The International Effects of the Depression

The Great Depression was the most severe economic downfall of modern times; millions lost their jobs, farmers and businesses went into bankruptcy, and suppliers of primary products were affected.  The economic collapse started solely in the United States, but soon affected other European countries because of the newly close relationships between American and European countries that had been formed after World War I.  The US came out of the war as a major creditor and financier of post war Europe.  The economies in Europe had been already weakened significantly as a result of the war, war debts, and war reparations in the case of Germany and other conquered nations.  As a result of such close relations and a heavy reliance of Europe on the US, the Great Depression's devastating affects were felt worldwide.

The Main Areas Affected
The United States, of course, was greatly affected by the Depression; the recession was initially seen as a inevitable part of the boom-bust cycle, especially after the great prosperity of the Roaring Twenties.  However, the economic decline lasted much longer than expected and almost everyone in the country was affected by the downturn.

The economic situation in Germany which was already unhealthy as a result of the war, was further distressed by the Great Depression.  Germany was forced to borrow heavily from the United States to pay off their war "reparations" to the triumphant European powers, as agreed to in the Treaty of Versailles, as well as pay for industrial reconstruction.  So, when America fell into an economic crisis, US banks recalled their loans, and the German banking system broke down.



Countries, such as Latin America, were dependent on exported primary products, were already enduring a depression in the late 1920s.  Advances in farming techniques and technology meant that agricultural products were being over produced, this imbalance in supply and demand led to falling prices.  At first, the governments of these export reliant countries stockpiled their products, but their ability to do this was dependent upon loans from the US and Europe.  When these loans were recalled, these stockpiles were released onto the market, causing prices to collapse and the income of these producing countries to diminish.


Politics Impacts
In countries such as Germany and Japan, the Depression catalyzed a rise of militarist governments who adopted regressive foreign policies (which eventually led to WWII).  In countries, such as the United States and Britain, the Great Depression lead to the creation of welfare systems and more governmental intervention in the economy.

In the US, Roosevelt was elected president and created the New Deal under which the government would intervene to decrease the rate of unemployment.  Agricultural and industrial industries were benefited by policies that restricted the country's output, which then raised rices.

In Germany Hitler adopted policies that were more interventionist, he developed a massive work-creation plan that greatly reduced unemployment.  In order to prevent inflation, consumption was regulated by rationing and trade controls.

The economic crisis was far from a solely American problem as countries worldwide felt the heavy-handed blow of the Great Depression.