The Making of a Global World

The Great Depression began around 1929 and lasted till the mid- 1930s.
The depression was caused by a combination of several factors. The post-war world economy was fragile.
To start with agricultural overproduction remained a problem. This was made worse by falling agricultural prices. As prices slumped and agricultural incomes declined, farmers tried to expand production and bring a larger volume of produce to the market to maintain their overall income. This worsened the glut in the market, pushing down prices even further. Farm produce rotted for a lack of buyers.
Secondly in the mid-1920s, many countries financed their investments through loans from the US. While it was easy to raise loans in the US when the going was good, US overseas lenders panicked at the first sign of trouble and withdrew the loan facilities. The withdrawal of US loans affected much of the rest of the world. In Europe it led to the failure of some major banks and the collapse of currencies such as the British pound sterling. In Latin America and elsewhere it intensified the slump in agricultural and raw material prices.
The US attempt to protect its economy in the depression by doubling import duties also dealt another severe blow to world trade.
During the Depression period most parts of the world experienced catastrophic declines in production, employment, incomes and trade. Agricultural regions and communities were the worst affected. This was because the fall in agricultural prices was greater and more prolonged than that in the prices of industrial goods.