Peddling Protectionism

Peddling Protectionism: Smoot-Hawley and the Great Depression

Douglas A. Irwin
Copyright Date: 2011
Pages: 256
https://www.jstor.org/stable/j.ctt7svnx
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  • Book Info
    Peddling Protectionism
    Book Description:

    The Smoot-Hawley tariff of 1930, which raised U.S. duties on hundreds of imported goods to record levels, is America's most infamous trade law. It is often associated with--and sometimes blamed for--the onset of the Great Depression, the collapse of world trade, and the global spread of protectionism in the 1930s. Even today, the ghosts of congressmen Reed Smoot and Willis Hawley haunt anyone arguing for higher trade barriers; almost single-handedly, they made protectionism an insult rather than a compliment. InPeddling Protectionism, Douglas Irwin provides the first comprehensive history of the causes and effects of this notorious measure, explaining why it largely deserves its reputation for combining bad politics and bad economics and harming the U.S. and world economies during the Depression.

    In four brief, clear chapters, Irwin presents an authoritative account of the politics behind Smoot-Hawley, its economic consequences, the foreign reaction it provoked, and its aftermath and legacy. Starting as a Republican ploy to win the farm vote in the 1928 election by increasing duties on agricultural imports, the tariff quickly grew into a logrolling, pork barrel free-for-all in which duties were increased all around, regardless of the interests of consumers and exporters. After Herbert Hoover signed the bill, U.S. imports fell sharply and other countries retaliated by increasing tariffs on American goods, leading U.S. exports to shrivel as well. While Smoot-Hawley was hardly responsible for the Great Depression, Irwin argues, it contributed to a decline in world trade and provoked discrimination against U.S. exports that lasted decades.

    Peddling Protectionismtells a fascinating story filled with valuable lessons for trade policy today.

    eISBN: 978-1-4008-3839-4
    Subjects: Economics, Political Science, History

Table of Contents

  1. Front Matter
    (pp. [i]-[iv])
  2. Table of Contents
    (pp. [v]-[viii])
  3. Introduction
    (pp. 1-10)

    On November 9, 1993, Vice President Al Gore and Texas billionaire and former presidential candidate Ross Perot debated the controversial North American Free Trade Agreement (NAFTA) on CNN’s television program,Larry King Live. An outspoken critic of the agreement, Perot had claimed that NAFTA would lead to a “giant sucking sound” of American jobs being lost to Mexico. Gore sought to defend the agreement on behalf of the Clinton administration, which was pushing a reluctant Congress to approve it.

    In the opening minutes of the debate, Perot casually suggested imposing a “social tariff” on imports from Mexico to offset that...

  4. Chapter 1 Domestic Politics
    (pp. 11-100)

    To understand the factors that gave rise to the Smoot-Hawley tariff, we need to understand the process by which Congress handled tariff revisions and the political forces at work in the late 1920s.

    The U.S. Constitution gives Congress the authority to levy duties on imports. From the very beginning, the use of this power was controversial. Throughout the nineteenth century, the debate centered on whether tariffs should be levied to raise revenue for the federal government, or to protect domestic industries from foreign competition as well. With the introduction of the income tax in 1913, tariffs were no longer a...

  5. Chapter 2 Economic Consequences
    (pp. 101-143)

    During the summer of 1929, as the Senate began considering the House bill, the United States reached a business cycle peak. Over the next four years, the nation would experience an unrelenting economic contraction known as the Great Depression. Although the economic decline began nearly a year before the new tariff took effect in June 1930, many have sought to blame the Smoot-Hawley tariff for turning a recession into a full-blown depression.

    Before we can examine this controversial claim, we have to resolve an even more basic dispute about how much the legislation increased tariffs and reduced imports. The Smoot-Hawley...

  6. Chapter 3 Foreign Retaliation
    (pp. 144-183)

    In the three years after the Smoot-Hawley tariff was enacted, protectionist trade measures proliferated, world trade collapsed, and the Depression intensified around the world. Smoot-Hawley’s contribution to this economic disaster has been debated ever since. While the tariff was clearly a step in the direction of higher trade barriers, it was not responsible for most of the spread of protectionism around the world in the early 1930s. However, the Smoot-Hawley tariff was very damaging from the standpoint of U.S. commerce because it led other countries to pursue trade policies that explicitly discriminated against the United States. This discrimination was much...

  7. Chapter 4 Aftermath and Legacy
    (pp. 184-221)

    The debate over the Smoot-Hawley tariff did not end in June 1930. Leading newspapers, Congressional Democrats, business leaders, and economists continued to criticize it long after its passage. In widely reported comments at a November 1930 conference, Thomas W. Lamont (1931, 92–93) complained that:

    we have complicated this situation of ours . . . by hanging the load of a new tariff act around our own necks. The increased rates have certainly led to a certain feeling of dismay and ill-will abroad and to some retaliatory tariffs. They have probably also caused some harm both to home trade and...

  8. Appendix: The Economists’ Statement against the Smoot-Hawley Tariff
    (pp. 222-226)
  9. Acknowledgments
    (pp. 227-228)
  10. References
    (pp. 229-238)
  11. Index
    (pp. 239-244)