A Reinterpretation of the Banking Crisis of 1930

The banking crisis of 1930 is one of the central events of the Great Depression. The causes of this wave of bank failures are examined using individual bank balance sheet data. Both real and monetary factors are found to have forced the closure of banks, many of which were already weakened by regulatory constraints and regional economic difficulties. The bank failures in this crisis do not seem to have been different in character from failures in previous years, suggesting that the rise in the number of failures may have marked only the beginning of a recession rather than a depression.