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How 1936 Consolidated the Progressives’ Triumph in 1913

Written by Gary North on October 25, 2014

Politically conservative Americans and libertarians generally agree on the worst year of the 20th century: 1913.

In 1913, three major events took place. First, Americans were informed that a constitutional amendment establishing an income tax passed. That was a lie. It did not pass. But the Attorney General of the United States announced that it had passed, and so, as far as the public was concerned, it had passed.

Second, the Constitution was amended, so that members of the Senate were voted into office by a general public election. This was mostly a symbolic change. Over half of the states had already adopted this. But it was a recognition that there had been a fundamental alteration of the United States Constitution. The old idea that the Senate would be elected by state legislatures was now officially defunct.

The third issue was the creation of the Federal Reserve System in late December.

The election of 1912 had pitted three Progressives against each other: Taft, Roosevelt, and Wilson. The election of 1904, in which the never-remembered Alton B. Parker lost to Teddy Roosevelt, was the last time that anyone holding constitutional principles of the federal government achieved the nomination by one of the two major political parties. Teddy Roosevelt smashed him at the polls. After the election, the radical Populist William Jennings Bryan announced that this was the end of “Clevelandism.” He was correct.


I submit that the year 1936 was the second disastrous year in the 20th century. In that year, Franklin Roosevelt was overwhelmingly reelected as President. The New Deal seemed to have been successful in reducing unemployment and getting the economy working again. In fact, it was monetary expansion by the Federal Reserve, coupled with the creation of the FDIC in 1934, which combined to allow the expansion of the money supply, which boosted the economy in a temporary boom.

In 1937, that boom turned into a major recession. From that time on, the New Deal was unsuccessful in overcoming the Great Depression. Only with the beginning of orders for military purchases by the British government in 1940 did the Great Depression recede. It disappeared during World War II, because of the combination of mass monetary inflation and price controls. The government pulled 12 million men out of the labor force, and it then expanded the economy by military purchases. Price controls lead to rationing. So, the rate of unemployment fell, along with 405,000 American dead, who were removed from the category “actively seeking employment” on a permanent basis. The Great Depression — unemployed resources — disappeared because real wages fell sharply, which is exactly what would have happened, had President Hoover and President Roosevelt not imposed various price floors, which kept prices from adjusting, thereby failing to clear the markets.

The other major event of 1936 was the publication of John Maynard Keynes’s book, The General Theory of Employment, Interest, and Money. After six years of depression, standard economists, other than the Austrian school economists, could not explain the Great Depression. It should have disappeared by 1933. It did not. The academic economists had no explanation, and the younger economists wanted one. Keynes’s book seemed to offer both an analytical solution and a practical solution: massive government deficit spending. This was what governments had been doing ever since 1930, but Keynes’s book baptized the practice, and called for more of the same.

(For the rest of my article, click the link.)

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One thought on “How 1936 Consolidated the Progressives’ Triumph in 1913

  1. It has been a long slow war against America fought by the Progressives/Communists/Marxists and they are about to accomplish their goal – a tyrannical government in America with total government domination. Their crowning achievement was the election of a Foreigner/Islamist to the office of President of the United States. He has instituted policy after policy to undermine freedom and the Constitution.

    In all likelihood, America has seen its last Presidential Election. Look for a "major event" (real or false-flag), declaration of Martial Law, Suspension of the Constitution and suspension of elections. We will thereafter have Deal Leader for Life Obama to rule, not govern, over us.

    Smile – you are about to be shafted!!