The Great Depression had an impact on the credit industry because it caused lawmakers to relax lending laws and credit even further, allowing banks to remain even more profitable. This has led the average American to believe that being in debt is acceptable.
Banks failed—between a third and half of all financial institutions in the United States failed, wiping out the life savings of millions of Americans. According to the well-known Great Depression narrative, banks were among the institutions that suffered as a result of the crisis. In response to the crisis, the government borrowed more money from abroad. The government laid off one-third of its civil servants and reduced pay for the remaining employees. Simultaneously, it imposed new taxes that increased the cost of living by approximately 30%. The government also cut health and education spending, but doubled its police force in 1932 to better maintain law and order in the face of growing public unrest.
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