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The Smoot-Hawley Tarrif and the Great Depression
fee.org ^ | 02/29/2012 | Thomas Phalan, Deema Yazigi, Thomas Rustici

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 America’s 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.


TOPICS: Business/Economy; News/Current Events
KEYWORDS: freetraitor; greatdepression; hawleysmoot
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I thought this was a well thought out explanation of the role of tarrifs and their role in the Great Depression. It looks to cover most, if not all the bases, including monetary policy and debt deflation.
1 posted on 12/23/2016 5:08:47 PM PST by Crucial
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To: Crucial

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.

Hugh.


2 posted on 12/23/2016 5:11:22 PM PST by cba123 ( Toi la nguoi My. Toi bay gio o Viet Nam.)
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To: Crucial
This is pure crap. Trade was only 4% of GNP in the 1930's. If all trade ceased it couldn't have had a major impact on the GNP and the GD. What a bunch of revisionist economics. Globalist propaganda at its worst.
3 posted on 12/23/2016 5:19:18 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: cba123

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.


4 posted on 12/23/2016 5:23:10 PM PST by henkster
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To: Crucial

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.


5 posted on 12/23/2016 5:23:43 PM PST by marktwain
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To: Crucial
But the impact of trade was miniscule when compared to the size of the overall economic contraction. Government expenditures remained essentially constant, but private consumption and investment plummeted. Of the $131 billion in lost economic output over the five-year period, only about $0.7 billion seems attributable to trade. This is shown as the last entry in the last row of the table. In either absolute or relative terms, the trade portion of the economic contraction of the Great Depression appears to be of little import.

Read more: Smoot-Hawley and the Great Depression

6 posted on 12/23/2016 5:23:48 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: Crucial

OK, who first heard of the Smoot-Hawley Act by watching Ferris Bueller’s Day Off?


7 posted on 12/23/2016 5:25:54 PM PST by SamAdams76
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To: Crucial

Note the time of my post—it is when someone of above-average reading-speed would indicate that they read the piece.


8 posted on 12/23/2016 5:26:33 PM PST by 1rudeboy
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To: SamAdams76

9 posted on 12/23/2016 5:28:00 PM PST by dfwgator
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To: SamAdams76


10 posted on 12/23/2016 5:28:10 PM PST by SamAdams76
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To: Crucial
I'm just a guy who was looking to protect my meager assets back when Carter was President and interest rates were 13% or more. (My first mortgage was 13.5%!) I understand the argument about tariffs and some part of me would like some poor Chinese guy to give me a large flat-screen TV. (And it's not part of my point here, but is it SUSTAINABLE for the Chinese to keep gifting us our consumer goods?)

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.

ML/NJ

11 posted on 12/23/2016 5:28:36 PM PST by ml/nj
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To: central_va

I don’t mind Trump renegotiating trade deals. I just think tarrifs are overkill.


12 posted on 12/23/2016 5:31:51 PM PST by Crucial
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To: Crucial

Bogus conclusions. Smoot-Hawley wasn’t even law until mid 1930 and the decline started long before that.


13 posted on 12/23/2016 5:34:20 PM PST by CodeToad (If it weren't for physics and law enforcement, I'd be unstoppable!)
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To: Crucial

A trade policy that doesn’t include tariffs is like a gun without bullets.


14 posted on 12/23/2016 5:34:22 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: Crucial

“I just think tarrifs are overkill.”

Don’t believe everything you think.


15 posted on 12/23/2016 5:35:08 PM PST by CodeToad (If it weren't for physics and law enforcement, I'd be unstoppable!)
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To: Crucial

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.


16 posted on 12/23/2016 5:41:37 PM PST by Perchant
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To: Perchant

But but Free Traitors™ tell us tariffs NEVER work.


17 posted on 12/23/2016 5:44:25 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: Crucial
I'm going to play uneducated, economic ignoramus -- i.e., liberal.

"What caused the Great Depression?" Please, serious answers ...

18 posted on 12/23/2016 5:49:00 PM PST by IronJack
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To: Crucial

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.


19 posted on 12/23/2016 5:49:38 PM PST by itsahoot (Three words I don't want to hear, Comprehensive Immigration Reform.)
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To: central_va

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....


20 posted on 12/23/2016 5:56:10 PM PST by Regulator
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