“The emergency banking legislation passed by the Congress today is a most constructive step toward the solution of the financial and banking difficulties which have confronted the country. The extraordinary rapidity with which this legislation was enacted by the Congress heartens and encourages the country.”
– Secretary of the Treasury William Woodin, March 9, 1933
“I can assure you that it is safer to keep your money in a reopened bank than under the mattress.”
– President Franklin Roosevelt in his first Fireside Chat, March 12, 1933
Immediately after his inauguration in March 1933, President Franklin Roosevelt set out to rebuild confidence in the nation’s banking system. At the time, the Great Depression was crippling the US economy. Many people were withdrawing their money from banks and keeping it at home. In response, the new president called a special session of Congress the day after the inauguration and declared a four-day banking holiday that shut down the banking system, including the Federal Reserve. This action was followed a few days later by the passage of the Emergency Banking Act, which was intended to restore Americans’ confidence in banks when they reopened.
The legislation, which provided for the reopening of the banks as soon as examiners found them to be financially secure, was prepared by Treasury staff during Herbert Hoover’s administration and was introduced on March 9, 1933. It passed later that evening amid a chaotic scene on the floor of Congress. In fact, many in Congress did not even have an opportunity to read the legislation before a vote was called for.
- 1The gold standard was partially restored by the Gold Reserve Act of 1934. The United States remained on the gold standard until 1971.
Federal Reserve Bank of St. Louis. “Documents and Statements Pertaining to the Banking Emergency, Presidential Proclamations, Federal Legislation, Executive Orders, Regulations, and Other Documents and Official Statements, Part 1, February 25 – March 31, 1833.” 1933, https://fraser.stlouisfed.org/scribd/?item_id=23564&filepath=/docs/historical/federal%20reserve%20history/bank_holiday/bank_emerg_pt1_19330225.pdf.
History Matters, the U.S. Survey Course on the Web. “‘More Important Than Gold’: FDR’s First Fireside Chat.” Accessed September 30, 2013, http://historymatters.gmu.edu/d/5199/.
Silber, William L. “Why Did FDR’s Bank Holiday Succeed?” Federal Reserve Bank of New York Economic Policy Review, July 2009, 19-30.