Talk:Smoot–Hawley Tariff Act

Untitled

There is something seriously wrong with this page. It looks to me that it has been vandalized and needs the attention of an editor. Older versions look more correct to me but the present version has someone I never heard of "signing the bill into law". —Preceding unsigned comment added by Rcallen7 (talk • contribs) 22:49, 2 September 2009 (UTC)

page move,

per precedence for laws, the name should be the name of the law, as in Tariff Act of 1930 instead of the Smoot-Hawley, which is a "commonly known as" not official name, after all this is an encyclopaedia.(Lihaas (talk) 15:21, 17 October 2010 (UTC)).

Paragraph needs work

From Economic Effects: removed the paragraph until responsible parties fix references:

There is not universal agreement about the effect of the tariff. According to the U.S. Statistical Abstract (when?) , the effective tariff rate was 13.5% in 1929 and 19.8% in 1933 with 63% of all imports being duty-free. From 1821-1900, the U.S. averaged 29.7% effective tariff rates and peaked in 1830 at 57.3% with only 8% of all imports being duty-free, dwarfing the Smoot-Hawley rate. In addition, imports during 1929 were only 4.2% of the United States' GNP and exports were only 5.0%. For monetarist authors (oh yeah? all of them?) who consider the Great Depression an effect of the monetary policy of the Federal Reserve, the Smoot-Hawley's effect on the entire U.S. economy was small compared to monetary policy. By 1937, the effective tariff rate was reduced to 15.6% when the reaction of 1937–1938 occurred, demonstrating no statistical correlation between this economic downturn and tariff levels. Senator Robert L. Owen testified at the hearings on HR 7230, the bill to make the Federal Reserve banks a national property, that "In 1937, when the Federal Reserve Board called upon the banks to raise their reserves to twice what they had been before, there was a contraction of credit of two billion dollars. [credible citation required, previous citation was misleading] —Preceding unsigned comment added by 99.119.67.32 (talk) 00:24, 11 December 2010 (UTC)

Removed POV paragraph

I've removed this paragraph:

"Most economists at the time and since agree that it had a negative effect on the economy. After the 1929 stock market crash, unemployment never reached double digits in any of the 12 months following that event, peaking at 9 percent, then drifted downwards until it reached 6.3 percent in June 1930. Then the federal government made its first major intervention in the economy with the Smoot-Hawley tariff. After that intervention the downward movement of unemployment rates reversed and shot up far beyond the level it had reached in the wake of the stock market crash hitting 11.6 percent in November 1930."

References

Several issues here. It talks about the opinion of "most economists," but then goes on to make a more general polemic against any form of dirigism. It may be true that most economists agree that this particular tariff at this particular level at this particular time was a bad idea, but this doesn't mean that they all oppose *any* form of government dirigism ("intervention") in the economy, or for that matter any protective tariff at any level at any time. Second, the stats about unemployment may be true, but there are quite a number of factors which affect that. Third, the work cited is a highly POV work. At any rate this all adds up to a paragraph which is highly POV and largely misleading. -Helvetica (talk) 04:16, 12 December 2011 (UTC)

Labeling

According to Rules of origin, the Tariff Act required country-of-origin labeling for many goods. This article doesn't mention it. Either this article should, or rules of origin should be corrected. (My recollection is that there was already labeling rules for at least some imports, and that the rules changed around this time to require "Made in $COUNTRY" rather than the previously acceptable labeling without the words "Made in".) 121a0012 (talk) 20:20, 28 January 2012 (UTC)

Export versus import re GDP paragraph makes no sense

The 1st sentence makes sense. The 2nd sentence might possibly make sense if it had some more context.

U.S. imports decreased 66% from US$4.4 billion (1929) to US$1.5 billion (1933), and exports decreased 61% from US$5.4 billion to US$2.1 billion, both decreases much more than the 50% decrease of the GDP. Thus exports minus imports which is the GDP formula declined from 1 billion to 600 million while GDP was 58.9 billion, a trivial effect on GDP of about 2/3 of 1%. — Preceding unsigned comment added by 216.80.124.218 (talk) 12:55, 28 May 2012 (UTC)

Eckes' view

IP, here's the talk page section. You need to show it's not a fringe view point, basically by showing that others have expressed this concern and supported this viewpoint. You also need to substantially rework the phrasing. Saying that "...scholars ignore..." when it's just one person is a massive POV. Ravensfire (talk) 01:43, 29 August 2013 (UTC)

Machinehead61's view

You allow other undocumented view points in this article yet censor mine. For example: "Both Reed Smoot and Willis Hawley were defeated for reelection in 1932, the controversial tariff being a major factor in their respective losses."

This is absolutely false. As Eckes states, both Smoot and Hawley's defeat in their reelection bids were due to nontariff issues as revealed in local newspapers in Oregon and Utah as quoted in Eckes book.

Need more examples of undocumented disinformation in this article that Wiki editors don't challenge? I have more.

Machinehead61 (talk) 02:12, 29 August 2013 (UTC)

Tariff Levels - Irwin's view Agrees with Eckes'. This is NOT a "fringe" view - it is documented.

“The legislated increase in import duties in 1930 was only partly responsible for the higher tariff during this period. Severe deflation in import prices also contributed to the rise of the average tariff on dutiable imports in 1931and 1932. How did this happen? There are two types of duties applied to imports: ad valorem duties ( a percentage of the good's value, such as 15 percent) and specific duties ( a fixed dollar amount, such as 42 cents per bushel). If import prices fall, the ad valorem rate stays the same, but the value of a specific duty in terms of the percentage of the good's value increases. For example, if imports of shirts are charged $5 per unit and the average price is $20, the tax rate is 25 percent. If the price of shirts falls to $10 and the import duty remains at $5 per unit, the tariff rate, or ad valorem equivalent, has doubled from 25 percent to 50 percent.

At the time of Smoot-Hawley, about two-thirds of dutiable imports in the U.S. tariff code were subject to specific duties. Import prices plunged in the early 1930s, falling 18 percent in 1930, 22 percent in 1931, and another 22 percent in 1932. Because of falling prices, the average tariff on dutiable imports crept up to 53 percent in 1931 and up to 59 percent in 1932. This deflation-induced increase in the tariff was unrelated to the Smoot-Hawley legislation: it began in 1929 and was driven by changes in monetary policy, and therefore would have occurred whether or not the bill had passed.

Looking at the whole period, the combined impact of Smoot-Hawley and deflation increased the average tariff on dutiable imports from 40.1 percent in 1929 to 59.1 percent in 1932 – an increase of 47 percent. In effect, the Smoot-Hawley legislation raised the average tariff by 16 percent and deflation raised the average tariff by another 30 percent. Consequently, about one-third of the increase in the average tariff during this period was because of the Smoot-Hawley legislation and two-thirds because of deflation. Clearly, not all of the blame for the higher tariff in the early 1930s can be blamed on Senator Smoot and Congressman Hawley.”

Douglas A. Irwin Peddling Protectionism: Smoot-Hawley and the Great Depression ISBN 978-691-15032-1 Princeton University Press, 2011 p. 106-108

If you would please note, Mr. Irwin is no fan of Smoot-Hawley. He concludes (as I do ) that Smoot-Hawley was a bad idea but he agrees with Eckes whom he even referes to in his book, that the high levels of 1932 were mostly due to deflation. The U.S. Congress did not increase the Smoot-Hawley rates in 1932. If you wish to remove any reference to "scholars overlook an important factor" which is a direct quote from Eckes book ( my entire original edit was a direct quote from Eckes ) please do. I am not here to stir the pot - I am here to set the historical record straight. If you review the other sources that state the historically high rate in 1932, you will note that none of them refere to the import price deflation. I have several economic text books that commit this omission.

Shall I rewrite my edit or will you simply remove it again?Machinehead61 (talk) 13:09, 14 September 2013 (UTC)

Please read over WP:FRINGE. You've now got 2 people with this view. Based on what's you've got, it's still a fringe, minority view and warrants minimal mention at best, see WP:UNDUE. Ravensfire (talk) 14:42, 14 September 2013 (UTC)

First, Thank you for taking the time to review this.

"Wikipedia summarizes significant opinions, with representation in proportion to their prominence. A Wikipedia article should not make a fringe theory appear more notable than it is. Claims must be based upon independent reliable sources. A theory that is not broadly supported by scholarship in its field must not be given undue weight in an article about a mainstream idea,[1] and reliable sources must be cited that affirm the relationship of the marginal idea to the mainstream idea in a serious and substantial manner."

I can also add the U.S. Tariff Commission that also supports this. In fact Eckes quoted them. This is not "fringe theory" - this is documented trade history as supported by a U.S. government agency. If the U.S. Tariff Commission qualifies as "fringe theory" then you need to define "fringe theory". I might add that "significant opinions" have been historically incorrect (classical economics, neoclassical economics and phlogiston). The vast majority of economic scholarship has refused to examine the reason why the tariff levels went so high because the vast majority of economic scholarship has been indoctrinated in free trade ideology and they simply dig deep enough to find what they need to support their view. The vast majority of economic scholarship was indoctrinated in the neoclassical economics of Alfred Marshall until Keynes came along and it took years of exposure to get Keynes even mentioned in text books. A topic as old as Smoot-Hawley barely gets a paragraph in modern economic text books and that is simply regurgitation of what J. K. Galbraith called "conventional wisdom".

If you will tolerate a "minimal mention" - how much text would that be?Machinehead61 (talk) 16:44, 14 September 2013 (UTC)

Economists (over 1000 of them publicly) and diplomats at the time repeatedly warned there would be disastrous unanticipated consequences of the tariff--and there certainly were. Smoot and Hawley repeatedly denied there would be any ill effects--I suggest that politicians who ignore warnings do indeed get blamed for the disasters. Rjensen (talk) 17:36, 14 September 2013 (UTC)

First, the prediction of "disaster" does not appear anywhere in the statement of the 1,000+ economists. They merely regurgitated the standard pro free trade teachings found in nearly all economic text books of the time. If you like, I can give you the full text of their letter to Congress.

I see that a bias exists here and why the article has tolerated undocumented false claims for months while my documented history was removed literally within minutes.

http://www.voxeu.org/article/understanding-great-trade-collapse-2009

"At the height of the 2008–09 financial crisis, global trade fell by far more than global output – a pattern that defied past experience and became known as the Great Trade Collapse. This column uses a new model for analysis to argue that the collapse was caused mainly by the crash in global demand. . . . in 2009, real world output decreased by 0.7%, whereas real trade flows collapsed by a much larger proportion, 11%."

The crash and global depression would have occured with or without tariffs as has happened throughout history.

"During the nineteenth century financial crises followed by depressed economic conditions occurred in England in 1815, 1825, 1836, 1847, 1857, 1866, 1873, 1882, 1890, and 1900.

In the United States crises were a little less frequent, perhaps because of the presence of an extensive land frontier, but they were still numerous: 1819, 1837, 1854, 1857, 1873, 1883, 1893.

Furthermore, the world economy as a whole experienced three "great depressions" during the "hungry forties", the 1870s, and the 1890s."

Daniel R. Fusfeld The Age Of The Economist, 1982 p. 75Machinehead61 (talk) 13:28, 15 September 2013 (UTC)

Eckes makes the point that he is opposing the overwhelming % of published studies, history & economics textbooks, and presidential advisors. That makes him a small minority. "fringe" has a flat-earth connotation that is not deserved here, but the Wiki rules are about small minority views. Rjensen (talk) 15:25, 15 September 2013 (UTC)

“In emphasizing the 59.1 percent figure, scholars overlook an important factor. First, Congress did not enact such a high average tariff in 1930." - Alfred E. Eckes, Jr., Opening America's Market, The University of North Carolina Press, 1995 p. 107

Eckes, Irwin and the U.S. Tariff Commission were not "opposing", they were adding information that the "overwhelming % of published studies, history & economics textbooks, and presidential advisors" conveniently left out.

Eckes, Irwin, and the U.S. Tariff Commission never claimed that the dutiable rate in 1932 wasn't the second highest in U.S. history, they pointed out HOW it got that high - something that I don't see in the "overwhelming % of published studies, history & economics textbooks, and presidential advisors".

Name one single study among the "overwhelming % of published studies, history & economics textbooks, and presidential advisors" that ever mention HOW the tariff percent rate climbed so high in 1932.

There is absolutely no disagreement here, it is all documented statistics that were left out.Machinehead61 (talk) 16:52, 15 September 2013 (UTC)

let's not make Eckes look foolish. NOBODY raised the tariffs???? Actually Hawley, Smoot etc were highly expert on tariff issues & knew exactly how the system worked. If they wanted a lid on % rate they would have put one on. The point is that this way they could pretend the rate was lower when actually it was higher. Rjensen (talk) 22:43, 16 September 2013 (UTC)

Are you claiming that Smoot-Halwey knew in 1930 that two years later the global prices would deflate by a level never seen before in history??? Specific duties were applied on those items because historically importers would artificially lower the value if their products had ad valorem rates applied thus reducing the duty. This is called "dumping" - selling a product for less than it sells for in the home market - a Japanese exmple was the machine tool industry in the late 1970s. They could offset the loss by under the table subsidies that were funneled through the government (MITI) from other sources.Machinehead61 (talk) 00:45, 17 September 2013 (UTC)

S&H knew that prices had started to fall and could continue to fall, and that ANY fall would raise the % rate. They could have capped the % rise but did not. Actually they WANTED a higher rate to keep foreigners from flooding the market. Falling prices were very common in 1880s and 1890s (Smoot = born 1862 was a businessman in 1890s; Hawley b 1864 was a professor of economics in 1890s) Rjensen (talk) 00:43, 17 September 2013 (UTC)

You are making an unfounded claim. What is your source that Smoot-Hawley - or anyone - knew that prices would fall that drastically by 1932?Machinehead61 (talk) 00:49, 17 September 2013 (UTC)

S&H knew it COULD happen because it DID happen before (1890s) when they were close observers. How far would prices fall nobody could predict, but the key point is they made no provision to stop the resulting rise in % duty because they WANTED a higher %. Rjensen (talk) 00:54, 17 September 2013 (UTC)

The combination of specific and ad valorem duties has been the practice of the U.S. government since the Tariff Act of 1789, not the creation of Smoot-Hawley in 1930. In addition, the 1,000+ economists in their letter to Congress made no mention of the posssible deflation effect on the specific rates. If the 1,000+ economists didn't see it coming nor concern themselves with it, how did Smoot-Halwey see it?Machinehead61 (talk) 01:42, 17 September 2013 (UTC)

Politicians who make policy against the advice of most experts get the blame when disaster strikes. They were explicitly warned of retaliation which indeed happened. They did not ask about or care about the consequences of their decisions. Rjensen (talk) 02:55, 17 September 2013 (UTC)

The disaster would have happened with or without the tariff as has happened throughout history. In fact the vast majority of economists did not see the crash coming.

GOLD EXCHANGE STANDARD

"Some will no doubt be surprised that in 1961, practically alone in the world, I had the audacity to call attention to the dangers inherent in the international monetary system as it existed then. My fears at the time were based essentially on the growing similarities between the international monetary developments of the years 1958-1961 and those of the latter part of the 1926-1929 period. There was the same accumulation of Anglo-Saxon currencies in the monetary reserves of European countries, in particular France, and the same inflation in creditor countries. In both periods the monetary system was characterized by the widespread application of a specific, adventitious procedure that Anglo-Saxon countries termed the gold-exchange standard. . .

Under this system, central banks are authorized to include in their reserves not only gold and claims denominated in the national currency, but also foreign exchange. The latter, although entered as assets of the central bank which owns it, naturally remains deposited in the country of origin.

The use of such a mechanism has the considerable drawback of damping the effects of international capital movements in the financial markets that they affect. For example, funds flowing out of the United States into a country that applies the gold-exchange standard increase by a corresponding amount the money supply in the receiving market, without reducing in any way the money supply in their market of origin. The bank of issue to which they accrue, and which enters them in its reserves, leaves them on deposit in the New York market. There they can, as previously, provide backing for the granting of credit.

Thus the gold-exchange standard considerably reduces the sensitivity of spontaneous reactions that tend to limit or correct gold movements. For this reason, in the past the gold-exchange standard has been a source of serious monetary disturbances. It was probably one cause for the long duration of the substantial credit inflation that preceded the 1929 crisis in the United States. The first action of an international conference that was resolved seriously to deal with monetary problems should be to eliminate it.

As a result of this large influx of sterling and dollars from over-seas to the countries that had recently recovered, the Continental banks of issue did not ask for payment in gold, as they would have been required to do, at least for the most part of those resources, under the gold standard. Instead, they left the pounds and dollars in deposit at their place of origin, where they were usually loaned to national borrowers....

The unending feedback of the dollars and pounds received by the European countries to the overseas countries from which they had come reduced the international monetary system to a mere child's game in which one party had agreed to return the loser's stake after each game of marbles....

The reason for this was simple. During this period the banks of issue of the creditor countries, while creating, as a counterpart to the dollars they acquired through the settlement of the American deficits, the national currency they remitted to the holders of claims on the United States, had reinvested about two-thirds of these same dollars in the American market. In doing so between 1951 and 1961 the banks of issue had increased by about $13 billion their foreign holdings in dollars. Thus, the United States did not have to settle that part of their balance-of-payments deficit with other countries. Everything took place on the monetary plane just as if the deficit had not existed. In this way, the gold-exchange standard brought about an immense revolution and produced the secret of a deficit without tears. It allowed the countries in possession of a currency benefiting from international prestige to give without taking, to lend without borrowing, and to acquire without paying.""

Jacques Rueff

The Monetary Sin of the West, 1972 p. 15-23

The main impact of the gold-exchange standard was, through the aforementioned duplication phenomenon, to dissociate the evolution jf purchasing power from the requirements of economic expansion and to bring it under the unpredictable influences of inter-national capital shifts.

Thus, as a result of capital inflow to Germany, the assets of the Reichsbank increased from 747 million reichsmarks to 1,198 million reichsmarks between 1923 and 1924, and the foreign ex-change holdings of the Bank of France rose from 252 million francs to 32,845 million francs from 1927 to 1928.

These huge processes, creating purchasing power without the relevant base, were the one factor that, notwithstanding the offsetting variations that they tended to generate, merrily brought about the worldwide boom of the years 1928-1929 and caused not a general price increase but a spectacular flareup in the prices of stocks and shares in financial markets.

It was obvious, however, that the duplication of purchasing power could not go on indefinitely. In 1931 a collapse occurred, bringing down the foreign-exchange holdings of the Reichsbank from 764 to 120 million reichsmarks between late 1930 and late 1931, those of the Bank of France from 26 to 21 billion francs, and those of Austria from 801 to 140 million shillings.

The collapse of this two-tiered credit structure, to which the gold-exchange standard had given rise, caused a fantastic contraction in purchasing power. This marked the onset of the most formidable deflationary crisis that the world had ever known. Access to foreign markets was becoming impossible; agricultural produce, unsalable. Unemployment was causing havoc in all sectors of the population and was spreading despair and ruin everywhere.

Between 1929 and 1931, the price index fell gradually from 137 to 105 in the United States (base 1928= 100), from 124 to 92 in France, from 127 to 89 in Britain, and from 137 to in in Germany.

Jacques Rueff

The Monetary Sin of the West, 1972 p. 53-54

No one could have known this was coming because the gold exchange standard had not existed before. The spectacular global inflation followed by the equally spectacular global deflation had never happened to this degree. Please note how Mr. Rueff doesn't even mention tariffs in this analysis for they effected a trivial percent of the world economy.Machinehead61 (talk) 00:39, 19 September 2013 (UTC)

Dr. Calzolari's comment on this article

Dr. Calzolari has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

excellent article, nothing to add!

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Calzolari has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Calzolari, Giacomo & Scarpa, Carlo, 2007. "Footloose Monopolies: Regulating a "National Champion"," CEPR Discussion Papers 6413, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 15:36, 24 August 2016 (UTC)

Quote of Irwin in leading paragraph seems to be a misquote

The quote attributed to Irwin in the leading paragraph suggesting the tariffs did not impact the economy seems contrafactual to the article that is quoted. The elipses seems to do a large amount of water-carrying to push the fringe notion the tariffs did not damage trade. 73.170.156.225 (talk) 19:26, 7 October 2016 (UTC)

Essay from a Marine Le Pen fan

This does not fit.

• JM Keynes did not promote national self-sufficiency: "Having sought to understand and to do full justice to the ideas which underlie the urge felt by so many countries to-day towards greater national self-sufficiency, we have to consider with care whether in practice we are not too easily discarding much of value which the nineteenth century achieved. In those countries where the advocates of national self sufficiency have attained power, it appears to my judgment that, without exception, many foolish things are being done. Mussolini, perhaps, is acquiring wisdom teeth. But Russia to-day exhibits the worst example which the world, perhaps, has ever seen, of administrative incompetence and of the sacrifice of almost everything that makes life worth living to wooden heads. Germany is at the mercy of unchained irresponsibles--though it is too soon to judge her. The Irish Free State, a unit much too small for a high degree of national self-sufficiency except at great economic cost, is discussing plans which might, if they were carried out, be ruinous.".
• A big majority of American Economic Historians agree that protectionism worsend the Great Depression [1]. A statement to the opposite has to be presented carefully especially as a minority position and without creating straw man arguments. --Pass3456 (talk) 18:34, 29 May 2017 (UTC)

Pass3456 I saw that you added a POV tag to the Economic_effects section, almost a year ago. The section was presenting an extremely self-contradictory view on the subject. The Whaples ref was convincing in establishing the NPOV position, so made a rather drastic edit cutting the WP:UNDUE contradictory content, and I removed the tag. I thought you should take a look. Alsee (talk) 11:08, 3 April 2018 (UTC)

Economic Analysis Section

As the guy who had his changes reverted just now I think I agree with having the section totally removed byThenightaway. The section seemed out of line with the claims of the rest of the article hiding under the guide of an 'economic analysis'. I'm no expert tho. The question of course being how much did the tariff really do vs correlation. 164.47.245.32 (talk) 20:19, 20 November 2024 (UTC)

"The act received attention" doesn't seem at all encyclopedic.

1. You can find any subject receiving attention by pointing to an article about it (there's no way to refute it by citing an article that *doesn't* draw attention to it.)

2. And #1 is particularly poignant because "Receiving attention" is highly nebulous. What specifically does it mean given that every Presidential Election has candidates providing position papers. THIS by itself draws attention to each entry. We need a better criteria for encyclopedic entries.

𝓦𝓲𝓴𝓲𝓹𝓮𝓭𝓲𝓪𝓘𝓼𝓝𝓸𝓽𝓟𝓮𝓮𝓻𝓡𝓮𝓿𝓲𝓮𝔀𝓮𝓭-𝓟𝓮𝓮𝓻𝓡𝓮𝓿𝓲𝓮𝔀𝓮𝓭𝓜𝓮𝓪𝓷𝓼𝓡𝓮𝓿𝓲𝓮𝔀𝓮𝓭𝓑𝔂𝓟𝓮𝓮𝓻𝓼𝓞𝓷𝓵𝔂 (talk) 17:45, 27 November 2024 (UTC)