You might think as someone with libertarian leanings, that I would dislike Franklin Delano Roosevelt (or as us Americans know him, “FDR”), but I actually think FDR was one of the better Presidents of the 20th Century, and that the majority of Americans have misinformed views about late 19th Century American economic policies.
There was nothing “laissez-faire” about American economic policies from 1865 – 1933. This is one of the biggest myths pushed by historians. The US was dedicated to mercantilist trade protections, that insulated domestic industries (mostly situated in the Northeast and Midwest) from foreign competition. These policies also impoverished the South, by forcing Southerners to buy overpriced goods from the North, rather than being able to import cheaper, better-quality goods from Europe. Moreover, Southerners were forced to deal with European tariffs that lowered the value of their own agricultural exports.
Herbert Hoover’s response to the Great Depression is a testament to just how much the US economy was dependent upon Federal intervention in order to protect exporting industries. Hoover enacted the Smoot-Hawley tariff, dramatically increased government spending (in order to make up for lost demand for American goods), and then dramatically raised taxes (in order to try to avoid deficit spending). It’s a classic mercantilist response and it failed miserably. By raising spending and raising taxes, Hoover merely forced private capital out of the market, thereby creating less investment. Moreover, the Europeans retaliated against the Smoot-Hawley tariff, further exacerbating America’s export woes.
What did FDR do? He reversed 140 years of American mercantilism and shifted the US to a free trade economy. By doing so, he finally allowed the Southern states to escape the grip of poverty, and he forced American industries’ to become more competitive with the rest of the world.