In the spring of 1933, global trade was being undermined by nationalistic economic responses to the Great Depression, including currency devaluations, rising tariffs and declining prices.
After a year’s planning, 66 nations gathered in London in June for the World Economic Conference to try to foster greater international cooperation.
Countries had sought to protect their economies by limiting imports while pushing exports, a strategy known as "autarky." To offset rivals’ cheaper prices, tariffs were increased, and shipments stagnated as prices continued to slide.
Nations that were off the gold standard tried to reduce their currency's exchange value as a way to make exports cheaper and help domestic producers. Market trading caused floating currencies to fluctuate. France remained on the gold standard, hoping to avoid the currency chaos.
Changing exchange rates also affected payments of international debts. When a currency needed for payment appreciated, it became more difficult to settle accounts; if it depreciated, it became easier.
At the opening of the conference, King George V told the delegates: "There is a new recognition of the interdependence of nations and the value of collaboration between them. Now is the opportunity to harness this new consciousness of common interests to the service of mankind."
A core goal of the meeting was to stabilize currencies to help end tariff wars and restore trade. The Economist defined the central question: "Are the statesmen prepared to make the necessary changes in their individual policies and to take the long view, which realizes that an apparent momentary gain at the expense of others will in nine cases out of ten react against their own prosperity?”
The answer proved to be "no," despite U.S. Secretary of State Cordell Hull's push for reciprocal trade liberalization. Hull condemned the status quo under which "each country proposes to sell but not to buy, to export but not to import, and to get rich at the expense of the other."
Yet President Franklin D. Roosevelt refused to commit to a currency freeze, and Senate leaders rejected the 10 percent across-the-board tariff reduction that Hull and other conference leaders advised. The collapse of U.S. cooperation was a dreadful disappointment to other world leaders.
The Western Mail newspaper in Perth, Australia, offered a sharp analysis of "the invisible forces which haunt” the conference: Will the U.S. consent to cancel war debts? Will the American “home-town man, who thinks that international bankers are to blame for everything,” accept lower tariffs, increasing imports and creating more competition for exports? Will leading U.S. businesses fight back? Who in the U.S. wants the dollar to rise, easing Europe’s pain, but constraining U.S. sales abroad?
Not business and not Congress.
Commentator Will Rogers captured U.S. nationalist sentiment in his June 20 syndicated “Telegram.” The only reason for the conference, he wrote, was "to cancel the debt to America." Delegates could then work on lowering U.S. tariffs and stabilizing U.S. money above the price of their own. "If things don’t pick up in their own countries, they’ll think up something else to blame America for, and have another conference."
U.S. economic nationalism was alive and well; international cooperation was dead.
(Philip Scranton is a Board of Governors professor of the history of industry and technology at Rutgers University, Camden, and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog. The opinions expressed are his own.)
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