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|User Info||Are We Going To Sit On Our Hands?; entered at 2009-01-19 15:52:48|
Registered: 2007-07-10 Stumptown
The day after FDR took office in 1933 he declared a bank holiday: |
On March 5--the day after being sworn into office--Roosevelt stepped into the breach and declared a "bank holiday," which, for four days forced the closure of the nation's banks and halted all financial transactions. The "holiday" not only helped stem the frantic run on banks, but gave Roosevelt time to push the Emergency Banking Act through the legislative chain. Passed by Congress on March 9, the act handed the president a far-reaching grip over bank dealings and "foreign transactions." The legislation also paved the path for solvent banks to resume business as early as March 10. Three short days later nearly 1,000 banks were up and running again.
This (as I understand it) was done ostensibly to figure out which banks were solvent and which ones weren't. They let the solvent ones open up 5 days later and they shut down the insolvent ones. As I understand it there were very few bank failures after this action.
While FDR is remembered for all the Keynsianism that followed, Perhaps this was FDR's best contribution to help solve the problem? It was kind of like Mellon's "Liquidate, liquidate..." idea. The banks couldn't play hide the sausage any longer. The keynesians seem to want to only remember FDR's keynesianism.