Rise up for America

[[Supplement I, Pages 1084‑1088]]

Saturday, March 4, 1933

  At 1:30, I was awakened by the policeman who delivered the attached letter

from Eugene Meyer. At 8 o'clock in the morning I checked up and found that the

two Governors had issued their proclamations. I called up Mills at 9:30 to ask

him what had taken place at the Federal Reserve Board that gave rise to the

letter they had written to me. He told me that he had objected to the letter

but that they had overruled him; that Meyer was merely trying to escape

responsibilities; that Meyer had been the origin of the whole movement with

Woodin and was anxious to loom large in the new administration; that he, Mills,

had objected all along to the letter.

  At 10 o'clock I wrote to Meyer my opinion of what he had done.

[Eugene Meyer's letter with enclosures, dated March 3, 1933, follows.]

Dear Mr. President:

  The Federal Reserve Board has been in session again this evening reviewing

the latest reports of developments. The situation as reported from Chicago has

reached the point of extreme tension, with prospects that by the end of banking

hours tomorrow the gold reserves of the Federal Reserve Bank of Chicago will be

dangerously depleted. Representative bankers are assembled there tonight and

have requested that a national holiday be proclaimed as the only method they

know of dealing with the immediate exigency with which they are confronted.

  There is enclosed a copy of a resolution adopted by the Board of Directors

of the Federal Reserve Bank of New York, now in session. This resolution speaks

for itself as to the New York situation.

  Similar conditions are developing rapidly in other Federal reserve districts.

  The Federal Reserve Board has considered two methods of dealing with this

emergency, one by executive order and the other by joint resolution of

Congress. The Senate having adjourned for the day, the issuance of an executive

order seems to be the only alternative to meet the immediate situation. A form

of executive order is enclosed for your consideration.

  The Federal Reserve Board feels that it cannot too strongly urge that the

situation has reached a point where immediate action is necessary to prevent a

banking collapse.

     Respectfully,

        EUGENE MEYER

           Governor

P.S. Since this letter was dictated, there has been communicated to us, by

telephone, a resolution adopted by the Executive Committee of the Federal

Reserve Bank of Chicago, now in session. A copy of this resolution also is

enclosed.

Enclosures.

[The President, The White House]

     RESOLUTION ADOPTED BY THE FEDERAL RESERVE BOARD OF NEW YORK

  WHEREAS, In the opinion of the Board of Directors of the Federal Reserve

Bank of New York, the continued and increasing withdrawal of currency and gold

from the banks of the country has now created a national emergency, and

  WHEREAS, It is understood that adequate remedial measures cannot be enacted

before tomorrow morning,

  NOW, THEREFORE, BE IT RESOLVED, That in this emergency the Federal Reserve

Board is hereby requested to urge the President of the United States to declare

a bank holiday Saturday, March 4, and Monday, March 6, in order to afford

opportunity to governmental authorities and the banks themselves to take such

measures as may be necessary to protect the interests of the people and

promptly to provide adequate banking and credit facilities for all parts of the

country.

PROPOSED EXECUTIVE ORDER

EXECUTIVE ORDER

  WHEREAS the nation's banking institutions are being subjected to heavy

withdrawals of currency for hoarding; and

  WHEREAS there is increasing speculative activity in foreign exchanges: and

  WHEREAS these conditions have created a national emergency in which it is in

the best interest of all bank depositors that a period of respite be provided

with a view to preventing further hoarding of coin, bullion or currency or

speculation in foreign exchange, and permitting the application of appropriate

measures for dealing with the emergency in order to protect the interests of

all the people: and

  WHEREAS it is provided in Section 5(b) of the Act of October 6, 1917, as

amended, that "The President may investigate, regulate, or prohibit, under such

rules and regulations as he may prescribe, by means of licenses or otherwise,

any transactions in foreign exchange and the export, hoarding, melting, or

earmarkings of gold or silver coin or bullion or currency * * *"; and

  WHEREAS it is provided in Section 16 of the said Act that "Whoever shall

willfully violate any of the provisions of this Act or of any license, rule, or

regulation issued thereunder, and whoever shall willfully violate, neglect, or

refuse to comply with any order of the President issued in compliance with the

provisions of this Act shall, upon conviction, be fined not more than $10,000,

or, if a natural person, imprisoned for not more than ten years, or both * * *";

  NOW, THEREFORE, pursuant to the authority granted by said Act, I hereby

order, direct, and declare that:

  1. From Saturday, the fourth day of March, to Tuesday, the Seventh day of

March, Nineteen Hundred and Thirty Three, both dates inclusive, there shall be

maintained and observed throughout the United States of America a bank holiday

for all of the purposes hereinafter set forth;

  2. During said holiday, no banking institution as hereinafter defined shall

pay out, export, earmark, or permit the withdrawal or transfer in any manner or

by any device whatsoever of any gold or silver coin or bullion or currency or

take any other action which might facilitate the hoarding thereof; nor shall

any such banking institution pay out deposits, make loans or discounts, deal in

foreign exchange, or transact any other banking business whatsoever.

  3. Upon the expiration of said holiday and until otherwise ordered by the

President of the United States, such banking institutions may pay out, export,

earmark or permit the withdrawal or transfer of gold or silver coin or bullion

or currency, or deal in foreign exchange to such extent as may be permitted by

license or otherwise under regulations issued by the Secretary of the Treasury

with the approval of the President.

  4. The Secretary of the Treasury, with the approval of the President, is

authorized and empowered to prescribe such regulations as he may find necessary

to carry out the purposes of this order.

  5. The term "banking institution" as herein used shall include all Federal

reserve banks, national banking associations, banks, trust companies, savings

banks, building and loan associations, credit unions, or other corporations,

partnerships, associations or persons engaged in the business or receiving

deposits, making loans, discounting business paper, or transacting any other

form of banking business.

The White House

March, 1933.

RESOLUTION ADOPTED BY THE FEDERAL RESERVE BOARD OF CHICAGO

  WHEREAS, The Executive Committee of the Board of Directors of the Federal

Reserve Bank of Chicago believes that the continuation of the withdrawal of

currency and gold from the banks of the country has created a national

emergency which requires immediate action, and

  WHEREAS, it appears that adequate measures cannot be enacted to remedy this

situation unless governmental authorities act tonight.

  NOW, THEREFORE, be it resolved that because of this emergency it is the

sense of this Committee that the Federal Reserve Board should urge upon the

President of the United States that he immediately declare a bank holiday for

Saturday, March 4, and Monday, March 6, in order to give the banks and the

governmental authorities sufficient time and an opportunity to provide the

necessary measures for the protection of the public interests and so that

adequate banking and credit facilities may be provided as promptly as possible

for the entire Nation.

[President Hoover's letter, dated March 4, 1933, in response to Eugene Meyer,

follows.]

My dear Governor Meyer:

  I received at half past one this morning your letter dated March 3rd. I must

assume that this letter was written on the basis of information received by you

prior to 11:30 o'clock last night for the reason that before your letter was

sent you had certain information as follows:

  a. At 11 o'clock last night the President had informed me he did not wish

such a proclamation issued.

  b. The Attorney General had renewed the same opinion which he had already

given to the Board that the authorities on which you were relying were

inadequate unless supported by the incoming Administration.

  c. That groups of representative bankers in both Chicago and New York,

embracing members of the Board of Directors of the Federal Reserve Banks in

those cities, were then in conference with the governors of the states of

Illinois and New York, and that the governors of these two states were prepared

to act if these representative groups so recommended. It appears that the

governors did take action under their authorities, declaring a temporary

holiday in these two critical states, and thus accomplishing the major purposes

which the Board apparently had in mind.

  In view of the above I am at a loss to understand why such a communication

should have been sent to me in the last few hours of this Administration, which

I believe the Board must now admit was neither justified nor necessary.

     Yours faithfully,

        HERBERT HOOVER

[Hon. Eugene Meyer, Federal Reserve Board, Washington, D.C.]

[The coverage of this volume ends at noon on March 4, 1933, with the close of

the Hoover administration. Copies of the journal of events from the evening of

March 4 to March 8, can be obtained from the Herbert Hoover Presidential

Library, West Branch, Iowa. 52358]