U.S. banks stopped investments in Europe and demanded repayment of foreign loans.
Explanation:
The Great Depression, also known as the Crisis of the 29th, was a global economic crisis that lasted during the 1930s, in the years before the Second World War. Its duration depends on the countries analyzed, but in the majority it began around 1929 and lasted until the late 1930s or early 1940s. It was the longest depression in time, of greater depth and the one that affected more countries in the 20th century. In the 21st century it has been used as a paradigm of the extent to which a serious deterioration of the economy on a world scale can occur.
The First World War had profound and lasting economic consequences by ending the existing international economic order since the second half of the nineteenth century. It represented a direct and indirect demographic decline of around 10% of the European population and 3.5% of the existing capital. From the financial point of view, the armed conflict led to a huge public expenditure in Europe financed by public debt, both internal and external, which entailed the multiplication by six of the existing debt; it also generated the creation of money, which meant a strong inflationary pressure.
In the course of the war, various nations not involved in the conflict such as the United States and Japan seized some international markets, traditionally dominated by Europeans, who at that time focused their industrial efforts on military production. In the agricultural sector, the external demand for food products from the participating countries grew during the war, which stimulated the agricultural production of the neutral countries, which at the end of the war and return to the previous situation saw how they had an excessive supply of agricultural products, which forced a reduction in prices in this sector, which suffered large losses.
The war also established a new political map of Europe with new frontiers that disrupted the continent's economic and commercial structure, breaking markets and losing economic efficiency, which required new investments.
The economic reparations imposed by the victors of the war on the defeated were astronomical. The amount set for Germany by the Reparations Committee in 1921 was 132,000 million gold marks, which meant, in its initial stage, the annual payment of 6% of the gross domestic product (GDP) of that country. The creditors collected only a small part of the debts, at the cost of the international economy losing opportunities for strengthening and growth.
