair because of the seemingly endless depression, and his policies "saved capitalism" by mitigating its intrinsic cruelties and inequalities.

This view of Roosevelt and the New Deal amounts to a myth compounded of ideological predisposition and historical misunderstanding. In a 1936 book called The Menace of Roosevelt and His Policies, Howard E. Kershner came closer to the truth when he wrote that Roosevelt

took charge of our government when it was comparatively simple, and for the most part confined to the essential functions of government, and transformed it into a highly complex, bungling agency for throttling business and bedeviling the private lives of free people. It is no exaggeration to say that he took the government when it was a small racket and made a large racket out of it.'

As this statement illustrates, not everyone admired FDR during the 1930s. Although historians have tended to view Roosevelt's opponents as self-interested reactionaries, the legions of "Roosevelt haters" actually had a clearer view of the economic consequences of the New Deal. The nearly 17 million men and women who, even in Roosevelt's moment of supreme triumph in 1936, voted for Alf Landon could not all have been plutocrats.

Prolonging the Depression

The irony is that even if Roosevelt did help to lift the spirits of the American people in the depths of the depression-an uplift for which no compelling documentation exists-this achievement only led the public to labor under an illusion. After all, the root cause of the prevailing malaise was the continuation of the depression. Had the masses understood that the New Deal was only prolonging the depression, they would have had good reason to reject it and its vaunted leader.

In fact, as many observers claimed at the time, the New Deal did prolong the depression. Had Roosevelt only kept his inoffensive campaign promises of 1932-cut federal spending, balance the budget, maintain a sound currency, stop bureaucratic centralization in Washington-the depression might have passed into history before his next campaign in 1936. But instead, FDR and Congress, especially during the congressional sessions of 1933 and 1935, embraced interventionist policies on a wide front. With its bewildering, incoherent mass of new expenditures, taxes, subsidies, regulations, and direct government participation in productive activities, the New Deal created so much confusion, fear, uncertainty, and hostility among businessmen and investors that private investment, and hence overall private economic activity, never recovered enough to restore the high levels of production and employment enjoyed in the 1920s. …

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