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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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