Smoot-Hawley Tariff Act: No Tariff Goes Unpunished – National Compass

How tariffs and trade wars quickly deepened the Great Depression of the 1930s.

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Hoover signed the bill 18 months after deliberations began, and at the early beginnings of the Great Depression. The stock market was in a shamble after crashing and the world economy was sagging.  It didn’t take long for America’s biggest trading partners to retaliate.

Canada struck first after Smoot-Hawley raised the tariff on a dozen Canadian eggs from 8 cents to 10 cents. It backfired on the egg producers and started the snowball rolling down the hill on all other goods.

According to American Trade Policy, other countries retaliated, and world trade shrank enormously.  By the end of 1934 world trade had plummeted by some 66 percent from the 1929 level. Response to the tariff internationally became a domestic problem that required a reaction from each country.

Figures from the Foundation for Economic Education showed U.S. iron and steel exports decreased 85.5 percent by 1932 due to retaliation by Canada…

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4 thoughts on “Smoot-Hawley Tariff Act: No Tariff Goes Unpunished – National Compass

  1. Our present problems are largely due to removal of tariffs and other protectionist policies. By the way, unless one is deprived of even greater wealth to be invested offshore to gain greater riches and avoid paying taxes on those earnings, protectionism is a noble word. Like military protection. Under the Bush managed Reagan years, American taxpayers helped finance the shipping of our industrial base out of the country. We went from the world’s greatest creditor nation to the world’s largest debtor nation, and we have plunged ever since. By the way, the problems were compounded by the recipients of our manufacturing base by offering a labor force requiring suicide nets at the workplace, environmental laws, work rules, labor laws, etc., did not apply to them but we’re made stricter in the U. S. Additionally, central banks were the biggest winners. Increased national debt, removal of Glass-Steagall, and foreclosure of mortgages resulted as planned. As for Smoot-Hawley, that was signed into law June 1930; the depression began September 1929. It was caused by Wall Street and lack of funds with which the public could purchase the goods that had been manufactured. Add to that the military coup attempted by J. P. Morgan and friends and the confiscation of gold demanded and paid for at less than its value only to be made available once again at a higher price. If we don’t know whom we should not trust now, I don’t know if we ever will.

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  2. Theoretically I agree with you, marblenecltr, that local communities (and democratic input) is stronger if greater emphasis is placed on building strong local and regional economies. In general, only banks benefit from globalism – not ordinary people.

    That being said, sudden tariff changes can put a lot of working people who depend on exports out of work.

    I also agree that the banks triggered the 1929 Depression by contracting the monetary supply. I think the original author of this article acknowledges this. However because the US economy depended on vigorous foreign trade, once Smoot-Hawley took effect the US economy tanked even further when a lot of people in export industries were put out of work.

    Thanks for your comment.

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