Free Trade Agreement

Your article on “The Great Trade War” misrepresents the historical record (World Report, May 18). It is quite clear that the American Smoot-Hawley Tariff was a political effect, rather than an economic cause, of the Great Depression. It is enough to point out that the Depression began in 1929 while Smoot-Hawley was enacted in 1930. Nor can you get away with qualifying the assertion with the suggestion that Smoot-Hawley “aggravated” the Depression, even if it did not cause it. The actual magnitudes indicate that whatever “aggravation” there might have been was quite small.

According to Commerce Department estimates, measured in constant 1987 prices, real GDP in the U.S. fell by $235 billion between 1929 and the Depression trough of 1933, but exports fell by only $16 billion. Moreover, the drop in exports was largely offset by a decline in imports. The net effect (exports minus imports) was just about nil. If there is a lesson to be drawn from history for the U.S., it is that a sudden move toward protection is likely to be ineffective as a device for avoiding a business downturn. But our failure to ratify this or that treaty will collapse neither the world economy nor our own.

DANIEL J. B. MITCHELL

Professor, Anderson Graduate

School of Management, UCLA