FDR's Triumph
A reply to Jim Powell.

Thanks to Jim Powell for the cordial tone of his reply to my last comment in this FDR–New Deal discussion. We may be reaching the point of diminishing returns, but I am glad to say that I agree with most of what he wrote. I am just about as much a pure capitalist as he is and have long admired some of his writings and those of his kindred economists.

I must repeat that I credit Roosevelt with catastrophe-avoidance, not correct economics, until the Fourth and Fifth New Deals: the huge defense buildup and the GI Bill of Rights. I agree completely that what he should have done as soon as he had cleaned up the banking crisis is what Jim Powell wrote near the end of his piece: revoke the Smoot-Hawley Tariff and the Hoover tax increases. But he also had to provide emergency relief, or there would have been a danger of widespread starvation and violence in the country.

I did not mention any of the New Deal public-works projects in my last comment, and did so in the earlier one only to distinguish the New Deal from the Keynesian idea of digging holes and filling them up again to employ people. I always admired Roosevelt's rather disdainful treatment of Keynes, whose only useful contribution to the Roosevelt administration was his support of FDR's sabotage of the London Economic Conference in 1933, which was just an effort by the world's politicians to claim they were helpless victims of economic acts of God, while they tried to fix the U.S. dollar at an unjustifiably high value. Marriner Eccles, the Fed chairman, had some influence on U.S. government policy, but Keynes did not.

I will not be portrayed as a supporter of what we see of the Obama Plan, with its insane tax increases and coercive medical care and energy caps and trades and abolition of union-election secret ballots; much less of the views of Paul Krugman, with whom I do not recall one moment of agreement in 20 years. Good try, Mr. Powell, but no sale.

Roosevelt felt he needed to make some symbolic tax increases in 1935 to fight off Huey Long and Francis Townsend and Father Coughlin. I think the taxes were economic nonsense and damaging, but I am a little reluctant to challenge the tactical political judgment of the most successful political leader in the history of large democratic countries. Roosevelt abhorred the "pauperism of the dole," as he called it, because he did not want to salary idleness or get Americans accustomed to being paid for not working.

Not only is there more common ground between Mr. Powell and me, as I have been saying for some time with what must seem almost neurotic persistence, there is some between Roosevelt and Mr. Powell also. FDR sincerely believed he was a great capitalist — that he was saving 90 percent of the system Mr. Powell commends in the Twenties, by doing the minimum necessary to make it less vulnerable to terrible economic crises. He covered it all in a lot of posturing about punishing "the money changers" and so forth, and distributing "blue eagles" (that were in fact thunderbirds) to those who adopted the absurd NIRA codes. He was trying to lift spirits, alleviate desperation, maintain national unity, avoid singling out real scapegoats, and ensure that the U.S. was ready to help save civilization from the Nazis if necessary — which, from his first days as president, he presciently feared would be necessary.

Apart from the absolute need for emergency measures for the one-third of the country with no means of support at all, I believe my differences with Mr. Powell can be reduced to two. First, the New Deal workfare workers were employed people, like contemporary German and Japanese draftees, as Mr. Powell is sidling toward conceding, while denying its significance, which is that Roosevelt virtually eliminated unemployment in three years. Second, Roosevelt had a comprehensive plan for dealing with the nation's major problems in the order of their scale and chronological urgency. He used the isolationist reformers in Congress to help him palliate the economic crisis, and then transformed the New Deal into a military buildup when fear of Hitler made that possible. He ditched the isolationists and turned to the small-government conservatives in the South to help him overwhelm his isolationist former allies and the Republicans, to help Britain and Canada, and to arm the nation to the teeth to complete the rout of the Depression while preparing the country to deter, or, if necessary, defeat Nazism and Japanese imperialism.

This was one of the great tours de force in the history of the grand strategy of great powers since the rise of the nation-state, the more so because of Roosevelt's astounding ability to disguise what he was doing until it was possible for dispassionate historians to appreciate it. With the utmost respect, to be appreciated, this requires a broader perspective than Mr. Powell's rather narrow economic analysis. With that perspective, the indisputable fact remains that in twelve years and 39 days as president, Franklin D. Roosevelt brought U.S. unemployment from between 25 percent and 35 percent to half of 1 percent; doubled the GDP; led the world to the defeat of Nazism and its allies while the Russians took 90 percent of the casualties in doing so; developed an atomic monopoly; and took the U.S. to half of the world's entire Gross Product and a place of power and respect, as Mr. Churchill said in his eulogy of Roosevelt, unapproached by any other country in history.

I respect Mr. Powell's economic views and share most of them. But it is unrigorous and unjust to slice off a piece of Roosevelt's record, compare it with a counsel of economic perfection, and dismiss his unprecedentedly long and popular and internationally respected presidency as "FDR's Folly" because he did not embrace economic concepts that have only become the conventional wisdom among perceptive economists decades later.

– Conrad Black is the author of Franklin Delano Roosevelt: Champion of Freedom and Richard M. Nixon: A Life in Full.

© 2024 Conrad Black