This etext was produced by Steve Bonner.

The Fireside Chats of
Franklin Delano Roosevelt

Radio addresses to the American peoplebroadcast between 1933 and 1944.

March 12, 1933.

I want to talk for a few minutes with the people of the UnitedStates about banking—with the comparatively few who understand themechanics of banking but more particularly with the overwhelmingmajority who use banks for the making of deposits and the drawingof checks. I want to tell you what has been done in the last fewdays, why it was done, and what the next steps are going to be. Irecognize that the many proclamations from state capitols and fromWashington, the legislation, the treasury regulations, etc.,couched for the most part in banking and legal terms should beexplained for the benefit of the average citizen. I owe this inparticular because of the fortitude and good temper with whicheverybody has accepted the inconvenience and hardships of thebanking holiday. I know that when you understand what we inWashington have been about I shall continue to have yourcooperation as fully as I have had your sympathy and help duringthe past week.

First of all let me state the simple fact that when you depositmoney in a bank the bank does not put the money into a safe depositvault. It invests your money in many different forms of credit—bonds, commercial paper, mortgages and many other kinds of loans.In other words, the bank puts your money to work to keep the wheelsof industry and of agriculture turning around. A comparativelysmall part of the money you put into the bank is kept in currency—an amount which in normal times is wholly sufficient to cover thecash needs of the average citizen. In other words, the total amountof all the currency in the country is only a small fraction of thetotal deposits in all of the banks.

What, then, happened during the last few days of February and thefirst few days of March? Because of undermined confidence on thepart of the public, there was a general rush by a large portion ofour population to turn bank deposits into currency or gold—a rushso great that the soundest banks could not get enough currency tomeet the demand. The reason for this was that on the spur of themoment it was, of course, impossible to sell perfectly sound assetsof a bank and convert them into cash except at panic prices farbelow their real value.

By the afternoon of March 3d scarcely a bank in the country wasopen to do business. Proclamations temporarily closing them inwhole or in part had been issued by the governors in almost all thestates.

It was then that I issued the proclamation providing for thenation-wide bank holiday, and this was the first step in thegovernment's reconstruction of our financial and economic fabric.

The second step was the legislation promptly and patrioticallypassed by the Congress confirming my proclamation and broadening mypowers so that it became possible in view of the requirement oftime to extend the holiday and lift the ban of that holidaygradually. This law also gave authority to develop a program ofrehabilitation of our banking facilities. I want to tell ourcitizens in every part of the nation that the national Congress—Republicans and Democrats alike—showed by this action a devotionto public welfare and a realization of the emergency and thenecessity for speed that it is difficult to match in our history.

The third stage has been the series of regulations permitting thebanks to continue their functions to take care of the distributionof food and household necessities and the payment of payrolls.

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