Franklin D. Roosevelt

Start Free Trial

Student Question

What were the main points of Roosevelt's bank holiday?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

Upon taking office, FDR knew that his biggest challenge was to try and get the shattered economy back on its feet. Among other things, this would mean fixing the banking system, which was in a disastrous state after nearly four years of the Great Depression. Only two days after he was sworn in, Roosevelt announced a Bank Holiday, shutting down the entire American banking system. This was in response to a month-long run on the banks, in which millions of customers removed their savings, greatly depleting crucial financial resources that could've been used to loan money to businesses to help them create jobs.

Three days later, Congress passed the Emergency Banking Act. This authorized Roosevelt to encourage the Federal Reserve to create de facto 100% deposit insurance in reopened banks. When the banks subsequently reopened after their brief holiday, many who had previously queued around the block to remove their savings now did so to put back their money, safe in the knowledge that their hard-earned cash was now completely protected by deposit insurance.

The Bank Holiday and the Emergency Banking Act combined to reestablish the credibility and stability of the American banking system in the eyes of savers and investors alike. This growing confidence was reflected in the first day of trading on Wall Street after the Bank Holiday ended, in which share prices recorded their largest ever one-day percentage increase.

See eNotes Ad-Free

Start your 48-hour free trial to get access to more than 30,000 additional guides and more than 350,000 Homework Help questions answered by our experts.

Get 48 Hours Free Access
Approved by eNotes Editorial