by seeking foreign markets and foreign investments to take off the goods and capital they cannot sell or use at home. John A. Hobson Imperialism and its Onslaught (c) Protectionism and Consequent Political Friction Two major financial crashes, one in Vienna and the other in New York, led to a full blown economic depression in Europe and America in the mid-1870s. The depression severely affected production, prices and wages.
Cheap grain flooded the markets of western European nations affecting the domestic producers who suffered due to fall in prices. People began to question the wisdom of free trade policies. Germany precipitated a crisis by its protectionist policy. Its Tariff Act of imposed tariffs on industrial and agricultural imports into Imperial Germany.
Soon other nations followed suit. As Britain could fall back on its policy of colonial trade preferences, it revoked trade treaties in with France and Germany. Tariff actions and counter-actions by the various European powers escalated protectionism and political friction. The leaders who administered the empires realised that the outcome of such conflict would depend on the strength of their armed forces.
So they vied with each other in building their arsenal, thereby creating the conditions for war.