IB History – 12



IB History – 12

Study Questions: Chapter 24 (The Enduring Vision)

Answers

1. Compare the value of all stocks in 1925 and 1929.

➢ 1925 – stocks = $27 billion

➢ 1929 - $87 billion

2. What is “margin buying?”

➢ Buying stocks on credit – up to 75% credit with only 25% cash

3. How did the Secretary of Treasury make stock speculation easier?

➢ Andrew Mellon increased the volume of money available for speculation

4. How did the Federal Reserve attempt to dampen speculation in 1928 and 1929? How effective were they?

➢ By raising the interest rate on federal reserve notes (money lent to banks)

➢ The Fed also warned banks to tighten their lending practices

➢ Speculators were willing to pay up to 20% interest and banks kept lending money – the efforts of the Fed were not effective

5. What happened to the stock market between October 24 and mid-November of 1929?

➢ The value of stocks went from $87 billion to $30 billion

➢ It took one month to undo what had taken four years

6. Compare the economic interpretations on “the underlying causes” of the depression. Does one seem more plausible than others? Which one, and why?

A. Agriculture was weak; the industrial sector did produce higher wages but higher corporate profits; 40% of the poorest Americans only received about 12% of total national income; purchasing power was reduced and the industrial sector became overextended

B. Monetary policy – the Federal Reserve is blamed for tight money policies which allegedly destroyed any chance of recovery. (higher interest rates reduces the amount of money available – people borrowed less because of the interest rate)

C. Worldwide depression affected the US economy; war debt payments and a trade imbalance

7. Identify:

a. GNP from 1929 – 1932 --- $104 billion to $59 billion (43%)

b. Farm prices from 1929 – 1932 --- fell by 60%

c. Banking system 1930 – 1933 --- 5500 banks had closed by 1933

d. Unemployment 1929 – 1933 (rate and numbers) --- 25% / 13,000,000 workers

2008-2009 = $600 billion drop in GDP - $14.4 trillion to 13.8 trillion (4%) --- 200 bank closures----employment 4.4%-10% (currently 8.5%)

8. *Assess the attitude of Herbert Hoover in combating the depression considering the following:

a. His general philosophy and beliefs – localism, private initiative, voluntarism

b. Actions he took in 1930-31 – advised state and local governments to set up public works projects; set up an Emergency Committee for Unemployment; he convinced the largest banks to set up the National Credit Corporation to assist smaller banks; called for a tax increase in 1931

c. Actions he took in 1932 – had Congress set up the Reconstruction Finance Corporation to make loans to major institutions like banks and insurance companies; also, the RFC gave loans to state and local governments for public works projects; also allocated loans for struggling businesses to stay alive

d. Explain the reason for the policy shift – it was an election year and the Republicans had already lost the House during the midterm elections and lost eight seats in the Senate.

9. What was a “Hoover blanket?”

➢ Newspapers used by the homeless as blankets

10. What was the Farm Holiday Association?

➢ A boycott organized by Midwestern farmers; they forced prices up by withholding grain and livestock from the market; dairy farmers dumped milk because of low prices

11. Who were the “bonus marchers?” What did they want? What happened to them?

➢ In 1924, Congress voted WWI veterans a bonus stretched over twenty-one years

➢ In 1932, 10,000 veterans, many jobless, went to Washington DC to demand immediate payment of the bonus

➢ Congress refused and most went home

➢ About 2000 remained and set up make-shift shelters on the outskirts of DC

➢ Gen MacArthur was called in to drive the “bonus marchers” away – he had tear gas, tanks and machine guns – the marchers were unarmed – their shelters were burned and they were gassed with the tear gas

12. What were the results of the election of 1932?

➢ 23 million votes for FDR and less than 16 million for Hoover

➢ Both houses of Congress went heavily Democratic

13. What were the three components of FDR’s early depression-fighting strategy?

➢ Industrial recovery through business-government cooperation and pump-priming federal spending

➢ Agricultural recovery through crop reduction

➢ Short-term relief funneled through state and local agencies when possible, but directly by the federal government if necessary

14. What nickname was given to FDR’s close circle of advisers?

➢ The brain trust

15. Describe the relationship between Franklin and Eleanor Roosevelt.

➢ Through her, FDR met reformers, social workers and advocates of minority rights

➢ Mrs. Roosevelt traveled ceaselessly and served as an astute observer for FDR

16. Who was Francis Perkins?

➢ Sec. of Labor

➢ First woman to hold a cabinet position

➢ Previously served as the industrial commissioner of New York

17. *What was the Bank Holiday? How did FDR try to get people’s faith in the banks restored? What two laws were passed in 1933 to deal with the banking crisis? What did each law do?

➢ FDR ordered all banks closed for four days

➢ Fireside chats were a series of radio addresses by FDR to try to restore American’s faith in banks

➢ The Emergency Banking Act – permitted healthy banks to reopen; set-up procedures for managing failed banks; increased federal oversight of banking; required banks to separate their savings deposits from their investment funds

➢ Federal Deposit Insurance Corporation (FDIC) to insure all bank deposits up to $5000 (today the limit is $250,000)

18. What was the purpose of the CCC? How effective was it?

➢ The Civilian Conservation Corps – employed jobless youths in gov’t projects that helped the environment, thus combining the two programs

➢ Yes – ½ million young men were earning $35 week for their families

19. What was FERA? What did it do? Who was its administrator?

➢ The Federal Emergency Relief Act – appropriated $500 million to state and local relief agencies that had exhausted their funds

➢ Harry Hopkins

20. The goal of the AAA was parity. What is parity, and how was this to be reached?

➢ Parity means equal and fair.

➢ The government paid farmers to plow up their crops and kill livestock

➢ The major agricultural commodities would receive subsidies – payments – for reduction production.

21. *Assess the work of the NRA.

➢ The National Recovery Administration drafted codes of “fair competition”

➢ It set production limits, prescribed wages, and working conditions, and forbade price cutting and unfair competitive practices

➢ It wanted to end the cycle of wage cutting, falling prices, and layoffs

➢ Francis Perkins persuaded the NRA to ban child labor in the textile industry

➢ Senator included a provision in the NIRA law to allow unions the right to organize and bargain collectively

22. What prompted the passage of the Federal Securities Act? What was the job of the SEC?

➢ The stock market crash

➢ It required corporations to inform the Federal Trade Commission fully on all stock offerings, and made executives personally liable for any misrepresentations of securities their companies issued

23. What was the TVA and what made it such a popular achievement?

➢ The Tennessee Valley Authority built a series of dams throughout the Tennessee Valley and provided cheap hydroelectric power to the region

➢ It promoted flood control, water recreation and erosion prevention

➢ It allowed people in the region to store foods, buy new machines to launder clothes, pump water closer to the home, and have electric lighting in the home

24. *Why did the NRA fail in its efforts to help the nation recover from the depression?

➢ Too many trivial codes

➢ As corporate America was becoming unhappy with NRA regulation, code violations increased

➢ Corporate trade associations used the codes to restrict competition and maintain prices, not to stimulate the economy

➢ In 1935 the Supreme Court unanimously ruled the NRA to be unconstitutional

25. How did the AAA affect farm laborers and sharecroppers?

➢ Farm and land owners were pocketing the profits and subsidy checks and cutting loose laborers, tenant farmers and sharecroppers

26. Why was the CWA abolished after only a few months in operation?

➢ It was a short-term public works project for the homeless during the winter; FDR abolished the program when warm weather returned

27. Describe the anti-Roosevelt attitudes of

a. American Liberty League – business leaders and an embittered Al Smith called the New Deal socialistic

b. Charles Coughlin – a Catholic priest and radio personality called FDR a great betrayer and a liar, an anti-Semite, and called for nationalization of the banks

c. Francis Townsend – he wanted the government to pay retirees $200 a month and require it be spent within 30 days to stimulate the economy and promote retirement to open up jobs – this would have bankrupted the nation

d. Huey Long – he became senator of Louisiana and promoted a “Share Our Wealth” program that taxed 100% of all income over $1,000,000

All of the programs undermined the popularity of FDR’s programs and he would ultimately take measures even bolder than his Hundred Days initiative.

28. What were the six central elements of FDR’s Second New Deal?

➢ An expanded public works program

➢ Assistance to the rural poor

➢ Support for organized labor

➢ Benefits for retired workers and other needy groups

➢ Tougher business regulation

➢ Heavier taxes on the well-off

29. *Describe the WPA.

➢ It funneled assistance directly to individuals – must be work and not handouts to the jobless

➢ Over its eight year life it:

➢ Employed over 8 million Americans

➢ Pumped $11 billion into the economy

➢ Constructed or improved 650,000 miles of roads

➢ Built or repaired 124,000 bridges

30. What was Roosevelt’s attitude toward deficit spending?

➢ As an unwelcome necessity, not a positive good

31. Why did the Second New Deal take a “sharp turn to the left” in 1935?

➢ FDR was worried that Coughlin, Townsend and Long could siphon off enough votes to cost him the election (to the Republican candidate)

32. Why was the AAA declared unconstitutional? How did Congress react?

➢ The Court held that the processing tax that funded the subsidies was an illegal use of the government’s taxing power

33. Describe the Wagner Act.

➢ Guaranteed collective bargaining rights, permitted closed shops, and outlawed management tactics like blacklisting union organizers

34. *Describe the new Social Security system and how it reflected new attitudes and responsibilities.

➢ It was a mixed federal-state system of workers’ pensions

➢ Unemployment insurance

➢ Survivors’ benefits for victims of industrial accidents

➢ Aid for disabled persons and dependent mothers with children

➢ Taxes were paid partly by employers and partly by workers in the form of a special withholding tax from the workers paycheck to fund the program

➢ Social Security established the principle of federal responsibility for social welfare and laid the foundation for a vastly expanded welfare system in the future.

35. Describe the election of 1936.

➢ Roosevelt carried every state except Maine and Vermont

➢ Democrats increased their majorities in Congress

➢ Collectively, the third parties only carried 1.17 million votes

36. What four new groups joined with the traditional base to form a new Democratic Party coalition?

➢ Farmers, unions, northern blacks, and women

37. *What efforts did the Roosevelt administration make to fight racism and sexism in the country?

➢ He worked to rid New Deal agencies of blatant racism

➢ Appointed more than 100 blacks to policy level positions

➢ Appointed Mary McCleod Bethune as director of minority affairs in the National Youth Administration.

➢ The Roosevelt Supreme Court issued antidiscrimination rulings in cases involving housing, voting rights, wage inequity, and jury selection.

➢ The administration made several symbolic gestures as well: Eleanor sat half way between segregated isles and resigned from the Daughters of the American Revolution when they barred Marion Anderson, a black contralto, from performing.

➢ FDR appointed the first female cabinet member and first female ambassador.

38. What would the court reform bill proposed by FDR in 1937 have done? What happened to the plan? How was the Supreme Court affected in the end?

➢ The bill would allow FDR to appoint an additional justice for each current justice over the age of seventy, up to six additional justices.

➢ Called the “court packing” scheme by conservatives

➢ It was defeated and FDR stopped his pursuit of the legislation

➢ Ultimately four justices would retire by 1939 and FDR would be able to appoint more liberal justices to the Court

➢ The Court also upheld several key New Deal measures

39. *Describe the “Roosevelt recession.”

➢ Industrial production slumped; steel production sank to 19% of capacity

➢ Unemployment topped 20%

➢ Caused by federal policies that reduced consumer income, I. e. Social Security taxes withdrew some $2 billion from circulation

➢ Sensing recovery and worried about growing deficits, FDR cut back various New Deal programs

➢ Ultimately FDR would authorize new relief spending, causing unemployment to go down and increasing industrial output.

40. *Describe/summarize the unionization of industrial workers.

➢ Union leaders frustrated with the AFL’s slowness in organizing factory workers started the Committee for Industrial Organization (CIO)

➢ In 1937 US Steel recognized the steel workers’ union, granted a wage increase, and accepted the forty-hour workweek.

➢ In December 1936 male employees staged a sit-in at two GM body plants; women picketed outside; FDR and Michigan’s governor refused to send in troops to break the strike; on February 11, 1937 GM signed a contract recognizing the United Automobile Workers (UAW)

➢ Chrysler soon fell into line, but Ford would hold out until 1941

➢ Between 1933 and 1941 union membership would grow from 3 million to 8 million workers.

➢ In 1941 a group of small steel companies would finally recognize union workers.

➢ Textile workers failed to organize even with CIO support

➢ Many other workers were still left unorganized

➢ Unionization was possible because of worker militancy and skillful labor leaders and the Wagner Act, which protected workers’ rights to organize.

➢ Also, the Fair Labor and Standards Act and the National Labor Relations Board made clear that Washington would no longer automatically back management in labor disputes.

41. Summarize the “conclusion” (p. 761).

➢ Depression caused by prosperity masking problems such as:

- Low farm prices

- A glut of consumer goods bought with credit

- Problems with the money supply

➢ The TVA brought electricity to millions in rural areas

➢ Congress restored the legal status of native Americans laying the groundwork for economic revitalization and treaty claims in the future

➢ Mexican farm laborers faced deportation, but went on strike for better wages

➢ Women were pushed from the workplace in favor of men, but many resisted and the female workforce continued to grow

➢ The New Deal was not a complete success:

- Programs failed

- Unemployment was 17% as late as 1939

- Only hesitantly addressed racism

-

➢ The Second New Deal

- Addressed the plight of the poorest Americans, including sharecroppers and migrants

- Pursued tougher business regulation and higher taxes for the wealthy

- Brought about Social Security, laying the groundwork for the welfare state

- The Wagner Act guaranteed worker’s rights to organize

➢ The New Deal radically redefined the nation’s political agenda, the role of the federal government, and the role of the presidency

➢ FDR’s strengths outweighed his weaknesses

➢ FDR’s open, experimental approach served the nation well during a time of crisis

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