Product Overview

In May 1932, US president Herbert Hoover and British prime minister Ramsay MacDonald called for leaders from 65 nations to attend the World Economic Conference, scheduled to occur in the winter of 1933 after the American presidential election. Hoover turned his attention to the instructions he would have to give to the American delegation about the forthcoming conference. Arguments by pundits, critics, and Hoover's advisers fell into at least three mutually exclusive camps. Some wanted the United States to assume world monetary leadership, since the world needed a financial hegemon. Others thought the United States should simply promote better financial cooperation among nations, since the world needed cooperation more than hegemony, and hegemony was costly. The third camp wanted the United States to simply let the markets equilibrate, since even mild "cooperation" might sacrifice national self-interest without much benefit. The global economic depression presented a dire situation. All the old rules of international monetary stability had been broken. Now, what new rules should Hoover aim to promote? This case set has been taught successfully in Darden online and in-person classes.

Learning Objectives

Review the strengths and weaknesses of the gold exchange standard (GES) as the successor to the gold standard, including examining why the GES was established and why it collapsed. Consider the influence of leading nations in the workings of the GES, and evaluate Charles Kindleberger's theory that the absence of a global hegemon doomed the GES. Explore the role of central bank coordination (and lack of it) in the onset of the Great Depression; in contrast to Kindleberger, Barry Eichengreen and others argue that it wasn't the absence of hegemony, but the absence of coordination in the context of an inflexible monetary regime that doomed the global economy to the Great Depression. Finally, assess why the orthodoxy of international economic behavior collapsed. Orthodox policies such as free trade, balanced budgets, stable currencies, the gold standard, and respect for debt claims had characterized international relations for decades before World War I. What about the war and the Depression had undermined the old orthodoxy?