collapse of financial system

• When did the economic crisis within the United States worsened dramatically.

  
  

  In the months between Roosevelt being elected and taking office as president. November 1932 - March 1933
• Hoover was still president until March 1933 and had ideas for dealing with the crisis. He wanted Roosevelt's cooperation to do this but Roosevelt refused to help.
• As a result of Roosevelt refusing to help, by the time Roosevelt was inaugurated as president, there was a major crisis in banking, and the banks in 32 states had closed. Banks which were still open were now limiting the amount of cash that could be taken out, as there had been a mass withdrawal of savings and funds by investors.
• Meanwhile, investigations by the Senate revealed corruption and incompetence on Wall Street, and the New York stock exchange had closed. Such widespread closures were symptoms of a collapse which led to capital and gold flooding out of the USA. However, Hoover had refused to abandon the gold standard or declare the financial crisis a national emergency.
• The whole country was affected by this crisis. The states' limited welfare funds ran out. National unemployment was over 13 million and was rising.
• The states were unable to provide any support for the unemployed. Violence was increasing in rural areas in protest against evictions for non-payment of mortgages. There were also a growing number of hunger marches in cities and other demonstrations.
• mortgages:

  
  

  A very large loan made by a bank or other institutions to an individual so they can buy land or a house.

  Interest is paid on the loan by the borrower, who pays back the loan over an agreed period of time.
• Those in power at both the national and local level feared that law and order might break down completely unless radical action was taken to deal with the financial crisis. There was a growing awareness that the federal government, led by the president, was the only institution capable of dealing with this situation.