WHY SHOULD sensible people try to follow obscure subjects like currency exchange rates and trade balances, when there are larger troubles closer to home? Why should Congress send American dollars abroad, when there are so many people here still out of work?
In answer, we will tell you a true story. It begins in the 1920s, when the European economies, desperately weakened by the first World War, swung erratically through a series of currency crises. The German mark collapsed in hyperinflation 60 years ago this December. The French franc fell to a fifth of its prewar value. The British struggle to maintain the pound pushed the country into severe unemployment that lasted nearly two decades.
As world prices fell, the United States tried to build a dike against cheap imports with the Smoot- Hawley tariff of 1930. Countries began to devalue their currencies deliberately to make their exports more competitive. Both Britain and the United States tried it. But countries that bar imports have trouble selling exports. By 1933, American exports were down to one-third the 1929 level--and unemployment was up to 25 percent. The German rate was over 30 percent until a new government that took power just 50 years ago began to pull it down by rapid rearmament.
There was a conference in London in the summer of 1933 to try to stabilize the world's sinking economies, but the United States, fearful of being drawn into what it considered a European quarrel, refused to cooperate. President Roosevelt told the conference that international currency reform might better await "concerted policies in the majority of nations to produce balanced budgets and living within their means. . . ."
As Europe staggered out of the wreckage of the second World War, everyone knew that the failures of economic cooperation and leadership had contributed powerfully to the catastrophe. Among Americans, all but the most committed isolationists acknowledged that the United States could, and should, have done much in economic policy to avert the war. Throughout the Western world there was a passionate resolve not to let it happen again.
Recently you have been seeing frequent references to the International Monetary Fund, the World Bank, and GATT--the General Agreement on Tariffs and Trade. They are basic institutions of the postwar economic structure, built at the end of the war to knit nations indissolubly together with flows of trade and exchange that none could afford to break. The idea was to create a stable prosperity that would be the foundation for liberal democracy. It worked.
In the United States, since 1950, real incomes per person have doubled. We are, on average, twice as well off as our parents were a generation ago. In Western Europe, incomes have tripled from the prewar level. But there are a lot of congressmen who say that they don't see much value to the IMF and foreign trade and that sort of thing.
This week a commission led by the German politician Willy Brandt warned that the world was sliding toward economic anarchy and perhaps worse. It called urgently for more vigorous cooperative action to stabilize currencies, production and jobs. Mr. Brandt was 10 years old, living in Luebeck, when inflation destroyed the German mark. He was 19 when Hitler came to power, 20 when the London conference failed and 26 when the war started. He later became the chancellor of a West Germany grown wealthy in a triumph of those postwar policies now in danger of falling into confusion. His commission's appeal to Europeans, Japanese and Americans could be reduced to a single question: have you forgotten so soon?