The Collapse of the United States Banking System during the Great Depression, 1929 to 1933. New Archival Evidence

Abstract

During the Great Depression, one third of all banks in the United States failed. Scholarsdispute reason for their demise. This essay analyzes new evidence on the sources of bankdistress. The data demonstrates that contagion via correspondent networks and bank runspropagated the initial banking panics in the fall of 1930. As the depression deepened and assetvalues declined, insolvency loomed as the principal threat to depository institutions. Thesepatterns corroborate some and question other conjectures concerning the causes andconsequences of the financial crisis during the Great Contraction.