Why Did A Mild Recession in 1929 Become the Great Depression of the 1930s. Overview. Why did a mild recession turn into the Great Depression? Alleged causes of the Great Depression The Fed explained More likely causes of Great Depression Failed monetary policy Failed fiscal policy
Why Did A Mild Recession in 1929 Become the Great Depression of the 1930s
Why did a mild recession in 1929 become the Great Depression of the 1930s? A Hint
It’s primarily about money, banks, and the Federal Reserve System
Quick Review of the Fed
Are banks the same as hardware stores?
There are 12 Federal Reserve Districts, each is served by an independent Reserve bank. There are also 24 branch offices.
Federal Reserve Branch city, by District:(4) Cincinnati, Pittsburgh
(5) Baltimore, Charlotte (6) Birmingham, Jacksonville, Miami, Nashville, New Orleans (7) Detroit
(8) Little Rock, Louisville, Memphis
(10) Denver, Oklahoma City, Omaha
(11) El Paso, Houston, San Antonio
(12) Los Angeles, Portland, Salt Lake City, Seattle
Back to the Great Depression…
*Currency plus bank deposits, in billions of dollars.
“ I would like to say to Milton and Anna: Regarding the Great Depression, you were right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”
1930-1933 bank failures= 9,106
$6.9 billion in deposits
… or, 7.2% of GDP