The Fireside Chats of Franklin Delano Roosevelt | Page 3

adequate security--and every good bank has an
abundance of such security.
One more point before I close. There will be, of course, some banks
unable to reopen without being reorganized. The new law allows the
government to assist in making these reorganizations quickly and
effectively and even allows the government to subscribe to at least a
part of new capital which may be required.
I hope you can see from this elemental recital of what your government
is doing that there is nothing complex, or radical, in the process.

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 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. It was the government's
job to straighten out this situation and do it as quickly as possible--and
the 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 sound banks
through reorganization.
It has been wonderful to me to catch the note of confidence from all
over the country. I can never be sufficiently grateful to the people for
the loyal support they have given me in their acceptance of the
judgment that has dictated our course, even though all our processes
may not have seemed clear to them.
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. 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; it is
up to you to support and make it work.
It is your problem no less than it is mine. Together we cannot fail.

May 7, 1933.
On a Sunday night a week after my inauguration I used the radio to tell
you about the banking crisis and the measures we were taking to meet
it. I think that in that way I made clear to the country various facts that
might otherwise have been misunderstood and in general provided a
means of understanding which did much to restore confidence.

Tonight, eight weeks later, I come for the second time to give you my
report; in the same spirit and by the same means to tell you about what
we have been doing and what we are planning to do.
Two months ago we were facing serious problems. The country was
dying by inches. It was dying because trade and commerce had
declined to dangerously low levels; prices for basic commodities were
such as to destroy the value of the assets of national institutions such as
banks, savings banks, insurance companies, and others. These
institutions, because of their great needs, were foreclosing mortgages,
calling loans, refusing credit. Thus there was actually in process of
destruction the property of millions of people who had borrowed
money on that property in terms of dollars which had had an entirely
different value from the level of March, 1933. That situation in that
crisis did not call for any complicated consideration of economic
panaceas or fancy plans. We were faced by a condition and not a
theory.
There were just two alternatives: The first was to allow the foreclosures
to continue, credit to be withheld and money to go into hiding, and thus
forcing liquidation and bankruptcy of banks, railroads and insurance
companies and a recapitalizing of all business and all property on a
lower level. This alternative meant a continuation of what is loosely
called "deflation", the net result of which would have been
extraordinary hardships on all property owners and, incidentally,
extraordinary hardships on all persons working for wages through an
increase in unemployment and a further reduction of the wage scale.
It is easy to see that the result of this course would have not only
economic effects of a very serious nature but