The Smoot-Hawley Tariff and Its Impact on the Great Depression

Herbert Hoover's Presidency and the Smoot-Hawley Tariff Act

Herbert Hoover, the 31st President of the United States, served from 1929 to 1933 during a period of significant economic turmoil. His administration is often associated with the Great Depression and the enactment of the Smoot-Hawley Tariff Act. Signed into law on June 17, 1930, the Act was intended to protect American farmers and manufacturers by imposing high tariffs on a wide range of imported goods. Although Hoover aimed to fulfill his campaign promises and assist the agricultural sector, the Smoot-Hawley Tariff is widely criticized for exacerbating the Great Depression by stifling international trade and causing retaliatory tariffs.

The Political Climate and Protectionism

The early 20th century political climate in the United States was characterized by a prevailing Republican preference for protectionist policies. Protectionism, which involves restricting international trade to support domestic industries, was a cornerstone of Republican economic strategy. The party had dominated presidential politics since the Civil War, with the exception of Democrat Woodrow Wilson's presidency, which had briefly lowered tariffs. When Hoover entered the White House, he inherited a political environment that was predisposed to the idea of protecting U.S. industries through tariffs.

The Agricultural Sector and Tariff Policies

American farmers experienced economic hardship in the 1910s and 1920s due to falling crop prices and overproduction, leading to calls for government intervention. While agricultural products were not as heavily impacted by foreign competition as industrial goods, farmers lobbied for increased tariffs to provide parity with the protection afforded to manufacturers. Hoover, who had a philosophy of promoting individual self-reliance, nonetheless pledged to support farmers with higher tariffs and the establishment of cooperatives to help stabilize prices during his presidential campaign.

Drafting and Debating the Smoot-Hawley Tariff

The Smoot-Hawley Tariff was the product of a protracted and divisive legislative process that lasted over a year. The bill was shaped by conservative Republicans who controlled the influential congressional committees and were staunch advocates of protectionism. The House Ways and Means Committee, under the leadership of Representative Willis Hawley, and the Senate Finance Committee, chaired by Senator Reed Smoot, encountered resistance from Progressive Republicans and Democrats who sought to stall the bill. The debates were intense and highlighted the deep divisions within Congress over trade policy.

Controversy and Consequences of the Tariff's Signing

Despite strong opposition from the academic community, including a petition signed by over a thousand economists, President Hoover signed the Smoot-Hawley Tariff into law. Hoover had significant reservations about the bill, which he expressed by calling it "vicious, extortionate, and obnoxious." He included a provision that allowed him to adjust tariffs without Congressional approval, hoping to mitigate potential negative effects. Nevertheless, the enactment of the high tariffs aligned Hoover with the conservative wing of his party and alienated Progressive Republicans, some of whom later shifted their support to Franklin D. Roosevelt in the 1932 presidential election.

International Repercussions and the Great Depression

The international response to the Smoot-Hawley Tariff was swift and severe, with global trade volumes plummeting by nearly half within two years of its enactment. Countries around the world retaliated by imposing their own tariffs, which led to a sharp decline in international trade and exacerbated diplomatic tensions. The role of the Smoot-Hawley Tariff in deepening the Great Depression has been debated by historians and economists, with many agreeing that it contributed to the severity and duration of the economic downturn.

The End of the Smoot-Hawley Tariff and Shift in Trade Policy

The election of Franklin D. Roosevelt in 1932 signaled a shift in U.S. economic policy. Roosevelt's New Deal included a variety of government interventions, but it also featured a move towards lower tariffs with the Reciprocal Trade Agreements Act of 1934. This legislation reversed many of the high tariffs set by the Smoot-Hawley Tariff and encouraged international trade through bilateral agreements. This marked a significant departure from the protectionist policies of the Hoover administration and laid the groundwork for more open trade relations in the subsequent decades.