Franklin Roosevelt: The Great Depression

To rescue America from the Great Depression, President Franklin Roosevelt attempted to steer the country on a new economic course. He called his plan the New Deal. Did it succeed, or did it make matters worse? Amity Shlaes, author of The Forgotten Man, explores this critical question.

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Script:

A great commander in chief abroad does not always make a great president at home.

That is the case when it comes to Franklin Delano Roosevelt.

In the 1940s, president Roosevelt led us to victory in world war II. That stunning achievement however obscures Roosevelt's record in the 1930s. In the ‘30s, Roosevelt battled the great depression at home—and met defeat.

To understand how this happened, it helps to remember who Roosevelt was before he became president.

His passion was the sea. An experienced sailor, he knew every crack and cranny of the Atlantic coast. His first work in the federal government was as assistant secretary of the navy, where his mastery of the seas became evident to colleagues.

After serving as governor of New York, Roosevelt was elected president in 1932. The job confronting him was all land. America lay mired in the great depression. One in four was unemployed. Roosevelt made a promise: to put Americans back to work. He would help “the forgotten man,” the “man at the bottom of the economic pyramid.”

To rescue America, the new president decided to steer the country like a ship in a storm, with himself as captain.

Just as a commander calms a nervous crew, Roosevelt told Americans to forget their fear. The only thing to fear, he said was fear itself. Roosevelt also promised to re-rig the economy and run it tight as a ship.

Roosevelt called his re-rig the New Deal, and made its military aspect explicit: this was “a call to arms” he said. The depression was an emergency for which Roosevelt claimed broad executive power. The downturn should be treated like a “foreign foe.”

Perhaps because Roosevelt didn’t like economics very much, the captain recklessly steered the economy into uncharted waters. Roosevelt opted for a command-and-control philosophy, never before tried in peacetime. and he gave himself the broadest possible license—a license to pursue, as he put it, “bold, persistent experimentation.”

Roosevelt called for government to manage industry.

New laws ordered companies to raise prices and wages—even when they couldn’t afford to do so. He slammed individual businessmen. He called big corporations “enemies of peace.”

Roosevelt was a man born into wealth. He imagined that he and his senior crew, his brain trust, could run the economy better than entrepreneurs.

For example, the new national recovery administration decided everything down to how many logs a lumberyard could cut, and at what time—or how many chickens a butcher might sell.

But in the storm of the 1930s, few dared mutiny. Maybe this was the way economies were now supposed to work. That's what Roosevelt's “experts” said.

Roosevelt subsidized farmers and created temporary jobs in the arts; social work experienced a boom. He promised pensions to seniors. That sounded good. And the New Deal backed organized labor’s demands for much higher wages. The recovery was just around the next bend, Roosevelt promised. All Americans had to do was wait for it.

As the years passed, however, the recovery stayed away.

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