686 Chapter 26 The New Deal: 1933–1941
The Hundred Days
As the date of Franklin Roosevelt’s inauguration
approached, the banking system completely disinte-
grated. Starting in the rural West and spreading to
major cities like Detroit and Baltimore, a financial
panic swept the land. Depositors lined up before the
doors of even the soundest institutions, desperate to
withdraw their savings. Hundreds of banks were
forced to close. In February, to check the panic, the
governor of Michigan declared a “bank holiday,”
shutting every bank in the state for eight days.
Maryland, Kentucky, California, and a number of
other states followed suit; by inauguration day four-
fifths of the states had suspended all banking opera-
tions. Other issues loomed, especially war clouds over
Europe and east Asia, but few Americans could look
much beyond their own immediate, and increasingly
dire, economic prospects.
Something drastic had to be done. The most
conservative business leaders were as ready for gov-
ernment intervention as the most advanced radicals.
Partisanship, while not disappearing, was for once
subordinated to broad national needs. A sign of this
change came in February, even before Roosevelt took
office, when Congress submitted to the states the
Twenty-First Amendment, putting an end to prohibi-
tion. Before the end of the year the necessary three-
quarters of the states had ratified it, and the
prohibition era was over.
But it was unquestionably Franklin D. Roosevelt
who provided the spark that reenergized the
American people. His inaugural address reassured the
country and at the same time stirred it to action.
“The only thing we have to fear is fear itself.... This
Nation asks for action, and action now.... I assume
unhesitatingly the leadership of this great army of our
people... .” Many such lines punctuated the brief
address, which concluded with a stern pledge: “In the
event that Congress shall fail... I shall not evade the
clear course of duty that will then confront me. I shall
ask the Congress for the one remaining instrument to
meet the crisis—broad Executive power to wage a war
against the emergency.”
The inaugural address captured the heart of the
country; almost half a million letters of congratulation
poured into the White House. When Roosevelt sum-
moned Congress into a special session on March 9,
the legislators outdid one another to enact his propos-
als into law. “I had as soon start a mutiny in the face of
a foreign foe as... against the program of the
President,” one representative declared. In the follow-
ing “hundred days” serious opposition, in the sense of
an organized group committed to resisting the admin-
istration, simply did not exist.
Roosevelt had the power and the will to act but
no comprehensive plan of action. He and his eager
congressional collaborators proceeded in a dozen
directions at once, sometimes wisely, sometimes not,
often at cross-purposes with themselves and one
another. One of the first administration measures was
the Economy Act, which reduced the salaries of fed-
eral employees by 15 percent and cut various veter-
ans’ benefits. Such belt-tightening measures could
only make the Depression worse. But most New Deal
programs were designed to stimulate the economy.
All in all, an impressive body of new legislation was
placed on the statute books.
On March 5 Roosevelt declared a nationwide bank
holiday and placed an embargo on the exportation of
gold. To explain the complexities of the banking prob-
lem to the public, Roosevelt delivered the first of his
“fireside chats” over a national radio network. “I want
to talk for a few minutes with the people of the United
States about banking,” he explained. His warmth and
steadiness reassured millions. A plan for reopening the
banks under Treasury Department licenses was
devised, and soon most of them were functioning
again, public confidence in their solvency restored.
In April Roosevelt took the country off the gold
standard, hoping thereby to cause prices to rise.
Before the session ended, Congress established the
Federal Deposit Insurance Corporation (FDIC) to
guarantee bank deposits. It also forced the separation
of investment banking and commercial banking con-
cerns while extending the power of the Federal
Reserve Board over both types of institutions, and it
A 1933 banner celebrates the repeal of prohibition. created the Home Owners Loan Corporation