The Fireside Chats of FDR HTML version

Radio addresses to the American people
broadcast between 1933 and 1944.
March 12, 1933.
I want to talk for a few minutes with the people of the Unit ed
States about banking–with the comparatively few who understand the
mechanics of banking but more particularly with the overwhelming
ma jority 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 bene?t 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 sympat hy 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 d eposit
vault. It invests your money in many dierent 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 su?cient to cover the
cash needs of the average citizen. In ot her 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
?rst few days of March? Because of undermined con?dence on the
part of the public, there was a general rush by a large portion of
* PDF created by
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 3d scarcely a bank in the count ry was
open to do business. Proclamations temporarily closing them in
whole or in part had been issued by the governors in almost all the
It was then that I issued the proclamation providing for the
nation-wide bank holiday, and this was the ?rst step in the
government’s reconstruction of our ?nancial and economic fabric.
The second step was the legislation promptly and patriotically
passed by the Congress con?rming my proclamation and broadening my
powers so that it became possible in view of the requirement of