FDR Yes, Obama No
FDR solved a financial crisis.


Conrad Black

The Yalta Myth is no longer sufficiently credible to be flammable, and the argument that Roosevelt failed to end the Depression is too foamite-sodden for even so fiendishly persistent and endearing a pyromaniac as the delightful and otherwise rigorous Amity Shlaes to make any headway reigniting it. But, sensing the proximity of tinder with the feral olfactory acuity of a hob ferret detecting the invisible presence of a mate in heat, the Scorch Roosevelt Society has encroached, as softly as bats, on what the Republicans tried, without success, to sell 72 years ago as the “Roosevelt Recession.”

The argument is that Roosevelt threw money out of the windows from 1933 to 1937 to pull out of the Depression, and then eased up; and that the economy therefore relapsed until he was rescued by Hitler and Tojo, in response to whom he was able to absorb the unemployed in the arms buildup and the war. These choristers claim that Obama is about to suffer the same fate, for similar reasons, with no savior in sight, not even one so unbidden as Hitler.

Coming in to office in March 1933, Roosevelt found unemployment at between 25 and 33 percent, depending on which unofficial source is relied on (the states kept these numbers, rather haphazardly, and the Hoover administration was not much interested in precision); and there was no direct federal aid for the jobless. The banking and stock- and commodity-exchange systems had collapsed and shut down. The stock market was down by 90 percent, the money supply had shrunk drastically, there was severe deflation, and 45 percent of the country’s residential accommodation was under threat of mortgage foreclosure. All farm prices were below subsistence levels. Roosevelt instituted gigantic programs that would today be called workfare in the fields of infrastructure and conservation.

By reconstructing the banking system, sponsoring democratically agreed farm-price levels (by free vote of farmers by agricultural category) and incentivizing farmers to scale back production to levels necessary to sustain those prices, refinancing millions of mortgages, and generally infusing optimism into the country, the New Deal achieved in its first year the rehiring of about 4 million of the unemployed, and the absorption of 6 million more in the workfare and conservation programs. So about 60 percent of the unemployed were gainfully occupied within a year. All the codes and blue eagles and parades, attracting the celebrities from Al Jolson to John Steinbeck (the precursors to Warren Beatty and Barbra Streisand) were razzmatazz to boost public morale. All this was the first New Deal.

By 1934, Roosevelt had withdrawn the dollar from the gold standard, though intergovernmental dollar holdings could be translated into gold, and he had fought off the French, British, and German bacterium of reliance on an overvalued U.S. dollar, which lingers yet in the systems of such viral carriers as China. He also established Social Security, the cornerstone of the second New Deal, which provided direct cash relief to the unemployed. But Roosevelt incentivized both public- and private-sector work over what he called “the pauperism of the dole.”