Making It Happen

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Making it happen

Making it happen

As the date for the inauguration of the new President of the United States drew closer, the necessity for a Bank Holiday became more evident. News of closings in other states frightened New York depositors and brought on panic conditions. In this situation the officials of American Express were still determined that its Travellers Cheques would retain their record of never having been refused. There were two problems to be overcome. One was to obtain permission of the government to remain open after the banks had been closed, and the other was to accumulate the necessary cash.

Through a prominent New York banker the American Express Company stated its case to William H. Woodin, the incoming Secretary of the Treasury: "The American Express Company is not a bank. People who are travelling all over the country hold its Travellers Cheques. If they cannot get cash when they are far from their homes they will get panicky. If the American Express offices stay open they will perform a useful service."

Woodin agreed, and the first problem was solved.

The second was more serious. With many of the people of the United States withdrawing deposits and banking the cash in safe-deposit boxes and likewise in old shoes, under mattresses, and in tin cans buried in the ground, there was an acute shortage of currency. Small called his best executives to a council of war. Sitting down with him to map a strategic plan for meeting the crisis were Ralph Reed, J. K. Livingston, Howard Smith, and Herbert C. Elwes. Elwes, who had charge of Travellers Cheque sales, was, tragically, a casualty of the ensuing campaign. The long hours and intense strain to which he subjected himself brought on a fatal heart attack in the very moment of victory.

The council decided that, if American Express could amass sufficient reserves to last for the first four or five days, public confidence in its Travellers Cheques would be restored and the money would flow in again. Then Small set out to acquire the necessary currency. He had several sources of supply open to him.

First, there was a considerable amount of the cash taken in from Detroit and other cities still on hand. American Express had large deposits with the Chase National Bank, and Small succeeded in getting a considerable quantity of money from that source. American Express still worked closely with the Railway Express Agency, and that organization sent all the actual cash taken in for American Express Money Orders and Travellers Cheques. Finally, by special permission of the United States Government, the company obtained £1,000,000 from the New York Clearing House.

On that eventful morning of March 4, 1933, the great vaults under 65 Broadway were bulging with stack on stack of currency, Federal Reserve notes, gold certificates, silver certificates, bank-notes, bags of silver and a little gold, every form of legal tender in the United States. The total cash on hand was nearly £10,000,000.

But it was not enough to have the money; there had to be a system for distributing it to all American Express offices according to their needs. Under the guidance of President Small, a method of procedure was organized by Ralph Reed, J. K. Livingston, and Howard Smith.

The busiest place in New York's financial district on that unnaturally quiet Saturday morning was the directors' room of the American Express Company. It was a stately room. Down the centre ran a long table of polished wood, at one end of which stood a smaller table at right angles, where the president and the chairman of the board sat. Normally it was a quiet room, but that day it was clamorous with rapid-fire conversations and the buzzing of telephone signals.

Twenty officials of American Express sat around the directors' table communicating with company offices all over America and in Europe. They were like a general staff co-ordinating a battle, the battle to pay American Express Travellers Cheques in cash.

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As the Golden Decade climbed up the financial graphs to the peak of prosperity, American Express, moving as always with the times, reached new levels of business volume. Its biggest year before the present era was 1929. However, the common sense of its high officials mentally in sound condition, they remained closed on Saturday at the joint request of the President of the United States and the President-elect. The financial heart of America had stopped beating.

This was the final stage of the great depression which had begun more than three years before on that wild October day in 1929 when the rainbow bubble of prosperity burst as panic swept the floor of the New York Stock Exchange. After the crash had come the slow agonizing months of diminishing business, the gradual creeping paralysis of the American economy. The banks had stood the strain amazingly well, but in the winter of 1932 those in the hardest-hit areas began to weaken. The governor of Michigan... see: BANK HOLIDAY

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