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T
HE
Free World's 40-
year period of u n–
precedented prosperity
may soon come to a crash–
ing halt.
Support in the U nited
States- the West's leading trad–
ing nation-for maintaining free
trade is crumbling fast.
lnstead, there reverberate in the
halls of Congress warnings to trade
partners to open markets or face
the retaliation of heightened tariffs
and quotas.
President Ronald Reagan is
caught in a political vise. He de–
fends his economic policies by
pointing to the seven to eight
million jobs created during his
tenure in offi ce. But many of
these jobs are in the service area.
Hundreds of thousands of jobs are
fad ing from older manufacturing
fields , f rom primary industrial
products such as steel to soft
goods such as tex ti les an d
footwear.
The swing away from free trade
is so pronounced that there are now
180 trade protection bi lis under
consideration in the House of Rep–
resentatives and about 300 in the
Senate. Many of these deal with
specific problem cases, but a few
are broad-based "omnibus bilis"
such as one calling for a surtax of
as much as 25 percent on goods
from Japan, Taiwan, South Korea
and Brazil unless they dramat ically
open more markets to U.S. prod–
ucts.
Mr. Reagan is painfully aware of
where unbridled protectionism
could lead. Jn recently rejecting a
protectionist plea from one industry,
the President evoked memories of
the Depression-era Smoot-Hawley
Tariff Act. "Sorne of us remember
the 1930s, when the most destruc–
tive trade bill in history, the Smoot–
Hawley Tariff Act , helped plunge
this nation and the world into a
decade of depression and despair,"
he tolda radio audience. " From now
on, if the ghost of Smoot-H awley
rears its ugly head in Congress, if
Congress creates a depression-mak–
ing bill, 1'11 fight it."
But the ghost is rising, and sup–
port for the President' s trade policy
Prepare
for
TRADE
WAR!
by
Gene H. Hogberg
is waning, even from those within
his own party.
What Smoot-Hawley Did
Just how disastrous was the Smoot–
Hawley bill? The devastat ing role
it played in the Great Depression
was explained in the September 5
issue of
The Wa/1 Street Journal,
in an article wrítten by its editor,
Robert
L.
Bartley.
" The stock-market crash of 1929
carne in the midst of debate in
Congress over the tariff," wrote
Mr. Bartley.
"It
bad spent the year
adding ítem after ítem to the pro–
tection líst. I n mid-1930 the
Smoot-Haw ley Bill became law,
with the highest tariffs in the na–
tion's history."
What might have been an ordi–
nary correction, continued Mr .
Bartley, "turned into the Great
Depressíon.... As the interna–
tional accounts closed down, the
world economy choked. "
Are there parallels to the Smoot–
Haw ley disaster today? Indeed
there are!
"What is troublesome," contin–
ued the editor of America's largest–
circulation newspaper, "is to see
the same politico-economic sce–
nario working itself out today: In–
ternatíonal debts, falling primary
prices, agricultura! distress, an end
to foreígn lending, and now rising
clamor for protection.
"No one intends to write anotber
Smoot-Hawley, of course, but no
one intended to write the first one.
Once the notion of protection was
Jet loose ... more and more protec–
tion was claimed by specíal ínterest
after special interest. ... If we toy
with protectionism, we will be toy–
ing with another depression."
Recently, a deeply concerned
J apanese Prime Minister Yasuhiro
Nakasone warned that protection–
ism is a " narcotic" that would put
world trade in a coma. Tbe
J apanese, polls show, reject charges
of unfai r competition, stressing in–
stead the high value of the U.S.
dollar plus the chronic American
budget deficit. The trade issue un–
fortunately revo lves less now
around facts than emotions.
Dangerous Security Changes
Other experts warn that American
política! leaders-responding to
calls for immediate competitive re–
lief from tbei r constituents-may
be ignoring another lesson of tbe
Great Depression: tbat the severe
contraction of world trade gave
added ímpetus to imperialist surges
in Asia and Europe, specifically
J apan and Germany.
Since 1945 Japan has cbosen the
mercantile road as íts path to
power, prestige and national
restoration. Germany, specifically
(Continued on page 42)