The Great Depression and the Glass-Steagall Act

The First World War was the game changer in the global hegemonic order of the time. It is the reason why the United States came to dominate the global economy, eclipsing Britain as the world’s principal creditor nation. Many factors contributed to the First World War. After Prussia’s victory in the Napoleonic Wars, which continued from 1799 to 1815 before Napoleon was finally defeated in the Battle of Waterloo, Prussia slowly emerged as a potent economic and political power on the continent. On January 1, 1834, the formation of the Zollverein, or the German Customs Union, with the individual independent German states consolidated its economic power.1 Its victory in the Franco-Prussian War of 1870 was a reflection of its political might. By 1871, the individual German states and Prussia had unified into the German Empire (or the Second Reich, with the Holy Roman Empire counting as the First Reich and Nazi Germany as the Third Reich) under Otto van Bismarck. The Treaty of Frankfurt, the agreement ending the Franco-Prussian War, had compelled France to cede the possession of the Alsace and Lorraine regions in the east to Germany. This served as a constant reminder of French defeat and kept tensions high between the two continental powers.