what were the consequences of loans from US bankers?

Question

American banking. During the stock market exchange? Maybe the early 1920's

Answer 1

First, let's explain what a loan is. Using a loan is called buying on credit. This is when a bank offers you money and asks you to pay them bank. During the 1920s, everyone was buying things on credit (farmers, to regular citizens buying new inventions, to banks using credit (and the money of people who had deposited money into the bank) to buy stocks in the stock market.

In 1929, the Stock Market crashed and those who put money into the Stock Market, including banks, lost all of their borrowed money, which meant they could not pay back their loans to the bank. Since the banks were not paid the money they were owed, the banks failed because they had no money. This meant that people who deposited their savings in banks could not get any of their money back because the banks had no money to give.