The Emergency Banking Act of 1933 was emergency legislation signed by President Franklin D. Roosevelt on March 9, 1933, that stabilized a collapsing American banking system by ratifying a national bank holiday, granting the president sweeping powers over banking and gold, authorizing the Reconstruction Finance Corporation to recapitalize failing banks, and letting the Federal Reserve issue emergency currency. Congress introduced, debated, passed, and enacted it in a single day. The full text is preserved in the FRASER digital archive of the Federal Reserve Bank of St. Louis and can be downloaded as a PDF there.1FRASER, Federal Reserve Bank of St. Louis. Emergency Banking Act of 1933
Why Congress Passed It
Roughly 9,000 banks failed between 1930 and 1933, erasing about $7 billion in depositors’ assets at a time when no federal deposit insurance existed. When a bank went under, depositors lost everything.2Social Security Administration. Bank Failures and the Great Depression Fear fed on itself: as banks failed, depositors rushed to withdraw before their own bank closed, which drained reserves, forced surviving banks to call in loans, and contracted the money supply further.3Federal Reserve Bank of St. Louis. Economic Episodes in American History, Part 6
States tried to stop the bleeding on their own. Nevada declared the first state bank holiday on October 31, 1932. Michigan followed on February 14, 1933, after Detroit banks failed to secure loans from the Reconstruction Finance Corporation, and that decision accelerated a nationwide gold drain.4Federal Reserve History. Banking Panics of 1931–33 On March 3, 1933, the Federal Reserve Board suspended the gold reserve requirement. The next day, the Federal Reserve Banks themselves closed. The system had frozen.
The Bank Holiday and One-Day Passage
Roosevelt was sworn in on March 4, 1933. Two days later he issued Proclamation 2039, declaring a four-day national bank holiday from March 6 through March 9.5The American Presidency Project. Proclamation 2039 – Bank Holiday He invoked Section 5(b) of the Trading with the Enemy Act of 1917, a World War I statute authorizing the president to regulate financial transactions during wartime.
Every banking institution in the United States, its territories, and insular possessions was shut down. Banks could not pay out or export gold, silver, or currency, pay deposits, make loans, deal in foreign exchange, or transfer credits abroad. The Secretary of the Treasury could authorize limited exceptions, including special trust accounts for new deposits that would remain fully withdrawable.6GovInfo. Proclamation No. 2038
While banks sat dark, Treasury officials drafted the legislation. Much of the text had been prepared by Treasury staff under the Hoover administration. Incoming Treasury Secretary William Woodin worked with Roosevelt adviser Raymond Moley on the final version and asked outgoing Secretary Ogden Mills to stay on and help.7Federal Reserve Bank of New York. Silber – Why Did FDR’s Bank Holiday Succeed?
Congress convened on March 9, 1933. The bill (H.R. 1491) was introduced, debated, passed by both chambers, and signed by Roosevelt at 8:30 p.m. that same evening.8GovInfo. Emergency Banking Act, 48 Stat. 1 The full legislative process took roughly eight hours. Many members did not have a printed copy in hand when the vote was called.9Federal Reserve History. Emergency Banking Act of 1933
What the Act Did
The statute is organized into five titles, each aimed at a different piece of the crisis.
Title I: Presidential Emergency Powers Over Banking and Gold
Title I retroactively confirmed every order and regulation the president and Treasury secretary had issued since March 4, including the bank holiday itself. It then amended Section 5(b) of the Trading with the Enemy Act to extend the president’s authority from “time of war” to include “any other period of national emergency declared by the President.”10Office of the Law Revision Counsel. 50 U.S.C. Chapter 53 – Trading With the Enemy That single phrase converted a wartime statute into a peacetime instrument.
Under the amended authority, the president could regulate or prohibit foreign exchange transactions, credit transfers between banks, and the hoarding, melting, or export of gold and silver coin and bullion. The Secretary of the Treasury was empowered to require the surrender of all gold coin, bullion, and gold certificates in exchange for other currency. That authority underpinned Executive Order 6102, issued April 5, 1933, which prohibited the private hoarding of gold and required citizens and businesses to deliver their gold to a Federal Reserve Bank by May 1, 1933, with limited exceptions for small amounts, industrial use, and rare coins. Willful violations carried penalties of up to $10,000, ten years in prison, or both.11The American Presidency Project. Executive Order 6102 – Forbidding the Hoarding of Gold
Title II: Bank Conservatorship
Title II, known as the Bank Conservation Act, let the Comptroller of the Currency appoint a conservator to take possession of a troubled bank’s books, records, and assets. The Comptroller could restrict the bank’s operations, authorize receipt of new deposits under conservatorship, and permit the bank to resume business when conditions warranted. Reorganization required written consent from depositors and creditors representing at least 75 percent of the bank’s total liabilities, or stockholders holding at least two-thirds of its stock.
Title III: RFC Capital Injections
Title III authorized national banks, state banks, and trust companies to issue preferred stock with regulatory approval, and it authorized the Treasury Secretary to have the Reconstruction Finance Corporation buy that stock or lend against it. Preferred shares were senior to common stock and carried cumulative dividends of up to six percent.
This was a structural change, not just a funding tool. The RFC had previously been limited to secured loans to banks, but those loans acted as senior claims on bank assets and actually worsened the position of depositors. Preferred stock was junior to deposits and did not tie up the bank’s best collateral, so it made banks safer for depositors rather than more precarious.12NBER. NBER Working Paper 9624 Over the following years, the RFC injected roughly $782 million in preferred stock from 4,202 banks and $343 million in capital notes and debentures from another 2,910 institutions, a combined total of about $1.1 billion into nearly 6,800 banks.13EH.net. Reconstruction Finance Corporation At the program’s peak, RFC-provided capital represented nearly one-third of total bank capital in the American financial system.14Yale Journal of Financial Crises. RFC Preferred Stock Purchase Program
Title IV: Emergency Currency and Fed Lending
Title IV authorized Federal Reserve banks to issue emergency circulating notes, called Federal Reserve Bank Notes, backed by assets deposited with the Treasurer of the United States. Notes backed by direct U.S. government obligations could be issued at the face value of those obligations. Notes backed by commercial paper such as drafts, bills of exchange, and bankers’ acceptances were capped at 90 percent of estimated value. The notes were legal obligations of the issuing Federal Reserve bank, receivable at par nationwide and redeemable in lawful money.
Title IV also let Federal Reserve banks make emergency advances to member banks that lacked the usual eligible collateral, provided the loans were secured to the Reserve bank’s satisfaction and bore interest at least one percentage point above the highest prevailing discount rate. Combined with Title I’s gold provisions, this took the United States and Federal Reserve Notes off the gold standard in practice.9Federal Reserve History. Emergency Banking Act of 1933
Title V: Penalties and Appropriations
Title V appropriated $2 million for the president to spend implementing the Act. Violations of the Title I emergency banking regulations carried fines of up to $10,000 and up to ten years’ imprisonment. Misdemeanors related to Title II regulations carried fines of up to $5,000 and up to one year’s imprisonment.
Reopening the Banks
On March 12, 1933, Roosevelt delivered his first fireside chat, a radio address explaining what the law did and why Americans should bring their money back. He described the Act as a program to “rehabilitate our banking facilities,” explained that the Federal Reserve could now issue additional currency backed by “good assets,” and told listeners: “I can assure you that it is safer to keep your money in a reopened bank than under the mattress.”15The American Presidency Project. Fireside Chat on Banking
The reopening was staggered so government examiners could verify each bank’s soundness first:
- March 13: banks in the twelve Federal Reserve Bank cities.
- March 14: banks in roughly 250 cities with recognized clearinghouses.
- March 15: sound banks throughout the rest of the country.
Of the 16,790 commercial banks operating when the holiday began, about 11,793 were fully reopened by the end of March and another 1,685 reopened under restrictions. Another 1,500 were fully licensed by the end of June. Roughly 4,000 banks closed permanently or needed substantial recapitalization.16NBER. NBER Working Paper 31088 Between 4,500 and 5,000 banks were not permitted to reopen at all, and more than 2,100 of those were eventually placed in liquidation or receivership.17FRASER, Federal Reserve Bank of St. Louis. Bank Suspensions Report, 1935
One behind-the-scenes step made the reopening work. On March 11, Treasury Secretary Woodin telegraphed George Harrison, governor of the Federal Reserve Bank of New York, conveying Roosevelt’s personal pledge to ask Congress to indemnify all twelve regional Federal Reserve Banks for any losses from emergency loans. Economists have described that guarantee as de facto 100 percent deposit insurance for every bank the government allowed to reopen.18Federal Reserve Bank of New York. Why Did FDR’s Bank Holiday Succeed?
The response was fast. Between March 4 and March 15, $370 million in gold coin and gold certificates were returned. Another $260 million came back in the second half of March. By the end of the month, the public had redeposited roughly two-thirds of the $1.78 billion in cash pulled out during the four weeks before the holiday.9Federal Reserve History. Emergency Banking Act of 1933 When the New York Stock Exchange reopened on March 15, the Dow Jones Industrial Average rose 8.26 points to 62.10, a gain of 15.34 percent, the largest single-day percentage increase in the index’s history at that time.7Federal Reserve Bank of New York. Silber – Why Did FDR’s Bank Holiday Succeed?
Not to Be Confused With Glass-Steagall
The Emergency Banking Act is frequently mixed up with the Banking Act of 1933, commonly called the Glass-Steagall Act. They are separate laws. Glass-Steagall was signed on June 16, 1933, created the Federal Deposit Insurance Corporation to insure individual deposits (initially up to $2,500, raised to $5,000 in 1934), separated commercial banking from investment banking, and imposed interest rate ceilings on deposits through Regulation Q.19Federal Reserve History. Glass-Steagall Act Federal deposit insurance is a Glass-Steagall creation, not an Emergency Banking Act provision.
Legal Challenges to the Gold Provisions
The gold provisions produced litigation almost immediately. In United States v. Campbell, decided November 16, 1933, Frederick Barber Campbell had deposited 27 bars of gold bullion with Chase National Bank and demanded their return after the executive orders took effect. The bank refused. Campbell was indicted on two counts: failing to file a return of his gold holdings as required by the August 28, 1933 executive order, and possessing more than $200,000 in gold bullion without a license.20Justia. Campbell v. Chase National Bank, 5 F. Supp. 156
The court upheld the constitutionality of the Act and sustained the first count. It dismissed the second, ruling that the executive order requiring physical surrender of gold bullion exceeded the authority the Act had granted, because the power to compel surrender was vested specifically in the Secretary of the Treasury, not the president.21University of Michigan Law Review. Recent Decisions – Constitutional Law
The Longer Legal Impact: Presidential Emergency Power
The Act’s most far-reaching legal consequence was its amendment to Section 5(b) of the Trading with the Enemy Act. By extending presidential emergency economic powers from wartime to any declared national emergency, the 1933 change created what legal scholars later described as a “general grant of legislative authority” allowing the executive branch to regulate virtually any economic activity with a foreign connection.22JustSecurity. IEEPA House Committee Report, 1977 Congress recognized at the time that it was conferring “unusual powers” that “should not normally be available to Presidents in peacetime.”
That framework stayed in place for more than four decades. By the mid-1970s, a Senate special committee found that four national emergencies remained active, some dating back decades, and the broad powers granted in 1933 had never been meaningfully constrained. In 1976, Congress passed the National Emergencies Act to impose procedural requirements on emergency declarations. In 1977, it enacted a three-part statute that restructured the entire framework:23Congressional Research Service. CRS Report on Emergency Economic Powers
- Title I amended the Trading with the Enemy Act to restrict it solely to declared wars, stripping out the peacetime national emergency authority the 1933 Act had added.
- Title II created the International Emergency Economic Powers Act (IEEPA), which provided a new, more limited set of authorities for peacetime emergencies, subject to congressional notification and reporting requirements.
- Title III amended the Export Administration Act to house authorities previously derived from Section 5(b).
IEEPA kept much of the old Section 5(b) regulatory language but removed the power to “vest” or confiscate foreign-owned property, a power only partially restored by the USA PATRIOT Act in 2001 for situations involving armed hostilities.24Harvard Journal on Legislation. Presidential Power, Tariffs, and Peacetime The presidential emergency economic authority that runs through modern sanctions and export controls traces its structure directly to the amendment the Emergency Banking Act made in March 1933.