The Man, The Myth, The Legend

Joseph Hirsch Professor Bowen Dec. 05 2006

Tumultuous times ebb and flow in the history of American economics, and no period exemplifies the earth shaking decline and resulting fall out associated with hard ship, unemployment, and an unsure outlook on the countries prosperity as the Great Depression. Exacerbating the situation beyond a short lived recession can be blamed on a number of policies, or more exacting, the person who constructed and aided and abetted the establishment of said policies. Franklin Delanor Rosevalt, henceforth FDR, and his tail coat riding progressives implemented some of the countries most ill agendaed economic ploys, focusing on reform rather than recovery. FDR, who often confronted the country with his morale raising Fireside Chats had good intentions for the countries welfare, but his programs routinely created more turmoil than they cleaned up. The New Deal, and FDR’s subsequent projects and plans further entrenched the United States in a depression whose life span could have been cut in half. GOLD, the longstanding backbone of America’s financial prowess was one of FDR’s first targets. Many Americans kept a private investment of gold, and depended on its value for future needs. Powell continues, “…FDR became convinced that to solve the country’s financial crisis, the federal government had to gain total control over money1” 1933 brought this conception to fruition with the “…Executive Order 6012, which expropriated privately owned gold” Of course Congress members were poorly

informed on this new directive, and it passed the nets of checks and balances. However ingenious this move may have seemed to FDR, the value of the dollar spoke for itself. A sudden decrease in its value in international trading showed the results of FDR’s decision making. But to what end? FDR thought that this coup de gold could raise prices of U.S. farm commodities, however, this proved futile as well. One of the primary effects of this

Jim Powell, FDR’s Folly (New York, Crown Forum Publishing, c2003)

gold hoarding was on the wealthy businessmen of America, those with the largest stores of gold. Entrepreneurial spirit and profit incentives, not to mention, their rewards, were in one swoop sliced and diced. This curtailed any economic ambitions business men might have had, and coupled with the impending implementation of huge tax increases, stifled all means new business activities; a prime factor in pulling the USA out of the depression. Economic depressions are resolved by economic rallies, and economic rallies begin with investments, capital, credit, confidence and other factors contributed to by the veins of big business and the wealthy oligarchy resembling power brokers of Wall Street. However, FDR sought to debilitate these individuals, and “…Blamed them for the Great Depression.” Laze fare, a staple in pre FDR times, provided businessmen the opportunity to generate wealth and bolster the economy, but what could businessmen do if the rewards of their ventures were siphoned from them? The U.S Chamber of Commerce president Henry Harriman said it best, “ …All the country needs is a thorough spirit of cooperation… I mean a condition in which government does not attack business and business does not attack government” Everything received higher taxes, from luxury items including liquor and tobacco, to estates and income, to taxes on companies retaining profits for savings. Powell adds, “ Companies that retained 70 percent of their net income would see 73.91 percent of it go to the government” This UP tax, as it was referred to, discouraged bankers and businessmen alike, If a banker currently stand to lose their bank investment, all is lost, if they stand to profit from their investments, it is first substantially taxed within the company, then taxed again personally as it trickles down to the investors. Economist for all spectrums ridiculed these taxes for the same

reasons, people would no longer have an incentive to invest and create wealth for themselves and their investors. However, little could be done to improve the lot for the big business man. Geisst continues, “Unfortunately, public sympathy for Wall Street and corporate America was nonexistent, so appeals to the average citizen would be useless2” FDR did not stop with gold robbing or mass taxing, he created a slew of acronyms to provide employment and relief to the poor, or so he thought. CCC, PWA, RFC, FERA, CWA, WPA, TVA, How can anyone begin to keep up with all these new agencies, reforms, and administrations devoted to spending tax dollars and attempting to lower unemployment? The CCC or Civilian Conservation Corp aimed to employ young men at a dollar per day to develop national landscapes and improve wilderness areas, a noble idea, but the economics of which were unsound. The private sector was opposed, “labor unions feared this would depress private sector wages1” and adding to its poor planning, “ …Sending a disproportionate amount of money to western states.” The PWA or Public Works Administration was another compassionate attempt at saving the economy through the public sector employment of architects and engineers, focused primarily on water projects, including; bridges, dams, submarines and warships. But once again, the economics of the project were throne aside, and again, public sector employees were being paid a dollar an hour, while simultaneously private sector labor unions were striking for $.75 an hour wages. This was not even the tip of the iceberg, along with poor allocation of funds, personal vendetta’s of FDR were levied upon different parts of the country, whose native inhabitants were collateral damage. In New York the Triborough Bridge projects were almost brought to a stand still over FDR’s
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Charles Geisst, Wall Street (New York, Oxford Press, c1997) Jim Powell, FDR’s Folly (New York, Crown Forum Publishing, c2003)

hatred of Robert Moses. And each of theses administrations had their own set of follies, which are innumerable, and equally damaging in their escapades and experiments with tax dollars and employment. It began to show a wider pattern of corruption with in large scale government organizations and expose the poor planning of FDR and his administration. The problems of which were clear, wasted money, pork barreling, and most importantly, no change in unemployment, which was the primary goal of these projects in general. “After a year and a half of these programs the unemployment rate was still about 22 percent1” A failure! It should be noted, that even though these ambitious programs wasted money and did not improve the overall economic situation, they did create physical assets for the countries, including access to Key West in Florida, and the bridge system of New York. The Great Depression was a difficult time for America, no one will debate the otherwise, except for the few who profited from the fall. In reviewing the Great Depression and its longevity, criticism only goes so far, the key element is to learn from the mistakes that were made, in order to pull ourselves from the next inevitable financial break down all the quicker. If the institutional memory of Wall Street is only 20 years long, the future of the economy rests in the hands of those who don’t try to predict the future, but those who can learn from the past. America is in no position to experience De Ju Vu all over again.


Jim Powell, FDR’s Folly (New York, Crown Forum Publishing, c2003)

WORK CITED: Charles Geisst, Wall Street (New York, Oxford Press, c1997) Jim Powell, FDR’s Folly (New York, Crown Forum Publishing, c2003)