The circle of debt fell apart.
(MUSIC: "Brother, Can You Spare A Dime?"/Bing Crosby with Lennie Hayton and His Orchestra)
MARIO RITTER: The situation grew worse and worse throughout the early months of nineteen thirty. Hoover finally had to announce that all nations could delay their debt payments to the United States for one year.
Hoover's action did what he wanted it to. It put a temporary stop to the international debt crisis. But it caused great damage to private banks. People lost faith in the banking system.
Throughout Europe, people withdrew their money from banks. As a result, the European banks could not repay more than a billion dollars that they had borrowed from private American banks.
CHRIS CRUISE: This was not the only problem. Nations throughout Europe were also forced to take their currencies off the gold standard. This meant their money no longer could be exchanged for gold.
The economic situation grew worse. And, as it did, serious political tensions began to threaten peace in Asia and Europe.
MARIO RITTER: The threat in Asia became clear first.
Japan had defeated Russia in a war in nineteen five. This victory gave Japan control over the economy of the southern part of what was then called Manchuria, in northeastern China.
As years passed, Japan began to feel threatened by two forces. First, Chinese leader Chiang Kai-shek was trying to organize all of China under the control of his Nationalist forces. Second, Russia was extending the Chinese Eastern Railway to the Russian port city of Vladivostok.
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2013-11-25
2013-11-25
2013-11-25
2013-11-25
2013-11-25
2013-11-25