After a month-long run on American banks, Franklin Delano
Roosevelt proclaimed a Bank Holiday, beginning March 6, 1933,
that shut down the banking system. When the banks reopened on
March 13, depositors stood in line to return their hoarded cash.
This article attributes the success of the Bank Holiday and the
remarkable turnaround in the public's confidence to the
Emergency Banking Act, passed by Congress on March 9, 1933.
Roosevelt used the emergency currency provisions of the Act to
encourage the Federal Reserve to create de facto 100 percent
deposit insurance in the reopened banks. The contemporary press
confirms that the public recognized the implicit guarantee and,
as a result, believed that the reopened banks would be safe, as
the President explained in his first Fireside Chat on March 12,
1933. Americans responded by returning more than half of their
hoarded cash to the banks within two weeks and by bidding up
stock prices by the largest ever one-day percentage price
increase on March 15--the first tra