A General Equilibrium Analysis Of U.S. Foreign Trade Policy

The 1930s deserve their bad reputation. Unemployment, misery, for many people hunger and, for more, the lack of hope, went with all the other ills of the Great Depression. Then Hitler came to power and fascism around the world grew stronger. The invasions of China by Japan and Ethiopia by Italy, and the Franco rebellion in Spain that soon came to be seen as a kind of global civil war--all showed the way the world was going. Driven by economic pressures, the policies of democratic countries became more narrowly nationalistic; bilateral and preferential trade agreements increased and France, Britain and Holland did what they could to assert privileged positions in their colonies. Although the Soviet Union was hardly a worker's paradise, the very fact that it offered an alternative to collapsed capitalism stirred people's interest and the Kremlin had new cards to play with. The worried democracies, meanwhile, did little to check the rising strength of fascism and were led to make one concession after another. If the times had any redeeming feature, it was that they made people think.