Theodore Joslin and banking crisis
In late February 1933, Theodore Joslin of Washington, D.C., took a precaution many others across the country had already made. Two weeks earlier, the governor of Michigan had declared a "banking holiday" after two of his state's largest banks came close to failure. Fearing worse to come, Americans across the country chose to pull their savings out of interest-paying financial institutions and into mattresses, shoeboxes, and other hiding placesanywhere but the bank. Joslin followed suit, withdrawing the greater part of his checking account.
As any secretary might, Joslin confessed his decision to his bossPresident Herbert Hoover. The conversation that followed Joslin's guilty confessionhe writes that he felt "unpatriotic" withdrawing so much moneyis recounted in Joslin's diary entry below.
The banking crisis lasted through the end of Hoover's presidency; by the time Franklin D. Roosevelt took office, Americans had withdrawn more than $1.2 billion from banks in just two weeks. Hoover had left, but Joslin, his secretary, was still around to witness Roosevelt's reaction: Looking "angry and depressed," Roosevelt apparently said: "We are at the end of our string."
Diary of Theodore Joslin:
Tuesday, Feb. 28, 1933
The people are more panic stricken today than at any time since the beginning of the depression. This is now quite strictly a banking panic, which is drying up business as never before. Speaking to Ogden Mills this afternoon, the President said:
"As a matter of fact we are dealing with three panics, banking, currency and gold. It seems to me that leaving house scrip would best meet the situation. If such scrip should be issued, it would be used. I do not respond to the suggestion of guaranteeing bank deposits. If we should guarantee 75 percent of the deposits, it might well be that withdrawals would continue. But the policy of banks in distress making payments of five and ten percent is no good. It is limiting business dreadfully."
He gave the day to the subject, having numerous conferences with hulls and Harvey Robinson. He was to have a conference thought with Carter Glen by the called it off. I gathered much data for him for the Treasury. The hoarding today was scarier than ever. Treasury estimates were $200,000,000.
Monday, Feb. 27, 1933
The Commercial did open this morning and although I felt unpatriotic in doing so, I drew out most of the money in my checking account and had Rowena come in and withdraw her savings account. And I told the President what I had done.
"Don't hoard it, Ted," was his only comment. "Put it in another bank that is safe. I would suggest the Riggs. It is the most liquid."
But I am "hoarding" temporarily. No bank is really liquid today and won't be until this panic is over. The daily hoarding figures from the Treasury are ghastly. That of yesterday was $165,000,000 bring the total to in excess of $2,200,000,000.
I had a conference with Charles Scribner this noon and may be able to arrange for the publication of a book on the last four years. The President inquired most anxiously as to all the details of our conversation and expressed the hope we could reach an agreement. "I shall think you could give Scribner's a good book," he remarked. "I hope it will work out."