More than nine thousand banks failed in the United States between 1930 and 1933 equal to some 30 percent of the total number of banks in existence at the end of 1929. This clearly represents the highest concentration of bank suspensions in the nation's history. The rate of increase of bank suspensions was discontinuous. The data reveal at least four separate intervals when there was a marked acceleration and then deceleration in the number of bank failures: November 1930 to January 1931, April to August 1931, September and October 1931, and February and March 1933. Friedman and Schwartz (1963) designated these four episodes as banking panics to which special macroeconomic significance was attached. If we exclude the 3,400 banks that were not licensed by the Secretary of the Treasury to reopen at the end of the Banking Holiday in March 1933 only two out of five bank suspensions occurred during banking panics. It is well to bear in mind that 60 percent of bank closings between 1930 and 1932 were not panic induced, and that the problem of understanding why so many banks failed during the Great Depression goes beyond simply explaining what happened during banking panics although the evidence is conflicting whether the causes of individual bank suspensions differ between panic and nonpanic periods.

Nevertheless, banking panics represent a class of economic disturbance whose origin is to be found in an abrupt and unanticipated revision of expectations whose effects may be correctly described as traumatic. These disturbances include stock market manias and hyperinflations as well.