From my book (written in 2003):
*** The Great Depression and the Smoot-Hawley Tariff Act
The Great Depression and World War II go together -- it's impossible
to understand one without the other. We're going to be studying the
Great Depression in detail in chapter 6, but for now let's look
at its part in leading to World War II.
Research seems to indicate that a financial crisis and a war crisis
seem to feed on each other and make each other worse: A financial
crisis makes people restless and angry, looking for a scapegoat, for
justice and retribution, making a war crisis worse; and a war crisis
makes people financially risk aversive, less willing to make purchases
and investments, making the financial crisis worse.
There seems to be plenty of evidence that the Great Depression was a
major factor in providing the energy for World War II. When a person
loses his job or his home, he'll get angry with his former boss or
the bank that foreclosed on him.
When a society goes through a recession, the people look to their
own government leaders to blame.
When the recession gets very bad, to the point of a depression, then
jealousy can set in, and the desire for justice and retribution
becomes enormous. A nation might start thinking about how great
things are on the other side of the border. This is the kind of thing
we've already seen in the Civil War: the Panic of 1857 devastated
northern businesses, but hardly had any effect at all on the cotton
farms of the south, especially in view of the free slave labor.
When a financial crisis gets so bad that many people are starving and
homeless, a war becomes much more desirable. If you're starving you
really have nothing to lose by going to war, and becoming a soldier
may be the only way to get food and shelter, and to feed your wife
and children.
Now let's see how the Great Depression was an integral part of the
steps that led to World War II.
Perfectly reasonable acts by one country can be interpreted as
hostile acts by another country. Guns and bombs are not needed to
create an impression of war.
And if one country's innocent act is a shock to another country and
is viewed as hostile by that country, and if the people of that
country are in a mood for retribution rather than compromise, than
they may well look for a way to retaliate.
In that sense, the enactment of the Smoot-Hawley Tariff Act in June
1930, can be viewed as the first of the shocking, provocative acts
that led to World War II.
The Act was opposed by an enormous number of economists as being
harmful to everyone, but it was very popular with the public, because
of the perception that it would save American jobs. Many in
the public believed that the crash had been caused by withdrawal of
investment funds by foreign banks, just as many in the public today
believe that the Nasdaq crash of 2000 was caused by the illegal or
improper actions of CEOs of Enron and other corporations. The public
demanded the Smoot-Hawley Act in retribution, just as the public today
demands the jailing of corporate CEOs.
Interestingly, the Smoot-Hawley Act is still debated by politicians
today, with regard to whether it caused or aggravated the Great
Depression or had no effect, with pro-free trade politicians taking
the first position, and politicians supporting restrictions on free
trade taking the second position.
Those discussions are entirely America-centric because, for the
purposes of this book, it makes no difference whatsoever whether or
not the Act aggravated the American depression. We're interested in
the effect it had on foreign nations.
And the effects were enormous. The bill erected large trade barriers
for numerous products, with the intention of saving American jobs.
How many American jobs it saved, if any, is unknown, but it virtually
shut down product exports to the United States. Both Germany and
Japan were going through the same financial crisis America was going
through, and they were furious that America as a market was closed to
them.
Japan was the hardest hit. The Great Depression was hurting Japan
just as much as it was hurting America but, in addition, Japan's
exports of its biggest cash crop, silk, to America were almost
completely cut off by the Smoot-Hawley Act. Furthermore,
Japan would have been going through a generational change: The country
had undergone a historic revolution some 70+ years earlier,
culminating in a major change of government (the Meiji Restoration) in
1868, and the people who had lived through that revolution would be
dead or retiring by the early 1930s.
[["Japan's exports of its biggest cash crop, silk, to America were
almost completely cut off by the Smoot-Hawley Act.": Jude Wanniski,
referencing his 1977 book, <i>The Way the World Works</i>, in
"Remember Pearl Harbor?" appearing in <i>WorldNetDaily</i>, May 16,
2001,
http://www.worldnetdaily.com/news/artic ... 5fID=22850]]
So one thing led to another, and in September 1931, almost exactly a
year after Smoot-Hawley, Japan invaded Manchuria and later northern
China. Britain and American strongly protested this aggression, and
Roosevelt finally responded with an oil embargo against Japan.
This is the usual pattern of provocative acts on both sides. America
saw Smoot-Hawley as its own business, but to Japan it was a hostile
shock. Japan saw the Manchuria invasion as "Asian business," while
Britain and America saw it as attacking their own Asian interests.
Roosevelt saw an oil embargo as a measured response of containment,
while energy-dependent Japan saw it almost as an act of war,
eventually triggering Japan's attack on Pearl Harbor in 1941.
Japan wasn't the only country affected, of course. England, Germany,
Italy, and many other countries were hit hard by the sudden trade
barriers with America. Just like in Japan, nationalistic and
militaristic feelings were aroused in many countries.
Germany was especially frustrated. The map of Central Europe had
been redrawn some 70 years earlier during a series of wars in the
1860s, culminating in the Franco-Prussian war of 1870, and the
unification of Germany in 1871. The Great War (WW I) had been a
mid-cycle war for Germany, and had been a humiliating defeat,
especially because the American and British led Allies had imposed
harsh conditions -- the loss of some German-speaking territories, and
the payment of reparations. The loss of territories was especially
provocative, since it partially reversed the German unification of
1871.
Germany was reaching the point where it was going to explode anyway,
when the Smoot-Hawley Act was passed. On top of the reparations, the
Act was seen as enormously hostile by the Germans. As in Japan, it
gave rise to militaristic nationalism in the form of the rise of the
Nazis. Germany remilitarized its border with France in 1936, and
then annexed German-speaking parts of Eastern Europe in 1938.
So when did World War II start? It depends on what the word "start"
means, but an argument can be made that America had started the war,
and that the first act of war was the Smoot-Hawley Tariff Act.