Crisis and Liberty: Lecture 6 | Robert Higgs


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The New Deal was not as widely popular as many stories about FDR might suggest. The Depression began about midway through 1929. Prices fell for four years. Unemployment was as high as it had ever been, and for a long time. Construction work disappeared. Many Americans thought that it was wrong to go on the government dole. But most became willing to change both this moral view and their character. Many were desperate by the time FDR took office and the New Deal was put into practice. They felt the market machine was busted and only the government could now provide for them. The New Deal is not a logical, coherent thing. Many of the programs warred with each other. FDR’s braintruster was a wannabe communist. He wanted central planning of everything. Many strange bedfellows appeared. Bernard Baruch convinced many that WWI had been a successful government project and that the New Deal was another fine project. He felt that raising pricing – or reflation – or restricting supply - was a solution. That policy was guaranteed to fail. Much government activity, that had only been local, was now centralized at the Federal level like welfare and relief. Many farmers became debtors and required mortgage relief. Businessmen clamored for bailouts. The National Industrial Recovery Act imposed 750 codes binding businesses to cut competition. The NIRA was declared unconstitutional in 1935.The vitality of markets had been killed just like industry under Mussolini. A great number of the New Deal programs had to do with finance. Gold was nationalized in 1933. Bank holidays were declared. Other programs had to do with labor and labor unions. The New Deal scared the investor class so badly that net investment was negative for a decade. Bibliography (PDF): Recorded at the Mises Institute on June 23-27, 2003.

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