Banks suffered financial strain from "summary" of The Great Crash 1929 by John Kenneth Galbraith
The calamity that overtook banks in the late 1920s was not just a localized problem. It was a symptom of a broader malaise that had infected the entire financial system. Banks, those venerable institutions that were supposed to be the bedrock of the economy, found themselves teetering on the brink of collapse. The source of their woes lay in the speculative excesses of the era. As the stock market soared to dizzying heights, banks had eagerly joined the fray, extending credit to investors who were all too willing to leverage their gains. This strategy worked well enough as long as stock prices continued to rise. But when the inevitable correction came, banks were left holding the bag. Suddenly, the assets that had seemed so solid were revealed to be nothing more than paper profits. As investors rushed to liquidate their holdings, banks found themselves facing a liquidity crisis. They simply did not have enough cash on hand to meet the demands of their depositors. The situation was made worse by the fac...
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