February 21, 2023 Reading Time: 4 minutes
Franklin D. Roosevelt campaigns at Soldier’s Field, Chicago, Illinois. Source: Flickr

The American Institute for Economic Research was formed 90 years ago to combat the New Deal, a series of vast socioeconomic experiments perpetrated by President Franklin Delano Roosevelt, the Dr. Jekyll of Hyde Park, New York. All of those experiments failed to extricate Americans from the Great Depression, and severely injured members of minority groups, including blacks.

Yet for the better part of a century, the US, state, and local governments have run a disinformation campaign, primarily through the government school system, that asserts that FDR “saved” America from the Great Depression, and in the process aided sundry downtrodden groups, including women, American Indians, and African Americans. FDR, according to this claim, is one of, if not the, greatest of American presidents.

In reality, as Garet Garrett, E.C. Harwood, Albert J. Nock, and other contemporary critics made clear, FDR and his New Dealers kept the Depression going until the outbreak of World War II in order to continue sundry socioeconomic experiments on Americans and their most hallowed institutions, like the US Supreme Court, which they twisted to their own twisted ends. New Dealers did provide relief, from their own Depression, to members of certain groups, but only to lure them into the Democratic party.

The Indian New Deal, for example, flipped tribes that had voted Whig or Republican because Democrat Andrew Jackson had forced them out of Georgia and onto the long Trail of Tears. Most still vote Democratic, as do most African-Americans, who up until the New Deal had been solid for the GOP, the party of Lincoln.

Blacks in the South, however, got little out of FDR’s numerous relief and recovery programs. The South was solid for Democrats and suppressed black voters in various ways. In Memphis, in the 1940 election, for example, the Democratic boss turned the police against black Republicans, so there was no need for FDR to curry favor with Southern blacks. 

In the contested Northern states, however, blacks received more than their share of federal monies. While not technically vote buying, it was essentially vote buying. Wealthier black Republicans who could not be bought, like sports legends Jesse Owens and Joe Louis, found themselves harassed by the taxman at FDR’s behest.

The New Deal also engaged in virtue signaling by placing a few blacks in visible, if not terribly powerful, positions and induced journalists to spread the illusion of a “black cabinet.” Even friends of the New Deal, however, admitted that racial discrimination remained rampant.

What the New Deal gave with one hand, it took with the other. Perhaps its worst policy was the imposition of minimum wages under the Blue Eagle, state minimum wage laws upheld in 1937 in West Coast Hotel Company v. Parrish, by a Supreme Court fearful of FDR’s wrath, and finally, the federal Fair Labor Standards Act of 1938. 

Those early minimum wage laws were not always binding, but when and where they were, they tended to increase black unemployment by making it impossible for blacks to negotiate a lower wage. While most people tend to think of minimum wage laws as “giving” workers $.25 an hour instead of, say, $.20 an hour, the actual result is that workers earn nothing at all if they cannot convince employers that they will produce at least $.25 an hour in value. 

The New Deal also bolstered labor unions, the largest and most powerful of which were controlled by white Democrats with little concern for black workers. Some banned blacks from membership altogether, while others steered them into the lowest-paid jobs.

In its earliest iterations, when recipients received far more than they had paid in, Social Security excluded members of occupations like agriculture and domestic work, which were dominated by black Americans. Later, when Social Security became a bum deal for everyone, but especially for blacks, members of those occupations were forced to join the quasi-pyramid scheme.

Because it supported commodities instead of people, the Agricultural Adjustment Act hurt all farmers, but none more than the 100,000 or so African-American tenant farmers it displaced. Thousands more black tenant farmers lost their land, without compensation, when the Tennessee Valley Authority flooded their lands.

The negative effects of the New Deal on blacks are not theoretical speculations. Black unemployment was much higher than that of whites and, most tellingly of all, almost nine in ten African-American families lived below the federal poverty threshold, even after federal transfers were included. Life expectancy dropped on average, but fell most for blacks.

FDR hurt blacks in other palpable ways, too. Whenever he had to choose between bigoted white Southerners and blacks, he always sided with the former, including on federal anti-lynching legislation. Apologists claim that such legislation never had a chance of passing, which seems a bit disingenuous coming from people who applaud FDR’s successful implementation of much more controversial policies, like confiscating Americans’ gold, forcing a socialized life annuity down their throats, and weakening the US Supreme Court’s ability to restrain government overreach.

The indictment of the New Deal’s treatment of blacks could go on for many more pages. Suffice it to say here that the New Deal was a raw deal for Americans, especially African Americans. And the New Deal would not be the last time that a Democrat-controlled federal government would extend its left hand to blacks while firmly holding them down with its right hand.

Robert E. Wright

Robert E. Wright

Robert E. Wright is the (co)author or (co)editor of over two dozen major books, book series, and edited collections, including AIER’s The Best of Thomas Paine (2021) and Financial Exclusion (2019). He has also (co)authored numerous articles for important journals, including the American Economic ReviewBusiness History ReviewIndependent ReviewJournal of Private EnterpriseReview of Finance, and Southern Economic Review. Robert has taught business, economics, and policy courses at Augustana University, NYU’s Stern School of Business, Temple University, the University of Virginia, and elsewhere since taking his Ph.D. in History from SUNY Buffalo in 1997. Robert E. Wright was formerly a Senior Research Faculty at the American Institute for Economic Research.

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