ipl-logo

The Glass-Steagall Banking Reform Act Of 1933

974 Words4 Pages

The year is 1929. The Stock Exchange is failing and panic rises in the American people. Left and right people are pulling every dollar and cent out of their bank accounts, as the banks begin to close one by one. Commercial and investment banks, whose affairs were intertwined with one another, collapse sending the economy into a downward spiral. This economic crisis needed to be reformed, and the Glass-Steagall Banking Reform Act was the light at the end of the tunnel. The Glass-Steagall Banking Reform Act of 1933 was successful because of its ability to separate commercial banks and investment banks, its creation of the FDIC, and its ability to keep the economy from crashing again despite its 1999 repeal.
The Glass-Steagall Banking Reform Act …show more content…

In the peak of the Great Depression, millions of Americans lost all of their money due to bank runs that used up all of the money in the reserves. Prior to the Depression, there was nothing to insure that your money was truly protected in your bank account. The provision to create an organization that insures all deposits in national banks kept our economy stable. Frontrunner of the Act, Henry Steagall, was insistent upon putting the provision into the act despite its controversial nature. Steagall advocated for this provision with small, rural banks in mind but was opposed by large banks because they believed that they would “end up subsidizing small banks” (Maues). The public began to agree with Steagall because the People wanted to oppose the big banks “partly in the hope of recovering some of the losses and partly because many blamed Wall Street and big bankers for the Depression” (Maues). The response from the public swayed a doubtful FDR from vetoing and the provision for the FDIC was put into effect. The purpose of the FDIC was to give deposit insurance to bank customers which helped the public trust the banking system again. The FDIC uses a “pool of money collected from banks” in order to protect the deposits of their constituents (Maues). In 1933 the FDIC protected all deposits with a sum of $150 million (Mullens) which …show more content…

Throughout the twentieth century this act has kept the American economy above water and has averted potential crises like in the 1980s economic scare, but in 1999, despite its success, most of the Act was repealed by the Clinton Administration (What Was Wrong with the Glass-Steagall Act,

Show More
Related

The FDIC: The Great Depression

245 Words | 1 Pages

The FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. The FDIC was a provision of the Glass-Steagall Act. During the nine year period from 1921-1929 more than 600 banks failed each year. The failed banks were small banks operating in the rural suburban areas and held the deposits of mostly farmers and blue collar folks. When banks fold and continue to do so, people will start to worry about their money in any bank.

Read More

Two Examples Of Fdr Fireside Chat

901 Words | 4 Pages

In the first couple paragraphs of FDR's speech he explains what happens when you deposit money into a bank. He tells the citizens that when you deposit money into and bank the money is not just kept in a vault the money is invested into the economy or things such as loans. Then FDR talked about how the market crashed and that was because the money that was deposited was invested into many different forms that when the large amount of people rushed to the bank to get the little bit of the deposited money that was actually kept in currency the banks could give out any money and ran out. ALso he explained that when all the banks had to cloths it was known as a bank holiday because tons and tons of banks had to close their doors on the same day. The congress granted the president more power to stop the banking crisis and it also allowed him to create a plan to fix banking and the economy.

Read More

Franklin Rossevelt Research Paper Outline

819 Words | 4 Pages

Saved failing banks- During the Great Depression, many people were withdrawing their money from banks and keeping it at home as they were scared that banks will fail and they will lose all their money. Rossevelt called a special session of Congress the day after the inauguration and declared a four-day banking holiday that shut down the banking system, including the Federal Reserve. This action was followed a few days later by the passage of the Emergency Banking Act, which was intended to restore Americans’ confidence in banks when they reopened. 2.

Read More

Dust Bowl Dbq

1117 Words | 5 Pages

During the 1920’s there was a sense of a booming economy leading more people to buy on credit with the economy being stable. However after the stock market crash droves of people rushed to withdraw their money. This caused many problems for the banks as they had invested money into the stock market themselves, many closed down leaving millions questioning where their money had gone. This is the main reason people viewed banks as untrustworthy and feared giving them there hard earned money. This is why President Roosevelt created programs such as the FDIC to create a trust between the people and the government.

Read More

How Did President Hoover Cause The Great Depression

294 Words | 2 Pages

The government could not really do a lot to help the banks from crashing because the economy was not regulated as much however President Hoover introduced

Read More

How Successful Was The New Deal Dbq

779 Words | 4 Pages

The Glass-Steagall Act helped with future bank failures, it “ Created federally insured bank deposit ( $2500 per investor at first) to prevent bank failures.(Doc D)” Today we still have this and it has helped many people over the years. The New Deal also met its goal of the Securities and Exchange Commission program or SEC, this helped and still helps regulate the stock market and restrict margin buying(Doc D). The USA still has this program however it has been adapted over time to help the stock market of today. The last, but important thing the New Deal did was help ease the burden of debt and mortgage.

Read More

Dbq Essay On Government Control

971 Words | 4 Pages

The source is stating that a country is at it’s best when the individual is allowed to express themselves in a way that is free from government control. In doing this it allows for a society that is reflective of the individual rather than the government. When society is based on the individual, government interference will be lessened because the need for it will no longer be prevalent to society. This source is for classical liberalism and reflects the ideologies of philosopher Adam Smith who was strictly for individual benefit and limited government control. Based on historical events it is wrong to have lessened government control because it can lead to civil unrest and lack of authority.

Read More

New Deal Initiatives

1251 Words | 6 Pages

This new policy sit well with the American public because it gave them security blanket once again to believe in the banks due to having the promise by the federal government of repaying their money that could be lost. Along with this new policies created with the New Deal, came proponents for economic

Read More

Essay On Andrew Jackson

1027 Words | 5 Pages

The presidential election of 1836 is approaching. Besides heating discussions of the nominees such as Willie Person Mangum, we should also look back into Andrew Jackson’s presidency and ask ourselves: what type of president he is? Andrew Jackson was elected as the President of the United States in 1829 and was re-elected in 1834. Born in poverty and became a successful self-made man, Jackson won the popular vote with a lie that he would be a “President of the People” and a “Spokesman of the Common Man”; being a military hero at the Battle of New Orleans, he failed his obligation to protect the 12 million people in America, but instead trying to turn the whole country into a place where the people were his soldiers and he would be the Commander

Read More

How Did The New Deal Lead Up To The Great Depression

632 Words | 3 Pages

In the early years of the Great Depression, Americans distrusted the banks since “Black Tuesday” that caused their laborious life. In some cases, not only their saving disappeared in vain, they fell into the depth of debts because of the investments with credits. FDR and his Hundred Days Congress were responsible for relief, recovery, and reform over banking issues. They steadily reopened the banks that have been closed since the declaration of a national banking holiday.

Read More

Banking During The Great Depression Essay

323 Words | 2 Pages

Furthermore, many depositors would have become worried about the safety of their money, leading to a run on the bank. To make ends

Read More

How Did The Great Depression Affect The Economy

1559 Words | 7 Pages

The United States Gross Domestic Product (GDP) declined by nearly 30% between 1929 and 1933, while industrial production fell by 47% (What is the difference between a recession and a depression?, 2007). Thousands of banks failed, erasing the savings of American civilians. The extent of the crisis was further highlighted through Marriner S. Eccles, Chairman of the Federal Reserve, to Congress in 1933 stating “Our banking system was in collapse. The public had lost faith in financial institutions” (Marriner Eccles, n.d.). The collapse of the banking system was at the forefront of economic impact, these bank failures not only disintegrated public confidence but also caused a severe contraction in monetary supply, exacerbating the economic downturn.

Read More

Bretton Woods Pact Pros And Cons

516 Words | 3 Pages

After the Great Depression, the Bretton Woods pact was not the only innovation, in fact in the US in 1933 had been approved the new legislation for banking, the Glass-Steagall act: the division between the commercial and investment banks. In order to alleviate the problem born in 1929 after the Stock Market Crash there were two acts entering into force. The first one, in 1932, made the Federal Reserve more powerful in control of the money supply. The second wanted to make safer the banking system. In fact after this date banks cannot be commercial and investment banks at the same time, also the insurance services cannot be supply by banks.

Read More

Fdr New Deal Essay

831 Words | 4 Pages

The FDIC helped the majority of the American citizens regain confidence and control, while the Indian reorganization act helped a minority that had, for the time being, learned to live with poverty. Both were the works of a time that brought the nation out of the greatest economic slide it has ever seen. Though it had its critics and doubters, the new deal proved to be an effective and efficient way to recover from the crash of 1929 and the great depression but it was simply not enough to cure the economy of its problems. The economy was still nowhere near where it was in 1929 and unemployment was still a growing

Read More

What Caused The Great Depression Essay

1493 Words | 6 Pages

These areas are conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices; supervising and regulating banks and other important financial institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers; maintaining the stability of the financial system and containing systemic risk that may arise in financial markets; and providing certain financial services to the U.S. government, U.S. financial institutions, and foreign official institutions, and playing a major role in operating and overseeing the nation's payments systems. The Federal Reserve was created because of events such as the panic of 1907. The panic of 1907 was very similar to the

Read More

More about The Glass-Steagall Banking Reform Act Of 1933

Related Topics

Open Document