Chart 1: Total number of bank suspensions, 1921 to 1936. That environment harbored the causes of banking crises. Those nonmember banks operated in an environment similar to that which existed before the Federal Reserve was established in 1914. When the crises began, over 8,000 commercial banks belonged to the Federal Reserve System, but nearly 16,000 did not. In November 1930, however, a series of crises among commercial banks turned what had been a typical recession into the beginning of the Great Depression. A rapid and robust recovery was anticipated. 1The downturn that began in the summer of 1929 had lasted for fifteen months. The previous three contractions, in 1920, 1923, and 1926, had lasted an average of fifteen months. ![]() ![]() In the fall of 1930, the economy appeared poised for recovery.
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