US/World role in the Depression

For the history buffs - while growing up, I had the impression that the US was the only game in town back in the 20’s and 30’s. I only remember hearing the American perspective about the depression. My recollection is that the country went into the depression because of the collapse of the market bubble in 1929 and the resulting failures in the gov’t/economy in the years that followed. But what role did the rest of the world have in the collapse? I thought the US didn’t really become the financial superpower it was to become until after WWII. Did the markets around the world also have a huge bubble in the 20’s or did the rest of the world follow the US markets off of the cliff?

Dude search the board. They totally discussed this on AF back in '29

“In December 1928, Ohlin discussed Johan Åkerman’s analysis of the economic situation under the headline ”Business cycle prophecies”. Åkerman, who characterized the economic situation in the US as very unstable, pointed at violent speculation on the US stock market and warned against a serious crisis. Ohlin waved these fears aside: ”First of all, as concerns the prospects in the US, there seems to me to be little or no reason to expect a depressive development in the year of 1929. … It is certainly true that a minor drawback within production and trade can follow from a collapse of the stock exchange; as far as I am concerned, however, I do not think that the effects will be very profound.”” … “At the end of September 1929, Ohlin still had no feeling for the coming crisis. ”There are some signs that a business cycle turning point, although possibly a very minor one, will affect America next year.” Two months later, after the great collapse of the stock exchange, he was still an optimist. The stock exchange crisis might be connected to a general business cycle downturn.” … “”Our industry must expect a difficult winter, even if there is reason to expect the beginnings of a change for the better already in the spring. Even in this favorable case, a considerable part of 1931 will be characterized by a certain depression.” The question now was what kind of action the Government and the municipal authorities should take to check unemployment. Ohlin argued: ”It is most likely that a more extensive public economic activity during the first stages of a recession can have a beneficial effect on production and on the labor market, even if unemployment will not be reduced to the same extent - the private sector will probably be somewhat reduced - as the increase in the number of workers in public works.”” (Source: Ohlin on the Great Depression -The popular message in the daily press" bu Benny Carlson and Lars Jonung February 2001 http://swopec.hhs.se/hastef/papers/hastef0431.pdf)

Much of the “roaring twenties” was do to cheap borrowing rates. They were cheap because the UK had just re-floated the gold-backed pound. They didn’t want the currency to become massively inflated, which would lead to huge issues, so they asked us to suppress the dollar by lowering rates, which we did so they could follow suit. Other countries faced significant problems. UK went through the Depression in a bad way, after just having gone on the gold standard they got off of it. Japan was very insulated, they weren’t on a gold standard. China was on a silver-standard, which allowed them to have an actual market-valuation of the currency, rather than an asset pegged one, thus their currency was able to float, reducing the impact of the GD. France, which was a bastion of the gold backed currency, went through it reasonably well, but that was mainly because they were flooded with gold as people sought more safety. Germany was affected worse than most, since they were already a ruined country and since France had taken over the industrial heart of Germany through the treaties. Most countries felt the GD to the same extent as the US, although here it was compounded by the Dust Bowl.