Historical Perspectives 71Despite the position of political and economic leadership that the United States
shared with Great Britain after World War I, the former country rapidly retreated
into its traditional inward orientation. To be sure, many American banks and
corporations continued to expand abroad very rapidly in the 1920s and the country
remained an important world power, but the United States refused to join the
League of Nations or any of the other international organizations created in the
period. American tariff levels, which had been reduced on the eve of World War
I, were once again raised. The reasons for the country’s post-World War I
isolationism, as it is often called, are many and controversial. Chief among them
were the continued insularity of major segments of the American public, which
were traditionally inward-looking in political and economic matters; the resistance
to American power of such European nations as Great Britain and France; and
widespread revulsion at the apparently futile deaths that had resulted from
involvement in the internecine strife of the Old World.
Whatever the reasons for the isolationism of the 1920s, these tendencies were
heightened as the world spiraled downward into depression after 1929. In the
Smoot-Hawley Act of 1930, the United States dramatically increased its tariffs,
and by 1933 the world was engulfed in a bitter trade and currency conflict. In
1933, desperate to encourage domestic economic recovery, U.S. president Franklin
Roosevelt significantly devalued the dollar, thus effectively sounding the death
knell of what remained of the nineteenth-century international economic order.
During the nearly four centuries summarized here, the international economy
underwent several dramatic transformations. From a closed and highly regulated
mercantilist system, the international economy evolved toward free trade in the
middle of the nineteenth century. However, after a relatively brief period of openness,
the international economy reversed direction and, starting with the resurgence of
formal imperialism and accelerating after World War I, once again drifted toward
closure. This historical survey highlights the uniqueness of the contemporary
international political economy, which is the focus of the rest of this reader; David
A.Lake compares the central characteristics of the international economy in the
nineteenth and twentieth centuries. This survey also raises a host of analytic
questions, many of which appear elsewhere in the book as well. Particularly
important here is the question of what drives change in the international economy.
In the readings that follow, Charles Kindleberger, in a domestic society-centered
approach, focuses on interest groups and ideology; Peter Alexis Gourevitch examines
interest groups and domestic institutions; Jeffry A.Frieden focuses on the evolving
nature of international investment and its impact on the need for direct, colonial
control over peripheral regions; and Lake emphasizes changes in the international
political and economic systems.