How did the decline in worldwide trade contribute to the Depression?

Less money came into each country. Factories couldn't sell their goods abroad.

The decline in worldwide trade played a significant role in contributing to the Great Depression. Let me explain why.

To understand this, we need to look at the context of the time. The 1920s were known as the Roaring Twenties, a period of economic prosperity in many countries, particularly the United States. During this time, there was a rapid expansion of global trade, with many countries participating in international commerce. However, towards the end of the 1920s, several factors led to a decline in worldwide trade.

One major factor was the imposition of tariffs and other trade barriers. In an attempt to protect domestic industries and employment, many countries started implementing protectionist policies, such as higher tariffs on imported goods. This led to a significant reduction in international trade as it became more expensive and less attractive for countries to engage in cross-border commerce.

Another factor was the collapse of the global financial system. The stock market crash of 1929, known as "Black Tuesday," triggered a chain reaction that resulted in a severe banking crisis. As banks failed, credit became scarce, and businesses struggled to obtain loans for their operations. This scarcity of credit further hindered international trade as businesses had difficulty financing their import and export activities.

Moreover, the decline in worldwide trade had a negative impact on the economies of many countries. As international trade contracted, countries reliant on exports experienced a decline in demand for their products, leading to a decrease in production and layoffs. This, in turn, led to a decrease in consumer spending, further exacerbating the economic downturn.

Additionally, the decline in trade affected industries and workers involved in transportation, logistics, and other supporting sectors. These industries suffered as demand for their services diminished, resulting in a ripple effect throughout the economy.

To summarize, the decline in worldwide trade during the Great Depression was caused by protectionist policies, the collapse of the global financial system, and a subsequent reduction in demand for goods and services. This decline in trade contributed to the deepening of the economic crisis by reducing production, employment, and consumer spending, exacerbating the effects of the Depression.