New Deal or Raw Deal?: How FDR's Economic Legacy Has Damaged America

by Burton W. Folsom Jr.

A sharply critical new look at Franklin D. Roosevelt's presidency reveals government policies that hindered economic recovery from the Great Depression -- and are still hurting America today. In this shocking and groundbreaking new book, economic historian Burton W. Folsom exposes the idyllic legend of Franklin D. Roosevelt as a myth of epic proportions. With questionable moral character and a vendetta against the business elite, Roosevelt created New Deal programs marked by inconsistent planning, wasteful spending, and opportunity for political gain -- ultimately elevating public opinion of his administration but falling flat in achieving the economic revitalization that America so desperately needed from the Great Depression. Folsom takes a critical, revisionist look at Roosevelt's presidency, his economic policies, and his personal life. Elected in 1932 on a buoyant tide of promises to balance the increasingly uncontrollable national budget and reduce the catastrophic unemployment rate, the charismatic thirty-second president not only neglected to pursue those goals, he made dramatic changes to federal programming that directly contradicted his campaign promises. Price fixing, court packing, regressive taxes, and patronism were all hidden inside the alphabet soup of his popular New Deal, putting a financial strain on the already suffering lower classes and discouraging the upper classes from taking business risks that potentially could have jostled national cash flow from dormancy. Many government programs that are widely used today have their seeds in the New Deal. Farm subsidies, minimum wage, and welfare, among others, all stifle economic growth -- encouraging decreased productivity and exacerbating unemployment. Roosevelt's imperious approach to the presidency changed American politics forever, and as he manipulated public opinion, American citizens became unwitting accomplices to the stilted economic growth of the 1930s. More than sixty years after FDR died in office, we still struggle with the damaging repercussions of his legacy.

Genres: History, Economics, Politics, Nonfiction, American History, Biography, American

336 pages, Hardcover

First published November 4, 2008

About the author

Burton W. Folsom, Jr. (born 1947 in Nebraska) is an American historian and author who holds the Charles F. Kline chair in history and management at Hillsdale College and is a senior fellow in economic education for the Mackinac Center for Public Policy.

Reviews

[Amora · Rating 4 out of 5]

We’ve all been told the same narrative in school: Roosevelt ran for office to get us out of the Great Depression using the power of government while inept Republicans did nothing to stop it. As Folsom shows in this book, that narrative is incorrect. Roosevelt extended the length and severity of the Great Depression by intervening in the economy instead of letting the economy recover by itself. This book also presents a different view of Roosevelt’s character and debunks the myth that free-market capitalism somehow caused the Great Depression. Lots of footnotes as well!

Edited (7/26/20): I was looking through my older reviews and noticed some spell mistakes.

[Jeanette · Rating 4 out of 5]

Facts to the economics of the period between 1933 and 1945 are quite different from the myth you hear at school. This book illuminates reality for some of the major American cities (especially in the middle of the country once again) and for what "improvements" were actually most felt and were most lasting. And the processes and laws that FDR used.

This became rather personal in reading. How? Because my Mother adored FDR and thought of him as a god. And my Dad's Dad (my German grandfather who got half of my family to the USA in the 1930's and was separated from them for nearly 9 years with one two month break) HATED FDR. In two or three languages it was always a "fight" between them if his name was mentioned. LOL! Shades of these times, huh!

Well my Dad had his own thoughts and proofs but he mainly kept quiet. At least he didn't spit on the ground at the sounds of the initials as did my Grandfather. (My Grandpa was a gentle genius in mechanics and rarely loud or effusive so that really made an impression on me.)

But truthfully, especially in the authoritarian avenues FDR took and the avenues he transgressed in precedents for pure power (and for offense against individual civil rights and liberties)- and in his personal life path of "treatments" he actually lived daily as opposed to the "picture" he choose to advertise- my Grandfather was spot on.

But then he had fought in a war for the "other side" in WWI and also saw what "civic" power did to individual rights with the rise of Socialist Nazi Hitler adoration to everything he loved. And also spent 15 to 20 years of extreme suffering getting away from Germany too.

The facts upon Chicago in this book were of high interest and eye opening to me. It's absolutely the start of the "help" that has insured a 7 going on 10 generation lifestyle of misery in Chicago welfare and soup to nuts "free stuff" ghetto existence.

But most of all- if you read this clearly stated encompassing act to act book of outcomes for these altruistic ideas and real programs- there is always a winner and also large quotient of loser. And it's often not the one who seems apparently so by the titles.

WWII and huge quotients of manufacturing production and job output per adult populations is what got the USA economics on any kind of a restart after the world reversals and Great Depression. In some measures of real wealth and uses 1939 was worse than 1934 had been- it was only well into the war (WWII) and the 1940's that foods, lodging, any kind of actual appropriate service levels etc. were "enough" for the "at home" USA population.

So here we are more than 75 years later and in my earliest days' memories. And knowing how correct and valid my Grandfather was. Long term be damned, that's what he'd say about FDR methods. Oh so accurate. Actually each act that FDR pushed actually prolonged the Depression. He had 20% unemployment after 8 years of his autocratic dominance.

Highly recommend this read although it can be dry in portions as it contains so much numerical and truth reality. Which is often harder to swallow than pie in the sky theory reads.

[Arminius · Rating 4 out of 5]

Some historians consider FDR the greatest president. Others have him rated in the top three. They must be smoking dope. A 20% unemployment rate after 8 years as president makes you a great one?

FDR was smart though, however he spent like a drunken sailor. He would funnel money into sectors of large areas of large states to democratic cronies. These guys would dole out jobs in exchange for votes for themselves and FDR. He employed this tactic just enough in various states to ensure that each particular state which received federal money voted for him in the next election. Then he would collect the benefit of their Electoral College vote at Election Day.

The uncontrollable Federal debt of the United States is one of FDR's greatest accomplishments.

In fact FDR’s Treasury Secretary and personal friend painstakingly admitted the following “We have tried spending money. We are spending more money than we have ever spent before and it does not work. And I have just none interest, and if I am wrong . . . somebody else can have my job. I want to see this country prosperous. I want to see people get a job; I want to see people get enough to eat. We have never made good on our promises. . . . I say after eight years of this administration we have just as much unemployment as when we started . . . . And an enormous debt to boot!”

He would also punish fellow democratic congressmen if they did not support his agenda. He would turn on them by supporting rivals for congressional leadership roles, by cajoling congressmen into supporting his choice for congressional leadership positions and various other means.

The 22nd Amendment (which limits the president's term to two) was established because of FDR's extreme use of power for personal accomplishment.
Just think about how many Presidents have lost elections after their first term because of a bad economy. Jimmie Carter and George Bush I (the first) come to mind. In fact, I would bet that if Herbert Hoover were reelected he would of ended the great depression quicker than FDR. This is because they couldn’t or wouldn’t use devious election tactics.
Just imagine what the country looked like after 8 years of FDR’s reign and imagine giving Jimmie Carter or George Bush 12 years to straighten out their bad economies.

[Jim · Rating 4 out of 5]

Actually found this to be enlightening, interesting and - despite what some critics said - well documented. I read it because of the similarities in the current economic and political climate.

It was disconcerting to see how so much economic clout put in the hands of the government can be used for political manipulation. And once that genie was out of the bottle, we've never been able to put it back - no matter which party was in "power".

It would seem that, for the first time (actually beginning with Hoover and then tremendously expanded by Roosevelt) the new deal took support and charity out of the hands of local and state authorities and organizations and moved it to the federal government. The size of our federal government has grown exponentially ever since.

What are we going to see in the next few years when, what we now call liberals instead of progressives, have control over all three branches of government?

[Rod · Rating 5 out of 5]

A must read in view of today's call for a "new" New Deal. Bottom line is that virtually every action Roosevelt took to mitigate the Great Depression prolonged it. Furthermore, many of his actions were clearly intended to expand his political power. We are suffering for the effects even today.

It's important to remember that US unemployment reached 20% during the depression, and lasted until 1940, when war production began in earnest. Unemployment in other western countries was high during the early 30's, but declined rapidly in the later part of the decade.

Also recommended: Amity Shlaes's "The Forgotten Man"

"Those who don't remember the past are condemned to repeat it."

[David Robins · Rating 5 out of 5]

Completely obliterates the FDR myth, revealing him as a profligate scoundrel, using taxpayers' money to buy votes, support boondoggles, and redistribute the income of hard-working Americans - and with nothing to show for it except a longer and greater Great Depression. FDR was among America's worst Presidents: his legacy is that of government theft and dependence, and tragic losses of individual property and freedom.

[Alicia · Rating 5 out of 5]

Wow. This book was fascinating, such an honest review of FDR in the 1930’s, with primary sources quoted on nearly every page. Highly recommended to anyone who wants to know what actually happened during FDR’s time in office and what most history books left out about the Great Depression.

From my notes of interesting things I learned while reading this book:

FDR was not a good student, but he was a brilliant politician. He lacked any training in economics. He was dishonest during his campaign speeches, promising contradictory policies to different groups, based on what he thought people wanted to hear. For example, he promised some cities he would cut the cost of government by 25%, and in other cities he promised to reorganize industry and redistribute wealth.

FDR easily beat Hoover, who had failed to end the Great Depression. Hoover signed the Smoot-Hawley tariff law which led to import tariffs being the highest ever, which “may have been the single most economically destructive law to pass the U.S. Congress” (p. xiv)

With the NRA and its price fixing system, FDR overthrew America’s free enterprise system. Even John M. Keynes wrote in the NYT that the NRA “probably impedes recovery” (p. 45). The NRA put smaller companies out of business (e.g. tire companies) as they could no longer charge less than big companies. Two years later in 1935, the Supreme Court voted 9-0 that the NRA was unconstitutional.

The AAA (which paid farmers not to produce) was a disaster that led to massive unemployment, higher prices for consumers, and a need to import food.

The WPA created jobs, but it destroyed as many jobs as it created. WPA led to much higher taxes. WPA jobs went to battleground states, not the poorest states. FDR played politics with WPA jobs and funds, as he funnelled money to Democrats.

Many people lost their jobs because of their political views (proof is available in the National Archives). Relief agencies had become glorified political machines.

New Deal also caused deaths (FDR ignored the warnings of experts and proceeded with his dangerous plans): 12 pilots died, plus 250 veterans sent to the Florida Keys during hurricane season to live in shacks and work in the area were killed by a hurricane.

FDR kept stirring up a war against big business. By 1939, when unemployment was still over 20%, FDR’s closest advisors thought that FDR’s attitude toward business was delaying recovery. But FDR remained hostile toward big business and even proposed a 99.5% tax rate on the wealthiest! (those earning over $100,000)

FDR was the first president to employ the IRS as “a weapon of political retribution” (p. 146). Some cases were dropped if the victim pledged to vote for FDR. Very dishonest politicians with rampant charges of corruption (e.g. Hughes) were left alone by the IRS if they supported FDR. But opponents of FDR were investigated for much smaller issues.

Folsom does point out the good that FDR did: he lowered tariffs (after Hoover’s high tariffs caused damage), he helped make investments less risky, he stopped runs on banks, he made improvements in the nation’s infrastructure (sewers, bridges), and his optimistic speeches were very encouraging to people.

FDR played interest-group politics: he propped up the price of silver (to the detriment of tax payers) which won him the support of the seven silver states to help him win his re-election.

FDR’s minimum wage had good intentions, but it led to many working poor losing their jobs.

The National Labor Relations Act gave unions power, but diminished sales and new hiring and helped prolong the Great Depression. Higher wages led to fewer workers.

FDR raised revenue by excise taxes, very regressive taxes that hit lower-income families very hard. He also imposed two new regressive taxes: social security tax and a tax on food and clothing. But he didn’t impose the income tax, which is progressive.

In contrast to FDR’s “soak the rich” schemes, Mellon (treasury sec under Pres Coolidge) cut taxes on the wealthy from 73% to 24% of their incomes; the result was an outpouring of economic development. Mellon believed that 25% was about as much as rich people will willingly pay before they rush their money to tax shelters (e.g. foreign investment).

Blacks had been largely Republican since the Civil War, but FDR lured many to his party by including blacks in some (but not all) New Deal programs. It’s been a problem for Republicans ever since: if a politician argues for cutting relief programs to balance the budget, voters will be upset about losing their handouts.

FDR was no civil rights hero. He wouldn’t allow black reporters into his press conferences. He refused to endorse the anti-lynching bills presented by the Republicans in 1937 and 1939 (lynching needed to be declared a federal crime, because some localities still allowed lynching), and the anti-lynching bills did not pass. He refused to support a constitutional amendment to abolish the poll tax (the poll tax kept blacks from voting). FDR refused to support the push to let blacks enter skilled trades. He ignored Jesse Owens (who won gold medals at the Olympics) and wouldn’t invite him to the White House, because Owens didn’t vote for FDR. Then FDR sent the IRS to investigate Owens but not Babe Ruth (who also had a large income but Ruth supported FDR).

FDR won the biggest landslide ever in 1936: more than 80% of votes. Folsom presents charts showing that “as the aid for relief went up in American cities, so did Roosevelt’s vote.” (p. 188) FDR hadn’t won Pennsylvania in 1932, but he increased WPA payments by 3,000% in 1936 and won the state; FDR made sure the relief payments were highly publicized and mailed the checks just a few weeks before the election. FDR “bought” big-city political bosses with generous federal aid. He was reelected in 1936 thanks to the patronage of party bosses in the cities. If he knew he couldn’t win a region’s votes (e.g. Vermont and Maine), FDR didn’t shower them with government aid and projects. He focused on the swing states.

FDR tried to pack the Supreme Court and went after democrats who opposed packing. He went on a purge campaign in which he campaigned for politicians who agreed with him, ignored others, and tried to replace senators who only supported 80% of the New Deal (instead of 100%).

FDR used the IRS to ruin (fine and imprison) politicians who weren’t useful to him, sending the IRS to investigate people for minor things but ignoring his friends who had major dishonest tax dealings. When the IRS was doing an investigation on young congressman LBJ (who supported FDR’s court packing attempts), FDR halted the investigation and helped LBJ to settle quietly (with no publicity) by paying over $300,000 for the back taxes he owed. FDR sent the IRS and FBI after political enemies (such as Andrew Mellon) repeatedly, even after they were declared innocent. FDR was very generous with journalists who wrote positively about everything he did. But FDR sent the IRS to investigate journalist Moe Annenberg (who wrote in his paper against the New Deal); 35 agents worked for over 2 years to find any careless mistake. Annenberg was willing to pay the back taxes they demanded, but FDR wanted him to spend time in jail too. He spent 3 years in jail, which gave FDR a break from unfavorable newspaper articles. FDR rewarded those inspectors who helped spearhead IRS investigations of his political opponents: 2 were appointed to the Supreme Court, and one became attorney general.

FDR wanted to scare rich people into paying 79% of their income to the government and was furious when they found ways to shelter their income. Ironically, FDR used so many tax loopholes (completely legal, but resulting in less money for his New Deal programs) that he paid less than 0.2% of his own income in taxes in 1932.

FDR was re-elected because of his charisma. His “charm” included telling people what they wanted to hear, even if the statements were complete lies. His top advisors all admitted (revealed in their writings or in private meetings, shown in the book) that FDR never felt bound by any statement or commitment he made.

FDR charmed reporters, often previewed their stories before they were printed, invited reporters to dinners and special events, and made sure that the New Deal was reported on favorably. He had such control of the press that no newspaper reported on FDR’s many affairs and on FDR’s very rude treatment of his wife.

Congress set up the FCC which allowed FDR to control what was said on the radio: he could grant or revoke licenses of radio stations. Supporters of the New Deal had their licenses renewed quickly, while opponents of court packing would have their licenses delayed or denied.

Why was the USA so slow to recover from the Great Depression? Tax policies: excise taxes fell heavily on the poor, corporate taxes increased, estate taxes increased, and the undistributed profits tax was harmful.

The legacy of the New Deal was an expanded federal government.

Minimum wage: every time it increases, black teen unemployment skyrockets.

Social security: proven to be financially unsound and headed for bankruptcy

Labor unions: “Industries with labor unions have tended to be less productive than those industries without unions. The 22 states with right-to-work laws have, on the whole, much more economic growth as a group than those 28 states with closed shops.” (p. 166)

Farm subsidies: have expanded

AFDC (welfare): incentivized births out of wedlock

Tariffs: Democrats still argue for higher tariffs, despite the damage of Hoover’s Smoot-Hawley tariff

Federal Reserve

FDIC: costly for taxpayers; requiring banks to have private insurance would be a better system

SEC: which makes it harder for new businesses to begin

Character: “A big change in the New Deal was the lowered emphasis on strong character to be president.” Personal integrity was no longer a key factor in presidential nominees. FDR could “promise one thing in an election and deliver something quite different and get away with it as long as many political constituencies received their subsidies.” Voters looked “more closely at money promised than at the integrity of the presidential contenders.” (p. 270)
---------------------------
Quotes:

“The top tax rate under Roosevelt soared to almost 80 percent and then 90 percent, thus smothering any possibility of a recovery- a history lesson the Democrats would be wise to memorize.” -p. xiv

“To declare Social Security a great success is to say that the Titanic had a glorious maiden voyage until it hit the iceberg.” -p. xv

Treasury Secretary Morgenthau sadly confessed in 1939 (as the unemployment rate was over 20%, 6 years after FDR came into office), “‘We are spending more than we have ever spent before and it does not work...We have never made good on our promises.’
..Is it possible that the Roosevelt legend is really the Roosevelt myth?” -p. 15

“War debts, high tariffs, and failed monetary regulation were all government blunders...all three causes (of the Great Depression) involve problems created by government, not the free market.” -p. 33

“The story of the dynamic nature of the steel and car industries shows three things. First, competition is necessary for new and cheaper products to appear on the market. Second, competition is also a sensible way to set prices and wages. Third, many businessmen want to avoid competition … If that happens, innovation declines and customers pay more.” -p. 49

“Even data compiled by the NRA itself showed how dismally it failed to help the U.S. economy recover from the Great Depression…(reporting) huge price hikes, price fixing, regulation of output, and persecution of efficient businessmen-- all to the disadvantage of consumers… Yale economist Irving Fisher analyzed the impact of the NRA and told Roosevelt ‘the NRA has retarded recovery and especially has retarded re-employment.’” -pp. 56-7

“Throughout American history, right from the start, charity had been a state and local function… Face-to-face encounters of givers and receivers of charity benefited both groups. It created just the right amount of uplift and relief, and discouraged laziness and a poor work ethic.” -p. 76

“This historic shift to using federal dollars for local relief profoundly changed the American work ethic...During the New Deal years, states had new incentives to look to Washington to solve their relief needs. In fact, they had incentives to do a poor job raising local funds, and then exaggerate their needs. That way they could secure more cash for their states, and disperse the costs of raising the taxes to cover these funds to other states.” -p. 81

In FDR’s 1935 State of the Union address, he spoke of the unintended consequences of his relief programs: “‘The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of a sound policy.’” -p. 83

Oklahoma senator Thomas Gore was completely blind but “claimed to see clearly through the political chicanery that would occur if the federal government entered the relief business. No depression, Gore argued, ‘can be ended by gifts, gratuities, doles, and alms handed out by the Federal Treasury, and extorted from taxpayers that are bleeding at every pore.’ ...Soon after the ERA brought federal relief into existence, Gore said, ‘The day on which we began to make these loans by the Federal Government to States, counties, and cities was a more evil day in the history of the Republic than the day on which the Confederacy fired upon Fort Sumter.’” -p. 91

The TVA subsidies prevented recipients from being more productive:“Thus, with the TVA (Tennessee Valley Authority) we have the irony of 98 percent of the country subsidizing electric power for the other 2 percent, and the result is that the 2 percent started lagging behind and did not perform as well as the 98 percent who gave them the tax dollars.” -p. 102

“During the New Deal, Roosevelt, for different reasons, manipulated prices for both gold and silver. In both cases, the results were a weakened currency, diminished property rights, and a sharp rise in interest group politics.” -pp. 103-4

“When an accountant quizzed Roosevelt about the economic problems with social security, especially its tendency to create unemployment, he responded, ‘I guess you’re right on the economics, but those taxes were never a problem of economics. They are politics all the way through.’

[Lori · Rating 5 out of 5]

The Myth of FDR still lives and history is repeating itself. We should all know the facts of how FDR's policies destroyed prosperity and undermined our Republic.

[Aaron Miller · Rating 5 out of 5]

An eye-opening alternative to the heroic picture of FDR and his New Deal that's taught in our public schools.

One of Roosevelt's big programs was later declared unconstitutional by the Supreme Court. Small business owners were jailed for not charging the high prices the government had arranged with giant corporations. And by the end, Roosevelt's own economic mastermind bluntly admitted that their plans had failed. There are many hard facts here to warn us against repeating these mistakes.

FDR had some strong points, but his domestic policies were not among them. You'll notice the similarities to Obama's political philosophies. We are repeating these mistakes. This book will help you understand how.

[John Ethier · Rating 5 out of 5]

I thought the book was interesting and provided a view of Roosevelt's policies and approach/style to the presidency that was very insightful.
The book itself is very technical from a policy standpoint and gets into details of the political and economic approach that Roosevelt and his team took while in office. It provides of view of what worked and what did not. It does provide factual examples of various initiatives they took and what were the consequences of them. For most part it viewed his economic policies as not providing much of a benefit to getting the country out of the depression. I found it very insightful and not all that flattering of someone many call one of the greatest presidents ever. After reading this book it is clear that he was good as a communicator, however as a trusted leader who put the interests of the country first he is a failure. It was eye opening to me how much of what was done during the presidency was with an eye on getting reelected or for the benefit of the democratic party (kind of similar to the approach we are seeing today). For those interested in both political history and also current politics I would recommend this book.

[Ian Divertie · Rating 1 out of 5]

Recommended by Glenn Beck and the National Review and felt I had to read it in order to understand the right wings view of our current situation. It starts out with a discussion of the validity of the Laffer Curve, so that gives you an idea of where the author is coming from. Got to know what the other half thinks I always say. Basically, didn't tell me anything I didn't already know, it did review the three favorite theories of conservatives for the cause of the Depression. It also covered underconsumption, which is the agreed upon liberal cause, it reviews them all. How we got out of the depression its a little weak on in my opinion, but then if you're Glenn Beck, Laffer Curve, National review type people it'll seem just fine.

[David · Rating 5 out of 5]

To many people Franklin Delano Roosevelt is one of the best presidents in American history who skillfully guided the country through the depression and WWII. But a number of recent books, including New Deal or Raw Deal?: How FDR's Economic Legacy Has Damaged America by Burton W. Folsom Jr., use objective evidence to dispute the popular myth of FDR's performance. He had approached the problem of the Great Depression and high unemployment without any planning other that to try one thing after another to see if any of them worked. Mostly the results either didn't help or even made things worse. Unemployment stubbornly remained high throughout his terms until the start of WWII. The author relies on economic and political facts to make the case that FDR was primarily a political animal playing favorites with his supporters in proposing various programs to try. Generally his proposals vastly expanded government expenses and control over the economy and the country. Great read for anyone interested in the period leading up to and including WWII who is open minded enough to listen to an objective look at FDR's record.

[Don · Rating 4 out of 5]

Franklin Roosevelt is a favorite subject for historians. He was a larger than life figure, with a compelling background story who was president during historic times. Invariably FDR comes across as a sympathetic, caring and heroic figure.

If that is the view you hold of Roosevelt, you owe yourself the challenge to read this critical assessment of Roosevelt's actions during the 1930's. The author makes a well supported argument that Roosevelt did not lead the country out of economic depression, but rather made things worse. It is clear from this book that Roosevelt was an economic ignoramus and that the actions he took were politically motivated and not based on what would improve the economy (see any parallels to the current president?).

This book really knocks FDR off of his pedestal and leaves him reputation pretty banged up. This is a good read.

[Jacob Aitken · Rating 4 out of 5]

Echoes some Austrian school criticisms of FDR. Good but basic. Move on to Rothbard.

[Austin D. · Rating 5 out of 5]

Great in-depth exposé of damaging FDR years

What a penetrating analysis and review of the FDR years and a real myth buster! The author does a fabulous job describing all of the specific initiatives of FDR to supposedly combat the great depression. Then, the author one by one shows how each of these initiatives did not help alleviate suffering but in many cases made economic conditions worse.
As a somewhat new reader to this area, I appreciated the detail that the author gave, and it was so engaging to read about his life in a story format. Moreover, I really felt that the “legend” of FDR was thoroughly demolished.

However, the greatest contribution of the book was probably how it shows with detailed references how FDR used the New Deal programs first and foremost as a way to extend his personal power, buy votes, and demolish his political enemies. The author also spends a good deal of time telling the story of FDR’s personal life. In this way, the author then links FDR’s many personal failings and lack of character in his early life with the ultimately misguided and not well thought out new deal policies. The reader is finally left very unsurprised that the many failed programs ultimately degenerate into nothing more than a means for FDR to maintain his power base.

Lastly, my one critique of the book is that it felt like the author missed the mark somewhat on unmasking the myth of FDR in the area of money and banking. Specifically, the author seems to almost agree with FDR as doing a good thing by taking the US off the gold standard. Several authors have pointed out that the federal reserve at the time had plenty of gold and there was no real threat to redeemability. See eg Lawrence Reed (with lectures on Youtube)

Also, the author identifies the federal reserve contraction as a possible major cause of the depression and then ignores FDR’s policy towards fed policy for the next ten years. The analysis feels incomplete in this regard. By contrast, many authors have suggested ways in which the US could have reshaped the banking system to eliminate it’s many shortcomings, thereby allowing for the fed to be ultimately abolished and allowing for a much faster economic recovery. See eg George Selgin and Lawrence White (with lectures on Youtube).

[Joelle Lewis · Rating 4 out of 5]

Joelle Reads Her Bookcase #37

A different viewpoint of the dazzling New Deal that parades throughout our history textbooks. After reading Doris Kearns Goodwin's "Home Front", the only real takeaway, as far as criticisms of FDR went, was that he tended to be unorganized, and allowed the bureaucracy to become bloated. This was not just an observation; this was a major issue with the entire Roosevelt administration. Although "New Deal or Raw Deal" does not address that issue specifically, it allows one to fill in some of the missing puzzle pieces. Roosevelt wasn't an economist; he wasn't an able administrator, and often created far too many bureaus and programs that competed with one another. He also was an obsessive micromanager. Roosevelt had a narcissistic personality. Roosevelt was first and foremost a politician, which is why he excelled at being an authority figure and in the spotlight. However, when it came to actually knowing how to be an executive - he was clueless.
The book does become repetitive and slightly pedantic towards the end, and the writing can be a little annoying. However, it is fairly written. Despite outlining the numerous faults of the New Deal, and also the many character/integrity issues of FDR himself, the author avoids casting personal opinions and overtly petty aspersions.
It is a negative book that is written without being mean or vituperative.

[Brian Katz · Rating 4 out of 5]

This was a very good book. It provided a different perspective of Rosevelt and his New Deal. Specifically, it provided a conservative rebuttal to the plethora of books written by liberal professors from academia that have hailed Rosevelt as the best president in history. What else would one expect ? I will accept that the Great Depression was difficult on many people and that drastic measures were needed in order to provide security to many people. All good stuff. His programs did just that, provide much needed support. But a few of them were considered unconstitutional by the Supreme Court and the amount of patronage that occurred under these programs in order to get Rosevelt re-elected was disgusting. From an economic perspective, the New Deal was a bust. It did not push the US economy into recovery, it prolonged the pain, a full decade. Higher taxes, tariffs (initially imposes by Hoover), attacks on businesses and the various New Deal programs (paying farmers not to plant, price fixing, etc..) all had a negative impact on unemployment. Rosevelt was a bleeding heart liberal and should be remembered as such.

I will read another book about him and the war, which may impact my view as above. We shall see.

[Rita · Rating 5 out of 5]

WOW!! What an eye-opener. Everything I'd heard about FDR and the New Deal has been upended. Full of corruption and patrimony. How could people have written about that time and not seen how wrong it was. Extreme loyalty was paramount to FDR as was packing the Supreme Court with those in favor of his policies which amounted to keeping him in office.

[Ebookwormy1]

After reading Folsom's The Myth of the Robber Barons, I was disappointed that he dabbled in depression economics at the end of the book with analysis of Andrew Mellon, but then wrapped up his coverage of the Gilded Age entrepreneurs. I wanted more. What I really wanted was another perspective on The Forgotten Man by Amity Shlaes.

Thus, The New Deal or Raw Deal landed on my to-reads....

--


The Myth of the Robber Barons, Folsom, 1991
https://www.goodreads.com/review/show...

The Forgotten Man, Shlaes, 2007
https://www.goodreads.com/review/show...

[Mattjmjmjm · Rating 4 out of 5]

1. “The economic travail of the New Deal years can also be seen in the seven consecutive years of unbalanced trade from 1934 to 1940. Much of our government spending during the decade went to prop up prices of wheat, shirts, steel, and other exports, which in turn, because of the higher prices, made them less desirable as exports to other countries. From 1870 to 1970, only during the depression years plus the year 1888 did the United States have an unfavorable balance of trade.”
2. The underconsumption thesis was used by FDR for the rationale of the new deal. “However, the wages going to employees actually rose during the 1920s from 55 to 60 percent of corporate income. In other words, employees were capturing a larger share of corporate dollars during the 1920s than before. Third, the percentage of GNP that went to consumption expenses did not fall, but actually rose from 68 percent in 1920 to 75 percent in 1927, 1928, and 1929.7 A more accurate picture of the 1920s would show Americans buying more and more radios, telephones, cars, vacuum cleaners, and refrigerators. The 1920s was more a decade of overconsumption than underconsumption.”
3. National Industrial Recovery Act (NIRA), which became law in 1933 and was soon shortened to NRA - It allowed American industrialists to collaborate to set the prices of their products, and even the wages and hours that went into making them. Leaders in all industries, from steel and coal to shoulder pads and dog food, were invited to sit down together and write “codes of fair competition” that would be binding on all producers in their industry. The NRA “probably impedes recovery,” Keynes wrote in the New York Times, and “has been put across too hastily.” What’s more, as Edward Chamberlin, another Harvard economist, pointed out, “There is no doubt that the tendency to substitute machinery for labor is strengthened by artificially high wages.... A rate of wages which is too high may work positive injury to the class it is sup¬ posed to benefit."7 The whole NRA, by carving up markets among existing producers and by fixing prices and wages, assumed all industry was stagnant and unchanging.
4. “My father,” Elliott Roosevelt observed of his famous parent, “may have been the originator of the concept of employing the IRS as a weapon of political retribution. Another target of the president was Hamilton Fish, the Republican congressman from Roosevelt’s home district in New York. When Fish began to oppose Roosevelt on program after program, Roosevelt at first tried to oust Fish at the ballot box. Hyde Park was Roosevelt’s territory and FDR hated the idea of Fish representing the president and his neighbors in Congress. When Fish kept winning reelection, sometimes by large margins, Roosevelt brought in the men at the IRS. They alleged that Fish owed $5,000 in back taxes and demanded payment. Fish challenged this ruling in court. “The case dragged on for several years,” Fish observed, “costing the government many thousands of dollars as it attempted to make me pay the money, which if I had agreed, would have be¬ smirched my reputation." Eventually, the IRS lost its case completely, and even had to concede a tax refund to Fish of $80. In 1942, the IRS launched a multiyear audit of Fish and that also failed. Finally, during World War II, Roosevelt asked J. Edgar Hoover at the FBI to investigate Fish on a charge that he was engaging in “subversive activities.” 'That effort also fizzled, but Roosevelt finally got his way when his friends in New York gerrymandered Fish's congressional district, and he lost his seat in the 1944 elections.”
5. “But with a six-week filibuster in early 1938, Harrison and his southern colleagues did stop the antilynching bill from reaching the Senate floor. Roosevelt again refused to endorse the bill, or use any political capital to make it pass. He would antagonize southern senators to promote his wages-and-hours bill—which did nothing to reduce unemployment—but he ignored antilynching. Roosevelt also refused to publicly support a constitutional amendment to abolish the poll tax, a device that had been used for decades to keep blacks from voting. That was another chance for Roosevelt to show that liberal political ideas, not just patronage and personal loyalty, were guiding his presidency.”
6. “One reason that the United States lagged behind other countries in recovery from the Great Depression is that Roosevelt strongly emphasized raising revenue by excise taxes. According to another League of Nations study, the U.S. increased its revenue from excise taxes more rapidly than did any of the other nine nations surveyed. Britain and France, for example, decreased their dependency on excise taxes from 1929 to 1938.Japan, Germany, Italy, and Hungary did increase their excise revenues, but only slightly. The United States, however, had a whopping 328 percent increase in excise revenue from 1929 to 1938. “The very large increases of yield [in tax revenue] which are shown in the case of Belgium [310 percent] and the United States [328 percent] are due to substantial increases in the rate of duty,” the study concluded. Since these taxes fell heavier on lower incomes, that may have con¬ tributed to the poorer rate of recovery from the Great Depression by the United States.”
7. “Some historians, trying to defend Roosevelt, point out that unemployment in the United States slightly dropped each year from 1933 to 1937, which suggests some progress in fighting the Depression. Unemployment was 25.2 percent in 1933, 22 percent in 1934, 20.3 percent in 1935, 17 percent in 1936, and 14.3 percent in 1937. That 14.3 percent, however, is alarmingly high and— outside of the 1930s—was only exceeded for a brief period in all of American history during the Panic of 1893. Whats worse, the business uncertainty during Roosevelts second term stifled that modest recovery of his first term. To be fair, if we describe the downward move of unemploy¬ ment during Roosevelt’s first term, we must present the steady upward move of unemployment during most of his second term. Unemployment was 15.0 percent in September 1936,15.1 percent in January 1937,17.4 percent in January 1938,18.7 percent inJanuary 1939, and 20.7 percent in April 1939. Thus, more than six years after Roosevelt took office, and almost ten years after the stock market crash of 1929, unemployment topped the 20 percent mark.”
8. “the Democrats, under Farley and Roosevelt, would use the federal jobs primarily (1) to “reward” party members, and (2) for “assistance for building the party machine for the next election.”1 Under the New Deal, Roosevelt sponsored a flurry of new fed¬ eral programs—including the AAA, FERA, CCC, and later the mammoth WPA, which provided government jobs for millions of American voters. Roosevelt and Farley distributed the jobs connected with these agencies (as Farley promised) in ways that best served the Democrat Party. Emil Hurja, deputy director of the Democratic National Committee and Farley's right-hand man, was an expert pollster and he gathered data regularly on the political effects of patronage.”

[Tony · Rating 5 out of 5]

When I've finished a book and I feel that it's been well written and either entertaining or informative, I typically conclude that I ought to rate it with five stars. A book like "New Deal or Raw Deal?" by Burton Folsom, Jr. can sometimes be the curve-buster though.

My fear is that I've rated so many books with five stars that me rating this with five stars will be overlooked. I truly hope that isn't the case. This book is one of the most insightful books I have ever read. We're taught all throughout high school and college that President Herbert Hoover "did nothing" at the outset of The Great Depression (TGD), which caused it to spiral out of control. But that's simply not true. President Hoover meddled with wages and signed into law a massive tariff hike. Both of these made it more difficult to produce. When production is hampered, this costs jobs and creates inflation. We're also taught that FDR was a great president and ended The Great Depression. But if that's true, why did TGD last another decade? Why have we faced so many times of extended recessions by applying the same techniques of expanding government involvement?

For some reason, from FDR on we began judging a public policy based off its intentions and not its results. Many of FDR's policies were struck down as unconstitutional and have made production more difficult and unemployment often high. This isn't even to mention a complete lack of character from a man that not only openly flaunted his affair, but also openly lied even when there was no reason to do so.

This book opened my eyes to no longer believing what I'm told about history. The assumptions today about the role of government is false. FDR gets a monstrosity of a memorial in D.C., while President Calvin Coolidge is often forgotten. Coolidge once said something to the effect of it being more important to not sign bad laws than it is to sign good laws. It seems it doesn't matter what kind of action is taken by the president, as long as action is taken. This would largely explain the 2012 election results.

[Garrett Cash · Rating 5 out of 5]

It's horrifying how many similarities can be drawn between FDR and his administration to our presidential incumbent. Government relief that doesn't work, trying to spend our way out of debt, using the IRS as a weapon against detractors, unabashed dishonesty, etc. Just like Obama's "hope" mantra, anyone who lived at the time would tell you that FDR gave them hope that things were going to get better. But hope doesn't fix an economic crisis. Knowledge of how economics actually works fixes it. FDR didn't know anything about economics because he spent his education learning politics instead, and when the time came that he needed advisers on how to fix the economy he got a bunch of pointy-headed scholars that didn't know how things worked versus businessmen or economists. FDR violently attacked business during his tenure as president, the very thing that could actually save America from the depression. Instead, FDR seemed to think an entire country that was government dependent would fix the problem. How in the world does that make any sense? What he should have done was lower taxes, balance the budget, and lower the tariff like he promised he was going to do when he ran for election. Instead he came up with several failed government programs that did more harm than good. NRA, AAA, WPA, the repercussions of these Roosevelt programs continue to plague us. Even one of FDR's best friends, the secretary of the treasury, admitted in 1939 that FDR's policies had failed and that the economy wasn't getting any better. This is the book that we should be teaching in schools. Real history, actual economics. Not leftist daydreams.

* Fun bit of trivia: The government got into more debt during the thirties than all of American history previously combined.

[Jordan · Rating 2 out of 5]

Hats off to Burton Folsom for diligently compiling the research necessary for this work. While I don't dispute his facts and agree emphatically that the New Deal era continues to cripple American prosperity, listening to thousands of concrete examples of FDR's deceitful, manipulative, scandalous, power lusting soul, was difficult to bare(even for me)for the 11 hrs and 20 mins of this audiobook. Ellsworth Toohey put it best when he said, "Don't bother to examine a folly—ask yourself only what it accomplishes." As long as we continue to point fingers and debate particular policies while ignoring the principle ideas on which they stand, we can never correct the problem. This book like so many others from competent intellectuals fails to highlight the connection between politics and ethics. It is this failure, whether it be made by scholars, politicians, or businessmen, that has allowed people to cling to the idea that being on 'the dole'(no matter what it's form) is morally acceptable(and somehow often morally superior). As long as this remains so FDR's "Raw Deal" will live on.

[Reynolds S · Rating 5 out of 5]

A wonderful book that systematically and deliberately examines the major policies of FDR during the Great Depression and the effects those policies had on the country. Needless to say, most of his policies and programs were spectacular failures and caused the Depression to last longer than past depressions. The one thing FDR did that was somewhat of a success what the Securities Act of 1934. FDR and his brain trust were of the mind that the actions of the president during the Depression of 1920 were not the correct ones and they set out to prove that they knew what was best for the country. As a result, unemployment continued to grow, taxes remained high, as did government spending, and those that disagreed with the administration were vilified and ridiculed. What is interesting to note is that the current administration, President Obama, appears to be following FDR's playbook and is having the same results. A great book to read if only to see what not to do in a depression or recession.

[Jordan · Rating 4 out of 5]

Most people’s understanding of FDR’s economic policy involves him saving America from the Great Depression with the New Deal, following a do-nothing president. This book tracks along with the conditions (as defined by unemployment rate, GDP, and the stock market) and the specific policies pursued along the way by both Hoover and FDR, and it’s easy to see the typical narrative promoted by academia does not track with reality. Hoover was the opposite of a do-nothing president and took disastrous actions, and FDR prolonged the Great Depression in ways that were Hoover’s activist policies on steroids. Unemployment didn’t skyrocket until after these awful policies were put into place.

Policies must always be analyzed in terms of incentives and constraints, not intentions, and understanding the specific policies pursued during the Great Depression should be a useful lesson in history for all Americans as we dare not ever repeat this.

[Steve Hadfield · Rating 5 out of 5]

This was a real shock, how bad of a president FDR really was. What else do you say about a guy that uses the IRS as his personal attack dogs? Or doles out boat loads of taxpayer dollars to elect Democrats. To hell with the people, they can starve! From his use of soak the rich class warfare, his lie about wanting to decrease the debt, using the IRS to go after anyone that opposed him, his attempt to pack the Supreme court, it is a myth that FDR was anything but a totalitarian, power hungry politician. His policies did NOT get us out of the great depression, they prolonged. FDR has to rank as one of the worst president's this country has ever had.

[Bernie · Rating 4 out of 5]

I was interested in this book in light of the current administration's attempt to "stimulate" the country into economic revovery rather than allow the market to naturally correct itself. It is FDR's economic legacy that put into place the mechanisms that has allowed this to happen--- saddling our children with unfortunate debt.

I found the book to be a frank, eye-opening account of the harm that this charismatic but economically ignorant leader caused our Country and our Constitution. I see erie and frightening similarities in America's current President.

[Jpavalock · Rating 5 out of 5]

History class just didn't go into detail about how destructive the Roosevelt administration really was. We learn dates, and about the war, but not much about the destructive and unconstitutional policies of the 1930's and just how they prolonged the depression. Then they all say it was the war that brought us out, but actually Congress cut taxes and regulations to unleash the American spirit and look at the boom that followed!

[Naomi · Rating 5 out of 5]

I loved this book. It was a great study of the FDR "legacy" and how damaging it was and has continued to be to the American economy. I also liked that it showed FDR for the joke that he was as a president and the socialist he truly was and was about all about his agenda versus the long term health of the American economy...Americans past,present and future... be damned!

[Dillon · Rating 1 out of 5]

misleading, inaccurate use of statistics and lack of detail in his citations.