The Guaranty of Bank Deposits

March 24, 1932

Report Outline
Bank Failures and the Hoarding or Currency
The Guaranty of State Bank Deposits
The Federal Reserve System and Deposit Insurance
Current Proposals for Federal Guaranty of Deposits
Special Focus

Bank Failures and the Hoarding or Currency

Failure during the last two years of 3,643 banks in the United States with total deposits of $2,556,225,000 have caused losses to depositors of at least three-quarters of a billion dollars and perhaps as much as a billion and a quarter of dollars. These losses to depositors and the resultant hoarding of currency, which at its peak early in the present year was estimated to be withholding a billion and a half of dollars from use as a basis of credit, have directed attention to projects for the guaranty or insurance of bank deposits by the Federal reserve system.

Since the opening of the present Congress last December, at a time when bank failures were more numerous than ever before in the history of the country, twelve bills have been introduced—nine in the House and three in the Senate—to provide a federal guaranty of bank deposits. The most important of the House measures was offered by Rep. Steagall (D., Ala.), chairman of the Banking and Currency Committee, on March 7. A similar bill is said to be in preparation by Senator Norbeck (R., S. D.), chairman of the Senate Banking and Currency Committee. A substantial measure of support for such legislation has been indicated in both houses of Congress.

Bank Failures and the Hoarding of Currency

Prior to the present depression deposits tied up by failures of national banks and state banks in the Federal reserve system averaged less than half the amounts tied up by suspensions of state banks outside the reserve system. During the last two years, however, there has been a notable increase in failures of Federal reserve member banks.

ISSUE TRACKER for Related Reports
Jan. 20, 2023  The Future of Cryptocurrency
Apr. 06, 2018  Financial Services Deregulation
Sep. 26, 2014  Digital Currency
Oct. 05, 2012  Euro Crisis
Jan. 20, 2012  Financial Misconduct
Jan. 13, 2012  ‘Occupy’ Movement
Oct. 24, 2008  Financial Bailout Updated
Sep. 01, 2000  The Federal Reserve
Jun. 22, 1990  S&L Bailout: Assessing the Impact
Nov. 04, 1988  Behind the S&L Crisis
Apr. 26, 1985  New Era in Banking
Nov. 18, 1983  Bankruptcy's Thriving Business
Aug. 07, 1981  Banking Deregulation
Jul. 19, 1974  Banking Stability
Jul. 17, 1968  Banking Innovations
May 06, 1964  Monetary Policy in Prosperity
May 16, 1940  Revision of the Securities Acts
Feb. 27, 1937  Expansion of Branch Banking
Sep. 03, 1935  The Decline of Commercial Banking
Dec. 11, 1934  Proposals for a Government-Owned Central Bank
Sep. 12, 1934  Bank Reserves and Credit Inflation
Nov. 27, 1933  Bank Credit in Depression and Recovery
Aug. 12, 1933  Closed Banks and Banking Reform
Apr. 04, 1933  Unified Control of Banking
Apr. 09, 1932  The Glass Banking Bill
Mar. 24, 1932  The Guaranty of Bank Deposits
Apr. 17, 1930  The International Bank and the Gold Standard
Feb. 08, 1930  Branch Banking and Chain Banking
Apr. 29, 1929  Mergers of Banking Institutions
Oct. 28, 1927  The Federal Reserve Rate Controversy
May 21, 1927  Labor Banking and Finance Since 1920
Jan. 31, 1924  The Northwestern Bank Failures and the Attack on Treasury Savings Certificates
Dec. 01, 1923  Why State Banks Do Not Join the Federal Reserve System, the Effect on the System and the Issues Involved
Nov. 23, 1923  Branch Bank Controversy
Economic Crises
Financial Institutions