Americans Wonder When Sun Will Rise on Economic Recovery

The Wall Street Journal | July 10, 2003 | DAVID WESSEL

[Dave S]

The assertion that the Smoot-Hawley tariff was responsible for the Great Depression is a myth based on ignorance of historical facts. The stock market crashed in October, 1929, but Hoover did not sign the tariff into law until June 17, 1930, and therefore could not have caused it.

And the Great Depression continued until WWII. Smoot-Hawley took a correction of a speculative bubble and turned it into a world wide economic disaster. The stock market is a leading indicator. The day after the market crash, the real economy was still in good shape. It starting going south and accelerated as a result of Smoot Hawley which became law eight months later.

[Dave S]

Imports formed only 6 percent of the GNP. With average tariffs ranging from 40 to 60 percent, this represents an effective tax of merely 2.4 to 3.6 percent. Yet the Great Depression resulted in a 31 percent drop in GNP and 25 percent unemployment. The idea that such a small tax could cause so much economic devastation is too far-fetched to be believed.

I wasnt worried about the US consumer. What did it do the companies that manufactured products for export around the world? Our trading partners didnt just sit there and let us protect our markets to their detriment. They raised tariffs and otherwise restricted their markets killing exports from the US. Without those markets, manufacturing suffered and mass layoffs resulted.

[Willie Green]

What did it do the companies that manufactured products for export around the world?

Virtually zip, zero, nothing, nada...
Smoot-Hawley merely raised rates on some items that were already on the tariff list
B> and increased the amount of goods to which no tariffs were applied.And with trade comprising such a small fraction of GNP, any anecdotal effects are insignificant.
If anything, firms engaged in international trade were more affected by the overall decline in economic activity rather than by any specific effect attributable to the tariffs.

Your whiney rant attempting to reverse the roles of cause and effect and exagerate the significance is nothing but pure baloney.

[RoughDobermann]

Smoot-Hawley tariff

"Bueller? Bueller? Bueller?" Sorry, couldn't help myself...

[Dave S]

Your whiney rant attempting to reverse the roles of cause and effect and exagerate the significance is nothing but pure baloney.

You do know the differnce between imports and exports? Dont you?

You do know what a trade war is, dont you? Or didnt Pat tell you about those?

When the world is in world-wide recession, the last thing to do is to increase the cost of goods and restrict entry in an attempt to artificially inflate the value of your products. The effect would be a kin to raising income taxes significantly at the beginning of a recession to forstall expected losses of revenue do to the recession. The results are disastrous.

[Dec31,1999]

The assertion that the Smoot-Hawley tariff was responsible for the Great Depression is a myth based on ignorance of historical facts. The stock market crashed in October, 1929, but Hoover did not sign the tariff into law until June 17, 1930, and therefore could not have caused it.

Too bad Perot didn't have this information on hand during the presidential debates in 1992. It could have changed the direction of the campaign.

[riri]

That may be the funniest thing I have read here to date.

[riri]

All the talk is focused on products. Yeah, we can get some cheap products but I don't know about you but the bulk of my income goes toward housing, utilities, health insurance, auto insurance, having a car to get to work, taxes and other various fees.

If that stuff can start being made and offered through 3rd world countries well then...but until then the fact that we can buy a five dollar t-shirt made with cotton so shitty if you hold it up you can see through it and cheap electronic crap just doesn't hold too much weight.

[Dave S]

All the talk is focused on products. Yeah, we can get some cheap products but I don't know about you but the bulk of my income goes toward housing, utilities, health insurance, auto insurance, having a car to get to work, taxes and other various fees.

So basically what you are saying is that the parts of the economy that are still showing decent growth, housing and services, are the ones that are important to you. I agree. I spend more on those items than I do on products.