False Dawn: The New Deal and the Promise of Recovery, 1933–1947

Economist Selgin (senior fellow, Cato Inst.; emeritus, Univ. of Georgia; Floored!: How a Misguided Fed Experiment Deepened and Prolonged the Great Recession) offers a detailed analysis of the effects of the New Deal on the Great Depression by examining contemporary sources and studies. He argues that neither the major initiatives of the New Deal (banking reform, the National Recovery Administration, the Agricultural Adjustment Administration) nor federal control of interest rates brought about the eventual recovery which was accompanied by an unexpected increase in private investment. Instead, Selgin asserts that the atmosphere became less hostile to business, making businesspeople more willing to invest. He attributes this change, at least in part, to new administrators in Washington working with business owners and seeing their abilities. Selgin argues convincingly that this caused some liberal New Deal bureaucrats to be more respectful of capitalism, whereas attacks on business by FDR and other authorities created a state of uncertainty that discouraged business investments and thus worked against recovery.