|FDR Delivering "Fireside Chat"|
FDR began his first address with the words: “I want to talk for a few minutes with the people of the United States about banking.”
He had told his lifelong-GOP Secretary of the Treasury, Will Woodin, that he didn't want to be bothered with the details of the solution to the bank panic because he was going to concentrate on communicating the resolution to the public. This was a disappointment to Columbia Prof. Raymond Moley, who was serving as FDR's adviser on the banking crisis and wanted to consult with FDR at every point, but Woodin went right to work.
The Friday before FDR's inauguration, most banks had already been closed because so many states had initiated their own bank holidays, to give the banks some breathing room as depositors were lining up to withdraw all their money (outgoing President Hoover wouldn't act without FDR's agreement, and FDR's position was that he was not going to become President until March 4).
The scene of panic throughout the banking system was shown vividly in Frank Capra's movie It's a Wonderful Life (1947), starring Jimmy Stewart as small-town banker George Bailey, who is considering suicide as he sees his depositors destroying his bank, one depositor at a time.
FDR's first act was to announce a Federal bank holiday – i.e., a presidentially ordered closing of the banks – pending examination of all the banks (largest ones first) and the reopening only of the solvent banks. Secretary Woodin knew what to do as a top manager, because he had been Chairman of a locomotive company and President of a railway car manufacturer that in 1928 were two of the 20 companies in the Dow. He started working around the clock as if it were a three-shift factory, pushing government staff to:
- Print $2 billion more greenbacks for the banks to have on hand.
- Publicize the printing and packing of the greenbacks with filmed news clips for the cinemas.
- Close the banks.
- Examine the banks one by one for solvency, on a priority basis.
- Reopen the sound banks.
- Take steps to close and liquidate the unsound banks.
- Prepare new legislation to prevent a recurrence of the banking crisis–the legislation being passed within months as the Banking Act of 1933, aka the Glass-Steagall Act, named for the bank-regulatory provisions proposed by Senate Banking Chair Carter Glass (D-Va.) and the deposit-insurance plan proposed by House Banking Chair Henry B. Steagall (D-Ala.).
- Prepare new legislation to provide oversight over non-bank financial institutions, which became the Securities Exchange Act of 1933.
When FDR took office, the United States was suffering the highest rate of unemployment, with between one-fourth and one-third of workers being unemployed.
The Fireside Chat got its name from radio journalist Robert (Bob) Trout, who was called "the Iron Man of Radio" for his ability to keep talking during a breaking news story. FDR's purpose was to inspire confidence in himself and in the nonfunctioning banking system. While the chats sound folksy, FDR took great pains to make them that way, using simple vocabulary and anecdotes. Presidents had previously communicated with their citizens almost exclusively through journalists. The Fireside Chats were without precedent and they were effective because radios were still magical and were owned by 90 percent of U.S. households.