Financial crisis of 1933 - 4 March 1983

I don’t think anything that happens this weekend, unless it’s some huge natural catastrophe, will blot out or dim the memory for those of us who lived through them, of the immense events of 50 years ago, this weekend, 4 March 1933.

It was a Saturday, a grey, dank day in Washington and the north-eastern seaboard. It was the day that a new president, Franklin Delano Roosevelt was to be inaugurated. But it was also – today and will be always known as – the day the money stopped. Literally, there was no money in the United States, no crisp new money to be had anywhere.

Every bank in the 48 states had locked its doors. Before I recall what it was like to be a young man almost crassly non-political, planning a frisky weekend in New York and then living through it, I ought to say how, and why, the money stopped.

For several days and nights before Roosevelt’s inauguration neither the new president, nor the old one, Herbert Hoover, had had much sleep, indeed for many weeks. They had been besieged by their advisors to do something drastic about what the bankers – banker JP Morgan – had warned was an emergency more threatening to the life of the whole nation than any since the civil war.

Now, it would be possible to write volumes, in fact they have been written, on the origins and the symptoms and the possible cures for this problem of the country’s solvency. But, at the root of it was a problem of distrust, of the American peoples' disillusion not in the political system, but in the banks.

In the previous November, 1932, Roosevelt had been elected over the incumbent Hoover by a thumping majority of 472 electoral votes to 59. The Crash, and the Depression, had come three years before, under Hoover, therefore, Hoover, like the coach of a losing football team, had been fired.

But in those days the interval between the election of a new president and his actually taking office ran from November to March. For four months, the new president was always hamstrung, the old one was not only a lame duck but an impotent one. It was a bad system. That year, in fact, would mark the end of it, for Congress was frightened enough by the crisis of March 1933 to move the inauguration of a new president up to January.

Over the turn of the year, 1933, small banks were failing in many parts of the country, but there was no large, no public, sense of crisis until February when two holding companies that more or less guaranteed the solvency of every bank in the state of Michigan, where automobiles are made, suddenly begged for a $50million government loan. Both the senior senator from Michigan and the emperor of the automobile industry, Henry Ford, were against a government loan.

Ford had $25million of his own on deposit in his bank, the largest in Michigan. He thought that for him or the government to bail out an entire state would proclaim a total lack of faith in the system and that disillusion would spread like a contagion around the country. Let the crash come, he said. So Michigan declared a bank holiday. It didn’t help, the panic spread anyway.

The country was just then engrossed in reading reports of a government investigation of incompetent, and even corrupt, banking practices before and since the 1929 Crash. From California to Maine, bank lines were added to the bread lines, with one-quarter of the workforce looking for jobs. People totted up the money they had in the bank and the scant money they had in their pockets and they went out and lined up to withdraw whatever they had, and even to try and cash in their policieswith the insurance companies.

There were two opposing solutions: the bankers, who had been against federal help for anything, even for the jobless, wanted the government to come to the rescue with no demand for security. The other solution was bank holiday, of indefinite length, for the entire nation. Hoover leaned towards the bankers, Roosevelt refused to lean either way, till he was in power, but inclined towards the bank holiday which he could only legally proclaim by invoking emergency powers when he was president.

But one state, his own, New York, was qualified to do it under its own laws. Roosevelt prevailed on his friend Governor Lehman, and at four in the morning of 4 March, inauguration day, Lehman gave in and issued his proclamation. The national proclamation would follow as soon as Roosevelt had taken the oath at noon. And so, on that grey Saturday morning, a black-haired young student of the Yale drama school almost, it now seems to me, criminally unaware of banking crisis, political crisis or of the drama of ordinary life, apart from the breadlines and the well-dressed men pacing the streets and begging for dimes and quarters, yours truly, in fact, arrived at Grand Central Station in time to meet an old English girlfriend who sailed into New York that very dawn. They were to meet in the lobby of a hotel, across 42nd Street from the station. They were then to plan their sprightly weekend.

Let me hasten to say, to any listeners beginning to wonder if this programme should, like the movies, bear the warning parental guidance "Advised", let me say that the girl was a fiancé of a good friend of mine whom I’d promised to, as the saying went, show her a good time. And that our carryings on around the town, both by night and by day, were chivalrous in the extreme.

Well, the girl was there rosy and thrilled by her first glimpse of New York, we sat down and had coffee, made our delectable plans. All I need now, I said, is to cash a cheque at the desk and we’ll sally forth on our safari. I went over to the cashier's window, the man looked at me in blank disbelief. "You’ve got to be kidding, sonny," he said. Well sonny (it was fifty years ago) demanded, with icy courtesy, to see the manger. I had stayed at this place several times and was not to be put off by a sassy cashier.

The manager appeared, he heard my appeal. He looked blanker still, blank and pitying. He went to the cigar stand and came back with the morning's New York Times and pointed, limply, with infinite tolerance of this English cretin, to the banner headline, it said, “Roosevelt to be inaugurated today, moratorium declared on all banks”.

I grunted and reverted to one of those elaborate forms of English sarcasm that masquerade as good manners. "Would you be so kind as to tell me," I said, "where I might cash a cheque?" "Nowhere," he said.

I went back to the girl and the coffee cups. There was no hope of getting rooms in the hotel since we’d only a little cash, a little walking money. "Tell you what," I said, being young and incapable of surrender, "If you will stay here, have lunch, walk around, read anything, I will go back to New Haven, and rustle up whatever cash I can cadge from my friends". She was English and sound of de coeur and said that was fine. I’d be back in about five hours. It takes about 90 minutes from New York to New Haven, I had luckily a season ticket on the railroad, and if there had been no girl in the picture, I could have commuted back and forth for the duration of the crisis.

I called on my friends, one by one. Two dollars was as much as anyone dare spare. A Yorkshireman who had smelled it coming and banked his currency under his mattress, saw himself starving within the month but I did wrench out of him one dollar. Then I recalled a rich boy I knew, but I could find him nowhere. And I resent to this day the failed contribution of this same Vinnie Price, later to be known as the king of the horror movies.

The windfall came from one of my closest friends, who was no means, a rich boy. In fact, he waited on his fellows in hall. He was indeed, according to the then immemorial American custom, working his way through college.

But he was also editor of a campus magazine, the Hartness Hoot. "Have you ever," he said craftily, "heard of a due bill?". I had not. It’s an unpaid bill, in this case on a very chic New York hotel which had advertised in the magazine. My friend scribbled a note, authorising his friend, me, to make charges on the hotel, against, if need be, the hotel's entire liability, of $100 which, in those days, was a colossal sum.

I was back in New York in a couple of hours. Come, I said to the game but wilting blonde, we splurged 30 cents on a cab ride to Fifth Avenue's St Regis hotel, we swept in with bags. "Can I help you?" said the room clerk with almost mocking condescension. I showed him the magazine, the ad, the due bill signed Eugene V Rostow.

The manager appeared, scrutinised it, scrutinised us. Fingers were snapped, the only human traffic was that of hordes of well-heeled guests, leaving the hotel on their way home. Two rooms were procured, room service, an early luscious dinner, reservations made for the supper dance on the roof, everywhere heeled-clicking service. They had found one client, who was, on this darkest day, a moneyed man.

We went to the theatre – I’d had tickets for a week or more, it was the first night of a new musical called Strike Me Pink with Jimmy Durante and Lupe Velez. Robert Benchley said in the next New Yorker that he had been struck pinker in his time, but that it was a rousing, even an historic, occasion.

The audience was restless and full of fear, till during the first chorus, the chorus girls stopped on a beat, advanced to the footlights, tapped out a resounding routine, flung their arms up and shouted in unison, "We depend on Roosevelt, we depend on him". The audience rose and cheered. Said Benchley, it practically marked the end of the Depression.

Well, of course it didn’t, but the word of Roosevelt's soaring inaugural, the blitheness and courage of this crippled man, flared round the country like a prairie fire. America would be strapped for six more years, but never so depressed again.

So it was with something close to cheerfulness that everybody lived on credit. In some states, Connecticut was one, we lived off scrip. Many years later, I came on a wad of old dog-eared returned cheques. The names of the payees were a mystery. It was, "Pay Antonio Lamontique 35 cents", "Pay Herman Schultz, 30 cents", "Pay Aaron Goldberg, 40 cents".

And then I remembered, they were New York cab drivers. These slips were all I had left from the scary, gorgeous adventure, during the weekend the money stopped.

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