Question

Although the Reconstruction Finance Corporation loaned about $238 building-and-loan associations by early 1932, it failed to

a. exercise sufficient caution.
b. increase its lending sufficiently
c. raise prices on agricultural products.
d. reduce government spending.

Answer 1

The RFC primarily aided large banks, was not aligned with the immediate needs of the American people during the Great Depression, and the public disclosure of borrowing banks rendered the effectiveness of the RFC questionable.

Step-by-step explanation:

The Reconstruction Finance Corporation (RFC), established by President Hoover in 1932, provided financial support to banks, credit unions, and insurance companies with the aim of bolstering confidence in the financial system. Despite its efforts, the RFC was criticized for several reasons. Firstly, it primarily supported large banks, as they were the ones with sufficient collateral, leaving small and rural banks out of reach. Secondly, its assistance was not directed towards the immediate needs of the American populace who required food and jobs, and thus had little effect on increasing consumer purchasing power. Lastly, the disclosure of the institutions receiving help under the RFC made them appear financially weak, which could undermine the public's confidence.

Many Americans at the time needed more direct forms of assistance, which Hoover's policies failed to provide. Later, Roosevelt's New Deal included programs such as the Agricultural Adjustment Act (AAA), which aimed to raise prices on agricultural products by reducing production, addressing one of the problems the RFC didn't solve.