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
1
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

2
Charles Geisst, Wall Street (New York, Oxford Press, c1997)
1
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.

1
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)