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The USA was hit by the Great Depression in 1929 because of increasing restrictions on international trade. How far do you agree with this opinion?

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Introduction

?The USA was hit by the Great Depression in 1929 because of increasing restrictions on international trade?. How far do you agree with this opinion? The Great Depression was caused by numeral factors including the over production of goods, the economic impact of World War One and the decline of the construction industry. However, I would be inclined to support the opinion that ?the USA was hit by the Great Depression in 1929 because of increasing restrictions of international trade?, due to the implementation of tariffs. Both the Fordney McCumber Act and Hawley Smoot resulted in retaliation tariffs on exports; therefore purchasing power relied solely on the domestic market. However, by the late 1920s the market was already saturated as a result of the inequalities in wealth throughout the USA due to Republican Laissez faire policy; which created an economic crisis within the country due to failure of purchasing to keep up with productivity. Source 7 supports the view that the Great Depression was because of increasing restrictions on international trade; quoting that the ?trend in most countries to raise tariffs?made trade more difficult?. Due to the Fordney McCumber Act being passed in 1922 there was already tariffs on goods imported to the USA. ...read more.

Middle

The result of such reparations meant that European countries would have concentrated their money on paying back reparations rather than on trade, primarily because the increased 40% tariff on America?s exported goods, as a result of the Hawley Smoot Act and similarly the tariffs implemented on exports by other countries, meant most countries would not have been able to afford to contribute to world trade. Therefore, America would have had to rely on its own economy. However, the inequalities in wealth, highlighted by the fact that the 5% of the population with the top incomes had a third of all personal income in America, resulted in ?failure of purchasing power to keep pace with rising productivity? as argued by source 8, leading again to the downward spiral of unemployment and lack of spending in the US which caused the country to hit the Great Depression. It can be argued though, that the underlying reason for over production was the lack of purchasing power caused by not only increasing restrictions of international trade but also the inequalities of wealth. Farmers made up 30% of the population and participated in receiving the lowest wages, farmers in South Carolina earning only $129 per capita in 1929; therefore lacking purchasing power due to their ...read more.

Conclusion

As a result of this unemployment levels rose and had a serious knock on effect on the economic society as suppliers of goods similarly lost their jobs; thus fuelling the downward spiral in the USA?s society as over production would have therefore increased in terms of construction goods and without a domestic market or international market to sell to, the USA would have again found itself in the downward spiral that caused the country to be hit by the Great Depression. Overall, it can be argued on balance that ?the USA was hit by the Great Depression in 1929 because of increasing restrictions of international trade?, due to the Hawley Smoot tariff resulting in retaliation tariffs and therefore a sole reliance on the domestic market which by 1929 was already saturated. However, in turn the Republican Laissez faire policy which allowed the inequalities in wealth to continue must be considered a significant factor as it allowed the economic crisis to spiral out of control highlighted by the fact that in a sample of 100 families in 1929, 75% earned less than recommended by the Federal Bureau of Labour as the minimum income. This therefore meant there was a lack of purchasing power throughout the USA which was reliant in the domestic market and therefore led to the USA being hit by the Great Depression. ...read more.

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