The Great Depression was the worst economic crisis in U.S. history. From 1931 to 1940 unemployment was always in double digits. In April 1939, almost ten years after the crisis began, more than one in five Americans still could not find work.
On the surface, World War II seems to mark the end of the Great Depression. During the war more than 12 million Americans were sent into the military, and a similar number toiled in defense-related jobs. Those war jobs seemingly took care of the 17 million unemployed in 1939. Most historians have therefore cited the massive spending during wartime as the event that ended the Great Depression.
Some economists — especially Robert Higgs […] challenged that conclusion. Let’s be blunt. If the recipe for economic recovery is putting tens of millions of people in defense plants or military marches, then having them make or drop bombs on our enemies overseas, the value of world peace is called into question. In truth, building tanks and feeding soldiers — necessary as it was to winning the war — became a crushing financial burden. We merely traded debt for unemployment. The expense of funding World War II hiked the national debt from $49 billion in 1941 to almost $260 billion in 1945. In other words, the war had only postponed the issue of recovery.
Even President Roosevelt and his New Dealers sensed that war spending was not the ultimate solution; they feared that the Great Depression — with more unemployment than ever — would resume after Hitler and Hirohito surrendered. Yet FDR’s team was blindly wedded to the federal spending that (as I argue in my 2009 book New Deal or Raw Deal?) had perpetuated the Great Depression during the 1930s.
FDR had halted many of his New Deal programs during the war — and he allowed Congress to kill the WPA, the CCC, the NYA, and others — because winning the war came first. In 1944, however, as it became apparent that the Allies would prevail, he and his New Dealers prepared the country for his New Deal revival by promising a second bill of rights. Included in the President’s package of new entitlements was the right to “adequate medical care,” a “decent home,” and a “useful and remunerative job.” These rights (unlike free speech and freedom of religion) imposed obligations on other Americans to pay taxes for eyeglasses, “decent” houses, and “useful” jobs, but FDR believed his second bill of rights was an advance in thinking from what the Founders had conceived.
Burton Folsom, “If FDR’s New Deal Didn’t End the Depression, Then It Was World War II that Did”, The Freeman, 2014-12-26.
June 6, 2016
QotD: What really ended the Great Depression in the United States?
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There is a case to be made that the USA after the war ended up as Bastiat’s glazier. This lasted until our foreign former enemies had recovered, whilst supping deeply from the Marshall Plan’s nourishing cup, to the extent of sending funny looking little cars to the States. “We’ll be good freedomloving(ish) free enterprise(ish) little guys, while you Big Strong Ma-an keep the wolf (or rather Bear) from our door”.
Perhaps we should have left them to sweep their own streets and rebuild their own economies, build a new Jerusalem in Australia or the Levant, instead of spending yet more blood and treasure coddling the little gits. Perhaps instead we should have offered the full protection of the flag and its might, adding more stars to the flag.
But history *is*. It’s actual, like cement. Our adopted children, orphans of the War, are grown now. We wish them well. Time to start building a boat in the basement, and give Momma that sewing room she always wanted. More likely an artist’s studio, or writer’s retreat, but you get the idea.
And even though you miss the kids, for the love of God, don’t turn into the crazy cat lady, adopting strays and ferals. Check their tags and send them home. If they don’t have tags, it is our sad duty to hand them over to the SPCA, not to feed them and send them back out to our streets.
Comment by JC — June 6, 2016 @ 21:47
The Marshall Plan was an interesting economic and political experiment, and it’s amazing how often some US congresscritter or senator manages to recall it (or call for a new one for their particular hobbyhorse in foreign affairs). It was certainly a better solution to the German problem than treating the Germans the way the Soviets treated “their” Germans (but the liberalization of the German economy — against US wishes — had a much greater effect than any Marshall Plan emanations).
That’s not how they teach it in school these days. History is an ever-changing laundry list of un-associated racist, sexist, xenophobic, and irrational actions (I’m waiting for them to be branded “macro-aggressions”) of Britain/the USA/the West against everyone else in the world.
Comment by Nicholas — June 7, 2016 @ 08:13