The Great Depression

As time passed, whether other forces had been behind the stock market crash no longer mattered.

For the United States now, the most important thing was stabilizing the economic order after the crash and reducing its impact on the national economy.

With the collapse of the stock market, the economies of every industry in the United States had already fallen into a devastating disaster, and chain reactions continued to unfold.

Whenever people faced a disaster like this, the first thing they thought of was withdrawing their savings from the banks and buying emergency supplies such as food and medical necessities.

On the very next day after the crash—July 15—all the banks in New York saw their monetary reserves fall by more than $70 million, most of it withdrawn by private depositors.

There were many banks in the United States, but most of them were small or medium-sized. Each branch had limited reserves and simply could not handle so many frequent withdrawals.

It was obvious that after the crash, far more people wanted to withdraw money than deposit it. On top of that, many small banks could not produce enough money to repay their depositors, leaving bankruptcy as their only possible fate.

The waves of bankruptcies and bank runs plunged the American banking industry into collapse within a short time. It was not just the small banks—even the banks belonging to famous American families such as the Morgans and Rockefellers were being drained by mass withdrawals.

Where had all the banks' money gone? Banks naturally had to make money; they could not possibly keep all of it in their vaults.

Under normal conditions, most of a bank's funds were distributed as loans to businesses and individuals in need of them.

But under the circumstances of a stock market crash, could those