Even though bankers were significantly smart in the year 1929, the structure of banking had been inherently weak. With the failure of one bank, there were frozen assets of other banks, while the depositors were being warned about it for going and asking for their money. Therefore, one failure resulted in the failure of others, and these had been spreading extremely with a domino impact. Since the initial six months of the year 1929, 346 banks faced failure in a number of different parts of the nation, having aggregate deposits at approximately 115 million dollars. As markets for the claims of finance can be seen as incomplete, intermediation across certain classes of lenders and borrowers requires non- trivial information gathering and market making service. With a rise in actual costs of intermediation, some of the borrowers faced a lot of difficulty and expense for obtaining it. Hence, it can be stated that a number of factors resulted in triggering the Great Depression, all being related to one another. The conventional perception about the Depression is that it started off from the crises of bank and further was triggered by the failure faced by Federal Reserve for expanding the supply of money.
Based on this, it can also be argued that in order to recover from Depression, the economies had been on track until the year 1937. This was the time when Fed considered raising requirements of bank reserve and there had been a reduction of fiscal stimulus. However, the immediate chronic and depth duration of the Great Depression seems to maintain inconsistency of past explanations. Based on this, it can be stated that the Depression started off as a severe consequence as the output of manufacturing fell by 35 per cent during the initial period of the Depression, prior to the large declines in the supply of money and the panics of banking. The Depression ended up lasting for a longer period than anticipated. After the year 1933, the growth of productivity had been rapid; liquidity was in abundance, the system of banking faced stabilization, there was elimination of deflation and a lot of demand stimulus as the monetary base of Federal Research more than doubled between the year of 1933 and the year of 1939.