As I said in previous columns, FDR decided that huge amounts of government spending would get America out of the depression, (it didn’t) but he had no money to pay for such spending. Since dollars were backed by gold, it would have been difficult to simply turn on the presses to get the required funds for government spending. There had to be gold to back the press runs, and the treasury was virtually empty of gold. What to do? Get more gold, of course. The mines were turning it out as fast as they could, but it wasn’t enough. FDR then decided to use his executive orders to command Americans to turn in their gold, which was then priced at $20.67 per ounce. Most, probably turned theirs in, as they couldn’t afford not to. Money was tight, and a paper $20 bill spent just as good as a double eagle. Those who could afford to keep their gold did, and if they didn’t, obviously the ’rare’ coin dealers wouldn’t have thousands of them for sale. (The pre-1933 double eagles, real or fake, are the most plentiful of the old coins around, so if you decide you have to have one, containing .9675 of an ounce of gold, don’t pay much for it, no matter what condition it is in.) With the gold in the treasury, dollars could be printed and spent.
Roosevelt hired several avowed communists to do his administrating, and created dozens of ’alphabet soup’ bureaucracies, several of which were declared to be unconstitutional by the Supreme Court. Among his hires were Henry Hopkins, Frances Perkins, Adolph Berle Jr, Rex Tugwell, and even a couple of Supreme Court Justices, namely Louis Brandeis, and Felix Frankfurter. There were a good many more, but all seem to have had the same characteristics of being super liberal, rich, intelligent, and graduates of Harvard, or Yale. Their attitudes were those of, ’the solution to any problem is government control.’ These things had been tried after WW I, and didn’t work, but no one seemed to think past their current time. The “New Deal” is what FDR called all his laws, rules, and fixes, which didn’t fix anything. FDR’s actions, laws, bureaucrats, taxes, etc. made the depression last longer.
The Agricultural Adjustment Act forced food prices above market levels, in an effort to help farmers, and at the same time hurt everyone who wasn’t a farmer. The National Recovery Act forced up prices of manufactured goods, and hurt farmers who had to buy farm tools and equipment. Taxes were levied on just about everything. Farmers were told how much they could plant, what they could plant, and for how much they could sell it. There were snoopers, bureaucrats, and agents everywhere, all at taxpayer expense. Relief (welfare) spending helped the unemployed, while corporate income taxes, undistributed profits taxes, Social Security taxes, minimum wage laws, and compulsory unionism, all passed and enforced by FDR and his gang, plus the Democrat controlled Congress, led to higher unemployment. Nothing accomplished, except ever larger government and ever higher taxes.
Rex Tugwell and other “progressives,” had visited Russia and were very much impressed with their brand of slavery. Supreme Court Justice Brandeis believed that ever more government power could fix whatever was wrong with society, and he regularly spoke out against business. In 1934, FDR passed the Wealth Tax, which ran income taxes up to 75%. There just didn’t seem to be any limit on the ’good’ that huge government could do…if it had enough power. Still not having enough gold or money, FDR passed the Emergency Banking Act, which authorized the printing of dollars, not backed by gold, but backed by government bonds. This meant simply that government could print as much money as it desired, and could print an equal amount of bonds to back the dollars, which is of course basically what we have today.
The “New Deal,” was the American version of communism and collectivism, which was becoming popular around the world. When FDR gave a speech or set a policy, it was usually similar to one which would be given by Mussolini or Stalin. FDR passed the “Beer-wine Revenue tax on March 22, 1933, and on January 11th, 1934 passed the “Liquor Taxing Act,” which nearly doubled the taxes on alcohol. He secured higher taxes on gasoline and tobacco and even added a tax on millers who ground wheat, and cotton farmers. Estate taxes were raised to 60%. In his January 1935 budget message, FDR promised no more new taxes, and on July 19th he demanded from Congress more new taxes, and a “wider distribution of wealth.” In 1936, FDR signed into law a gradual undistributed profits tax, which penalized companies for building up savings essential for investment in new equipment or wealth building devices and machinery. Economist Alfred G. Buehler warned that, “To the extent that the undistributed profits tax deprived business of funds needed for expansion, it will slow up business improvement, dampen the spirits of businessmen, and tend to reduce the long run of profits of business.” Not to mention the lack of jobs created.
Obviously, unemployment increased radically, thanks to FDR’s “New Deal,” and the depression was prolonged ever longer. No wonder my Dad hated FDR like the plague! FDR planted bureaucracies, controls, agencies, and government snoopers, like seeds in fertile soil, which has blossomed into the confiscatory, out of control government we see in D.C. today, which I call, “The D.C. Gang.” More Friday, but isn’t it obvious that FDR and his Democratic Congress were the beginning of the downfall of America? Other things didn’t help, such as WW I, War Between the States, our taking the Philippines and Cuba, etc, but it was FDR which really got the soapbox racer coasting downhill at full speed. No one has yet figured out how to stop it or even slow it…till it gets to the bottom of the figurative hill.