The New Deal: Response to FDR's Folly by Jim Powell

Résumé du document

What Can We Learn from FDR's Mistakes? The title and content of the last chapter of the book FDR's Folly illustrate the real purpose of Jim Powell through this book. It defended a laissez faire approach to today's economic problems. This aim led him to emphasize the downside of the New Deal and leave aside what doesn't meet his thesis and highlight the positive achievements of the New deal. Noticing the author's apparent refusal to include anything that might possibly reflect favorably on the thirty-second president, John Moser ironically asked how such a bad president managed to be reelected thrice, and each time by a convincing margin. It is true that the historians of the New Deal had long been overwhelmingly adulatory. Even amongst the New Deal's opponents, historians who criticized Roosevelt for tampering with the free market had long been outnumbered by historians from the Marxist left. FDR's Folly would have usefully balanced the traditional analysis of the New Deal if the book had not been so one-sided. Indeed, there is a large amount of truth in FDR's Folly and this paper doesn't aim to refute this large part of the book. On the other hand, Jim Powell has a very debatable analysis of some measures of the New Deal and even more important, he omits a lot of positive achievements of the leader and as a result, he concludes negatively on the New Deal.

Extraits

[...] The FDIC still exist as well. This paper is too brief to permit a presentation of the Home Owners Loan Corporation (HOLC). Nevertheless, this extremely popular security program deserves to be noticed because it clearly showed how the New Deal enabled people to survive the Great Depression and profoundly shaped the American society after war. Indeed, HOLC refinanced and made secure almost one fifth of all the private homes in America (Edsforth 193). In the long run these programs built up America's middle class by opening the possibility of home ownership to millions of families who would have been ineligible for home loans before the New Deal. [...]

[...] Restoring confidence was the leitmotif of President Roosevelt at the beginning of his first term. Powell himself admits that President Roosevelt's personality, communication skill and “fireside chats” helped to bring back confidence (Powell 55, Edsforth 121). The Federal Bank Deposit Insurance Corporation (FBDIC, later simply FDIC), created by the Glass-Steagall Banking Act of 1933, was a key element to put an end to bank panics. This new entity guaranteed individual bank deposit up to $5,000 and was funded by minimal subscriptions from Federal Reserve member institutions. [...]

[...] In 1932, the federal government spent $208 million on relief. This system was nevertheless stretched to the breaking point at a time when the unemployment rate reached 50% in many cities. In 1935 under FDR more than billion were dedicated to relief. Eventually the total would reach more than $11 billion (Leuchtenburg, The FDR Years 255). Public works programs enabled poor workers to feed their families while also preventing the social problems alcoholism, domestic violence, broken families, and crime resulting from the demoralizing effect of unemployment. [...]

[...] The Federal Reserve Board, a committee of seven bank officials, each equal of the others, was generally unable to agree on bold actions and therefore tended to do nothing (35). Consequently, President Roosevelt should be credited for his reform of the Federal Reserve System, what Powell obviously does not admit. The Banking Act of 1935 authored by Marriner Eccles gave power to the President to appoint the seven members of the Board of Governors, including a chairman. The Board was given effective power over interest rates, discounting, reserve requirements, and open market operations (Edsforth 193). [...]

[...] It is true that the historians of the New Deal had long been overwhelmingly adulatory. Even amongst the New Deal's opponents, historians who criticized Roosevelt for tampering with the free market had long been outnumbered by historians from the Marxist left. FDR's Folly would have usefully balanced the traditional analysis of the New Deal if the book had not been so one-sided. Indeed, there is a large amount of truth in FDR's Folly and this paper doesn't aim to refute this large part of the book. [...]