The purpose of the Emergency Banking Act of 1933 was to stabilize the banking system in the United States following the Great Depression. It was passed by Congress on March 9, 1933, shortly after President Franklin Roosevelt took office.Continue Reading
Four days before the passage of the Emergency Banking Act of 1933, President Roosevelt called for a four-day banking holiday that completely shut down the banking system in the United States. This included shutting down the Federal Reserve. During this time, the banking systems were inspected to ensure that each was financially secure, as legislation in the Emergency Banking Act did not allow for a bank to be reopened until it was found to be financially secure by the examiners.
The Emergency Banking Act also gave 12 Federal Reserve Banks the ability to issue additional currency based on good assets. New currency was then sent to all parts of the United States by the Bureau of Engraving and Printing.
There were five different sections in the Emergency Banking Act. Title I focused on outlining the authority of the president during a bank crisis. Title II gave power to the comptroller of the currency in restricting the operations of a bank that had impaired assets. Title III gave the secretary of the treasury the ability to determine if a bank needed additional funds in order to operate. Title IV gave the Federal Reserve the power to issue emergency currency, while Title V made the act effective.Learn more about Law