New Deal Flashcards
What did the Emergency Banking Relief Act (EBRA) do?
US taken off gold standard
Required those who had gold to turn it in at Federal Reserve Banks for $20.6 an ounce
Made the dollar no longer redeemable by gold
What did the Emergency Banking Act do?
To strengthen the banks capital position, authorised the RFC to buy stock and buy up bank debts to make institutions financially sound when reopened
Between 11th and 15th March nearly 70% of banks reopened
What did FDR do in the first fireside chat?
Explained significance of banking system
Reassured depositors that their money would be going into government approved banks
Encouraged people to place savings into a bank
What was the outcome of the first fireside chat?
By 15th March deposits exceeded withdrawals
By beginning of April nearly $1 bil had flowed back into system
What was the Glass Steagall Act?
Commercial banks banned from speculating with depositors money
Bank officials not allowed to take personal loans from own banks
Federal Deposit Insurance Corporation established to provide a system of Federal guarantees for bank deposits (up to $2,500)
Shares purchased in the margin were banned
How were FDR’s banking reforms criticised?
Many believed Hoover created them and FDR took credit
Many claimed FDR was not radical enough
Some critics wanted to see complete nationalisation
Some felt FDR had rewarded bankers for past incompetence by giving them government subsidies so they could stay in business
Large banks given control over smaller ones
What was the Truth in Securities Act?
Required brokers to offer clients realistic information about the securities they were selling
False statements about the sales of securities were outlawed
What did FDR do to stop people withdrawing money from the banks?
Using the 1917 Trading with the Enemy Act, he declared a 4 day bank holiday.
What did the Securities Act 1934 do?
Established the Securities Exchange Commission
What did the Securities Exchange Commission do?
Regulated the stock market and tried to prevent fraudulent activity such as insider dealing.
Prospective issuers of securities had to file detailed financial statements with the Federal Trade Commission and wait 20 days before securities could be issued, anyone who dealt with the statements were legally liable for their accuracy.
Joseph Kennedy put in charge of this agency, controversial as he was a major speculator in 20s.
Was the SEC successful?
Between 1934-41 staff increased from 696 to 1,678, established 10 regions offices and operated an annual budget that rose from $1.5 mil to $5.3 mil suggesting acts weren’t working.
Most agree that SEC brought order to financial markets, SEC had halted the issue of $155 mil of fraudulent securities showing that it was successful.
What were the aims of the AAA?
Establish a parity of price and wage Establish a minimum price for produce Control crop production Raise farm prices Give price support loans
What successes did the AAA have?
Gave $4.5 mil between 1934-40
Over 3 million individuals participated - 75% cotton farmers, 95% tobacco farmers, 93% Iowa farmers
Succeeded in driving up farm prices
What failures did the AAA have?
Committees overwhelmingly white, black farmers ignored
700,000 farms not represented
Small farmers not represented
No livestock producers included
Industrial workers could not afford produce
Surpluses in 1940
Farmers continued to produce more despite gov. limitations - new technology
What other factors affected farmers?
Drought
Overproduction - 1933, unsold cotton exceeded total average world consumption of US cotton
Dust bowl
Poverty
What happened to the AAA?
1936, deemed unconstitutional, federal government should not be able to dictate state laws
How did the dust bowl affect farmers?
More than 100 million acres affected by the Dust Bowl.
Thousands of families forced to leave their homes.
More than 300,000 people moved to California during Dust Bowl.
Nebraska had 14.5 inches of rain in 1934 instead of the usual 20 causing a 75% drop in yield of corn crops.
Approx 2 mil people became homeless.
Approx 6,500 people killed during one year of Dust Bowl.
What were the aims of the NRA?
Voluntary participation Fair competition Raising profits Minimum wages Restore purchasing power Avoid excess consumption
What were the methods of the NRA?
541 codes established regulating prices, wages and competition.
Unnecessary amount of codes, even codes for strippers.
Anti-trust measures suspended for 2 years
Section 7a made management have to engage with talks with employers, assisting trade unions.
Section 7b permitted the establishment of standards regarding maximum hours of labour, minimums rates of pay and working conditions.
Banned yellow dog contracts.
What did the PWA do?
Aim to get skilled/semi skilled workers back to work
$3.3 billion available
Road building, construction of dams, hospitals and schools (13,000 schools and 50,000 miles of road)
Funded building of 34,000 major construction schemes, employing thousands of workers
What were the successes of the NRA?
Ended child labour
Minimum wage established
Working condition terms established
What were the weaknesses of the NRA?
1934 - over a million workers took part in 1,856 separate strikes
Monopolies helped make the codes
Voluntary - Henry Ford never subscribed to the NRA
Did not deal with agriculture/domestic servants
Minimum wage agreed but hard for smaller firms to abide by
Unconstitutional 1935 - too much power to the president
What did FERA do?
Hopkins allocated budget of $500 million to provide help for unemployed by creating new unskilled jobs in local and state government.
Half of budget spent directly, other half with ratio of $1:$3 (one fed dollar to 3 state dollars).
Projects included projects for professionals (writers, artists, etc.) and production of consumer goods.
Was FERA successful?
Provided work for 20 million people and developed facilities on public lands across country.
Gave states and localities $3.1 billion.
Professional projects accused of boondoggling but consumer goods made, eg. canned foods, garments, bedding, were distributed to relief recipients.
Came under fire from capitalists for competing with the private sector.
What did the Federal Surplus Relief Corporation do?
Aimed to reduce farm surpluses by government purchase and then redistribution of food to the needy.
Three methods of distribution were employed with varying success: direct distribution, food stamps and school lunches.
What did the CCC do?
Men aged between 17 and 24 (later 28) were recruited to work in national forests and parks.
Volunteers planted nearly 3 bil trees, constructed more than 800 parks and upgraded most state parks and built a network of service buildings and public roadways in remote areas.
They were laid $30 a month, $25 was sent back to their families.
Military style leadership.
What was the impact of the CCC?
Max enrolment was 300,000.
In nine years 3 million participated.
By 1933 there were 1,463 camps.
A total of 200,000 AAs enrolled in camps and were segregated after 1935 but received equal pay and housing.
Included work opportunities for veterans of all ages following second Bonus Army.
Separate Indian Division was a major relief force for Native Americans.
What did the CWA do?
Set up to create jobs for winter period of 1933/34.
Had a budget of $400 million but within 6 weeks they were spending $200 million a month.
Ended on March 31 1934 after giving jobs to 4 million people.
Accused of boondoggling.
Built 12 million feet of sewers, 255,000 miles of road, 40,000 schools, 3,700 playgrounds, nearly 1,000 airports and 250,000 outhouses which were badly needed in rural America.
Criticisms were that it lacked coherence and structure.
What were the aims of the TVA?
It was believed that the lack of electricity would inhibit the mechanisation and diversity of agriculture in TV region.
20 dams would be constructed to provide irrigation, flood control and electricity.
Agriculture would be transformed with the use of fertilisers which would be manufactured in the area.
What impact did the TVA have?
Most dramatic change came from TVA generated electricity.
Electric lights and modern appliances made life easier and farms more productive.
Electricity drew industries to the region providing desperately needed jobs.
Revitalised a vast area of ruined rural America by building dams to provide cheap electricity.
By 1945 75% of all properties had electricity compared to 2% in 1932.
Average incomes in the area went up by 200% between 1929 and 1945.
Did the Supreme Court support the TVA?
Supreme Court ruled TVA to be constitutional in Ashwander vs TVA in 1936.
Court noted that regulating commerce among the states includes regulation of streams and that controlling floods is required for keeping streams navigable.
War powers also authorised the project.
The argument was that the electricity generation was a by-product of navigation and flood control and therefore was constitutional.
What did HORC do?
Offered low rates of interest over extended periods of time.
Many wrote to the White House thanking FDR for it.
By mid 1930s HORC had refinanced nearly 20% of urban home in the country.
Between 1933 and 1935 HORC made around over one million loans.
What did the FHA do?
Its intent was to regulate the rate of interest and the terms of mortgages that it insured, which had government backed insurance on long term mortgages.
If you couldn’t pay, they wouldn’t take your house but help you retain it.
Boosted home ownership.
You could only get loans for new homes with single families, not for extending or refurbishing existing ones.
Benefitted mostly white middle class and did not help the poor in the city.
What were the main goals of the Dawes Severalty Act of 1887?
Breaking up of tribes as social units
Encouraging individual initiatives
Furthering the progress of native farmers
Reducing the cost of native administration.
Securing parts of the reservations as Indian land
Opening the remainder of the land to white settlers for profit
Assimilation
Allotment - having their territory divided and distributed to individual Indians to own
