There was fractional reserve banking (http://en.wikipedia.org/wiki/Fractional-reserve_banking http://en.wikipedia.org/wiki/Fractional-reserve_banking). Banks co

There was fractional reserve banking (http://en.wikipedia.org/wiki/Fractional-reserve_banking http://en.wikipedia.org/wiki/Fractional-reserve_banking). Banks could lent more dollars, than they had in reserves. Money supply (M2) was expanding with great rate till the 1928.