US Presidency
1929

The foreign central banks having determined that they would bring the crisis to an end, at least so far as their own countries were concerned, [ p.367 ] advanced money rates very rapidly in practically every European country in order to attract capital that had drifted from Europe into New York, back into their own industry and commerce. Incidentally, the effect of increasing discount rates in Europe is much greater on their business structure than it is with us. Our business structure is not so sensitive to interest rates as theirs is. So their sharp advancement of discount rates tended to affect this market, and probably expedited or even started this movement. But once the movement has taken place we have a number of phenomena that rapidly develop. The first is that the domestic banks in the interior of the United States, and corporations, withdraw their money from the call market.