This Day In Market History: FDR Signs Banking Act Of 1933

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened? On this day in 1933, U.S. President Franklin D. Roosevelt signed the Banking Act of 1933.

Where The Market Was: The Dow traded at around 2,080. The S&P 500 was not yet created.

What Else Was Going On In The World? In 1933, the U.S. repealed prohibition by passing the 21st Amendment. San Francisco began constructing the Golden Gate Bridge. The average price of a new house was $5,750.

Glass-Steagall Act: The most important part of the Banking Act of 1933 was the Glass-Steagall Act, a landmark piece of legislation that helped to protect American’s savings. Millions of Americans lost their jobs during the Great Depression, but one out of every four Americans also lost their life savings thanks to the collapse of more than 4,000 American banks from 1929 to 1933.

The Glass-Steagall Act prohibited banks from using deposits to make speculatory bets in the equities market, and it also created the Federal Deposit Insurance Corporation to insure bank deposits of up to $2,500. Today, the FDIC insures up to $250,000 in deposits per account.

Senator Carter Glass of Virginia and Representative Henry Steagall of Alabama co-sponsored a piece of legislation in 1932 designed to help stimulate the frozen credit market by authorizing the Federal Reserve to lend to distressed banks and make government gold available to combat shortages due to hoarding. A year later, Glass and Steagall also co-sponsored the Banking Act of 1933.

Sen. Carter Glass and Rep. Henry B. Steagall, the co-sponsors of the Glass–Steagall Act. Public domain.