Question

Before 1933, what happened to customers' deposits if a bank failed?

A) the bank had to reimburse the customers
B) the government reimbursed the customers
C) the customers lost their money

Answer 1

Answer: C.)

I read up on a couple articles and none of them stated the bank or government paying the people back. It did state that “The state of American banks in 1933 was unsure, and there was widespread fear, based on previous closures, that banks funds were mismanaged and that hard-earned deposited money could disappear overnight.”

Answer 2

Before 1933, when a customer's deposits in a bank failed then

(C) the customers lost their money

because there was too much panic in the banking system and people were taking out money from their banks too frequently. As a result, the banks were unable to pay the customers who wanted to withdraw their deposited money in the banks.