FDR closes the banks
Two days after his inauguration, on March 6, 1933, Franklin Roosevelt declared a national bank holiday under the Emergency Banking Act. Every bank in America was closed for a week while federal examiners sorted the solvent from the failing. Roughly 4,000 banks had already collapsed since 1929. The US abandoned the gold standard the same month. On March 12, Roosevelt delivered the first fireside chat, explaining the rescue in plain language. Deposits flowed back in the following week. Recovery in the real economy began that summer.
The bank holiday worked not because of what the examiners found but because of what Roosevelt said on the radio — the first fireside chat, March 12, 1933. 'You people must have faith,' he told them. 'Let us unite in banishing fear.' Deposits flowed back in the following week.
04 · The Great Depression
The Dow peaked at 381 in September 1929. It bottomed at 41 in July 1932 — a decline of 89% over 34 months. Recovery to the 1929 peak took until 1954. Margin lending wiped out the middle class. Unemployment reached 25%. One in four US banks failed. The New Deal, modern securities law, the FDIC, and most of the 20th century's economic institutions exist because of this crash.
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