From reconstruction to depression

Franklin D. Roosevelt´s 9th Press Conference

(shortened version)

THE PRESIDENT: It is very good to see you all. My hope is that these conferences are going to be merely enlarged editions of the kind of very delightful family conferences I have been holding in Albany for the last four years. And so I think we shall discontinue the practice of compelling the submitting of questions in writing before the conference in order to get an answer. There will be a great many questions, of course, that I won't answer, either because they are "if" questions—and I never answer them—and Brother Stephenson will tell you what an "if" question is—

MR. STEPHENSON (Reporter): I ask forty of them a day.

THE PRESIDENT: And the others, of course, are the questions which for various reasons I do not want to discuss, or I am not ready to discuss, or I do not know anything about. There will be a great many questions you will ask that I do not know enough about to answer.

Then, in regard to news announcements, Steve (Early, Assistant Secretary to the President) and I thought that it would be best that straight news for use from this office should always be without direct quotations. In other words, I do not want to be directly quoted, unless direct quotations are given out by Steve in writing. That makes that perfectly clear.

Then there are two other matters we will talk about: The first is "background information," which means material which can be used by all of you on your own authority and responsibility, not to be attributed to the White House, because I do not want to have to revive the Ananias Club. (Laughter)

Then the second thing is the "off the record" information which means, of course, confidential information which is given only to those who attend the conference. Now there is one thing I want to say right now about which I think you will go along with me. I want to ask you not to repeat this "off the record" confidential information either to your own editors or to your associates who are not here; because there is always the danger that, while you people may not violate the rule, somebody may forget to say, "This is off the record and confidential," and the other party may use it in a story. That is to say, it is not to be used and not to be told to those fellows who happen not to come around to the conference. In other words, it is only for those present.

Now, as to news, I don't think there is any. (Laughter)

Steve reminds me that I have just signed the application for Associate Membership in the Press Club, which I am very happy to do.

Q. You mentioned in your greetings to the Governors on Monday that you favored a unified banking system. Is that in your emergency plan?

THE PRESIDENT: That wasn't quite the way I put it to them. What I said to them was that it was necessary to treat the State and national banks the same way in this emergency, so there would not be two different classes of banks in this country; and the other thing I said was to try to avoid forty-eight different plans of putting this into effect.

Q. Do I understand you are going to keep hold of this banking situation until permanent legislation is enacted?

THE PRESIDENT: Off the record answer, yes.

Q. May I ask if the long-time settlement of the banking situation is intermeshed with the World Economic Conference?

THE PRESIDENT: I should say on that—background information—so far as banks go within the United States, no; so far as international exchange goes, yes. I think that is the easiest way of putting it. In other words, the opening of banks and the maintaining of banks once they are opened are not connected with the World Economic Conference.

Q. In your Inaugural Address, in which you only touched upon things, you said you are for sound and adequate . . .

THE PRESIDENT: I put it the other way around. I said "adequate but sound."

Q. Now that you have more time, can you define what that is?

THE PRESIDENT: No. (Laughter.) In other words—and I should call this "off the record" information—you cannot define the thing too closely one way or the other. On Friday afternoon last we undoubtedly did not have adequate currency. No question about that. There wasn't enough circulating money to go around.

Q. I believe that. (Laughter.)

THE PRESIDENT: We hope that when the banks reopen a great deal of the currency that was withdrawn for one purpose or another will find its way back. We have got to provide an adequate currency. Last Friday we would have had to provide it in the form of scrip, and probably some additional issues of Federal Bank notes. If things go along as we hope they will, the use of scrip can be very greatly curtailed, and the amounts of new Federal Bank issues, we hope, can be also limited to a very great extent. In other words, what you are coming to now really is a managed currency, the adequateness of which will depend on the conditions of the moment. It may expand one week and it may contract another week. That part is all off the record.

Q. Can we use that part-managed?

THE PRESIDENT: No, I think not. . . .

Q. Now you came down to adequacy; but you haven't defined what you think is sound. Don't you want to define that now?

THE PRESIDENT: I don't want to define "sound" now. In other words, in its essence—this is entirely off the record—in its essence we must not put the Government any further in debt because of failed banks. Now, the real mark of delineation between sound and unsound is when the Government starts to pay its bills by starting printing presses. That is about the size of it.

Q. When you speak of a managed currency, do you speak of a temporary proposition or a permanent system?

THE PRESIDENT: It ought to be part of the permanent system that is off the record—it ought to be part of the permanent system, so we don't run into this thing again. . . .

Q. Can you tell us anything about guaranteeing of bank deposits?

THE PRESIDENT: I can tell you as to guaranteeing bank deposits my own views, and I think those of the old Administration. The general underlying thought behind the use of the word "guarantee" with respect to bank deposits is that you guarantee bad banks as well as good banks. The minute the Government starts to do that the Government runs into a probable loss. I will give you an example. Suppose there are three banks in town; one is 100 percent capable of working out, one 50 percent and another 10 percent. Now, if the Government assumes a 100 percent guarantee, it will lose 50 percent on one and 90 percent on the other. If it takes on a 50 percent guarantee, it will lose nothing on the first and second, but will lose a lot on the 10 percent solvent bank. Any form of general guarantee means a definite loss to the Government. The objective in the plan that we are working on can be best stated this way: There are undoubtedly some banks that are not going to pay one hundred cents on the dollar. We all know it is better to have that loss taken than to jeopardize the credit of the United States Government or to put the United States Government further in debt. Therefore, the one objective is going to be to keep the loss in the individual banks down to a minimum, endeavoring to get 100 percent on them. We do not wish to make the United States Government liable for the mistakes and errors of individual banks, and put a premium on unsound banking in the future.

Q. That is off the record?

THE PRESIDENT: Yes.

Q. Couldn't you make it background? There is a demand for the guarantee proposition.

THE PRESIDENT: As long as you don't write stories to give the average depositor the thought that his own particular bank isn't going to pay. That is what I want to avoid, because, when you come down to it, the great majority of banks are going to pay up. There will be many other banks which won't pay out the whole thing immediately, but will pay out 100 percent in time. There will be a very small number of banks that will probably have to go to the Examiner; but I don't want anybody to get the idea in reading the stories that the average bank isn't going to pay one hundred cents on the dollar, because the average bank is going to pay it. . . .

 

Source: Franklin D. Roosevelt: "Press Conference," March 8, 1933.

Online: http://www.presidency.ucsb.edu/ws/?pid=14672.