That morning Miss Catherine Shea, a messenger for the Treasury Department, had brought Herbert Hoover his last $500 pay check. He had received it with a semblance of cheer; reports reaching him before noon suggested that the panic was lessening. After lunch, however, it became clear that this was only an illusion. Minnesota and Kansas were gone, North Carolina and Virginia were going. Hoover, too exhausted for the traditional inauguration eve dinner with the President-elect, received Roosevelt formally at 4 P.M. They parted at dusk. An hour later Governor Horner, who had given up all hope of attending the inauguration, flung himself across a bed in Chicago’s Congress hotel. His bankers remained in session.
In Washington the National Symphony Orchestra had scheduled as its first number that evening a composition by the incoming Secretary of the Treasury. Woodin had reserved a box, but wasn’t in it. He was in the Presidential Suite with Roosevelt, Raymond Moley, Cordell Hull and Jesse Jones, debating the wisdom of a nationwide bank moratorium, while in the White House the same question engaged Hoover, Mills and Meyer. Hoover called Roosevelt twice, to compare notes. Thomas Lamont, who was at the New York Reserve Bank with sixteen other bankers, telephoned the Mayflower. Daniel Ellis Woodhull, president of the American Banknote Company, was with them and was prepared to print scrip, but the bankers didn’t feel this was necessary; they were sure they could stay open.
At 1 A.M. Roosevelt suggested to Hoover that they turn in and get some sleep. They did. And as they slept, their advisers decided everything for them.
Moley, stepping from the elevator into the Mayflower lobby, found Woodin waiting for him. “This thing is very bad,” Woodin said wearily. “Will you come over to the Treasury with me? We’ll see if we can give those fellows a hand.”
At the Treasury were Mills and Meyer, back from the White House, A. A. Ballantine, Mills’ Under Secretary, and F. G. Awalt, his Acting Comptroller. Before them lay the latest bleak Federal Reserve figures. During the last two days, $500,000,000 had been drained from the nation’s banks. They were convinced that the New York bankers did not understand the immensity of the disaster, and must be protected. Governor Herbert Lehman, who had canceled his trip to the inauguration at 11 P.M., Awalted the decision of the Lamont group. Mills and Woodin agreed that regardless of what the bankers decided Lehman must be persuaded to close New York’s banks, and that Horner must also declare a moratorium for Illinois.
At 1:45 A.M. Horner’s hotel telephone jangled—his groggy bankers were ready to capitulate. He taxied to meet them, and together they held a telephone conference with Lehman and the Treasury. At 2 A.M. he proclaimed his holiday. The sixteen New York bankers, meanwhile, piled into five limousines and drove to Lehman’s home, where arguments continued. Moley, spent, fell asleep in Mills’ office. Finally, at 4:20 A.M., the governor of New York reached his decision.
Woodin shook Moley. “It’s all right, Ray. Let’s go now. Lehman’s agreed.”
Hoover was told at 6 A.M. “We are at the end of our string,” he said. “There is nothing more we can do.”
On Saturday, March 4—the day Franklin Roosevelt took office and Howard Scott, technocrat, was formally declared bankrupt—inauguration visitors in Washington found this notice posted over hotel counters:
MEMBERS FIND IT NECESSARY THAT, DUE TO UNSETTLED BANKING CONDITIONS THROUGHOUT THE COUNTRY, CHECKS ON OUT-OF-TOWN BANKS CANNOT BE ACCEPTED.
The Washington Hotel Association
The financial heart of the country had ceased to beat. Banking in every state was wholly or partly suspended. Flags flew in Wall Street, honoring the inauguration, but the Stock Exchange was closed indefinitely, and so, for the first time in eighty-five years, was the Chicago Board of Trade. By 10 A.M. Woodhull’s presses were roaring, turning out $250,000,000 in scrip for the New York Clearing House.
Arthur Krock compared the atmosphere in Washington to “that which might be found in a beleaguered capital in wartime.” The sky was the color of slate. Money worries had kept half the anticipated crowd at home; Vice President Garner wore a borrowed muffler; Woodin, unable to reach his seat, perched on a railing with a cameraman; and during his address Roosevelt, uncovered and coatless, braced himself in the chill wind.
“President Hoover, Mr. Chief Justice, my friends…”
He was flaying the money-changers, gone from the temple. Later it occurred to some that his speech had political implications, but actually it was mild abuse that weekend—Norman Vincent Peale, no revolutionary, demanded from his Fifth Avenue pulpit the following morning that the bankers and corporation heads get down on their knees before God and confess their sins. The fact is that the Treasury, at least, had never been freer of politics. Awalt, the Republican Acting Comptroller, was working on under the Democrats, his uncut hair hanging over his ears. Ballantine, the G.O.P. Undersecretary of the Treasury, was drafting Roosevelt’s first fireside chat on the banks. And Mills’ invocation of the Trading-With-the-Enemy Act, originally written for Hoover, was issued by Roosevelt Sunday night.
His cigarette holder atilt, the new President declared the next four days a holiday for all banks and empowered Woodin to make exceptions. An embargo was declared on the export of gold—the Paris sailed without her precious cargo. Congress was being called into special session on Thursday, when emergency legislation would be ready. Meanwhile the people of the United States would have to manage without money-changers.
How was it done? A great deal depended on who you were—and where you were. As a rule, the farther a man was from home, the greater was his plight. If you were in Havana, you found that Cuba had declared its own holiday. In Cairo you were offered seventeen piasters to the dollar—the previous day’s rate had been twenty-eight—and in Montreal your dollar dropped thirty-five cents in value overnight. Traveling salesmen had to hitchhike—one, in New York, hawked his shoe samples in a hotel lobby to earn his fare home. Ten New Yorkers stranded in Chicago were sent home in a bus by their hotel.
In Reno that week, fewer than a half-dozen court cases were filed each day; women had court costs and fees, but lacked funds for train tickets. Miami was in an uproar—the American Express Company declared a fifty-dollar limit on the cashing of its checks there Monday as 5000 tanned visitors lined up. Pasadena’s exclusive Huntington Hotel printed scrip for stranded millionaires; among those seen in the lobby queue were Edward Bausch, of Bausch and Lomb; Sir Montagu Allan; and Prince Erik of Denmark. In Washington, Cordell Hull’s first official chore was to deal with enraged diplomats, who argued that their money was entitled to diplomatic immunity from sequestration. He held them off—their plight was no worse than that of many an American alone in a strange city where his credit meant nothing. In New York a drunken Hawaiian entertainer killed his partner for accepting a check. As Prince Mike Romanoff, the noted impostor, noted piously, “A great many people’s checks are now as good as a great many others.”
At home Americans struggled along with varying success, depending upon the length of local holidays. Detroit, in its fourth week of moratorium, was suffering. Two thirds of the city’s 1400 laborers had been unable to raise anything on their pay checks, and several fainted on the job from hunger before emergency food cards were issued. Merchants estimated their business at 60 to 70 percent below normal, restaurant cash registers were crammed with signed lunch checks, and doctors, unable to get gasoline, had to restrict their calls. In Springfield, Massachusetts, on the other hand, a newspaper survey showed that the average citizen had $18.23 cash—in trousers, purses, teapots and baby banks—when the city’s banks closed on Inauguration Day.
In such communities the problem was not cash, but change. Many a man was walking the streets with a full wallet, unable to buy cigarettes, ride a bus, or use a pay telephone, because no one would break his bills. As early as Saturday, March 4, New York suburbanites began redeeming their commutation tickets to obtain silver. That night a crowd flourishing $100, $500 and even $1000 bills formed in Pennsylvania Station—buying tickets to Newark so that t
hey could get change.
Automats were invaded by women in mink who got twenty nickels change for dollar bills and left without eating anything, subways by men in homburgs who had never ridden a subway and didn’t intend to start now. Clerks, watching their stocks of coins shrink, became wary. On Lexington Avenue a man with a fifty-dollar bill tried to buy $3.52 in shaving supplies; he was advised to grow a beard. The Commodore Hotel turned away a changeless man with a $30,000 certified check. Hotel managers sent bellhops to churches to exchange bills for silver. Churches, however, were having their own difficulties; even the devout were close-fisted that March 5. One Methodist minister in New York advised his congregation to keep its silver; another solicited an offering of IOU’s.
As the week wore on the shortage of change became crippling. On Monday storekeepers in Elgin, Illinois, learned that a sixteen-year-old boy had saved 11,357 pennies toward his college education, and within an hour they had his home surrounded. There weren’t many such caches, however; by Wednesday even the eleemosynary Mr. Rockefeller had run out of dimes and had to give his caddie a whole buck. About the only people with fluid currency were the Alaskans, who were using gold dust, and bootleggers.
Credit, indeed, was the only solution to the holiday, as smart retailers had realized at the beginning. “If I try to get all my cash I shall certainly make matters worse,” declared Jesse Isidor Straus, president of R. H. Macy & Co., which normally dealt only in hard money. “Use your charge account at Lord & Taylor!” “Use your credit!” cried newspaper ads. “Do not declare a moratorium on your appetite,” advertised the Hollywood Cabaret Restaurant. In Texas, pharmacists accepted IOU’s for prescriptions. Gimbel’s extended credit to patrons of its restaurant, and taxi dancers in Manhattan’s Roseland Dance Hall accepted IOU’s—from men who could produce bankbooks.
Harry Staton, manager of the Herald Tribune Syndicate, was in California when the banks closed there. They kept on closing ahead of him, but he returned to New York on ten dollars, signing his name all the way. When he visited a gambling casino, the manager agreed to give him chips on credit, but warned that he would be paid in chips if he won. In Florida, two race tracks folded. More significant to the economy were the steel industry, whose orders hit a new low; the real-estate business, which was paralyzed; and the automotive industry, some of whose plants were forced to close. Barbershops and railroads reported sharp declines. Hollywood was near ruin—box-office receipts dropped forty-five percent, and every studio shut down. King Kong went into his second week at Radio City, but he was snarling at empty houses.
Where credit failed, people fell back on barter or improvised scrip. During the first week of the new administration, stamps, phone slugs, Canadian dollars, Mexican pesos and street-car tickets were used for currency. Mormons in Salt Lake City designed a paper money that could be used locally. The Greenwich Village Mutual Exchange issued $1000 in tokens to member businesses. In Princeton the Princetonian printed twenty-five-cent scrip notes for students, to be redeemed when the banks reopened. A Wisconsin wrestler signed a contract to perform for a can of tomatoes and a peck of potatoes; an Ashtabula newspaper offered free ads in exchange for produce; and a New York state senator arrived in Albany with twelve dozen eggs and a side of pork to see him through the week.
The most spectacular experiment in barter was conducted by the New York Daily News, which was sponsoring the semifinals of the Golden Gloves tournament in Madison Square Garden. The price of seats was fifty cents, but any article worth that amount was accepted as admission, provided the five-cent amusement tax was paid. An appraiser was engaged, who inspected, during the evening, frankfurters, mattresses, hats, shoes, overcoats, fish, noodles, nightgowns, steaks, spark plugs, cameras, sweaters, canned goods, sacks of potatoes, golf knickers, mechanics’ tools and foot balm. A boy presented his New Testament, a girl her step-ins. The items most frequently offered were jigsaw puzzles.
Nearly everyone assumed the holiday would end with the formal adoption of scrip—local currencies, managed by states, cities and individual firms. Atlanta, Richmond, Mattituck, L.I., and Knoxville, of all places, were already on the stuff; before the week of March 6 was out Nashville would have $1,000,000 in circulation; Philadelphia, $8,000,000. The Louisville Courier-Journal was paying its employees in private scrip. More than a hundred communities were having notes printed, including Chicago, Boston, Providence, New Haven, Detroit and New York. Governor Lehman had appointed Al Smith chairman of an Emergency Certificate Corporation, and tellers’ cages were being constructed in the New York Clearing House to distribute rainbow-colored bills ranging in value from one dollar to fifty dollars. Woodhull’s Bronx plant now employed 2500. In Nutley, New Jersey, a safety-paper company which had been working three days a week for months went on three shifts, turning out six tons of scrip for Wisconsin and Tennessee.
To Secretary of the Treasury Woodin, however, the thought of state and municipal currencies and company certificates floating around the country was appalling, and at breakfast on Tuesday, March 7, he told Moley that he had been up half the night, brooding over alternatives. Scrip wasn’t needed, he had decided. “We can issue currency against the sound assets of the banks,” he said. “It won’t frighten people. It won’t look like stage money. It’ll be money that looks like money.” There was nothing to lose. After all, he said publicly, “We’re on the bottom. We’re not going any lower.”
Working endlessly in his Carlton Hotel suite with Carter Glass, Woodin met Thursday’s legislative deadline. As congressmen filed into the special session the finished bill was handed to the clerk—“My name’s Bill, and I’m finished, too,” Woodin muttered—and was read aloud. Few representatives heard it above the hubbub. They had no copies of their own. There had been no time to print them. Even the copy given the clerk bore last-minute changes scribbled in pencil. In thirty-eight minutes they whooped it through while Eleanor Roosevelt sat knitting in the gallery like a benign Madame Defarge, counting votes. Then they crowded into the Senate chamber to hear Glass explain just what it was they had done.
The little Virginian backed it, though he acknowledged there were parts which shocked him. It was, in fact, a shocking measure, ratifying all acts “heretofore or hereinafter taken” by the President and the Secretary of the Treasury. It provided prison terms for hoarders, “conservators” rather than receivers for weak banks—a euphemistic triumph almost as great as “holiday”—and authorized the issuance of $2,000,000,000 in new currency based on bank assets. At 8:36 P.M. a rumpled Roosevelt signed it in the White House library, surrounded by unpacked books and pictures from Hyde Park. That evening the Bureau of Engraving and Printing recruited 375 new workers. The official printing presses of the United States finally were going into action.
All that night and the next the lights of the Bureau twinkled across the Tidal Basin. There was no time to engrave new dies—plates bearing the imprint “Series of 1929” were pressed into service. There wasn’t even an opportunity to acquire facsimile signatures of two officials from each of the twelve Federal Reserve banks; signatures were taken from files in the district and sent by messenger to the American Type Foundry in Jersey City, where logotypes were cut. Early Saturday morning planes began taking off from Washington bearing bales of cash. The first were delivered to New York’s Federal Reserve bank shortly before noon. Transfer to member banks began immediately.
The real trick was prying open the rigid fists of hoarders, who in one week had taken fifteen percent of the nation’s currency out of circulation. Even a bewitched Congress couldn’t make the penal clauses apply to hoarding that already had taken place, and so the government turned to the spur of publicity. On Wednesday, March eighth, the Federal Reserve Board announced that its banks would prepare lists of persons who had withdrawn gold since February first and who failed to bring it back by March thirteenth, the following Monday. Newspapers had scarcely appeared with this announcement before bank switchboards were jammed. Anonymous callers wanted to know
what would be done with the names, what it was all about. The replies were ominously vague. Callers were told only that if they had gold and wanted to return it, the banks would open for them, and newspapermen would be kept out of lobbies.
In the next few hours thousands of mattresses were torn open, cans dug up, hidden boxes brought forth. Banks everywhere reported long queues, reminiscent of the preceding week’s panic but comprised this time of men and women carrying Gladstones and briefcases. In Cleveland $300,000 was deposited that day; in Minneapolis, $182,000. Thursday, the day Woodin’s bill was cheered through Congress, Cleveland took in $500,000, Philadelphia $700,000, Richmond $163,000. The real flood of double eagles, however, was in New York, which, despite a fifty-six-mile gale—which tore loose the stitching in a woman’s petticoat and sent a sheaf of gold certificates scudding across Sixth Avenue—banked $30,000,000 that day. One man brought in $700,000; one firm, whose identity remains a secret, delivered $6,000,000 in bullion to the Federal Reserve Bank.
Encouraged, the bank extended its order on Friday, asking for reports covering withdrawals of the past two years. The widened hunt brought bigger game; the nation’s gold supply rose dramatically. By 9:30 A.M., when the Federal Reserve Bank of New York opened, there was a line of 1000 people, their pockets and luggage sagging with gold. An hour later, the crowd had grown to 1500. Filing through the grilled gates, the depositors filled out deposit slips, presented the same bags and rolled paper stacks they had withdrawn, and waited while the money was counted. When the bank closed at 5 P.M., two hours late, 4000 people had passed in and out.
The flow continued, uninterrupted, on Saturday, enhanced in Wilmington by a twenty-year collection of gold pieces turned in by Irenée du Pont. By that night, Federal Reserve banks had recovered $300,000,000 in gold and gold certificates, enough to support $750,000,000 additional circulation. Even before the planes took off with new bank notes, Woodin had permitted individual savings banks to dole out ten dollars to each depositor. Business began to stir, and not all the money was spent for necessities. In Boston Saturday afternoon a Herald reporter found several hundred women crowded around five counters in a bargain basement, buying jigsaw puzzles.
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