Chapter 6 - Controversy: The New Deal and its impact Flashcards
What was Franklin D. Roosevelt’s presidential background?
Democrat. Crippled by polio. 1932-1945. Pledged himself to create a 'New Deal'. 'Relief, recovery, reform'.
Why did Franklin D. Roosevelt win the 1932 election?
Hoover - poor treatment of the bonus marchers, ‘Hoovervilles’.
Good press relationship - charmed 125 journalists.
Two press conferences per week.
Divided information into: ‘attributable, background and off the record’.
Used ‘fireside chats’ to appeal to the US public.
Skillful Congress manipulator - Democrat majority.
58% popular vote.
How did Roosevelt approach the banking crisis?
Democrat party - split between high/low tariffs.
Intertwined the two policies - experimental.
Surrounded himself with a Brains Trust - academic experts.
Established initiatives - ‘The Hundred Days’.
How bad was the US economic crisis by the 1930s?
GNP - halved since 1929. Unemployment: 4 million in 1930. 12-15 million in 1933. 25% workforce was out of work. Malnutrition signs started appearing.
How badly hit was the US population regarding the public?
Poor farmers/sharecroppers were technically unemployed/hardly any income.
AA - worst off.
Whites also suffered - even the middle class.
Chicago - teachers were unpaid for a year.
10,000 schools shut.
25% Americans lost their homes in 1932.
350,000 had lost homes in the previous 2 years.
Crime rose - prison population increased by 40%.
How badly hit was the US population regarding the banks?
Bank failures had led to 32 states to close their banks for ‘extended bank holidays’ to avoid collapse.
6 states had closed almost all their banks.
10 states had limited withdrawals - Texas $10 per day.
$7 billion of the depositors’ money had been wiped out.
How was Russia involved regarding the US unemployment problem?
Some young skilled men sought refuge in the ‘socialist paradise’ - Stalin’s Russia.
USSR advert for 6,000 workers - over 100,000 applied.
No unemployment there.
USA’s democracy was questioned.
What was ‘The Hundred Days’?
Inaugural FDR speech - asked Congress for 100 days of total cooperation.
March 19th-June 16th.
16 significant measures were put through.
Originally supposed to be for just the banking crisis - but extended to other issues as well.
What issues did ‘The Hundred Days’ tackle? 4
- The Banking System/markets - re-establishing stability.
- Agricultural issues - rural importance.
- Providing jobs in a revived industry - urban economy.
- Relief for slump victims - society/political leaders - more responsibility.
What was FDR’s opinion on the cause of the depression?
Bankers/brokers.
No agenda for radical change.
Planned to overhaul system - not build a new structure e.g. public ownership of the banks.
Many were disappointed - too conservative.
He should’ve seized the moment - the 58% popular vote was behind him.
What did FDR do following the day of his inauguration?
Emergency action powers - 4 day national bank holiday.
The Emergency Banking Act 1933 had been prepared.
Relied on active support of the outgoing Republican team - notably Treasury Secretary Odgen Mills.
Used Hoover’s RFC to buy stock.
Bought up bank debts to insure financial stability when the banks reopened.
Banned gold export.
Suspended dollar convertibility to gold.
What happened regarding the banks after FDR’s 4 day closure?
70% were able to reopen.
3 days - 5,000 banks given permission to re-open.
April - $1 billion dollars had been registered as bank deposits.
Savings were entering the financial system once more.
How did FDR play a part in the reopening of the banks after the 4 day closure?
‘Fireside’ chats.
Confident words - explained the significance of the banking system.
Stressed the need for a national partnership based on trust to restore stability AND THEN prosperity.
Significant economic boost.
What banking measures were passed under FDR’s time?
The Emergency Banking Act 1933.
The Glass-Steagall Act 1933.
Securities Exchange Commission 1934.
+ USA left the gold standard in 1933.
What did The Glass-Steagall Act 1933 do?
Emergency response to 5,000 failing banks.
Ordinary high street banks - no longer allowed to be involved in investment.
Removed conflicting interests.
The Federal Deposit Insurance Corporation established deposits under $2,500 were insured against bank failures.
What did the Securities Exchange Commission 1934 do?
Provided framework - tackled speculation.
Banned insider dealing.
Banned purchasing of shares ‘on the margin’.
First chairman - Joseph Kennedy - very effective.
How was FDR criticised regarding his handling of the banks?
Should’ve gone further in promoting the rationalisation of the banking system.
By removing small banks - big weakness.
Problem wasn’t large banks e.g. JP Morgan - however they gained lots of criticism.
However FDR took the popular route, as well as promoting some degree of stability.
How was the agricultural community of great important to the US?
1930s farmers made up 30% of the workforce.
Agricultural associations - masters at lobbying in Washington.
Traditionally had formed the US backbone.
Growing signs of farmer militancy in 1933.
FDR had a genuine interest.
What agricultural acts were passed in FDR’s time?
The Farm Credit Act 1933. The Agricultural Adjustment Act 1933. The Commodity Agency 1933. The Farm Mortgage Refinancing Act 1934. The Tennessee Valley Authority (TVA) 1933. Rural Electrification Act 1935.
What was The Farm Credit Act 1933?
FDR - GOOD.
Loan funds were made available.
Protected farmers from low prices/debt.
$100m to be available for re-finance mortgages.
What was The Agricultural Adjustment Act 1933?
FDR - KIND OF SUCCESSFUL.
Issue was OVERproduction.
Paid farmers to cut down production - increased prices/income - created the AAA in 1933.
Farmers owning their own land were paid to take land out of production in certain crops.
Subordinate agency 1934 - The Commodity Credit Agency.
What did The Commodity Credit Agency do?
SUCCESSFUL.
As part of the AAA - set up 1934.
Loans to farmers to store their products.
Only repaid when certain crop price was reached.
Targets: corn, cotton, milk, pigs, tobacco and wheat.
Payment was to be financed by a tax on food processing - the cost would then be passed on to the consumer
Gave $1.5b in loans.
What were the statistics for the farmers trying to tackle overproduction regarding the AAA?
AAA bought and slaughtered 6 million pigs.
1m cotton farmers were paid NOT to plough 10m acres.
12m acres of tobacco.
75% cotton farmers had signed up.
95% tobacco farmers, 93% lowa farmers.
California - peaches left to rot.
What were the issues with the AAA?
SC - unconstitutional in 1936 - argued that the Fed Gov. shouldn’t be able to dictate laws.
Only 7 of the thousands of different grown crops - eligible for AAA payment.
Farmers continued to grow - despite government action.
Underproduction may be the issue.
1940s surplus pile up - although WW2 solved this.
3 million sharecroppers suffered (AAs).
STFU didn’t feel listened to.
Owners of the big estates gained.
Only had 3,000 staff.
What were the aims of the AAA?
Establish a parity of price and wage. Establish a minimum price for produce. To control crop production. To raise farm prices. To give price support loans.
Was the AAA successful?
If every US family had an adequate diet - needed to INCREASE production.
It did succeed in raising farm prices for the landowners.
BUT most were worse off - millions of unemployed industrial workers - had to pay more for food.
Farmer Credit Act/TVA - more positive impact.
In what ways was the ND NOT successful with dealing with the agricultural problems?
Bad for consumers.
Unconstitutional - AAA - 1936.
Incoherent - only long-term benefited big farmers
UNDERproduction was actually the problem.
AAA - 3,000 - understaffed.
STFU - not listened to.
What was the TVA?
GOOD.
Tackled flooding, provided cheap electricity, and replanting forests.
Improved travel on the Tennessee River.
Developed business/farming - south-east farmers.
What was the Farm Credit Administration 1933?
What did The Farm Mortgage Refinancing Act 1934 do?
BOTH GOOD.
Administered loans 1933.
Rescheduled debts.
Avoiding foreclosures on indebted farms.
What did the Rural Electrification Act 1935 do?
What agency did it work with and how was the aim achieved?
Aimed to provide electric power everywhere.
The Rural Electrification Agency.
Low interest loans to rural cooperatives.
Helped fund electricity in more rural areas.
How successful were the aims of The Rural Electrification Agency?
GOOD.
Cooperation/development of local democracy.
1933 - 20% farming families had electricity
1949 - 90%.
What were the agricultural problems between 1933-1937 regarding the weather?
The Dust Bowl- Great Plains region affected by drought.
Oklahoma, Kansas, northern Texas and eastern Colarado.
Widespread soil erosion - ‘black blizzards’.
Problem arose from previous attempts to increase acreage by removing trees.
What was done in response to the ‘Dust Bowl’?
1934 - 300,000 farmers decamped to Pacific coast.
1940 - 2.5 million had fled - 10% to California.
What did The Soil Erosion Act 1935 and The Soil Conservation Act 1936 do?
GOOD.
Farmers paid to plant soil conserving grasses and legumes.
Reduced crop acreage.
3 years later, soil erosion had dropped by 65%.
Big producers - received most funding.
Was the ND successful with dealing with the agricultural problems?
1936 - farm prices rose 66%. 50% rise farm income. Farm Credit Act - $100m farmer loans. Commodity Credit Agency. Farm Mortgage Refinancing Act. AAA. TVA. Soil Erosion/Conservation Act. Gold standard removal - 1933.
What happened to the AAA in 1936 and what happened afterwards?
SC - unconstitutional - 1936.
Modified act - passed in 1938.
Farmer price support - fixed marketing quotas/allotted acreage.
What were the negative aspects of the New Deal regarding agriculture?
Terrible waste of food in a time of scarcity - AAA.
Had a tendency to reward/favour better-off farmers.
What did FDR rely on regarding ‘putting America back to work’?
Active cooperation of the business community.
Agricultural approach - needed support of richer farmers.
Wanted to save capitalism.
What was FDR like regarding the budget spending?
Lewis Douglas as Budget Secretary.
Hoover budget deficit of 4.6% GNP - unacceptable.
58% popular vote gave FDR opportunity for fundamental change - fairer wealth distribution.
What did FDR’s administration propose to overcome unemployment in March 1933?
30 hour working week.
Job sharing.
BUT passed in haste.
The National Industrial Recovery Act (NIRA).