Smoot–Hawley Tariff Act in the context of "Great Depression"

⭐ In the context of the Great Depression, the Smoot-Hawley Tariff Act is considered to have had what primary effect?

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⭐ Core Definition: Smoot–Hawley Tariff Act

The Tariff Act of 1930, also known as the Smoot–Hawley Tariff Act, was a protectionist trade measure signed into law in the United States by President Herbert Hoover on June 17, 1930. Named after its chief congressional sponsors, Senator Reed Smoot and Representative Willis C. Hawley, the act raised tariffs on over 20,000 imported goods in an effort to shield American industries from foreign competition during the onset of the Great Depression, which had started in October 1929.

Hoover signed the bill against the advice of many senior economists, yielding to pressure from his party and business leaders. Intended to bolster domestic employment and manufacturing, the tariffs instead deepened the Depression because the U.S.'s trading partners retaliated with tariffs of their own, leading to U.S. exports and global trade plummeting. Economists and historians widely regard the act as a policy misstep, and it remains a cautionary example of protectionist policy in modern economic debates. It was followed by more liberal trade agreements, such as the Reciprocal Trade Agreements Act of 1934.

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👉 Smoot–Hawley Tariff Act in the context of Great Depression

The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and business failures around the world. The economic contagion began in 1929 in the United States, the largest economy in the world, with the devastating Wall Street crash of 1929 often considered the beginning of the Depression. Among the countries with the most unemployed were the U.S., the United Kingdom, and Germany.

The Depression was preceded by a period of industrial growth and social development known as the "Roaring Twenties". Much of the profit generated by the boom was invested in speculation, such as on the stock market, contributing to growing wealth inequality. Banks were subject to minimal regulation, resulting in loose lending and widespread debt. By 1929, declining spending had led to reductions in manufacturing output and rising unemployment. Share values continued to rise until the October 1929 crash, after which the slide continued until July 1932, accompanied by a loss of confidence in the financial system. By 1933, the U.S. unemployment rate had risen to 25%, about one-third of farmers had lost their land, and 9,000 of its 25,000 banks had gone out of business. President Herbert Hoover was unwilling to intervene heavily in the economy, and in 1930 he signed the Smoot–Hawley Tariff Act, which worsened the Depression. In the 1932 presidential election, Hoover was defeated by Franklin D. Roosevelt, who from 1933 pursued a set of expansive New Deal programs in order to provide relief and create jobs. In Germany, which depended heavily on U.S. loans, the crisis caused unemployment to rise to nearly 30% and fueled political extremism, paving the way for Adolf Hitler's Nazi Party to rise to power in 1933.

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Smoot–Hawley Tariff Act in the context of Reed Smoot

Reed Smoot (January 10, 1862 – February 9, 1941) was an American politician, businessman, and apostle of the Church of Jesus Christ of Latter-day Saints (LDS Church). A Republican who was first elected to the U.S. Senate by the Utah State Legislature in 1902, he served from 1903 to 1933. Smoot is primarily remembered as the co-sponsor of the 1930 Smoot–Hawley Tariff Act, which increased almost 900 American import duties. Criticized at the time as having "intensified nationalism all over the world" by Thomas Lamont of J.P. Morgan & Co., Smoot–Hawley is widely regarded as one of the catalysts for the worsening Great Depression.

Smoot was a prominent leader of the LDS Church, called to serve as an apostle and member of the Quorum of the Twelve in 1900. His role in the church, together with rumors of a secret church policy continuing polygamy and a secret oath against the United States, led to a four-year controversy after he was elected to the Senate. A Senate committee investigated his eligibility to serve, known as the Reed Smoot hearings, and recommended against him, but the full Senate voted to seat him.

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Smoot–Hawley Tariff Act in the context of Willis C. Hawley

Willis Chatman Hawley (May 5, 1864 – July 24, 1941) was an American politician and educator in the state of Oregon. A native of the state, he served as the president of Willamette University in Salem, Oregon, where he earned his undergraduate and law degrees before entering politics. A Republican, he served 13 terms as a member of the United States House of Representatives from Oregon, from 1907 to 1933. He is best known as a lead sponsor of the Smoot–Hawley Tariff Act in 1930.

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Smoot–Hawley Tariff Act in the context of Reciprocal Tariff Act

The Reciprocal Tariff Act (enacted June 12, 1934, ch. 474, 48 Stat. 943, 19 U.S.C. § 1351) provided for the negotiation of tariff agreements between the United States and separate nations, particularly Latin American countries. The Act served as an institutional reform intended to authorize the president to negotiate with foreign nations to reduce tariffs in return for reciprocal reductions in tariffs in the United States up to 50%.

It resulted in a reduction of duties. This was the policy of the low tariff Democrats in response to the high tariff Republican program which produced the Smoot–Hawley tariff of 1930 that raised rates and sharply reduced international trade. The Reciprocal Tariff Act was promoted heavily by Secretary of State Cordell Hull.

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LINKED FROM (PARENTS)
← Great Depression ← Reed Smoot ← Willis C. Hawley ← Reciprocal Tariff Act
LINKS TO (CHILDREN)
Protectionism → United States → Herbert Hoover → Reed Smoot → Willis C. Hawley → Tariff → Great Depression → Reciprocal Tariff Act →