The Hundred Days and Bank Relief 19-1

The Hundred Days Before FDR inaugurated unemployment continued to rise, and bank runs continued Before FDR inaugurated unemployment continued to rise, and bank runs continued People exchanged dollars for gold People exchanged dollars for gold Bank holidays were declared in 38 states Bank holidays were declared in 38 states Gold standard Gold standard Some afraid that FDR would abandon and would reduce value of dollar Some afraid that FDR would abandon and would reduce value of dollar FDR did take the country off the gold standard shortly after becoming pres FDR did take the country off the gold standard shortly after becoming pres Then, FDR raised (and fixed) the price of gold Then, FDR raised (and fixed) the price of gold

The Gold Standard FDR allowed the govt to basically print 3 billion dollars out of nothing to finance his programs FDR allowed the govt to basically print 3 billion dollars out of nothing to finance his programs Now, paper money is devalued 41% Now, paper money is devalued 41% (Nixon eventually got us totally off the gold standard in 1971) (Nixon eventually got us totally off the gold standard in 1971)

Executive Order 6102 Forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States". Forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States". The order criminalized the possession of monetary gold by any individual, partnership, association or corporation. The order criminalized the possession of monetary gold by any individual, partnership, association or corporation. all persons to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 (equivalent to $ today) per ounce all persons to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 (equivalent to $ today) per ounce Specifically exempted "customary use in industry, profession or art"a provision that covered artists, jewelers, dentists, and sign makers among others Specifically exempted "customary use in industry, profession or art"a provision that covered artists, jewelers, dentists, and sign makers among others Gold coins also upped in limit, due to collectors Gold coins also upped in limit, due to collectors

Inauguration March 4, 1933 March 4, 1933 Let me assert my firm belief that the only thing we have to fear is fear itself…This nation asks for action, and action now! Let me assert my firm belief that the only thing we have to fear is fear itself…This nation asks for action, and action now!

The New Deal Begins Brain Trust FDR advisors Brain Trust FDR advisors Often disagreed Often disagreed No clear agenda (No actual New Deal) No clear agenda (No actual New Deal) The country needs bold persistent experimentation…Above all try something. The country needs bold persistent experimentation…Above all try something. And he did. LOTS of bills sent through legislation And he did. LOTS of bills sent through legislation Hundred Days March 9-June 16 Hundred Days March 9-June major acts passed 15 major acts passed

Economics Keynes Keynes Government spending would spur demand and thus pull a nation out of depression Government spending would spur demand and thus pull a nation out of depression Keynesian economics was Roosevelts philosophy Keynesian economics was Roosevelts philosophy Traditionalists Traditionalists (Ex Hayek) (Ex Hayek) Cut government spending to encourage private investment Cut government spending to encourage private investment com/watch?v=d0nE RTFo-Sk com/watch?v=d0nE RTFo-Sk com/watch?v=d0nE RTFo-Sk com/watch?v=d0nE RTFo-Sk

New Nationalism or New Freedom Govt work w/ business Govt work w/ business Regulate wages, prices, production Regulate wages, prices, production OR OR Distrust big business completely Distrust big business completely Govt run parts of economy Govt run parts of economy Trust busting Trust busting Regulation to keep competition fair Regulation to keep competition fair

Banks and Debt Relief Temporarily closed all banks March 9 Temporarily closed all banks March 9 Emergency Banking Relief Act Emergency Banking Relief Act Unanimous Unanimous 38 min of debate 38 min of debate Required Fed examiners to survey banks and issue licenses to those that were financially sound Required Fed examiners to survey banks and issue licenses to those that were financially sound

Fireside Chats March 12 March 12 Sixty million listeners Sixty million listeners Money will be secure in banks Money will be secure in banks When banks opened, deposits > withdrawals When banks opened, deposits > withdrawals

SEC and FDIC Securities Act companies that sold stock/bonds had to provide info Securities Act companies that sold stock/bonds had to provide info SEC (Securities and Exchange Commission) SEC (Securities and Exchange Commission) Regulate stock market and prevent fraud Regulate stock market and prevent fraud Glass-Steagall Act commercial banking separate from investment banking Glass-Steagall Act commercial banking separate from investment banking Commercial banks no longer allowed to risk despositors money by using it to speculate on the stock market Commercial banks no longer allowed to risk despositors money by using it to speculate on the stock market Created Federal Deposit Insurance Corporation (FDIC) to insure bank deposits Created Federal Deposit Insurance Corporation (FDIC) to insure bank deposits

Mortgage and Debt Low prices or debt cause of GD Low prices or debt cause of GD Most income went to paying back debt Most income went to paying back debt Cut back on spending Cut back on spending Home Owners Loan Corporation Home Owners Loan Corporation Bought mortgages of many homeowners who were behind in their payments restructured, with lower interest rates Bought mortgages of many homeowners who were behind in their payments restructured, with lower interest rates 10% of homeowners 10% of homeowners Not farmers, still employed Not farmers, still employed

The Farm Credit Administration (FCA) lent 4x as much $ to farmers as the entire banking system had the year before (FCA) lent 4x as much $ to farmers as the entire banking system had the year before Lowered interest rates Lowered interest rates Long-term value? Long-term value? Money to poor farmers meant that money was not able to be lent to more efficient business Money to poor farmers meant that money was not able to be lent to more efficient business Slowed overall economic recovery Slowed overall economic recovery