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It was then that i issued the proclamation providing

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It was then that I issued the proclamation providing for the national bank holiday, and this was the first stepin the government’s reconstruction of our financial and economic fabric.The second step, last Thursday, was the legislation promptly and patriotically passed by the Congressconfirming my proclamation and broadening my powers so that it became possible in view of therequirement of time to extend the holiday and lift the ban of that holiday gradually in the days to come. Thislaw also gave authority to develop a program of rehabilitation of our banking facilities, and I want to tell ourcitizens in every part of the nation that the national Congress—Republicans and Democrats alike—showed bythis action a devotion to public welfare and a realization of the emergency and the necessity for speed that itis difficult to match in all our history.The third stage has been the series of regulations permitting the banks to continue their functions to takecare of the distribution of food and household necessities and the payment of payrolls.This bank holiday, while resulting in many cases in great inconvenience, is affording us the opportunity tosupply the currency necessary to meet the situation. Remember that no sound bank is a dollar worse off thanit was when it closed its doors last week. Neither is any bank which may turn out not to be in a position forimmediate opening. The new law allows the twelve federal reserve banks to issue additional currency ongood assets and thus banks that reopen will be able to meet every legitimate call. The new currency is beingsent out by the Bureau of Engraving and Printing in large volume to every part of the country. It is soundcurrency because it is backed by actual, good assets.Another question that you will ask is this: why are all the banks not to be reopened at the same time? Theanswer is simple, and I know you will understand it. Your government does not intend that the history of thepast few years shall be repeated. We do not want and will not have another epidemic of bank failures.As a result, we start tomorrow, Monday, with the opening of banks in the twelve federal reserve bank cities—those banks which on first examination by the Treasury have already been found to be all right. That will befollowed on Tuesday by the resumption of all other functions by banks already found to be sound in citieswhere there are recognized clearing houses. That means about 250 cities of the United States. In otherwords, we are moving as fast as the mechanics of the situation will allow us.On Wednesday and succeeding days banks in smaller places all through the country will resume business,subject, of course, to the government’s physical ability to complete its survey. It is necessary that thereopening of banks be extended over a period in order to permit the banks to make applications for thenecessary loans, to obtain currency needed to meet their requirements, and to enable the government tomake commonsense checkups.

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Term
Fall
Professor
Ms. Matzel
Tags
Government, Federal Reserve System

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