Contrary to What You Might Have Heard: Burton Folsom, FDR, and the New Deal
Growing up, I always loved history. I probably knew and heard more about history than I did about God or any other important subject, so it was central to my early life. There was always something about learning your country’s past and finding out who died where and what happened when that fascinated me. Naturally, history was my favorite class in school, and this was certainly the case in high school. One of the topics that we dove in depth into was the Great Depression. Due to capitalist greed and mistakes during the ’20s, so I was told, the country fell into tremendously hard economic times. Herbert Hoover’s lack of leadership did not do the country any favors, and he fired on unemployed, poor veterans to boot! Then came Franklin Delano Roosevelt, the ideas-driven governor of New York. He rallied the country to his side, vanquished the Republican/capitalist monster, and put the good news of the New Deal into affect, hence eventually ending the Great Depression. Through Dr. Burton Folsom’s book New Deal or Raw Deal?: How FDR’s Economic Legacy Has Damaged America, I came to recognize how the sacred myth of FDR really is a boatload of brainwashing nonsense.
Burton Folsom’s career has, in many ways, centered on rehabbing the reputation of capitalism in American history. A professor at Hillsdale College in south-central Michigan, Dr. Folsom received his undergraduate degree from Indiana University, received his master’s degree from the University of Nebraska, and earned a Ph.D. in history from the University of Pittsburgh. He has written several books, and their titles indicate the line of history that he pursues: Entrepreneurs vs. the State, The Myth of the Robber Barons, Empire Builders: How Michigan Entrepreneurs Helped Make America Great, and, finally, New Deal or Raw Deal?: How FDR’s Economic Legacy Has Damaged America. His The Myth of the Robber Barons has become a cult favorite within conservative collegiate and intellectual circles, and his book on the New Deal has made considerable waves, being popular enough at the large bookstores to merit large stacks of the books being displayed in the history section.
In New Deal or Raw Deal?, Dr. Folsom systematically analyzes the Great Depression, Franklin Delano Roosevelt, and the New Deal, and he demonstrates how most of what we learned in high school is just simply wrong. Providing a brief biographical sketch of Pres. Roosevelt, he shows us that the president’s academic accomplishments were on par with those of much-maligned Pres. George W. Bush. One of the subjects that challenged FDR in particular was, of all things, economics. Economics was simply not one of his strong suits, and so his understanding of economics was greatly influenced by the academic economists that he surrounded himself with.
Discussing the Great Depression, Dr. Folsom argues that there are primarily three “credible causes that help explain how Americans slid into their worst economic crisis ever”. First of all, America had lent $10 billion to European countries during World War I. However, “almost all of Europe (Finland was an exception) balked at repayment and, in fact, soon repudiated their debts to the United States”. Second, there was the Smoot-Hawley Tariff Act. 
This act either added or raised taxes incredibly on imported items, such as Swiss watches. However, other countries retaliated and refused to import various American products. Therefore, American industry was hurt by that as well as by the fact that imported goods necessary for business were now more expensive. Finally, a third possible cause for the Great Depression was “the poor performance of the Federal Reserve”. The Fed raised interest rates multiple times, which made it more difficult for businesses to borrow money from banks for investments. Also, the Fed did little to timely intervene during the failure of banks, especially the Bank of the United States. Due to these reasons, as opposed to capitalist greed or underconsumption, the Great Depression happened, according to Dr. Folsom.
After analyzing the Great Depression, Dr Folsom attacks the alphabet soup of New Deal programs that many of us had to memorize back in high school history: the National Industrial Recovery Act (NRA), the Agricultural Adjustment Act (AAA), the Works Progress Administration (WPA), the Tennessee Valley Authority (TVA), and the Federal Emergency Relief Administration camps (FERA), just to name a few. This section is the heart of New Deal or Raw Deal?. For the sake of space, I will review what is perhaps the most outrageous of Franklin Delano Roosevelt’s New Deal programs: the National Recovery Act.
According to Dr. Folsom, the NRA “allowed American industrialists to collaborate to set the prices of their products, and even the wages and hours that went into making them. Leaders in all industries, from steel to coal to shoulder pads and dog food, were invited to sit down together and write ‘codes of fair competition’ that would be binding on all producers in their industry. Laborers were often allowed to organize, and antitrust laws were suspended.” The logic behind this plan was the underconsumption theory of how the Great Depression began, which is that the Depression was caused by there being too little purchasing of products by consumers. Therefore, if people had more money, more products could be purchased and the consumption-production imbalance would be relieved. Roosevelt admitted that the NRA “was passed to put people back to work, to let them buy more of the products of farms and factories and start out business at a living rate again”. The head of the NRA, Hugh Johnson, declared that the program was a “Holy Thing…the Greatest Social Advance Since the Days of Jesus Christ”. And woe betide those who bucked the authority of the NRA! Since prices for products were set at a minimum, many companies saw diminished or evaporated profits and were forced to lay off workers. In order to turn a profit, some small businessmen tried to get around the NRA by offering discounts, paying lower wages to keep their employees employed, or simply ignoring the new regulations, and many of them were imprisoned or fined for doing so. For instance, Sam and Rose Markowitz of Cleveland were thrown into jail “because they cleaned suits for 5 cents less than the NRA code provides”. The NRA, however, was eventually overturned by the Supreme Court as being unconstitutional. The Schechter brothers of Brooklyn, who sold kosher chickens, were charged with, amongst other things, “allowing customers to choose the chicken they wanted to buy rather than demanding that customers select their chickens randomly from the coop.” The federal prosecutor, during the case, proclaimed that under the NRA regulations, “the customer is not permitted to select the [chickens] that he wants. He must put his hand in the coop when he buys from the slaughterhouse and take the first chicken that comes to hand. He has to take that.” At this, members of the Supreme Court literally laughed, and they eventually struck down the law 9-0. The NRA is representative of the controlling, beyond-the-pale regulations that FDR included in his New Deal policies. Many of them were declared unconstitutional by the Supreme Court, but not before many citizens suffered considerably as a result of them.
In New Deal or Raw Deal?, Dr. Folsom deftly articulates a fresh view of the New Deal and of Franklin Delano Roosevelt’s presidency. He demonstrates that Pres. Roosevelt, while he probably had good intentions at heart, prolonged the Great Depression, habitually toyed with the truth, used the New Deal to further his political ambitions, and otherwise behaved in a manner hardly befitting a person often credited as being one of the greatest presidents of the United States. There are two sides of every story, and we finally get to see the other side of Franklin Delano Roosevelt in Dr. Folsom’s impressive tome. Wabash should welcome Dr. Folsom when he lectures here, and hopefully his talk will encourage Wabash students and faculty to give the old myths that we learned about FDR a new look.
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