<P> The US government's commitment to the gold standard prevented it from engaging in expansionary monetary policy . High interest rates needed to be maintained, in order to attract international investors who bought foreign assets with gold . However, the high interest also inhibited domestic business borrowing . The US interest rates were also affected by France's decision to raise their interest rates to attract gold to their vaults . In theory, the U.S. would have two potential responses to that: Allow the exchange rate to adjust, or increase their own interest rates to maintain the gold standard . At the time, the U.S. was pegged to the gold standard . Therefore, Americans converted their dollars into francs to buy more French assets, the demand for the U.S. dollar fell, and the exchange rate increased . The only thing the US could do to get back into equilibrium was increase interest rates . </P> <P> The Wall Street Crash of 1929 is often cited as the beginning of the Great Depression . It began on October 24, 1929, and was the most devastating stock market crash in the history of the United States . Much of the stock market crash can be attributed to exuberance and false expectations . In the years leading up to 1929, the rising stock market prices had created vast sums of wealth for those invested, in turn encouraging borrowing to further buy more stock . However, on October 24 (Black Thursday), share prices began to fall and panic selling caused prices to fall sharply . On October 29 (Black Tuesday), share prices fell by $14 billion in a single day, more than $30 billion in the week . The value that evaporated the week was 10x more than the entire federal budget and more than all of what the U.S. spent on World War I. By 1930 the value of shares had fallen by 90% . </P> <P> Since many banks had also invested their clients' savings in the stock market, these banks were forced to close when the stock market crashed . After the stock market crash and the bank closures, people were too afraid to lose more money . Because of the fears of further economic challenge, individuals from all classes stopped purchasing and consuming . Thousands of individual investors who believed they could get rich by investing on margin lost everything they had . The stock market crash severely impacted American economy . </P> <P> A large contribution to the recession is due to the closure and suspension of thousands of banks across the country . The causation of these failing financial institutions come from several reasons including unregulated lending procedures, confidence in the Gold standard, consumer confidence in future economics, and agricultural defaults on outstanding loans . With these compacting issues the banking system struggled to keep up with the high demand of cash withdraws from the public . This impact overall decreased the money supply and forced the banks to result to short sale (real estate) and liquidation of existing loans . In the race to liquidate assets the banking system began to fail on a wide scale . In November 1930 the first major banking crisis begun with over 800 banks closing their doors by January 1931; over 2100 banks will be suspended by October 1931, with the highest suspension rate recorded in the St. Louis Federal Reserve District with 2 out of every 5 banks suspended . The economy in whole experienced a massive reduction in banking footholds across the country amounting to more than nine thousand closed banks by 1933 . </P>

What increased within the united states as a result of the great depression