President Roosevelt Delivers His First “Fireside Chat” on the Banking Crisis: March 12, 1933
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This text comes from our book, The American Venture.
Such swift work was thought necessary, especially because, since the election in November, the federal government had done nothing about the depression. For three months, Hoover initiated no new policies, though he tried to get Roosevelt to endorse measures which made the New Deal much more like the old deal that had lost Hoover the election. With government doing nothing, panicky investors withdrew their savings from banks. This led to so many bank failures that some state governors began proclaiming “bank holidays”—days on which no banking could occur and, thus, no savings could be withdrawn.
Becoming president, Roosevelt met the banking crisis with swift, decisive action. Only three days after his inauguration, he ordered the closing of all banks for four days. Then on March 9, the first day of the new session of Congress, he submitted an emergency bank bill that the representatives and senators passed in the record time of eight hours. The new law allowed the banks to reopen, but with a new license system and under the direction of conservators. Such swift work instilled a new confidence in the public. When the banks reopened on March 13, there was no run to withdraw savings.
The day before the banks reopened, Roosevelt surprised Americans by addressing them on the banking crisis over the radio. The homey quality of speaking to the public over the airwaves captured people’s imagination. In this, the first of his “Fireside Chats,” as he called them, Roosevelt explained and promoted his policies to the public—as he would continue to do for several years to come.
Many of the bills of the first 100 days were emergency measures to take care of immediate problems. The Federal Emergency Relief Act (passed May 12, 1933) dedicated $500 million to help states, cities, and counties—a figure that would eventually rise to $5 billion. The Agricultural Adjustment Act (AAA, passed May 12) established federally-appointed county agents to see that farmers reduced the planting of crops to increase their price. Fields were left fallow, and farmers plowed crops under and slaughtered livestock. In the fall of 1933, farmers slaughtered 6 million piglets, and the government froze 100 million pounds of pork, which was sent to families on government relief. The federal government paid $200 million in subsidies to farmers who cooperated with the AAA. The Emergency Farm Mortgage Act (also passed May 12) stopped banks from foreclosing on farms.
Roosevelt wanted relief programs for those in want, but he thought such aid should be linked with work and not come just as a handout. The Civilian Conservation Corps (CCC), passed by Congress on March 31, fit the president’s wishes. Directed by the army, the CCC employed young men to help conserve natural resources. A similar program, but not established until 1935, was the Works Projects Administration (WPA), which employed men in reforestation and flood control projects, in building schools and in clearing slums. The WPA employed “white collar” workers as well. College graduates were commissioned to write guides for regions and states, unemployed librarians were hired to staff government-run libraries, and artists were employed to create public art.
On June 16, 1933, Congress approved the National Industrial Recovery Act (NIRA), which established a National Recovery Administration (NRA) to create and apply codes to industry. These codes set maximum hours of work and, in some cases, maximum prices for goods. They determined minimum wages, by which Roosevelt said he meant “living wages,” “the wages of decent living.” The codes forbade child labor and reaffirmed workers’ right to organize themselves in unions. Businesses that cooperated with the NRA were allowed to post an image of a blue eagle with the words “We Do Our Part” in their windows and on their products. If they violated the codes, they could lose this distinctive symbol.
Roosevelt was the first president to appoint a woman to his cabinet. This was Frances Perkins, who served as his secretary of labor. With the first lady, Eleanor Roosevelt, Perkins sought ways to provide heads of families with a living wage. The hope was that, not only children, but even mothers of families need not leave the home to find a job. Since heads of families were presumed to be male, New Deal programs tended to discourage female employment and assured men a higher wage structure than women.
Laws passed during the 100 days were not just stop-gap measures for emergencies. One piece of legislation that looked to the future and not just the present was an act establishing the Tennessee Valley Authority (TVA). Governing the 652-mile valley of the Tennessee River that runs through Tennessee, Alabama, Mississippi, and Kentucky, the TVA built dams for flood control and for production of electricity; it erected power plants and nitrate plants for fertilizer. The TVA built a total of six dams on the Tennessee River between 1933 and 1936. The dams and power plants brought electrical power to most of Tennessee and to portions of Georgia, Alabama, Mississippi, and Kentucky.
On April 19, Roosevelt made a momentous decision by abandoning the gold standard. With Congress’ permission, Roosevelt could determine the value of the dollar by deciding how much it was worth in gold. Roosevelt eventually determined that one dollar equaled only 60 cents of gold. The value of paper money thus decreased 40 percent. This move elicited much criticism, though it was praised by Wall Street, which said that abandoning the gold standard would make American industries more competitive in the world market.
On June 16, Congress passed the Glass-Steagall Banking Act to stabilize the banks. The act ruled that commercial banks (which took in deposits from savers and made loans) no longer might use investors’ funds to speculate on the stock market. Such activity in the past had jeopardized the savings of many common folk who placed their earnings in banks. To further protect these savings, Glass-Steagall established the Federal Deposit Insurance Corporation (FDIC) which guaranteed all bank deposits up to $5,000.
On June 16, 1933, Congress adjourned after completing a prodigious undertaking. With President Roosevelt, it made a major onslaught on the Great Depression. This, however, was only the beginning of their labors. The next few years would see more New Deals, as well as significant challenges to the work of reform. More significantly, the years would set in motion changes that would greatly expand the role of the federal government in the life of the nation. As far as the development of the United States went, the New Deal would prove to be a very big deal, indeed.