In March 1933 Congress passed the Emergency Banking Act, also known as the Emergency Banking Relief Act. The act—the first piece of legislation of President Franklin D. Roosevelt’s New Deal—was designed to restore confidence in the U.S. banking system. The act gave the president the power to examine banks closed by the banking holiday and to determine which banks could reopen. Roosevelt also had the power to take over banks that were in financial trouble. In addition, the Emergency Banking Act gave the president control over the gold and silver reserves in the country and made it illegal to export or accumulate large quantities of the precious metals. The act ended the panic caused by the failure of many banks and renewed Americans’ trust in the banking system. The Emergency Banking Act laid the groundwork for further banking reforms, most notably the creation of the Federal Deposit Insurance Corporation (FDIC). The act was President Roosevelt’s first step in changing the role of the government in its relation to business.
