History The Great Depression Questions
The decline in international lending during the Great Depression was primarily caused by a combination of factors. Firstly, the economic downturn led to a decrease in global trade and a decline in the demand for loans. Additionally, the collapse of the stock market in 1929 resulted in a loss of confidence in the financial system, leading to a reduction in lending. Furthermore, protectionist policies implemented by various countries, such as high tariffs and trade barriers, further restricted international lending.
The effects of the decline in international lending were significant. Firstly, it exacerbated the economic crisis by reducing the availability of credit for businesses and individuals, leading to a decrease in investment and consumption. This, in turn, contributed to a further decline in global trade and economic activity. Additionally, the decline in international lending led to a wave of bank failures and financial instability, as many banks were unable to repay their foreign loans. This further deepened the economic crisis and resulted in widespread unemployment and poverty. Overall, the decline in international lending during the Great Depression worsened the economic downturn and had far-reaching consequences on a global scale.