In this Institute of Economic Affairs event, IEA Executive Director Tom Clougherty interviews George Selgin about his new book “False Dawn: The New Deal and the Promise of Recovery, 1933-1947.” Selgin is a Senior Fellow and Former Director of the Centre for Monetary and Financial Alternatives at the Cato Institute and Professor Emeritus of Economics at the University of Georgia. The conversation examines how the US finally recovered from the Great Depression and what exact contribution the New Deal made to that recovery.

Selgin challenges conventional wisdom about the New Deal, arguing it was neither a Keynesian fiscal stimulus programme nor an exercise in monetary expansion. He explains how Roosevelt’s policies—including the National Recovery Administration’s price controls and the Agricultural Adjustment Act’s crop destruction—actually hindered recovery by artificially raising prices without increasing demand. The discussion covers the banking crisis of 1933, the role of gold flows in driving what limited recovery occurred, and the devastating 1937-38 recession caused by Federal Reserve and Treasury anti-inflation policies. Selgin also examines why the Depression finally ended, arguing it wasn’t World War II spending itself but rather the restoration of business confidence during the war that enabled the postwar investment boom.

The conversation includes discussion of Herbert Hoover’s actual policies, the distinction between relief and recovery, FDR’s opposition to monetary expansion and deposit insurance, and what Keynes himself thought about Roosevelt’s approach. Selgin concludes by explaining why free banking systems respond more appropriately to economic crises than centrally managed monetary systems.

Timestamps:

00:00 - Introduction

02:26 - Why This Book on the New Deal?

06:14 - How Severe Was the Great Depression?

08:48 - Banking Crisis and Money Supply Collapse

15:13 - FDR’s Inauguration and Bank Holiday

25:09 - Gold Standard and FDR’s Monetary Policy

31:12 - Not Keynesian Fiscal Stimulus

34:32 - Hitler’s Gold Drove Recovery

42:28 - The Real New Deal: Price Controls

48:37 - Agriculture Policy: Paying Farmers Not to Produce

58:11 - What Really Ended the Depression

01:02:19 - Business Confidence, Not War Spending

01:05:23 - Keynes Was Right About Roosevelt

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