In 1933, the banking crisis led to bank closings across the nation. Banks were unable to meet currency withdrawals as people panicked and withdrew their money at alarming rates. Many bank customers feared that banks would close indefinitely, and they would lose their money forever. As a result, President Franklin D. Roosevelt declared a federal banking holiday that lasted from March 6th to March 13th, 1933. The stock market crash in October 1929 and borrowers' inability to pay back loans eventually led to the banking crisis in 1933.
Stop Hoarding Money
Roosevelt tried to persuade the American people to stop withdrawing money out of panic. Most didn't truly need their mass withdrawals for purchases and were hoarding the money. They wanted to remove their money from banks, in the form of tangible liquid assets, out of fear about the strength of the banks. "Let me make it clear that the banks will take care of all need -- and it is my belief that hoarding during the past week has become an exceedingly unfashionable pastime," FDR said in a public radio broadcast, later termed his first fireside chat.
Be Patient as Banks Reopen and Reorganize
Roosevelt wanted people to be patient as the government assisted in bank re-openings. At first, only the stabilized, major banks in big cities reopened. FDR didn't want people in smaller communities to panic again, fearing that their banks were shutting down for good. "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," Roosevelt in his fireside chat.
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