in the Severity of the Great Depression
Charles Kindleberger, in The World in Depression: 1929-1939, has essentially argued that there is no single explanatory cause for the Great Depression. However, he has stressed the fact that the reason the 1929 downturn was so wide, so deep, and so long was because the international economic system was rendered unstable due to British inability and U.S. unwillingness to assume responsibility for stabilizing it (Kindleberger, 1973, pp. 291-308). Thus, Kindleberger introduces into the cauldron of conflicting interpretations of the causes of the Great Depression the international political dimension: the appropriate leadership role of a great nation in a time of economic crisis.
The analysis which follows will first briefly present the historical economic evidence Kindleberger and others marshall to support this perspective. It will then attempt to abstract from this economic history the standards of political leadership which Kindleberger believes are necessary to avert economic catastrophe in a time of international economic instability. Finally, this inquiry will evaluate whether Kindleberger's assessment is an adequate understanding of the causes and duration of the Great Depression.
In the 19th century the American economy had borrowed extensively from Europe and had remained a net borrower until 1914. But by 1918, as Kindleberger points out, a transformation had taken place. Britain had been forced not only to liquidate many of her North American investments but also to borrow large sums of money from the United States. France, too, had borrowed from the U.S. and also from Britain, as well as suffering great losses on her foreign investments in eastern Europe. As World War I progressed, many primary producing countries found that they needed to borrow more foreign capital. In the past they had turned to the London capital market but now the major source was the U.S. Thus...