Conrad Black, in today’s Wall Street Journal($), defends the myth that the Roosevelt policies saved markets and capitalism from the ravages of the Great Depression. He does partly by making unemployment appear worse than it was at the begining of his term and better than it actually was towards the end of his term. Black states that unemployment was 33% when Roosevelt took office in 1933 while BLS data (all data as reproted by Atack and Passell, A New View of American History, 628) show a peak at 25% in 1933. Black credits Roosevelt’s programs for reducing unemployment to under 7% if those in workfare programs are counted as employed by September 1939, but the adjusted BLS data actually actually has unemployment reaming above 9% until after 1940. The unadjusted unemployment rate was reamined above 14% through 1940, not the below 10% reported by Black.
The Black’s distortions are even clear when looked at during the middle of Roosevelt’s first term. Christopher Westley observed in “The Roosevelt Nobody Knows“: ”By the midpoint of FDR’s second term, the failure of the New Deal policies was evident to all but the truly delusional. The unemployment rate again reached levels associated with the hated Hoover, while the public’s tolerance of the pretentious New Dealers and their endless attempts to control the economy waned.
In the assessment of Atack and Passell, “A glance at almost any of the statistical data covering the period, such as unemployment, GNP, the money supply, or prices, shows that no matter how kindly disposed one is to Roosevelt’s policies, recovery did not come with the new deal.”
And on the supposed wartime recovery (citing Higgs “Wartime Prosperity ...”, Journal of Economic History, 1992) they comment, “Even then one must question whether or not the exigencies of wartime economy constitute a recovery and a return to normality. Thus, although recovery was one of the goals of New Deal, on this score it can hardly be considered a resounding success.”
As reflected in the above and reinforced by the the excellent analysis of Gallaway and Vedder, Out of Work, on economics the New Deal does not deserve a passing grade — New Deal policy’s not only prolonged the depression, contributed to the 1937-38 recession within a depression. As to crisis management, the policies represent classic mismanagement and not as presented by Black a “huge success.”
