Non-Monetary Effects of the Financial Crisis in the Propagation of the Great Depression

About half of all residential properties were mortgaged at the beginning of the Depression.

“For example, about half of all residential properties were mortgaged at the beginning of the Depression”

The subset of corporations holding more than fifty million dollars in assets maintained positive profits throughout this period.

“But the subset of corporations holding more than fifty million dollars in assets maintained positive profits throughout this period”

Problems of the financial system tended to lead output declines.

“This is contradicted by the facts that problems of the financial system tended to lead output declines”

The value of urban real estate mortgages outstanding increased from $11 billion in 1920 to $27 billion in 1929.

“For example, the value of urban real estate mortgages outstanding increased from $11 billion in 1920 to $27 billion in 1929”

Simultaneously aggregate output began a recovery that was sustained until 1937.

“Simultaneously aggregate output began a recovery that was sustained until 1937.”

Bank failures tended to occur in short spasms, rather than in a steady stream.

“Also notable Is the fact that bank failures tended to occur in short spasms, rather than in a steady stream (see Table 1, column 2 for monthly data on the deposits of failing banks).”

Runs were clearly an important part of the banking problems of this period.

“Runs were clearly an important part of the banking problems of this period.”

Farmers were in more difficulty than homeowners because of the long spell of low food prices.

“Because of the long spell of low food prices, farmers were in more difficulty than homeowners.”

During the twenties small borrowers, such as households and unincorporated businesses, greatly increased their debts.

“Perhaps more significantly, during the twenties small borrowers, such as households and unincorporated businesses, greatly increased their debts.”

• cites Persons (1930) sourceNot checked — no full text of the source

Because of failures and mergers, the number of banks operating at the end of 1933 was only just above half the number that existed in 1929.

“because of failures and mergers, the number of banks operating at the end of 1933 was only just above half the number that existed in 1929.”

At the beginning of 1933, owners of 145% of all U.S. farms, holding 52% of the value of farm mortgage debt, were delinquent in payments.

“At the beginning of 1933, owners of 145% of all U.S. farms, holding 52% of the value of farm mortgage debt, were delinquent in payments.”

As of March 1934, the governments of 37 of the 310 cities with populations over 30,000 and of three states had defaulted on obligations.

“As of March 19314, the governments of 37 of the 310 cities with populations over 30,000 and of three states had defaulted on obligations.”

According to Clark (1933), the ratio of debt service to national income went from 9% in 1929 to 19.8% in 1932-33.

“According to Clark (1933), the ratio of debt service to national income went from 9% in 1929 to 19.8% in 1932-33.”

• cites Clark (1933)Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

For the entire interwar sample, the statistical significance of the credit variable was much reduced.

“For the entire interwar sample, however, the statistical significance of this variable was much reduced.”

Including free dummy variables for each quarter from 1931:I to 1932:IV increased the magnitude and statistical significance of the coefficients on bank and business failures.

“The rather surprising discovery was that the inclusion of the dummies increased the magnitude and statistical significance of the coefficients on bank and business failures.”

The estimated Lucas supply curve, equation (11.2), shows an effect of price shocks on output that is statistically and economically significant.

“The estimated”

The fall in bank loans outstanding was partly offset by the relative expansion of alternative forms of credit.

“The fall in bank loans outstanding was partly offset by the relative expansion of alternative forms of credit.”

The contraction of bank credit was twice as large as that of other major countries, even those which experienced comparable output declines.

“Second, the contraction of bank credit was twice as large as that of other major countries, even those which experienced comparable output declines.”

When equations (11.1) and (11.2) are used to simulate output from mid-1930 to March 1933, they capture no more than half of the total decline of output during the period.

“When equations (11.1) and (11.2) are used to perform dynamic simulations of the path of output between mid-1930 and the bank holiday of March 1933, they capture no more than half of the total decline of output during the period.”

The paper was not able to find effects of money or prices lagged more than three months.

“Like Evans, we were not able to find effects of money (or prices) lagged more than three months.”

• cites Evans (1981)Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

The shift toward safety and liquidity by Canadian banks was less pronounced than in the U.S. case.

“This shift toward safety and liquidity, though less pronounced than in the U.S. case, drew criticism from all facets of Canadian society.”

The Baa-Treasury yield differential went from 2.5% during 1929-30 to nearly 8% in mid-1932.

“Nevertheless, this indicator showed some impressive shifts, going from 2.5% during 1929-30 to nearly 8% in mid-1932.”

In almost every case, the addition of proxies for the general financial crisis improved the purely monetary explanation of short-run monthly output movements.

“In almost every case, then, the addition of proxies for the general financial crisis improved the purely monetary explanation of short-run (monthly) output movements.”

The relationship of output to money surprises, equation (11.1), is weaker than the price-shock relationship.

“The relationship of output to money surprises, equation (11.1), is a bit weaker.”

Except for a brief period of liquidation of speculation loans after the stock market crash, credit outstanding declined very little before October 1930, despite a 25% fall in industrial production by that time.

“For example, except for a brief period of liquidation of speculation loans after the stock market crash, credit outstanding declined very little before October 1930--this despite a 25% fall in industrial production that had occurred by that time.”

In consumer finance, retail merchants, service creditors and non-bank lending agencies improved their position relative to banks and primarily bank-supported installment finance companies.

“In the area of consumer finance, retail merchants, service creditors and non-bank lending agencies improved their position relative to banks and primarily bank-supported installment finance companies.”

In the presence of money or price shocks, the effect of a decline in the credit variable on output was negative for two months, positive for the next two months, then strongly negative for the fifth and sixth months after the decline.

“In the presence of money or price shocks, the effect of a decline in this variable on output was found to be negative for two months, positive for the next two months, then strongly negative for the fifth and sixth months after the decline.”

• AssumptionThe authors state this as an assumption: The supervised bank closings of March 1933 had the same effect as an unsupervised bank crisis involving 15% as much in frozen deposits.

The deposits of banks suspended in March 1933 were seven times those of the next worse month.

“As can be seen in Table 1 , the deposits of banks suspended in March 1933 is seven times that of the next worse month.”

Small firms during this period significantly reduced their traditional reliance on banks in favor of trade credit.

“Small firms during this period significantly reduced their traditional reliance on banks in favor of trade credit.”

The ratio of outstanding bank loans to the sum of demand and time deposits declined sharply as banks switched out of loans and into more liquid investments.

“This ratio declined sharply as banks switched out of loans and into more liquid investments.”

The Baa-Treasury yield differential entered very strongly as an explanator of current and future output growth, overall and in every subsample.

“The yield differential variable turned out to enter very strongly as an explanator of current and future output growth, overall and in every subsample.”

With the first banking crisis of November 1930, a long period of credit contraction was initiated.

“With the first banking crisis of November 1930, however, a long period of credit contraction was initiated.”

The Baa-Treasury yield differential never exceeded 3.5% in the sharp 1920-22 recession.

“(The differential never exceeded 3.5% in the sharp 1920-22 recession.)”

In October 1931, the worst month for bank failure before the bank holiday, net credit reduction was a record 31% of personal income.

“for example, in October 1931, the worst month for bank failure before the bank holiday, net credit reduction was a record 31% of personal income.”

The banking crises were as important a determinant of the loan-change-to-income ratio as output.

“Comparison with the first two columns of Table 2 shows, however, that the banking crises were as important a determinant of this variable as output.”

The five-year handicap period covers most of the time between the recessions of 1929-30 and 1937-38.

“a period which covers most of the time between the recessions of 1929-30 and 1937-38.”

The regression indicated a powerful negative effect of financial crisis on bank loans.

“(This regression indicated a powerful negative effect of financial crisis on bank loans.)”

The evidence is at least not inconsistent with the proposition that the financial collapse of the early 1930s had real effects on the macroeconomy other than through monetary channels.

“The evidence is at least not inconsistent with this proposition.”

The bank failure coefficients in the regressions retained high significance even when less weight was given to March 1933.

“However, the bank failure coefficients in the regressions retained high significance even when less weight was given to March 1933.”

Private lenders were even more cautious after 1933 in home mortgage lending than in business lending.

“In this sphere private lenders were even more cautious after 1933 than in business lending.”

The magnitudes and significance of the coefficients of money and price shocks are not much changed.

“The magnitudes and significance of the coefficients of money and price shocks are not much changed.”

In 193L, the government-sponsored Home Owners' Loan Corporation made 71% of all mortgage loans extended.

“In 193L, the government-sponsored Home Owners' Loan Corporation made 71% of all mortgage loans extended.8”

• cites [8] 8. Cagan, Philip, Determinants and Effects of Chaes in the Stock of Mony1875-196O,NewYork: N.B.E.R., 1965.Not checked — no full text of the source

The resulting high rates of default caused problems for both borrowers and lenders.

“The resulting high rates of default caused problems for both borrowers and lenders.”

The financial disruptions of 1930-33 reduced the efficiency of the credit allocation process.

“We argue that the financial disruptions of 1930-33 reduced the efficiency of the credit allocation process”

• AssumptionThe authors state this as an assumption: Markets for financial claims are incomplete, so intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.
• AssumptionThe authors state this as an assumption: Banks specialize in making loans to small, idiosyncratic borrowers whose liabilities are too few to be publicly traded.

As real costs of intermediation increased, some borrowers, especially households, farmers, and small firms, found credit to be expensive and difficult to obtain.

“As the real costs of intermediation increased, some borrowers (especially households, farmers, and small firms) found credit to be expensive and difficult to obtain.”

• AssumptionThe authors state this as an assumption: Markets for financial claims are incomplete, so intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.
• AssumptionThe authors state this as an assumption: Banks specialize in making loans to small, idiosyncratic borrowers whose liabilities are too few to be publicly traded.

The resulting higher cost and reduced availability of credit acted to depress aggregate demand.

“and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand”

• AssumptionThe authors state this as an assumption: Markets for financial claims are incomplete, so intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.

The bankers' fear of runs had important macroeconomic effects.

“The bankers fear of runs, we shall argue below, had important macroeconomic effects.”

Effects of this type can help explain the unusual length and depth of the Great Depression.

“Evidence suggests that effects of this type can help explain the unusual length and depth of the Great Depression.”

• AssumptionThe authors state this as an assumption: Markets for financial claims are incomplete, so intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.

Reductions of the money supply in this period seem quantitatively insufficient to explain the subsequent falls in output.

“Another is that the reductions of the money supply in this period seems quantitatively insufficient to explain the subsequent falls in output.”

The effects of this credit squeeze on aggregate demand helped convert the severe but not unprecedented downturn of 1929-30 into a protracted depression.

“The effects of' this credit squeeze on aggregate demand helped convert the severe but not unprecedented downturn of 1929-30 into a protracted depression.”

• AssumptionThe authors state this as an assumption: Markets for financial claims are incomplete, so intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.

Given that debt contracts were written in nominal terms, the protracted fall in prices and money incomes greatly increased debt burdens.

“Given that debt contracts were written in nominal terms,15 the protracted fall in prices and money incomes greatly increased debt burdens.”

• AssumptionRests on an assumption: Debt contracts were written in nominal terms.

Sources of financial panics unconnected with the fall in U.S. output have been documented by many writers.

“sources of financial panics unconnected with •the fall in U.S. output have been documented by many writers.”

The behavior of almost the entire banking system was adversely affected, not just that of marginal banks.

“The result of this was that the behavior of almost the entire system was adversely affected, not just that of marginal banks.”

The second major aspect of the financial crisis was the pervasiveness of debtor insolvency.

“The second major aspect of the financial crisis (one that is currently much neglected by historians) was the pervasiveness of debtor insolvency.”

The monetary view is not a complete explanation of the link between the financial sector and aggregate output in the 1930s.

“However, it is not a complete explanation of the link between the financial sector and aggregate output in the 1930s.”

The disruptions of 1930-33 reduced the effectiveness of the financial sector as a whole in performing market-making and information-gathering services.

“The disruptions of 1930-33 (we shall try to show) reduced the effectiveness of the financial sector as a whole in performing these services.”

• AssumptionThe authors state this as an assumption: Markets for financial claims are incomplete, so intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.
• AssumptionThe authors state this as an assumption: Banks specialize in making loans to small, idiosyncratic borrowers whose liabilities are too few to be publicly traded.

The financial crisis of 1930-33 affected the macroeconomy by reducing the quality of certain financial services, primarily credit intermediation.

“This paper posits that, in addition to its effects via the money supply, the financial crisis of 1930-33 affected the macroeconomy by reducing the quality of certain financial services, primarily credit intermediation.”

• AssumptionThe authors state this as an assumption: Markets for financial claims are incomplete, so intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.
• AssumptionThe authors state this as an assumption: Banks specialize in making loans to small, idiosyncratic borrowers whose liabilities are too few to be publicly traded.

As the representative borrower became more insolvent, debtor insolvency necessarily raised the cost of credit intermediation for banks.

“Either way, debtor insolvency necessarily raised the CCI for banks.”

The fall in bank loans after November 1930 was not simply a balance-sheet reflection of the decline in deposits.

“The fall in bank loans after November 1930 was not simply a balance-sheet reflection of the decline in deposits.”

Canadian lenders other than banks also tried to retrench.

“Canadian lenders other than banks also tried to retrench: According to the Financial Post, May 1, 1932 (quoted in Safarian, p.130)”

• cites Financial Post, May 1, 1932Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

• cites SafarianNot matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

A higher cost of credit intermediation for some borrowers, such as households and smaller firms, implies that for a given safe interest rate these borrowers must face a higher effective cost of credit.

“A higher cost of credit intermediation for some borrowers (e.g., households and smaller firms) implies that, for a given safe interest rate, these borrowers must face a higher effective cost of credit.”

These factors, plus actual failures, forced a contraction of the banking system's role in the intermediation of credit.

“These factors, plus the actual failures, forced a contraction of the banking system's role in the intermediation of credit.”

• AssumptionThe authors state this as an assumption: Banks specialize in making loans to small, idiosyncratic borrowers whose liabilities are too few to be publicly traded.

The 1930-33 debt crisis can be thought of as the progressive erosion of borrowers' collateral relative to debt burdens.

“A useful way to think of the 1930-33 debt crisis is as the progressive erosion of borrowers' collateral relative to debt burdens.”

The duration of the credit effects described depends on the amount of time it takes to establish new or revive old channels of credit flow after a major disruption and to rehabilitate insolvent debtors.

“As a matter of theory, the duration of the credit effects described in Section III above depends on the amount of time it takes to 1) establish new or revive old channels of' credit flow after a major disruption, and 2) rehabilitate insolvent debtors.”

Most larger corporations entered the 1930s with sufficient cash and liquid reserves to finance operations and any desired expansion.

“While many businesses did suffer drains of working capital and investment funds, most-larger corporations entered the decade with sufficient cash and liquid reserves to finance operations and any desired expansion (see, for example, Lutz (1915)].”

• cites Lutz (1915)Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

The Canadian experience in the Depression does not seem inconsistent with the point that even good borrowers may find it more difficult or costly to obtain credit when there is extensive insolvency.

“However, on first appraisal, that experience does not seem to be inconsistent with the point that even”

• AssumptionRests on an assumption: Canada entered the Depression with a large external debt, much of it payable in foreign currencies.
• AssumptionRests on an assumption: The combination of deflation and the devaluation of the Canadian dollar led to many defaults.

There was a close relationship between the Baa-Treasury yield differential and banking crises.

“but note also the close relationship of the differential and the banking crises (a fact first pointed out by Friedman and Schwartz).”

• cites Friedman and SchwartzNot matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

In the 1930s, extraordinary default rates on residential mortgages forced banks and life insurance companies to practically stop making mortgage loans, except for renewals.

“For example, it was reported that the extraordinary rate of default on residential mortgages forced banks and life insurance companies to”

• cites [32] 32. Merwin, Charles L., Finano1 Small Corporations, N.B.E.R., 19142.Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

The combination of collateral and simple loan contracts helps create a low effective cost of credit intermediation.

“Thus, the combination of collateral and simple loan contracts helps to create a low effective CCI.”

The banking problems of 1930-33 disrupted the credit allocation process by creating large, unplanned changes in the channels of credit flow.

“The banking problems of 1930-33 disrupted the credit allocation process by creating large, unplanned changes in the channels of credit flow.”

• AssumptionThe authors state this as an assumption: Markets for financial claims are incomplete, so intermediation between some classes of borrowers and lenders requires nontrivial market-making and information-gathering services.
• AssumptionThe authors state this as an assumption: Banks specialize in making loans to small, idiosyncratic borrowers whose liabilities are too few to be publicly traded.

The debt crisis should be added to banking crises as a potential source of disruption of the credit system.

“The debt crisis should be added to the banking crises as a potential source of disruption of the credit system.”

The Baa-Treasury yield differential tends to understate the true difference in yields between representative risky and safe assets because it contains no adjustment for reclassification of firms into higher risk categories.

“Because this variable contains no adjustment for the reclassification of firms into higher risk categories, it tends to understate the true difference in yields between representative risky and safe assets.”

The financial crisis of the 1930s probably did not turn the United States into a temporarily underdeveloped economy.

“Although this possibility is intriguing, the answer to the question is probably no.”

Unless outputs of large and small businesses are not potentially substitutes, the aggregate supply effect of credit market problems must be regarded as not of great quantitative importance.

“Unless it is believed that the outputs of large and of small businesses are not potentially substitutes, the aggregate supply effect must be regarded as not of great quantitative importance.”

• AssumptionRests on an assumption: Outputs of large and small businesses are potentially substitutes.

Collateral reduces a bank's risk when the borrower has wealth that can be attached in the event of non-payment.

“If the borrower has wealth that can be attached by the bank in the event of non-payment, the bank's risk is low.”

The reduced significance of the credit variable over the entire interwar sample is due to the recovery of 1933-34 being financed by non-bank sources, with bank loans remaining at a low level.

“This last result is due to the fact that the recovery of 1933_Lfl was financed by non-bank sources, with bank loans remaining at a low level.”

The threat of loss of collateral provides incentives for borrowers to use loans only for profitable projects.

“Moreover, the threat of loss of collateral provides the right incentives for borrowers to use loans only for profitable projects.”

Since establishing or reviving credit channels and rehabilitating insolvent debtors may be difficult and slow, the persistence of non-monetary effects of financial crisis has a plausible basis.

“Since these processes may be difficult and slow, the persistence of non-monetary effects of financial crisis has a plaus1ble basis.”

In a complete-markets world, bankruptcy would never be observed because complete state-contingent loan agreements uniquely define each party's obligations in all possible circumstances, rendering third-party arbitration unnecessary.

“In a complete-markets world, bankruptcy would never be observed; this is because complete state-contingent loan agreements would uniquely define each party s obligations in all possible circumstances, rendering third-party arbitration unnecessary.”

If higher borrowing costs apply to household and small firm borrowing but not to their saving, then higher borrowing costs unambiguously reduce their demands for current-period goods and services.

“If this higher rate applies to household and small firm borrowing but not to their saving (they may only earn the safe rate on their savings), then the effect of higher borrowing costs is unambiguously to reduce their demands for current-period goods and services.”

For a given safe rate, an increase in the cost of credit intermediation reduces the total quantity of goods and services currently demanded, shifting the aggregate demand curve downward.

“Then the paragraph above implies that, for a given safe rate, an increase in the cost of credit intermediation reduces the total quantity of goods and services currently demanded.”

• AssumptionThe authors state this as an assumption: The behavior of borrowers unaffected by credit market problems is unchanged.

The March 1933 bank holiday episode qualitatively resembled earlier crises.

“Qualitatively, then, the March 1933 episode resembled the earlier crises; it would be throwing away Information not to include in some way the effects of this crisis and of its resolution on the economy.”

For a bank writing a loan contract, the simple agreement approach usually dominates the complete state-contingent contract approach, especially for small borrowers.

“The second approach usually dominates the first, of course, especially for small borrowers.”

The effect of bank portfolio choices on an asset price could not happen in a Fama-type complete-markets world.

“This effect of bank portfolio choices on an asset price could not happen in a Fama-type, complete-markets world.”

The observation of bankruptcies in an incomplete-markets world suggests that creditors and debtors find simple loan arrangements plus ex post bankruptcy adjudication cheaper than writing and enforcing complete state-contingent contracts.

“That we do observe bankruptcies, in our incomplete-markets world, suggests that creditors and debtors have found the combination of simple loan arrangements and ex post adjudication by bankruptcy (when necessary) to be cheaper than attempting to write and enforce complete state-contingent contracts.”

Bank crises depressed the prices of lower quality investments as fear of runs drove banks into assets that could be used as reserves or for re-discounting.

“Bank crises depressed the prices of lower quality investments as the fear of runs drove banks into assets that could be used as reserves or for re-discounting.”

The reluctance of even cash-rich corporations to expand production during the Depression suggests that the aggregate demand channel for credit market effects on output may be more fruitful.

“The reluctance of even cash-rich corporations to expand production during the Depression suggests that consideration of the aggregate demand channel for credit market effects on output may be more fruitful.”

The yield differential reflected changing perceptions of default risk.

“The yield differential reflected changing perceptions of default risk, of course”

Bank failures are not simply the product of current and past output performance.

“For banks, it might well be argued that not only are failures relatively independent of anticipations about output, but that they are not simply the product of current and past output performance either:”

• AssumptionRests on an assumption: Banking crises had never previous to this time been a necessary result of declines in output.

The decline in default rates of mortgage loans made in the early 1930s was too large to be explained by the improvement in business conditions alone.

“this decline was too large to be explained by the improvement in business conditions alone.”

• cites Behrens (1952, p. 11)Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

Non-monetary effects of the financial crisis augmented monetary effects in the short-run determination of output.

“This provides at least a tentative confirmation that non-monetary effects of the financial crisis augmented monetary effects in the short-run determination of output.”

The relatively low reported rate of bank failures at this time may be an artifact of state moratoria, restrictions on withdrawals, and other interventions.

“The relatively low reported rate of bank failures at this time may be an artifact of state moratoria, restrictions on withdrawals, and other interventions.”

The countries in which banking crises occurred held a large share of world trade and output.

“Moreover, these countries held a large share of world trade and output.”

• cites [19] 19. Frederiksen, D.M., "Two Financial Roads Leading Out of Depression", Harvard Business Review, 10, no. 1 (October 1931), 131-I8.Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

Friedman and Schwartz, as well as other writers, have identified specific events that were important sources of bank runs during 1930-33.

“Second, Friedman and Schwartz, as well as other writers, have identified specific events that were important sources of bank runs during 1930-33.”

• cites Friedman and SchwartzNot matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

The domestic insolvency problem had an international analogue.

“As the fall of the gold standard parallelled domestic bank failures, the domestic insolvency problem had an international analogue as well.”

The fact that the Depression hit countries which did not have banking crises does not preclude the possibility that banking and debt problems were important in the U.S.

“Thus the fact that the Depression hit countries which did not have banking crises does not preclude the possibility that banking and debt problems were important in the U.S. (or, for that matter, that countries with strong banks had problems with debtor insolvency).”

Economic institutions can affect costs of transactions and thus market opportunities and allocations.

“The solution to this paradox lies in recognizing that economic institutions, rather than being a”

Institutions which evolve and perform well in normal times may become counterproductive during periods when exogenous shocks or policy mistakes drive the economy off-course.

“Institutions which evolve and perform well in normal times may become counterproductive during periods when exogenous shocks or policy mistakes drive the economy off-course.”

The effects of financial crisis can help explain the persistence of the Depression.

“This is consistent with the claim that the effects of financial crisis can help explain the persistence of the Depression.”

Bank failures are relatively independent of anticipations about output.

“For banks, it might well be argued that not only are failures relatively independent of anticipations about output, but that they are not simply the product of current and past output performance either:”

• AssumptionRests on an assumption: Banking crises had never previous to this time been a necessary result of declines in output.

The reduction of imports as these economies weakened exerted downward pressure on trading partners.

“The reduction of imports as these economies weakened exerted downward pressure on trading partners.”

The financial recovery would have been more difficult without extensive government intervention and assistance.

“and that the financial recovery would have been more difficult without extensive government intervention and assistance.”

The banking crisis of late 1932 and early 1933 was in fact quite severe.

“However, accounts from the time suggest that the banking crisis of late 1932 and early 1933 (which ended in the banking holiday) was In fact quite severe; see Kennedy (1973).”

• cites Kennedy (1973)Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

A moderate estimate is that the U.S. financial system operated under handicap for about five years, from the beginning of 1931 to the end of 1935.

“A moderate estimate is that the U.S. financial system operated under handicap for about five years (from the beginning of 1931 to the end of 1935), a period which covers most of the time between the recessions of 1929-30 and 1937-38.”

The consensus from surveys, as well as the opinion of careful students such as Chandler, is that credit difficulties for small business persisted for at least two years after the bank holiday.

“In any case, the consensus from surveys, as well as the opinion of careful students such as Chandler, is that credit difficulties for small business persisted for at least two years after the bank holiday.5”

• cites ChandlerNot matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

The return of the private financial system to normal conditions after March 1933 was not rapid.

“Summarizing the reading of all of the evidence by us and by other students of the period, it seems safe to say that the return of the private financial system to normal conditions after March 1933 was not rapid;”

To the extent that the home mortgage market functioned in the years immediately following 1933, it was largely due to direct involvement of the Federal government.

“To the extent that the home mortgage market did function in the years immediately following 1933, it was largely due to the direct involvement of the Federal government.”