Echoes of 1933

February 3, 2009

Will President Barack Obama attend the summit of the Group of 20 rich and emerging countries in early April, hosted by UK Prime Minister Gordon Brown to tackle the financial and economic crisis?

The working assumption is he will, on one of his first foreign trips as president. But there is still no official confirmation.

At the G20 summit in Washington on Nov. 15, Obama’s transition team stuck strictly to the rule: “There is only one president at a time”, and the president-elect did not meet any of the foreign summiteers.

Brown has warned that if the London summit fails, the world risks sliding into protectionism and a slump similar to the 1930s.

That raises uncomfortable echoes of an earlier London Economic Conference, called in June 1933 to tackle the Great Depression, revive trade and regulate currencies.

The new U.S. President, Franklin D. Roosevelt, effectively pulled the plug on the conference by rejecting currency stabilisation negotiations and devaluing the dollar by taking it off the gold standard to push up prices.

It was not until World War II – which was partly caused by the Depression — that the United States was able to regain global economic leadership.

As Roosevelt’s negotiator at the conference, Secretary of State Cordell Hull, put it:
“If goods cannot cross borders, armies will.”

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