Bank Failures happened because of the stock market crashing, missed and late loan payments, and bank runs.As the stock market crashed in 1929, the economy became very rocky. People began to panic and went on bank runs to pull out their money before it was too late. A bank run is when an accountholder requests to withdraw a hefty amount of money from the bank. The banks could not fund these runs, so people could not get their money out. During the Dust Bowl, farmers could not pay their loans that they had on their farms. A large amount of loans went unpaid which meant that the banks were seriously low on funds. The banks were required to fail, meaning they had to close. Bank Failures and closures caused a domino effect among other banks throughout the United States. It was a vicious cycle. ("Bank Run - Facts & Summary - HISTORY.com," 2018) Consumer SpendingFor a business to boom, money needs to be made. And how is money made? People need to buy things. So for an economy to survive, people need to spend money. After the Stock Market crash of 1929, people were so afraid to spend any money that they may have had. They were terrified of losing it all. This resulted in reducedretail sales, which meant a reduced workforce. People that had purchased items on credit were now defaulting on their payments. Many people were also unemployed, so money was not being made or spent, thus resulting in less consumer spending. This caused the economy to weaken. (Norton, 2015)
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