FDR Declares National Bank Holiday, Closing All Banks to Stop Collapse of Financial System

On March 6, 1933, two days after his inauguration, President Franklin D. Roosevelt invokes emergency powers to declare a nationwide “bank holiday,” closing all banks in the United States and suspending all banking transactions. The unprecedented action aims to stop the complete collapse of the American banking system, as panic-stricken depositors race to withdraw their savings from institutions many believe are insolvent. By inauguration day, governors of 38 states had already closed their banks or restricted withdrawals; Roosevelt’s national holiday brings the entire system to a coordinated halt.

The banking crisis that forces the holiday represents the culmination of three years of cascading failures: between 1930 and 1933, over 9,000 banks fail, destroying the savings of millions of depositors. The final panic accelerates after the Pecora hearings expose Wall Street corruption in early 1933, destroying remaining public confidence in financial institutions. In February 1933, runs intensify as depositors—including major corporations—attempt to convert bank deposits to cash or gold before expected bank failures and dollar devaluation. The Federal Reserve proves unable or unwilling to stem the crisis, and the outgoing Hoover administration cannot coordinate with Roosevelt, leaving the banking system in complete paralysis.

Roosevelt uses the Trading with the Enemy Act of 1917 as legal authority for the bank holiday—stretching a wartime statute to address a domestic financial emergency. During the holiday, Treasury officials and bank examiners work around the clock to determine which banks are solvent enough to reopen. The holiday succeeds in breaking the panic psychology: when banks begin reopening on March 13, Roosevelt’s first “fireside chat” radio address reassures the public, and deposits exceed withdrawals. The bank holiday demonstrates both the fragility of a financial system based on confidence and the power of decisive government action to restore that confidence—a lesson invoked during subsequent financial crises including 2008, though later interventions primarily benefit the institutions that caused the crises rather than the depositors victimized by them.