HISTORY 1DD3 Lecture Notes - Lecture 14: Bourgeoisie, Money Supply, Retained Earnings
22 Oct 2017
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The wealthy and middle class cannot buy anything crippling demand for goods: holding companies. Spreads depression from unhealthy companies to otherwise healthy ones: attempt by managers to keep company a oat. Adds to distrust and confusion: bank runs. Banks, scared of runs, hold onto money making borrowing more dif cult although demand for loans are already low: high protective tariff. Most countries (from wwi) owed money to the u. s. Could not sell goods here to get money (usd) to pay debt. Had been borrowing, but that dries up. As depression spreads, foreign nations stop buying causing a further drag on demand. Smoot-hawley tariff effectively ends international trade: federal reserve. How companies raise capital: retained earnings. Reinvest pro t: pro t that they don"t give away; keep in company to reinvest and build up, slow process, bank loans. Borrow $, pay back with interest: dif cult to get large loans. Small companies don"t get big loans: bonds.
