Saturday, April 8, 2017

The New Deal Extended the Depression

The New Deal programs did not end the Great Depression; they delayed recovery and prolonged it.  Economically, there is but one route to prosperity, and that is through freedom of enterprise, productivity, and competition.  The New Deal hampered enterprise and competition.  Production was discourage by such devices as acreage allotments for farmers, shorter hours of work in industry and reducing then number of people in the labor force.  Enterprise was hampered by diverting capital from private hands and spending it for public employment and public enterprises.  The proof of the pudding came in the period 1937-1939, when in the midst of prolonged depression, the depression deepened.  The stock market crashed again in 1937, though not so loudly.  Unemployment rose, until in the course of 1938 it reached the highs of 1933, despite such programs as WPA and the CCC.  According to some surveys, it reached 11 million in this period.  Higher wages resulting from government encouraged unionization and wages and hours legislation contributed to the deepening depression.

To show how the New Deal programs prolonged depression and worsened the situation, it may be helpful to examine a little more closely the fate of the farmers.  These measures were often supposed to save the family farm and even increase the number of people in farming.  If anything, they worked the other way.  About 25 per cent of the population lived on farms in 1933; this had fallen to 23 per cent in 1940 and to 15 per cent in 1950, when most of the programs were still in effect.  As for tenant and sharecroppers, who were supposed to be special objects of consideration, the comments of two historians are in order.  One says, “The AAA brought benefits to almost all commercial farmers.  But in limiting acreage and providing the strongest possible incentive for more efficient land use, and thus for better technology, it forced sharecroppers off the land and worsened the plight of farm laborers.”  Another says, “New Deal policies made matters worse.  The AAA’s reduction of cotton acreage drove the tenant and the cropper from the land. . . .”  They prolonged the agony of leaving the farm, with the usually small government checks, but by limiting acreage to money crops they sealed the fate of many farms.

The New Deal concentrated much attention on raising wages and farm prices.  To foster this, it adopted monetary and fiscal policies which brought in later years the scourge of inflation, the destruction of savings, and a society bent on somehow holding on to a portion of what has been earned.  The long-term result to this date [October 1986] has been the progressive destruction of the dollar.  That, too, is a legacy of the New Deal.

Clarence B. Carson, A Basic History of the United States, Volume 5: The Welfare State 1929-1985, pg.93-94

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