“the key domino was smoot-hawley....and the sudden contraction of the money supply...”
Smoot-Hawley’s role in the Depression is vastly overrated. International trade accounted for less than 5% of GNP at that time. America was a virtually self contained economy.
But the money supply collapse over the years 1930-33 was a huge factor. A full one third of American banks failed in that span and 30% of the money supply evaporated. There was no FDIC in that era and depositors were wiped out.
smoot-hawley started a trade war with the world....the first domino was the farmers, who exported 30% of their crops...I do not know of a business that could survive that..as the farmers failed, so did the banks they did business with...the suppliers of seed and fertilizer and farm equipment suddenly lost their customer base...they failed, and so did the banks they did business with... these businesses laid off all employees, and these employees could no longer buy anything..manufacturers of household goods started to fail, and so did the banks they did business with..
example #2 is the garment industry...the price of cotton and wool rags, used to make the thread that makes the cloth to make the garments, doubled...the manufacturers could not afford to buy the rags, and because of the wage freeze in effect, could not lower wages....they failed, and so did the banks they did business with...
tungsten for the steel industry was imported..the price quadrupled..the steel industy failed, and so did the banks they did business with..
That only 5% that you speak of were the critical components necessary for our industry and farmers at the time... smoot hawley started a trade war that could only result in our own destruction..