What collapsed were the banks, due to mismanagement by the Fed (the government). In particular, it was trying to maintain a fixed (government specified) exchange rate between gold and money while inflating the money 2:1.
Like all such pegging schemes, the result was a run on the banks, leading to their collapse. This (finally) stopped when FDR made it illegal to exchange gold for money.
What collapsed were the banks, due to mismanagement by the Fed (the government). In particular, it was trying to maintain a fixed (government specified) exchange rate between gold and money while inflating the money 2:1.
Like all such pegging schemes, the result was a run on the banks, leading to their collapse. This (finally) stopped when FDR made it illegal to exchange gold for money.