Neither is any bank which may turn out not to be in a position for immediate opening. No sound bank is a dollar worse off than it was when it closed its doors last Monday. This bank holiday while resulting in many cases in great inconvenience is affording us the opportunity to supply the currency necessary to meet the situation.
#Fdr fireside chats impact series
The third stage has been the series of regulations permitting the banks to continue their functions to take care of the distribution of food and household necessities and the payment of payrolls. I want to tell our citizens in every 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 emergency and the necessity for speed that it is difficult to match in our history. This law also gave authority to develop a program of rehabilitation of our banking facilities. The second step was the legislation promptly and patriotically passed by the Congress confirming my proclamation and broadening my powers so that it became possible in view of the requirement of time to entend (sic) the holiday and lift the ban of that holiday gradually. It was then that I issued the proclamation providing for the nation-wide bank holiday, and this was the first step in the Government's reconstruction of our financial and economic fabric. Proclamations temporarily closing them in whole or in part had been issued by the Governors in almost all the states. The reason for this was that on the spur of the moment it was, of course, impossible to sell perfectly sound assets of a bank and convert them into cash except at panic prices far below their real value.īy the afternoon of March 3 scarcely a bank in the country was open to do business. A rush so great that the soundest banks could not get enough currency to meet the demand.
What, then, happened during the last few days of February and the first few days of March? Because of undermined confidence on the part of the public, there was a general rush by a large portion of our population to turn bank deposits into currency or gold. In other words the total amount of all the currency in the country is only a small fraction of the total deposits in all of the banks. A comparatively small part of the money you put into the bank is kept in currency-an amount which in normal times is wholly sufficient to cover the cash needs of the average citizen. In other words, the bank puts your money to work to keep the wheels of industry and of agriculture turning around. It invests your money in many different forms of credit-bonds, commercial paper, mortgages and many other kinds of loans. I know that when you understand what we in Washington have been about I shall continue to have your cooperation as fully as I have had your sympathy and help during the past week.įirst of all let me state the simple fact that when you deposit money in a bank the bank does not put the money into a safe deposit vault.
I owe this in particular because of the fortitude and good temper with which everybody has accepted the inconvenience and hardships of the banking holiday. I recognize that the many proclamations from State Capitols and from Washington, the legislation, the Treasury regulations, etc., couched for the most part in banking and legal terms should be explained for the benefit of the average citizen. I want to tell you what has been done in the last few days, why it was done, and what the next steps are going to be. I want to talk for a few minutes with the people of the United States about banking-with the comparatively few who understand the mechanics of banking but more particularly with the overwhelming majority who use banks for the making of deposits and the drawing of checks.
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