Saving Private Capitalism: The US Bank Holiday of 1933

Abstract

This paper examines the week-long U.S. bank holiday of 1933, in which President Franklin D. Roosevelt responded to a banking panic by closing all of the banks and promising that the government would review them and reopen only those that were solvent. When the banks reopened the panic was over, as deposits far outstripped withdrawals. This paper provides a detailed look at the bank holiday, with a focus on the review and selective reopening of the banks. It also tries to assess the relative importance of the bank review in rejuvenating public confidence and hence in the overall success of the bank holiday.