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Sunday, July 1, 2007

Roosevelt, the Great Depression, and the Economics of Recovery Revisited

A Useful Account of the New Deal That Rises Above the Usual Flattery of FDR and His Followers

University of Virginia Press • 2005 • 308 pages • $39.50 hardcover; $19.50 paperback

As professor emeritus at Rutgers University, Elliot Rosen has written this book as the culmination of a life’s study of Franklin Roosevelt and the New Deal. Rosen’s special expertise is on Raymond Moley, who was an ardent member of FDR’s “Brains Trust” for many years. Eventually, however, Moley broke with the President and, in his old age, ended up supporting Barry Goldwater for president. In the 1940s Moley befriended Rosen, who was then a college student, and eventually the two collaborated on various books on Roosevelt and the New Deal. As Moley told Rosen, “You are a bright young fellow; I’m sure you can figure out the depression as well as FDR and I could.”

Perhaps Moley’s evaluation was prophetic. Rosen has crafted a useful account of the New Deal that clearly rises above the usual flattery of FDR and his followers. Rosen is critical of much of the New Deal planning in general and the National Industrial Recovery Act and the Agricultural Adjustment Act in particular. The strong points of the book are Rosen’s detailed research into the many factions that tried to influence policy in the 1930s. New Dealers, Rosen reminds us, though eager to use the power of government to do good, were usually divided by conflicting visions of the good society and weren’t always above the temptation to send federal largess to groups they favored.

During Roosevelt’s first term, those planners who wanted a corporate state had much influence on policy (mainly through the National Recovery Administration). They had, Rosen notes, “plans for control of investment and production, fair pricing, limits on entry, and increased employment and wage levels. . . .” Led by Moley himself for a while, the planners urged a restructuring of business under state direction. Stuart Chase suggested “National and regional planning boards to coordinate the whole [economy].” As Rexford Tugwell noted, “This amounts, practically, to the abolition of ‘business.’ This is what planning calls for.” And it was exactly what they wanted. Rosen here gives us a useful reminder that when government officials plan, individual liberty necessarily shrinks.

At one level Harvard professor Felix Frankfurter opposed the planners; he and others wanted to have government break up business into small units, not  consolidate it into large state-directed behemoths. At another level Lewis Douglas, FDR’s budget director, was skeptical of the results planning might yield. He wanted balanced budgets and a resuscitation of private business.

Roosevelt became a master at picking and choosing among items on the interventionist menu offered by his advisers. Rosen makes it clear, however, that “whatever ideas Roosevelt accepted from others, it was he who untangled the threads and he alone who made the great decisions of the day.” Rosen specifically describes the frustration of Douglas, who would argue, usually in futility, against the President’s massive spending increases. Once FDR had his mind made up, no argument would shake him.

Rosen, although critical of Roosevelt, still gives him more credit for competence and consistency than he deserves. In the President’s campaign speech in Pittsburgh in 1932, he promised the nation a balanced budget; he pronounced himself eager and willing to end Hoover’s spending sprees and unbalanced budgets. When Douglas tried to hold FDR to those promises, he reneged.

More than that, as Turner Catledge of the New York Times points out in My Life and The Times, Roosevelt would deliberately lie to members of the various factions in his administration. Catledge describes one episode where he wrote an article for the Times based on a memo Douglas had from the President showing his willingness to constrain spending. The President then called Catledge in and told him he was disregarding his memo to Douglas.

Rosen might have been better served by paying more attention to what his mentor Ray Moley wrote in his private diary in May 1936 after a frustrating meeting with the President. “I was impressed as never before by the utter lack of logic of the man, the scantiness of his precise knowledge of things that he was talking about, by the gross inaccuracies in his statements, by the almost pathological lack of sequence in his discussion. . . . In other words, the political habits of his mind were working full steam with the added influence of a swollen ego.”

Certainly there is more to Roosevelt than Moley suggests in that quotation, but Moley observed something very real about FDR, and few historians have captured the Roosevelt that Moley described.

Nevertheless, Rosen’s book is a valuable addition to the growing literature that questions the conventional wisdom that the New Deal consisted of brilliant policy measures that saved the country from collapse during the Depression.

  • Burton Folsom, Jr. is a professor of history at Hillsdale College and author (with his wife, Anita) of FDR Goes to WarHe is a member of the FEE Faculty Network