The estimated number of banks and thrifts in the United States fell from around 31,000 in 1920 to 26,000 in 1929, when the onset of the Great Depression would then see it fall further, below 15,000 in 1933. This marks a cumulative decline of over 16,000 banks and thrifts, which is equal to a drop of more than 52 percent in 13 years.
Tumultuous Twenties
Despite the economic prosperity associated with the Roarin' 1920s in the U.S., it was a tumultuous decade in financial terms, with more separate recessions than any other decade. However, the 1920s was also privy to frivolous lending policies among many banks, which saw the banking sector collapse in the wake of the Wall Street Crash in 1929. Many banks failed as the Great Depression and unemployment spread across the country, and customers or businesses could not afford to repay their loans. It was only after this financial crisis where the federal government began keeping more stringent and accurate records on its banking sector, therefore precise figures and the reasons behind these bank failures are not always clear.
Franklin D. Roosevelt
Just two days after assuming office in 1933, Franklin D. Roosevelt drastically declared a bank holiday, and all banks in the country were closed from March 6 until March 13. This break allowed Congress to pass the Emergency Banking Act on March 9, which saw the Federal Reserve provide deposit insurance for all reopened banks thereafter. Through his first fireside chat, Roosevelt then encouraged Americans to re-deposit their money in the banks again, which successfully restored much of the public's faith in the banking system - it is estimated that over half of the cash withdrawn during the Great Depression was then returned to the banks by March 15.
Estimated number of banks and thrifts in the United States in each year from 1920 and 1935
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Banking Strategist. (June 30, 2022). Estimated number of banks and thrifts in the United States in each year from 1920 and 1935 [Graph]. In Statista. Retrieved December 21, 2024, from https://www.statista.com/statistics/1317843/us-number-banks-thrifts-great-depression/
Banking Strategist. "Estimated number of banks and thrifts in the United States in each year from 1920 and 1935." Chart. June 30, 2022. Statista. Accessed December 21, 2024. https://www.statista.com/statistics/1317843/us-number-banks-thrifts-great-depression/
Banking Strategist. (2022). Estimated number of banks and thrifts in the United States in each year from 1920 and 1935. Statista. Statista Inc.. Accessed: December 21, 2024. https://www.statista.com/statistics/1317843/us-number-banks-thrifts-great-depression/
Banking Strategist. "Estimated Number of Banks and Thrifts in The United States in Each Year from 1920 and 1935." Statista, Statista Inc., 30 Jun 2022, https://www.statista.com/statistics/1317843/us-number-banks-thrifts-great-depression/
Banking Strategist, Estimated number of banks and thrifts in the United States in each year from 1920 and 1935 Statista, https://www.statista.com/statistics/1317843/us-number-banks-thrifts-great-depression/ (last visited December 21, 2024)
Estimated number of banks and thrifts in the United States in each year from 1920 and 1935 [Graph], Banking Strategist, June 30, 2022. [Online]. Available: https://www.statista.com/statistics/1317843/us-number-banks-thrifts-great-depression/