Summary

There’s a history to this history. The New Deal has long been a battleground and the source of broad, ahistorical thinking. Robert McElvaine quotes Senator Mitch McConnell in 2009, who held forth on how he was “reading history” and learning that “for sure” the “big spending programs” of the 1930s “did not work.” Eric Rauchway details the history of the debate in “New Deal Denialism,” published in 2010. The idea that the New Deal was a failure is one of the most pervasive and persistent historical beliefs on the political right.

But instead of arguing directly from the data or focusing on particular failures, many critics of the New Deal very strangely pivot to the assertion that the depression ended because of the war, not because of FDR’s economic, monetary, and social policies. In other words, massive government spending didn’t end the depression; it was really, really, really massive government spending that did it. This is baffling in its self-defeating logic. Several historians who responded took this up.

Robert McElvaine: “What the fact that the Depression did not end until World War II shows is the exact opposite of what McConnell and Grassley argue.… It wasn’t that the policies of the New Deal didn’t work; it was that they were not taken far enough.”

Eric Rauchway: “An argument that war mobilization ended the Depression is an argument that the New Deal was an effective policy, and could have worked better only by being as big as mobilization for war. Senator Grassley is thus arguing for a much bigger New Deal, not for no New Deal. If he followed his own logic, he should wholeheartedly support an enormous investment in a Green New Deal.”

(Also suggestive of the idea that the New Deal didn’t spend enough is the recession-within-the-depression of 1937. Katheryn Olmsted notes that this followed a drawdown in spending by FDR that year: “The recession of 1937 proved that the New Deal policies worked, and the president quickly returned to them.”)

Senator Grassley’s reference to the war ending the depression is a remarkable self-own. The only reason I can imagine for the pervasiveness of this idea among New Deal critics is that they often see military spending as appropriate federal spending, while spending to fix unemployment and provide relief is not. Maybe that’s the conversation they really want to have, but this is an odd way of getting there.

The historians who replied also brought the numbers. David M. Kennedy reminds us that this was not your average downturn, but “the greatest economic shock in modern history.” Nevertheless, during FDR’s administration the unemployment rate went from 25 percent to 14-15 percent. Still high, but trend lines pointed to a full recovery even if there had been no war. Meanwhile, as Rauchway and Olmsted point out, annual GDP growth was consistently around 8 or 9 percent (1937-1938 being an exception). Trump is ecstatic these days when he sees quarters with 3 percent growth (and of course he takes full credit while his colleagues in the Senate would deny such credit to Roosevelt). Despite these numbers there’s still room for criticism; not every part of the New Deal was a rousing success, or even well-considered. Robert F. Himmelberg points out that the National Recovery Administration of 1933-1935 was “to a great extent … a license to form cartels.” But the fundamental indicators were all moving in the right direction, or had made up almost all lost ground, by the time the United States went on a war footing.

But show such numbers to a critic like Grassley or McConnell and they will likely reply that things would have gone much faster if they’d been left to the market’s invisible hand. Such counterfactuals are hard to prove or disprove, but economist Christina Romer has developed models that suggest the New Deal’s intervention was decisive. Given the decimated financial sector and the lack of markets for goods, its hard to imagine laissez faire outperforming what actually took place. Especially when we have the example of 1929-1933, years in which the free and unfettered market continually failed to save the economy.

But Grassley has shown how logic doesn’t really figure into many of the political attacks on the New Deal. He might not even be swayed by the opinion of conservative economist and New Deal critic Milton Friedman. As quoted by Rauchway, Friedman, for all his extreme views, was not as extreme as today’s critics when he said, “Providing relief for the unemployed, providing jobs for the unemployed, and motivating the economy to expand … an expansive monetary policy. Those parts of the New Deal I did support.”

Those aspects are among the longest-lasting, and bring us to one other common thread among these historians. The New Deal should be measured not just on its gains against the depression. It had a much longer run, and created a much longer-term success:

“The system of business regulation, such as that under the Securities and Exchange Commission, and the system of security benefits that emerged from the New Deal, after all, was the environment in which the American economy thrived for nearly twenty years after World War II” (Robert Himmelberg)

“The policies implemented then, in particular those legislated by the Social Security Act of 1935 and the Fair Labor Standards Act of 1938, profoundly reshaped the American economy and U.S. society by creating federally-funded programs to provide essential aid to the young, the elderly, and the disabled as well as by establishing groundbreaking workplace regulations, including a federal prohibition on child labor and a national minimum wage.” (Anya Jabour)

“The longest and deepest legacy of the New Deal was not its record of anti-Depression initiatives, but its transformation of the social, economic, and political landscape—creating lasting institutions that have served the American people very well, including Social Security, the SEC, FHA, and enormous reclamation projects in the South and throughout the West.” (David M. Kennedy)

“Leaders of both parties understood that Keynesian economics worked; that’s why the Republican establishment adopted Keynesian economics after the war.” (Katheryn Olmsted)

These points I’ve quoted at length to underscore something else about this history: It helps to ask historians. We must listen to the economists, as do all the scholars quoted here, but in evaluating past policies historians are the ones who can help us see the greater legacies and wider impact. We should hope our policymakers would be interested in that broader view.