Why was there a financial crisis in 1931?

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Direct result of the Wall Street Crash:

  • The Wall Street Crash in October 1929 triggered a worldwide economic crisis. Britain's economy experienced additional declines to that of the 1920's, as export markets were heavily affected. This contributed to the rise in unemployment by the early 1930's.

The rise in unemployment:

  • The economic crisis essentially triggered the financial crisis as unemployment rose. The increase in unemployment resulted in an increase in government spending, in particular with the unemployment benefit. Government spending was perhaps the most significant reason for the financial crisis, as  the May Committee later


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