Nib asked
Why did the Great Depression affect the whole world?
The 1929 crash was a spark; the gold standard, bank failures and tariffs carried it everywhere.
7 steps, drawn by Nib. Read it here, or watch him draw it. Updated .
1worldwide slump
Factories everywhere shut. From 1929 to 1932, industrial output fell about 46 percent in the United States, 41 in Germany, 24 in France and 23 in Britain.
2spark, not fire
It is a myth that the Wall Street crash alone did this. The crash was the spark. What carried the fire overseas was the way countries' money was tied together.
3gold standard
In 1929 most major currencies sat on the gold standard: each was a promise to be swapped for a fixed weight of gold. So every country's money hung from the same hook.
4banks fall
Then the shock spread. After lending dried up, Vienna's biggest bank failed in 1931, German banks froze, and Britain was forced off gold that September.
5trade shrinks
Tariffs made it worse. America's 1930 Smoot-Hawley tariff was copied abroad, and historians debate how big a role it played. World trade fell by half in dollars and roughly a quarter in volume.
6leaving gold
The proof is who escaped. Britain left gold in 1931 and the United States in 1933, and both recovered sooner than France, which held on until 1936.
7the whole idea
So here it is whole. A crash lit the spark, gold tied every nation's money together, banks and tariffs spread the damage, and leaving gold was the way out.
The crash was only the spark; the gold standard, failing banks and tariffs wired one country's slump into everyone's.