.

             However, the attitudes in the U.S. were evolving in an unusual .

             direction: an increasing number of American financiers were starting .

             to literally seek ut potential borrowers which led to competition .

             among U.S. banks and the spreading of unsound lending.2 The main .

             object was to "do the most business", even at the expense of essential .

             caution.

             What seemed like a beginning of recovery from the Great War, .

             was in fact an immense accumulation of debts, which made the.

             international economic order vulnerable to depression. Analyzing these .

             events with the insight we have today, they seem even more .

             unbelievably audacious given the high instability of the borrowing .

             nation. (i.e., Europe).

             The triggering event was the crash of the Wall Street stock .

             market in October of 1929. The stock market collapsed after steady .

             declines in production, prices and incomes over three previous months .

             which forced the speculators to revise their expectations. Anxiety .

             soon gave place to panic which led to the crash. However, the .

             depression affected the different industrialized countries in various .

             ways and degrees of intensity.

             The depression was of especially great magnitude in the U.S. .

             because there were not any welfare benefits for laid off workers. In .

             the period between 1929 and 1933, money income fell by 53 percent .

             (real income fell by 36 percent.)3 As a consequence, demand fell .

             significantly, which in turn led to lower production and more .

             layoffs-- up to a high of 25 percent rate of unemployment in 1933.

             Despite the severity of the situation, the Federal Reserve did .

             not pursue a monetary expansion on policy which would have stimulated .

             the economy through lower interest rates and increased the stock of .

             money in circulation. This inaction is often attributed to the fact .

             that market interest rates in 1930-1931 fell to very low levels, much .

             lower than in the earlier recessions (of 1924 and 1927), and .