page_title: History of the United States (1918–1945)
section_title: "Bank holiday" and Emergency Banking Act
hierarchical_section_title: History of the United States (1918–1945) / Great Depression / "Bank holiday" and Emergency Banking Act
caption_attribution_description: English: Public domain picture from FDR Library
context_page_description: The history of the United States from 1918 through 1945 covers the post-World War I era, the Great Depression, and World War II. After World War I, the U.S. rejected the Treaty of Versailles and did not join the League of Nations.
  In 1920, the manufacture, sale, import and export of alcohol was prohibited by an amendment to the United States Constitution. Possession of liquor, and drinking it, was never illegal. The overall level of ab alcohol consumption did go down, however, state and local governments avoided aggressive enforcement. The federal government was overwhelmed with cases, so that bootlegging and speakeasies flourished in every city, and well-organized criminal gangs exploded in numbers, finances, power, and influence on city politics.
  A few local domestic-terrorist attacks from radicals, like the 1920 Wall Street Bombing and the 1919 United States anarchist bombings sparked the first Red Scare. Culture wars between fundamentalist Christians and modernists became more intense, as demonstrated by prohibition, the KKK, and the highly publicized Scopes Trial.
  The nation enjoyed a period of sustained prosperity, 1921–1929.
context_section_description: On March 6, two days after taking office, Roosevelt issued a proclamation closing all American banks for four days until Congress could meet in a special session. Ordinarily, such an action would cause widespread panic. But the action created a general sense of relief. First, many states had already closed down the banks before March 6. Second, Roosevelt astutely and euphemistically described it as a "bank holiday." And third, the action demonstrated that the federal government was stepping in to stop the alarming pattern of bank failures.
  Three days later, President Roosevelt sent to Congress the Emergency Banking Act, a generally conservative bill, drafted in large part by holdovers from the Hoover administration, designed primarily to protect large banks from being dragged down by the failing smaller ones. The bill provided for United States Treasury Department inspection of all banks before they would be allowed to reopen, for federal assistance to tottering large institutions, and for a thorough reorganization of those in greatest difficulty. A confused and frightened Congress passed the bill within four hours of its introduction. Three-quarters of the banks in the Federal Reserve System reopened within the next three days, and $1 billion in hoarded currency and gold flowed back into them within a month. The immediate banking crisis was over. The Glass–Steagall Act established various provisions designed to prevent another Great Depression from happening again. These included separating investment from savings and loan banks and forbidding the purchase of stock with no money down. Roosevelt also removed the currency of the United States from the gold standard, which was widely blamed for limiting the money supply and causing deflation, although the silver standard remained until 1971. Private ownership of gold bullion and certificates was banned and would remain so until 1975.
caption: Roosevelt's ebullient public personality, conveyed through his declaration that "the only thing we have to fear is fear itself" and his "fireside chats" on the radio did a great deal to help restore the nation's confidence.
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