Pass the Notecards

by Burt on June 13, 2011

Doing research is tedious, but it is the key to discovering historical truths. In the last couple of weeks, I finished a three-day trip to the Harry Truman Presidential Library in Missouri. Anita, my wife and co-author, spent four days in the Franklin Roosevelt Presidential Library in Hyde Park, New York. Presidential libraries house the letters, papers, and documents of all presidents since Herbert Hoover, and they also include the papers of cabinet officials and other insiders during the presidency in which they served.

Much research in these libraries is ordinary and unexciting. But occasionally some gems emerge and these sparkling nuggets are essential to filling out details in a controversial presidency. For example, five years ago, I was in the Roosevelt Presidential Library going through the Henry Morgenthau papers on microfilm. Morgenthau served as FDR’s secretary of treasury, and my eyes were about to glaze over as I read dull financial reports when suddenly I stumbled across a remarkable statement by Morgenthau in May 1939. He was holding a private meeting with key Democratic finance leaders in Congress, and Morgenthau was furious. The April jobs report was in, and the new unemployment rate was 20.7%. After almost two terms of Roosevelt’s New Deal spending, and after doubling the national debt, the result was that more than one of every five Americans was out of work.

“We have tried spending money,” Morgenthau conceded. “We are spending more than we have ever spent before and it does not work.” That admission was startling; Morgenthau was best friends with FDR, and the failure of New Deal spending to create jobs infuriated the treasury secretary. “We have never made good on our promises. . . I say after eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!”

In those words, Morgenthau summarized a decade of disaster. Massive federal spending, he reluctantly admitted, had not worked. I use Morgenthau’s comments to begin NEW DEAL OR RAW DEAL? because FDR’s major theory–that government spending would cure the Great Depression–was false. He believed his spending narrative with all his heart, but it was simply bad economics. You can’t create jobs by redistributing wealth from entrepreneurs to key political groups in the Democratic party. Yes, FDR could buy votes doing that, but not jobs.

If we can learn that lesson from studying the New Deal, it will help us as Americans to avoid similar government stimulus packages today. To escape recession, we must rely on a free people investing their own money freely to create the jobs that will keep the U. S. prosperous. Yes, doing research is rarely fun, but discovering useful facts that point people toward a greater truth is a service worth the time and effort of this generation of historians. Last week, Anita made a copy of Morgenthau’s tirade, and we hope to post it on our blog soon.

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