The Impact of US Credit Crunches on International Trade during the Great Depression
In this dissertation project I study the financing of international trade during the interwar period. When payment commitments on outstanding trade credit cannot be fulfilled, the supply of trade credit may evaporate. To study the collapse of the international payment system, a web of interlocking cash commitments spinning across the globe, the breakdown of the interwar gold standard, serves as a case in point. The thin strings of daily payments made by importers come together in the financial centers of London and New York from where exporters draw funds for the production and shipment of the next round of trade. Special emphasis is placed on the market for bankers’ acceptances denominated in U.S. dollars, which financed not only U.S. foreign trade but also a large share of trade between foreign countries at the onset of the Great Depression. How much did the evaporation of trade credit contribute to the interwar trade bust? What are the causes and effects of the breakdown of the financial structures that allowed international trade during the wars? Was the financial crisis of the 1930s transmitted across the globe via the channel of trade finance? How did monetary policy of the Federal Reserve System shape the market for bankers’ acceptances?