Bank failures of the Great Depression
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- In the 1920s one of the ways banks contributed to the health of the economy was by managing their cash reserves.
- Typically, banks only hold onto a small percentage of the money that is provided and lends the rest in the search of profit. That is how the money is made.
- Banks count on the ability to borrow from other financial institutions, once the stock market crashed Americans demanded their cash, so ironically once banks tried to start fixing everything they made matters worse when they stopped lending money. Businesses could not get access to the capital, and closed their doors, throwing millions of Americans out of work.
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