How was the banking industry affected by the Great Depression?

Answer 1

Just as is happening today, many Americans became distrustful of banks during the Great Depression. When the Depression hit, some banks did not have enough cash on hand to pay all accounts. There was no FDIC during the 20s or 30s. Some banks folded and people often lost all their money, while others were saved by the Emergency Banking Act, which eliminated weak banks simply by identifying them. Some banks were only able to pay depositers a percent of dollars in their accounts. The Federal Reserve System was given power to issue loans to well-managed banks (like the stimulation package today). FDR declared a bank holiday and had all the banks examined by federal inspectors. When the government allowed an examined bank to reopen, the people concluded that the bank was safe. They then stopped withdrawing their deposits and returned funds they had already taken out of their accounts. This caused confidence in the banking system to increase.

Answer 2

Faith in the banking industry plummeted as the Great Depression wore on. Banks collapsed in masses, bringing down people's life-savings with them. Many people immediately started pulling their money out of banks, fearing more bank failures. It wasn't until the New Deal days when FDR declared a national banking holiday, shutting down all banks so that the government could properly analyze the situation and remedy problems, that any improvement was made towards stopping the chains of bank failures. The 1933 Emergency Bank Act reopened solvent banks that were deemed strong enough to be back in business and kept banks that were still weak under further inspection and system reconstruction. FDR first announced this with his famous Fireside Chats which reassured the American public and further boosted his popularity. He rebuilt the people's faith in banks through this, although a lot of money had already gone down with the failed and closed banks.

Answer 3

They had no food, no water, no clothes, they were loosing their jobs and homes many banks were closed so people that had money in there accounts were cleaned

Answer 4

People lost their savings.