“More Important Than Gold”: FDR’s First Fireside Chat (explains the bailout)

[CountAllVotes]

Read this and it explains the bailout. The only difference is the date which was on March 12, 1933.

When President Franklin D. Roosevelt took office in 1933, one in four Americans was out of work nationally, but in some cities and some industries unemployment was well over 50 percent. Equally troubling were the bank panics. Between 1929 and 1931, 4,000 banks closed for good; by 1933 the number rose to more than 9,000, with $2.5 billion in lost deposits. Banks never have as much in their vaults as people have deposited, and if all depositors claim their money at once, the bank is ruined. Millions of Americans lost their money because they arrived at the bank too late to withdraw their savings. The panics raised troubling questions about credit, value, and the nature of capitalism itself. And they made clear the unpredictable relationship between public perception and general financial health—the extent to which the economy seemed to work as long as everyone believed that it would. To stop the run on banks, many states simply closed their banks the day before Roosevelt’s inauguration. Roosevelt himself declared a four-day “bank holiday” almost immediately upon taking office and made a national radio address on Sunday, March 12, 1933, to explain the banking problem. This excerpt from Roosevelt’s first “fireside chat” demonstrated the new president’s remarkable capacity to project his personal warmth and charm into the nation’s living rooms.

<snip>

President Franklin D. Roosevelt: My friends, I want to talk for a few minutes with the people of the United States about banking—to talk with the comparatively few who understand the mechanics of banking, but more particularly with the overwhelming majority of you who use banks for the making of deposits and the drawing of checks. I want to tell you what has been done in the last few days, and why it was done, and what the next steps are going to be. I recognize that the many proclamations from the state capitals and from Washington, the legislation, the Treasury regulations and so forth, couched for the most part in banking and legal terms, ought to be explained for the benefit of the average citizen. I owe this in particular because of the fortitude and the good temper with which everybody has accepted the inconvenience and the hardships of the banking holiday. And I know that when you understand what we in Washington have been about I shall continue to have your cooperation as fully as I have had your sympathy and your help during the past week.

First of all, let me state the simple fact that when you deposit money in a bank the bank does not put the money into a safe deposit vault. It invests your money in many different forms of credit—in bonds, in commercial paper, in mortgages, and in many other kinds of loans. In other words, the bank puts your money to work to keep the wheels of industry and of agriculture turning round. A comparatively small part of the money that you put into the bank is kept in currency—an amount which in normal times is wholly sufficient to cover the cash needs of the average citizen. In other words, the total amount of all the currency in the country is only a comparatively small proportion of the total deposits in all the banks of the country.

What, then, happened during the last few days of February and the first few days of March? Because of undermined confidence on the part of the public, there was a general rush by a large portion of our population to turn bank deposits into currency or gold—a rush so great that the soundest banks couldn’t get enough currency to meet the demand. The reason for this was that on the spur of the moment it was, of course, impossible to sell perfectly sound assets of a bank and convert them into cash except at panic prices far below their real value.

entire text here:

http://historymatters.gmu.edu/d/5199

We need another President like this; one that can gain and hold the confidence of the people. This is the root of the problem as I see it right now - no trust in the government after 8 years of lies. Mixed with greed and selfishness it has become nothing but a highly chaotic mixture to sort out. What a mess is right!

:dem:

[knowbody0]

1. I'm wondering what impact baby boomers coming of age

in the last three years has had on this situation. Big bite out of social security, cashing in 401K's.

[CountAllVotes]

2. I'd worry more about bad deals made by crooked bankers

that a baby boomer cashing out a 401K. As for social security, I know people in their 90s receiving it. I do not see this as being a big problem as the average social security recipient receives about $850.00 a month.

[RoyGBiv]

3. FDR and the Depression ...

There are several theories about the causes of and the proper responses to the Great Depression. They vary in details and focus but all come around to the same basic set of facts. Some give FDR more credit than others for helping to fix the mess. And of those there is a distinct contingent strong enough to create what amounts to a school of thought on the matter that when creating a hierarchy of solutions to the economic problems this nation faced, FDR, the person, is at the top of it. Yes, the policies are what made the difference in the details. The little things here, the big things there. That all had to be done. But very few people could have done it. Fewer were even willing to try.

Many paths were available. Fascism was on the move. Outright dictatorships were suggested. Letting anarchy reign wasn't all that uncommon. But FDR didn't allow that.

The force of FDR's personality, then, was an essential factor in recovery ... a kind of recovery that genuinely made things better.

Pray Obama has that kind of personality.

[CountAllVotes]

5. Pray Obama has that kind of personality.

At times I have seen this ability in Obama but not often enough. I truly hope that once he is hopefully in place that he will have enough power to really make the changes necessary.

FDR managed to gain the confidence of a people that had zero confidence in the economy.

I believe it can happen again because it would be for the good of the people. We can recover I believe, yes.

History teaches us much. Too bad that so many don't care to study it and learn from its lessons.

[Captain Hilts]

11. FDR saw the GD as, first, a political crisis and second, as an economic one. nt

[sandnsea]

4. And the right hated FDR too

and opposed his plans as communist and interfering with the free market.

[BrklynLiberal]

10. Smedley Butler:THE BUSINESS PLOT TO OVERTHROW ROOSEVELT

In the summer of 1933, shortly after Roosevelt's "First 100 Days," America's richest businessmen were in a panic. It was clear that Roosevelt intended to conduct a massive redistribution of wealth from the rich to the poor. Roosevelt had to be stopped at all costs.

The answer was a military coup. It was to be secretly financed and organized by leading officers of the Morgan and Du Pont empires. This included some of America's richest and most famous names of the time:

* Irenee Du Pont - Right-wing chemical industrialist and founder of the American Liberty League, the organization assigned to execute the plot.
* Grayson Murphy - Director of Goodyear, Bethlehem Steel and a group of J.P. Morgan banks.
* William Doyle - Former state commander of the American Legion and a central plotter of the coup.
* John Davis - Former Democratic presidential candidate and a senior attorney for J.P. Morgan.
* Al Smith - Roosevelt's bitter political foe from New York. Smith was a former governor of New York and a codirector of the American Liberty League.
* John J. Raskob - A high-ranking Du Pont officer and a former chairman of the Democratic Party. In later decades, Raskob would become a "Knight of Malta," a Roman Catholic Religious Order with a high percentage of CIA spies, including CIA Directors William Casey, William Colby and John McCone.
* Robert Clark - One of Wall Street's richest bankers and stockbrokers.
* Gerald MacGuire - Bond salesman for Clark, and a former commander of the Connecticut American Legion. MacGuire was the key recruiter to General Butler.

The plotters attempted to recruit General Smedley Butler to lead the coup. They selected him because he was a war hero who was popular with the troops. The plotters felt his good reputation was important to make the troops feel confident that they were doing the right thing by overthrowing a democratically elected president. However, this was a mistake: Butler was popular with the troops because he identified with them. That is, he was a man of the people, not the elite. When the plotters approached General Butler with their proposal to lead the coup, he pretended to go along with the plan at first, secretly deciding to betray it to Congress at the right moment.
<snip>
Needless to say, the survival of America's democracy is not an automatic or sure thing. Americans need to remain vigilant against all enemies... both foreign and domestic.

more at...
http://www.huppi.com/kangaroo/Coup.htm

[girl gone mad]

6. He gave this speech after the Bank Holiday.

This was after the bailouts had failed and there were large scale bank runs.

[CountAllVotes]

9. yes

did you read the whole thing?

Towards the end ...

We had a bad banking situation. Some of our bankers had shown themselves either incompetent or dishonest in their handling of the people’s funds. They had used the money entrusted to them in speculations and unwise loans. This was, of course, not true in the vast majority of our banks, but it was true in enough of them to shock the people of the United States for a time into a sense of insecurity and to put them into a frame of mind where they did not differentiate, but seemed to assume that the acts of a comparative few had tainted them all. And so it became the government’s job to straighten out this situation and to do it as quickly as possible. And that job is being performed.

I do not promise you that every bank will be reopened or that individual losses will not be suffered, but there will be no losses that possibly could be avoided; and there would have been more and greater losses had we continued to drift. 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 more sound banks through reorganization.

After all, there is an element in the readjustment of our financial system more important than currency, more important than gold, and that is the confidence of the people themselves. Confidence and courage are the essentials of success in carrying out our plan. You people must have faith; you must not be stampeded by rumors or guesses. Let us unite in banishing fear. We have provided the machinery to restore our financial system; and it is up to you to support and make it work.

*****

Is this not where we are now already? Some of the biggest banks in America have fallen. People have lost everything, and not just homes, we're talking jobs and pension funds, etc.

We've been bailing out on and off since the Savings & Loan scandals and it has obviously not worked. It has only encouraged the problem and it has mushroomed.

It has been a miserable failure.

[yurbud]

7. Zeitgeist had a section on JP Morgan engineering a bank run to buy up his competitors

[Golden Raisin]

8. And what a difference (and pleasure)

to have a President who can actually speak in grammatically correct, cohesive sentences with proper syntax, and without dropping (droppin') final "g's" to show us all how folksy and down-home he is. FDR and Dubya both came from wealthy, patrician, powerful, privileged, American Brahmin family backgrounds. One of the many differences is FDR actually had some class.