World Depression Essay

This essay has a total of 737 words and 4 pages.

World Depression

World Great Depression
Macro Economics
June 2005

The depression that plagued the United States in the 1930's was distinctive in its
enormity and its consequences. Europe and other countries suffered in the depression due
to three main areas of discussion. The effects of trade contributed to depression
throughout Europe and America. United States and other countries unemployment soared. With
the ravages of world war one many countries where in debt in post war world one or became
in debt due to reparations.

It has been said that the Great Depression began in 1929 after a cataclysmic collapse of
the New York Stock Exchange. It began in the United States but quickly spread across the
world causing an economic slump. "During the collapse of the world the German case is
perfect example of what happen virtually everywhere in the 1930s. The international
economy broke up into trading blocks determined by political allegiances and currencies."
Britain's economy suffered with the loss of the over seas market and the country's choice
to not to devalue the pound. When face with falling exports earnings governments began
overreacting and began severely reducing trade. Nearly all countries needed to protect
their domestic production and began imposing tariffs. By doing this it greatly reduced the
amount of international trade and furthered them into debt. The high tariffs hindered the
payments of war debts, which were only paid off by loans from the United States and
Britain for war reparations. The destabilization of the European economy came through the
international debt structure that appeared after World War one.

Many countries that where allies with the United States during the war owed large amounts
of money to American banks. The amount of money was so immense that it is one reason that
the Allies insisted at Treaty of Versailles that repartitions be paid which they thought
would be able to pay off their debts. After America fell into the depression they recalled
their loans making many German banks to close their doors and the whole system to
collapse. Not being able to pay off their reparations to the Allies due to Germany and
Austria being in the debt themselves. Along with Germany the United States started to
remove money from Europe, leading to the selling for European monies and collapse of
European banks. (,

As the countries loss money and began to fall into debt the unemployment began to rise. In
the United States between 1929 and 1933 unemployment climbed form three to twenty percent,
also in other countries the unemployment rate was anywhere from fifteen to twenty five
percent. To combat the unemployment many countries became interventionist. In America
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