Roosevelt Bank Holiday-Bold action and communication

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Can we repeat History ?????

During the depression my very Republican Catholic mother in law grew up on a northernWisconsin small farm in the depression. She had two dresses to attend school.

She told me that things were so bleak the only hope was the fire side chat on the radio. She said you had a sense of hope after Rooseveltspoke.

It would serve us well to look at the immediate response from Roosevelt upon election; One has to think Fresh Idea’s, action and Communication

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The following link provides the narrative of the problem before Roosevelt took office. In short the banks were failing and some thing had to be done. Critical to the solution was fresh thinking, fast action and communication

How FDR Reversed the 1933 Banking Crisis

http://www.larouchepub.com/other/2007/3409fdr_banks_33.html

 This link is a narrative of the conditions and actions taken

 The following link goes to a Federal Reserve paper describing the results of Roosevelt’s actions

Why Did FDR’s Bank Holiday Succeed?

http://www.newyorkfed.org/research/epr/09v15n1/0907silb.pdf

From this link

Roosevelt’s fifteen-minute radio address to the American

people on Sunday evening, March 12—his first Fireside Chat—

informed the public that only sound banks would be licensed

to reopen by the U.S. Treasury: “I can assure you that it is safer

to keep your money in a reopened bank than under the

mattress.”1 Much to everyone’s relief, when the institutions

reopened for business on March 13, depositors stood in line to

return their hoarded cash to neighborhood banks. Within two

weeks, Americans had redeposited more than half of the

currency that they had squirreled away before the suspension

 

 

The key phrase here is only sound banks will be licensed to reopen.

In other words he closed the bad banks down

From  Wikipedia

Emergency Banking Act

http://en.wikipedia.org/wiki/Emergency_Banking_Act#cite_ref-1

The provisions of the act were as follows:

Title I

Section 1. To affirm any orders or regulations the President or Secretary of the Treasury had given since March 4, 1933.

Section 2. To give the President the ability to declare a national emergency and have absolute control over the national finances and foreign exchange of the United States in the event of such an emergency.

Section 3. To authorize the Secretary of the Treasury to order any individual or organization in the United States to deliver any gold that they possess or have custody of to the Treasury in return for “any other form of coin or currency coined or issued under the laws of the United States”.

Section 4. To make it illegal for a bank to do business during a national emergency (per section 2) without the approval of the President.

Title II.

To enable the Comptroller of the Currency (a post in the US Treasury) to take complete control of and operate any bank in the United States or its territories and to establish the terms and conditions under which bank is administered.

Title III.

To allow banks to not allow debt to extinguish the use of stock.

Title IV.

Section 401. To allow Federal Reserve banks to convert any US debt obligation (such as a bond) into cash at par value and any check, draft, banker acceptance, etc, into cash at 90% of its apparent value.

Section 402. To allow the Federal Reserve banks to make unsecured loans to any member bank at an interest rate of 1% over the prevailing discount rate.

Section 403. To allow Federal Reserve banks to make loans to anyone for up to 90 days if the loan is secured by a general obligation of the United States (such as a Treasury bond, for example).

Title V

Section 501. Appropriation of $2,000,000 to the President for carrying out this legislation. Section 502. (a severability clause)

 

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About fiscalliberal

New blogger primarily in financial and government issues. Retired male (71) who has followed lifetime of politics and read extensively on the financial crisis
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