Magazine article American Heritage

1933: Banks Take a Holiday: Not Long after Becoming President, Roosevelt Shut Down All of the Nation's Banks

Magazine article American Heritage

1933: Banks Take a Holiday: Not Long after Becoming President, Roosevelt Shut Down All of the Nation's Banks

Article excerpt

ON MARCH 4, 1933, toward the close of the fourth winter of the greatest of depressions, Franklin Delano Roosevelt prepared to take the oath of office as president of the United States, as fiduciary confidence crashed and factory whistles were eerily silent. That morning, as traders on the floor of the New York Stock Exchange awaited the gong to signal the start of buying and selling, the exchange's president, Richard Whitney, stepped to the rostrum to announce a shocking edict: the market was closing before it opened. Wall Street was running up the white flag. All eyes turned toward Washington. No one was sure what to expect of the new president, thought by many to be a waffler.

After an electrifying inaugural address, which ringingly affirmed that "the only thing we have to fear is fear itself" and denounced "money changers ... in the temple," FDR moved swiftly and resolutely to deal with the financial exigency. On March 5, he called Congress into extraordinary session; and at 1 a.m. the next morning, acting boldly if questionably under the Trading with the Enemy Act of 1917, halted transactions in gold and proclaimed a national "bank holiday"--a merry euphemism for the grim reality of total national lockdown. With every bank closed, Roosevelt directed his secretary of the treasury to collaborate with officials of the outgoing Hoover administration in drafting responsive legislation. They did so, working around the clock.

People in every American town and village woke on the morning of Monday, March 6, to find that they would have to make do in a world without any further supplies of money for days to come. Transactions dependent on ready cash became difficult to consummate. At the recently opened Radio City Music Hall in New York, King Kong played to empty houses. Pickpockets were unable to ply their trade. Floating crap games disappeared. And in this edgy interlude folks had nary a clue about what the White House was fixing to spring on them next.

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On Thursday, March 9, the special session of Congress convened to consider the administration's improvised-round-the-clock banking bill. In an extraordinary assertion of executive prerogative, it sanctioned all acts of the president and of the secretary of the treasury "heretofore or hereinafter taken"; arranged for reopening banks with liquid assets and re-organizing the rest; and authorized the immediate issue of $2 billion in currency. …

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