What would you have done?

Question

The world financial system that emerged after World War I was based upon the gold standard. The United States and Great Britain guaranteed that they would exchange their currencies for gold at a fixed rate - $20.67 for an ounce of gold or 4.86 British pounds. Other major countries, most notably Germany and Austria, experienced serious bank runs. To stabilize their currencies, they exchanged their dollars and pounds for gold. The United States experienced a serious loss of gold (as did Great Britain). To encourage foriegn investors to buy American investments, the Federal Reserve Banks raised interest rates. If you were an American business ownder planning to build a new factory or buy new equipment, what would you have done after interest rates were increased?

Answer 1

.

Answer 2

Seeing as how higher interest rates means that it costs more to borrow the money, domestic investment (factories and equipment purchased by US businesses) would have decreased, leaving more investment to be done by foreign nations. If put in this same situation, I would have done the same, as buying new factories and equipment at this higher interest rate would be less profitable, if profitable at all.

Answer 3

I would have waited for people to get foreclosed on and get what I needed cheap. For the factory I would have also waited for people who got in to trouble with their loans and bought the building from somebody who had a 3% loan increase to a higher number.

Answer 4

I would have tried to borrow money from foreign banks, enlisted investments from established foreign companies to build here.