__NOTOC__ The Emergency Banking Act (EBA) (the official title of which was the Emergency Banking Relief Act), Public Law 73-1, 48 Stat. 1 (March 9, 1933), was an act passed by the

United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...

in March 1933 in an attempt to stabilize the

banking system A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Becaus ...

Bank holiday

Beginning on February 14, 1933,

Michigan Michigan () is a U.S. state, state in the Great Lakes region, Great Lakes region of the Upper Midwest, upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the List of U.S. states and ...

, an industrial state that had been hit particularly hard by the Great Depression in the United States, declared a four-day bank holiday. Fears of other bank closures spread from state to state as people rushed to withdraw their deposits while they still could do so. Within weeks, all other states held their own bank holidays in an attempt to stem the bank runs, with

Delaware Delaware ( ) is a state in the Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes its name from the adjacent Del ...

becoming the 48th and last state to close its banks on March 4. Following his inauguration on March 4, 1933, President Franklin Roosevelt set out to rebuild confidence in the nation's banking system and to stabilize America's banking system. On March 6, he declared a four-day ''national'' banking holiday that kept all banks shut until Congress could act. During this time, the federal government would inspect all banks, re-open those that were sufficiently solvent, re-organize those that could be saved, and close those that were beyond repair.

Passage of the Emergency Banking Act

A draft law, prepared by the Treasury staff during

Herbert Hoover Herbert Clark Hoover (August 10, 1874 – October 20, 1964) was an American politician who served as the 31st president of the United States from 1929 to 1933 and a member of the Republican Party, holding office during the onset of the Gr ...

's administration, was passed on March 9, 1933. The new law allowed the twelve Federal Reserve Banks to issue additional currency on good assets so that banks that reopened would be able to meet every legitimate call. The Emergency Banking Act, an amendment to the

Trading with the Enemy Act of 1917 The Trading with the Enemy Act (TWEA) of 1917 (, codified at and et seq.) is a United States federal law, enacted on October 6, 1917, that gives the President of the United States the power to oversee or restrict any and all trade between the ...

, was introduced on March 9, 1933, to a joint session of Congress, and was passed the same evening amid an atmosphere of chaos and uncertainty as over 100 new Democratic members of Congress swept into power determined to take radical steps to address banking failures and other economic malaise. The EBA was one of President Roosevelt's first projects in the first 100 days of his presidency. The sense of urgency was such that the act was passed with only a single copy available on the floor of the House of Representatives and legislators voted on it after the bill was read aloud to them by Chairman of the House Banking Committee

Henry Steagall Henry Bascom Steagall (May 19, 1873 – November 22, 1943) was a United States representative from Alabama. He was chairman of the Committee on Banking and Currency and in 1933, he co-sponsored the Glass–Steagall Act with Carter Glass, an ac ...

. Copies were made available to senators as the bill was being proposed in the Senate, after it had passed in the House. According to William L. Silber: "The Emergency Banking Act of 1933, passed by Congress on March 9, 1933, three days after FDR declared a nationwide bank holiday, combined with the Federal Reserve's commitment to supply unlimited amounts of currency to reopened banks, created 100 percent deposit insurance". On March 12, the evening before banks began to reopen, FDR gave his first fireside chat, a national radio address explaining the alterations made by the federal government on the banking industry. Due to confidence in FDR and the proposed alterations, Americans returned $1 billion to bank vaults in the following week.

Public reaction

Much to everyone's relief, when the institutions reopened for business on March 13, 1933, depositors stood in line to return their stashed cash to neighborhood banks. Within two weeks, Americans had redeposited more than half of the currency that they had squirreled away before the bank suspension. The stock market registered its approval as well. On March 15, 1933, the first day of stock trading after the extended closure of Wall Street, the Dow Jones Industrial Average gaining 8.26 points to close at 62.10; a gain of 15.34%. , the gain still stands as the largest one-day percentage price increase ever. In hindsight, the nationwide Bank Holiday and the Emergency Banking Act of March 1933 are seen to have ended the bank runs that plagued the Great Depression.

Hoarding gold becomes a crime

One month later, on April 5, 1933, President Roosevelt signed

Executive Order 6102 Executive Order 6102 is an executive order signed on April 5, 1933, by US President Franklin D. Roosevelt "forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States." The executive order w ...

criminalizing the possession of monetary gold by any individual, partnership, association or corporation and Congress passed a similar resolution in June 1933.

Gold Repeal Joint Resolution Gold is a chemical element with the Symbol (chemistry), symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a Brightness, bright, slightly orange-yellow, dense, s ...

, 48 Stat. 112, Chapter 48, H.J.Res. 192, enacted June 5, 1933

1933 Banking Act

This act was a temporary response to a major problem. The

1933 Banking Act The Banking Act of 1933 () was a statute enacted by the United States Congress that established the Federal Deposit Insurance Corporation (FDIC) and imposed various other banking reforms. The entire law is often referred to as the Glass–Stea ...

passed later that year presented elements of longer-term response, including the formation of the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cr ...

(FDIC).

References

External links

Full Text of the Emergency Banking ActDocuments on the Banking Emergency of 1933
available on FRASER {{authority control 1933 in law 1933 in the United States United States federal banking legislation 73rd United States Congress 1933 in economics ko:뉴딜 정책#은행과 금융 개혁