Franklin D. Roosevelt had been inaugurated as president of the United States on March 4, 1933, a day that found the U.S. banking system paralyzed. On March 6, Roosevelt declared a nationwide "bank holiday," closing all U.S. banks until March 13. The "holiday" allowed a time-out in the rapid decline of the U.S. banking system. The Emergency Banking Act of 1933, passed by Congress on March 9, provided for government inspection of the nation's banks. The Banking Act of 1933, passed a few months later, and the Banking Act of 1935 laid the foundation for reform of the U.S. banking industry. The 1933 Banking Act provided for creation of the Federal Deposit Insurance Corporation (FDIC), which insured depositors against loss of their money in the event of a bank failure. The FDIC restored the public's confidence in the banking system.

All of these measures were part of the New...