Skip to Main Content
Have library access? Log in through your library
Roosevelt, the Great Depression, and the Economics of Recovery

Roosevelt, the Great Depression, and the Economics of Recovery

ELLIOT A. ROSEN
Copyright Date: 2005
Pages: 288
https://www.jstor.org/stable/j.ctt6wrqhm
  • Cite this Item
  • Book Info
    Roosevelt, the Great Depression, and the Economics of Recovery
    Book Description:

    Historians have often speculated on the alternative paths the United Stages might have taken during the Great Depression: What if Franklin D. Roosevelt had been killed by one of Giuseppe Zangara's bullets in Miami on February 17, 1933? Would there have been a New Deal under an administration led by Herbert Hoover had he been reelected in 1932? To what degree were Roosevelt's own ideas and inclinations, as opposed to those of his contemporaries, essential to the formulation of New Deal policies?

    InRoosevelt, the Great Depression, and the Economics of Recovery,the eminent historian Elliot A. Rosen examines these and other questions, exploring the causes of the Great Depression and America's recovery from it in relation to the policies and policy alternatives that were in play during the New Deal era. Evaluating policies in economic terms, and disentangling economic claims from political ideology, Rosen argues that while planning efforts and full-employment policies were essential for coping with the emergency of the depression, from an economic standpoint it is in fact fortunate that they did not become permanent elements of our political economy. By insisting that the economic bases of proposals be accurately represented in debating their merits, Rosen reveals that the productivity gains, which accelerated in the years following the 1929 stock market crash, were more responsible for long-term economic recovery than were governmental policies.

    Based on broad and extensive archival research,Roosevelt, the Great Depression, and the Economics of Recoveryis at once an erudite and authoritative history of New Deal economic policy and timely background reading for current debates on domestic and global economic policy.

    eISBN: 978-0-8139-3427-3
    Subjects: History

Table of Contents

Export Selected Citations Export to NoodleTools Export to RefWorks Export to EasyBib Export a RIS file (For EndNote, ProCite, Reference Manager, Zotero, Mendeley...) Export a Text file (For BibTex)
  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. ACKNOWLEDGMENTS
    (pp. vii-viii)
  4. ABBREVIATIONS
    (pp. ix-xii)
  5. INTRODUCTION
    (pp. 1-7)

    History’s might-have-beens can be as intriguing as the recital of what happened. The threads that led to great decisions in the past are intertwined with other strands, which, if they had prevailed, might have brought about an entirely different aftermath. What would have been the consequence for this nation if Roosevelt had been felled by one of Giuseppe Zangara’s bullets in Miami, on February 15, 1933? Would there have been a New Deal under an administration led by Herbert Hoover had he been reelected in 1932? Would he have initiated the interventionist state?

    Historians have speculated on these questions with...

  6. 1 FINANCIAL CRISIS
    (pp. 8-22)

    Confronted by deflationary pressures, a massive decline in corporate income and investment, evaporated farm incomes, and widespread unemployment, Herbert Hoover attributed the Great Depression principally to international events beyond his control. As he put it in hisMemoirs,“The great center of the storm was Europe. That storm moved slowly until the spring of 1931, when it burst into a financial hurricane.”¹

    While such an analysis provided Hoover with a rationale for limited intrusion into the domestic arena, the impact on the U.S. economy by external events was not inconsiderable. These included the demand for remission of the debts and...

  7. 2 NATIONALIZING THE ECONOMY
    (pp. 23-40)

    The great depression sundered the special relationship between Great Britain and the United States, each now fending for itself. An industrial sector in decline, Britain depended on the processing of cheap raw materials from the empire into finished products, a protected home market, and a depreciated pound as a trading advantage vis-à-vis its competitors. With a mixed economy and with raw materials producers in the South and West dependent for recovery on appreciated prices for recovery, the United States, Roosevelt decided, more nearly resembled the British Empire than the British Isles.¹

    The decision to build an internal economy helps to...

  8. 3 DOLLAR DEVALUATION AND THE MONETARY GROUP
    (pp. 41-56)

    Roosevelt’s rejection of the stabilization agreement negotiated by Chamberlain and Moley at the London Economic Conference opened the way to unilateral pursuit of price-raising measures. That development led to the first substantial internal debate of Roosevelt’s administration—a debate that helps to clarify two matters: the belief that the president proved subject to capture by his advisers and his choice of a domestic as opposed to international priorities in approaching the Great Depression.

    The argument that Herbert Hoover framed the New Deal’s programmatic approach to the economic debacle, originated by Walter Lippmann, can be tested in the context of the...

  9. 4 MONETARY POLICY AND THE HOOVER-STRAWN GROUP
    (pp. 57-70)

    The 1930s deflation proved more crippling in its impact on the nation’s economy, indeed more insurmountable, than wartime inflationary cycles. Collapsed price levels discouraged business investment that would prove to be unprofitable, and a decline in incomes stymied consumers’ propensity to buy the output of industry. Debtors defaulted and brought down thousands of banks with them. Those banks that survived proved reluctant to lend given their own parlous circumstances. Adherence to the gold-sterling standard under the Hoover administration fed the deflationary tide. Any potential price recovery was regarded as inflationary and under the so-called rules of the game required higher...

  10. 5 FISCAL POLICY AND REGIONAL DIVERSITY
    (pp. 71-93)

    Release from the requirements imposed by the gold standard was the first step in Roosevelt’s strategy for achieving economic recovery. It liberated domestic policy from the lock hold of needlessly high, deflationary interest rates, credit restriction, and budget balance.

    As it has been argued that Hoover’s thought on demand management was more advanced than Roosevelt’s, it may be appropriate to examine Hoover’s legacy to Roosevelt’s fiscal policies. This leads to the question, at what level could the Roosevelt administration unbalance its budgets and add to the national deficit? One might also ask, on what rationale did Roosevelt seek recovery, since...

  11. 6 THE MYTH OF A CORPORATE STATE
    (pp. 94-108)

    Planners believed that the economic implosion of the early 1930s could not be remedied in the absence of structural reform. Plans for control of investment and production, fair pricing, limits on entry, and increased employment and wage levels emanated from diverse sources. Protagonists included business leaders, members of the Roosevelt Brains Trust, the U.S. Chamber of Commerce, raw materials producers, economists, and popular writers. With profits evaporated and 25 percent unemployment, most such proposals reflected the belief that a market economy had become an anachronism and needed overhead management either by trade associations or by a federal economic council. These...

  12. 7 THE LIMITS OF PLANNING
    (pp. 109-131)

    Business leaders and peak organizations such as the U.S. Chamber of Commerce quickly backed away from planning, wary lest the National Recovery Administration, subject to presidential authority, bring about federal control of the economy. U.S. Chamber of Commerce endorsement of an industrial recovery plan rested on two assumptions: trade association primacy, with the federal government possessed of no more than a veto power over industry management of pricing, marketing, wages and hours, and child-labor controls; and the belief that Section 7(a) of the National Industrial Recovery Act tolerated company unions and bargaining with separate groups of employees within the same...

  13. 8 TRADE RECIPROCITY OR THE LAND USED AS CONCEALED DOLE
    (pp. 132-150)

    From a macroeconomic point of view, “the effect of the agricultural depression on the level of aggregate activity in the United States . . . appears to have been small” compared with the deflationary impact of the international currency crisis of 1931.¹ Then again, in terms of rural poverty and national income, the agricultural depression loomed large. The structure of national income in the interwar years showed a marked level of disparity between those employed in manufacturing, or 20.7 percent of the national total and less than half, 9.5 percent, for agriculture. Median income of families for 1935–36 was...

  14. 9 RELIEF, PUBLIC WORKS, AND SOCIAL INSURANCE
    (pp. 151-171)

    From the inception of the New Deal, the Roosevelt Brains Trust conceived that relief and public works programs would tide people over until the industrial system recovered sufficiently to offer adequate employment. But even in normal times the business system proved subject to cyclical swings that brought on temporary unemployment and discarded those too old to work. The answer lay in provision for the unemployed and the superannuated through social insurance. Hopefully, social insurance would also help to inure the economy against another depression. The sources of these programs lay in the social justice component of progressivism; the success of...

  15. 10 THE NEW ECONOMICS
    (pp. 172-191)

    The 1937–38 recession within a depression was profoundly disappointing as it followed a gradual recovery achieved by the mid-1930s. The recession was attributable to a misguided Federal Reserve policy of increased interest rates and bank reserve requirements, a decline in federal expenditure, and a surfeit of manufacturers inventory that needed to be drawn down. The cure was contested initially within the National Resources Planning Board and subsequently in the Congress.

    While institutional planners led by the NRPB economist Gardiner C. Means advocated federal micromanagement of industry, particularly output and wage maintenance, this approach to a permanent recovery came under...

  16. 11 THE NATIONAL RESOURCES PLANNING BOARD
    (pp. 192-210)

    Rexford tugwell offered a rationale for overhead economic management in his explanation of the “Fourth Power.” Industry’s mastery of technology and planning required government to rein in the economic chaos that characterized the interwar era. Artificial separation of government from industry ensured a struggle for sovereignty, as the two spheres could not be divorced. Whereas industry had mastered planning techniques for selfish ends, governmental planning had been implemented in uncoordinated bits and pieces. Planning, he argued, lacked direction when it served special interests, and “direction” was critical to the salvation of democracy.

    Direction was Tugwell’s goal as opposed to subsidies...

  17. 12 MATURE CAPITALISM AND DEVELOPMENTAL ECONOMICS
    (pp. 211-233)

    The demise of the nrpb and the possibilities for planning in the framework of a developmental economy are best understood within the context of the debate that emanated from the 1937–38 recession. The NRPB and fiscal-full employment planners declared that chronic private-sector underinvestment, or industry’s inability to sustain full use of resources and manpower at the volume of savings, condemned the economy to equilibrium at less than full employment. Full employment necessitated a long-term program of planned federal outlay, with government’s net contribution ratcheted up or downward by an administrative agency to meet the nation’s annual income and consumption...

  18. 13 THE ECONOMICS OF RECOVERY
    (pp. 234-240)

    In recent years a substantial number of historians have attributed U.S. recovery from the Great Depression to a wartime “Third New Deal” induced by Americanized Keynesianism in response to the 1937–38 recession. We are given to understand that Keynes’s advocacy of a compensatory economy, or massive public spending to prevent future depressions and to sustain full employment, was validated by the level of government expenditure during the Second World War. Neither this nor other components of Third New Deal theory satisfactorily address the foundations of the postwar recovery and the basis for U.S. economic ascendancy after the war.¹

    Keynes...

  19. NOTES
    (pp. 241-284)
  20. INDEX
    (pp. 285-308)