Alphabet Soup II - Roosevelt's New Deal
By Toni Lee Robinson
Answer Key
President Roosevelt's first three months in office were busy. Things had to be done quickly to help
needy people. The President had called Congress to special session. The leaders worked together on
the New Deal. Laws were passed to bring healing to an ailing nation. This time was later called the
"Hundred Days."
The Emergency Banking Act had ended the banking crisis. But there was more work to be done. The
next step in Roosevelt's plan was reform. Laws were needed to change parts of the U.S. system.
People had thought banks a safe place to put their money. But the Depression had made it clear that
some things were badly wrong with banks. Thousands had lost all they had when banks failed. The
system on which banks were based needed to be fixed.
Congress passed the Glass-Steagall Banking Act. Under this law, banks were divided into types.
Regular (1) banks were separated from banks that dealt with stocks and bonds. That meant that the
money of regular bank patrons would not be used for big gambles in the stock (2) market . The GlassSteagall Act also limited speculation. In other words, banks couldn't gamble with money entrusted to
them. Their investments had to be safe.
The law went on to make banking even safer. The Federal Deposit Insurance Corporation (FDIC)
was set up to back deposits with federal funds. The FDIC would pay back at least some of patrons'
money if a bank closed. In 1933, up to $5,000 would be paid back. The amount has been changed
several times. Today the FDIC promises to repay up to $100,000. The GSBA made banks a safer place
for money.
The Securities Exchange Act made changes in the way the stock market was run. The bill corrected
some of the problems that led to the stock market crash. It created the Securities and Exchange
Commission. The SEC monitored the sale of stocks and bonds. Its job was to protect investors from
(3) fraud . The SEC is still doing this job today.
One of the blows to business during the 1930s was caused by tariffs. These taxes on foreign goods
had been put in place to protect American markets. But the tariffs had backfired. Other countries were
angry about the U.S. tariffs on their goods.
Many countries were having an even harder time in the Depression than the U.S. was. European
nations were burdened with heavy war (4) debt from WWI. No markets in the U.S. meant that these
countries would be even poorer. In return, they had levied tariffs on U.S. goods. Some even banned
U.S. goods from (5) crossing their borders. Foreign sales for U.S. products dropped. U.S. business
was further damaged.
The Trade Agreements Act was passed to end the tariff wars. The TAA allowed the President to
bypass the tariffs. He could make agreements with countries the U.S. traded with most often. They
could then sell goods in the U.S. with much less tax added on. This meant that more of a country's
products would be sold.
With the TAA, other countries made more money. Then they had an easier time paying war
(6) debts . Tariffs on U.S. (7) goods were eased in those nations. U.S. business did better in foreign
(8) markets .
Roosevelt went on to work on other parts of the economy. During World War I, the (9) government
had (10) launched a huge utilities project. It was located on the Tennessee River. The (11) facility
had made electricity and (12) nitrates for weapons. In 1933, Congress passed the Tennessee Valley
Authority Act. This set up a (13) public agency to run the power plant. It also planned for development
of the (14) region served by the plant.
The TVA built dams and plants to make electric power. Lines were built to bring (15) power to the
people who lived in the Tennessee River Valley. Many people without electricity now had power at low
prices.
The TVA did other things for the area as well. Homes in the valley were protected by flood control
programs. A (16) nitrate fertilizer (17) industry was created. All this development brought jobs and
money to the people of the valley. The TVA led the way for other such projects around the nation.
Roosevelt had promised Americans a New Deal. As President of a nation in distress, he worked
toward the goals of relief, recovery, and (18) reform . Did he make the sick patient well? Not entirely.
The dark cloud of Depression still hung over the nation. But the "alphabet soup" of new laws brought
changes for the people of America. Most were very glad for Roosevelt's New Deal.
Answers to Reading Comprehension Questions
1 Various, including that it was the first three months of FDR's Presidency, and that during a special
session of Congress, lawmakers and the President worked together at a furious pace to carry out
Roosevelt's remedies for the sick nation.
2 Various, including (1) the separation of regular banks and investment banks, (2) the limiting of
speculation, and (3) the creation of the FDIC to guarantee deposits
3
SEC
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The placing of tariffs on U.S. goods by foreign countries angry about U.S. tariffs placed on
foreign goods
5 Various, including the impact of the Depression worldwide and the burden of war-debt on many
countries who suffered further depressed markets because of high U.S. tariffs
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The President
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Set up the TVA, a public agency, to run the hydroelectric facility and develop the region
8 The many acronyms used to represent the laws sometimes seemed to produce a swirling chaos of
letters akin to a bowl of alphabet soup.