by Jerry O’Driscoll
Amity Shlaes has written an enlightening op ed on “FDR, Obama and ‘Confidence’” in today’s Wall Street Journal. She details how FDR destroyed investor confidence in the 1930s by his incessant attacks on business and businessmen, and by his policy inconsistency.
Treasury Secretary Morgenthau at first served as FDRs “yes” man and cheerleader. But he came to realize how destabilizing FDRs actions were. The Treasury Secretary began resisting his boss’s policies. She writes that Morgenthau “found an unlikely supporter” in John Maynard Keynes. Keynes wrote a critical letter to FDR about his persecution of utilities. “What’s the object of chasing them around the lot every other week?”
Market confidence returned when FDR concluded he needed to make allies of business once he decided he needed to plan for war. She concludes: “Perhaps Mr. Geithner might like to read up on Morgenthau’s progress. Treasury secretaries who forget the past condemn us all to repeat it.”