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The Role of Business Liquidity During the Great Depression and Afterwards: Differences Between Large and Small Firms

Published online by Cambridge University Press:  03 March 2009

Helen Manning Hunter
Helen Manning Hunter
Affiliation:
Associate Professor of Economics at Bryn Mawr College, Bryn Mawr, Pennsylvania 19010.
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Abstract

This paper describes two contrary developments in corporate finance during the Great Depression. In 1930s downswings the top one percent of firms acquired unusually high rations of liquid assets to receipts, thus withdrawing funds from the spending stream. Smaller firms, however, were forced into highly illiquid positions (by postwar standards) by episodes of monetary restriction in 1931 and 1937. It is argued that both developments made the Depression more severe. A structural change is found after 1945 in the financial behavior of large firms. This is attributed to a new cyclical pattern of price change and lower business uncertainty during postwar recessions.

Type
Articles
Information
The Journal of Economic History , Volume 42 , Issue 4 , December 1982 , pp. 883 - 902
Copyright
Copyright © The Economic History Association 1982

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References

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