England and Germany Unite.

He was partially correct, in that Wartime Production did bring us out of the Depression for good. However even without the war, FDR and the "New Deal" and the public works projects and Interstate Highway projects would of brought us out of the depression too. The war just made it sooner than later.

 

No. I'm saying that the United States' productive capacity, man power, and organizational ability in 1937, combined with the USSR's productive capacity, manpower, and organizational ability gave the combination almost twice the war-making potential of all the Axis countries (plus the UK) combined. Once the US and USSR ramped up for serious war-time production (beginning about the start of 1943) their combined war-making potential was well in excess of twice the potential of the Axis countries (plus the UK). That is all hypothetical, of course, but given the disparity, the US and USSR would be a very tough team for the Axis, even with the UK allied, to prevail against. In simple terms, the US (along with the USSR) was far stronger in 1937 than the Axis could ever hope to be.

That is correct Falcon Jun; The war-making potential of the US was there in 1937, it only remained for the US to mobilize it's industry, convert the production of consumer goods to military devices and weapons, and organize it's manpower. The Axis countries were much further along in this process, but even when they had fully completed their mobilization, their actual war-making ability fell far short of the US. With the USSR's potential added to that of the US, the two were damn near unbeatable. By 1945, when the US actually was drawing down it's industrial and manpower mobilization, it was many times stronger than it had been in 1937. For example, in the spring of 1945, nine out of every ten warships in operation world-wide were US.

Well, that is incorrect.

By any measure, the United States was a super power by 1937 with far more productive potential than any other country. The US had not chosen to spend a great deal of wealth on armaments, but it could, and did, out build almost the entire rest of the world combined during WW II, in terms of military production. In addition, the United States was the only economy in the world in which consumer spending increased during WW II.

I agree with everything you write except the part about the US naval air wing in 1941.

It was actually far advanced over the RN's Fleet Air Arm during that period and very close to being on par with the IJN's Air Force. The Japanese probably held an edge in combat-experienced pilots, but in tactical air doctrine, the USN had no peer. The proof of this is that by June, 1942, the USN, almost entirely due to efforts of the USN air wing, had stopped the IJN cold in the Pacific, and seized the initiative. By the end of 1942, through attritional warfare, the USN had decimated the ranks of Japanese naval pilots and begun to demonstrate that it was the master of the Pacific.

Actually, it was the war in Europe, coupled with our own rearmament beginning in June, 1940, which pulled the US out of the doldrums of the Great Depression.

The US wallowed in the legacy of the Great Depression at least twice as long as any other major industrialized country, due almost entirely to the misguided anti-business policies of the Roosevelt administrations. While his schemes did provide some fortuitous engineering developments, his policies were economically disastrous and prolonged the recovery from the 1929 Wall street crash, for almost ten years.

 

This is a pretty controversial (and politicized) issue (the left/Keynesians say one thing, the center and the right say the other), and there's a mountain of evidence against it.

 

Well, on the issue of Roosevelt's economic policies, I grew up believing that Roosevelt was instrumental in the US's recovery from the Great Depression because that was what was taught in American high schools and colleges up until the mid-1980's. But I always wondered why the economic troubles lasted nearly ten years in the United States while most European countries recovered in 2-3 years at the most. Even Japan, with a most fragile economy and high military spending, managed a recovery in only 2 years.

Then, in the late 1980's, I started reading about several economists on both ends of the political spectrum who were doing historical research into the great Depression and finding that Roosevelt's economic policies were to blame. Yes, some left-leaning historians and economists still defend his agenda, but more and more reputable historians and economists are coming around to the conclusion that Roosevelt's administrations were economically disastrous for the US.

FDR's policies prolonged Depression by 7 years, UCLA economists calculate

By Meg Sullivan
| 8/10/2004 12:23:12 PM



Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.
Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

"High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.
Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

Roosevelt's role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century's second-most influential figure.

"This is exciting and valuable research," said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. "The prevention and cure of depressions is a central mission of macroeconomics, and if we can't understand what happened in the 1930s, how can we be sure it won't happen again?"

NIRA's role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.

"Historians have assumed that the policies didn't have an impact because they were too short-lived, but the proof is in the pudding," Ohanian said. "We show that they really did artificially inflate wages and prices."
Even after being deemed unconstitutional, Roosevelt's anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.
The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.

NIRA's labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor's bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.

Recovery came only after the Department of Justice dramatically stepped enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.

"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."


See;FDR's policies prolonged Depression by 7 years, UCLA economists calculate / UCLA Newsroom


In fact, many of the apologists for Roosevelt's policies do not make any in-depth analysis of the effects of those policies on economic factors, but rely on simple cause-and-effect statistics; "Policy 'A' was instituted and unemployment went down" or "Policy 'B' went into effect and prices stabilized". This ignores a large range of pertinent economic factors and the fact that economies can sometimes respond positively despite harmful policies. Those historians who take the time to look at the more fundamental economic processes have found that the New Deal policies were, more often than not, negative in terms of economic growth.


I will be the first to admit that Roosevelt did initiate some projects that turned out to be absolutely crucial in WW II. The TVA for example, created an electrical power generating system that was critical in the development of the atomic bomb, and Hoover dam provided plentiful electrical power for the west coast aircraft industry. That notwithstanding, Roosevelt's well meaning meddling with the American economy had far-reaching and generally harmful results.



See also; Burton W. Folsom Jr., "New Deal or Raw Deal", Threshold Editions, 2008. ISBN 1416592229

 

I too find that year of "spiked" recession to be the one used by those who demean the "New Deal" to be the most used. It was also the year which the Federal government REDUCED its spending, and was the year of unemployment rise as well. That had been dropping in percentage until then, and once again went downhill when FDR realized the error and started funding projects again.

There were many mistakes and mis-steps taken in the New Deal, but on the whole it was a success, not a failure.

 

That's a pretty superficial analysis of the continuing problems associated with Roosevelt's New Deal. The fact that the effects of the Depression lingered far longer in the US, than in any other major industrialized country can't be explained away by claiming Roosevelt was temporarily distracted from his disastrous policies.