—SIGN HELD BY A JOBLESS WORKER
Our greatest primary task is to put people to work.
—FRANKLIN D. ROOSEVELT IN HIS INAUGURAL ADDRESS, MARCH 4, 1933
On December 7, 1932, one month after the election, the temperature in New York City reached a springlike 62 degrees. Better-off New Yorkers undoubtedly enjoyed the unexpected warmth, but men without jobs at the approach of winter prayed for snow. Two days later it appeared their prayers were answered. The temperature dropped to 30 degrees, and on December 10 the season’s first real snow began to fall. Fifteen thousand jobless men waited for the call to clean the city’s streets, but the uncooperative skies dropped a mere two inches and left them disappointed. The next week, things improved. A daylong blizzard dropped half a foot of snow and this time, street bosses handed out shovels to 20,000 men for two days’ worth of work at 50 cents an hour. Men in suits and overcoats joined laborers in work clothes, all bending to their shoveling not just in New York but in cities up and down the snow-blessed eastern seaboard.
Across the country in Los Angeles, the city council was trying to pry money from the Reconstruction Finance Corporation to create some public works jobs. It had been almost six months since Hoover had reluctantly opened the business loan program to state and local governments. Many had filed applications, but most of these were tied up in Washington red tape; of the $300 million set aside for public sector relief loans, a mere $30 million had been granted. But even if they had been approved quickly it would not have made much difference, for the money was inadequate. The Los Angeles application, for example, would cover only ten days’ work for 14,000 men.
For most jobless workers, there were not even these faint glimmers of hope. Several states, following New York’s fall 1931 initiative, had begun relief programs, but while these improved on what local governments had done, they barely dented the need. The Seventy-second Congress convened in a lame duck session on December 5 and debated work-relief spending, but with Hoover still holding veto power, it decided not to act. Nor did it act on Hoover’s measures, including a national sales tax that Roosevelt opposed because it would hit the poor harder than the rich. The new Congress would not take office until inauguration day, March 4. The private sector had nothing new to offer. Indeed, hearings into banking practices begun by the Senate Committee on Finance and Currency in 1932, and resumed in January 1933, were producing a parade of bankers confessing to gross ethical lapses, on one hand, and on the other, a parade of business leaders admitting they still had no clues about how to revive the economy. Three full years of depression had failed to generate solutions to the idle factories, the crops rotting in the fields, and the millions of jobless men and women without money for bare necessities for themselves and their families.
And still the crisis deepened. Through the gray days of late winter, more factories shut down and more shops and offices closed their doors, putting still more people out of work. Unemployment climbed to new heights, rising until one in every four employable workers had no job and no prospect of finding one. It was a jobless rate of 25 percent.
On the first day of the outgoing Congress’s final session, the Communists mustered protests and marches that echoed their hunger march on Washington; 1,200 descended on the Capitol to chant, “Feed the hungry, tax the rich,” while locally the Unemployed Councils organized rent strikes and agitated for relief payments. Each new incident and headline increased the fear that Communism might find a wider audience, and nervous voices called for public order at all costs. Kansas governor Alfred M. Landon said, “Even the hand of a national dictator is in preference to a paralytic stroke.” Republican senator David A. Reed of Pennsylvania looked with admiration at the order fascism had imposed on Italy. “If this country ever needed a Mussolini, it needs one now,” he said. Indeed, his colleagues in the Congress seemed ready to confer dictator-like powers upon Roosevelt. New York representative Hamilton Fish wrote the president-elect in February to say that he and his fellow Republicans were ready to “give you any power you may need.”
And as the country waited for the new administration and whatever it had to offer, fear also attacked the banking industry, driving depositors to tellers’ windows to withdraw their funds and pushing the nation’s monetary system toward collapse and with it, what remained of the economy.
Louisiana, concerned that a run of withdrawals would accelerate, closed its banks in early February. Such closures were euphemistically called bank “holidays.” The withdrawal fever subsided in Louisiana and its banks reopened. But at the end of the second week in February, Henry Ford’s troubled Union Guardian Trust, one of two big bank holding companies in Michigan, was reduced to begging for an RFC loan in order to stay open. But it didn’t have the collateral to support the $50 million loan it wanted, and Ford himself refused a compromise that would have subordinated his claim to certain assets. His version of rugged individualism was at least consistent; he scorned government assistance just as he scorned the workers who toiled on his assembly lines.
On Valentine’s Day, after Ford refused to rescue his own bank, Michigan governor William A. Comstock introduced the concept of the bank holiday to his state, ordering the banks closed for eight days. Frightened depositors made their way to Indiana and Ohio, then to Illinois and Pennsylvania, trying to withdraw cash or preferably gold. Bank closings rippled outward, spreading as depositors panicked. Before the Michigan action, they had been taking gold out of banks at the rate of $20 million a day, their right under the gold standard that promised the dollar’s convertibility to gold. But after Michigan acted, the rate of gold withdrawals almost doubled, and currency was flying out of the banks at the rate of $122 million daily. By that point, more than 5,500 banks had failed. Millions of citizens had lost their life’s savings. The Senate finance committee hearings, revealing that bank owners and officers had routinely protected their own interests at the expense of their customers, eroded depositor confidence still further. Those people who still had assets to protect headed for the exits, taking their cash with them. The rich sought shelter overseas, but the vast majority hid their money within reach: under mattresses, behind a brick in a corner of the basement, or in coffee cans that they buried beneath the bushes in their backyards under the cover of darkness.
As William Gibbs McAdoo, the treasury secretary under Woodrow Wilson, two-time candidate for the Democratic presidential nomination, and newly elected senator from California, said, “Our entire banking system does credit to a collection of imbeciles.”