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What immediate challenges did Franklin Roosevelt face in March 1933?
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The most immediate challenge facing Roosevelt in 1933 was the collapse of the US banking system which he had to try and repair. Banks are the foundation of a capitalist system, and Roosevelt knew that unless he could restore confidence to the banking system, the economic crisis would only get much worse. To this end, Roosevelt signed into law the Emergency Banking Act, which restored people's trust in the banks by guaranteeing deposits.
Ever since the onset of the Great Depression banks had been failing at an alarming rate. Among other things, this meant that there was less capital available for businesses to grow or invest with. In turn, this had an inevitable negative effect on the unemployment rate. Without the ability to access capital, businesses had to cut back on costs, and especially employment costs, leading to a massive growth in unemployment.
As banks continued to fail in alarming numbers, customers started to panic. Millions rushed to withdraw their money, depleting the already low level of available capital reserves in the economy. On taking office, Roosevelt knew that in order to save capitalism he had to intervene and prevent the banking system from going under.
Immediately after taking office FDR declared a four-day bank holiday in order to prevent people from rushing to get their money out of the banks. A few...
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days later, the new President signed into law the Emergency Banking Act, which was designed to restore confidence in the US banking system.
Under the new legislation, banks would have their books examined to see if they were financially viable. Once the banks reopened the Federal Reserve would effectively guarantee 100% of all deposits. This measure, along with all the others in the Emergency Banking Act, was designed to restore confidence in the system.
And it worked. When the banks reopened after the emergency holiday, queues of people waited outside to put their money back after only recently withdrawing it.
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.
References
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.