THE GREAT DEPRESSION 1929 1940
THE GREAT DEPRESSION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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They earned interest on their savings accounts.
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They sold their shanties to the bank for a profit.
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Many of them lost their savings when banks closed.
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They asked the bank for loans to buy stocks.
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Detailed explanation-1: -In all, 9, 000 banks failed–taking with them $7 billion in depositors’ assets. And in the 1930s there was no such thing as deposit insurance–this was a New Deal reform. When a bank failed the depositors were simply left without a penny. The life savings of millions of Americans were wiped out by the bank failures.
Detailed explanation-2: -Nearly all banks in the United States are FDIC-insured, which means even if a bank were to fail, your money is protected. The FDIC insures each bank account up to $250, 000 per depositor per account.
Detailed explanation-3: -Analysis of new data from the early 1930s suggests that depositors’ fears led to runs on banks that were clustered in time and space. These panics significantly reduced lending and monetary aggregates.