Did Franklin Roosevelt's policies prolong the great depression?

[DinoDoc]

Originally posted by The Templar
As for DinoDoc and "court packing",

I think you meant to talk about his organized crime connections rather than a topic that wasn't a part of my post.

[David Floyd]

As for DinoDoc and "court packing", I would remind him that the threat of court packing was the only thing that forced the courts to quit stonewalling modernization of the bureacracy.

Oh, you mean forcing the President and Congress to follow the Constitution? Gee, what a shame. Congress could have tried to pass an amendment, but they can't just violate it. And they were certainly violating it, otherwise how would you explain why much of the early New Deal was struck down? And, by the way, what do you think the reason was for most of the later New Deal being upheld?

As for Huey Long

[Dr Strangelove]

I think that one of the major factors that prolonged the Great Depression was the Taft-Hawley-Smoot bill. FDR was not responsible for it, but he is responsible for not understanding how much it hurt the global economy and thence for not attempting to get it repealed.

[Giancarlo]

Can you explain what the bill was? I don't know about it...

[David Floyd]

It basically raised tariffs, which is always bad.

[Giancarlo]

Certainly such a bill would prolong the depression. It reduced competition nationally in the US, and internationally aswell. This prevented industries from spending more or hiring more.. why wasn't the bill thrown out?

[Berzerker]

Fez -

This prevented industries from spending more or hiring more.. why wasn't the bill thrown out?

The "populists" like tariffs because they ascribe to the "America" First" concept. They wanted to punish Americans for buying foreign goods; well, maybe they just wanted to "protect" American industries, but I can't help but see a vindictiveness in alot of these protectionists toward Americans who don't always buy American. I remember the flap Pat Buchanan got into when he was running for president and it was discovered that he or his wife had a Mercedes. OUCH!

Templar -

I would remind him that the threat of court packing was the only thing that forced the courts to quit stonewalling modernization of the bureacracy.

Hmm...so much for the Constitution... Those Framers just forgot to allow future generations to change it I guess. No, wait, they didn't forget...they installed a process for changing the Constitution - the amendment process. But FDR didn't want people trying to limit his power...strange you would point to a lying dictator wanna-be as someone worthy of admiration (assuming you do admire him).

And like Chegitz said - if the courts hadn't let FDRs programs through, communism would have won out here.

I think you guys over estimate the leftist tendencies of Americans, it would take quite a while longer than 5-8 years to convince Americans to embrace communism.. but that's where Fabian Socialism enters the picture... I understand the USA has already implemented a large chunk of the Communist Manifesto, but I doubt we'll ever go all the way. But as Thomas Jefferson said, it is the nature of governments to grow and liberty to give way...

[Tingkai]

Originally posted by Fez
Certainly such a bill would prolong the depression. It reduced competition nationally in the US, and internationally aswell. This prevented industries from spending more or hiring more.. why wasn't the bill thrown out?

Not necessarily. The developed economies were all in a depression.

If demand for products in Britain was not enough to support British industry then opening the borders to more trade would not necessarily have created more jobs in the US.

However, creating trade barriers did result in lost jobs because companies relying on exports, meagre as they were, lost access to markets.

In short, free trade would not have improved things, but increased trade barriers created resulted in some job losses.

The biggest problem was the perception people had of the economy and this is where Keynes was innovative.

Businesses stopped investing because they saw no signs of recovery and there was no signs of recovery because business stopped investing. The result is a downward spiral.

Lowering interest rates, which usually results in increase consumption and investment, would have no effect in this type of climate.

Keynes argued that increasing government spending would reverse the downward spiral. As government's spent money, businesses would hire more people and invest in order to get government contracts.

[Kidlicious]

The cut down in international trade may have supported prices some too.

[Berzerker]

In short, free trade would not have improved things, but increased trade barriers created resulted in some job losses.

Does that mean increased trade barriers improved the situation?
If not, wouldn't that mean free trade would have improved the situation?

[Kidlicious]

Everyone has there own causes for the Great Depression. How do you know what effect the trade barriers were when the barriers were placed because the economy was already f'ed up?

[Berzerker]

They didn't help. If you and your neighbor are exchanging goods and I walk up and impose a 60% tax on your deals, would you guys continue exchanging goods at the same rate especially when you can avoid the tax by dealing with someone else? I'm no economist, but I do know high tariffs inhibit trade. Btw, the economy was messed up because the Federal Reserve constricted the money supply, i.e., the same government that increased tariffs from ~20% to ~60% created the problem in the first place.

[Tingkai]

Originally posted by Berzerker


Does that mean increased trade barriers improved the situation?
If not, wouldn't that mean free trade would have improved the situation?

No, given the economic conditions of the 1930s.

Normally, free trade allows companies to access new markets and to obtain cheaper raw materials.

In the 1930s, the removal of trade barriers would not have opened up substantial markets.

Lowering trade barriers would have resulted in more supply added to economies that already had excess supply.

The cheaper raw materials would not have made a difference because consumption was down and a lowering of price would not have sparked a significant increase in consumption just as lower interest rates did not lead to increased consumption and investment.

[Tingkai]

Originally posted by Berzerker
They didn't help. If you and your neighbor are exchanging goods and I walk up and impose a 60% tax on your deals, would you guys continue exchanging goods at the same rate especially when you can avoid the tax by dealing with someone else? I'm no economist, but I do know high tariffs inhibit trade. Btw, the economy was messed up because the Federal Reserve constricted the money supply, i.e., the same government that increased tariffs from ~20% to ~60% created the problem in the first place.

I think there is general agreement among economic historians that the depression in the US was caused by the bursting of an economic bubble that led to the stock market crash. The bubble burst because perceptions changed, not because of increased tariffs.

[Giancarlo]

Tingkai, I don't believe in Keynesism and do not think it works in the long term. Sure the government can put some money in the private sector but infringing upon it is wrong.