King George V Addresses The 1933 Economic Conference In London
This week, President Obama and other world leaders gather in London to confront an international economic crisis. The same thing happened in 1933, as the world was grappling with the Great Depression.
Obama, who arrived Tuesday in London ahead of a summit with leaders of the Group of 20 countries, says he will push for international action to restore economic growth. The statesmen who gathered 76 years ago had similar goals. But the parallel is disturbing: The 1933 economic conference collapsed in failure.
The world was in desperate economic shape at the time. Banks were failing everywhere. People were hungry and out of work. Global trade had come to a screeching halt. The World Economic Conference in London in June 1933 was seen as a last chance to turn things around. King George himself greeted the delegates in somber tones.
"At this time of widespread economic distress, it is with a feeling of deep responsibility that I welcome you to this country," he said at the time.
Optimism Despite Dark Mood
The thousand or so conference attendees filled the lofty hall of London's Geological Museum. Almost every nation on Earth was represented. In his keynote address, George V pleaded with the delegates to look beyond their narrow national interests.
"In the face of a crisis, which all realize and acknowledge, I appeal to you all to cooperate for the sake of the ultimate good of the whole world," he said.
The mood was dark, but there was still hope: The United States had a dynamic new president, Franklin Delano Roosevelt. He had taken office just three months earlier, and the world was waiting to see what he would do.
"In 1933, you want to imagine Europe on the brink: Hitler has just been elected. France is wondering: What next? We have Mussolini in Italy, all this is going on, and countries are looking to the U.S. to show leadership," says Amity Shlaes, the author of The Forgotten Man: A New History of the Great Depression.
Actually, it was the United States that was largely responsible for the collapse of global trade. The Smoot-Hawley Act, passed in 1930, raised tariffs on more than 20,000 imported goods and triggered retaliation by countries around the world.
Fighting Protectionist Tendencies
A top priority of the London conference was to reverse the protectionist trend. The U.S. delegation was led by Secretary of State Cordell Hull, who saw the need to revive international trade. Before leaving, he asked Roosevelt to undo Smoot-Hawley.
"What Cordell Hull was saying was, 'Please let me have some new freer-trade legislation in the U.S. Then I can come with something in my hand to London and maybe we can agree again and stop our reprisals and our tariffs,' " Shlaes says.
Another parallel with today: Countries have again moved toward protectionist policies — from the "Buy America" provision in the U.S. stimulus bill to import tariffs in countries like South Korea.
Martin Wolf, economics commentator for the Financial Times newspaper, says during times of high unemployment, it is natural for politicians to want to protect domestic industries.
"They start looking around, and they think, goods coming into their country, that's not helping us," Wolf says. "They look at domestic workers, and they think: 'How can I make work for these people?'
"They find dealing with their foreign counterparts very difficult; it takes a long time. They want to do things at once and urgently. So they start taking action at home."
In 1933, the temptation to protect U.S. workers was so strong that Roosevelt was unable to overturn Smoot-Hawley.
Shlaes, now a fellow at the Council on Foreign Relations, says Hull was still on a ship en route to the London conference when, to his great dismay, he learned he would have nothing new to offer on trade.
"Hull said, 'Here I am traveling to London in the hopes of negotiating free trade, and my hands are empty.' By the end of his journey over, he was already disappointed and yet he knew, and he was prophetic, that trade was an important part of peace," Shlaes says.
Lessons From The 1933 Conference
The London conference lasted about six weeks, but it accomplished little. Hull went home in despair. Hitler proceeded in Germany with the program he called "national socialism." Other European governments concluded that the United States was ignoring the developing threats on the Continent. The Depression deepened and, within a few years, the world was at war.
Could it happen again? Not likely. There is no Hitler lurking in the shadows. International organizations now bind countries together. And the Financial Times' Wolf says we're all wiser.
"Though it's a long time ago, at some level, everybody does know what happened in the '30s," he says. "There is a pretty strong sense, even now, that this is not an experience we want to repeat.
"We know how bad it is, and it's terrifying we've gotten so close. We really don't want to repeat all that."
Still, there is a lesson to be drawn from the London conference of 1933: King George urged nations then to work together for "the good of the whole world." They chose not to, and the whole world paid the price.