During the early months of the Great Depression, a large number of banks failed. What were two primary causes for
this? Select all that apply.
Farmers who had gone bankrupt could no longer pay back their loans.
Foreign countries could no longer pay their war debts.
There was not enough gold to back up the currency.
They had not been charging enough interest on credit.

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-05-11T17:09:44-04:00

The primary causes for the bank failures in the early Great Depression were lack of gold to support currency and farmers unable to repay loans.

Two primary causes for the large number of bank failures during the early months of the Great Depression were:

Farmers who had gone bankrupt could no longer pay back their loans: As a result, rural banks were left with unpaid loans and assets that continued to decrease in value.
There was not enough gold to back up the currency: The lack of gold to support the currency led to a collapse in the banking sector and the economy as a whole.

Additionally, high real interest rates, bank failures due to structural flaws, and panic among depositors also contributed to the banking crisis.

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