What happened when many banks failed during the early Great Depression?
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Correct answer: Depositors lost savings, credit shrank, and public confidence weakened
Before federal deposit insurance, many people lost savings when banks failed. Bank failures also reduced lending, making it harder for businesses and consumers to recover.
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More Causes of the Great Depression questions
- Why did bank runs worsen the financial crisis?
- Which international factor helped spread the Great Depression globally?
- How did high tariffs such as the Smoot-Hawley Tariff worsen the Depression?
- Which statement best describes the Federal Reserve's role in the early Depression?
- What is deflation, a major problem during the Great Depression?
- Which industry showed signs of weakness before the stock market crash and was important to the broader economy?