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Difficulty: MediumCauses of the Great Depression

“We have of late years placed barriers in the way of the importation of foreign goods. We have at the same time insisted upon the payment of foreign debts. But we cannot expect to export our surplus products if we refuse to buy the goods of those who wish to purchase from us. By maintaining excessively high tariffs, we have disrupted the natural flow of international commerce and undermined the purchasing power of our foreign customers, leaving our agricultural and industrial producers with unsold surpluses.”
— Representative Cordell Hull, Congressional Record, 1926

Hull’s argument in the excerpt best serves as evidence for which of the following causes of the Great Depression?

  1. A
    The strict adherence of Republican administrations to laissez-faire principles by refusing to intervene in trade or protect domestic industries
  2. The implementation of protectionist trade policies that disrupted global credit cycles and reduced foreign demand for American goodsAnswer
  3. C
    The complete withdrawal of the United States from international financial networks, resulting in absolute diplomatic and economic isolation
  4. D
    The immediate collapse of consumer purchasing power due to the premature implementation of New Deal relief programs

Answer

The implementation of protectionist trade policies that disrupted global credit cycles and reduced foreign demand for American goods
The correct answer is correct because high tariff policies, such as the Fordney-McCumber Tariff of 1922, restricted international trade. By preventing European nations from exporting goods to the United States, these tariffs made it difficult for foreign nations to acquire the US dollars necessary to pay off their war debts or purchase American industrial and agricultural exports, creating a dangerous cycle of domestic overproduction and international credit instability.

Step-by-Step Solution

1
Analyze the stimulus text to identify the core historical debate.
The text by Cordell Hull criticizes the high tariff policies of the 1920s, arguing that blocking imports makes it impossible for foreign nations to pay their debts or buy American exports.
Understanding the context of the source is necessary to link it to the causes of the Great Depression.
2
Connect the tariff policies of the 1920s to international economic instability.
High protective tariffs (like the Fordney-McCumber Tariff of 1922) created a trade imbalance where European nations, already burdened by World War I debts, could not sell goods to the United States to earn dollars, leading to a reliance on American bank loans that eventually dried up.
This links the policy to the global economic collapse.
3
Identify which option accurately matches this causal chain.
The option describing protectionist trade policies disrupting global credit cycles and reducing foreign demand is correct, as it accurately reflects how tariffs restricted the flow of international trade and exacerbated domestic overproduction.
Selecting the correct cause of the depression based on the provided stimulus.

Key Concept

The role of international trade barriers and debt structures in causing the Great Depression
Estimated Time:1m 30s
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Topics

Causes of the Great Depression

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