Representative W.C. Hawley, and Senator Reed Smoot shake hands in agreement on new tariff bill

The Hawley-Smoot Tariff (or Smoot-Hawley Tariff Act)^[1] was signed into law on June 17, 1930 and raised U.S. tariffs on over 20,000 imported goods to record levels, and, in the opinion of many economists, worsened the Great Depression. Many countries retaliated and American exports and imports plunged by more than half. The tariff was replaced by lower bilateral agreements in the mid 1930s. Image File history File links HawleySmoot. ... June 17 is the 168th day of the year in the Gregorian calendar (169th in leap years), with 197 days remaining. ... Year 1930 (MCMXXX) was a common year starting on Wednesday (link is to a full 1930 calendar). ... Motto: (Out Of Many, One) (traditional) In God We Trust (1956 to date) Anthem: The Star-Spangled Banner Capital Washington D.C. Largest city New York City None at federal level (English de facto) Government Federal constitutional republic  - President George Walker Bush (R)  - Vice President Dick Cheney (R) Independence from... A tariff is a tax on foreign goods. ... The Great Depression was a time of economic down turn, which started after the Stock Market Crash on October 29, 1929, also known as Black Tuesday. ...

Congressional sponsors

The act was pioneered by Senator Reed Smoot, a Republican from Utah, and Representative Willis C. Hawley, a Republican from Oregon. President Herbert Hoover had asked Congress for a downward revision in rates, but Congress raised rates instead. While many economists urged a veto, Hoover signed the bill. Hoover had, during the 1928 election campaign, pledged to help beleaguered farmers by, among other things, raising tariff levels on agricultural products. Seal of the U.S. Senate Federal courts Supreme Court Chief Justice Associate Justices Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures State Courts Counties, Cities, and Towns Other countries Politics Portal      Senate composition following 2006 elections The United States Senate is... Sen. ... The Republican Party, often called the GOP (for Grand Old Party, although one early citation described it as the Gallant Old Party) [1], is one of the two major political parties in the United States. ... Official language(s) English Capital Salt Lake City Largest city Salt Lake City Area  Ranked 13th  - Total 84,876 sq mi (219,887 km²)  - Width 270 miles (435 km)  - Length 350 miles (565 km)  - % water 3. ... Seal of the House of Representatives The United States House of Representatives (or simply the House) is one of the two chambers of the United States Congress, the other being the Senate. ... Willis Chatman Hawley (May 5, 1864 - July 24, 1941), American politician, was a Republican member of the United States House of Representatives from Oregon. ... The Republican Party, often called the GOP (for Grand Old Party, although one early citation described it as the Gallant Old Party) [1], is one of the two major political parties in the United States. ... Official language(s) None Capital Salem Largest city Portland Area  Ranked 9th  - Total 98,466 sq mi (255,026 km²)  - Width 260 miles (420 km)  - Length 360 miles (580 km)  - % water 2. ... Herbert Clark Hoover, (August 10, 1874 – October 20, 1964), the 31st President of the United States (1929–1933), was a world-famous mining engineer and humanitarian administrator. ... Congress in Joint Session. ... Alan Greenspan, former chairman, United States Federal Reserve. ...

Opponents of the measure organized a petition signed by 1,000 economists, who expressed concern about anticipated tariff reprisals from other countries.

Impact of the Tariff

Smoot-Hawley Tariff Act "imposed an effective tax rate of 60% on more than 3,200 products and materials imported into the US," quadrupling previous tariff rates.

Although the tariff act was passed after the stock-market Crash of 1929, many economic historians consider the political discussion leading up to the passing of the act as a factor in causing the crash and its eventual passage as a factor in deepening the Great Depression. Unemployment was at a troublesome 9% in 1930 when the Smoot-Hawley tariff was passed, but it jumped to 16% the next year and 25% two years after that. The annual rate of unemployment in the United States never fell below 9% during the entire decade of the 1920s. For the protest against the Communications Decency Act, see Black World Wide Web protest. ... Economic history is the study of economic change, and of economic phenomena in the past. ... The Great Depression was a time of economic down turn, which started after the Stock Market Crash on October 29, 1929, also known as Black Tuesday. ...

As America, seen through the tariff, and European countries, increasingly resorted to protectionism as an economic policy, the general amount of international trade radically decreased, causing the world economy to slow. Protectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports, and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over...

In part as a result of the Hawley-Smoot Tariff and other countries' responses to it, the post-World War II world saw a push towards multilateral trading agreements that would prevent a similar situation from unfolding. This led in part to the Bretton Woods Agreement in 1944 and the General Agreement on Tariffs and Trade (GATT) in the 1950s. Wikipedia does not have an article with this exact name. ... 1944 (MCMXLIV) was a leap year starting on Saturday. ... The General Agreement on Tariffs and Trade (typically abbreviated GATT) was originally created by the Bretton Woods Conference as part of a larger plan for economic recovery after World War II. The GATTs main purpose was to reduce barriers to international trade. ... // Recovering from World War II and its aftermath, the economic miracle emerged in West Germany and Italy. ...

There is still some historical debate as to how harmful the tariff was to the US domestic economy. Those who view trade as a zero sum game maintain that tariffs can be beneficial to a domestic economy if other countries do not retaliate with tariffs of their own. However, the economist David Ricardo proposed that free trade is a positive sum game and protectionism inevitably harms a domestic economy, as was the case with the British corn laws. Also, various schools of economic thought including classical, Austrian, and neoclassical support the general concept that tariffs inevitably lower revenue, harm trade, and reduce the general welfare of the economy. Zero-sum describes a situation in which a participants gain or loss is exactly balanced by the losses or gains of the other participant(s). ... David Ricardo (April 18, 1772 – September 11, 1823), a political economist, is often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, and Adam Smith. ... It has been suggested that Win-win strategy be merged into this article or section. ... The Corn Laws, in force between 1815 and 1846, were import tariffs ostensibly designed to protect British farmers and landowners against competition from cheap foreign grain imports. ... Classical economics is widely regarded as the first modern school of economic thought. ... Neoclassical economics refers to a general approach (a metatheory) to economics based on supply and demand which depends on individuals (or any economic agent) operating rationally, each seeking to maximize their individual utility or profit by making choices based on available information. ...

Abolitionalists of Smoot-Hawley argue that it angered major trading partners who retaliated. Canada for example not only raised its tariffs but forged closer economic links with the British Commonwealth, and US-Canada trade plunged. France and Britain protested and developed new trade avenues. Germany developed a system of autarky. Imports plunged two-thirds from $4.4 billion (1929) to $1.5 billion (1933), exports fell from $5.4 billion to $2.1 billion, in both cases far more than the 50% fall in GDP. The tremendous drop in foreign trade was a stunning shock to the proponents of Smoot-Hawley, and effectively destroyed advocacy of high tariffs in the US. The Commonwealth of Nations (CN), usually known as The Commonwealth, is a voluntary association of 53 independent sovereign states all of which are former colonies of the United Kingdom, except for Mozambique and the United Kingdom itself. ... An autarky is an economy that limits trade with the outside world, or an ecosystem not affected by influences from the outside, and relies entirely on its own resources. ...

Causes

Recently, it has been argued that Smoot-Hawley was an attempt by the Republican party to deal with the problem of overcapacity that plagued the U.S. economy in the 1910s and 1920s, itself the result of extremely-high-throughput, continuous-flow mass production. Rated capacity had increased tremendously; actual output, income and expenditure had not. Under the watchful eye of Senator Reed Smoot of Utah, the party drafted the Fordney-McCumber tariff act in 1921 with an eye to increasing domestic firms' market share. Weakening labor markets in 1927 and 1928 prompted Smoot to propose yet another round of tariff hikes. In his memoirs, Smoot made it clear: "the world is paying for its ruthless destruction of life and property in the World War and for its failure to adjust purchasing power to productive capacity during the industrial revolution of the decade following the war"^[2].

Economic impact

Economic historians have made different estimates of the impact of this tariff on world trade; however, they all conclude the impact was negative. Using panel data estimates of export and import equations for 17 countries, Jakob B. Madsen (2002) estimated the effects of increasing tariff and nontariff trade barriers on worldwide trade over the period 1929 to 1932. He included not just Hawley-Smoot but the tariff increases in other countries as well. He concluded that real international trade contracted by around 14% because of declining GNP in each country; 8% due to increases in tariff rates; 5% because of deflation-induced tariff increases; and an extra 6% because of the imposition of nontariff barriers.

The Smoot-Hawley Tariff in popular culture

In the discussion leading up to the passage of NAFTA Vice President Al Gore mentioned the Tariff as a rejoinder to objections voiced by Ross Perot during a debate they had on the Larry King show. He gave Perot a framed picture of Smoot and Hawley shaking hands after its passage. Nafta or NAFTA may refer to: an acronym for the North American Free Trade Agreement an acronym for the New Zealand Australia Free Trade Agreement the town/Tokyo of Nafta, Tunisia This is a disambiguation page: a list of articles associated with the same title. ... Albert Arnold Gore, Jr. ... Henry Ross Perot (born June 27, 1930) is an American businessman billionaire from Texas best known as a candidate for President of the United States (in 1992 and 1996). ... Henry Ross Perot (born June 27, 1930) is an American businessman billionaire from Texas best known as a candidate for President of the United States (in 1992 and 1996). ... Larry King (born Lawrence Harvey Zeiger on November 19, 1933) is an award-winning American broadcaster. ...

In comedy, mention of the Tariff is occasionally made when reference to a notably obscure event from American history is needed, as well as for its silly-sounding name. Examples of this have occurred in the following:

• The Daily Show with Jon Stewart
• Ferris Bueller's Day Off
• Dave Barry's Dave Barry Slept Here
• Homestarrunner.com (where it was spoonerized into the "Hoot-Smalley" Tariff).
• Casey and Andy used it for an edition of Casey and Andy's snooty discussion hour.
• The Wrong Coast in its parody of 24
• In 2006, when George F. Smoot won the Nobel Prize for Physics, Stephen Colbert of the Colbert Report mentioned that he "loved his early work with Hawley."

"Hawley Smoot" was used in Harvard Lampoon's 1969 book Bored of the Rings as a magic incantation. The Daily Show (currently The Daily Show with Jon Stewart) is a Peabody and Emmy Award-winning half-hour American comical news television program produced by and run on the Comedy Central cable television network. ... Ferris Buellers Day Off is a 1986 comedy film written and directed by John Hughes. ... David Barry, Jr. ... It has been suggested that Teen Girl Squad and Cheat Commandos be merged into this article or section. ... This article or section does not adequately cite its references or sources. ... Casey and Andy is an online web comic by Andy Weir. ... The Wrong Coast is a Canadian cartoon show on Teletoon channel. ... ‹ The template below has been proposed for deletion. ... George Smoot celebrating his Nobel Prize on October 3, 2006 at Lawrence Berkeley National Laboratory. ... This article is about Stephen Colbert, the actor. ... Stephen Colbert, star of The Colbert Report The Colbert Report (, or possibly Colbert Réport) is a television program announced by Comedy Central that will star Stephen Colbert, currently best-known as a correspondent for The Daily Show. ... Bored of the Rings (BOTR) is the shared title of various independent parodies of The Lord of the Rings (LOTR), a novel by J. R. R. Tolkien. ...

Ogden Nash wrote a poem called Invocation, with the headline 'Smoot Smites Smut' being much ridiculed therein. Frederic Ogden Nash (August 19, 1902 – May 19, 1971) was an American poet best known for writing pithy and funny light verse. ...

Footnotes

1. ^ ch. 497, 46 Stat. 590, June 17, 1930, see 19 U.S.C. § 1654
2. ^ Merill, Milton 1990, Reed Smoot: Apostle in Politics, Logan UT: Utah State Press. p. 340.

The United States Statutes at Large, commonly referred to as the Statutes at Large, is the official source for the laws and resolutions passed by Congress. ... June 17 is the 168th day of the year in the Gregorian calendar (169th in leap years), with 197 days remaining. ... Year 1930 (MCMXXX) was a common year starting on Wednesday (link is to a full 1930 calendar). ... The United States Code (U.S.C.) is a compilation and codification of the general and permanent federal law of the United States. ...

Bibliography

• Beaudreau, Bernard C. 2005 Making Sense of Smoot-Hawley: Tariffs and Technology New York, NY: iUniverse.
• Crucini, Mario J. and James Kahn. "Tariffs and Aggregate Economic Activity: Lessons from the Great Depression." Journal of Monetary Economics 38, no. 3 (1996): 427–67.
• Crucini, Mario J. "Sources of variation in real tariff rates: The United States 1900 to 1940" American Economic Review 1994. 82: 346–53.
• Eckes, Alfred. Opening America's Market: U.S. Foreign Trade Policy since 1776 (1995)
• Eichengreen, Barry. "The Political Economy of the Smoot-Hawley Tariff." Research in Economic History 12 (1989): 1-43.
• Irwin, Douglas. "The Smoot-Hawley Tariff: A Quantitative Assessment." Review of Economics and Statistics 80, no. 2 (1998): 326–334.
• Kaplan, Edward S. American Trade Policy: 1923-1995 (1996)
• Madsen, Jakob B.; "Trade Barriers and the Collapse of World Trade during the Great Depression" Southern Economic Journal Volume: 67. Issue: 4. 2001.
• Judith McDonald, Anthony Patrick O'Brien, and Colleen Callahan. "Trade Wars: Canada's Reaction to the Smoot-Hawley Tariff." Journal of Economic History 57, no. 4 (1997).
• Merill, Milton 1990, Reed Smoot: Apostle in Politics, Logan UT: Utah State Press.
• O'Brien, Anthony, "Smoot-Hawley Tariff" EH Encyclopedia
• Robert Pastor, Congress and the Politics of United States Foreign Economic Policy, 1929–1976 University of California Press, 1980.
• Schattsneider, E. E. Politics, Pressures and the Tariff (1935). classic study of passage of Hawley-Smoot tariff
• Taussig, F. W. The Tariff History of the United States. 8th edition (1931)
• Temin, Peter. Lessons from the great depression MIT Press 1989
• Tariffs and Trade in U.S. History: An Encyclopedia (2003, 3 vol) Edited by Elaine C. Prange Turney and Cynthia Clark Northrup

See also

• International trade
• Protectionism

International trade is the exchange of goods and services across international boundaries or territories. ... Protectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports, and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over...

External links

• Article on the Smoot-Hawley Tariff from EH.NET's Encyclopedia by economic historian Anthony O'Brien
• Smoot-Hawley Tariff page on the United States Department of State website
• Opinion on the role of the Tariff in the Great Depression from the National Center for Policy Analysis
• Casey and Andy's snooty discussion hour.