Conservatives and liberals still argue about government’s role in ending the Great Depression and many people see the discussion more relevant today than ever before.
Conservatives point to a compelling 2004 study by two UCLA economics professors showing that Roosevelt’s New Deal policies actually prolonged the recovery. But the conventional wisdom of history flows with such force that in 2008 George W. Bush dare not risk laissez faire.
The real story of how FDR led us out of the Great Depression is less about liberal and conservative government policies and more about good business sense than most modern ideologues might suspect. The real story is about gold.
The unfolding historic record shows that FDR picked the British clean; that is, he rearmed Britain in her hour of need, giving her the weapons to stand up to Hitler, but only in exchange for “real wealth.”
First that meant gold bullion. At one point, when Britain dallied, claiming difficulty in getting the gold safely transported, a helpful FDR dispatched an American battleship to Cape Town, South Africa to complete the task.
We not only took Britain’s gold, we took much of the French and Czechoslovakian gold, smuggled out of those nations before their collapse.
When the gold was gone we picked up military bases on British soil around the world. And when that was done he took intellectual property, such as radar and the beginnings of our atomic research, a story that until now, has been conveniently ignored by history.
To hear our version, it all happened under the bleachers at the University of Chicago. The work of British scientists is downplayed. The Maud Committee, which operated in Great Britain in 1940 and developed the concepts of uranium enrichment and fission bomb design, is almost never mentioned.
Still, British purchase orders kept coming. On June 26, 1941 Winston Churchill wrote Harry Hopkins, Franklin Roosevelt’s personal envoy, saying that Britain will need nine months of all available American tank production.
Imagine — no showrooms, no salesmen, no newspaper advertising needed. Everything manufactured is already sold in advance. You get a bit of the picture of how American rocketed out of the Great Depression.
Only when Great Britain was absolutely threadbare and FDR’s many envoys and spies assured that there was nothing left, did he generously announce “Lend Lease,” which meant we would now finally “loan” Britain the money to buy even more from us. That was 18 months after the beginning of World War II.
This is not to say that American was not generous. At the end of the war, under Harry Truman, we offered magnificent loans of product and equipment to Great Britain, with minimal interest.
Our Marshall Plan saved France and Germany and the rest of Europe from descending into poverty. But rather this is to show how American production, not American deficit spending, brought us out of the Great Depression. And how our initial management of that production created the wealth we could later shower upon the world.
It was the biggest transfer of wealth in the shortest period of time in modern history. It dwarfs what the oil cartel has done since the 1970s. The British only finally paid back their World War II debts to the United States in December 2006.
Well, you might say, Why haven’t I heard about all of this before? And the answer is that only now are historians beginning to catch up with the truth of those years for much of it was buried as “classified” by the Anglo-American governments. And then, interested parties have had their own political reasons for crafting alternative versions.
Churchill, for example, had no desire to go down in history as the man who lost the British Empire.
The question for us today is this, if FDR demanded “real wealth” as repayment for American product to our English speaking brothers, if he demanded gold bullion, iron ore, oil, diamonds, timber, intellectual property, military bases, all at a time when Hitler threatened Western civilization, then why would the communist regime of the People’s Republic of China accept anything less from us?
Why would China subsidize and finance a trillion-dollar American war in Iraq and accept printed paper money, diluted in value by inflation, as its repayment?
America’s economic and political future may very well depend on your view of history. If you still believe that she emerged from the Great Depression through government deficit spending and stimulus programs, our future may yet be bright indeed.
For our spending today in relation to GDP is staggering and is not far off from our spending ratio of 1941-45. But if you believe that America worked or produced her way out of the Great Depression in exchange for “real wealth.”
If you believe that the bulging gold reserves of Fort Knox made us the world’s richest nation, then we may soon find ourselves in the position of Great Britain and Europe at the end of World War II. They were then at the mercy of the United States, and we responded generously.
We will be at the mercy of the People’s Republic of China. How will they respond?
Doug Wead is a New York Times best-selling author, philanthropist, and adviser to two presidents, including being special assistant to President George H.W. Bush.
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