Financial Markets & Institutions

1 - GREAT DEPRESSION (1.i) PREVAILING CONDITIONS & major CAUSES During 1920/21 general deflation in the value of US bring forths, on average 50%, led to record numbers of farm foreclosures. Banks responded by radically tightening lending polices, effectively ceasing to flummox new loans to decriminalise customers and businesses. Farm foreclosures weakened the residue sheets of hundreds of artless banks leading to a epidemic of Bank failures averaging 600 per year end-to-end the 1920s and predominately in the agricultural regions of the US (L B doubting Thomas 1997). Sharp reductions in US import levels impacted humanity markets, driving down exact and prices. Worst affected in Australia were primary producers who experienced declines in export values of up to 40% over the distributor point 1929 to 1932 (Gregory & Butlin 1988). Australia movie to fluctuations in demand for primary products was exuberated by the relatively high gear degree of wool and stalk that make up the balance of exports. Both these commodities experienced sharp declines in demand and price, with wheat prices experiencing further downward pressures due to outsize stockpiles being released onto the world-wide market post 1929, and sold for some(prenominal) they would fetch (Schedvin 1970).

Australia during the 1920s had strong investment into the urbanisation of the coastal cities, drawing funds international from the rural sector and into industrial and manufacturing areas, World War 1 added further stimulus to this shift. The Australian Government and its public servants were below pressure to commit bulky amounts of resources into the creation of urban assets and la bor infrastructure such as railways and comm! unication networks. These were typically funded by loans secured in London, which suffered due to the mental unsoundness of the London capital market. The Australian authorities were reluctant to concern decisive execute due to political tensions at the time. The job was further compounded... If you destiny to get a full essay, gear up it on our website: OrderEssay.net

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