Amity Shlaes:

“One evening in the 1930s, a 13-year-old named William Troeller hanged himself from the transom of his bedroom in Greenpoint, Brooklyn.

William’s father was laid up in Kings County Hospital awaiting surgery for an injury he’d suffered on the job at Brooklyn Edison. A federal jobs program was paying William’s older brother Harold for temporary work. But the amount wasn’t nearly enough to make ends meet. Gas and electricity to the family’s apartment had been shut off for half a year. Harold told a New York Times reporter that both hunger and modesty had driven William to act. “He was reluctant about asking for food,” read the headline in the paper.

The surprising part of this story is not that it happened; most Americans know that after the 1929 stock-market crash, hard times sometimes led to suicide. The surprising part is that William Troeller killed himself not in 1930, when Herbert Hoover was president, but in 1937, in Franklin D. Roosevelt’s second term. The New Deal was almost five years old, but the economy was not back. In fact, the country seemed farther from recovery than before. A new sense of futility was overcoming Americans. The British magazine the Economist sneered that the United States “seemed to have forgotten, for the moment, how to grow.”

The date matters, because our new president has made it clear that his model is Roosevelt. Barack Obama has spoken of creating 3 million jobs with his stimulus plan. As a new president in 1933, Roosevelt spoke of creating “one million jobs by October 1″ through his spending packages. At about $850 billion, Obama’s stimulus represents about 5.9 percent of gross domestic product. The spending programs of Roosevelt’s National Recovery Administration amounted to almost precisely the same share. Then as now, the country was in what we might call an “illions” moment, when a nation contemplates federal spending of a magnitude previously unimaginable. The only difference is that today, we’re discussing trillions instead of billions.

It’s reasonable that a new executive in a downturn would want to evoke Roosevelt the leader. Like no other president, Roosevelt inspired those in despair. He kindled hope with his fireside chats on a then-young medium, radio. The new president gives radio talks, but they are also made available on this era’s young medium, the Internet.

But Roosevelt the economist is unworthy of emulation. His first goal was to reduce unemployment. Of his own great stimulus package, the National Industrial Recovery Act, he said: “The law I have just signed was passed to put people back to work.” Here, FDR failed abysmally. In the 1920s, unemployment had averaged below 5 percent. Blundering when they knew better, Herbert Hoover, his Treasury, the Federal Reserve and Congress drove that rate up to 25 percent. Roosevelt pulled unemployment down, but nowhere near enough to claim sustained recovery. From 1933 to 1940, FDR’s first two terms, it averaged in the high teens. Even if you add in all the work relief jobs, as some economists do, Roosevelt-era unemployment averages well above 10 percent. That’s a level Obama has referred to once or twice — as a nightmare.

The second goal of the New Deal was to stimulate the private sector. Instead, it supplanted it. To justify their own work, New Dealers attacked not merely those guilty of white-collar crimes but the entire business community — the “princes of property,” FDR called them. Washington’s policy evolved into a lethal combo of spending and retribution. Never did either U.S. investors or foreigners get a sense that the United States was now open for business. As a result, the Depression lasted half a decade longer than it had to, from 1929 to 1940 rather than, say, 1929 to 1936. The Dow Jones industrial average didn’t return to its summer 1929 high until 1954. The monetary shock of the first years of the Depression was immense, but it was this duration that made the Depression Great.”

Of course liberals will foam at the mouth whenever this truth is unveiled – see (here), (here), (here).

Nevertheless Sclaes is 100% correct that FDR’s “New Deal” turned a stock market crash into the Great Depression. It was FDR’s mantra, “Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.” That liberals follow today.

Shlaes wrote a book on the subject, “The Forgotten Man”, get a copy to fight the lefty revision of history.

More information here as well.

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