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Bank Failures

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In the 1920s, Nebraska and also the nation in its entirety had actually many financial institutions. At the start of the 20s, Nebraska had actually 1.3 million world and tright here was one financial institution for eincredibly 1,000 civilization. Eexceptionally small tvery own had a financial institution or two struggling to take in deposits and also loan out money to farmers and also businesses.

As the financial depression deepened in the beforehand 30s, and as farmers had less and also much less money to spfinish in town, banks started to fail at alarming rates. During the 20s, tright here was an average of 70 banks failing every year nationally. After the crash during the initially 10 months of 1930, 744 financial institutions failed – 10 times as many kind of. In all, 9,000 financial institutions failed during the decade of the 30s. It"s approximated that 4,000 financial institutions failed throughout the one year of 1933 alone. By 1933, depositors witnessed $140 billion disappear via bank failures.

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Gresham, Nebraska, had 2 banks – one also many kind of for that small tvery own. The financial institution in danger of faiattract merged through the other. Gresham resident Wtransform Schmitt (right) remembers the deadly aftermath for the owner of the failed financial institution.

When a new president, Franklin Delano Roosevelt was inaugurated in March 1933, banks in all 48 claims had actually either closed or had put restrictions on how much money depositors might withdraw. FDR"s first act as President was to declare a nationwide "bank holiday" – closing the banks for a three-day cooling off duration. The many memorable line from the President"s speech was directed to the bank crisis – "The just point we need to fear is are afraid itself."

Some economists and historians have actually argued that the financial institution crisis resulted in the Great Depression. But others have looked at fundamental financial components and local histories and also argued that financial institutions failed as an outcome of the financial collapse.

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Whether the are afraid of financial institution failures caused the Depression or the Depression caused banks to fail, the outcome was the same for people who had their life savings in the banks – they shed their money. At the beginning of the 30s, there was no such thing as deposit insurance. If a bank failed, you shed the money you had in the financial institution. Carla Due"s family members experienced the fear that a financial institution failure would certainly wipe out savings.

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Birdie Farr"s (left) father-in-law, Jack Farr, lost his savings in a Grand Island also financial institution, however he was philosophical about it. Birdie says, "Tbelow wasn"t nothing for him to perform. He sassist, "Standing there crying isn"t going to assist.""

Louise Dougherty"s (right) father owned a financial institution in Perkins County. When the Depression hit, he worked tough to keep the bank afloat. But the Depression went on also lengthy, and eventually he was required to go out of service.

Written by Bill Ganzel of the Ganzel Group. First created and also publiburned in 2003.

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