American financial history to 1934 was characterized by numerous bank failures, because the majority of banks were local enterprises, not regional or national institutions with numerous branches. Lax state government regulations and inadequate examinations permitted many banks to pursue unsound practices. With most financial eggs in local economic baskets, it took only a serious crop failure or a business recession to precipitate dozens or even hundreds of bank failures. On the whole, state-chartered banks had a particularly poor record.
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