The stakes in the upcoming vote to renew or reject China's MFN status go way beyond profits for big corporations. Coming at a time of rising protectionist sentiment in both the U.S. and Europe, a no vote on MFN could set off a series of falling dominoes that would ultimately lead to a repeat of the Great Depression and international crises of the 1930s. PNS editor Franz Schurmann, a professor emeritus of history and sociology at the University of California, Berkeley, is author of "The Logic of World Power" and other books on foreign affairs. This is the second of two articles by Franz Schurmann on the MFN vote. Call PNS at 415-243-4364 for the first article.

This summer Congress could make history repeat itself by voting against renewing "most favored nation" (MFN) status for China, and thereby impose punitive high tariffs on Chinese goods imported into the United States.

Even if the vote falls short of the two-thirds needed to overturn a presidential veto, it would mark a giant step down a path blazed by passage of the Smoot-Hawley Tariff Act in June 1930 -- towards wrecking world trade, undermining the global financial system, maybe bringing on a new depression and new international crises.

Then, as now, isolationist sentiment was on the rise in the U.S. Congress used Smoot-Hawley to reverse the country's growing economic and political involvement in Europe. Today, by rejecting MFN ostensibly in the name of promoting human rights, Congress would send a similar signal -- that the U.S. is breaking its deepening economic and political ties with China, in essence, turning its back on the future economic powerhouse of the world.

In 1930, the impact of the most protectionist legislation ever passed in the U.S. was devastating. Most people believe the Depression was triggered by the financial crash of October 1929. In fact, by the spring of 1930, both the American and European economies had weathered the storm, thanks in large part to robust international trade which had remained brisk despite the crash. By the end of 1931, however, Smoot-Hawley had set off a wave of retaliatory tariff measures in twenty five other countries, crippling the trade boom. By early 1932, the Great Depression had set in, paralyzing economies in Europe and America.

Economic collapse wasn't the only consequence. Then, as now, rapidly growing global trade worked only because of a solid global financial system -- the connective tissue that binds countries to one another, even when diplomacy is at an impasse. At the time, the currency that fueled world trade was Britain's pound sterling, just as the dollar does today. But as Britain watched first the U.S. and then one country after another turn their backs on world trade, it decided it could no longer manage the world's money. In September 1931, it abandoned the gold standard.

The pivot for global money is global trust -- especially among governments, corporate leaders and bankers. It works through credit -- a word whose root meaning is trust. During the booming twenties and well into 1931, huge sums were swapped all over the world, with bankers trusting in repayment. That trust broke in 1931 following Smoot Hawley and Britain's resignation as world money manager.

By the end of 1932, the atmosphere among the world's political, economic and military elites was one of suspicion, paranoia and hatred. Once the international monetary system broke down, internal authoritarianism and external wars became inescapable.

In 1997, it is not difficult to construct a scenario comparable to 1930. Unless Congress delivers a strong yes vote, presidential decree will allow the MFN to limp along for another year. But worldwide the sense will spread that the U.S. is going protectionist.

The next move would likely come in Europe where voters in England and France have already in effect voted against the euro, the new Europe-wide currency that is supposed to form the lifeblood of the European Union in 1999. Congress' vote against MFN could mean the death knell of the euro.

The scuttling of the euro -- or even a soft euro offered as a compromise -- would also mean a direct blow against the German mark, one of the three pillars of the global monetary system, along with the dollar and the yen. If the mark softens, this system which now links three great world regions, North America, Western Europe and East Asia, into a single world system of finance, trade and production would quickly come apart. Each region would scramble to survive on its own.

Asia stands to come out best from this break up. Not only are its three sub-regions -- China, Northeast Asia and Southeast Asia -- booming, but they are increasingly interdependent. Europe, by contrast, stands to come out worst. Its economies are becoming less and less competitive with America and Asia, while its social fabrics are seriously weakened by high unemployment and the reappearance of historic conflicts. Bosnia is an ominous warning of what Europe could look like a decade from now.

America would probably come out middling well. In the absence of a world system, it would do best to tilt away from Europe and towards Asia -- unless of course East Asia erupts in new conflicts of its own (a not unthinkable possibility given the current arms races .)

The lesson history offers is that while globe-spanning systems may be fated to break down, supporting rather than wrecking them promises a better outcome for the world. The stakes in the MFN vote thus go way beyond profits for big corporations. A yes vote is a vote against repeating the horrors of depression and war which the Smoot Hawley Act helped provoke.