America's financial system was nearing collapse in 1932. Between the start of the Great Depression in 1929 and 1932, the U.S. economy shrank by almost half. Nine thousand banks closed their doors. Nearly 100,000 businesses failed. Corporate profits dropped 90 percent and farm income fell by over 50 percent.
As banks and corporations folded, millions of people lost their savings and jobs. Consumer spending plummeted, leading to further drops in business activity and even greater job losses. The nation was trapped in what seemed to be an endless deflationary spiral.