Emergency Banking Act

Faced with this economic decline, came other factors that included unemployment and lack of confidence in banks (Church 100). Restoring faith in banks across the United States was one goal for FDR. As depositors lost confidence in the national bank, over $1,000,000,000 was taken out in cash and hoarded (Boardman 64). The Emergency Banking Act closed all banks for four straight days, and put them under inspection by the national government (Schraff 52). Banks were put under meticulous scrutiny by the Treasury Department. The U.S. government demanded that all hoarded gold be returned and all of the $1,000,000,000 was deposited (Boardman 65). Banks were allowed to open only under a strict system of licensing (Schraff 52). Another banking program was The Federal Deposit Insurance Corporation, or FDIC, which was created by Congress to guarantee deposits up to $5000 (Gupta). In the case

Two days after taking office, Roosevelt issued a proclamation closing all American banks for four days until Congress could meet in special session to consider banking-reform legislation. So great was the panic about bank failures that the "bank holiday," as the president euphemistically described it, created a general sense of relief. Three days later, Roosevelt sent to Congress the Emergency Banking Act, a generally conservative bill designed primarily to protect the larger banks from being dragged down by the weakness of smaller ones. The bill provided for Treasury Department inspection of all banks before they would be allowed to reopen, for federal assistance to some troubled institutions, and for a thorough reorganization of those in the greatest difficulty.

The real reason for the Emergency Banking Relief Act (1933), the Fireside Chats, and the Glass-Steagall Banking Reform Act (1933) was to calm down the public from all of the banking failures and chaos occurring and also to stabilize the banking systems.

After Roosevelt was elected president, one of his first actions was to restore the banking system. The banking crisis can be attributed to risky loans made by the banks following World War One. After the stock market crashed, many Americans rushed to take all of their money out of the banks. The people were gripped with the fear of losing their money, so this forced the banks to shut down. In his inaugural address, Roosevelt “vowed to use federal

Both era’s had also decided to create a new banking system in order to help the economy and thus the public. Wilson created the Federal Reserve Act/Board which appointed twelve regional reserve districts each with its own central bank. The board was able to create paper money backed by commercial paper in order to make sure the amount of money in circulation could be increased as needed. Franklin Roosevelt similarly established the Glass Steagal Banking Reform Act which spawned the Federal Deposit Insurance Corporation which insured that there were individual deposits up to $5000. The act had ended the bank failures and saved the money of many unemployed. The two era’s had always attempted to assist the farmers. Wilson made credit available to farmers at low rates of interest with the Federal Farm Loan Act of 1916, as well as authorized loans on the security of staple crops with the Warehouse Act of 1916. The New Deal had created the Agricultural Adjustment Act of 1933 which made millions of dollars available to help farmers meet their

Finally, in 1932 when President Franklin Delano Roosevelt was elected president, he started the New Deal. The New Deal was, well, a new deal. He promised the citizens of America a better place to live in, and a place that the Great Depression ceased to exist. When he became president, Roosevelt immediately started working on delivering the New Deal. During his first 100 days in the office, Roosevelt a never-ending stream of bills were passed to end poverty, to hand out new jobs, and to speed the economic recovery.

Roosevelt in 1933. In this speech he explained to the average citizen what happened with the banking crisis, why it happened, and how the government was going to fix it. He explained in the commoner’s vernacular the system in which banks invest a large majority of money people deposit and keep only a small amount in currency. It is normally plentiful for the needs of the community, but when people had started distrusting the banks and rushed to get their money out, the banks weren’t able to meet the rushed demand. By the 3rd of March hardly any banks were open for business and to explain how the government had stopped the problem from escalating President Roosevelt commented “It was then that I issued the proclamation providing for the national bank holiday, and this was the first step in the Government’s reconstruction of our financial and economic fabric.” (Roosevelt) This shows how they had began to fix the problem, and tells why all of the banks were closed. The second step in repairing the economy was to extend the bank holiday which was to be lifted gradually as different bank facilities were being rehabilitated. The bank holiday was put into effect because it provided the time that was needed to for banks to be able to supply needed currency. Roosevelt reassured people that none of the banks were worse off than they were

When Franklin D. Roosevelt was elected to his first term as president of the United States in 1932, America was in a severe depression. When Franklin Roosevelt took office in March of 1933, President Hoover handed the problems of the Great Depression over to Roosevelt. Upon taking office, Franklin Roosevelt issued a bank holiday which forced all banks to close from March 6 to March 10 while he met with Congress to pass the Emergency Banking Act to allow banks with enough money to reopen and for the Federal Government to help the banks that did not have enough money (A Bank). This act was a prerequisite to many other programs that would develop under Franklin D. Roosevelt’s administration. Under

The credit system of the country had ceased to operate, and thousands of firms went into bankruptcy (Born...,.12). Something had to be done that would provide for a flexible amount of currency as well as provide cohesion between banks across the United States. (Hepburn, 399) This knight in shining armor, as described in the story of the bank run, was the Federal Reserve. The Federal Reserve Act of 1913 helped to establish banks as a united force working for the people instead of independent agencies working against each other. By providing a flexible amount of currency, banks did not have to hoard their money in fear of a bank run. Because of this, there was no competitive edge to see who could keep the most currency on hand and a more expansionary economy was possible.

People lost their life’s savings, their homes and farms. In his first broadcast on the radio Roosevelt speech, declared that “This great Nation will endure as it has endured , we will revive and will prosper the only thing we have to fear is fear itself”. Heeding the nation to call for action, and action now he promise to exercise broad executive power to wage a war against the emergency. The first step was to save the banks. During his first hundred days as president, FDR ordered all banks to closed to stop people from withdrawing money from the banks, until congress meeting into special session. On March 9 congress passed Roosevelt’s Emergency Banking Act, in which recognized the banks and closed the ones there were insolvent. Banks would re open immediately with government support, and the ones that were insolvent would be handed over to federal conservators who would guide them to solvency. The President urged Americans to put their savings back to the bank, when banks re open the next day, deposits exceed withdrawals. Saving the banks and financial markets meant little if human suffering continue. One work relief program proposed by FDR was the Civilian Conservation Corps (CCC). This program consist to employed hundreds of thousands of young men from relief rolls, and sent them into the woods and fields to plant trees, build parks and fight soil erosion. During its ten years put more than three million young men with jobs. The need to alleviate starvation led Roosevelt to proposed a new giveaway program. The Federal Emergency Relief Administration (FERA) which consist in gave grants to the states to operate relief programs.The main goal of the program was to alleviate unemployment by creating new unskilled jobs in local and state government. The Social Security Act, and unemployment insurance were incorporated in a separate piece of legislation. The Social Security Act sought

The Glass Steagall Act was passed on 1933, which is also known as The Banking Act to tighten regulation on the way banks did their business. This act was written as an emergency measure when about 5,000 banks failed during the Great Depression. Banks mostly failed because of the way they would invest with money. The act prohibits banks from investing money on investments that turn out to be risky. Banks could no longer sell securities or bonds. The act also created Federal Deposit Insurance Corporation (FDIC) to protect the deposits of individuals, which is still used to this date. The FDIC in this era insures your deposits in your bank up to $250,000. This gave the public confidence again to deposit their money in the bank. In 1933

With troubling incidents like the stock market crash of 1929, reform was highly necessary to never have a relapse of these events in the future. Historian Allan Nevins says that the New Deal was the epiphany the government needed to possess greater responsibility for the economic welfare of its citizens. It made the government initiate attempts to reorganize the economic turmoil and restore the people’s faith in banking system which was successful with the Emergency Banking Relief Act and Bank Holiday. Congress allotted for the Treasury Department to weed out the unfit banks and reopen the stable banks, significantly lowering bank failures. Especially with measures like the Glass-Steagall Act it offered assurance and insurance to citizens with a compensation of 5,000 dollars in the case of an inconvenience of their bank and since the creation of the FDIC there were no incidents in which a depositor has lost its insured funds. Many of the legislations passed under the Reform point remained for fifty years to prove the reliability and effectiveness like the Securities and Exchange Commission that regulated stock market activities and prevented another large scale crash to occur, keeping the economy at bay. And the Social Security Act of 1935 to reinforce the sensation of

The banking industry as a whole after the stock market crashed was going bankrupt due to not being able to carry the “bad debt” that was created from using customer money to buy stock. Because the banks were out of money, they were unable to cover customer withdrawals from their bank, causing many bank customers to lose all of their savings. With the uncertainty of the future of the banking industry, many people withdrew all of their savings, which caused more than 9,000 banks to close their doors and go out of business (Kelly). Due to the effects of the Great Depression, and the collapse of the banking industry, the government created regulations to prevent similar failure in the future. For Example, the SEC, (or Securities Exchange Commission), which regulates the sell and trade of stocks, bonds and other investments was created as a result of The Great Depression. The FDIC (or Federal Deposit Insurance Corporation), was created to insure bank accounts so that that the consumer would be protected if the bank were to go out of business (Kelly). The Great Depression's effect on the banking industry led to many useful changes to the banking industry and helped restore confidence in banks in the American people.

The day after his inauguration he right away took decisive action by proclaiming a Bank Holiday and on March 9th Congress passes Roosevelt’s Emergency Banking Act, putting brakes on the continuing of collapsing banks. By the the end of the month almost 3 quarters of them had reopened. For the next eight years, the government created a series of projects and programs, known as the New Deal. The New Deal had the overarching goal of restoring dignity and prosperity to many people, and change the federal government. FDR’s bold initiatives likewise set the stage for the growth of American power to superpower

To help recover the nation, the New Deal was designed to bring the economy back to its pre-depression levels. It achieved that by deficit spending, dropping the gold standard, and increasing foreign trade. To reform the nation, the New Deal made it possible for the economy to be stabilized. The reform measures that President Roosevelt proposed included the NIRA or the National Industrial Recovery Act, the regulation of Wall Street by the SEA or Security Exchange Act, the AAA or Agricultural Adjustment Act that was intended for farm programs, the FDIC or the Federal Deposit Insurance Corporation that dealt with insurance for bank deposits, as well as the Wagner Act, which dealt with labor-management relations.