Effects+of+the+Great+Depression

Ch. 25 - Effects of the Great Depression ** **Domestic Effects:**

Due to the lack of a welfare system, many Americans were left unemployed by [|The Great Depression]. Personal income, tax revenue, profit decreased, prices fell and international trade plomitted. Money income fell to 53% and the unemployment rate reached 25% in the United States by 1933, while in other countries reaching as high as 33%.

The popularity of credit use during the 1920s also had a great impact on Americans during the Depression. People were no longer making money, or enough money, and therefore could not pay off their credit debt. This led to repossession of automobiles and household items. Farmers were over producing crops with no one willing to buy them. Crop prices fell by nearly 60%. Farmers were hit particularly hard by the depression because farming was their main and only source of income. With this job an unreliable source of money, farmers were left with few alternatives during the depression.

** Worldwide Effects: **

After American banks started collapsing, in 1931 New York banks started calling in their loans from Germany and Austria. This caused the downfall of one of Austria's largest banks which led to a panic throughout central Europe. The crash of Austria's and Germany's economy meant neither country could continue paying reparations, as required by the Treaty of Versailles, to Britain and France which meant Britain and France could not pay their reparations to the US.

International trade was greatly impacted by the Depression. Like the domino effect, once the American economy crashed, other countrys' economies soon followed. Hoover, who was president during the beginning of The Great Depression, did not help international relations with his passing of the Hawley-Smoot Tariff Act in 1930. This act would increase tariffs to such high levels and was objected by more than 1,000 economists. Other nations were outraged and as a result rasied their tariffs.

Due to industrial countries feeling a strain on their economies, small colonies and nations in Africa, Asia, and South America experienced economic troubles. This led to the increase of poverty in those smaller countries.

Eventually the economy was turned around during World War 2.