The Emergency Banking Act of 1933, passed by Congress on March 9-combined with the Federal Reserve's commitment to supply unlimited amounts of currency to reopened banks--created de facto 100 percent deposit insurance.
Together, the Emergency Banking Act and the de facto 100 percent deposit insurance created a safety net for banks and produced a regime shift with instantaneous results, similar to Sargent's (1986) description of "The Ends of Four Big Inflations.
The evidence presented here on the speed with which the Bank Holiday and the Emergency Banking Act of 1933 reestablished the integrity of the payments system demonstrates the power of credible regime-shifting policies.
Section 3 reviews the reasons for the suspension, and Section 4 describes the solution to the crisis: the Emergency Banking Act of 1933.
The Emergency Banking Act, passed by Congress on March 9, 1933, gave the President the backing that he needed to ensure the safety of the reopened banks.
20) Titles I through IV of the Emergency Banking Act went much further, however, granting the President near dictatorial powers.
After declaring a four-day bank holiday the day after his inauguration in early March 1933, Roosevelt (and a compliant Congress) followed with the first of a long series of federal outrages: the Emergency Banking Act.
Following the Emergency Banking Act, Roosevelt moved to bring agriculture under the federal umbrella, creating a new system of farm subsidies and production controls under the aegis of the Agricultural Adjustment Administration (AAA).