Why was banking reform an important first step in the New Deal? It prevented another financial collapse. It forced banks to lend money to people who were hit hardest by the Great Depression. It increased people's confidence in the government's ability to control the economy.

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History

Gregory Lloyd

6 October, 04:26

Why was banking reform an important first step in the New Deal? It prevented another financial collapse. It forced banks to lend money to people who were hit hardest by the Great Depression. It increased people's confidence in the government's ability to control the economy.

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Zion · Answer 1

c. it increased people's confidence in the government's ability to control the economy.

Tiana Mason · Answer 2

Banking reform was an important first step in the New Deal because it increased people's confidence in the government's ability to control the economy.

The severity of the crisis allowed Roosevelt and his administration to exert a great influence on Congress during the first months of his term. This made it easy and quick to adopt a series of measures aimed at restoring the balance of the banking system and the financial market.

The measure of the United States bank holiday, a four-day national banking holiday, aimed to restore confidence until the ratification of a new law, the Banking Emergency Law, voted on March 9. The latter imposed that only banks that had successfully passed an examination of their solvency under the control of the United States Department of the Treasury would be opened. Three-quarters of the banks reopened in the three days that followed the adoption of the law. One billion dollars in currency and gold, retained until then, returned to the banks, allowing a stabilization of the banking system. Throughout 1933, several thousand banks closed their doors, others merged to give rise to larger establishments (depositors thus charged approximately 85% for every dollar saved). In order to prevent future crises, the Government created the Federal Deposit Insurance Corporation (FDIC) in June, which allowed securing deposits of up to $ 5,000. The first New Deal also attended the birth of the Securities and Exchange Commission (SEC), created by the Securities Exchange Act, initiated during the "One Hundred Days". To appease the world of finance in part, Roosevelt put Joseph Kennedy at the head of the SEC, a man who knew the ins and outs of Wall Street.

Thus, the American society saw the measures of Roosevelt with an optimistic look, since the economy was recovering.