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Two separate United States laws are known as the Glass-Steagall Act. Both were reactions of the U.S. government to cope with the economic problems which followed the Stock Market Crash of 1929.
Glass-Steagall Act of 1932 The first act, enacted February 27 1932, took the United States off the gold standard and greatly increased the ability of the Federal Reserve to influence the money supply. This act included the following provisions: Banking Act of 1933 The second act (ch. 89, 48 Stat. 162), was enacted on June 16 1933 to make banking safer and less prone to speculation. The Banking Act of 1933 included the following provisions: Major Effect of the Acts Of the important changes to the banking laws in these acts, perhaps the most significant was the separation of commercial and investment banks. Before Glass-Steagall, Federal Reserve notes (i.e., U.S. dollars) could be issued by the government only if they were backed with gold. This restricted the amount of dollars the government could issue. By allowing collateralization of dollars on government debt, the treasury gained the authority to create dollars in any amount it desired. Both bills were sponsored by Democratic Senator Carter Glass of Lynchburg, Virginia, a former Secretary of the Treasury, and Democratic Congressman Henry B. Steagall of Alabama, Chairman of the House Committee on Banking and Currency. Repeal of the Acts On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act. One impact of this repeal is that certain advisory activities of the banks are now regulated by the Investment Advisers Act of 1940. Note The Banking Act of 1933 is not the same as the "Emergency Banking Act" of March 9, 1933 which officially took the United States off the gold standard, gave the Secretary of the Treasury the power to compel owners of gold to surrender it to the government, and gave the president wide latitude to dictate fiscal rules and policy. | ||||||||
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