At the end of World War One, the economies of many foreign countries were chaotic. Having had to pay the prices of war, European countries such as Germany owed thousands upon thousands of dollars in reparations to the United States. However, the cost of war itself was pricey, and these countries found themselves unable to even rebuilt their own infrastructure, let alone pay reparations to the United States.
After World War One, the American economy was booming. This rise in economic prosperity led to the production of surplus merchandise; American businesses were producing more than the public could consume. Due to this fact, the United States was dependent on foreign countries to purchase that merchandise that the American people did not. Unfortunately, this would quickly prove to be impossible.
Foreign economies were tied up in their struggle to pay for what they saw as the most costly war in the history of the world. Few countries had the economic means to spend precious dollars on extraneous American goods; so they did not. The American economy no longer divulged in the luxury of foreigners spending their money on our goods. However, in addition to their inability to buy goods from the United States, foreign countries could not even afford to pay America money it was owed.
World War One was by far the most expensive war the world had seen at that time. Many countries borrowed money, and military equipment from the United States with the intention of repay America at the conclusion of the Great War. What was not foreseen was the immense economic hardships the war would inflict on its participants - hardships that would not allow for the repayment of loans, and the reduction of debts.
America faced a dilemma immediately following World War One. The moneys required to balance the postwar economy were not available. The difficulty, was finding a new source of income for the American economy. This presented an unfortunate economic predicament to the United States that would lead to the eventual collapse of the economy.
Unequal Distribution of Wealth
Unequal Distribution of Corporate Power
Poorly Structured Banking
American Economic Beliefs