By March 2nd 21 states had closed their banks. Over 200 million dollars in gold had been taken out of US banks. The following day panic spread to the Federal Reserve as 110 million dollars in gold was paid out to foreign banks from New York and Chicago banks. Another 40 million dollars in gold was paid out by other banks on that same day.
On March 4th Roosevelt was sworn in and he announced a four day bank holiday to do what Hoover originally planed on doing. Deflation was another major factor to the Great Depression. It “started in 1930 and eventually led to a 25% decline in the price level” (Mishkin 191). This was brought about because of the huge decline in the stock prices. This had such a major effect because at this time people were borrowing money to buy stocks, which is called buying on margin. Since so many people were now burdened by debt, the overall net worth of the population fell so people began to spend less money which inadvertently caused companies to restructure, which finally led to the rise in unemployment. After experiencing the debt deflation, Fisher wrote his debt-deflation