The week that `saved capitalism'
USN&WR
On a dreary Saturday 70 years ago this month, America was as close to collapse as it had ever been. The Great Depression in its fourth grinding year, fears of chaos and totalitarianism abounded. Herbert Hoover's war secretary massed troops near big cities in case of a revolt by "reds and possible Communists."
Hoover awoke that day--his final morning in the White House--to word that Illinois and New York had joined a long list of states where all the banks had ceased to function. "We are at the end of our string," the outgoing president lamented. "There is nothing more we can do."
The president-elect, Franklin D. Roosevelt, knew what was at stake. If he succeeded, a friend told him, he would be remembered as the greatest president ever, and if he failed he would be known as the worst. "If I fail," FDR replied, "I shall be the last."
That Saturday--March 4, 1933--millions of Americans turned on their radios and heard a president who believed that plenty still could be done. "This great nation will endure as it has endured, will revive, and will prosper," Roosevelt declared in his brief inaugural address. "So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself."
Waging a war. For the first time since 1929, a president's words brought genuine cheers. But amid the hurrays came a grim analogy. If Congress failed to enact recovery measures, Roosevelt warned, he would seek "the one remaining instrument to meet the crisis--broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe." On March 5, to prevent a total failure of the banking system, FDR declared a national bank holiday, closing every bank until further notice, and banned the export of gold. On March 8, he created the open press conference. "I am told," he said to the reporters gathered around his desk, "that what I am about to do will become impossible, but I am going to try it." It was the first of 998 press conferences in a presidency that would last more than 12 years.
On March 9, Congress met in special session. Within hours, both houses passed the Emergency Banking Relief Act, putting banks under federal control and providing for their reopening. Three days later, in his first "fireside chat," FDR told a national radio audience: "It is safer to keep your money in a reopened bank than under the mattress." That week, 3 of every 4 banks reopened. Banks were safe, people concluded, because FDR said so. The mattress money became bank deposits, and the stock market jumped 15 percent.
But much more had to be done. Lights burned late in the White House as Roose-velt's "Brain Trusters" looked for ways to revive industries, rescue farmers, and feed the hungry. "Take a method and try it," the new president urged. "If it fails, try another. But above all, try something."
In what would be known as "The Hundred Days," Congress enacted the chief programs of FDR's New Deal, a blizzard of agencies known by their initials, including AAA, CCC, NLRB, TVA, and FDIC.
But the most crucial time had been that one week from the inauguration to the fireside chat. Raymond Moley, then a top FDR aide, would later become his harsh critic, but he never changed his view of what happened that March: "Capitalism," he said, "was saved in eight days."
This is the third in a series of monthly reports marking the 70th anniversary of U.S. News.
This story appears in the March 31, 2003 print edition of U.S. News & World Report.
advertisement
