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FDR's Treasury Secretary Morgenthau Concluded that Big Spending Stimulus "Does Not Work"


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Henry Morgenthau, Jr.

Source of portrait: http://en.wikipedia.org/wiki/Henry_Morgenthau,_Jr.


Henry Morgenthau, Jr. was FDR's Secretary of the Treasury from 1934-1945. In the following important quote, he admits that the big New Deal stimulus spending programs had failed.

(p. 2) We have tried spending money. We are spending more money than we have ever spent before and it does not work. And I have just none 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!


Source:

Folsom, Burton W., Jr. In New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. 4th ed. New York: Threshold Editions, 2008.

(Note: ellipses in Folsum's version of the quotation.)


Folsum says that this statement was from testimony before the House Ways and Means Committee in May 1939; and can be found in Morgenthau's Diary entry for May 9, 1939 at the Roosevelt Presidential Library.


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Source of book image: http://www.flickr.com/photos/roscoe/3121498653/





Comments

I think that a fuller version of the quote is found in Blum, "From The Morgenthau Diaries -- Years of Urgency 1938-1941" at pp. 24-25 The portions ommitted by Folsom are in brackets: We have tried spending money. We are spending more money than we have ever spent before and it does not work. And I have just none 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. . . . [We have said we would give everybody a job that wanted it. We have never taken care of the people . . . . there are four million that don't have that much income. We have never done anything for them . . . We have never begun to tax the people in this country the way they should be . . . . People who have it should pay. . . . It's never a good year to have a tax bill, but I think it's a darn good year to begin to balance the budget. . . . the biggest deterrent of all . . . is that the country does not know when the end is in sight and this unbalancing of the budget . . . that's what frightens people.] I say after eight years of this administration we have just as much unemployment as when we started . . . . And an enormous debt to boot!
Are there any serious economists or historians who understand economics who still credit the New Deal with pulling America out of the Great Depression. The statistics of unemployement rates throughout the 1930's should be sufficient to put that myth to rest.
Are there any serious economists or historians who understand economics who still credit the New Deal with pulling America out of the Great Depression. The statistics of unemployement rates throughout the 1930's should be sufficient to put that myth to rest.
Massive government spending does pull economies from a depression. The problem with the New deal is that it was 10 times too small. What does everybody think WW2 was? It was government spending and stimulus on a massive level. It thrust us from the depression and most of that money went to unproductive war. Imagine if all that money had gone to education, R&D, infrastructure, and retrofiting of buildings what it would have done for our country. The problem with the new deal and now the stimulus of 2009 is they were drastically too small. WW2 showed you can have massive government spending to stimulate an economy.
Massive government spending does pull economies from a depression. The problem with the New deal is that it was 10 times too small. What does everybody think WW2 was? It was government spending and stimulus on a massive level. It thrust us from the depression and most of that money went to unproductive war. Imagine if all that money had gone to education, R&D, infrastructure, and retrofiting of buildings what it would have done for our country. The problem with the new deal and now the stimulus of 2009 is they were drastically too small. WW2 showed you can have massive government spending to stimulate an economy.

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