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False Dawn: The New Deal and the Promise of Recovery, 1933–1947
A definitive history of the United States’ recovery from the Great Depression—and the New Deal's true part in it.
FDR’s New Deal has long enjoyed a special place in American history and policy—both because it redefined the government’s fundamental responsibilities and because Roosevelt’s “bold experimentation” represented a type of policymaking many would like to see repeated.
But “the thing about bold experiments,” economist George Selgin reminds us, “is that they often fail.” In False Dawn Selgin draws on both contemporary sources and numerous studies by economic historians to show that, although steps taken during the Roosevelt administration’s first days raised hopes of a speedy recovery from the Great Depression, instead of fulfilling those hopes, subsequent New Deal policies proved so counterproductive that over seventeen percent of American workers—more than the peak unemployment rate during the COVID-19 crisis—were still either unemployed or on work relief six years later.
By distinguishing the New Deal’s successes from its failures, and explaining how the U.S. finally managed to lay the specter of mass unemployment to rest, Selgin draws salient lessons for dealing with future recessions.
FDR’s New Deal has long enjoyed a special place in American history and policy—both because it redefined the government’s fundamental responsibilities and because Roosevelt’s “bold experimentation” represented a type of policymaking many would like to see repeated.
But “the thing about bold experiments,” economist George Selgin reminds us, “is that they often fail.” In False Dawn Selgin draws on both contemporary sources and numerous studies by economic historians to show that, although steps taken during the Roosevelt administration’s first days raised hopes of a speedy recovery from the Great Depression, instead of fulfilling those hopes, subsequent New Deal policies proved so counterproductive that over seventeen percent of American workers—more than the peak unemployment rate during the COVID-19 crisis—were still either unemployed or on work relief six years later.
By distinguishing the New Deal’s successes from its failures, and explaining how the U.S. finally managed to lay the specter of mass unemployment to rest, Selgin draws salient lessons for dealing with future recessions.
384 pages, Hardcover
Published April 15, 2025
26 people are currently reading
468 people want to read
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Displaying 1 - 11 of 11 reviews
September 14, 2025
Selgin doggedly (if wonkily) proves that New Deal impositions on businesses such as increased regulations and taxes, wage controls, and cartel-producing programs like the National Industrial Recovery Act (NIRA) were headwinds to a recovery. In other words, we’d have been better off if we just let capitalism cook!
July 12, 2025
Way too dense. Needed a stronger editor.
Got off to a good start but then took too many detours and lost focus. Author claims to have written the book for a general audience but it's distinctly lacking in clarity.
Got off to a good start but then took too many detours and lost focus. Author claims to have written the book for a general audience but it's distinctly lacking in clarity.
July 2, 2025
Startling New Insights into Ending the Great Depression
Book Review
Monetary economist and economic historian George A. Selgin asserts a provocative new thesis: President Franklin Delano Roosevelt effectively ended the Great Contraction (1929-1933), but his experimental New Deal policies failed to restore the economy to pre-crash levels. In his tenth book, the professor emeritus of economics at the University of Georgia presents convincing evidence that private business investment did not rebound until after World War II, due to increased business confidence after Roosevelt’s presidency. Selgin emphasizes that his conclusion is limited to the recovery aspect and does not evaluate the relief and reform parts of the New Deal. Criticizing FDR and even a portion of his New Deal is risky because the four-term president is often ranked among the top five presidents by both historians and the public. I suggest that readers keep an open mind to reconsider FDR’s leadership and New Deal policies.
Beginning in 1929 and extending into FDR’s first term, the U.S. faced a widespread banking crisis known as the Great Contraction. Selgin explains that hundreds of banks failed due to failed loans and customers losing confidence in retrieving their deposits. The author assigns a portion of the blame to government regulations, which prohibited banks from branching out or crossing state lines. The unitary banking system, especially in agricultural areas, lacked sufficient diversification and was highly vulnerable to failure because the geographically isolated banks’ loan portfolios could be severely impacted by local issues such as crop failures, weather problems, or shifts in demand. As one of his first presidential actions, FDR declared a bank holiday by executive order and worked to restore depositor trust in the remaining healthy banks, including the establishment of a federally operated deposit insurance program.
Second, FDR removed gold from the U.S. monetary system by ending the gold-convertible dollar and recalling all gold from individuals, effectively making public gold ownership for monetary purposes illegal. People and banks turned over their gold coins and bars to the government. As a result, Americans had to rely on paper currency, which FDR devalued by executive order. Selgin credits Roosevelt’s policies with ending the disastrous banking decline by restoring depositor confidence and improving the government’s monetary policies.
Once the Great Contraction ended early in his term, FDR launched a three-part program—relief, recovery, and reform—that President Roosevelt called the New Deal. While not discussing the relief and reform aspects in this book, Selgin believes that the New Deal efforts did not return the economy to its pre-1929 levels. The two main recovery measures, the Agricultural Adjustment Act (AAA) and the National Industrial Recovery Act (NIRA), failed to significantly increase farm incomes and business activity before being ruled unconstitutional by the Supreme Court.
Alternatively, Selgin argues that Europeans, fearing the rise of Adolf Hitler and the German Nazis, deposited vast amounts of gold in US banks, thereby boosting their lending capacity. The unprecedented influx of gold triggered a significant boost in economic activity between 1933 and 1937. However, this one-time external inflow did not result in a sustained recovery, and in 1937-38, the U.S. economy slipped back into recession.
Later, war preparations and military support to Europeans lifted the U.S. economy. However, Selgin rejects the commonly held idea that World War II ended the Great Depression. He points out that non-defense business investment stayed well below pre-depression levels. After the war, many government officials and economists worried that reduced defense spending would cause a recession. Despite the enormous drop in government spending, the post-war economy boomed. Selgin offers a new perspective, suggesting that significant increases in business confidence led to a surge in post-war investments. This is what created sustained prosperity that ended the depression.
Why was FDR unsuccessful in ending the Great Depression? First, Selgin challenges the idea that Keynesian government deficit spending jump-started the economy. Roosevelt, a balanced budget hawk, increased taxes alongside expenditures, thereby maintaining pre-Depression deficit levels. Based on contemporary correspondence, the author presents convincing evidence that Keynes offered his expertise and policy advice to Roosevelt, but the president rejected the British economist's suggestions.
Alternatively, Selgin argues that FDR’s fervent anti-business attitudes and policies discouraged business leaders from taking risks and investing in new ventures. During the 1930s, business investment remained low despite the large amount of investable capital fleeing from Europe. CEOs and entrepreneurs lacked confidence that new investments would generate returns because of the New Deal’s restrictions on prices, wages, and taxes. This was especially true for small and medium-sized firms, the principal engine of the American economy.
Professor Selgin cites copious studies and authors to support his conclusions. One of the book’s best features is its citation of economists with differing views and analyses, which counter the author’s arguments. The alternative points of view permit readers to assess for themselves the veracity of the proponent of the modern Free Banking School, which attributes financial crises to misguided government interference. Selgin’s best example is the pre-depression government-mandated unitary banking, which introduced massive financial risks without concomitant benefits. On the other hand, some will criticize Selgin for underestimating the political pressure on FDR to implement a command economy due to the public’s perceived failures of the capitalist system.
Less open to debate are Selgin’s data-driven portrayals of economic history, many of which dispel common myths. He provides insightful charts and quotes illustrating his interpretations. For example, he cites John Maynard Keynes’ surprising views on Frederick A. Hayek’s book, The Road to Serfdom, highlighting the agreement between two economists who are often seen as polar opposites in the popular press (p. 301). Both were concerned about a “collectivist virus” of government planning, with Keynes aiming to introduce a small dose, like a vaccine, to counter the disease. Meanwhile, to prevent the malady, Hayek resisted any encroachment on market allocation. In Selgin’s view, the iconic economists of the left and the right “played their part in the postwar capitalist revival,” only disagreeing over the best way to ensure its long-term success (pp. 301-2).
In False Dawn, George Selgin demonstrates that even long-held beliefs need to be challenged, and the final consensus on ending the Great Depression has not yet been reached. Scholars and readers will gain new insights into the impact of New Deal policies on the economy and monetary system. Reexamining the historical record, considering different perspectives, and developing more rigorous interpretations will benefit everyone as we face future economic crises.
Book Review
Monetary economist and economic historian George A. Selgin asserts a provocative new thesis: President Franklin Delano Roosevelt effectively ended the Great Contraction (1929-1933), but his experimental New Deal policies failed to restore the economy to pre-crash levels. In his tenth book, the professor emeritus of economics at the University of Georgia presents convincing evidence that private business investment did not rebound until after World War II, due to increased business confidence after Roosevelt’s presidency. Selgin emphasizes that his conclusion is limited to the recovery aspect and does not evaluate the relief and reform parts of the New Deal. Criticizing FDR and even a portion of his New Deal is risky because the four-term president is often ranked among the top five presidents by both historians and the public. I suggest that readers keep an open mind to reconsider FDR’s leadership and New Deal policies.
Beginning in 1929 and extending into FDR’s first term, the U.S. faced a widespread banking crisis known as the Great Contraction. Selgin explains that hundreds of banks failed due to failed loans and customers losing confidence in retrieving their deposits. The author assigns a portion of the blame to government regulations, which prohibited banks from branching out or crossing state lines. The unitary banking system, especially in agricultural areas, lacked sufficient diversification and was highly vulnerable to failure because the geographically isolated banks’ loan portfolios could be severely impacted by local issues such as crop failures, weather problems, or shifts in demand. As one of his first presidential actions, FDR declared a bank holiday by executive order and worked to restore depositor trust in the remaining healthy banks, including the establishment of a federally operated deposit insurance program.
Second, FDR removed gold from the U.S. monetary system by ending the gold-convertible dollar and recalling all gold from individuals, effectively making public gold ownership for monetary purposes illegal. People and banks turned over their gold coins and bars to the government. As a result, Americans had to rely on paper currency, which FDR devalued by executive order. Selgin credits Roosevelt’s policies with ending the disastrous banking decline by restoring depositor confidence and improving the government’s monetary policies.
Once the Great Contraction ended early in his term, FDR launched a three-part program—relief, recovery, and reform—that President Roosevelt called the New Deal. While not discussing the relief and reform aspects in this book, Selgin believes that the New Deal efforts did not return the economy to its pre-1929 levels. The two main recovery measures, the Agricultural Adjustment Act (AAA) and the National Industrial Recovery Act (NIRA), failed to significantly increase farm incomes and business activity before being ruled unconstitutional by the Supreme Court.
Alternatively, Selgin argues that Europeans, fearing the rise of Adolf Hitler and the German Nazis, deposited vast amounts of gold in US banks, thereby boosting their lending capacity. The unprecedented influx of gold triggered a significant boost in economic activity between 1933 and 1937. However, this one-time external inflow did not result in a sustained recovery, and in 1937-38, the U.S. economy slipped back into recession.
Later, war preparations and military support to Europeans lifted the U.S. economy. However, Selgin rejects the commonly held idea that World War II ended the Great Depression. He points out that non-defense business investment stayed well below pre-depression levels. After the war, many government officials and economists worried that reduced defense spending would cause a recession. Despite the enormous drop in government spending, the post-war economy boomed. Selgin offers a new perspective, suggesting that significant increases in business confidence led to a surge in post-war investments. This is what created sustained prosperity that ended the depression.
Why was FDR unsuccessful in ending the Great Depression? First, Selgin challenges the idea that Keynesian government deficit spending jump-started the economy. Roosevelt, a balanced budget hawk, increased taxes alongside expenditures, thereby maintaining pre-Depression deficit levels. Based on contemporary correspondence, the author presents convincing evidence that Keynes offered his expertise and policy advice to Roosevelt, but the president rejected the British economist's suggestions.
Alternatively, Selgin argues that FDR’s fervent anti-business attitudes and policies discouraged business leaders from taking risks and investing in new ventures. During the 1930s, business investment remained low despite the large amount of investable capital fleeing from Europe. CEOs and entrepreneurs lacked confidence that new investments would generate returns because of the New Deal’s restrictions on prices, wages, and taxes. This was especially true for small and medium-sized firms, the principal engine of the American economy.
Professor Selgin cites copious studies and authors to support his conclusions. One of the book’s best features is its citation of economists with differing views and analyses, which counter the author’s arguments. The alternative points of view permit readers to assess for themselves the veracity of the proponent of the modern Free Banking School, which attributes financial crises to misguided government interference. Selgin’s best example is the pre-depression government-mandated unitary banking, which introduced massive financial risks without concomitant benefits. On the other hand, some will criticize Selgin for underestimating the political pressure on FDR to implement a command economy due to the public’s perceived failures of the capitalist system.
Less open to debate are Selgin’s data-driven portrayals of economic history, many of which dispel common myths. He provides insightful charts and quotes illustrating his interpretations. For example, he cites John Maynard Keynes’ surprising views on Frederick A. Hayek’s book, The Road to Serfdom, highlighting the agreement between two economists who are often seen as polar opposites in the popular press (p. 301). Both were concerned about a “collectivist virus” of government planning, with Keynes aiming to introduce a small dose, like a vaccine, to counter the disease. Meanwhile, to prevent the malady, Hayek resisted any encroachment on market allocation. In Selgin’s view, the iconic economists of the left and the right “played their part in the postwar capitalist revival,” only disagreeing over the best way to ensure its long-term success (pp. 301-2).
In False Dawn, George Selgin demonstrates that even long-held beliefs need to be challenged, and the final consensus on ending the Great Depression has not yet been reached. Scholars and readers will gain new insights into the impact of New Deal policies on the economy and monetary system. Reexamining the historical record, considering different perspectives, and developing more rigorous interpretations will benefit everyone as we face future economic crises.
September 12, 2025
This is an excellent, fair look at whether those programs intended to pull the country out of the Great Depression did in fact do so (in other words, it doesn't consider forward-looking measures, such as the Social Security Act).
Selgin goes program by program (AAA, NRA, dollar devaluation, etc.) and attempts to suss out the impact that each effort made. His conclusion, perhaps unsurprisingly, is that most did little good; a few harmed. Perhaps the only bright spot was the bank holiday, which probably did prevent things from getting a lot worse.
Selgin returns again and again to original sources and to long-forgotten studies of the era to draw his conclusions. He is interested in politics only inasmuch as they speak to the intended aims of the various agencies and acts. He's far more devoted to the statistics, which means a nice crash course in macroeconomics, currency markets, etc.
It's often said that WWII pulled us out of the Depression (or perhaps the Roosevelt Depression, which hit later, in the second half of the 30s). What was just important was the run-up, when Hitler scared Europeans into shipping billions of dollars of gold across the ocean. That probably helped as much as anything!
I enjoyed this book, especially how it stuck to the facts and avoided much of the one-sided commentary surrounding the New Deal.
Selgin goes program by program (AAA, NRA, dollar devaluation, etc.) and attempts to suss out the impact that each effort made. His conclusion, perhaps unsurprisingly, is that most did little good; a few harmed. Perhaps the only bright spot was the bank holiday, which probably did prevent things from getting a lot worse.
Selgin returns again and again to original sources and to long-forgotten studies of the era to draw his conclusions. He is interested in politics only inasmuch as they speak to the intended aims of the various agencies and acts. He's far more devoted to the statistics, which means a nice crash course in macroeconomics, currency markets, etc.
It's often said that WWII pulled us out of the Depression (or perhaps the Roosevelt Depression, which hit later, in the second half of the 30s). What was just important was the run-up, when Hitler scared Europeans into shipping billions of dollars of gold across the ocean. That probably helped as much as anything!
I enjoyed this book, especially how it stuck to the facts and avoided much of the one-sided commentary surrounding the New Deal.
September 7, 2025
Selgin dismantles many of the myths around the Great Depression and the New Deal.
Many of FDR’s programmes had negative results, especially the NIRA. One example. FDR worked to limit agricultural production to raise prices thereby increasing farmers’ incomes. But the reduction in farm output meant fewer farm workers (a much higher percentage of the labour force then) were employed.
He did not implement a Keynesian programme of deficits to stimulate demand. Instead he was a deficit hawk - increased spending was offset by increased taxation.
WW2 didn’t bring about the recovery by increasing demand; it required FDR to lift a lot of restrictions on the economy and to treat business leaders as allies not enemies.
Etc.
Selgin considers all sides as he addresses each element of his analysis. He gives a fair hearing to opposing views and marshals the evidence supporting his argument.
An economics book to be sure - but written in a very accessible way.
Many of FDR’s programmes had negative results, especially the NIRA. One example. FDR worked to limit agricultural production to raise prices thereby increasing farmers’ incomes. But the reduction in farm output meant fewer farm workers (a much higher percentage of the labour force then) were employed.
He did not implement a Keynesian programme of deficits to stimulate demand. Instead he was a deficit hawk - increased spending was offset by increased taxation.
WW2 didn’t bring about the recovery by increasing demand; it required FDR to lift a lot of restrictions on the economy and to treat business leaders as allies not enemies.
Etc.
Selgin considers all sides as he addresses each element of his analysis. He gives a fair hearing to opposing views and marshals the evidence supporting his argument.
An economics book to be sure - but written in a very accessible way.
August 12, 2025
Fantastic in-depth look at how the US recovered from the Great Depression, informed by a wealth of economic-historical research. Selgin is never less than thoughtful and does a wonderful job of presenting all sides of the many and varied arguments regarding banking, devaluation, fiscal and monetary policy and the alphabet soup of New Deal agencies, as well as the effects of the war. Of particular interest to me was the demolition of the “Keynesian Myth” — the idea that the New Deal represented the triumph of activist stabilisation policy over the Depression, while in fact such policies were never really tried at scale, and Keynes’ General theory came out well after the bulk of the New Deal was already in place. Highly recommended.
November 25, 2025
A great overview of Roosevelt's New Deal policies and the extent to which they harmed or helped economic recovery. His central thesis is that Roosevelt's policies and what might be called the more general anti-capital vibes of the Roosevelt Administration suppressed American Capital's "animal spirits," leading to a decline in real net investment, which in turn prevented a full recovery. Only the devaluation of the dollar, the vast inflows of European Gold, and the rapprochement between Roosevelt and the Capital class allowed for the economy to limp along and eventually recover.
December 11, 2025
Good libertarian review of Roosevelt's economic programs to deal with the depression. Author does a good job being objective- about - this worked - but much more often- this definitely did not work. Still - for a libertarian, impressed with this evident desire for a non existent at the time- quantitative easing.... Much went over my head- i still don't understand gold , the gold standard and how that kept america afloat (the gold flowing back to america during the 30s due to hitler crises).
December 30, 2025
Bookending the year with a second great history book, this one on the Great Depression. Selgin does a fantastic job talking about the New Deal and answers the question: did the New Deal pull us out of the Great Depression? His answer is no, and in fact that it was a hindrance (outside of the bank reforms of Hoover/early Roosevelt).
August 12, 2025
Way too many notes on academic arguments as to effectiveness of New Deal programs on recovery from the depression. Way too little weighing of those arguments supporting a conclusion by the author.
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December 9, 2025Wsj best of 2025
Displaying 1 - 11 of 11 reviews