Spring 1938: easier reserve conditions and the end of the inactive gold account
Read the exact April ratios and distinguish available funds from their subsequent use.
Exam scope and assessment notes
Sixteen original lessons and 48 explained guided, independent and transfer tasks introduce the listed causes in enquiry 6.1 for 2027–2029. Compare Republican policy, the boom and unequal wealth, urban/rural differences, speculation and valuation, confidence, war and international trade, banking and the Federal Reserve, agriculture, old and new industries, production and oversupply. This is introductory teaching, not full AS or A Level preparation. Twenty-six further lessons and 78 explained tasks introduce enquiry 6.2: financial losses and bankruptcy, regulation demands, unemployment and hours, agriculture and deflation, welfare, family and minority experiences, Hoover’s agricultural, housing, RFC and relief responses, Bonus Marchers, and the 1932 election and developing coalition. Fifteen further lessons and 45 explained tasks begin enquiry 6.3 through the March crisis, advisers and Congress, holiday and emergency banking legislation, selective reopening, an original source-comparison workshop, conservation work, FERA, agricultural adjustment, industrial codes, public works, TVA and securities disclosure. Eighteen further lessons and 54 explained tasks deepen enquiry 6.3 through original banking-separation and temporary-insurance conditions, securities registration and non-approval, the 1934 market framework, distinct HOLC routes and later operational evidence, farm credit, November CWA recruitment and February 1934 reductions, a local tenant case, labour conditions and an original programme-source comparison. Ten further lessons and 30 explained tasks introduce Supreme Court disputes: Schechter’s delegation and commerce grounds, Butler’s majority and Stone’s dissent, the February 1937 draft’s conditions and ceilings, its failure, Gannett’s press argument, Sumners’s Southern Democratic opposition, the Jones & Laughlin industrial case and existing-seat appointments through 1941. A selected administration/publisher comparison uses original paraphrases, not a full authentic source set. Nine further lessons and 27 explained tasks introduce critics from the Left and Right through Thomas, the June 1936 Communist platform, Townsend’s changing pension plans, Long’s dated redistribution appeal, Coughlin’s monetary proposals and antisemitic propaganda, Republican alternatives and Smith’s Liberty League intervention. A selected Smith/Thomas comparison and a dated official election-table exercise distinguish shared opposition, different institutions, audience, votes and influence. These are original introductory case studies, not complete political histories. Enquiry 6.3 remains partial: wider programme implementation and local, racial and gender access and outcomes, deeper organisational and regional histories of opposition, earlier and later political tactics, further Supreme Court rulings and fuller political and legal depth still need teaching and practice. Ten further lessons and 30 explained tasks begin enquiry 6.4 through the January 1935 security initiative, selected original Social Security assistance, benefit and tax provisions, Wagner Act rights and Board procedures, and WPA creation and work rules. A selected proposal/statute comparison uses original paraphrases, not a full authentic source set. Ten further lessons and 30 explained tasks introduce the 1936 election through the electoral result and its denominator, party claims and pledges, Roosevelt’s Philadelphia economic-freedom argument, the September farm–city broadcast, labour mobilisation, Black political agency and Southern resistance, Farley’s organisation, the July postmaster procedures and June relief anti-coercion provisions. A selected Roosevelt/Republican comparison distinguishes shared concern with insecurity from different institutions. Fourteen further lessons and 42 explained tasks introduce selected 1935–1937 mechanisms: the June tax proposals and enacted individual and corporate schedules; NYA creation and student-aid limits; original rural power loans and allocations; conservation plans, payments and tenant safeguards; farm-acquisition and rehabilitation finance; and original low-rent housing access and finance. A selected tax-proposal/electrification-statute comparison distinguishes instruments and evidence of outcomes. Sixteen further lessons and 48 explained tasks introduce the 1937–1938 recession through industrial measures, fiscal cash flows, payroll collection, reserve requirements and bank responses, Treasury gold finance, inventories and prices, employment and hours, uneven business and household effects, the April recovery proposals, June work-relief and public-works authority, and an upturn with continuing weaknesses. A selected Roosevelt/Eccles comparison preserves the latter’s expressly personal standpoint. All three listed recession strands now have introductory teaching; full historical and assessment coverage remains unfinished. Ten further lessons and 30 explained tasks introduce the original 1938 Fair Labor Standards Act and its 1941 Darby validation: commercial coverage, phased wages and overtime, distinct exemptions, child-labour conditions, special certificates, enforcement and stronger applicable state standards. A selected statute/Court comparison distinguishes purpose, constitutional validity and measured outcomes. This is a selected labour-standards introduction, not complete beneficiary, exclusion or government-change coverage. Eleven further lessons and 33 explained tasks introduce family security under the original 1939 Social Security amendments: earlier monthly operation, worker qualification, wives, widows, children and parents, continuing employment exclusions, distinct state assistance, claims and hearings, pooled finance, actual January–June 1940 payment records and startup limits. A selected law/trustees comparison distinguishes legal rights, recorded delivery and unproven household adequacy. This is a selected family-security introduction, not complete beneficiary, exclusion, administrative or economic-recovery coverage. Enquiry 6.4 remains partial: fuller revenue and programme histories, political motives, deeper regional election and coalition histories, reception and causal evidence, fuller patronage and civil-service practice, programme implementation and unequal access and outcomes, deeper fiscal and bank series, industrial and household experiences, and government, recovery and experiences through 1941 still need further teaching and practice. The 1937 proposal is later follow-through within 6.3, not an event of the First 100 Days. Historical depth, wider authentic reading, subject-specialist review, complete source sets, full papers and calibrated marking remain unfinished. Selected source cards are labelled original paraphrases, not quotations or complete authentic documents. Existing 2026 lessons receive no automatic revised-year credit. The Great Crash, the Great Depression and the New Deal, 1920–1941 is an American Paper 2 topic in 2027 and 2029, and the American Paper 1 topic in 2028. Paper 1 Historical sources is 75 minutes and 40 marks: answer both parts of one question using four sources totalling at most 600 words, with at least three written sources and up to one visual. Part (a) compares two sources for 15 marks; part (b) uses all four sources and contextual knowledge for a 25-mark judgement. Paper 2 Outline study is 105 minutes and 60 marks: answer two questions from one section and both parts of each, with a 10-mark causal explanation and a 20-mark argument. These lessons are introductory practice, not a complete assessment programme.
Before you begin
- Distinguish industrial output, national income, headcount, hours, payrolls and household experience
- Separate dated fiscal, reserve, Treasury and private-sector mechanisms; test outcomes rather than infer them from authority
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
How should you explain a downturn and its reversal?
What you will learn
- What does the selected central reserve city calculation show?
- Why cannot one summary fraction be imposed on country demand and time deposits?
- How would you assess the role of easier credit conditions in the revival?
Evaluate an AS historical judgement
- Write your own response before opening the model.
- Define the outcome, explain dated mechanisms and weigh alternatives. Label invented arithmetic and distinguish source claims from measured results.
Sixteen original lessons and 48 explained guided, independent and transfer tasks introduce the listed causes in enquiry 6.1 for 2027–2029. Compare Republican policy, the boom and unequal wealth, urban/rural differences, speculation and valuation, confidence, war and international trade, banking and the Federal Reserve, agriculture, old and new industries, production and oversupply. This is introductory teaching, not full AS or A Level preparation. Twenty-six further lessons and 78 explained tasks introduce enquiry 6.2: financial losses and bankruptcy, regulation demands, unemployment and hours, agriculture and deflation, welfare, family and minority experiences, Hoover’s agricultural, housing, RFC and relief responses, Bonus Marchers, and the 1932 election and developing coalition. Fifteen further lessons and 45 explained tasks begin enquiry 6.3 through the March crisis, advisers and Congress, holiday and emergency banking legislation, selective reopening, an original source-comparison workshop, conservation work, FERA, agricultural adjustment, industrial codes, public works, TVA and securities disclosure. Eighteen further lessons and 54 explained tasks deepen enquiry 6.3 through original banking-separation and temporary-insurance conditions, securities registration and non-approval, the 1934 market framework, distinct HOLC routes and later operational evidence, farm credit, November CWA recruitment and February 1934 reductions, a local tenant case, labour conditions and an original programme-source comparison. Ten further lessons and 30 explained tasks introduce Supreme Court disputes: Schechter’s delegation and commerce grounds, Butler’s majority and Stone’s dissent, the February 1937 draft’s conditions and ceilings, its failure, Gannett’s press argument, Sumners’s Southern Democratic opposition, the Jones & Laughlin industrial case and existing-seat appointments through 1941. A selected administration/publisher comparison uses original paraphrases, not a full authentic source set. Nine further lessons and 27 explained tasks introduce critics from the Left and Right through Thomas, the June 1936 Communist platform, Townsend’s changing pension plans, Long’s dated redistribution appeal, Coughlin’s monetary proposals and antisemitic propaganda, Republican alternatives and Smith’s Liberty League intervention. A selected Smith/Thomas comparison and a dated official election-table exercise distinguish shared opposition, different institutions, audience, votes and influence. These are original introductory case studies, not complete political histories. Enquiry 6.3 remains partial: wider programme implementation and local, racial and gender access and outcomes, deeper organisational and regional histories of opposition, earlier and later political tactics, further Supreme Court rulings and fuller political and legal depth still need teaching and practice. Ten further lessons and 30 explained tasks begin enquiry 6.4 through the January 1935 security initiative, selected original Social Security assistance, benefit and tax provisions, Wagner Act rights and Board procedures, and WPA creation and work rules. A selected proposal/statute comparison uses original paraphrases, not a full authentic source set. Ten further lessons and 30 explained tasks introduce the 1936 election through the electoral result and its denominator, party claims and pledges, Roosevelt’s Philadelphia economic-freedom argument, the September farm–city broadcast, labour mobilisation, Black political agency and Southern resistance, Farley’s organisation, the July postmaster procedures and June relief anti-coercion provisions. A selected Roosevelt/Republican comparison distinguishes shared concern with insecurity from different institutions. Fourteen further lessons and 42 explained tasks introduce selected 1935–1937 mechanisms: the June tax proposals and enacted individual and corporate schedules; NYA creation and student-aid limits; original rural power loans and allocations; conservation plans, payments and tenant safeguards; farm-acquisition and rehabilitation finance; and original low-rent housing access and finance. A selected tax-proposal/electrification-statute comparison distinguishes instruments and evidence of outcomes. Sixteen further lessons and 48 explained tasks introduce the 1937–1938 recession through industrial measures, fiscal cash flows, payroll collection, reserve requirements and bank responses, Treasury gold finance, inventories and prices, employment and hours, uneven business and household effects, the April recovery proposals, June work-relief and public-works authority, and an upturn with continuing weaknesses. A selected Roosevelt/Eccles comparison preserves the latter’s expressly personal standpoint. All three listed recession strands now have introductory teaching; full historical and assessment coverage remains unfinished. Ten further lessons and 30 explained tasks introduce the original 1938 Fair Labor Standards Act and its 1941 Darby validation: commercial coverage, phased wages and overtime, distinct exemptions, child-labour conditions, special certificates, enforcement and stronger applicable state standards. A selected statute/Court comparison distinguishes purpose, constitutional validity and measured outcomes. This is a selected labour-standards introduction, not complete beneficiary, exclusion or government-change coverage. Eleven further lessons and 33 explained tasks introduce family security under the original 1939 Social Security amendments: earlier monthly operation, worker qualification, wives, widows, children and parents, continuing employment exclusions, distinct state assistance, claims and hearings, pooled finance, actual January–June 1940 payment records and startup limits. A selected law/trustees comparison distinguishes legal rights, recorded delivery and unproven household adequacy. This is a selected family-security introduction, not complete beneficiary, exclusion, administrative or economic-recovery coverage. Enquiry 6.4 remains partial: fuller revenue and programme histories, political motives, deeper regional election and coalition histories, reception and causal evidence, fuller patronage and civil-service practice, programme implementation and unequal access and outcomes, deeper fiscal and bank series, industrial and household experiences, and government, recovery and experiences through 1941 still need further teaching and practice. The 1937 proposal is later follow-through within 6.3, not an event of the First 100 Days. Historical depth, wider authentic reading, subject-specialist review, complete source sets, full papers and calibrated marking remain unfinished. Selected source cards are labelled original paraphrases, not quotations or complete authentic documents. Existing 2026 lessons receive no automatic revised-year credit.
Teaching brief and original analytical model
The opening brief is original StudyForA teaching prose, not a quotation, contemporary document or historian’s extract. The Great Crash, the Great Depression and the New Deal, 1920–1941 is an American Paper 2 topic in 2027 and 2029, and the American Paper 1 topic in 2028. Paper 1 Historical sources is 75 minutes and 40 marks: answer both parts of one question using four sources totalling at most 600 words, with at least three written sources and up to one visual. Part (a) compares two sources for 15 marks; part (b) uses all four sources and contextual knowledge for a 25-mark judgement. Paper 2 Outline study is 105 minutes and 60 marks: answer two questions from one section and both parts of each, with a 10-mark causal explanation and a 20-mark argument. These lessons are introductory practice, not a complete assessment programme.
StudyForA teaching brief · Spring 1938: easier reserve conditions and the end of the inactive gold account
[1] Original analytical brief. Read the exact April ratios and distinguish available funds from their subsequent use. This is StudyForA teaching prose, not a contemporary document or a historian’s extract. Write before opening the model.
1. How would you assess the role of easier credit conditions in the revival?
Compare after trying
The spring measures mattered because they changed reserve conditions during severe weakness. The Board’s recorded April decision reduced specific requirements, while discontinuance of the Treasury’s inactive gold account and later external gold inflows affected other reserve sources. These mechanisms should be explained separately before their combined significance is assessed.
The original table is more precise than a single summary fraction. The central reserve city example reduces the requirement from 260 to 227.50 on the stated base, but country demand and time ratios changed by different proportions. A required minimum is not an amount automatically lent or transferred to households, and a decision date is not the same as its effective date.
Actual responses remain the central test. The Board described increased funds available for investment but also a yearly decline in loans to trade and industry, offset by investments. That does not make easier conditions irrelevant; it shows why demand, portfolios and costs must be examined. Compare those records with fiscal support, inventory adjustment and private investment to judge how credit conditions assisted the revival without claiming that one reserve decision guaranteed full recovery.
Why this response fits
- Connect dated evidence to a specific causal or social mechanism.
- Compare timing, measurement, access and plausible alternatives.
- This original analytical model is not a calibrated examination script or Cambridge grade.
Use the recorded Board decision
The Board’s policy record describes a unanimous decision on 15 April 1938, effective at the opening of business on 16 April. Required balances on net demand deposits became twenty-two and three-quarter percent for central reserve city banks, seventeen and a half for reserve city banks and twelve for country banks. The requirement on time deposits became five percent. These are selected original historical ratios, not current banking rules, and the decision and effective dates should remain separate.
Compare the classes rather than apply one fraction everywhere
For an invented central reserve city member bank with one thousand dollars of qualifying net demand deposits and no other relevant balance, the May 1937 requirement of twenty-six percent gives 260. The April 1938 ratio gives 227.50, a reduction of 32.50. That is 3.25 percentage points, or twelve and a half percent of the earlier required amount. Other categories changed differently: country demand ratios moved from fourteen to twelve and time ratios from six to five. A broad summary must not replace those exact category differences.
Keep Treasury action and gold movements distinct
The Board’s report also records spring discontinuance of the Treasury’s inactive gold account and substantial later gold inflows from abroad. Together with the reserve changes these affected funds available to banks, but they were different operations involving different institutions and transactions. A change in the required minimum can raise the calculated excess at an unchanged balance; release of Treasury funds and external gold flows concern other sources of actual reserves. None should be counted automatically as an equal government expenditure or household benefit.
Test whether easier conditions became recovery
The Board explained its April action as part of a concerted recovery effort and estimated greater excess reserves. It subsequently reported increased investment funds alongside falling bank loans to trade and industry over the year, with investments offsetting that fall. This is a warning against treating capacity as observed lending. Assess the contribution through reserves, loan demand, portfolios, costs and timing, while comparing inventory adjustment, fiscal support and investment. Easier conditions can contribute without guaranteeing immediate and equal recovery.
Sources for this lesson
- Cambridge History 9489 · 2027–2029 Version 2 · American enquiry 6.4 p. 29, AS rotation pp. 37–38 and assessment pp. 66–69
- Cambridge History 9489 · 2027–2029 update · Version 2 changes, April 2025
- Federal Reserve Board · Annual Report for 1938, transmitted 27 January 1939 · original pp.22–25 and 73–74; contemporary indicators, sectors and policy record
- Federal Reserve Board · Annual Report for 1936 · original pp.2,7,10–14 and reserve table p.11; policy aims and dates are contemporary claims
- Roosevelt · 14 April 1938 radio address · public diagnosis, three groups of recommendations and acknowledgement of unequal effects; proposals are not expenditure records
Pause and explain
Which explanation best fits this lesson?
Worked example
What does the selected central reserve city calculation show?
Show the worked solution
- Calculate twenty-six percent of one thousand as 260.
- Calculate twenty-two and three-quarter percent as 227.50.
- Compare the 32.50 difference and retain the bank and deposit assumptions.
Answer The requirement falls by 32.50, equal to 3.25 percentage points of the deposit base or twelve and a half percent of the old required amount. This is not an automatic 32.50 loan, a household payment or the identical proportional reduction in every bank category.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
Guided: What does the selected central reserve city calculation show?
Give me a hint
Distinguish percentage points from the percentage of the old requirement.
Compare my reasoning
- Calculate twenty-six percent of one thousand as 260.
- Calculate twenty-two and three-quarter percent as 227.50.
- Compare the 32.50 difference and retain the bank and deposit assumptions.
The requirement falls by 32.50, equal to 3.25 percentage points of the deposit base or twelve and a half percent of the old required amount. This is not an automatic 32.50 loan, a household payment or the identical proportional reduction in every bank category.
Look for these in your work
- Uses the relevant dated evidence
- Explains the mechanism and the specific limit
Independent: Why cannot one summary fraction be imposed on country demand and time deposits?
Give me a hint
Read the exact categories and old and new ratios.
Compare my reasoning
- Compare fourteen with twelve for country demand deposits.
- Compare six with five for time deposits.
- Keep their denominators separate from the central reserve city example.
The categories had different exact changes. A summary description does not make them all a twelve-and-a-half-percent cut or the same percentage-point change. Use the stated bank class and deposit base for any calculation and distinguish it from actual reserve or loan movements.
Look for these in your work
- Uses the relevant dated evidence
- Explains the mechanism and the specific limit
Transfer: How would you assess the role of easier credit conditions in the revival?
Give me a hint
Trace availability into decisions rather than assume a fixed lending effect.
Compare my reasoning
- Separate the Board decision, Treasury release and external flows.
- Compare reserves, loan demand, securities and finance costs.
- Weigh the timing with fiscal support, stocks and investment.
These changes provide plausible supportive mechanisms, but their actual influence needs portfolio, credit and expenditure evidence. The Board’s own account of falling industrial loans alongside increased investments prevents a simple equation between more available reserves and equal new business lending.
Look for these in your work
- Uses the relevant dated evidence
- Explains the mechanism and the specific limit
Common mistakes
- Confusing a proportional cut with a percentage-point change
- Treating reserve capacity, Treasury spending and business lending as identical
What can you explain now?
Which explanation best fits this lesson?
Compare with the explanation
Use the exact dated ratios and distinguish reserve availability from actual lending
The exact changes differ by category. The selected central reserve city reduction is 3.25 percentage points; reserve capacity, Treasury flows, loans and household expenditure remain different measures.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Which explanation best fits this lesson?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.