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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.



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.

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.
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

UOtlllCellleuts fro 111 atl-

thorit3, figures might alter
the outcome. Bedrock
beliefs had been deeply
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.

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
downturn through tile use of
monetal), policy. Instead, the
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


Federal Reserve
Member Bank

State Banks

State Banks

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

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.

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
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

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
quest for cooperative action by
State Banks
National Banks
Federal Rese[ve
establishing the National Credit
Member Bank
State Banks
Corporation, to which New
York City baukers made $500
nfillion available for the purpose
of making loans to bauks that
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
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
Boston Post, March 5, 1933


"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.

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
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


"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

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
specified that: no such
Federal Reserve
Member Bank
State Banks
banking institution or branch shall pay
out, export, earmark, or permit the
withdrawal or transfer in any manner
or by any device whatsoever of any
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


State Banks

"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
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
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. 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~’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.,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

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
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,
seemed to take
the bank closings with good
nature. Police
officers on duty
at tlie banks,
witli instructions
to iuform any
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
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

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
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
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.




25. Ibid., p. 42.


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.


Ibid., p. 38.

27. Ibid., p. 8.


Ibid., p. 43.

28. Burns, p. 116.


Ibid., p. 89.

29. Galbraith, Money, p. 197.


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.

Ibid., p. 4.

Additional Sources


Beth Turin Weston, "Great Depression Glossary,"

Richard Morris, editor, The American Worker ( U.S.

Cobblestone Magazine, March 1984, p. 34.

Department of Labor, 1976).


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


National Archives, 306-NT-166.153-C

Came, Where It Went (Houghton Mifflin

page 12

National Archives, 306-NT-106052

Company, 1975), p. 194.


Nationa~ Archives, 306-NT-176.765-C


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.


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