answersLogoWhite

0

The failure of the Creditanstalt in Austria in 1931 (and to a lesser extent the Bank of the United States a year earlier) was key to altering what had been a deep recession (but not significantly different from the Panics of 1873 and 1893) into the Great Depression. What made the Great Depression into the dramatic worldwide economic failure of the 1930s were the interconnections among the banking systems of the world following World War I. Prior to the First World War, economic collapse in one country did not necessarily lead to worldwide economic collapse. However, by virtue of war debt payments by the allies to the USA, reparations payments by Germany to the France & the UK, and loans to Germany and Austria by the USA the banking world became locked in an endless circuit of money exchanges. While this was going on, central bankers had a compulsion to promote the gold standard. As a result, they would raise interest rates in an effort to ensure that gold did not leave their respective countries. Because of the increasingly higher interest rates banks were forced to charge, they could not in many cases collect debts, which ultimately resulted in their collapse. With no low interest loans available because of the relatively weak banking sector, and central banks in Western Europe and the United States refusing to lower their interest rates, the massive recession morphed into the Great Depression.

User Avatar

Wiki User

14y ago

What else can I help you with?

Related Questions

What led to the Great Depression?

The collapse of the stock marketis what led to the Great Depression.


What is one reason government intervention proved necessary during the Great Depression?

Bank failures and credit problems meant spiraling unemployment, home losses, and business failures.


During the great depression what happen to depositers money when a bank collapsed?

By 1933, depositors saw $140 billion disappear through bank failures. ... either closed or had placed restrictions on how much money depositors could withdraw. ... and historians have argued that the bank crisis caused the Great Depression.


Why did Franklin Roosevelt institute government oversight on banks and investments?

Because of the many bank failures and private bankruptcies after the great stock market crash of 1929 that started the Great Depression.


Why was the Banking Act of 1933 passed?

This act led to increased legislation between 1930 and 1960 that limited bank holding activity and expansion


Did US depositors lose money in the bank failures during the great depression?

YES. Banks were using depositors' money to invest in the stock market. When the market crashed everything vanished.


The period from 1929 to 1939 represents a period of?

economic depression known as the Great Depression, characterized by widespread unemployment, bank failures, and severe economic hardship. This period was marked by a significant decline in global economic activity.


What situation did Franklin d roosevelt hope to cure?

He was faced with a great economic depression . Bank failures, business failures, mortgage foreclosures and unemployment all needed curing, There was also the problem of Hitler in Germany and the threat of global warfare to try to fix.


What are bank failures?

# #


Was Grover Cleveland in The Great Depression?

No, but there was a nationwide bank panic in 1893


What was true of John Dillinger an Al Capone?

Their actions appealed to Americans angered by bank failures.


Why The FDIC was created after the Great Depression with the passage of which act?

to make sure there was not anymore bank runs