A New Deal Insider's Damning Account of FDR's Policies

[Herb Schaffler]

A New Deal Insider's Damning Account of FDR's Policies



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Over at Liberty & Power, distinguished economist Robert Higgs highlights some very damning passages from New Deal "Brain Truster" Raymond Moley's 1939 book After Seven Years. As Higgs puts it, Moley gives "one of the clearest, best informed accounts ever written of the problem of regime uncertainty in the 1930s." In other words, Moley admits that the New Deal stifled entrepreneurship and investment during the Great Depression. From Moley's book:

Confidence consists, on the one side, of belief in the prospect of profits and, on the other, in the willingness to take risks, to venture money....

This, Roosevelt refused to recognize. In fact, the term "confidence" became, as time went on, the most irritating of all symbols to him....

For one thing, the confusion of the administration's utility, shipping, railroad, and housing policies had discouraged the small individual investor. For another, the administration's taxes on corporate surpluses and capital gains, suggesting, as they did, the belief that a recovery based upon capital investment is unsound, discouraged the expansion of producers' capital equipment. For another, the administration's occasional suggestions that perhaps there was no hope for the reemployment of people except by a share-the-work program struck at a basic assumption in the enterpriser's philosophy. For another, the administration's failure to see the narrow margin of profit on which business success rests—a failure expressed in an emphasis upon prices while the effects of increases in operating costs were overlooked—laid a heavy hand upon business prospects. For another, the calling of names in political speeches and the vague, veiled threats of punitive action all tore the fragile texture of credit and confidence upon which the very existence of business depends.

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