A ‘holiday’ to remember: On March 4, 1933, Minnesota closed its banks

As the holiday continued for a second day, the mood in the city was festive, according to the Minneapolis Journal. There was laughter and a lot of joking, the paper reported. But not everyone in town was celebrating on this late winter weekend in 1933.

The “holiday” was the result of a state order closing Minnesota’s banks on March 4, just as Franklin Roosevelt’s inauguration was about to get under way in Washington.

The bank holiday, itself, was no laughing matter. It was a deadly serious effort by public officials all across the country to halt a potential bank run that could have led to the collapse of the U.S. economy. By Inauguration Day, Minnesota had become the 37th state to close its banks, when the Lt. Governor Solberg issued the order on behalf of Gov. Floyd Olson, who was on his way to Washington to meet with the Roosevelt.

The next day, on March 5, the new president would nationalize the bank closing by extending it to the entire country. Roosevelt declared that he was acting to provide a “respite” for depositors because there had been “heavy and unwarranted withdrawals of gold and currency from the banks for the purpose of hoarding.”
 
Newspaper tries to boost confidence
In an effort to bolster local consumer confidence, the Minneapolis Journal maintained that the state-ordered bank holiday did not reflect on the solvency of Minnesota’s banks. Rather it was forced on Minnesota by the action of other states, the paper said. “With the banks in New York and Chicago closed and Minnesota banks open, the outside world would have promptly withdrawn all its Minnesota deposits to meet its emergency currency needs, while Minnesota banks would have been powerless to protect their cash reserves by calling in their own balances deposited outside the state,”  the Journal noted.

But then, to lighten the somber mood, the Journal commented on the “laughter and myriad of the jokes” that accompanied the bank closing when people realized that they could use personal checks in place of cash to conduct their business.



“In downtown Minneapolis, trade contracted immediately upon the closing of the banks but not nearly to the extent to which businessmen had feared,” the Journal went on to report. “Trade in downtown department stores was very nearly up to the mark set on the previous Saturday.”

As the bank holiday continued for several more days, it was very nearly business as usual when those shoppers who had charge accounts could continue to use them to purchase what they needed — at least from the local department stores. 

Businesses tout charge accounts
Soon Twin Cities businesses were taking out ads in the local paper promoting their charge accounts.  In St. Paul, an ad for the Shunemanns & Mannheimers Department Store asked:  “Caught Short of Cash in the Bank Holiday? Your Charge Account Will Tide You Over.” The ad went on to tell customers that they could purchase street car tokens at Shunemanns and charge the tokens to their store account.

The Pioneer Press ran an ad in its own paper telling readers that they could place want ads by calling Cedar 5000 and telling the operator: “Charge It.”

On, March 8, five days after the state-ordered holiday, banks in Minnesota and elsewhere throughout the country reopened and began to do limited business under rules established by the Federal Reserve.  Bank customers could cash payroll checks and withdraw small amounts from their accounts for food and other necessities of life. 

Newspapers, executives express good wishes
As the new administration in Washington began taking steps to combat the banking crisis its leader was receiving pledges of support from editorial writers and business executives in the Twin Cities.

In words that could be echoed more than 75 years later about another new presidential administration, the Republican-leaning Journal observed that “the good wishes of every thoughtful American is with the new president as he enters upon the unchartered seas of political and economic administration. Seldom in our history has an incoming Administration held so overwhelming a mandate from the people. Seldom has it confronted problems so vast, so far reaching, so beyond the confines of past experience.”

“Mr. Roosevelt will have need of his utmost resources of patience, of wisdom and courageous initiative,” the Journal continued.  “From this point on, the ship of state is in his hands for better or worse. It is time for every intelligent man and woman to lay aside political prejudice and personal judgments and remember that Mr. Roosevelt is the president not just of the Democratic Party but of all of us. He has need of the moral support of the entire nation.”

Companies take out ad pledging support
On the day after Roosevelt’s inauguration, a group of St. Paul’s leading companies took out an ad in the Pioneer Press which read “Support our New President – Let’s Go! St. Paul.” The signers included the First National Bank of St. Paul, the Minnesota Mining and Manufacturing Co., the St. Paul Fire and Marine Company, the Schmidt Brewery Company, the Union Stockyards and West Publishing Co..

The ad declared that these local business firms “pledge to their utmost to co-operate with the national government and with the administration in securing a genuine New Deal.”

Later, many of these businesses and their leaders would have second thoughts about Roosevelt’s New Deal as it veered to the left on the political spectrum. But in those heady first 100 days,  the optimism and support expressed by St. Paul business leaders and their counterparts throughout the country, more than anything else, helped ease the financial crisis that brought on the bank holiday of 1933.

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Comments (1)

  1. Submitted by William Levin on 03/04/2009 - 05:19 pm.

    This was referred to as a “bank holiday” but in fact many other financial institutions were closed. My grandfather, David S. Levin, a Vice President of Continental Grain and head of Continental’s Minneapolis office for many years, told vivid stories about the tension over the bank holiday when the Minneapolis Grain Exchange was closed, and the relief when he and others could return to the floor and express their opinions of the grain market by trading in the pit once again, using open outcry and hand gestures that were part of their business. My grandfather appeared in a newspaper photo taken at the instant trading resumed. The old Speed Graphic cameras and their flashbulbs were not fast enough to capture the hand gestures; the traders’ busy hand motions were blurred in the picture.

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