Bank Holiday

The Bank Holiday

                                           by Collette
  

U.S. banks had been closing by the hundreds since 1929.  Banks sometimes closed if bad investments had been made, and that triggered “a run” on the banks. If someone heard a bank might be closing its doors, customers immediately wanted to remove their deposits and savings. All it took was a rumor a bank might not be solvent to create panic and start a run.

One of the first acts of the newly elected President Franklin Delano Roosevelt after entering office was the Bank Holiday of 1933. All banks in the United States were officially closed for four days to allow bank examiners to determine if each bank carried enough assets. They could not reopen until they proved they met the needs of their customers and the criteria of the federal government. Very few banks closed after the Emergency Banking Act was passed. Later the FDIC would protect funds even more by guaranteeing $2,500 of a person’s saving was insured against the failure of the bank. The amount increased over the years and provided Americans with a sound banking system.

The following sites might be helpful for further research:

http://en.wikipedia.org/wiki/Emergency_Banking_Act
http://www.ushistory.org/us/49a.asp
http://ncpedia.org/bank-holiday-1933
http://depts.washington.edu/depress/bank_crisis_1933.shtml