Mark Naison: Did FDR's Jobs and Spending Programs Make the Depression Worse?

During the debate on President Obama's stimulus package, I was astonished to hear Republican Congressional leaders argue that history shows us that massive government spending programs make economic crises worse. As an example, they invoke the jobs and public works programs of the Roosevelt Administration, which, they claim, lenththened the Depression rather than ameliorated its impact.

Their arguments are based on a 2004 book called"FDR's Folly" by a resident scholar with the Cato Institute named Jim Powell, a book that has been rejected by most historians of the period as unbalanced and innaccurate.

There is no question that Powell is right that FDR's policies did not lead to full recovery from the Depression- that only came as a result of World War II.

But his argument that reliance on the free market would have produced better results than government job creation, public works and encouragment of collective bargaining is not only impossible to prove , it flies in the face of the common sense understanding held by most Americans of what FDR achieved, as well as the assessment of FDR's policies offered by most scholars in American history.

As someone who has studied the impact of New Deal policies"on the ground," in the rural South as well as black and working class neighborhoods in New York City, I would like to offer my own deeply skeptical view of this revisionist history Republicans are promoting.

From my point of view, Roosevelt's policies offered hope and opportunity to a deeply wounded, fearful American population who had lost their jobs, their homes, their savings and their dignity during the three years between the stock market crash and Roosevelt's inauguration.

At the time Roosevelt took office, almost a third of the labor force was unemployed, and another third was working part time.

The banking system was in paralysis and the signature American industry, steel, was operating at 29% of capacity.

Large numbers of Americans were hungry. Long breadlines extended outside charities in New York and other cities and city goverments lacked the funds to supply hungry people with food.

Millions of Americans were homeless. Shantytowns, often called"Hoovervilles," filled parks and vacant lots in American cities, and an estimated 3 million people rode the rails from town to town and city to city looking for work.

Evictions and foreclosures,undertaken by banks and landlords provoked violent resistance in many sections of the country, Eviction riots involving thousands of people made throwing out working class families a dangerous proposition in the South and East Bronx, while gun wielding farmers prevented banks from taking over foreclosed farms in portions of Iowa, Wisconsin and Minnesota.

When you combine this level of popular distress with a financial system in disarray, and a near paralysis of economic activity in agriculture, manufacturing, construction and retail trades, you have conditions very similar to those which paved the way for the rise of fascism in Italy, and Nazism in Germany.

Left on their own, this is what market forces had wrought, so New Deal leaders took what in the context of American history was very radical step.

They decided to get money into the hands of displaced and demoralized people through direct relief, funded by the federal government, distributed by the states, through payments to farmers for restricting production, and for public works jobs created by the federal government.

These measures didn't restore the economy to pre-1929 levels. But they did dramatically reduce hunger and homelessness, bring a modest revival in manufacturing, construction agriculture and retail trades, reduce unemployment by half, and make dramatic improvements in the infrastructure by through the construction or roads, dams and bridges.

More importantly, they restored the morale of a population which had feared that their poverty would be permanent and that their hard earned skills would no longer have value. The work relief programs of the New Deal gave millions of unemployed Americans a renewed sense of their own value, which spilled over into their responsibilities as family members and citizens.

And when war did come this restored and reinvigorated people rose to the challenge of with a vigor and a unity that amazed the world, both on the product line and the battlefield.

This is hardly a legacy of failure!

Nor did the American people understand it as such. That is why they elected Roosevelt to four terns as president, and why pictures of Roosevelt adorned the mantelpieces of tens of millions of Americans, rural and urban north and south, east and west, black and white, native and immigrant.

This is the lived experience that Republicans seek to denigrate, offering as evidence only the mythic properties of private markets as exist in the imagination of conservative economists.

Let us remember: it was unregulated private markets that got us into the Great Depression and it is unregulated markets which have been are destroying our jobs and incomes for the last year and a half.

Now, as then, public works and government spending are needed to restore economic growth and ease the suffering of an increasing worried and frightened American people.