Franklin Delano Roosevelt: The Myth Of The Great Depression

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History is like cement, in that quickly after events occur, our understanding forms and hardens quickly and is difficult to change after it hardens. This period of “hardening” of our understanding of the Great Depression occurred during World War II, a time when Franklin Delano Roosevelt was still president. Roosevelt’s elongated presidency and sharp turn of perspective from domestic to foreign policy helped form a distorted view of the Great Depression that was favourable to Roosevelt. According to Lawrence Reed, one of these myths of the Great Depression is that it was caused by the free market. This myth could not be farther from the truth. Firstly, the economy had been free for more than 100 years. Without government intervention,…show more content…
This is also untrue. Franklin Delano Roosevelt stated himself that Hoover was the “greatest spending administration in peacetime in all of history.” His vice president accused Hoover of leading the country to socialism. Hoover also championed the Smoot-Hawley Tariff, which increased tariffs on many goods to unprofitable levels. Franklin Delano Roosevelt did not fix the Great Depression; rather, Roosevelt elongated it. Roosevelt managed an administration that devalued the dollar by 40%. By declaring a bank holiday, Roosevelt caused the closing of over 5,000 banks, roughly 3,000 temporarily and 2,000 permanently. Spending skyrocketed by 83 percent; this increased the federal debt by 73 percent. By hiking takes to insane levels of 90 to 100 percent, Roosevelt made it socially illegal to be wealthy, leading to fear for those who work for their money. The true cause of the Great Depression was irresponsible government intervention. The money supply was increased by 60% by the Federal Reserve. This drove interest rates down and temporarily bolstered the economy before it came crashing down. As a response to its own actions, the Federal Reserve then began to charge more interest on loans, shrinking the money supply by 30%, making interest far more at inflation-adjusted…show more content…
Roosevelt’s “bank holiday” sounded great to the American people, but resulted in an excuse for banks to close their doors. Roosevelt also did not use economic strategy when making important financial decisions, sometimes resorting to picking “a lucky number.” Deficit spending without intention to later repay the debt created a problem that is still being dealt with today. Farm products were destroyed in an attempt to increase prices, while ignoring the fact that people could not afford this food in the first place. Large business taxes to fund programs overseeing business increased the cost of doing business by 40%. In addition, the labor movement was given enormous power in the Wagner Act, crippling business’ abilities to negotiate settlements with employees. Overall, Roosevelt stretched the Great Depression, which may only have lasted 2 to 3 years, to a 9-year economic drought, only to be ended by the sequel to the War to End All Wars. Before the Depression, laissez-faire was the overall understanding of the American people. Although this practice was not followed exactly, sometimes for the better and sometimes for the worse, it was a general standard to adhere to, and any deviations kept to a minimal. During Roosevelt’s administration, the understanding was reversed. When the economy failed, a lack of government intervention was blamed. Laissez-faire was seen as evil

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