USA HISTORY

Detailed explanation-1: -November 1930–August 1931. The U.S. appeared to be poised for economic recovery following the stock market crash of 1929, until a series of bank panics in the fall of 1930 turned the recovery into the beginning of the Great Depression.

Detailed explanation-2: -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-3: -The banking panics in 1930 and early 1931 were regional in nature. The nature of the financial crisis changed in the fall of 1931, when the commercial banking crisis spread throughout the entire nation.

Detailed explanation-4: -Deflation increased the real burden of debt and left many firms and households with too little income to repay their loans. Bankruptcies and defaults increased, which caused thousands of banks to fail. In each year from 1930 to 1933, more than 1, 000 U.S. banks closed.

Detailed explanation-5: -Among the 608 banks that closed in November and December 1930, the Bank of United States accounted for a third of the total $550 million deposits lost and, it is thought, that with its closure, bank failures reached a critical mass. People flocked to withdraw their money from other banks.