FISCAL POLICY AND INTER- NATIONAL STABILITY
MANY persons vitally interested in sound international relations are too frequently disposed to assume that a high level of economic prosperity in all countries would be ensured if trade barriers were largely removed. It is undoubtedly true that the erection of postwar agricultural tariffs, together with the increasingly protectionist policies of primary producing countries, the reparations payments, and the unsound policies pursued with respect to foreign lending, were important factors intensifying the terrific world depression beginning in 1929. While this may certainly be granted, it would be a great mistake to assume that sounder international economic policies of the character referred to above would themselves ensure an avoidance of serious depressions. Indeed, one can go much farther and assert that even in a world which was completely under one political sovereignty the fundamental factor producing depressions would still be present, namely, the fluctuation in the rate of real investment.
A second point to be noted is that in laying plans for a durable peace it would be very dangerous to overlook the threat to the stability of any arrangements that may be made which would arise in case we had a recurrence of deep depressions.
It is increasingly the view of many economists that the depression starting in 1929 is, in very large measure, responsible