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'''Debate:  What do you think caused the Great Depression?'''

'''Debate:  What do you think caused the Great Depression?'''

 

One of the scariest and most devastating aspects of the Great Depression was the "run" on banks, which means nearly everyone trying to withdraw their deposits at a bank immediately before the bank runs out of money.

One of the scariest and most devastating aspects of the Great Depression was the "run" on banks, which means nearly everyone trying to withdraw their deposits at a bank immediately before the bank runs out of money.  Deposits in a bank are usually not really there, but are used to make loans to people in the community for their businesses and home purchases (with mortgages).  When a large number of depositors try to withdraw their money from a bank at the same time, it is a frightening situation because they cannot get their own money out of the bank.

Hoover's reaction to the Great Depression was to seek voluntary wage and price controls.  He generally opposed new federal programs sought by the Democrats.  But in 1932, Hoover did create the Reconstruction Finance Corporation, which was a federal agency that lent money to banks, and later lent money to businesses also.

Hoover's reaction to the Great Depression was to seek voluntary wage and price controls.  He generally opposed new federal programs sought by the Democrats.  But in 1932, Hoover did create the Reconstruction Finance Corporation, which was a federal agency that lent money to banks, and later lent money to businesses also.