As a result of the panic, stock prices declined. 500 banks closed, 15,000 businesses failed, and numerous farms ceased operation. The unemployment rate hit 25% in Pennsylvania, 35% in New York, and 43% in Michigan. Soup kitchens were opened to help feed the destitute. Facing starvation, people chopped wood, broke rocks, and sewed by hand with needle and thread in exchange for food. In some cases, women resorted to prostitution to feed their families. To help the people of Detroit, Mayor Hazen Pingree started "Pingree's Potato Patch" which were community gardens for farming. 
Laurence J. Kotlikoff is even more skeptical of the notion that the Federal Reserve can maintain macroeconomic stability under current institutional arrangements. Our financial system is rigged for failure, he argues, because it is very easy for financial institutions to gamble with other peoples money. Kotlikoff recommends that the entire financial system be reformed along the lines of limited-purpose banking. Financial intermediaries would be designated as one of two kinds of mutual funds: one that provides investment opportunities, or one that provides checking accounts and is 100-percent backed by highly liquid assets. This means the Federal Reserve would gain complete control over the money supply and in principle be able to better stabilize aggregate demand.