international economic issues

• It can be argued that the economic crisis was caused by international economic problems.
• Following the boom in industry created by WWI by 1921 the USA faced unemployment rising to 11% and to tackle unemployment the 1922 Fordney-McCumber tariff was passed which introduced a 40% tariff on imported goods with the idea to reduce foreign competition.
• Reducing foreign competition is important in leading to the economic crisis because this form of ‘protectionism’ backfired and as a result of Americans no longer buying imported, especially European, goods meant these countries found it extremely difficult to pay back the $10 billion worth of war loans they owed the US.
• However, this cannot be the most important factor as many of European countries such as Britain and France were receiving reparation payments from Germany following her defeat therefore it is untrue to say these countries were financially incapable of repaying their debts.
• In addition, from 1924 the USA had agreed the Dawes Plan with Germany and provided large loans therefore in order for Germany to start paying back her reparations as well as the loans she, like other European countries introduced similarly high import tariffs on goods as their own form of ‘protectionism’.
• This is important in leading to the economic crisis because this

  worsened the problem of over-production within America as they could no longer expand & sell her goods in Europe which resulted in further closure of factories and unemployment. However, again this cannot be the most important factor as Britain did not impose these high trading tariffs on American goods and US exports actually increased by 38% during the 1920s.
• Overall, some Historians, like Charles Kindleberger where he expressed his view in his book 'The World in Depression, 1929-1939', argue that international economic problems were the most important reason for the economic crisis because the downturns in global markets put further pressure on the American economy during hard times as she simply could not call back her loans or expand her markets abroad.
• However, most Historians argue that the Republican policies were more important because they directly created this ‘protectionist economic situation’ which ultimately increased pressure with the US economic system.