This practice now proved to be a fatal entanglement to many institutions.

There were instances in which country banks were forced to suspend, though cash resources were actually on the way to them from depository centers.* * Out of 158 national bank failures during the year, 153 were in the West and South.

In addition there went down 172 state banks, 177 private banks, 47 savings banks, 13 loan and trust companies, and 6 mortgage companies.
Even worse than the effect of these numerous failures on the business situation was the derangement which occurred in the currency supply.

The circulating medium was almost wholly composed of bank notes, treasury notes, and treasury certificates issued against gold and silver in the Treasury, coin being little in use except as fractional currency.

Bank notes were essentially treasury certificates issued upon deposits of government bonds.