"The banks... provided the money that financed the speculation that in each case preceded the crash. Those buying land, commodities or railroad stocks and bonds came to the banks for loans. As the resulting notes and deposits went into circulation, they paid for the speculative purchases of yet others. It helped that the banks were small and local and thus could believe what the speculators believed... that values would go up for ever. The banking system... was well designed to expand the supply of money as speculation required. Banks and money also contributed to the ensuing crash. A farther constant of all the panics was that banks failed. In the earlier panics the will-of-the-wisp enterprises... disappeared... Later in the century, the casualties continued, and still most heavily among the small state banks. ...After 1920, the real slaughter began, and, after 1929, it approached euthanasia. In the four years beginning in 1930, more than 9000 banks and bankers hit the dust. A bank failure is not an ordinary business misadventure. ...Owners lose their capital and depositors their deposits, and both therewith lose their ability to purchase ...But failure (or... fear of failure) also means a shrinkage in the money supply. ...A healthy bank is making loans and, in consequence, creating deposits that, in turn, are money. A bank that fears failure is contracting its loans and therewith its deposits. And one that has failed is liquidating its loans, and its frozen deposits are no longer money. The liquidation also draws on the reserves, loans, deposits and thus the money supply of other banks."