Final answer:
Most US bank panics in the 20th century were characterized by a combination of public fear, financial instability, stock market crashes, and extensive bank runs. They were often set off by a crisis in the banking sector, leading to widespread business failures and economic depression.
Step-by-step explanation:
In the 20th century, most US bank panics were accompanied by widespread public fear and financial instability, including stock market turbulence, the collapse of financial institutions, business failures, loss of jobs, and rapid deflation.
These events were often initiated by a crisis in the banking sector, such as a sudden bankruptcy or a shortage of liquidity. For instance, the 1873 panic was triggered by the bankruptcy of a major banking firm and the halting of investments in the railroad industry, leading to numerous bank and business failures.
Furthermore, the 1930s saw extensive bank runs, where people withdrew their money from banks to keep it safe at home, following the stock market crash that instigated the Great Depression.
The Federal Reserve Act of 1913 aimed to prevent such panics by establishing the Federal Reserve System as the central bank with a mandate to stabilize the economy.
However, banking panics preceding this act, such as the Panic of 1819, were characterized by a loss of public confidence in the banking system, risky loans, and speculative investment which caused the Second Bank of the United States to impose a deflationary policy, requiring the repayment of loans and leading to widespread financial distress.