the ABC agencies
EBRA- emergency banking relief act march 1933
6th march FDR closed all banks in the country for 4 days which gave the treasury officals time to draft emergency legislation which congress passed after only 10 mintutes of debate.
- FDR gave one of his fireside chats where he explained the crisis and how they could help--> told the people to put on money in the bank
- it was successful and allowed banks to reopen.
- $1 billion had been returned to bank deposits and crisis was over.
- Raymond moley one of the brain trusters felt that american capitalism was saved in 8 days- ST impact of the EBRA- LT.
- EBRA helped towards recovery of the banking system.
glass steagall act-1933
bank officals were not allowed to take personal loans from thier own banks.
- commerical banks that relied on small scale depositors were banned from involement in the type of investment that fuelled some of the 1920's speculation.
- authority over open-market operations such as buying and selling gov securties were centralised by being transferred from the federal reserve baks to the fed reserve board in washington.- had to check with board first.
- individual bank deposits were to be insured against bank failure up to the figure of $2500 with the insurance fund to be adminstered by a new agency the federal deposit insurance coperation FDIC
had therefore taken the credit of the banking legislation in some peoples opinions as some people thought he had adopted Hoovers ideas and polices.
Gold reserve act- 1933
FDR saw his role in finance to:
- stop flow of gold out of the country
- increase the amount of money in circulation in the USA thus raising prices.
what he did: between march and april he tool the USA off the gold standard by forbidding the export of gold. and prohibiting the trading in of currency for gold. those holding gold weere required to turn it in to the fed banks for $20.67 an ounce.
main objective: was to bring down the value of the dollar abroad. once dollar was no longer tied to the valued gold it would find its own level in international markets- meant foreginers could afford to buy more american goods.
did it work- did seem to work as international value of the dollar fell to $0.85 in gold- foreginers could buy 15% mroe american goods than before with thier money.
impact: left FDR in dilemma abroad. European countries had great hopes that the london economic conference would help solve thier financial problems- delongates wanted a general stabalisation of currencies but FDR beleived the falling value of the dollar would reviatlise the american economy and so refused any agreement. shows that FDR was concerntrating on American recovery and how the new deal was a domestic programme- stabalisation of foerigen economies was simply not on his agenda- collapse of conference.
ST- in just one year the follar devalued by nearly 60 since march 1933 so prices could go up
LT- while prices did rise somewhat juggling the rices of gold + currnecy mechanisms didnt effect any major economic recovery because of the nature of the depression was to compicated for any single measure to work.
the truth in securities act- 1933
background- to ensure the consequences of the wall st crash would not happen.
aim- made brokers have to offer thier client realistic info about the securities they were selling
FDR's personal ideas: created them to make sure the WSC wouldnt be repeated.
effects- led to more stable stock market making it more reliable.
long term impact--> made stock market more stable again trying to stop them falling into the great depresion again.
background- to ensure the WSC in the 1920's never happened again.
aim- oversee the stock market activites and prevent fraud activites such as inside dealings.
effects: successful despite tthe opposition of wall street insiders.
- good idea because things started to regulate againand they they could oversea all stock market activites.
- LT effect
- reform of stock market.
- 30% of all labour force worked in agriculture. - if agriculture could afford to buy more industry would be stimulated.
FDR's personal ideas- helieved agriculture was the backbone of USA. it provided jobs which meant that more money could be pumped into the economy- stimulating other industries this would lead to creation of more jobs- boosting economy further.
- The Farm Credit act- march 1933- brought all agencies that dealt with agriculture credit into 1 body- farm credit administration. easier for farmers.
farm credit adminstration- FCA helped to coordinate agricultural issues.
emergency farm morgage act- 1933 loaned money to farmers who were in danger of losing property.- good it meant jobs kept open for workers bad- more debt
franzier lemke farm morgage act- 1933 lent money fo farmers whos land had been repossessed.
the AAA- agriculture adjustment act
created to combat the problem of overproduction- important as overproduction was cauing the food prices to fall + unemployment to occur.
aim- to increase farmers income and reduce production- act paid farmers to reduce thier production as people wouldnt volenteer to do so.
process: the AAA was physically carried out by slaughtering pigs and feeding them to the unemplyed ploughing over cotton fields effectively rising costs ( also reducing breed of cows). FDR hoped AAA would be self financing i.e the cost of subsiding farmers would be paid for by tax on compaines that produced food- there companies would pay increased cost onto consumers.
effect: good LT- helped economy to pick up again. it meant that some other farms had to give up thier land. the AAA produced more jobs thus helping the problem of unemployment.
- drought of 1933- wiped out wheat crop this forced prices back up- not just work of AAA.
- farm income rose from $4.5 billion in 1932- $6.9 in 35.
- act was popular with farmers.
this act is for recovering the agriculture busienss and reforming agriculture business ideas.
TVA- tennessee valley authoirty-may 1933
background: created to harness the power of the river tennessee which ran through 7 of the poorest states in the usa. hoped by doing so the region of 80,000 square miles with a pop of 2 million would become more prosperous.
FDR's personal ideas: interested in conservation and ecology
aim: to develop ecological schemes such as tree planting to stop soil erosion.
- encourage farmers to use more effiecent means of cultivation e.g contour ploughing.
- produce jobs by setting fertiliser manufacture factories
- develop welfare and educational programmes
- to produce HEP for an area whos existing supply of electricity were limited to 2 out of every 100 farms.
- construct 20 huge dams to control the floods which effect the region.
effects: provided jobs
- responsible for the modernisation and improved living standard that saw residents increase thier average income by 200% from 1929-49 :)
- generated electricity a lot cheaper
- created 20 dams to control: floods,stop soil erosion
-encourage efficent farming.
- developed welfare+educational programmes
TVA was a recovery scheme and had LT sucess.
PWA- public works administration- june 1933
it was the 2nd part of the NIRA
headed by Ickes- secretary of interior
funded with $3.3billion
purpose: pump priming- gov spending leads to economic growth.
hoped that road building,hospitals etc would stimulate economy. e.g other industries e.g concrete would cause them business and in turn them to employ- workers spend money.
bad: ickes only funded 'worthwhile' projects
- critised for only spending $110mill in first 6 months.
- ickes didnt want to waste tax payers money.
-PWA gave hundreds of thousands of jobs.
- 13,000 schools+50,000 miles of road built
- pumped billions into economy- responsible for public work schemes a lot in west us- enabled dams to be built. land could be irrgated, national parks created.
relief: gave jobs
ST- employed straight away
LT- benifted community/
FERA- fed emergency relief act-1933
background: hopkins ran this programme
FDR wanted to involve gov indirect relief measures
Aim: to give unemployed relief and money.
- $500 million given to be divided equally between states to helped provide for unemployed- 1/2 states get given goes directly to relief other 1/2 gov pay $1 for every $3 the state spends on relief.
process: act said each state should set up FERA office and organise relief programmes- should raise money through borrowing, tax rises or other.
effects: good- LT- set the important preceedent of fed gov giving direct funds for relief.
bad: ST- may states didnt want to spend money on relief- wanted balance budget
- ohio and kentucky refused to comply- hopkins threaten to deny them any fed money.
- workers refused office space in some states and often thier case loads were numbered in thousands.
not enough- 1935- $25 a month to average family on relief- min wage 100.
- attitudes of state to FERA- being poors is own fault- poor treatment of unemployed-queues and form filling- unemployed were just a problem- no respect and funds limited.
:(- ST ferea was ineffective
:)- LT- sets the proceture for direct gov intervention into relief.
CC- civilian conservation corps- march 1933
aim: employed men age 18-21
-recruited by department of labour
-worked in national forests,public lands
-organised along military lines
- tasks set out by department of interior+agriculture
-1st year- cost= $5,500 mil
- 250,00 recruits worked on reforestation,soil conservation,forest management.
process:usually worked for 9 months- gave lots of people chances to join.
- earnt 30 a mnth- 25 went home.
- 2500 recruits in 2nd 'bonus army' (veterans given money by gov)
- orginally set up for 2 years but congress extended for another 7 in 1935.
- extended as it had 500,000 workers.
effects: installed 65,000 miles of telephone lines
spent 1.1million man hours lighting forest fires.
- planted 1.3 billion trees
- gave young men self respect
- 100,00 improived skills gave experience + improved literacy rates
:(- gave to white men
- no gurantee of job when CCC was over
- could end up claiming relief again
ST- jobs straight away.
relief- gave men jobs
Federal housing administration -FHA-june 1934
aim: used to offer federal insurance to protect the ability to repay low interest long term morgages for those who want to buy new homes also used to stimulate housing industry.
no personal ideas.
process: to get loan in order to buy a house.
bad- did nothing to help the increasing poverty stricken areas
- inner cities were run down and left to poor minorities
- only new houses were given low interest and low mortages
- didnt help suburbs or slums
long term recovery:
-as they want to stimulate the building industry which will help keep industry strong so thee is more money for economy.
RECOVERY- because before the FHA there were a lot of slums and the FHA there were a lot of slums and ut was set up to help minimise this.