Essays · 1929–1941
Did the New Deal end the Depression, or prolong it?
Three arguments from the Austrian and free-market tradition that Roosevelt’s response to the crash did not rescue the American economy — it interrupted the adjustment that was already under way, and left the country in depression for seven more years.
The essays
Read in order, they move from a general indictment of the New Deal to the specific monetary episode that all three treat as decisive.
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The core case
How FDR Made the Depression Worse
Robert Higgs (1924–2023)
The full argument in one essay: the bank holiday, the gold confiscation, the Agricultural Adjustment Act, the NRA codes, and the 1937 recession that followed a cut in spending Roosevelt had promised would never end.
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The monetary case
Roosevelt and Gold
Murray N. Rothbard (1926–1995)
What the 1933 confiscation actually did, in Rothbard’s accounting: it removed the one limit on the government’s ability to expand the money supply, and did so under a state of emergency that was never formally ended.
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The theoretical case
Currency Manipulation
Ludwig von Mises (1881–1973)
Why a gold standard is not a relic but a restraint, and why dismantling it does not abolish the state’s power to create money — it simply removes the brake.
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The claim these essays share
The depression began in 1929 and ended in 1941. That is the whole of the economic event. Almost everything else in the period is a consequence of what governments did during it.
The argument running through all three essays is not that Roosevelt was malicious, or that relief programmes were cynical. It is narrower and more specific: that the Federal government, acting under emergency powers it never surrendered, intervened in prices, in agricultural output, in industrial pricing and above all in the currency, and that each of these interventions blocked the price and wage adjustment that every other school of economics — including the classical one Roosevelt himself came from — considered the mechanism by which a depression ends.
They converge on a single moment. On 5 April 1933 Roosevelt issued Executive Order 6102, requiring every American to surrender their gold to the Treasury in exchange for paper dollars; ten months later the Gold Reserve Act cut the gold content of the dollar by about 41 percent. Before that order, a dollar was a defined quantity of something real, and the government’s capacity to manufacture more was bounded by how much of that something existed. Afterwards it was not.