Topic 2.3 - Roosevelt and the first New Deal 1933-35 Flashcards
- Following Roosevelts inauguration, what did he call for?
- What did it result in?
- What have historians categorised the measures into?
- He called Congress into a special session which was to last for 100 days and saw the development of the First New Deal.
- Resulted in a considerable amount of emergency legislation and the setting up of many ‘alphabet agencies’
- Relief, recovery, reform.
- What was the aim of the legislation of 100 days?
- How were agricultural problems tackled?
- How was the banking system reformed?
- How was industry helped?
- Largely to restore faith in the US economy.
- Agricultural Adjustment Act.
- Banking system- Emergency Banking Relief and Glass-Steagall Acts.
- Industry- National Industry Recovery Act.
The 100 days
What was Roosevelts priority?
What was this to ensure?
- Priority was to create economic improvement, which he attempted not merely through measures to effect recovery but to improve the infrastructure- e.g. banking and finance.
- Was to ensure that the system would be modern and sophisticated enough to promote and stimulate a modern economy and if necessary, able to address any downturn in the future.
What was Roosevelts personality like and how did he use this to his advantage?
What helped to restore confidence and make people feel recovery was on the way?
- He was very charismatic and used his persoanlity to great effect.
- He spoke directly to the electorate via the radio and in his ‘fireside chats’ in which he explained his policies.
His reassuring voice!!
Agricultural recovery was given a higher priority than what recovery?
Industrial recovery!
Why was agricultural recovery a higher priority than industrial recovery?
- 30% of the labour workforce worked in Agriculture.
- If agricultural workers could afford to buy more, industry would be stimulated.
- If agriculture became more profitable, there would be a reduction in farms being repossessed by banks.
In the long run, what was the aim of agricultural policies?
How would this be achieved?
To make farming more efficient by ending overproduction.
- Done by taking the most uneconomic land out of production so less would be produced- thereby raising prices.
- Agricultural workers who may have been displaced by this process would move to other jobs- perhaps in more urban areas- which would be created by other New Deal measures.
When was the Agricultural Adjustment Act?
May 1933
The Agricultural Adjustement Act, May 1933
What had been the greatest problem of American Agriculture?
What had not previosuly addressed this problem?
OVERPRODUCTION!
Neither the McNary-Haugen proposals of the 1920s nor Hoovers Federal Farm Board.
The Agricultural Adjustement Act, May 1933
- What had industrial production declined by in the years (1929-1933)?
- What had agriculture fallen by?
Industrial production- Declined by 42%.
Agriculture- fallen only by 6%.
What was the main principle behind the Agricultural Adjustment Act?
- The government would subsidise farmers to reduce their acreage and production voluntarily.
- By producing less- the price of food would increase, and so would farmers incomes!
The Agricultural Adjustement Act, May 1933
What was the new agency set up called?
The Agricultural Adjustment Administration (AAA)
What would the Agricultural Adjustment Administration do?
How was the programme to be financed?
- Pay farmers to reduce their production of ‘staple’ items, initially corn, cotton, milk, pork, rice, tobacco and wheat.
- It was to be self-financing through a tax placed on companies that processed food. It was assumed that these companies in turn would pass on the increased cost to the consumer.
The Agricultural Adjustement Act, May 1933
The reduction of what was the most pressing need?
Reduction of cotton!
The Agricultural Adjustement Act, May 1933
- At the beginning of 1933, unsold cotton in the USA exceeded what?
- How many acres had farmers planted more than in 1932?
- What did they need to do to much of this?
- Exceeded the total average annual world consumption of American cotton.
- 400,000 acres!
- They were simply paid to destroy much of this!
The Agricultural Adjustement Act, May 1933
How many acres of cotton were ploughed under?
10.5 million acres!
The Agricultural Adjustement Act, May 1933
What happened to the price of cotton from 1932- 1933?
It rose from 6.5 cents per pound in (1932) to 10 cents per pound in (1933.)
The Agricultural Adjustement Act, May 1933
Why was it so contentious to destroy food?
How many piglets were bought and slaughtered?
So many Americans were hungry!
6 Million!! ;((
The Agricultural Adjustement Act, May 1933
What did the AAA only destroy?
Cotton and piglets!
The Agricultural Adjustement Act, May 1933
What did the drought do to the 1933 wheat crop?
What agreements were reached?
It helped to make it the poorest since 1896.
Agreements were reached to limit acreage in other crops in subsequent years.
The Agricultural Adjustement Act, May 1933
What did farm income rise from and to between 1932-1935?
Rose from $4.5 billion (1932) to $6.9 billion (1935).
The Agricultural Adjustement Act, May 1933
Who was the Act very popular with, give an example!
It was very popular with farmers. The percentage of farmers signing up for AAA agreements was high at first, 95% of tobacco growers.
The Agricultural Adjustement Act, May 1933
Faced by drought, what did western ranchers sought to bring under the protection of the AAA in 1934?
By January 1935 what had the government purchased and what did the ranchers have to do in return?
Beef cattle!
Purchased 8.3 million head of cattle, in return for ranchers to reduce breeding cows by 20% in 1937.
The Tennessee Valley Authority, May 1933
What was the problem the Tennessee Valley Authority was set up to deal with in the Tennessee Valley?
Deal with the underdevelopment and poverty!
The Tennessee Valley Authority, May 1933
It was created to harness the power of what?
What did it hope by doing so?
- Harness the power of the River Tennessee, which ran through 7 of the poorest states in the USA.
- It hoped by doing so, this region of 80,000 square miles with a population of 2 million people would become more prosperous.
The Tennessee Valley Authority, May 1933
What major tasks did the TVA have?
(6)
- To construct 20 huge dams to control the floods that periodically affected the region.
- To develop ecological schemes such as tree planting to stop soil erosion.
- To encourage farmers to use more efficient means of cultivation such as contour ploughing.
- To provide jobs by setting up fertiliser manufacture factories.
- To develop welfare and educational programmes.
- Most significantly- to produce hydro-electric power for an area whose existing supplies of electricity were limtied to two out of every 100 farms.
The Tennessee Valley Authority, May 1933
What did TVA effectively become and what was it largely responsible for?
- Became a central planning authority for the region.
- Responsible for the modernisation and improved living standards that saw its residents increase their average income by 200% in the period from 1929- 1949.
Banking and finance
By 1932, banks were closing at a rate of what per day?
40 per day!
Banking and finance
In October 1932, what did the Governor of Nevada do and why?
What had happened by the time of Roosevelts inauguration?
- He declared a bank holiday and closed every bank in the state- fearing the imminent collapse of an important banking chain.
- Banks were closed in many states!
The Emergency Banking Relief Act
On March 6th 1933, what did Roosevelt do?
He closed all the banks in the country for four days to give Treasury officials time to draft emergency legislation.
The Emergency Banking Relief Act
- What was the aim of it?
- What did it give the Treasury power to investigate?
- To restore confidence in the American banking system.
- Gave them power to investigate all banks threatened with collapse!
The Emergency Banking Relief Act
What were the Reconstruction Finance Corporation authorised to do and what happened as a result?
- They were authorised to buy their stock to support them and to take on many of their debts.
- In doing so, the RFC became in effect the largest bank in the world!
The Emergency Banking Relief Act
What did Roosevelt do on the radio with the first of his fireside chats?
What was his message?
Did it work? What happened as a result?
- He explained to listeners, in a language they could all understand, the nature of the crisis and how they could help.
- Message- place your money in the bank rather than under your mattress.
- Yes it worked! Solvent banks - allowed to reopen, others were reorganised by government officials to put them on a sounder footing. By the beginning of April, $1 billion in currency had been returned to bank deposits and the crisis was over!
The Emergency Banking Relief Act
By the beginning of April, how much in currency had been returned to banks deposits ?
$1 billion!!!
What effects did the Glass-Steagall Act have?
(4)
- Commercial banks that relied on small-scale depositors were banned from involvement in the type of investment banking that had fuelled some of the 1920s speculation.
- Bank officials were not allowed to take personal loans from their own banks.
- Authority over open-market operations such as buying and selling government securities was centralised by being transferred from the Federal Reserve Banks to the Federal Reserve Board in Washington.
- Individual bank deposits were to be insured against bank failure up to the figure of $2,500 with the insurance fund to be administered by a new agency, the Federal Deposit Insurance Corporation (FDIC).
Regulation of the stock exchange
What did The Truth-in-Securities Act, 1933 require?
Required brokers to offer clients realistic information about the securities they were selling.
