Bank Reform, Remedial Action, and the Democratic Party 1929-1932
In the interregnum between the election of Franklin D. Roosevelt on November 8, 1932, and his inauguration as president of the United States on March 4, 1933, banking conditions throughout the country raced toward a chaotic climax. In the 1920s an epidemic of bank failures was symptomatic of the unhealthy state of the banking system. At the end of the decade the stock market crash of October 1929 and the depression that followed brought additional pressures on the banking industry and forced the closing of still more banks. As a result, the banking industry was subjected to rigorous scrutiny, and congressional investigations were held. As the number of bank failures continued to increase, public confidence declined and the faulty financial structure of an "overbanked" nation was strained to the utmost.
During the first two decades of the twentieth century, the number of banking institutions in the United States had rapidly increased. In 1900 there were 12,427 commercial banks; by 1920 the number had risen to 30,291 (see Table 1). Bank supervision then, as now, was divided between the federal and state governments. National banks were chartered by the federal government and were supervised by the Office of the Comptroller of the Currency. State banks were chartered by the various states and were regulated by the individual state banking authorities. In 1913, with the