The Impact of Foreign Market Loss on the Great Depression in the USA
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How significant was the loss of foreign markets as a cause of the Depression in the USA?
ESSAY
The loss of foreign markets played a significant role in the cause of the Great Depression in the USA. The post-World War I European recovery resulted in a decreasing demand for American products, which led to a loss of markets for US goods. This loss of foreign markets had a cascading effect on the American economy in various ways. For example, farmers in the US faced tough competition from cheaper Canadian grain, which contributed to a decline in agricultural prices and exacerbated the economic downturn in rural areas.
Moreover, in response to the economic challenges posed by the loss of foreign markets, the US government implemented tariffs on imported goods to protect domestic industries. However, this protectionist approach backfired as other countries retaliated with their own tariffs on American exports, further limiting US access to foreign markets. This trade war environment contributed to overproduction in both the industrial and agricultural sectors, exacerbating the existing economic imbalances within the US economy.
On the other hand, while the loss of foreign markets was a significant factor in the onset of the Great Depression, other factors also played crucial roles. Overspeculation and overconfidence in share prices on Wall Street led to the stock market crash of 1929, which triggered the economic downturn. The subsequent overproduction and saturation of domestic markets also contributed to the economic crisis.
Additionally, the vast income inequality in the US, with a significant percentage of the population living below the poverty line, exacerbated the impact of the economic downturn. The lack of government intervention and the adherence to laissez-faire economic policies further worsened the situation by failing to address the structural issues within the economy.
In conclusion, while the loss of foreign markets was a significant cause of the Great Depression in the USA, it was not the sole factor. The interplay of multiple economic factors, including overspeculation, overproduction, income inequality, and lack of government intervention, all contributed to the severity and duration of the economic crisis.
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How significant was the loss of foreign markets as a cause of the Depression in the USA? Explain your answer.
YES
- Post-war European recovery led to loss of markets; farmers competed against Canadian grain which was cheaper; US tariffs led to foreign tariffs on US goods; led to overproduction in industry and further overproduction in agriculture, etc.
NO
- More significant – overspeculation and overconfidence in share prices led to Wall Street Crash; overproduction and saturation of domestic markets; inequality of income in USA – 42% below poverty line; lack of government intervention – laissez-faire, etc.