The International Depression

The key factor in turning national economic difficulties into worldwide Depression seems to have
been a lack of international coordination as most governments and financial institutions turned
inwards. Great Britain, which had long underwritten the global financial system and had led the return
to the gold standard, was unable to play its former role and became the first to drop off the standard in
1931.
The United States, preoccupied with its own economic difficulties, did not step in to replace Great
Britain as the creditor of last resort and dropped off the gold standard in 1933.

At the London Economic Conference in 1933, leaders of the world’s main economies met to resolve
the economic crisis, but failed to reach any major collective agreements. As a result, the Depression
dragged on through the rest of the 1930s.

Isolationism

The Depression caused the United States to retreat further into its post-World War I isolationism. A
series of international incidents occurred during the 1930s
—the Japanese seizure of northeast China in 1931, the Italian invasion of Ethiopia in 1935, and
German expansionism in Central and Eastern Europe
—but the United States did not take any major action in response or opposition. When these and other
incidents occurred, the United States Government issued statements of disapproval but took limited
action beyond that. On a more positive note, isolationism manifested in Latin America in the form of
the Good Neighbor Policy of Presidents Herbert Hoover and Franklin Roosevelt, under which the
United States reduced its military presence in the region and improved relations between itself and its
neighbors to the south.

Presidents Hoover and Roosevelt were to an extent constrained by public opinion, which demanded
that primary attention be given to domestic problems. The Hoover and Roosevelt Administrations
concentrated upon rebuilding the U.S. economy and dealing with widespread unemployment and
social dislocation at home and as a result international affairs took a back seat.

President Herbert Hoover Rise of Fascism

As the United States turned inwards to deal with the lingering effects of the Depression, militaristic
regimes came to power in Germany, Italy, and Japan promising economic relief and national
expansion. While they achieved some measure of success on the economic front, these regimes began
to push their territorial ambitions and received minimal opposition from the rest of the world.
The lack of a strong U.S. response to Japan’s invasion of China in 1937 and Germany’s annexation of
Czechoslovakia in 1938 encouraged the Japanese and German governments to enlarge their military
campaigns. At the time, most U.S. leaders believed their decision to
avoid a more active role was justified because of the domestic context, but some began to realize that