“The public plainly showed that it recovered from the fear and hysteria which characterized the last few days before the banking holiday was proclaimed.” (The New York Times, March 14th, 1933.)
During the opening days of March, 1933, the U.S. economy resembled a stricken body slowly bleeding out, its organs failing one by one. The Federal Reserve System was hemorrhaging gold, and entire state banking systems were shutting down one after another. If the economy was to survive and recover, FDR had first to staunch the bleeding, and then to arrange for a transfusion. Here I explain how he managed the first of these steps.
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