What caused banks to close during the Great Depression?

Answer 1

As the economic depression deepened in the early 30s, and as farmers had less and less money to spend in town, banks began to fail at alarming rates. During the 20s, there was an average of 70 banks failing each year nationally. After the crash during the first 10 months of 1930, 744 banks failed - 10 times as many. In all, 9,000 banks failed during the decade of the 30s. It's estimated that 4,000 banks failed during the one year of 1933 alone. By 1933, depositors saw $140 billion disappear through bank failures.

Answer 2

Banks were forced to close during the Great Depression as there was a frantic run of customers withdrawing their money. Such was the run that the banks didn't have the actual money in their vaults. Much of the customers' money was on paper, loaned out to other banks, companies, etc. Banks also invested some of their customers' money in stocks and shares.

Answer 3

The banks closed during the Great Depression simply because they ran out or nearly ran out of money. Later deposits made in banks were guaranteed by the federal government.