Free Lords of Finance: 1929, the Great Depression, and the Bankers Who Broke the World by Liaquat Ahamed

safe deposit vault. It invests the money, puts it to work.” “I know you are worried . . . ,” he told them, “I can assure you, my friends, it is safer to keep your money in a reopened bank than under the mattress.” The next day the comedian Will Rogers wrote to the
New York Times
, “Our President took such a dry subject 723 as banking . . . [and] he made everyone understand it, even the bankers.”
    As the first banks prepared to open on Monday, March 13, no one could be sure what would happen. Many feared that after the measures restricting the convertibility of currency into gold, the panic might even continue and indeed become worse. As Harrison put it, “We had closed in the midst 724 of a great bank run, and as far as we knew would reopen under the same conditions.”
    That morning, long lines of depositors formed outside the reopened banks. But instead of taking their money out, they were putting it back in. The combination of the bank holiday, the rescue plan, and Roosevelt’s masterful speech—there is no way of distinguishing which was the more important—created one of those dramatic transformative shifts in public sentiment. As on other similar occasions where a new administration has taken charge in the middle of a crisis and introduced a radically new package of policies—for example, in Germany in November 1923 when hyperinflation was ended or in France in July 1926 when Poincaré stabilized the franc—the mood of the nation changed overnight.
    On March 15, when the New York Stock Exchange reopened after being closed for ten days, the Dow jumped 15 percent, the largest move in a single day in its history. By the end of the first week, a total of $1 billion in cash—half of everything that had been pulled out in the previous six weeks—had been redeposited in banks. By the end of March, two-thirds of the banks in the country, twelve thousand in total, had been permitted to resume business and the currency hoard in the hands of the public had dropped by $1.5 billion.
    This was one more bitter pill for Hoover to swallow. A bank rescue plan introduced by Roosevelt, a man he despised, drafted by Hoover’s own people on principles he had originally proposed, had in the space of a week restored confidence that had eluded poor old Hoover in three years of fighting the Depression.
    Raymond Moley would later write of that week, “Capitalism was saved in eight days 725 .” He was only half right. The rescue plan may have saved the banking system. But the tasks of getting the factories across the country producing once again and of putting average Americans back to work still remained.
    Over the next three months—the celebrated “first hundred days”—Roosevelt bombarded Congress and the country with new legislation. On March 20, Congress passed the Economy Act, which cut the salaries of public employees by 15 percent, slashed department budgets by 25 percent, and cut almost a billion dollars in public expenditures. At the end of March, it approved the creation of the Civilian Conservation Corps to employ young men in flood control, fire prevention, and the building of fences, roads, and bridges in rural areas. In the middle of May came the Emergency Relief Act and that same day Congress passed the Agricultural Adjustment Act, designed to push agricultural prices higher by controlling production and reducing acreage. The Tennessee Valley Authority was set up to build dams and construct public power plants. The National Industrial Recovery Act was passed in the middle of June to permit price fixing. It also authorized $3.5 billion in public works programs. The Glass-Steagall Act, also passed in the middle of June, divorced commercial andinvestment banking and guaranteed bank deposits up to a maximum of $2,500, while the Truth-in-Securities Act established disclosure provisions to govern the issue of new securities.
    The string of measures was a strange mixture of well-meaning steps at social reform,