The depression that began in the United States in 1929 went around the world in the years that followed.
By 1932, more than 30 million people could not find a job. That same year, industrial production worldwide was 38 percent less than it had been in 1929.
Just as in the U.S., unemployment rates in Germany and Great Britain reached 25 percent in 1932. In Germany that meant that over 5.5 million people were out of work. Some historians point to that fact as one of the reasons that democracy broke down and Adolph Hitler gained dictatorial power.
What caused the Great Depression to become a worldwide event? Some economists say that the fact that there was an international monetary system tied to the price of gold made the different economies closely related. Problems in one large economy were passed on to others and eventually back to the country where the problems began.
Others point to the fact that a trade war developed. Throughout the 1920s, American farmers exported commodities worth an average of almost $2 billion a year. Ag exports accounted for 42% of all U.S. exports. During the 1930s, ag exports dropped by almost two-thirds to $765 million and accounted for only 32% of exports. In part, the drop was caused by protective tariffs that were imposed on foreign ag products and the tariffs other countries imposed in retaliation.
Walter Schmitt (right) expresses this fact clearly. “The world is small,” he says. “What affects one [country] affects the other.”
Written by Bill Ganzel of the Ganzel Group. First written and published in 2003.