How did the Sec Treasury in 1939 view stimulus?

When he became president in 1934, FDR’s Secretary of Treasury was his close personal friend Henry Morgenthau. After 5 years of government stimulus through the holy “New Deal” Mr Morgenthau addressed the congressional ways and means committee and said: “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. 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!”

Do we need to re-elect Obama in 2012 before we hear Democrats admit that stimulus doesn’t work? or should we learn from our past and listen to the words of the original stimulus spending Democrats and stop the spending now?

For a history of the failed “new deal” I suggest reading “New Deal or Raw Deal” by Burton Folsom Jr. The author has a clear bias against FDR, but presents enough factual statistics to support his opinion that you have to agree with him on the failure of the “new deal” programs. It is blind party loyalty that will prevent people from accepting the truth of the facts presented by Mr Folsom.


8 thoughts on “How did the Sec Treasury in 1939 view stimulus?

  1. I think you can argue the New Deal didn’t end the Great Depression. However, if you then argue WW II did (and many conservative do), aren’t you saying a much larger stimulus did end the Depression.

    How is a war not stimulus with the additional cost of many lives lost?

  2. If war as stimulus ended the depression, why has the current 2 wars driven us deeper into the recession we are in?

    WW2 did help get us out of the depression, I think it is because there was an end to the war and a reward for victory.

    There are better ways out of a depression or recession than war. Our goal should be to turn to those other ways and make them work again.

  3. Just to be clear, I’m not advocating a war to cure the recession. My point is that government spending is to a degree stimulative, at least if you think WW II ended the Great Depression, and many critics of the 2009 stimulus seem to say:

    Stimulus didn’t end the Great Depression, the war did;

    but if fact a war is stimulus, at a terrible price.

  4. I don’t agree that war time spending during WW2 is what got us out of the great depression alone, I think saying that simplifies the situation.

    This is where I admit I am not an economist or a historian. What I am though is an interested American that is willing to read and study to form my opinion. Dr Folsom’s book is only one of those that I have read on the subject, but a very good one.

    I do not see any evidence that government spending, war time spending or government works projects, are ever the best option to rebound from a recession or depression, they may help on the surface but they do not help in a long term base. I think they are easy options for politicians to suggest and for people to accept, but for real recovery I don’t believe they work.

    The problem of recessions and depressions are much bigger than government deficit spending can fix.

    Bruce, if I may call you that, I appreciate your thought on this and your comments have been thought provoking.

  5. Just don’t call me Shirley.

    I think we agree on that both war or stimulus are government spending. My point was in response to saying spending for war stimulates but spending at home somehow doesn’t. That’s a huge inconsistency, that you don’t seem to fall into. But some stimulus critics do.

    Good exchange.

  6. Pingback: How did the Sec Treasury in 1939 view stimulus? (via America done right) « Keith's World

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