Amity Shlaes, Columnist

How FDR's 'Most Dangerous' Law Affected Economy: Echoes

June 17, 2011 at 6:19 PM UTC

Amity Shlaes, chairman of the Calvin Coolidge Presidential Foundation, is the author of "Great Society" and co-editor, with Matthew Denhart, of a new edition of Coolidge's autobiography.

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One of the least-covered aspects of the recession of 1937 is the then-new monetary law under which the country was operating. Marriner S. Eccles of Utah had agreed to be Federal Reserve chairman, but only on condition that President Franklin D. Roosevelt oversee passage of, and sign, new legislation redefining the Fed's job.

In 1935, at a luncheon of the National Republican Club in New York, Theodore Roosevelt, the son of the late president, criticized his cousin Franklin and predicted that the new law, the Banking Act of 1935, was another step toward dictatorship.