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What effects did the Great Depression in the United States have on the global economy...

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wealdooo | Student | eNoter

Posted April 20, 2013 at 5:01 PM via web

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What effects did the Great Depression in the United States have on the global economy of the 1930s?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted April 20, 2013 at 5:13 PM (Answer #1)

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There were a number of ways in which the Depression in the US affected the global economy.

First, there is the aspect of trade.  The United States was, of course, one of the richest countries in the world at the time.  It was an important player in global trade.  With the coming of the Depression, American demand for imports dried up.  This was exacerbated by the Smoot-Hawley Tariff.  This hurt all the countries that exported to the US.  It also encouraged other countries to create trade barriers.  This hurt world trade further.

Second, there was the fact that Germany’s economy was heavily dependent on trade and on loans from the United States.  With the Depression, the US stopped being able to loan money to Germany.  This, along with declines in trade, damaged the Germany economy terribly.

Finally, the Germans were, in those days, paying reparations for WWI to the French and English.  When the Depression hit and they could no longer borrow from the US, they stopped paying those reparations.  The French and British economies were badly damaged and the Depression spread.

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