Please enjoy March 12, 1933: Fireside Chat 1: On the Banking Crisis a great episode of the legendary Franklin D. Roosevelt - A Classic Old Time radio Show.
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This content was created in partnership and with the help of Artificial Intelligence AI
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:03):
Ladies and gentlemen, the President ofthe United States, My friends, I
want to talk for a few minuteswith the people of the United States about
banking. To talk with the comparativelyfew who understand the mechanics of banking,
but more particularly with the overwhelming majorityof you who used banks for the making
(00:28):
of deposits and the drawing of checks. I want to tell you what has
been done in the last few days, and whyet was done, and what
the next steps are going to be. I recognize that the many proclamations from
state capitals and from Washington, thelegislation, the Treasury, regulations and so
forth, couched for the most partin banking and legal terms, ought to
(00:52):
be explained for the benefit of theaverage citizens. I owe this in particular
because of the fortitude and the goodtemper which everybody has, with which everybody
has accepted the inconvenience and the hardshipsof the banking holiday. And I know
that when you understand what we inWashington have been about, I shall continue
(01:14):
to have your co operation as fullyas I have had your sympathy and your
health during the past week. Firstof all, let me state the simple
fact that when you deposit money ina bank, the bank does not put
the money into a safe deposit vault. It invests your money in many different
forms of credit, in bonds andcommercial paper, and mortgages, and in
(01:38):
many other kinds of loans. Inother words, the bank puts your money
to work to keep the wheels ofindustry and of agriculture turning round. A
comparatively small part of the money thatyou put into the bank is kept in
currency, an amount which in normaltimes is wholly sufficient to cover the cash
needs of the average citizen. Inother words, the total amount of all
(02:01):
the currency in the country is onlya comparatively small proportion of the total deposits
in all the banks of the country. What then happened during the last few
days of February in the first fewdays of March, because of undermined confidence
on the part of the public,there was a general rush by a large
(02:23):
portion of our population to turn bankdeposits into currency or gold, a rush
so great that the soundest banks couldn'tget enough currency to meet the demand.
The reason for this was that onthe spur of the moment, it was,
of course impossible to sell perfectly soundassets of a bank and convert them
(02:46):
into cash, except at panic pricesfar below their real value. By the
afternoon of March third, a weekago last Friday, scarcely a bank in
the country was open to do business. Proclamations closing them in the whole are
in part, had been issued bythe governors in almost all of the states.
(03:08):
It was then that I issued theproclamation providing for the National Bank Holiday,
and this was the first step inthe government's reconstruction of our financial and
economic fabrics. The second step lastThursday was the legislation promptly and patriotically passed
(03:30):
by the Congress, confirming my proclamationand broadening my powers so that it became
possible, in view of the requirementof time, to extend the holiday and
lift the ban of that holiday graduallyin the days to come. This law
also gave authority to develop a programof rehabilitation of our banking facilities. And
(03:53):
I want to tell our citizens inevery part of the nation that the National
Congress, Republicans and Democrats alike,showed by this action a devotion to public
welfare and a realization of the emergencyand the necessity for speed. That it
is difficult to match in all ourhistory. The third stage has been the
(04:16):
series of regulations permitting the banks tocontinue their functions to take care of the
distribution of food and household necessities andthe payment of payrolls. This bank holiday,
while resulting in many cases in greatinconvenience, is affording us the opportunity
to supply the currency necessary to meetthe situation. Remember that no sound bank
(04:43):
is a dollar worse off than itwas when it closed its doors last week.
Neither is any bank which may turnout not to be in a position
for immediate opening. The new lawallows the twelve federal Reserve banks to issue
additional currency on good assets, andthus the banks that reopen will be able
(05:03):
to meet every legitimate call. Thenew currency is being sent out by the
Bureau of Engraving and Printing in largevolume to every part of the country.
It is sound currency because it isbacked by actual good assets. Another question
that you will ask is this,why are all the banks not to be
(05:25):
reopened at the same time. Theanswer is simple, and I know you
will understand it. Your government doesnot intend that the history of the past
few years shall be repeated. Wedo not want and will not have another
epidemic of bank failures. As aresult, we start tomorrow Monday, with
(05:46):
the opening of banks in the twelveFederal Reserve Bank cities. Those banks which
are on first examination by the Treasuryhave already been found to be all right.
That will be followed on Tuesday bythe resumption of all other functions by
banks already found to be sound incities where there are recognized clearing houses.
(06:12):
That means about two hundred and fiftycities of the United States. In other
words, we are moving as fastas the mechanics of the situation will allow
us. On Wednesday and succeeding days, banks in smaller places all through the
country will resume business, subject ofcourse, to the government's physical ability to
complete its survey. It is necessarythat the reopening of banks be extended over
(06:38):
a period in order to permit thebanks to make applications for the necessary loans
to obtain currency needed to meet theirrequirements, and to enable the government to
make common sense checkups. Please letme make it clear to you that if
your bank does not open the firstday, you are by no means justified
(07:00):
in believing that it will not open. A bank that opens on one of
the subsequent days is in exactly thesame status as the bank that opens tomorrow.
I know that many people are worryingabout state banks that are not members
of the federal reserve system. Thereis no occasion for that worry. These
(07:20):
banks can and will receive assistance frommember banks and from the reconstruction finance cooperation,
and of course they are under theimmediate control of the state banking authorities.
These state banks are following the samecourse as the national banks, except
that they get their licenses to resumebusiness from the state authorities. And these
(07:44):
authorities have been asked by the Secretaryof the Treasury to permit their good banks
to open up on the same scheduleas the national banks. And so I
am confident that the state banking departmentswill be as careful as the national government
in the policy relating to the openingof banks, and will follow the same
broad theories. It is possible thatwhen the banks resume a very few people
(08:11):
who have not recovered from their fear, may again begin withdrawals. Let me
make it clear to you that thebanks will take care of all needs,
except, of course, the hystericaldemands have haught us. And it is
my belief that hawding during the pastweek has become an exceedingly unfashionable pastime in
(08:33):
every part of our nation. Itneeds no profit to tell you that when
the people find that they can gettheir money, that they can get it
when they want it for all legitimatepurposes. The phantom of fear will soon
be laid. People will again beglad to have their money where it will
(08:54):
be safely taken care of, andwhere they can use it conveniently at any
time. I can sure you,my friends, that it is safer to
keep your money in a reopened bankthan it is to keep it under the
mattress. The success of our wholenational program depends, of course, on
the cooperation of the public, onits intelligent support, and its use of
(09:18):
a reliable system. Remember that theessential accomplishment of the new legislation is that
it makes it possible for banks morereadily to convert their assets into cash than
was the case before. More liberalprovision has been made for banks to borrow
on these assets at the reserve banks, and more liberal provision has also been
(09:41):
made for issuing currency on the securityof these good assets. This currency is
not fiat currency. It is issuedonly on adequate security, and every good
bank has an abundance of such security. One more point before I close.
There will, be, of course, some banks unable to reopen without being
(10:03):
reorganized. The new law allows thegovernment to assist in making these reorganizations quickly
and effectively, and even allows thegovernment to subscribe to at least a part
of any new capital that may berequired. I hope you can see,
my friends, from this essential recitalof what your government is doing. Ford
(10:30):
is doing that there is nothing complex, nothing radical in the process. We
have had a bad banking situation.Some of our bankers had shown themselves either
incompetent or dishonest in their handling ofthe people's funds. They had used the
money entrusted to them in speculations andunwise loans. This was, of course
(10:52):
not true in the vast majority ofour banks, but it was true in
enough of them to shock the peopleof the United States for a time into
a sense of insecurity, and toput them into a frame of mind where
they did not differentiate, but seemedto assume that the acts of a comparative
few had painted them all. Andso it became the government's job to straighten
(11:18):
out this situation and to do itas quickly as possible, and that job
is being performed. I do notpromise you that every bank will be reopened,
or that individual losses will not besuffered, but there will be no
losses that possibly could be avoided,and there would have been more and greater
losses had we continued to drift.I can even promise you salvation for some
(11:45):
at least of the sorely pressed banks. We shall be engaged not merely in
reopening sound banks, but in thecreation of more sound banks through reorganization.
It has been wonderful to me tocatch the note of confidence from all over
the country. I can never besufficiently grateful to the people for the loyal
(12:05):
support if they have given me intheir acceptance of the judgment that has dictated
our course, even though all ourprocesses may not have seemed clear to them.
After all, there is an elementin the readjustment of our financial system
more important than currency, more importantthan goal, and that is the confidence
(12:26):
of the people themselves. Confidence andcourage are the essentials of success in carrying
out our plans. You people musthave faith. You must not be stampeded
by rumors or guesses. Let usunite in banishing fear. We have provided
the machinery to restore our financial system, and it is up to you to
(12:46):
support and make it work. Itis your problem, my friends, your
problem no less than it is mine. Together we cannot fail. Gentlemen,
the President of the United States hasspoken to you from the White House in
Washington, d c.
Ladies and gentlemen, the President ofthe United States, My friends, I
want to talk for a few minuteswith the people of the United States about
banking. To talk with the comparativelyfew who understand the mechanics of banking,
but more particularly with the overwhelming majorityof you who used banks for the making
(00:28):
of deposits and the drawing of checks. I want to tell you what has
been done in the last few days, and whyet was done, and what
the next steps are going to be. I recognize that the many proclamations from
state capitals and from Washington, thelegislation, the Treasury, regulations and so
forth, couched for the most partin banking and legal terms, ought to
(00:52):
be explained for the benefit of theaverage citizens. I owe this in particular
because of the fortitude and the goodtemper which everybody has, with which everybody
has accepted the inconvenience and the hardshipsof the banking holiday. And I know
that when you understand what we inWashington have been about, I shall continue
(01:14):
to have your co operation as fullyas I have had your sympathy and your
health during the past week. Firstof all, let me state the simple
fact that when you deposit money ina bank, the bank does not put
the money into a safe deposit vault. It invests your money in many different
forms of credit, in bonds andcommercial paper, and mortgages, and in
(01:38):
many other kinds of loans. Inother words, the bank puts your money
to work to keep the wheels ofindustry and of agriculture turning round. A
comparatively small part of the money thatyou put into the bank is kept in
currency, an amount which in normaltimes is wholly sufficient to cover the cash
needs of the average citizen. Inother words, the total amount of all
(02:01):
the currency in the country is onlya comparatively small proportion of the total deposits
in all the banks of the country. What then happened during the last few
days of February in the first fewdays of March, because of undermined confidence
on the part of the public,there was a general rush by a large
(02:23):
portion of our population to turn bankdeposits into currency or gold, a rush
so great that the soundest banks couldn'tget enough currency to meet the demand.
The reason for this was that onthe spur of the moment, it was,
of course impossible to sell perfectly soundassets of a bank and convert them
(02:46):
into cash, except at panic pricesfar below their real value. By the
afternoon of March third, a weekago last Friday, scarcely a bank in
the country was open to do business. Proclamations closing them in the whole are
in part, had been issued bythe governors in almost all of the states.
(03:08):
It was then that I issued theproclamation providing for the National Bank Holiday,
and this was the first step inthe government's reconstruction of our financial and
economic fabrics. The second step lastThursday was the legislation promptly and patriotically passed
(03:30):
by the Congress, confirming my proclamationand broadening my powers so that it became
possible, in view of the requirementof time, to extend the holiday and
lift the ban of that holiday graduallyin the days to come. This law
also gave authority to develop a programof rehabilitation of our banking facilities. And
(03:53):
I want to tell our citizens inevery part of the nation that the National
Congress, Republicans and Democrats alike,showed by this action a devotion to public
welfare and a realization of the emergencyand the necessity for speed. That it
is difficult to match in all ourhistory. The third stage has been the
(04:16):
series of regulations permitting the banks tocontinue their functions to take care of the
distribution of food and household necessities andthe payment of payrolls. This bank holiday,
while resulting in many cases in greatinconvenience, is affording us the opportunity
to supply the currency necessary to meetthe situation. Remember that no sound bank
(04:43):
is a dollar worse off than itwas when it closed its doors last week.
Neither is any bank which may turnout not to be in a position
for immediate opening. The new lawallows the twelve federal Reserve banks to issue
additional currency on good assets, andthus the banks that reopen will be able
(05:03):
to meet every legitimate call. Thenew currency is being sent out by the
Bureau of Engraving and Printing in largevolume to every part of the country.
It is sound currency because it isbacked by actual good assets. Another question
that you will ask is this,why are all the banks not to be
(05:25):
reopened at the same time. Theanswer is simple, and I know you
will understand it. Your government doesnot intend that the history of the past
few years shall be repeated. Wedo not want and will not have another
epidemic of bank failures. As aresult, we start tomorrow Monday, with
(05:46):
the opening of banks in the twelveFederal Reserve Bank cities. Those banks which
are on first examination by the Treasuryhave already been found to be all right.
That will be followed on Tuesday bythe resumption of all other functions by
banks already found to be sound incities where there are recognized clearing houses.
(06:12):
That means about two hundred and fiftycities of the United States. In other
words, we are moving as fastas the mechanics of the situation will allow
us. On Wednesday and succeeding days, banks in smaller places all through the
country will resume business, subject ofcourse, to the government's physical ability to
complete its survey. It is necessarythat the reopening of banks be extended over
(06:38):
a period in order to permit thebanks to make applications for the necessary loans
to obtain currency needed to meet theirrequirements, and to enable the government to
make common sense checkups. Please letme make it clear to you that if
your bank does not open the firstday, you are by no means justified
(07:00):
in believing that it will not open. A bank that opens on one of
the subsequent days is in exactly thesame status as the bank that opens tomorrow.
I know that many people are worryingabout state banks that are not members
of the federal reserve system. Thereis no occasion for that worry. These
(07:20):
banks can and will receive assistance frommember banks and from the reconstruction finance cooperation,
and of course they are under theimmediate control of the state banking authorities.
These state banks are following the samecourse as the national banks, except
that they get their licenses to resumebusiness from the state authorities. And these
(07:44):
authorities have been asked by the Secretaryof the Treasury to permit their good banks
to open up on the same scheduleas the national banks. And so I
am confident that the state banking departmentswill be as careful as the national government
in the policy relating to the openingof banks, and will follow the same
broad theories. It is possible thatwhen the banks resume a very few people
(08:11):
who have not recovered from their fear, may again begin withdrawals. Let me
make it clear to you that thebanks will take care of all needs,
except, of course, the hystericaldemands have haught us. And it is
my belief that hawding during the pastweek has become an exceedingly unfashionable pastime in
(08:33):
every part of our nation. Itneeds no profit to tell you that when
the people find that they can gettheir money, that they can get it
when they want it for all legitimatepurposes. The phantom of fear will soon
be laid. People will again beglad to have their money where it will
(08:54):
be safely taken care of, andwhere they can use it conveniently at any
time. I can sure you,my friends, that it is safer to
keep your money in a reopened bankthan it is to keep it under the
mattress. The success of our wholenational program depends, of course, on
the cooperation of the public, onits intelligent support, and its use of
(09:18):
a reliable system. Remember that theessential accomplishment of the new legislation is that
it makes it possible for banks morereadily to convert their assets into cash than
was the case before. More liberalprovision has been made for banks to borrow
on these assets at the reserve banks, and more liberal provision has also been
(09:41):
made for issuing currency on the securityof these good assets. This currency is
not fiat currency. It is issuedonly on adequate security, and every good
bank has an abundance of such security. One more point before I close.
There will, be, of course, some banks unable to reopen without being
(10:03):
reorganized. The new law allows thegovernment to assist in making these reorganizations quickly
and effectively, and even allows thegovernment to subscribe to at least a part
of any new capital that may berequired. I hope you can see,
my friends, from this essential recitalof what your government is doing. Ford
(10:30):
is doing that there is nothing complex, nothing radical in the process. We
have had a bad banking situation.Some of our bankers had shown themselves either
incompetent or dishonest in their handling ofthe people's funds. They had used the
money entrusted to them in speculations andunwise loans. This was, of course
(10:52):
not true in the vast majority ofour banks, but it was true in
enough of them to shock the peopleof the United States for a time into
a sense of insecurity, and toput them into a frame of mind where
they did not differentiate, but seemedto assume that the acts of a comparative
few had painted them all. Andso it became the government's job to straighten
(11:18):
out this situation and to do itas quickly as possible, and that job
is being performed. I do notpromise you that every bank will be reopened,
or that individual losses will not besuffered, but there will be no
losses that possibly could be avoided,and there would have been more and greater
losses had we continued to drift.I can even promise you salvation for some
(11:45):
at least of the sorely pressed banks. We shall be engaged not merely in
reopening sound banks, but in thecreation of more sound banks through reorganization.
It has been wonderful to me tocatch the note of confidence from all over
the country. I can never besufficiently grateful to the people for the loyal
(12:05):
support if they have given me intheir acceptance of the judgment that has dictated
our course, even though all ourprocesses may not have seemed clear to them.
After all, there is an elementin the readjustment of our financial system
more important than currency, more importantthan goal, and that is the confidence
(12:26):
of the people themselves. Confidence andcourage are the essentials of success in carrying
out our plans. You people musthave faith. You must not be stampeded
by rumors or guesses. Let usunite in banishing fear. We have provided
the machinery to restore our financial system, and it is up to you to
(12:46):
support and make it work. Itis your problem, my friends, your
problem no less than it is mine. Together we cannot fail. Gentlemen,
the President of the United States hasspoken to you from the White House in
Washington, d c.
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