Full text of Closed for the Holiday : The Bank Holiday of 1933
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THE BANK HOLIDAY OF 1933 THE BANK HOLIDAY OF 1933 is al~lm~achin,~,, ~dten no ore" Mll lu’ Iq/t to remind us that ".~ood he,dth " mid ,1 "stead),job" arc thin.~s that ou,~ht not to be tahcnJbr y, nmted. Hqth that in mind, theJbllo~dtt.~ paXes reaq~ tin" tu,o most c~,cnts qf the Great Dq~ression: the stoch marhct or, Mr qf 1929 amt the B,mh Holida), q/ 1933. As he stood before his party’s delegates to accept the 1928 Republican presidential nomination, Herbert Hoover had every reason to be optimistic. He had no way of knowing that he would soon face the most devastating economic collapse in U.S. history. WHAT OES UP... Herbert Hoover’s adult life had been au unbroken striug of successes. The Staufordtrained mining engiueer had amassed a fortune by age 40 and embarked on a secoud career in public service. As director of relief operations in the years after World War I, he was responsible t-or saviug countless lives in war-ravaged Europe and garnered international recoguition. From 1921 to 1928, lie stowed as SecretaW of Commerce under Presidents Harding and Coolidge aud was perhaps the ceutral figure iu the U.S. business conununit3,, developing statistical agencies, promoting trade associations, aud advocatlug cooperative plauning. As he stood before his party’s delegates to accept the 1928 tKepublican presidential nominatiou, Hoover had evmT reason to be optimistic. "We shall soou, with the help of God, be witbiu sight of the day \vhen povertT will be banished fiom the nation," predicted the mau who bad never knowu failure. He had uo way of knowing that lie would soon face the most devastating ecouonfic collapse in U.S. histoW. He never saw it comiug. Fexv people did. The years leadiug up to Hoover’s presidency bad beeu characterized by exuberance and optinzism. American business had prospered, and businessmen were the cultural heroes of the 1920s -- respected, admired, aud trusted. "The chief business of America is busiuess," declared President Coolidge in 1925, and hardly anyone disagreed. Corporatious turned out au euticiug array of new cousumer goods -- automobiles, refrigerators, washing machines, radios, phonographs -- aud middle-class Americans discovered tile wonders of buying on instalhnent credit. There was a widely-held belief that \vealth was witbiu reach of anyone with energy, initiative, and the willinguess to take a risk. Chicago gangster M Capone declared (perhaps with a touch of irony) that, "The Americau system of ours, call it Americanism, call it Capitalism, call it what you like, gives each and eveW one of us a great opportunity if we only seize it with both hands and make the most of it." Which is exactly what many Americans eudeavored to do. ... MUST COME DOWN. Duriug the mid-1920s, Wall Street attracted a sizable number of middle-class investors, many of whom, as John Keunetb Galbraith has observed, were "displaying an iuordinate desire to get rich quicHy with a miuimum of physical eflbrt."’ They seemed to regard the stock market as a "sure thing," and they expected the good times to contim~e unabated. The market was white hot at the start of 1929. Speculators were buying shares on margiu, putting as little as 10 percent of their own money down and borrowing the other 90 percent - a flue practice as long as share prices continued to increase. But what if the market were to falter a~d nervous lenders were to demand immediate repayment? Concerned tbat speculation was getting out of hand, Federal Reserve officials issued a series of relatively mild statements in February 1929. The intent of these statements was to caution colmnercial banks against using Federal serve credit to finance speculative security loans. (Brokers and others routinely used loans commercial banks to finance specolative ventures.) At tile same time, however, the Federal Reserve Board emphasized that it had "no disposition to assume authority to interfere with the loan practices of member banks, so long as they do not involve the Federal 1Reserve Banks."-" over speculation, and lie stood ready to back his words with his depositors’ money. Once again anxiety thded. "Stock market prices," proclaimed Yale economist hwing Fisher a few months later, "have reached xvbat looks like a permanently high plateau." But in actuality, the bottom was about to thll out. Tbe begim~ing of the end came in early September, following a widely-publicized speech by economist and educator lZoger Bahson, who predicted that, "Sooner or later a crash is coming, and it may be terrific."~ His remarks sent the market into a skid, but prices quic~y recovered and Babson became the target of derisive criticism. Tile Fed’s statements, coupled with the Then, on Thursday, October 24, 1929 Bank of England’s Februal3, 1929 announcement(also kuown as "Black Thursday"), events that it would raise rates in order to keep money proved Babson right. Lingering skittishness from flowing to the American stock market, caused investors to panic when the stock ticker triggered a sharp decline on Wall Street. And tbll behind. (Stock tickers were macbines that although tile market soon bounced back, the printed out the latest share prices on continushort-lived decline in stock prices left investors ous strands of paper known as "ticker tape.") ~vith a residue ofnervous~ess. Prices went into a fi’ee fall as brokers and speculators scrambled to unload their holdings for Then, ill March 1929, the market took an- wbatever price the shares would bring. other tumble and the rate for "call money" (money used to finance mar~n purchases) soared "Brokers in Uproar As Market Boils," to 20 percent as some bankers began to exercise blared the Neu, l~vh Tfmes headline on Friday, caution. But even after that, the call rate dropped October 25. "Perspiring Traders With Torn and prices recovered when Charles E. Mitchell, Collm~ Stand Limply Or Jump and Laugh," read cbairmal~ of the National City Bank in New the subhead. The Tim~:~ account described a "weird York (and a director of tile Federal Reserve roar of thousands of shouting men... (see quote Bank of New York) am~ounced that National page 5)." City Bank would loan as much money as necessa~T in order to "avoid a general collapse of the Brokers and clerks were uuable to cope securities ,narkets.’’~ In efibct, Mitchell had pub- with tile avalanche of sell orders. Fortunes dislicly shrugged off the Federal IKeserve’s concern appeared in a matter of bouts. CHRONOLOGY OF A CRASH The suddenness and severity of the 1929 stock market collapse took most Americans by surprise, but the warning signs had been there for anyone who cared to notice, "[he followiog excerpts at the bottom of pages 4 and 5 describe events leading up to the Great Crash. August 1928 -- Herbert Hoover accepts the Republican presidential nomination and predicts, "We shall soon, with the help of God, be within sight of the day when poverty will he banished from the nation." February 1929 -- The stock market drops sharply then recovers. The drop is a reaction to the Federal Reserve’s concerns over speculative trading and the Bank of England’s decision to raise interest rates in order to discourage British money from flowing to the American stock exchange. The effect was absolutely devastating. Thousands milled outside tile New York Stock Exchange, eager to learu more. "Notable in tile composition of tile crowd," observed tile Times, "was the number of women, largely stenographers, who apprehensively watched the Exchange building. Many of them had small accounts, and their talk iudicated that they were waiting for tile worst." Times. "It was tile rich meu of tile country .... It was tile big n]au whose holdings were eudaugered [this time] and who threw his holdings into tile Stock Exchange for.just xvhat they would bring, wheu hysteria finally seized him." During the days aud xveeks that fofloxved, bankers, Treasury officials, and politicians sought to reassure investors and tile general public, but tile damage had been done. The situatiou was far beyond the poiut xvhen upbeat pro- On Sunday, October 27, sightseers and morbid curiosity seekers strolled through tile streets of New York’s financial district. Tour conductors poiuted out "where all that money was lost last week." UOtlllCellleuts fro 111 atl- thorit3, figures might alter the outcome. Bedrock beliefs had been deeply shakeu. At first, experts characterized the crash as In tile aftermath of Black Thursday, there were flickers of hope when iuvestors believed that pronfinent baukers might intervene in the crisis (as J.P. Morgau had in 1907). Those hopes, however, soon ~ded. au extreule "price correc- tion." Most expected the market to rebouud after the amateurs and speculators were "shaken out." But the market hit many "uexv lo\vs" on its xvay to the bottom, aud by the end of 1929 experts and On Tuesday, October 29 (sometimes referred to as "Black Tuesday"), auother wave of panic selling sealed the market’s I~te. "It was not so much tile little trader or speculator who was struck by the [October 28] cyclone," noted tile March 1929 -- Some bankers begin to exercise caution in lending to speculators, and the rate for "call money" soars to 20 percent. The market takes another tumble but then recovers after Charles E. Mitchell, chairman of the National City Bank in New York, announces that his bauk will loan as much money as necessary to "avoid a general collapse of the securities markets." amateurs alike were forced to consider the possibilit3, that good ti,nes would not soou return. September 1929 -- Economist and educator Roger Babson predicts that, "Sooner or later a crash is coming, and it may be terrific." His words cause the market to skid, but share prices quickly recover. October 24, 1929 ("Black Thursday") -- Investors panic after stock ticker falls behind. The market goes into a free-fall as brokers and speculators scramble to unload their holdings for whatever price the shares will bring. October 29, 1929 ("Black Tuesday") -- Another wave of panic selling seals the market’s fate. BAD TO WORSE The suddenness and severity of the stock market collapse had taken most Americans by surprise, but indications of underlying economic weakness had emerged years earlier. In 1926, speculators received proof that "what goes up nmst come down" when declining demand and two severe hurricanes punctured the Florida real tightened their belts. Businesses retrenched. The number of bankruptcies soared. Borrowers defi~ulted on loans that once bad been considered sound. Job losses mounted at an alarming rate, and legions of unemployed depositors drained their bank accounts in a desperate eflbrt to keep their beads above water. estate bubble. A year later, in 1927, U.S. industrial production showed signs of faltering. COI1SUIIler demand was dropping, and inventoties were on the increase. The distress signals had been even more apparent in roral areas. American farmers had never recovered fiom the devastating decline in Governments around the globe made matters worse by imposing trade restrictions intended to protect domestic industries. Measures such as the infamous Smoot-Hawley Tariff, passed by the U.S. Congress ill 193(I, had a disastrous effect on international commerce and dolnestic employment. On top of all that, tile Federal R_eserve System demonTotal Banks strated a continued reluctance to ot}~et the et}~cts of the econonfic 64,125 downturn through tile use of 59,017 monetal), policy. Instead, the 46,304 40,451 American central bank seemed to put greater emphasis on prese~wing the dollar’s convertibility to gold, particularly after Great Britain abandoned the gold standard in September 1931. (Fearful that the United States would follow Britain’s lead, foreign investors rushed to withdraw their t\mds fiom U.S. banks and thereby put a severe strain on U.S. gold reserves. The Federal P,.eserve responded by moving to boost U.S. interest rates in the hope that higher yields on American financial instruments would stem the outflow of gold)) Assets of Commercial Banks in the United States, 1930-1933 (in millions of dollars) National Banks 1930 1931 1932 1933 28,828 27,430 22,318 20,813 Federal Reserve Member Bank 18,521 17,406 13,538 12,226 State Banks Nonmember Bank 16,776 14,181 10,448 7,412 Total State Banks 35,297 31,587 23,986 19,638 prices that followed World War I. The prosperit), that had visited the rest of the U.S. econom)r during the "B.oaring ’20s" bad largely eluded the Farm Belt. In short, the stock market crash was a respouse to existing economic conditions rather than a cause of tile Great Depression. Nevertheless, it resulted in a staggering loss of wealth and purchasing power that sent the economy into a violent, downward spiral. Delnand for goods and services dropped sharply as consumers CASHLESS SOCIETY The following excerpts, drawn from the Boston Globe, the Boston Herald, the Boston Post, and Time, convey a sense of how everyday Americans dealt with the Bank Holiday of 1933 and the resulting lack of cash. "Besieged by telephone calls from regular customers who related that they wanted to patronize the Egyptiaa Room but were temporarily without cash, L.C. Prior, managing director of the Lenox and Brunswick Hotels, announced last night that all regular or known patrons may eat at either hotel on credit during the bank holiday." Boston Post, March 4, 1933 "These are wholesome tinles, alld as you may have obsen~ed, we are taking them in the same spirit we used to take those things the grownups said were good for us when we were kids." - Henry Ford Boston Herald, March 4, 1933 Tight credit, rockbottom crop prices, and prolonged drought forced thousands of farm families off their land, Farmers from North Dakota to Mississippi fell victim to tile auctioneer’s gavel. By the end of 1932, conditions were so grim as to raise doubts over the survival of the U.S. economic and political system. Angered by the government’s failure to pay them the bonus they had been promised, World War I veterans clashed with federal troops in the streets of Washington, D.C. HOOVERVILLES, HOOVER BLANKETS, AND HOOVER HOGS By the end of 1932, conditions were so grim as to raise doubts over tile survival of the U.S. economic and political system. Although tile economy showed intermittent signs of recovew, the overall trend xvas downward. IKeal GNP tumbled 33 percent fiom 1929 to 1932." More than one-quarter of the work fbrce was unemployed, and in certain sectors of the economy, such as manufacturing, the employment rate dropped by 45 percent. Steel plants operated at a mere 12 percent of capacity. (United States Steel’s payroll plunged fiom 225,000 fiflltime workers in 1929 to a few thousand in 1932.) Things were no better in the counnTside. Tight credit, rock-bottom crop prices, and prolonged drought forced thousands of farm families offtheir land. Unable to pay their mortgages or their taxes, farmers from North Dakota to Mississippi fell victim to the auctioneer’s gavel. Some simply packed their trucks and headed for California without waiting for the sheriffto deliver their foreclosure notices. known as Hoover blankets. Jack rabbits that graced the kitchen tables of those unable to afford beef, chicken, or pork xvere served under tile sobriquet Hoover hogs7 Even those inclined to take a more charitable viexv, came to see the president as ineffectual and out-of-touch. Hoover’s philosophy of government added to his woes by constraining his ability to act. He took a limited view of the federal government’s responsibilities in times of economic crisis, and he remained steadfastly opposed to programs fimded and administered solely by tile government. Toward the end of 1930, he told Congress that "economic depressions cannot be cured by legislative action or by executive pronouncement .... Economic wounds must be healed by the action of tile cells of tile economic body -- the producers and consumers themselves .... FZecoveW can be expedited and its effects mitigated by cooperative action."* Not surprisingly, much of tile blame for the Great Depression fell on Herbert Hoover. His past accomplishments -- his humanitarian eftbrts on behalf of refugees and ~mfine victiins Yet the popular notion that Hoover was --were all but forgotten. The nla~l who had either unwilling or unable to take action is not once looked forward to the end of poverty in entirely accurate. Most of his proposals for dealAmerica, became tile target of popular scorn. ing with the crisis were structured as cooperative eflbrts between government and business -- an Shantytowns that sprang up on tile outskirts of nearly ever3, sizable American city were approach that was consistent with the initiatives dubbed Hoovervilles. Newspapers used as blan- he had taken as SecretalT of Commerce during kets by those who slept in the streets were tile 1920s. "A young woman undertook the role of Lady Bountiful at the expense of a Bowdoin Square restaurant last night and ended a brief career of philanthropy at the Joy Street [police] station. With a great show of liberality, she invited a small group of the hungry ones into the one-arm lunch and told them to go ahead and order. While they ate, she sat near the door and smoked a cigarette in medita- tion. When it came time to pay, she said something that sounded like: ’Charge it to the mayor,’ and made a bolt for the door. She was overtaken and later lectured at Joy Street. Then her parents were called and she was turned over to them." Boston Post, March 4, 1933 "A temporary dining hall has been established on the second floor of the Harvard Union, at which students of the university may obtain their meals on credit by presenting their bursar cards. Prices for meals will be 20 cents for breakfast, 50 cents for luncheon, and 65 cents for dinner. The charge will be billed on the fourth term bill." Boston Globe, March 4, !933 BANKING CONCERNS The Hoover Adnfinistration devoted cousiderable attention to tile plight of ailing banks, in part because bauk credit was a key elemeut of the cooperative recovery effort between business and government, but also because the hearings; and the baukers sought to limit the scope of proposed refomls. A ~-ew proposals were mulled by Congress, but no substantive measures were passed during 1930 or 1931. 1,1 the fall of 1931, bankers responded to the President’s reNumber of Commercial Banks in the United States, 1930-1933 Total Banks quest for cooperative action by State Banks National Banks Federal Rese[ve Nonmember Total establishing the National Credit Member Bank Bank State Banks 23,679 15,364 16,432 Corporation, to which New 1930 7,247 1,068 21,654 982 13,872 14,854 1931 6,800 York City baukers made $500 835 11,754 12,589 18,734 1932 6,145 nfillion available for the purpose 8,601 9,310 14,207 1933 4,897 709 of making loans to bauks that were unable to borrow from the Federal 1Keeconomic collapse had badly shaken public confidence iu the U.S. banking system. Amxious serveY’ (Since its establishnmnt in 1914, the Feddepositors raced to the bank and closed their eral lKeserve had stowed as the banking system’s accounts at tile slightest hint of trouble. Even "lender of last resort," making funds available to strong banks sometimes fell victim to the over- banks that experienced sudden deposit outflows due to runs or related causes. But borrowing all feeling of pessimism and despair. privileges extended only to members of the FedSigns of weakness in the U.S. banking sys- eral R.eserve System -- maiuly national banks.) tem bad begun to appear long before the stock A few months later, iu JanuaW 1932, market crashed. A statement issued in 1930 by the Comptroller of the Currency, the primaW Congress passed the l:keconstruction Finance regulator of national banks, noted "the ~:ailure of Corporation Act to support smaller banks and fi5,600 banks in the past ten year period.’"’ (Bank uaucial institutions in an effort to "give renewed failures had hit 775 in 1924 and 976 in 1926.) support to business, industW, and agriculture.’’’~ The ILFC xvas empowered to make collateralBanks in less prosperous rural areas were particized loans to financial institutious, industries, aud ularly vulnerable. railroads "whenever such advances would proBut in the aftermath of the Crash, the mote credit aud stinmlate employmeut.’’~-’ (The banks’ weakness became more pronounced, IZFC concept was originally put forth by Eugene prompting President Hoover to press for re- Meyer, Governor of the Federal R_eserve forms. Congress, too, gave banking reform a System.) Iu passing the Act, Congress was rehigh priority, as did the banking industW. Un- sponding to pressure fiom Hoover, who had fortunately, the parties were unable to agree on stated at the end of 1931 that, "Our people have a right to a banking system in which their deall appropriate course of action. Hoover sugposits shall be safeguarded and the flow of credit gested a joint commission; Congress scheduled "America’s bank holiday resulted in some unusual incidents yesterday .... In Milwaukee, ministers agreed they woulda’t pass collection plates until the crisis was over." Boston Post, March 4, 1933 "To the capitalist, the industrial king, and the merchant prince the bank holiday which started yesterday might be a serious situation. But to the average person ou the street in Boston the real effect of the bank closings seemed to be a test of who’s got a dime.... [T]broughout the entire city there was a serious situation caused by the lack of silver.... A local [Newburyport, MA] storekeeper sold $10 worth of goods to a customer today. The customer paid for his order with 1000 pennies contained in a cardboard box. Tbe box was placed near the cash till in the store and soon the odor of mothballs pervaded the place, leading to the belief that the pennies had come from a storage trunk where they had remaiued for some time." Boston Post, March 4, 1933 less subject to storms. Tile need of a sounder systeul is plaiMy shown by tile extent of bank failures. I recoum~end tile prompt improvemeut of the banking laws. Chauged finaucial conditious aud commercial practices must be met.’’~ The words may have sounded uninspiring, aud the creation of the IZFC may have been too-little-toolate, but Hoover was moving to shore up weaknesses ill the couunT’s banking system. Ill FebrualT 1932, Congress, with the President’s backiug, passed the Glass-Steagall Act of 1932. The Act (not to be confused with the more comprehensive Glass-Steagall legislation euacted during the Roosevelt Administration) gave tile Federal P.eserve greater latitude to provide credit to beleaguered fiuancial institutious. But many other measures died iu Congress. Tile bauking crisis and the overall economic outlook worseued, and Hoover’s political prospects dinnned. With each passing day, more Alnericans lost confidence iu his ability to lead them out of cosis. The contrast betxveen Hoover and the 1932 Democratic presidential candidate, New York Governor Franklin D. P,.oosevelt, could not have been greater. P,.oosevelt was all energetic, exuberant campaigner, who iuspired tile hope that things could, aud would, get better. He pledged himself to "a new deal for the Americau people," aud they wauted to believe him, even though the terms of his "new deal" were not entirely clear. "Thousands of unemployed marched through the Chicago Loop at noon today, waving red flags and singing the "lnternationale" as they paused for a demonstration before the City Hall. ’We want cash relief,’ was their cry, shouted again and again in cadence." Boston Globe, March 4, 1933 As tile 1932 presidential election drew closer, there seemed to be little doubt that Herbert Hoover’s days in the White House were numbered. And when voters went to the polls oo November 8, 1932, to choose a presideut, 22,800,000 cast their ballots for FZoosevelt; only 15,750,000 wanted to stick with Hoover. P, oosevelt’s margin ofvictoW ill the electoral college was even more overwhelming: 472 to 59. "The push-cart peddlers in [Boston’s] market district and the North End wanted tbeir customers to have their change ready. Before they placed the customer’s pnrchases in bags they demanded payment and if a large bill was tendered, the vendors declined to make any attempt to have the bill changed." Boston Post, March 5, 1933 11 "A woman who described herself as a former Harvard librarian, descended from the original settlers of New London, Conn., was arrested by police headquarters detectives in a downtown hotel yesterday, charged with larceny and attempting to pass a worthless check." Boston Post, March 5, 1933 In the absence of strong federal initiatives, state governors took extraordinary action to head off outright panic. Louisiana’s colorful governor, Huey Long, closed his state’s banks in early 1933. Ostensibly, Louisiana’s banks were closed to commemorate the 1917 severing of diplomatic relations with Germany. Advisers talked Governor Long out of declaring a hank holiday in honor of tile swasiTbuckling Louisiana pirate, Jean Lafitte. LOST IN TH E SHUFFLE Herbert Hoover endured a four-month "lame duck" period in which he seemed both unwilling and unable to undertake major new initiatives. (Until 1937, Inauguration Day Ibll on March 4 rather than JanuaU 20.) During those four months, the banking system showed signs of unraveling altogether. demand gold put a severe strain on New York banks, many of which held balances for banks in other parts of the country. On March 1, 1933, George L. Harrison, bead of the Federal Fzeserve Bank of New York, sent an orgent message to Federal Fzeserve Board Governor Eugene Meyer and Secreta~T of the Treasury Ogden Mills: Tile New York Fzeserve Bank’s gold reserve had fallen below the legal limit.’" As was so often the case in the past, the trouble began with a series of bank failures in At that time, Resmwe Banks were required rural areas and ultimately spread to the cities. Nervous depositors uot oMy withdrew their sav- to maintain gold reserves equal to 40 percent of ings but also demanded gold or gold certificates tile paper currency they issued." But foreign and domestic holders of U.S. currency were rapidly rather than Federal Reserve notes.’~ losing faith in paper money and were redeeming their dollars tbr gold at a rate that put a severe In the absence of strong federal initiatives, state governors took extraordinal3, action to bead strain on gold reserves. Harrison’s coinmunique offoutright panic. Tile governor of Nevada de- to Washington bhmtly stated that he would "no clared a statewide bank holiday in November longer take tire responsibility" for running the 1932 to stem bank runs. Three months later, Bank "with deficient reserves.’’’~ Louisiana’s colorful governor, Huey Long, When tile Federal Reserve Board in closed his state’s banks in a bid to avoid total fiWashington responded to Harrison’s concerns nancial chaos. Ostensibly, Louisiana banks were closed to commemorate the 1917 severing of by declaring that it was reluctantly considering diplomatic relations xx, itb Germany. Advisers a 30-day suspension of tile legal gold reserve talked Governor Long out of declaring a bank requirements, Harrison pointed out that a holiday in honor of the swashbuckling Louisiana suspension of tile requirements would not stein tile outflow of gold. In his view, tile best course pirate, Jean Lafitte.’~ Tile goveruor of Michigan closed his state’s banks on Valentine’s Day. By would be to declare a national bank holiday, tile end of Februa~T 1933, tile governors of which "would permit the count~3, to cahn down Indiana, MatTland, Arkansas, and Ohio had all and allow time for tile enactlnent of remedial legislatio,L"’" declared bank holidays, and the trend showed uo signs of abating. Then, only days before Roosevelt’s inauguration, new developments pushed the entire banking system to the brink of collapse. Tile nationwide rush to witlrdraw bank deposits and "Smaller stores in the suburhan districts vied with each other yesterday in swapping trade. The manager of one store would send his clerk to the rival store to mare some small purchase- but each time with a $20 hill. The purpose was to get change and Harrison’s carefifl. "gray" language masked the drastic nature of his proposal. In fact, the phrase "national bank holiday" was a banker’s euphemism for "close every bank iu tile United States until we come up with a real plan." not to swell the sales of the competitor. And the manager of the store where the purchase was made soon caught on to the scheme and sent his clerk out to other storekeepers." Boston Post. March 5, 1933 "No Holiday is Declared on Federal Income Tax; Office Accepts Checks." Boston Globe, March 5, 3.933 "Tile initiative in declaring such a holiday," writes George S. Eccles in The Politics of Banking, "could only come fiom President Hoover, but by now he had retreated into his own grief and was not accessible to [Treasury Secretary] Mills and [Federal Reserve Board Governor] Meyer." Governor Lehman, they declared they "would rather stay, open and take their beating.’’e’ But by March 3, the mounting toll of bank closures and failures had forced bankers and their regulators to recognize tile ueed for decisive action. Tile directors of tile Federal Reserve Bank of New York adopted a resolution requesting the Federal Ikeserve Board iu Washiugton, D.C., to urge Preside/it Hoover to proclaim a uationwide bank holiday. "The pair [Mills and Meyer], ou being blocked at tile White House door, returned to Harrison with a suggestion that lie ask Herbert Lehman -- who had succeeded President-elect Franklin D. P,.oosevelt as governor George Harriof New York -- to deSOl~, of the New York clare a bank holiday in FZeserve Bank, rethat state. Harrison reversed his opposition jected the suggestiou, to a statewide bank saying that even if holiday after meetiug Lehman agreed to the with Governor Lehman request, the New York and tile New York Federal Reserve Bank State Superintendent would still have to pay, of Banks. lZepresentaout gold to foreigners. tires of the Cleariug Besides, to halt all House Banks of New banking operations in York then gave the New York, the nation’s proposal their qualified financial center, would support (provided that make it impossible for tile banking system to tile record show they neither sought nor directfimction in the rest of the United States.’’> ly requested tile action,-~2 al~d Governor Lehman declared a statewide bank holiday, effective A number of New York’s most prominent March 4, 1933. The governors of Illinois, bankers also opposed the statewide bank bollMassachusetts, New Jersey,, and Peunsylvania day proposal on the grounds that it "would hurt soon followed New York’s lead.) their prestige." In a meeting with New York’s "Gluyas Williams, the cartoonist, ouce knew an artist who lost drawings in an office fire. Accordingly, Mr. Williams has been in the habit of keeping his advance drawings in a safety deposit vault until he has a batch ready for the syndicate which distributes his drawings. So-o-o-o, when Mr. Williams discovered that he was denied access to his safe deposit box at the bank, he sat himself down and spent Sunday at his Boston studio making some new pictures for the Globe." Boston Globe, March 5, 1933 14 "It was a regular Saturday night [March 4, 1933J in Boston. The same big crowds -- the same happy faces -- and (it was ever thus) if father was along you could see him moving down Washington Street for the North Station, or through Dewey Square for the South Station, loaded down uoder the On March 4, all twelve Federal 1Keserve Banks kept their doors locked, and banks in 37 states xvere either completely closed or operating under state-imposed restrictions o,1 \vithdrawals. (Despite the gravity of the situation, Kentucky’s bauk holiday proclamation reflected a certain tongue-in-cheek chain1. "While the people of the state of Keutucky are sufferiug fi-om a general depression, they may, perhaps, in comparison xvith the people of other states, have just cause for thanksgiving," declared Governor Ruby Laffoon in a proclamation that created four days of"Thanksgiving" as a pretext for closing Kentucky’s banks. -~-’) All that remained xvas for the President to order a nationwide bank holiday, but neither President Hoover nor President-elect iKoosevelt appeared eager to take that step. Hoover’s defeat at the polls had left him dispirited and seemingly incapable of rousing himself to call for such drastic action. And the Democratic majority in the House of iKepresentatives showed little inclination for cooperating with a lame duck tkepublican President. Hoover did, hmvever, send Roosevelt a ten-page handwritten letter describing the gravity of the banking crisis and urging the Presidentelect to issue a public statement on the matter. But no statement was forthcoming.-’~ Roosevelt’s advisers, xvho had no clearly defined strategy of their own for dealing xvith the banking crisis, xvere willing to remain vague until after their boss moved into the White House. weight of many bundles. To all outside appearances there was no change at all in Boston as a result of the bank holiday declaration." Boston Post, March 5, 1933 UNPAID HOLIDAY Expectations ran high on March 4, 1933, as Franklin D. FZoosevelt prepared to succeed Herbert Hoover. Americans fervently hoped that a change in Washington would lead to a change ill the countw’s economic fortunes. More than 100,000 people crowded onto a forD,-acre site near the U.S. Capitol to hear tile new President take tile oath of office and deliver his inaugural address; millions of others bnddied around their radios. FZoosevelt’s words were calculated to buoy public confidence, and by most acconnts they succeeded in doing so. He began by declaring his "firm belief that the only thing we have to fear is fear itself-- nameless, tmreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance." He blamed the econonfic collapse on "tile rnlers of the exchange of mankind’s goods [who] have failed through their own stubbornness and Although the address was short on specifics, Roosevelt identified two immediate objectives: putting people to work and "strict supervision of all banking and credits and investments." hnmediately after the inaugural ceremonies, tile new Adniinistration and the new Congress began to grapple with the bankmg crisis. The Senate swiftly approved l<oosevelt’s cabinet choices, and later that afternoon the entire cabinet was sworn ill during a single ceremony at the White House. The fbllowing day, cabinet members joined with Treasury and Federal P,_esetwe officials to lay, the groundwork for a national bank holiday, and at 1:00 a.m. on Monday, March 6, President l~.oosevelt issued a proclamation ordering the suspension of all banking transactions, effective immediately. (Tile bank holiday proclamation was based on drafts originally prepared by TreasuW and Federal P, eserve Board officials fbr President Hoover]’) Number of Commercial Banks Suspensions, 1930-1933 Tile terms of tile Presidential proclamation specified that: no such Federal Reserve Total Member Bank State Banks banking institution or branch shall pay 27 1,131 1,292 out, export, earmark, or permit the 107 1,804 2,213 withdrawal or transfer in any manner 55 1,140 1,416 or by any device whatsoever of any 174 2,790 3,891 gold or silver coin or bullion or curtheir o\wl incompetence, have admitted their rency or take ally other action which might f~fhilure and abdicated." For emphasis he added, cilitate tile hoarding thereo~ nor shall any such "Practices of the unscrupulous money changers ban~ng institution or branch pay out deposits, stand indicted in the court of public opinion, re- make loans or discounts, deal in f~oreign exjected by the hearts and minds of men .... The change, transfer credits fiom tile United States 1honey changers have fled fiom their high seats to any place abroad, or transact any other bankin the temple of our civilization." ing business whatsoever. National Banks 1930 1931 1932 1933 161 409 276 1,101 State Banks Nonmember Bank 1,104 1,697 1,085 2,616 "la Bronx Traffic Court today, 28 law violators served one-day sentences rather tbaa pay out their cash for fines of $2 to $5." Boston Globe, March 6, 1933 Total Banks "Cash Shortage Halts Racing at Agua Caliente; Betting at Hialeah Off 40 Percent." Boston Globe, March 6, 1933 "If little Willie’s bank has remained uashaken in tl~e [bank] crisis, it’s because little Willie’s papa didn’t bear anything when he shook it the last time." Bosto/] Herald. March 6, 1933 As government officials and Congressional leaders worked round the clock to resuscitate the U.S. banking system, everyone else tried to deal with the reality that all banks were to remain closed until further notice. People had no way of knowing when, or even if, they would ever see their money again. Major pieces of legislation can take years to make their way through Congress. But the senators and representatives can move fast when the need arises. The following Associated Press chronology, taken from the March 10, 1933, edition of the Boston Post, illustrates the sense of urgency that surrounded passage of the Emergency Banking Act, and it attests to the speed with which Congress can function in time of crisis. 12:04 a.m. President and Congressional leaders end conference at White House. 10:30 a.m. Roosevelt makes final revision of message to Congress. 11:30 a.m. Congressional and banking leaders [meet] at Capitol after bill details. 12:00 noon Congress’ extra session called to order. 12:30 p.m. Roosevelt message calling for immediate action delivered. 12:37 p.m. Message read to Senate. 1:40 p.m. Bank bill introduced in Senate, referred to Committee. 2:55 p.m. House begins consideration of bank bill. 4:05 p.m. House passes bill without dissent. 4:10 p.m. Senate banking committee approves bill. 4:30 p.m. Senate begins its consideration. 7:23 p.m. Senate passes bill by 73 to 7 vote. 7:40 p.m. Speaker Rainey calls House to order and signs bill. 7:55 p.m. Vice President Garner signs bill and messenger leaves with it for White House. 8:36 p.m. President Roosevelt signs the emergency bank bill, making it law. 10:10 p.m. President Roosevelt issues proclamation extending banking holiday indefinitely. The nationwide bank holiday was slated to extend through Thursday, March 9, at which time Congress would convene in extraordinaW session to consider emergency legislation aimed at restoring public confidence in the financial system. During the holiday, federal officials worked day and night on the emergency legislation. Congressional leaders cautioned the President against submitting vague measures to an unorga~fized Congress, and they pronfised to do evewthing in their power to insure prompt consideration of the Administration’s plan. Meantime, banks in all 48 states and the District of Columbia remained closed. On March 9, the emergency banking bill went to Congress, accompanied by a message fiom the President. Missing fiom the message were the references to "money cha,lgers" and the finger pointing that had characterized 1<oosevelt’s inaugural address. This time the language was temperate and direct: To the Setsate at;d House of Represeutati~,es: 0~ March 3, bm~ki~g operatio~ts i~ the UMted States ceased. To ~wfiew at this time the causes ~1 this failure qf battki~tg system is mmecessary. S~ce it to say that the got~emmettt has compelled to step it~ f,r the protectiott ~l depositors mtd the busittess ,f the ttatiott. Our.fi~st task is to mopett all somut b,mks. True to their word, legislative leaders shepherded the emergency measure through Congress and delivered it to the President in less than 24 horn3. (See box, "Swift Passage.") An excerpt fiom the March 20, 1933 issue of Time describes the scene at the White House signing ceremony: "A western paper plays up as news the fact that an inquiring reporter couldn’t get change for a $100 bill, overlooking the more remarkable circumstance that a reporter had a $100 bill to get change for." Boston Herald, March 6, 1933 Shortly qfier a lil~er & o~fiotts dimwr that same tti~qht, Presidettt Roose~,elt was hamted the baukitcq bill lmssed exactly as he mattted it. Mrs. Roosct,elt etttered the study as cameramett set ttp their trit)ods to record the st~wittX ce~vmott),. Secretary HToodi~ dashed i~ belatedly.fi’om the Ttvasur),. ki~]~ie, the Rooset,eh Sa, ttie, barked excitedl),. M~s. Rooset,elt cried: "Frm~kli~,.fix ),o,r haid" The Presidem grim~ed. His u,(lb called to Mr. Woodim "Mr. Secretar),, please help Frm~kli~ brash his hair dowm " Mr. Woodi~.qa~,e the Presidem’s head aJ~’u, pla)Jhl pats. P~vsidem Roose~elt took a S 1.5Qfimmai~ pet(li~,m Miss Na~ mtd sikmed his f!~st bill. dfier a secottd proclamatio~t comimfi~g the bauk holida),, he mined admi~fistratio~ qflthe law o~,er to Seovtary HToodi,. The Emergency Banking Act was never intended as a comprehensive reform bill. Its two main purposes were to stop the erosion of public confidence in the banking system and to establish a mechanism for reopening the closed banks. To those ends, the Act gave the President "tremendous World War powers of regulation over transactions in credit, currency, gold and silver, including foreign exchange." It also empowered the SecretaW of" the Treasut3, "to require delivery at the Treasury of all gold and gold certificates held by anybody in the countU [in exchange for dollars]." (The prohibition against U.S. citizens buying, selling, or holding gold -other than jexvelry -- was not to be repealed until 1974.) These measures stopped the out~oxv of U.S. gold reserves and put a halt to the domestic hoarding of gold. "As a direct result of the bank holiday every available police officer in the city reported for duty last midnight -three times more than the usual number -- for the dual purposes of thwarting any possible action of radical elements and protecting the unusually large amount of cash on hand in stores and other establishments." Boston Herald, March 6, 1933 "At least one Governor was caught by his own bank holiday proclamation. Gov. Gifford Pinchot of Pennsylvania said tonight that when he proclaimed the Saturday-through-Monday holiday in his state, he had exactly 95 cents to his name." Boston Herald, March 6, 1933 COPING WITH HOLIDAY STRESS As govermnent officials and CongTessioual leaders worked round tlie clock to resuscitate the U.S. banking system, everyone else tried to deal witli the reality that all banks were to remain closed until ther notice. People liad no way of knowing when, or even if, they would ever see their money again. Surprisingly, tlie bank lioliday created little panic. A front-page item in the Boston Post reported tliat, "Everybody seemed to take the bank closings with good nature. Police officers on duty at tlie banks, witli instructions to iuform any prospective depositors just wliy they could not leave their money, reported that there was little or no excitement because the doors of the bank were not open. There seemed to be few who appeared for the purpose of witlidrawing cash, the officers said, and many tliouglit it a great joke tliat they were unable to get into the banks for the purpose of making deposits." "Scores of church leaders were solicited yesterday by business men, particularly chain restaurant and store managers who had rua short of colas and $1 and $2 bills, and in virtually every instance the clergy respoaded by turning over the cash and taking checks in return." Boston Herald, March 6, 1933 According to an Associated Press account, "The average citizen’s cliie~’trouble appeared to lie in difficulty ofcasliing paychecks. Stores generally extended credit more liberally for liouseliold necessities .... Money orders generally were lilnited to SI00. One company paid 25 percent tbr incoming money orders and gave checks for the balances. IKailroad companies took emergency action, aunouncing broadened credit and stating that travelers would not be left stranded anywliere because of banking difficulties." At one point, TreasuW officials seriously considered issuing large alnounts of government scrip (an emergency substitute to take tlie place of scarce casli). Tliey even went so tar as to print more than $10 million xvortb. But on Tuesday, Marcli 7, TreasmT Secretary Woodin decided against the plan, primarily out of concern that tlie public would not accept scrip at face value. "Wliere would we be," Woodin wondered aloud, "ifxve had I.O.U.’s, scrip, and certificates floating all around the countw?’’-~ Instead he decided to "issue currency against tlie sound assets of the banks. [As opposed to issuing currency against gold.] The Federal Reserve Act lets us print all we’ll need. And it xvon’t fiigliten the people. It won’t look like stage money. It’ll be money that looks like real money." Nevertheless, currency remained in short supply during the bank holiday, and people tried to cope as best they could. "At El Paso, Texas, the First Baptist Church arranged to accept I.O.U.’s on the collection plate, while at Milwaukee, Wisconsin, the West Allis Presbyterian Church provided free gasoline and oil to all worshippers, with the collection baskets placed in an obscure spot to avoid embarrassmerit to the changeless." Boston Globe, March 6, 1933 "Police Station Cell at Woburn [MA] Is Used for Theatre Receipts." Boston Globe, March 6, 1933 Many took to the road in search of jobs and hope. But even when they managed to find work, the hours were long and the money was "short." ACT Two Perhaps most importantly, the Emergency speculation. Commercial banks xvere forced to Banking Act created a mechanism for the o,- divest themselves of their securities affiliates and derly reopening of American banks. Federal au- were no longer permitted to undem, rite securities or insurance. Investment banks, which dealt thorities divided banks into three categories. Class A banks were solvent institutions m little in securities, were barred fiom accepting deor no danger of failing. They would be the first posits. In short, Glass-Steagall xvas intended to allowed to reopen. Class B bauks were endan- uarroxv the likelihood that a sharp drop in the securities market would threaten the stability of gered, weakened, o, insolvent institutions that the commercial banking system. were daougbt to be capable of reopening after an indefinite period of reorganization. Class C Tbe new legislation also chartered the bauks were insolvent institutions that would uot Federal Deposit Insurance Corporation (FDIC) be alloxved to reopen. and provided for the federal guarantee of bank On Marcia 13, only four days after the deposits. Public pressure f-or federal deposit inemergency bauking legislation went into effect, surance bad been building over the years, but member banks in Federal Reserve cities received opponents bad managed to block legislative acpermission to reopen. By Marcia 15, banks con- tion. Fearful of greater government interference trolling 90 percent of the countt3,’s banking re- in their aflhirs, bankers bitterly opposed deposit sources had resumed operations, and deposits far guarantees. The president of the American Bankers Associatiou vowed to fight federal deexceeded witbdraxvals.2~ posit insurance "to the last ditch.’’> The innnediate crisis bad begun to subCongress was divided over whether or not side, but governmelrt officials, Congressional leaders, and most bankers recognized the need the government should assume responsibility for for a major overhaul of the U.S. banking system. private deposits. Even t<oosevelt displayed little Favorable reaction to the Emergency Banking entbusiasna for a federal guarantee of bank deAct had created momentum for comprehensive posits. According to a contempora~T account in reform, audjust three months later, on June 16, Time, "Citizen R.oosevelt called at the White President [Zoosevelt sigued the Bauking Act of House -- to pay the visit of courtesy due on the 1933, more popularly known as the Glass-Stea- day before inauguration. Courtesies passed and were forgotteu. What to do about the banks? ... gall Act. Should the government guarantee 50% of all Whereas the Emergency Banking Act bad bank deposits? President Hoover was willing to instituted a collection of stopgap measures, send an emergency message to Congress. CitiGlass-Steagall made fundamental changes to the zen R.oosevelt was not. An hour and a half passed. They parted. Nothing was done.’’> system. One of its primaW objectives xvas to insulate commercial banking fiom the excesses of "Use your charge accouat as usual." Ad placed by the Retail Trade Board of the Boston Chamber of Commerce. Boston Herald, March 8, 1933 "Former President Herbert Hoover was reported to be ’feeling more like his old self’ than anytime since 1927. One of his visitors asserted that the former chief executive looked ’like a new man .... His sense of ht,mor has come back. He is more jovial.’" Boston Herald, March 9, 1933 "The manager of a Moody Street chain store began a frantic search today for a nest of mice in his store, after he found only $25, and that badly chewed, out of $75 he had placed on a shelf behind some canned goods last night. He had been unable to bank the money yesterday." Boston Herald, March 9, 1933 Today the FOMC is composed of the seven members on the Federal Reserve’s Board of Governors, the president of the Federal Reserve Bank of New York, and four other Reserve Bank presidents who serve on a one-year rotation. The Committee meets in Washington, D.C., every four to six weeks to determine the course of monetary policy. All open market transactions are conducted through the Federal Reserve’s portfolio of Treasury securities maintained at the Federal Reserve Bank of New York. In simple terms, if FOMC members determine that economic conditions warrant a more stimulative monetary policy, they will instruct the manager of open market operations at the Federal Reserve Bank of New York to purchase Treasury securities from approximately three dozen firms known as primary dealers. The Fed then pays for the securities by adding the appropriate amount to the reserve accounts maintained by the primary dealers’ banks. The Fed has, in effect, added reserves to the banking system. By contrast, a more restrictive monetary policy would drain reserves from the banking system through the open market sale of Treasury securities from the Federal Reserve’s portfolio. But tile worselfiug bank crisis soon forced tile Presideut aud tile Cougress to overcome their reservations. Federal deposit insurance was successfully incorporated iuto the Glass-Steagall Act. Ou JanuatT 1, 1934, the federal government began to provide coverage of up to $2,500 per depositor, and tile e~’ect on public confidence xvas dramatic. Bank runs all but ceased. Depositors stopped rushiug to close their accounts at the slightest hint of trouble because they realized the U.S. government was guaranteeiug tile safety of their money. Bank failures dropped from more than 4,000 in 1933 to 62 in 1934, and ouly nine of those 62 banks were insured. Another provision of Glass-Steagall created the Federal Opeu Market Committee (FOMC) aud, for tile first time, expressly recognized tile Federal P,,eserve’s authority to determine the course of monetary policy through the opeu market purchase or sale of U.S. Treasury securities. Prior to 1933, tile Federal FZeserve had moved periodically to affect the level of reserves in tile bauking system by either buying or selliug TreasuW securities on the open market. But questions remained over the actual extent of its authority to engage in open market operatious. Glass-Steagall partially addressed those questions by formally establishiug a 12member FOMC, compdsiug tile governor (president) of each Federal Reserve Bauk. Members of the FOMC \vere given tile authority to meet regularly iu Wasbiugton to determine tile course of moueta~T policy, but they xvere still not given clear authority to implement their decisions. "Tile new law," observed George Eccles, "did "Here is little Betty Hart of Sea Street, Hough’s Neck [Quincy, MA], as she instituted a barter system in the drug store of Arthur J. LaBrecque near her home. She brought in a ripe red apple from her home supply and swapped it for a piece of candy." Photo caption Boston Post, March 10, 1933 not toucb the fundameutal wealoless that marked tile previous histotT of open market operations. While no P,.eserve Bauk could engage in open market sales or purchases uuless it conformed to Federal [Zeserve Board regulations, tile 1933 Act preserved its right to refuse to participate in the sales and purchases tile Open Market Committee recommeuded .... The committee could initiate policy but could not execute it."" This issue was resolved two years later iu tile Bauking Act of 1935. "The ’1 Will’ spirit of the nation is on the move. Things are happening] And better times are not far away. To back our faith in the current emergency program, we stand ready to keep millions of America’s families supplied with tooth paste.., on three months credit. Get three tubes. Take three months to pay." Ad for Pebeco Tooth Paste Boston Herald, March 9, 1933 "Twenty-three federal jurors, some of whom had been forced to break their children’s banks to get their carfares to court, were paid off by United States Deputy Marshall Ralph Gray yesterday after Judge James A. Lowell had discharged them from further attendance in the United States District Court." Boston Post, March 10, 1933 THE FINAL ACT After Glass-Steagall, the Roosevelt Administration completed its reform of the banking indum3, with the Bankiug Act of 1935, which strengthened the nlouetaD, aud regulatoW system by granting tile Federal Reserve greater independence fi’om tile White House, the Congress, and the banking industW. During tile Federal Reserve’s first 20 years, the 12 District serve Banks, particularly tile Federal Reserve Bank of New York, had overshadoxved tile Federal [Zeserve Board in Washingtou. The Banking Act of 1935, however, clearly established the authoriW and relative independence of tile Federal Reserve Board. (Tile Act also changed the Reserve Board’s name to the Board of Governors of the Federal 1Leserve System.) Open Market Committee and gave the FOMC \vider authorit5, to affect the level of reserves iu tile bankiug systeln through the opeu market purchase and sale of U.S. government securities. Tile pace of banking reform slowed considerably after Congress passed tlie Banking Act of 1935. Conditions stabilized, and tile sense of urgeucy that bad propelled major bankiug legislation through Congress gave way to tile partisan jockeying and leugthy deliberations that often characterize more "nom~al" times. But the Bank Holiday of 1933 bad marked a turning poiut in tile Great Depression. Federal action bad strengthened tile financial system, restored public confideuce iu banking, and helped to dispel the seuse of hopelessness that had beguu to pervade evm3, aspect of daily life. Fifty years later, tile bankiug reforms of the 1930s became tile target of mounting c~qticism. Many would argue tliat regulatm3, measures ellacted under tile extraordina~T circumstances of tile 1930s made it more difficult for banks to compete xvith other fiuancial services providers in the marketplace of tile 1980s and 1990s. Whatever the outcome of that debate, two things remaiu certain: The banking reforms passed in 1933 and 1935 revived and preserved a system that, for all intents and purposes, had ceased to function; aud they provided the fouuIll an effbrt to shield moneta~3, policy fiom dation for a period of financial stability that political pressure, tile Banking Act of 1935 stretched well into the next generatiou. provided for the removal of the Secreta~T of the Treasm3, and the Comptroller of the Currency as ex officio members of the Board of Goveruors. Furthermore, it reconstituted the Federal "In California, Governor Rolph reprieved Peter Farrington, condemned murderer. Reason: doubtful legality of hanging on a holiday." Time, March 13, 1933 "A wrestler signed a contract for a match with any opponent accepting as payment a can of tomatoes and a peck of potatoes." Time, March 13, 1933 "In Manhattan, a smart Rochester [NY] shoe drummer [traveling salesman] raised enough cash to get home by selling samples in a hotel lobby." Time, March 13, 1933 The Great Depression didn’t really loosen its grip on the U.S. economy until 1940. But the Bank Holiday of 1933 marked a turning point. Federal action strengthened the financial system, restored public confidence in banking, and helped to dispel the sense of hopelessness that had begun to pervade every aspect of daily life. N OTES & CREDITS Footnotes 25. Ibid., p. 42. 1. 26. "The Presidency: The Roosevelt Week," Time, John Kenneth Galbraith, The Great Crash, 1929 (Houghton Mifflin Company, 1955), p. 8. Vol. XXI, No. 12, March 20, 1933, p. 7. 2. Ibid., p. 38. 27. Ibid., p. 8. 3. Ibid., p. 43. 28. Burns, p. 116. 4. Ibid., p. 89. 29. Galbraith, Money, p. 197. 5. David C. Wheelock, "Monetary Policy in the Great 30. "The Presidency: Scrip v. Panic," Time, Vol. XXl, Depression: What the Fed Did, and Why," Federal Reserve Bank of St. Louis, Review, No. 11, March 13, 1933, p. 9. 31. Eccles, p. 91. March/April 1992, p. 17. 6. Ibid., p. 4. Additional Sources 7. Beth Turin Weston, "Great Depression Glossary," Richard Morris, editor, The American Worker ( U.S. Cobblestone Magazine, March 1984, p. 34. Department of Labor, 1976). 8. Helen M. Burns, The American Banking Community and the New Deal Banking Reform, T.H. Watkins, Tl~e Great Depression: America in the !933-1935 (Greenwood, 1974), p. 14. 1930s (Little, Brown and Company, 1993). 9. Ibid., p. 10. 10. Ibid., p. 15. Photo Credits 11. Ibid., p. 16. page 2 Library of Congress, LC-USZ62-64734 12. Ibid., p. 15. page 3 National Archives, 306-NT-163.820-C 13. Ibid., pp. 16-17. page 7 National Archives, 47-GA-90-494, photo by Ben Shahn 14, Milton Friedman and Anna Schwartz, A Monetary History of the United States (Princeton University page 8 National Archives, SC-97561 Press, 1963), p. 326. page 9 National Archives, 69-N-24862 15. John Kenneth Galbraith, Money: Whence It page11 National Archives, 306-NT-166.153-C Came, Where It Went (Houghton Mifflin page 12 National Archives, 306-NT-106052 Company, 1975), p. 194. page17 Nationa~ Archives, 306-NT-176.765-C page20 National Archives, 47-GA-90-3, 16. George S. Eccles, The Politics of Banking photo by Dorothea Lange (University of Utah Press, 1982), pp. 84-85. 17. Wheelock, p. 19. page 21 Library of Congress, LC-USF34-6322-D, photo by Carl Mydans 18. Eccles, p. 85. 19. Burns, pp. 36-37. page 22 National Archives, photo by Dorothea Lange 20. Eccles, p. 85. page25 National Archives, 47-GAo90-497, photo by Dorothea Lange 21. Ibid., p. 85. 22. Ibid., p. 85. page 26 photo by Dorothea Lange 23. "Business & Finance: Money & People," Time, Vol. XXI, No. 11, March 13, 1933, p. 45. 24. Burns, p. 26. Library of Congress, LC-USF34-9740-C, page 27 Library of Congress, LC-USZ62-55378, photo by Dorothea Lange