Mrs. Ruland's U.S. History Class Project
Banking System Reform
By Susie, Jen, Danielle, and Larkin
Banking system reform is a recurring pattern in United States History. During the Progressive and New Deal eras banking systems were drastically reformed. To reform the banks the government took actions. They passed new money standards, Federal Reserve systems and securities to protect or change the banks. Some of the major reformers include presidents such as Grant, Cleveland, McKinley, Theodore Roosevelt and Franklin D. Roosevelt. The support from all these leaders resulted in a new, more stable banking system.
Banking System Reform: Progressive Era
During the Progressive Era the banking system was faced with problems. Big Business had been formed and the government need a way to manage the country's banks.
As a result, the Federal Reserve act was created to help manage the countries banks. The Structure of the Federal Reserve System is the website published by the Federal Reserve Board. The Federal Reserve System was created in 1913 and has continued into the present. The website briefly covers the organization and role of the System today. It also contains links with more detailed information about the board.
The Federal Reserve System was created by the Federal Reserve Act on December 23, 1913. The purpose of this act was to create a system of Federal Reserve banks, to regulate the currency, to regulate banking in the United States, and other roles stated in the act. This site is the index for the sections of the articles of the Act . The site is published by the Federal Reserve Board. Index of the Federal Reserve Act
The Federal Reserve System has been a central bank for the United States of America since it was created by the Federal Reserve Act in 1913. The Library of Economics and Liberty provides a great site on the Federal Reserve System. The web site talks about how the Federal Reserve System operates. Library of Economics and Liberty .
The Federal Reserve System was born of a panic. The Banking Panic of 1907 was a driving force to change the way banking was done in the US.
Bank System Reform: The 1920's Boom and Bust
In the 1920's the banking system boomed. People "bought on a margin", taking loans out for things that they would originally have to save for. The banks made huge amounts of money off the loans. The federal banks began lending out more money than they had. The United States government was worried about the mass amounts of money loaned from the banks. The government raised interest rates to discourage people from buying on a margin. The banks began to slow down as a result of the high interest rates. In 1929 the stock market crashed and the economy collapsed. Americans began to panic and withdrew their money from the banks. Banks didn't have the cash to give to the people who came to withdraw their savings accounts. Thus, the banks closed and America entered the Great Depression.
In the 1930, a collapse of the United States ' economy, known as the Great Depression, occurred. Most of the banks in American fail and went bankrupt. This website contains a summary of the collapse and several primary sources on the events. This site however contains ads for book, making it less scholarly.
After the stock market crash the banking systems collapsed. The following website shows the effects that the banking system failures had on the farmers of the 1930s. The banking system failures had a major effect on the farmers and the economy. Bank Collapse and Effect on Farmers
Banking System Reform: The New Deal
Franklin Delanor Roosevelt's attempt to pull the United States out of the Great Depression was known as the New Deal. Three different ways to place the United States back on track and repair the economy were relief, recovery and reform. Relief, recovery and reform differed and contributed to stabilizing the banks each in a different way. Relief was the things done to specifically help the people in need, it was the action to taking care of people who couldn't take care of themselves. Recovery was the things done to try and pull the country out of the depression, it worked to fix the economy. Reform was the things done to make sure that the United States wouldn't enter the Great Depression again in the future.The Emergency Banking Act was passed to restore people confidence in the American banking system. It closed banks for a "bank holiday". The government told the people that the banks were being inspected.
After the initial stock market crash, people panicked and went to the banks to remove their money. The banks did not have most of the money; many banks failed. FDR issued a national bank holiday, and closed the banks so that they could be "evaluate", in order to restore the citizens confidence in the banking system. This site contains the proclamation for the bank holiday.
This website contains a summary of the effect of the stock market crash on the economy as well as the lives of Americans. The site contains several powerful graphics. It is written for grades 4 th -8 th. It is comprised of three slides. To go to the next to slides click the "next" button and the bottom of the page.
The Federal Deposit Insurance Corporation (FDIC) was created to insure that the failures of the bank would never happen again. It insured investors' deposits up to a certain amount of money. This site is provided by the FDIC. It contains an overview of the FDIC and tells about what the corporation does today. The FDIC's homepage provides more information on what the FDIC does today. It also gives access to their services. The site is searchable.
Last updated March 28, 2005
© Marcella Ruland 1998-2011, All rights reserved
