 The
onset of the worldwide depression in 1929 was a disaster for the banking system. In the
last quarter of 1931 alone, more than 1,000 U.S. banks failed, as borrowers defaulted and
bank assets declined in value. This led to scenes of panic throughout the country, with
long lines of customers queuing up before dawn in hopes of withdrawing cash before the
bank had no more to pay out.  The banking crisis was the first order
of business for President Franklin D. Roosevelt. The day after taking office, on March 5,
1933, he declared a bank holiday, closing all the country's banks until they could be
examined and either be allowed to reopen or be subjected to orderly liquidation. The bulk
of this work fell to the Office of the Comptroller of the Currency.
In June 1933, Congress enacted federal deposit insurance. Accounts were covered up to
$2,500 per depositor (now $100,000). Other laws were passed regulating bank activities and
competition, with the objective of limiting risks to banks and reassuring the public that
banks were, and would remain, safe and sound.
More of the Changing World of Banking:
 Introduction 1790 to 1832  1832 to 1864
 1865 to 1914 1929 to
1970 1970 to Today
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