Photo above: Franklin D.
Roosevelt having a fireside chat in Washington D.C., April
28, 1935 - Franklin D. Roosevelt Presidential
Library and Museum.
Here is the audio clip of FDR's
radio speech On the Bank Crisis. It is split into two
parts. Scroll down for the transcript.
It follows the full text transcript of
Franklin D. Roosevelt's first fireside chat, On
the Bank Crisis, broadcast from the White House, Washington
D.C. - March 12, 1933.
I want to talk for
a few minutes with the people of the United
States about banking, with the comparatively few
who understand the mechanics of banking but more
particularly with the overwhelming majority who
use banks for the making of deposits and the
drawing of checks.
I want to tell you
what has been done in the last few days, why it
was done, and what the next steps are going to
be. I recognize that the many proclamations from
State Capitols and from Washington, the
legislation, the Treasury regulations, etc.,
couched for the most part in banking and legal
terms should be explained for the benefit of the
average citizen. I owe this in particular
because of the fortitude and good temper with
which everybody has accepted the inconvenience
and hardships of the banking holiday. I know
that when you understand what we in Washington
have been about I shall continue to have your
cooperation as fully as I have had your sympathy
and help during the past week.
First of all let me state the simple fact that
when you deposit money in a bank the bank does
not put the money into a safe deposit vault. 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 wheels
of industry and of agriculture turning around. A
comparatively small part of the money you put
into the bank is kept in currency -- an amount
which in normal times is wholly sufficient to
cover the cash needs of the average citizen. In
other words the total amount of all the currency
in the country is only a small fraction of the
total deposits in all of the banks.
What, then, happened during the last few days of
February and the first few days of March?
Because of undermined confidence on the part of
the public, there was a general rush by a large
portion of our population to turn bank deposits
into currency or gold. -- A rush so great that
the soundest banks could not get enough currency
to meet the demand. The reason for this was that
on the spur of the moment it was, of course,
impossible to sell perfectly sound assets of a
bank and convert them into cash except at panic
prices far below their real value.
By the afternoon of March 3 scarcely a bank in
the country was open to do business.
Proclamations temporarily closing them in whole
or in part had been issued by the Governors in
almost all the states.
It was then that I issued the proclamation
providing for the nation-wide bank holiday, and
this was the first step in the Government's
reconstruction of our financial and economic
The second step
was the legislation promptly and patriotically
passed by the Congress confirming my
proclamation and broadening my powers so that it
became possible in view of the requirement of
time to entend (sic) the holiday and lift the
ban of that holiday gradually. This law also
gave authority to develop a program of
rehabilitation of our banking facilities. I want
to tell our citizens in every part of the Nation
that the national Congress -- Republicans and
Democrats alike -- showed by this action a
devotion to public welfare and a realization of
the emergency and the necessity for speed that
it is difficult to match in our history.
The third stage has been the series of
regulations permitting the banks to continue
their functions to take care of the distribution
of food and household necessities and the
payment of payrolls.
This bank holiday while resulting in many cases
in great inconvenience is affording us the
opportunity to supply the currency necessary to
meet the situation. No sound bank is a dollar
worse off than it was when it closed its doors
last Monday. Neither is any bank which may turn
out not to be in a position for immediate
opening. The new law allows the twelve Federal
Reserve banks to issue additional currency on
good assets and thus the banks that reopen will
be able to meet every legitimate call. The new
currency is being sent out by the Bureau of
Engraving and Printing in large volume to every
part of the country. It is sound currency
because it is backed by actual, good assets.
A question you will ask is this - why are all
the banks not to be reopened at the same time?
The answer is simple. Your Government does not
intend that the history of the past few years
shall be repeated. WE do not want and will not
have another epidemic of bank failures.
As a result we start tomorrow, Monday, with the
opening of banks in the twelve Federal Reserve
Bank cities -- those banks which on first
examination by the Treasury have already been
found to be all right. This will be followed on
Tuesday by the resumption of all their functions
by banks already found to be sound in cities
where there are recognized clearinghouses. That
means about 250 cities of the United States.
On Wednesday and succeeding days banks in
smaller places all through the country will
resume business, subject, of course, to the
Government's physical ability to complete its
survey. It is necessary that the reopening of
banks be extended over a period in order to
permit the banks to make applications for
necessary loans, to obtain currency needed to
meet their requirements and to enable the
Government to make common sense checkups.
Let me make it clear to you that if your bank
does not open the first day you are by no means
justified in believing that it will not open. A
bank that opens on one of the subsequent days is
in exactly the same status as the bank that
I know that many people are worrying about State
banks not members of the Federal Reserve System.
These banks can and will receive assistance from
member banks and from the Reconstruction Finance
Corporation. These state banks are following the
same course as the national banks except that
they get their licenses to resume business from
the state authorities, and these authorities
have been asked by the Secretary of the Treasury
to permit their good banks to open up on the
same schedule as the national banks. I am
confident that the state banking departments
will be as careful as the National Government in
the policy relating to the opening of banks and
will follow the same broad policy.
It is possible that when the banks resume a very
few people who have not recovered from their
fear may again begin withdrawals. Let me make it
clear that the banks will take care of all needs
-- and it is my belief that hoarding during the
past week has become an exceedingly
unfashionable pastime. It needs no prophet to
tell you that when the people find that they can
get their money -- that they can get it when
they want it for all legitimate purposes -- the
phantom of fear will soon be laid. People will
again be glad to have their money where it will
be safely taken care of and where they can use
it conveniently at any time. I can assure you
that it is safer to keep your money in a
reopened bank than under the mattress.
The success of our whole great national program
depends, of course, upon the cooperation of the
public -- on its intelligent support and use of
a reliable system.
Remember that the essential accomplishment of
the new legislation is that it makes it possible
for banks more readily to convert their assets
into cash than was the case before. More liberal
provision has been made for banks to borrow on
these assets at the Reserve Banks and more
liberal provision has also been made for issuing
currency on the security of those good assets.
This currency is not fiat currency. It is issued
only on adequate security -- and every good bank
has an abundance of such security.
One more point before I close. There will be, of
course, some banks unable to reopen without
being reorganized. The new law allows the
Government to assist in making these
reorganizations quickly and effectively and even
allows the Government to subscribe to at least a
part of new capital which may be required.
I hope you can see from this elemental recital
of what your government is doing that there is
nothing complex, or radical in the process.
We had a bad banking situation. Some of our
bankers had shown themselves either incompetent
or dishonest in their handling of the people's
funds. They had used the money entrusted to them
in speculations and unwise loans. This was of
course not true in the vast majority of our
banks but it was true in enough of them to shock
the people for a time into a sense of insecurity
and to put them into a frame of mind where they
did not differentiate, but seemed to assume that
the acts of a comparative few had tainted them
all. It was the Government's job to straighten
out this situation and do it as quickly as
possible -- and the job is being performed.
I do not promise you that every bank will be
reopened or that individual losses will not be
suffered, but there will be no losses that
possibly could be avoided; and there would have
been more and greater losses had we continued to
drift. I can even promise you salvation for some
at least of the sorely pressed banks. We shall
be engaged not merely in reopening sound banks
but in the creation of sound banks through
reorganization. It has been wonderful to me to
catch the note of confidence from all over the
country. I can never be sufficiently grateful to
the people for the loyal support they have given
me in their acceptance of the judgment that has
dictated our course, even though all of our
processes may not have seemed clear to them.
After all there is an element in the
readjustment of our financial system more
important than currency, more important than
gold, and that is the confidence of the people.
Confidence and courage are the essentials of
success in carrying out our plan. You people
must have faith; you must not be stampeded by
rumors or guesses. Let us unite in banishing
fear. We have provided the machinery to restore
our financial system; it is up to you to support
and make it work.
It is your problem, my friends, your problem no
less than it is mine. Together we cannot fail.