Franklin Roosevelt's Big Bank Bailout: March 6, 1933 Gary North from Specific Answers

Franklin Roosevelt's Big Bank Bailout: March 6, 1933

Gary North - October 15, 2016

You grew up on this story: "Franklin Roosevelt saved capitalism from itself." This is one of the major myths of American history.

Here is how we should understand the New Deal: Franklin Roosevelt saved the big bankers from their depositors.
To understand the truth, you must understand what is never mentioned in the textbooks. Roosevelt gave his famous Inaugural Address shortly after noon on March 4, 1933. It is most famous for these words: "We have nothing to fear but fear itself."
But the New York banks had a great deal to fear. There was a bank run going on: a run on the gold in the banks. The run on gold had begun as soon as Roosevelt was elected the previous November.
What the textbooks never, ever mention is this sequence of events.

1. The banks closed on Friday afternoon, March 3.
2. Roosevelt gave his Address on Saturday, March 4, around noon.
3. At one a.m. on Monday morning, March 6, Roosevelt closed the banks.
4. He made it illegal to withdraw gold from the banks before they opened.
5. He called this a "bank holiday."
6. He had no authority to do this.
7. Congress retroactively gave him the authority on March 9.

On what judicial basis did he do this? Woodrow Wilson's "Trading With the Enemy Act" of 1917. Roosevelt said it was still a wartime emergency. The phrase "grasping at straws" comes to mind.
All of this information is available from the documents, but the dots are never connected in the textbooks or PBS documentaries.

Fact: Roosevelt saved the New York banks in his first week in office. He saved the banks from their depositors, who were never again allowed to get their gold. They broke their contracts with the full support of the new government. This was theft, pure and simple. It was the end of the gold standard.
There are other dots that are never connected.
He was a Wall Street banker, bond salesman, and cartel builder, 1921-1928. The textbooks never mention this. The PBS documentaries never mention this. They focus on his polio, 1921-1928. We are never told what he did for a living. He even worked with Herbert Hoover in setting up one of the cartels in 1923: the American Construction Council. Hoover was Secretary of Commerce.
Antony Sutton proved all this from the documentation in his book, Wall Street and FDR (1975). The book was immediately dropped down the memory hole. No academic historian had ever written about any of this from 1933 to 1975. None has since then. Yet the documentation is overwhelming.
I was trained as a historian. I received my Ph.D. in 1972. None of this was known to my professors. The historical guild had sealed off this information in the 1930's and 1940's. The seven-year gap in his career has attracted no academic historians.
Students are not told that Wall Street millionaires turned against Hoover in 1932 when he refused to submit the Swope Plan to Congress. The Swope Plan would have annulled the anti-trust laws for large American businesses. It would have set up a system of cartels. You can read about it here. It was modified and then submitted by Roosevelt in June 1933. It was given a new name: the National Industrial Recovery Act. The Supreme Court overturned it in 1935.
Occasionally, advanced students are told of Roosevelt's 1932 speech in Pittsburgh, where he attacked Hoover's administration as spendthrift. He promised to cut government spending. I have reproduced it here. But his 1930 speech defending states' rights is never mentioned. He announced:

Now, to bring about government by oligarchy masquerading as democracy, it is fundamentally essential that practically all authority and control be centralized in our National Government. The individual sovereignty of our States must first be destroyed, except in mere minor matters of legislation. We are safe from the danger of any such departure from the principles on which this country was founded just so long as the individual home rule of the States is scrupulously preserved and fought for whenever it seems in danger.

Yes, he really said this. In 1930, he was not a New Dealer. He had no philosophy. He was a former bond salesman who had been elected governor during the boom in 1928. He was an Al Smith Democrat, whom he replaced as governor in 1929. But the depression changed him. It changed Wall Street. The New York bankers now wanted protection. So did the industrialists. Price competition was hurting them. They wanted the federal government to prohibit it. They funded Roosevelt's campaign after Hoover failed to meet their demands. Nevertheless, Roosevelt's thesis was accurate in 1930. The New Deal confirmed his speech's thesis: oligarchy masquerading as democracy. I have reproduced it here.
You have probably never listened to all of Roosevelt's Inaugural Address. You have probably never read it. It is a masterful piece of deception. He attacked bankers as money changers in the temple. He had been one of them in that temple, 1921-28. Yet within 48 hours of his Address, he bailed them out. He saved them from the #1 threat facing them: a run on their gold.
Listen to it.
Then read it. Download it here.
Then listen to my analysis of it. I prepared this for my American history students in the Ron Paul Curriculum.
For more information on how to enroll your children in the program, go here:
http://www.ronpaulcurriculum.com/public/3346.cfm