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Franklin D Roosevelt's Use Of Economic Reform

520 Words3 Pages

When Franklin D. Roosevelt was elected into office, America was in the middle of an economic collapse and banking crisis. Millions of Americans were counting on him in order to help recover the United States from the effects of the economic collapse and the following Great Depression. The root cause of the economic collapse was stemmed from the Stock Market Crash of 1929, which was caused by people and banks over investing into the stock market. Once people began realizing the issues and instability with the stock market, they began selling all of their shares which led to the crash on Black Tuesday, with over 16 million shares being sold in one day . In order to help combat the economic issues that American was facing, Roosevelt began formulating …show more content…

One of Roosevelt’s first actions in office was the Emergency Banking Act which shut down all U.S banks, including the Federal Reserve, until they were found stable and financially sound . This immediately provided relief from the banking crisis because it prevented everyone from withdrawing all of their money from the banks and helped rebuild America’s trust in the banking system. Another emergency act set in place by the Roosevelt administration was the Glass-Steagall Banking Act, which helped make the separation between commercial and investment banking. Investment banks specialize in creating capital for companies whereas commercial banks provide basic services like making deposits and giving out loans. The act made sure that no overlap could happen between the two kinds of banks, which helped prevent banks from using mishandling their assets. Both of these acts created immediate relief from the banking crisis but also managed to help achieve Roosevelt’s goal of restructuring the economy due to some of the affects still being felt

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FDR’s first incentive was to make “The Emergency Banking Act which authorized the Federal Reserve Board to issue new banknotes and allow the reopening of banks that had adequate assets, and arranged for the reorganization of those that did not” (Source 2). The New Deal helped reopen banks and provided loans to banks that needed help, and closed banks that were too unstable to open (Source 4). Along with this, he made the Glass-Steagall Act that insured bank accounts through the FDIC’s (Federal Deposit Insurance Corporation) main purpose is to insure deposits, examine and supervise financial institutions for safety, soundness, and consumer protection, make large and complex financial institutions resolvable (Source 5).

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During his first term in office, he took on programs and policies to relieve the effects of the depression, collectively known as the New Deal. During this time, many social policies were passed to specifically aid the working class. Some of the acts Roosevelt implemented were the Glass-Steagall Act, the Federal Deposit Insurance, the Securities and Exchange Commission, the Home Owners Loan Corporation, the Works Progress Administration, the National Labor Relation Board, and Social Security. All of these acts were put in place to aid the working class, and prevent the severity of future depressions. The outcome of the New Deal gave a new role for the federal government, which is the partial responsibility for the people’s financial

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It protected bank deposits and helped to reform the banking and economic system. During Franklin D. Roosevelt's First Inaugural Address on March 4, 1933, he states, “It can be helped by realistically preventing the tragedy of the growing loss through foreclosure of our small homes and our farms.” As well as, “We must act and act quickly.'' Franklin Roosevelt is saying that the role of the government needs to be changed in order to prevent future tragedies. If the people didn't change the role of the government everything would have gone even more downhill then it already was very fast.

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