Emergency Banking Act Passes in Eight Hours to Stabilize Collapsing Banking System

On March 9, 1933, just five days after Franklin Roosevelt’s inauguration and three days after his declaration of a national bank holiday, Congress passes the Emergency Banking Act in a mere eight hours—many members voting without even reading the legislation. The act grants the President sweeping powers over banking, authorizes the Treasury to issue emergency currency, and establishes a framework for reopening banks deemed solvent by federal examiners. The legislation marks the beginning of the New Deal’s rapid response to the Great Depression and represents the most significant emergency intervention in American financial history to that point.

The banking system had effectively collapsed before Roosevelt’s inauguration, with bank runs accelerating after the 1932 Pecora hearings exposed Wall Street corruption. By March 4, 1933, governors of 38 states had closed their banks or limited withdrawals, and the remaining states followed within hours of FDR’s inauguration. The new president immediately declared a “bank holiday,” closing all banks nationwide and suspending gold transactions. Treasury Secretary William Woodin and Federal Reserve officials worked through the weekend with holdover Hoover administration staff to draft emergency legislation, much of which had been prepared during the final weeks of the Hoover administration.

The Emergency Banking Act effectively nationalizes the banking system temporarily, giving federal authorities unprecedented control over which banks could reopen and under what conditions. Critically, the act also validates Roosevelt’s suspension of gold convertibility, beginning the process of taking the United States off the gold standard. When banks begin reopening on March 13, Roosevelt’s first “fireside chat” radio address reassures the public, and deposits exceed withdrawals—the panic effectively ends. The rapid bipartisan passage demonstrates how crisis conditions can enable swift democratic action against elite interests, though the legislation ultimately preserves the existing banking structure rather than fundamentally reforming it. The banking industry, having been rescued from collapse by government intervention, soon resumes its opposition to New Deal regulation, demonstrating the selective nature of corporate attitudes toward government involvement in the economy.