→ Prosperity in the USA during the 1920s created a cycle of
higher employment and incomes. It led to rise in consumption
and demands. More investment and more employment created
tendencies of speculations which led to the Great Depression of
1929 upto the mid-1930s.
→ Stock market crashed in 1929. It created panic among
investors and depositors who stopped investing and depositing.
As a result, it created a cycle of depreciation.
→ Failure of the banks. Some of the banks closed down when
people withdrew all their assets, leaving them unable to invest.
Some banks called back loans taken from them at the same
dollar rate inspite of the falling value of dollar. It was worsened
by British change in policy to value pound at the pre-war value.
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