Ivory marked by the Royal African Company. International Slavery Museum, Liverpool. Wikimedia Commons.
The Banking Act of 1933 created federal insurance on bank deposits so a household would not have to outrun its neighbors to the teller.
A stretched household whose balance sat under the insurance ceiling could leave the money in the bank during a rumor.
A household with savings above the ceiling was safe only on the insured part and still had a reason to watch the rest.
A bank that joined paid assessments and lived under federal supervision, and its depositors held a guarantee the bank itself had not been able to give in 1931.
The Federal Deposit Insurance Corporation began covering deposits at the start of 1934, up to a ceiling set in the law and funded by charges on the banks.
The guarantee was for ordinary deposits at insured banks, not for every stock a teller might once have recommended.
A rumor could still scare people, and it no longer had to empty a sound insured bank, because the reason to be first in line was gone for the insured amount.
Banking Act of 1933, 48 Stat. 162