Eagle Forum Legislative Alerts

Monday, November 19, 2012

Is Today Like the Great Depression?

Today’s high unemployment rates invite comparisons with the Great Depression of the 1930s. Is it pretty much the same, and are Barack Obama’s remedies helping to restore prosperity like President Franklin D. Roosevelt’s programs are said to do? The best source to answer these questions is Burton Folsom, a professor of history at the University of Pittsburgh, who has written several books on the FDR Administration. He specifically addresses this question, How effective were Franklin D. Roosevelt’s New Deal programs of the 1930s and did they help end the Great Depression? Conventional wisdom says yes. But Professor Folsom dug into authentic old papers and found a revealing statement by Henry Morgenthau, who was President Roosevelt’s personal friend and Secretary of the Treasury. Here is Secretary Morgenthau’s own statement when unemployment hit 20.7% in April 1939 toward the end of Roosevelt’s second term. Quoting from Morgenthau: “We have tried spending money. We are spending more than we have ever spent before and it does not work.... I say after eight years of this administration we have just as much unemployment as when we started ... And an enormous debt to boot!”

The New Deal gave us our first taste of using massive federal spending to create jobs, and it didn’t work. It was a ten-year disaster. The higher tax rates on the income of individuals and businesses stifled investment and stopped new industries from forming. Then World War II put millions to work, but that didn’t end the depression. The end came only after World War II, when the Republican Congress, elected on the slogan “Had enough?” drastically reduced the tax rates and government regulations. By the end of 1946, unemployment was only 3.9% and government had annual budget surpluses. America was responding to freedom. That’s a lesson we should all learn.

Listen to the radio commentary here:

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