Emergency Banking Act

The Emergency Banking Act (the official title of which was the Emergency Banking Relief Act), Public Law 1, 48 Stat. 1 (March 9, 1933), was an act passed by the United States Congress in 1933 in an attempt to stabilize the banking system. Beginning on February 14 of that year, Michigan, which had been hit particularly hard by the Great Depression, declared an eight-day bank holiday. Fears of other bank closures spread from state to state as people rushed to withdraw their money. Within weeks, thirty-six other states held their own bank holidays in an attempt to stem the bank runs. The banking system seemed to be on the verge of collapse. Following his inauguration in March 1933, President Franklin Roosevelt set out to rebuild confidence in the nation's banking system, first declaring a four-day banking holiday that shut down the banking system, including the Federal Reserve. Prepared by the Treasury staff during Herbert Hoover's administration, the legislation was passed on March 9, 1933. The new law allowed the twelve Federal Reserve Banks to issue additional currency on good assets so that banks that reopened would be able to meet every legitimate call.