Arguably, this must be the biggest bungle in recent history
In an effort to raise farm incomes, FDR forced up food prices by paying farmers to destroy crops when millions were hungry, and then he paid farmers to not to grow anything on a portion of their land. All this made food more expensive for the three-quarters of Americans (about 100 million) who weren’t farmers. The Anti-Chain Store Act (1936) made it illegal for chain stores like the A&P to buy goods in volume, get great discounts and pass savings to consumers.
Government thought that “universal” banks (engaging in both commercial banking and investment banking) had something to do with the Depression-era bank failures, so he signed the Glass-Steagall Act (1933) mandating the break-up of these banks into pure commercial banks and pure investment banks. Eugene White (Rutgers University) analyzed the failure rates of different types of banks, and he reported that universal banks – the banks broken up– were the strongest banks. Incidentally, FDR’s federal deposit insurance (the FDIC, launched in 1933) didn’t stop bank failures– it just transferred the cost of bank failures to taxpayers when there were any bailouts.
In an effort to raise farm incomes, FDR forced up food prices by paying farmers to destroy crops when millions were hungry, and then he paid farmers to not to grow anything on a portion of their land. All this made food more expensive for the three-quarters of Americans (about 100 million) who weren’t farmers. The Anti-Chain Store Act (1936) made it illegal for chain stores like the A&P to buy goods in volume, get great discounts and pass savings to consumers.
Government thought that “universal” banks (engaging in both commercial banking and investment banking) had something to do with the Depression-era bank failures, so he signed the Glass-Steagall Act (1933) mandating the break-up of these banks into pure commercial banks and pure investment banks. Eugene White (Rutgers University) analyzed the failure rates of different types of banks, and he reported that universal banks – the banks broken up– were the strongest banks. Incidentally, FDR’s federal deposit insurance (the FDIC, launched in 1933) didn’t stop bank failures– it just transferred the cost of bank failures to taxpayers when there were any bailouts.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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