Skip to comments.The Smoot-Hawley Tarrif and the Great Depression
Posted on 12/23/2016 5:08:47 PM PST by Crucial
Few areas of historical research have provoked such intensive study as the origins of Americas Great Depression. From 1929 to 1933 America suffered the worst economic decline in its history. Real national income fell by 36 percent; unemployment increased from 3 percent to over 25 percent; more than 40 percent of all banks were permanently closed; and international investment and trade declined dramatically.
The dimensions of the economic catastrophe in America and the rest of the world from 1929 to 1933 cannot be captured fully by quantitative data alone. Tens of millions of humans suffered intense misery and despair. Because of this trauma the Great Depression has dominated much of the macroeconomic debate since the mid-twentieth century.
I say “bunk” on this.
Smoot-Hawley happened way way back, when America actually MADE THINGS IN AMERICA.
Now is entirely different. Now we import everything, much of it from China, and Mexico.
That is a massive difference.
I agree that things are different. I think the biggest difference is the role played by energy in the modern industrial economy. If you have cheap abundant domestic energy, you can have tariffs. If you look at Trump’s cabinet nominations, it’s clear his whole policy is about energy.
A more serious problem was Hoover’s and Roosevelt’s constant meddling in the economy.
Business and investors never knew which way to jump. Investments were not secure.
The Government even made the possession of gold coin illegal!
Most economists now do not believe that the tarrifs were a large problem.
Read more: Smoot-Hawley and the Great Depression
OK, who first heard of the Smoot-Hawley Act by watching Ferris Bueller’s Day Off?
Note the time of my post—it is when someone of above-average reading-speed would indicate that they read the piece.
All that reading I did back when Carter was President convinced me that the thing that caused the Depression was the collapse of the British Pound circa 1926. Then the world's "Key Currency" was the Pound as the Dollar is now. The world found out that the Brits were just printing the stuff and all those who held Pounds tried to exchange them for something else. The result was a Depression in Europe that predated ours by several years. But eventually it made it to our shores.
There have been several unsuccessful runs on the Dollar. I'm not sure why it survives, but it is probably because it is the strongest of the major paper currencies.
Look out it that changes.
I don’t mind Trump renegotiating trade deals. I just think tarrifs are overkill.
Bogus conclusions. Smoot-Hawley wasn’t even law until mid 1930 and the decline started long before that.
A trade policy that doesn’t include tariffs is like a gun without bullets.
“I just think tarrifs are overkill.”
Don’t believe everything you think.
The Germans did Smoot-Hawley x 1000 and became the first nation to recover from the great depression. Italy wasn’t involved in global trade at all and really never was affected by the great depression. A nation like the US who had a huge trade surplus was going to get pounded as other nations went to self-contained economies.
But but Free Traitors tell us tariffs NEVER work.
"What caused the Great Depression?" Please, serious answers ...
Freidman himself said on his lecture series that they let he “American Bank” fail and that was the tipping point. The real cause was monetary meddling and it is about to happen again as soon as we have to pay interest on all the phoney money they printed for Obozo.
And none other then Benny Bernanke insists that Smoot-Hawley was a minor problem, and that the real problem was Federal Reserve mismanagement of the money supply in the aftermath of the stock market price collapse.
As he said to the Reserve bankers, We caused it.
Thus his label of Helicopter Ben because he planned to do quite the opposite should he be confronted with such an event.
Which of course he did, and the result is $20 trillion of debt. But that’s another discussion....