Spooky Parallels Between 1933 and 2009
Watching the moody Scot and Laborite Prime Minister Gordon Brown meet at the White House with President Obama amid worldwide panic, a meeting darkened by a mysterious diplomatic “snub”, there is new cause to search for a foreshadowing of troubles. Looking back seventy-six years to the depths of the Great Depression, we find that another moody, isolated Scot and Laborite Prime Minister, Ramsay MacDonald arrived to confer with the new President of the United States, Franklin Delano Roosevelt.
It was April 1933, and the financial crisis, called bluntly in America and Europe “the depression,” was in a new panic stage. Following a collapse in world trade and widespread protectionism, not to mention massive bank failures and severe price deflation in America, Congress had given the president what were understood as temporary dictatorial monetary powers. While the PM was crossing the sea, Roosevelt made the decision for the U.S. to go off the gold standard. The market reaction in New York and London was one of shock and worry. Senator Reed of Pennsylvania, in opposition to Roosevelt, said this was “frankly a programme of currency manipulation.”
MacDonald was in a rush when the gigantic Cunarder Berengaria delivered him to a municipal tug that steamed to Jersey City for a train to Washington. There was a general sense the Americans didn’t know where they were going.
MacDonald’s “flying visit” had a threefold purpose: to befriend the new president, to debate the causes of worldwide “economic ills,” and to encourage and hurry up the proposed World Economic Conference in London. MacDonald needed the Economic Conference to stop a trade war that he felt was wrecking Britain and Europe.
For four days, Saturday through Tuesday, at the White House and on the presidential yacht Sequoia, the two leaders and their aides ranged over tariffs, deflation, currency policy, market instability, military adventurism in Asia, and the new regime in Germany. Roosevelt was brash and powerful.
Somewhat surprisingly, the seemingly opaque MacDonald alarmed the Americans by making bold remarks at the National Press Club, broadcast nationally on the radio, in which the PM emphasized that the gold suspension was a “great crisis,” his regret that some were using the “ugly” word “retaliation” with regard to the President’s decision, and that there was now even greater need to focus on the London Conference in order to agree upon “common action.”
“I hope our French friends, our Italian friends, and all others will be spurred to seek agreement rather than be discouraged and make no attempt. Tarrifs, restrictions of all kinds, quotas – of what use are they in a free, sane world where exchange is as profitable in trade as in ideas?”
Ramsay MacDonald’s question deserved an answer in 1933 no less than it deserves an answer today. “Retaliation” was the weapon of choice that doomed the London Economic Conference in June of that year, and that opened the door for those who Paul Johnson names the Devils in Germany, Japan, and Russia.
The gold suspension, the paradoxical fears of deflation and inflation, currency policy: all were pieces of the larger face of the protectionist creature loosed in America by the sinister Smoot-Hawley legislation of 1930, and present in many guises in the Four Powers of Europe, as well as in Soviet Russia and predatory Imperial Japan. We know now that the failure of MacDonald and Roosevelt to agree on reversing the trade collapse ahead of the Conference was the last opportunity the two states would have – ever - before the trade war morphed into the military campaigns of 1936 and beyond.
Returning to the present, it is a simple, rational mission for Gordon Brown and Barack Obama. Brown calls his ambition “a global new deal,” but it is not necessary to oversell it with cable news concepts. What Messrs. Brown and Obama need to do, is to accomplish what MacDonald and Roosevelt did not. They must arrive at the G20 meeting next month in London united on trade, and with a vocal sense of alarm that world governments are following an anti-trade script that will surely end wretchedly.