History HW - Write 2 page paper,answer 13 questions, create complex thesis per instructions

696 CHAPTER 23

Roosevelt’s first step as president was to carry out reforms in banking and finance. By 1933, widespread bank failures had caused most Americans to lose faith in the banking system. On March 5, one day after taking office, Roosevelt declared a bank holiday and closed all banks to prevent further withdrawals. He persuaded Congress to pass the Emergency Banking Relief Act, which authorized the Treasury Department to inspect the country’s banks. Those that were sound could reopen at once; those that were insolvent—unable to pay their debts— would remain closed. Those that needed help could receive loans. This measure revived public confidence in banks, since customers now had greater faith that the open banks were in good financial shape.

AN IMPORTANT FIRESIDE CHAT On March 12, the day before the first banks were to reopen, President Roosevelt gave the first of his many fireside chats—

radio talks about issues of public concern, explaining in clear, simple lan- guage his New Deal measures. These informal talks made Americans feel as if the president were talking directly to them. In his first chat, President Roosevelt explained why the nation’s welfare depended on public sup- port of the government and the banking system. “We have provided the

machinery to restore our financial system,” he said, “and it is up to you to sup- port and make it work.” He explained the banking system to listeners.

A PERSONAL VOICE FRANKLIN DELANO ROOSEVELT “ When you deposit money in a bank the bank does not put the money into a safe deposit vault. It invests your money. . . . A comparatively small part of the money that you put into the bank is kept in currency—an amount which in normal times is wholly sufficient to cover the cash needs of the average citizen.”

The president then explained that when too many people demanded their sav- ings in cash, banks would fail. This was not because banks were weak but because even strong banks could not meet such heavy demands. Over the next few weeks,

many Americans returned their savings to banks.

REGULATING BANKING AND FINANCE Congress took another step to reorganize the banking system by pass- ing the Glass-Steagall Act of 1933, which established the Federal Deposit Insurance Corporation (FDIC). The FDIC provided federal insurance for individual bank accounts of up to $5,000, reassuring millions of bank customers that their money was safe. It also required banks to act cautiously with their customers’ money.

Congress and the president also worked to regulate the stock market, in which people had lost faith because of the crash of 1929. The Federal Securities Act, passed in May 1933, required corporations to provide complete informa- tion on all stock offerings and made them liable for any misrepresentations. In June of 1934, Congress created the Securities and Exchange Commission (SEC) to regulate the stock market. One goal of this commission was to prevent people with inside information about companies from “rigging” the stock market for their own profit.

In addition, Roosevelt persuaded Congress to approve a bill allowing the manufacture and sale of some alco- holic beverages. The bill’s main purpose was to raise gov- ernment revenues by taxing alcohol. By the end of 1933, the passage of the 21st Amendment had repealed prohibition altogether.

“ The only thing we have to fear is fear itself.” FRANKLIN DELANO ROOSEVELT

Franklin D. Roosevelt holds his dog Fala and talks to a young family friend.

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MAIN IDEAMAIN IDEA

B

Evaluating Leadership

How successful was FDR’s fireside chat?