Published: May 12, 2008 04:24 pm         

STUMPTALK: Please, not another New Deal nor cover up war

When asked to comment on John McCain’s economic speech, Hillary Clinton said it “sounded like Herbert Hoover.” Incredibly, this candidate besmirches the architect of the governmental policies which have been the bedrock of her entire political career. Did Hillary not know any better or did she think the American people, or the mainstream media for that matter, were too slow to catch on to yet another gaff? Not surprising since generations of students were schooled on the mythology that capitalism is inherently unstable and, whereas President Hoover sat on his laissez-faire duff and did nothing to solve the Great Depression, it was the heroic effort of President Franklin D. Roosevelt and his New Deal that came to the rescue to save capitalism from itself. Those hooked on this fable dearly need lessons in economic history.

What appeared as prosperity from 1813-1818 was nothing but a bubble that resulted from inflationary war (1812) finance. The bubble was unsustainable, resulting in the Panic of 1819. Congress debated a crisis far worse than that of 1929, but did not act. Because there was no intervention, the market made the necessary corrections and the panic ended quickly and peacefully by 1921. President Van Buren likewise refused to intervene in the Panic of 1837 and it ended in a few months.

But in 1929, the traditional laissez-faire course of previous depressions was rudely brushed aside. Led by President Hoover, the government embarked on an anti-depression program marked by extensive economic planning and intervention. Herbert Clark Hoover was the founder of the New Deal in America. He left office with the economy in the depths of an unprecedented depression with unemployment at 24.9 percent. It was Hoover’s interventionism beginning as commerce secretary in 1921, not his neglect or market instability, that sent the economy into a tailspin. Franklin D. Roosevelt took office in 1932 and merely elaborated the policies laid down by Hoover, putting his own stamp on it – the FDR New Deal.

New Deal fans are likely to rebuke this account and cling to the Marxist mythology rather than face the truth about FDR. But perhaps the following fact will shake their faith. Roosevelt’s work-relief programs had reduced unemployment by 1937 to only 14.3 percent. But then, astonishingly, in 1938 unemployment shot up 19 percent — a recession within a depression — and continued until the war broke out in 1941. Unemployment virtually disappeared as conscription pulled 12 million workers into the armed forces. But why did the economy remain depressed?

Roosevelt, like Hoover held an absolute hostility toward investors. Roosevelt, however, couldn’t run a war without business. He made some concessions in 1940, provoking many New Dealers to quit his administration. Harry S. Truman, who became president when Roosevelt died in April 1945, was himself a New Dealer, but hardly one of Roosevelt’s stripe. Businessmen didn’t like Truman, but tolerated him.

Truman gave the boot to the Roosevelt brain-trust in 1945-1946 and dismantled what remained of the New Deal. Good times did return, but certainly not, as many argue, by the introduction of a world war costing tens of millions of lives. A full recovery didn’t happen until the end of WWII. The stock market did not return to its pre-depression levels until 1954. Whereas the American economy had purged itself of previous depressions in a year or two, the Hoover-Roosevelt New Deal prolonged the depression 12 years with untold misery suffered by the American people.

Thanks to the legendary Murray Rothbard, Robert Higgs, Oakland Tribune journalist Robert B. Stinnett’s 1995 exposé and others, the Roosevelt Myth has been fully exposed. When the New Deal began to peter out in 1937, FDR turned to foreign affairs to fulfill his political ambitions (and cover up a failed legacy). He ordered naval intelligence officer Lt. Commander Arthur McCollum to lay out a plan to get America into Europe’s war without firing the first shot. Despite Roosevelt’s famous 1940 campaign speech, “Your boys are not going to be sent to into any foreign wars,” he had already set the McCollum war plans in motion in 1939.

Stumptalk is published weekly in the Crossville Chronicle. The opinions expressed in this column are not necessarily those of the Chronicle publisher, editor or staff. Phil Billington serves as coordinator of this column. He may be reached at 484-2766.