The most immediate challenge President Roosevelt encountered upon his inauguration on the 4th of March 1933 was the banking crisis in which the banking sector had undergone a meltdown leading to the closure of approximately 11,000 banks. Consequently, people lost their life savings overnight, causing widespread fear and panic among depositors who quickly rushed to salvage their funds by withdrawing from the banks. The banks depleted their reserves within a short time and could not even reimburse the depositors what they claimed. Businesses had to close down for lack of money to operate on, and it is estimated that 25% of Americans lost their jobs, further worsening the economic situation.
The American populace had lost faith in the government and questioned its capacity to make sound economic and financial decisions. This was another challenge that Roosevelt had to battle with. He had to come up with a means of instilling lost confidence among the citizens. Other challenges include the farm crisis, national debt and the collapse of international trade, all of which resulted from the Depression.
Even though the social, political and economic situation was desperate, President Roosevelt through his New Deal proposed policies and strategies that would resuscitate the American economy whilst protecting the citizens from adverse effects such as those experienced during the depression.
The immediate challenge facing President Franklin Roosevelt when he took office in March of 1933 (in those days, the new president’s term started in March, not January as it does today) was the generally miserable economic situation. First, the unemployment rate was terribly high. Next, there was a general lack of confidence in the economy. This led to businesses being unwilling to hire or invest. There was, of course, a great deal of poverty in the United States at the time as well. This was something that needed (in some people’s minds) to be addressed by the federal government. It also added to the general pessimism about the economy in which bank closures hit the general population with panic and losses.
Roosevelt, then, was faced with an absolutely horrible economic climate. The economy was his major challenge.
When President Roosevelt took office in March 1933, he faced several challenges. The immediate challenge with which he dealt was with the banks. Banks failed when people tried to get their money out of their accounts. Thus, President Roosevelt ordered a banking holiday where every bank in the country closed. The Emergency Banking Act was passed. The federal government would inspect the banks and only the strongest banks were allowed to reopen. Most banks were allowed to reopen after the bank holiday ended. Before the banks reopened, President Roosevelt talked to the nation about our banking system in one of his Fireside Chats. He reassured Americans that the banks were in good shape and that the people didn’t need to fear that the banks would fail again.
President Roosevelt also wanted to reform the banking industry. The Glass-Steagall Act prevented commercial banks from investing in the stock market. Glass-Steagall also provided insurance for deposit accounts with the creation of the Federal Deposit Insurance Corporation. This would reassure investors that their money was safe in their bank accounts.
Another immediate issue President Roosevelt had to face was the high rate of unemployment. About 25% of the population was unemployed. The Works Progress Administration was created to help employ people. People were put to work on construction projects. The Civilian Conservation Corps was created to provide work for unemployed young men. They would go to the west to work on conservation projects. President Roosevelt knew he had to get people back to work.
President Roosevelt also needed to reform the stock market. The Securities Act of 1933 was passed to try to accomplish this. This law required companies to give accurate information to investors. It also created the Security and Exchange Commission to monitor the stock market and prevent fraud.
President Roosevelt faced many challenges when he took office. These programs were designed to deal with some of the challenges he faced.