Question

The failure of foreign banks such as the Kredit-Anstalt Bank during the early 1930s can be partially attributed to the Smoot-Hawley Tariff Act because the act
A) forced banks to loan money to foreign nations.
B) caused a major reduction in international trade.
C) made it easier for workers to join labor unions.
D) led to a sharp decline in the number of American jobs.

Answer 1

Answer:

B. caused a major reduction in international trade

Explanation:

The "Smooth-Hawley Tariff" was an act that was meant to alleviate the people and the economy from the "Great Depression." It raised the tariff of import goods. This was retaliated by other countries, which, in turn, also increased their tariff on US goods. So, this contributed to a decline of both import and export of goods, thereby reducing international trade.

Since it is the role of the bank to assist people when it comes to financial trading, the reduction of international trade greatly affected banking. This resulted to many bank failures, including the collapse of the Creditanstalt Bank (used to be the largest bank in Austria). Farm banks also began failing due to the collapse of the export market. The tariff made a significant change in the country's monetary system.

So, this explains the answer.