The bad economy was to dominate Hoover's foreign policy. After a postelection goodwill tour to Latin America, Hoover had pursued the enlightened policy there that had originated under Coolidge. Much of the good effect was dissipated by the Smoot-Hawley Tariff of 1930, which raised barriers against foreign imports.
By 1931 the countries of Europe had been badly infected by the virus of worldwide depression. They blamed the American tariff, but it played a comparatively minor role in economic disruptions that were traceable back to the Treaty of Versailles. Congress and the American public believed that the war debts owed to the United States by Europe should be paid, but Europe could not pay. Hoover instituted in 1931 an eighteen-month moratorium on the debts, but even then European countries defaulted. The largest bank in Austria had failed, and Britain soon abandoned the gold standard. Hoover wasted his energies on trying to maintain, with the aid of France, an international gold standard. The depression grew worse.
Always influenced by Quaker pacifism, Hoover advocated international disarmament. The London Naval Disarmament Conference of 1930 attempted to extend the work of the Washington Naval Conference of 1921–1922, which had effectively stabilized the balance of arms in the Pacific. The London conference accomplished some further postponement of the arms race but, along with the Geneva World Disarmament Conference of 1932, was notably ineffective against Japanese imperialism, evidenced by Japan's invasion of Manchuria in September 1931.
Hoover and Secretary of State Henry Stimson differed on the proper American response to Japanese militarism. Hoover counseled patience, arguing from his experience that the dominant Chinese culture would ultimately either assimilate or expel the invaders. Stimson was more bellicose and considered supporting world sanctions through the League of Nations. Together they promulgated the Hoover-Stimson Doctrine of January 1932, announcing the American refusal to recognize any arrangement contrary to the Open Door policy. This, the president hoped, would cast "the searchlight of public opinion" on Japan.