A bill passed during the administration of former U.S. President Franklin D. Roosevelt in reaction to the financially adverse conditions of the Great Depression. The measure, which called for a four-day mandatory shutdown of U.S. banks for inspections before they could be reopened, sought to re-instill investor confidence and stability in the banking system.
Investopedia Says:
The infamous stock market crash, which preempted the Great Depression, put great strain on the U.S. monetary system. Collective fears of loss of individual savings as a result of bank failures caused massive runs on the banks, which only compounded the problem. Roosevelt's actions helped restore credibility (and thus functionality) to the banking system and the creation of the Federal Deposit Insurance Corporation under this legislation helped provide a more permanent solution.
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