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Thread: President Trump is right about taxing at our water’s edge.

  1. #61
    Quote Originally Posted by Swordsmyth View Post
    Smoot-Hawley was the designated scapegoat for the Federal Reserve's deliberate destruction of the economy, yes starting a trade war while you have a trade surplus was stupid but it was inconsequential compared to the actions of the banksters.

    Blaming Smoot-Hawley for the great depression is spreading bankster propaganda.
    The Federal Reserve did cause the Great Depression by letting the money supply collapse. That is indisputably true. But why did the "banksters" want to destroy themselves? There were mass bank failures. Why did they want to put themselves out of business? Maybe incompetence is the reason and not something more sinister?



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  3. #62
    Quote Originally Posted by Krugminator2 View Post
    The Federal Reserve did cause the Great Depression by letting the money supply collapse. That is indisputably true. But why did the "banksters" want to destroy themselves? There were mass bank failures. Why did they want to put themselves out of business? Maybe incompetence is the reason and not something more sinister?
    The big fish didn't suffer any damage, they ate the small banks for lunch and went on to increase the power of government which they controlled.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  4. #63
    Quote Originally Posted by johnwk View Post
    For America to not put a tariff on imports produced under slave labor conditions is tantamount to subsidizing slave labor.
    Should we tariff or outlaw products produced in socialistic or communistic countries because otherwise we are subsidizing communism? What about monarchies? Theocracies? Countries where they drive on the wrong side of the road?

  5. #64

    Smoot-Hawley myth

    Quote Originally Posted by Ender View Post
    The Smoot-Hawley Tariff Act turned the minor recession into the full blown Great Depression.

    Does that help you understand a little better?

    The statistical documentation does not confirm your opinion.


    The Smoot-Hawley Act did not give us the depression of 1929. The Act became law in the middle of 1930, well after the depression was in progress. When one studies the statistics, Smoot-Hawley had a very small impact on the economy. The cause of the crash was wild speculation on Wall Street and an abundance of cheap paper money. Stop making crap up.

    Aside from that, the use of taxes at our water’s edge are a very useful tool to promote America’s general welfare.

    In regard to promoting America’s common defense and general welfare under our nation’s first revenue raising Act, our founding fathers imposed an across-the-board tax on imports which was higher for imports arriving in foreign owned foreign built vessels, and discounted the tax for imports arriving in American owned American built ships:



    "...a discount of ten percent on all duties imposed by this Act shall be allowed on such goods, wares, and merchandise as shall be imported in vessels built in the United States, and wholly the property of a citizen or citizens thereof."
    SEE: An Act imposing duties on Tonnage July 20, 1789



    This patriotic use of taxing at our water’s edge not only filled our national treasury, but gave American ship builders a hometown advantage and predictably resulted in America's ship building industry to flourish and America’s merchant marine to become the most powerful on the face of the planet.

    Additionally, when a product is produced in China under slave labor wages, and America adds a tariff to the product in the amount which the laborer in China ought to have been paid, it levels the playing field and the America consumer can choose to purchase a well manufactured article produced in America or the inferior similar product produced in China under slave labor conditions.

    The fact is, there are countless international corporate giants who have no allegiance to America or any country and have aligned themselves with the leaderships of oppressive countries to gain access to slave labor in order to increase their profits, and have a competitive edge based on slavery which they use to destroy competitors where a fair market wage is paid. And this is particularly the case with China and the steel industry.


    For America to not put a tariff on imports produced under slave labor conditions is tantamount to subsidizing slave labor. Free trade begins with people being free to negotiate the value of their own labor, which is not the case in China.

    When globalists talk about “free trade”, what they are talking about is a managed trade, managed by them and not our representatives in Congress. And this is the case with the NAFTA under which globalists from participating countries, who represent the interests of international corporate giants and are not elected by the American people, are now regulating America’s trade with Canada and Mexico. See: Establishment of Binational Panels



    JWK


    The unavoidable truth is, our social democrat political leaders’ plan for “free” college tuition will be paid for by confiscating the paychecks of millions of college graduates who worked for and paid their own way through college and are now trying to finance their own economic needs.

    Last edited by johnwk; 03-10-2018 at 07:07 AM.



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  7. #65
    Quote Originally Posted by johnwk View Post
    The statistical documentation does not confirm your opinion.


    The Smoot-Hawley Act did not give us the depression of 1929. The Act became law in the middle of 1930, well after the depression was in progress. When one studies the statistics, Smoot-Hawley had a very small impact on the economy. The cause of the crash was wild speculation on Wall Street and an abundance of cheap paper money. Stop making crap up.

    [/size]
    I suggest you study Harding, who saved the US from a what would have been a great depression by doing the exact opposite of Hoover.

    And stop with the insults & try to have decent dialog. You can do it-
    There is no spoon.

  8. #66
    I just have to read these posts for motivation to donate to RANDPAC. All of these people begging for new taxes, we need more lovers of liberty fighting these lovers of taxation.

  9. #67
    Quote Originally Posted by TheCount View Post
    Should we tariff or outlaw products produced in socialistic or communistic countries because otherwise we are subsidizing communism? What about monarchies? Theocracies? Countries where they drive on the wrong side of the road?
    To answer your question, there are various reasons why a tariff could be justified. One reason would be that the product imported was produced in a situation in which the laborer(s) are not free to negotiate the value of their own labor. Keep in mind, "free trade" begins with a working person be able to negotiate the value of their own labor.


    JWK




    The unavoidable truth is, our social democrat political leaders’ plan for “free” college tuition will be paid for by confiscating the paychecks of millions of college graduates who worked for and paid their own way through college and are now trying to finance their own economic needs.


  10. #68
    Quote Originally Posted by johnwk View Post
    To answer your question, there are various reasons why a tariff could be justified. One reason would be that the product imported was produced in a situation in which the laborer(s) are not free to negotiate the value of their own labor. Keep in mind, "free trade" begins with a working person be able to negotiate the value of their own labor.
    I can see how laborers not being free to negotiate the value of their labor is a bad thing. I fail to see how it has anything at all to do with forcing us to give more money to the regime in Washington, DC, which has absolutely nothing at all to do with the arrangement those laborers have with their employers, nor with our purchasing of the goods they make.

  11. #69

    The Smoot-Hawley myth continued

    Quote Originally Posted by Ender View Post
    I suggest you study Harding, who saved the US from a what would have been a great depression by doing the exact opposite of Hoover.

    And stop with the insults & try to have decent dialog. You can do it-
    Stop changing the goal posts!

    In regard to a dialog, I was absolutely correct when I wrote: "The Smoot-Hawley Act did not give us the depression of 1929. The Act became law in the middle of 1930, well after the depression was in progress. When one studies the statistics, Smoot-Hawley had a very small impact on the economy. The cause of the crash was wild speculation on Wall Street and an abundance of cheap paper money. "


    Those who constantly point to Smoot-Hawley as evidence that taxing at our water's edge is destructive to the general welfare of the United States are either ignorant of the statistical facts, or perhaps are opposed to using tariffs in any situation, including those which may benefit the general welfare of the United States.

    The irrefutable fact is, the use of taxes at our water's edge is a useful tool to advance America's best interests, an example of which I have already documented when such a tax was used to encourage America's ship building industry.


    JWK



    “…a national revenue must be obtained; but the system must be such a one, that, while it secures the object of revenue it shall not be oppressive to our constituents.”___ Madison, during the creation of our Nation’s first revenue raising Act

  12. #70
    Quote Originally Posted by Superfluous Man View Post
    I can see how laborers not being free to negotiate the value of their labor is a bad thing. I fail to see how it has anything at all to do with forcing us to give more money to the regime in Washington, DC, which has absolutely nothing at all to do with the arrangement those laborers have with their employers, nor with our purchasing of the goods they make.
    Go start your own country where no taxes are necessary.



    JWK

  13. #71
    Quote Originally Posted by johnwk View Post
    Go start your own country where no taxes are necessary.
    I already have. But people like you insist on sending thugs from your government to rob me.

  14. #72
    Quote Originally Posted by johnwk View Post
    Stop changing the goal posts!

    In regard to a dialog, I was absolutely correct when I wrote: "The Smoot-Hawley Act did not give us the depression of 1929. The Act became law in the middle of 1930, well after the depression was in progress. When one studies the statistics, Smoot-Hawley had a very small impact on the economy. The cause of the crash was wild speculation on Wall Street and an abundance of cheap paper money. "


    Those who constantly point to Smoot-Hawley as evidence that taxing at our water's edge is destructive to the general welfare of the United States are either ignorant of the statistical facts, or perhaps are opposed to using tariffs in any situation, including those which may benefit the general welfare of the United States.

    The irrefutable fact is, the use of taxes at our water's edge is a useful tool to advance America's best interests, an example of which I have already documented when such a tax was used to encourage America's ship building industry.


    JWK
    You're the one moving the goal posts. Ender didn't say that Smoot Hawley gave us the Great Depression. His said (in a post which you have already quoted in about 6 other posts after that) that it "confirmed" the Great Depression, obviously meaning that the Great Depression was already underway, and Smoot Hawley impeded the recovery that would have otherwise taken place under a more free market.
    Last edited by Superfluous Man; 03-13-2018 at 10:13 AM.



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  16. #73
    Quote Originally Posted by Superfluous Man View Post
    You're the one moving the goal posts. Ender didn't say that Smoot Hawley gave us the Great Depression. His said (in a post which you have already quoted in about 6 other posts after that) said it "confirmed" the Great Depression, obviously meaning that the Great Depression was already underway, and Smoot Hawley impeded the recovery that would have otherwise taken place under a more free market.
    Thank You!

    And it doesn't matter what I say- he'll keep changing them as he continues to scream on the forum.
    There is no spoon.

  17. #74
    Quote Originally Posted by Superfluous Man View Post
    You're the one moving the goal posts. Ender didn't say that Smoot Hawley gave us the Great Depression. His said (in a post which you have already quoted in about 6 other posts after that) that it "confirmed" the Great Depression, obviously meaning that the Great Depression was already underway, and Smoot Hawley impeded the recovery that would have otherwise taken place under a more free market.
    I guess you missed the following post by ender:


    Quote Originally Posted by Ender View Post
    The Smoot-Hawley Tariff Act turned the minor recession into the full blown Great Depression.

    Does that help you understand a little better?




    JWK

  18. #75
    Quote Originally Posted by johnwk View Post
    I guess you missed the following post by ender:








    JWK
    The leftist tag team doesn't care about facts.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  19. #76
    Quote Originally Posted by Ender View Post
    Thank You!

    And it doesn't matter what I say- he'll keep changing them as he continues to scream on the forum.
    I addressed your absurd assertion that the Smoot-Hawley "Tariff Act turned the minor recession into the full blown Great Depression." I wrote:


    I was absolutely correct when I wrote: "The Smoot-Hawley Act did not give us the depression of 1929. The Act became law in the middle of 1930, well after the depression was in progress. When one studies the statistics, Smoot-Hawley had a very small impact on the economy. The cause of the crash was wild speculation on Wall Street and an abundance of cheap paper money. "


    Those who constantly point to Smoot-Hawley as evidence that taxing at our water's edge is destructive to the general welfare of the United States are either ignorant of the statistical facts, or perhaps are opposed to using tariffs in any situation, including those which may benefit the general welfare of the United States.

    The irrefutable fact is, the use of taxes at our water's edge is a useful tool to advance America's best interests, an example of which I have already documented when such a tax was used to encourage America's ship building industry.


    JWK




    American citizens are sick and tired of being made into tax-slaves to finance the economic needs of millions of poverty stricken, poorly educated, low and unskilled aliens who have invaded America borders.


  20. #77
    Quote Originally Posted by Swordsmyth View Post
    The leftist tag team doesn't care about facts.
    I gathered that when Ender, instead of addressing my post, he switched the goal posts and subject by bringing up Harding.


    The two in question appear to be anarchists.


    JWK




    There was a time not too long ago in New York when the able-bodied were ashamed to accept home relief, a program created by Franklin D. Roosevelt in 1931 when he was Governor. Now, New York City and many other major cities are infested with countless government cheese factions, including recent abled bodied immigrants, who not only demand welfare, but use it to buy beer, wine, drugs, sex, and Lotto tickets.


  21. #78
    Quote Originally Posted by johnwk View Post
    I gathered that when Ender, instead of addressing my post, he switched the goal posts and subject by bringing up Harding.


    The two in question appear to be anarchists.


    JWK




    There was a time not too long ago in New York when the able-bodied were ashamed to accept home relief, a program created by Franklin D. Roosevelt in 1931 when he was Governor. Now, New York City and many other major cities are infested with countless government cheese factions, including recent abled bodied immigrants, who not only demand welfare, but use it to buy beer, wine, drugs, sex, and Lotto tickets.

    Showing how Harding saved the country from a big depression by doing the EXACT OPPOSITE of Hoover and the Smoot Hawley Baloney is NOT changing the goal posts- it is showing you historical facts, that unfortunately most do not know about.
    There is no spoon.

  22. #79
    Quote Originally Posted by johnwk View Post
    I guess you missed the following post by ender:








    JWK
    That pretty much says the same thing I said.

  23. #80
    Quote Originally Posted by johnwk View Post

    I was absolutely correct when I wrote: "The Smoot-Hawley Act did not give us the depression of 1929. The Act became law in the middle of 1930, well after the depression was in progress. When one studies the statistics, Smoot-Hawley had a very small impact on the economy. The cause of the crash was wild speculation on Wall Street and an abundance of cheap paper money. "

    Smoot-Hawley exacerbated the Depression but I do agree it wasn't the cause. It was a bad supply side error just like raising income taxes was a error.

    However, wild speculation had little to nothing to do with what made the Depression a Great Depression. It is easy to see why that is the case. There was was wild speculation in the mid 80's and the stock market dropped 20%+ in one day. Where was the Depression that followed? The Nasdaq dropped 80% in 2000-02. Where was the Depression? In 2008, you had wild speculation and you had conditions that were probably worse than 1929, why didn't something as bad as the Great Depression follow?

    There is a very simple answer. The Fed actively provided liquidity after the three crashes I mentioned. In 1930 the Fed let the money supply collapse which made it so people couldn't service debts which led to a deflationary spiral.



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  25. #81
    Quote Originally Posted by Ender View Post
    Showing how Harding saved the country from a big depression by doing the EXACT OPPOSITE of Hoover and the Smoot Hawley Baloney is NOT changing the goal posts- it is showing you historical facts, that unfortunately most do not know about.
    Your nonsense has absolutely nothing to do with deterring the impact which Smoot-Hawley had, and which you asserted " . . . turned the minor recession into the full blown Great Depression."


    All you do is make crap up and then switch the subject when you are called upon to substantiate the crap you post.


    Carry on. No one with common sense buys into your nonsense.




    JWK




    American citizens are sick and tired of being made into tax-slaves to finance the economic needs of millions of poverty stricken, poorly educated, low and unskilled aliens who have invaded America borders.


  26. #82
    Quote Originally Posted by johnwk View Post
    Carry on. No one with common sense buys into your nonsense.
    False.
    https://mises.org/library/review-ped...-douglas-irwin

    Edit: Add Ron Paul to the list of those who buy into Ender's nonsense.
    https://mises.org/wire/ron-paul-case-free-trade
    In 1930, Congress passed the Smoot-Hawley tariff bill, imposing heavy tariffs on imports, with the avowed motive of "protecting" U.S. companies and jobs. Within one year, our 25 major trading partners had retaliated with their own tariffs on American goods. World trade declined sharply, and the depression was made world-wide and longer-lasting.

  27. #83
    Quote Originally Posted by Swordsmyth View Post
    The leftist tag team doesn't care about facts.
    As opposed to the collectivist tag team, running around trying to fight reasoned articulation with guilt-by-association and name calling?

    What are these "facts" of which you speak--your perception of which "undesirables" you associate certain people with? Because you certainly aren't grappling with any actual facts with this post.
    Last edited by acptulsa; 03-14-2018 at 09:25 AM.
    Quote Originally Posted by Swordsmyth View Post
    Ron is wrong...
    Quote Originally Posted by Swordsmyth View Post
    Amash is wrong...

  28. #84
    Quote Originally Posted by johnwk View Post
    Your nonsense has absolutely nothing to do with deterring the impact which Smoot-Hawley had, and which you asserted " . . . turned the minor recession into the full blown Great Depression."


    All you do is make crap up and then switch the subject when you are called upon to substantiate the crap you post.


    Carry on. No one with common sense buys into your nonsense.




    JWK




    American citizens are sick and tired of being made into tax-slaves to finance the economic needs of millions of poverty stricken, poorly educated, low and unskilled aliens who have invaded America borders.


    What the Smoot Hawley Act Can Teach Protectionists Today

    Those Who Don't Learn From Smoot-Hawley Are Doomed to Repeat It


    •••
    BY KIMBERLY AMADEO Updated December 18, 2017
    The Smoot-Hawley Act is the Tariff Act of 1930. It increased 900 import tariffs by an average of 40 to 48 percent. Most economists blame it for worsening the Great Depression. That means it also contributed to the start of World War II.

    In June 1930, Smoot-Hawley raised already-high U.S. tariffs on foreign agricultural imports. The purpose was to support U.S. farmers who had been ravaged by the Dust Bowl.

    Rather than helping, it raised food prices for Americans who were already suffering from the Depression. It also compelled other countries to retaliate with their own tariffs. That forced global trade down by 65 percent.

    Smoot-Hawley showed how dangerous trade protectionism is for the global economy. Since then, world leaders advocate free trade agreements that promote increased trade for all participants.

    History
    America had many characteristics of a traditional economy prior to the Depression. Almost 25 percent of Americans were farmers.

    Between 1915 and 1918, food prices skyrocketed as the world recovered from World War I. High demand for food created speculation in farmland. By the 1920s, farmers had taken on debt to fund growth and pay for the land. But as Europe recovered, food prices abruptly returned to normal. Debt-laden farmers faced bankruptcy.

    Congress wanted to protect American farmers from the now cheap agricultural imports.

    It had proposed other bills to support prices and subsidize food exports, but Calvin Coolidge had vetoed them all. So Congress shifted its strategy. It sought to raise farm tariffs to the same level as tariffs on manufactured goods. Raising tariffs had worked with the Fordney-McCumber Tariff in 1922.

    The 1930 Tariff Act is named after its sponsors. Congressman Willis Hawley from Oregon was the chairman of the House Ways and Means Committee. Senator Reed Smoot wanted to protect the sugar beet business in his home state of Utah.

    As the bill wound its way through Congress, every legislator wanted to add protections for their states' industries. By 1929, the bill proposed tariffs on 20,000 imported goods.

    Economists, business leaders and newspaper editors completely opposed the bill. They knew it would become a barrier to international trade. Other countries would retaliate. The tariffs would also raise import prices.

    Congress debated the bill as the stock market crashed in October 1929. During his presidential campaign, Herbert Hoover argued for more tariff equality. As president, he felt compelled to make good on his promise.

    How It Contributed to the Depression
    The timing of the bill's passage through Congress affected the stock market.

    May 28, 1929. Smoot-Hawley passes the House. Stock prices drop to 191 points.
    June 19. Senate Republicans revise bill. Market rallies, hitting its peak of 216 on September 3.
    October 21. Senate adds tariffs to non-farm imports. Black Thursday stock market crash.
    October 31. Presidential candidate Hoover supports bill. Foreigners start withdrawing capital.
    March 24, 1930. Senate passes the bill. Stocks fall.
    June 17, 1930. Hoover signs the bill into law. Stocks drop to 140 in July.


    Tariffs forced import prices up 45 percent. Millions of Americans had just lost everything in the stock market crash. Overnight, imports became unaffordable luxuries for all but the wealthy. It made it harder for those who lost their jobs to afford anything but domestic goods.

    Canada, Europe and other nations swiftly retaliated by raising tariffs on U.S. exports. As a result, exports fell from $7 billion in 1929 to $2.5 billion in 1932. Farm exports fell to a third of their 1929 level by 1933.

    Global trade plummeted 65 percent. That made it difficult for American manufacturers to remain in business.

    For example, tariffs on cheap imported wool rags rose by 140 percent. Five hundred U.S. plants employed 60,000 workers to use the rags to make cheap clothing. U.S. auto manufacturers suffered from tariffs on 800 products they used. At the time, exports comprised 5 percent of gross domestic product.

    Smoot-Hawley's Lessons for Today
    President Donald Trump advocates a return to trade protectionism to increase U.S. jobs. He immediately withdrew from the Trans-Pacific Partnership, the biggest trade agreement since NAFTA. He threatened to renegotiate NAFTA if Mexico refused to pay for a $20 billion border wall. He also warned Mexico and China he would raise tariffs by 30 percent to lower the U.S. trade deficit with those countries.

    Protectionism would have an even more devastating effect in 2017 than it did in 1929. That's because exports now comprise 13 percent of U.S. GDP. Most of that is oil, commercial aircraft and automobiles. These industries suffer a great deal from a trade war. (Sources: "Smoot and Hawley, the Ghosts of Tariffs Past, Haunt the White House," The Guardian, January 29, 2017. "The Smoot-Hawley Tariff and the Great Depression," CATO Institute, May 7, 2016.)

    https://www.thebalance.com/smoot-haw...-today-4136667
    Last edited by Ender; 03-14-2018 at 11:13 AM.
    There is no spoon.

  29. #85
    Quote Originally Posted by acptulsa View Post
    As opposed to the collectivist tag team, running around trying to fight reasoned articulation with guilt-by-association and name calling?

    What are these "facts" of which you speak--your perception of which "undesirables" you associate certain people with? Because you certainly aren't grappling with any actual facts with this post.

    Isn't it strange how it's always the ones who most loudly declaim others as "leftists," "communist collaborators" or "virtue signaling shills for globalist tyrants" who passionately support the most collectivist, socialistic policies? Just a simple observation.
    Chris

    "Government ... does not exist of necessity, but rather by virtue of a tragic, almost comical combination of klutzy, opportunistic terrorism against sitting ducks whom it pretends to shelter, plus our childish phobia of responsibility, praying to be exempted from the hard reality of life on life's terms." Wolf DeVoon

    "...Make America Great Again. I'm interested in making American FREE again. Then the greatness will come automatically."Ron Paul

  30. #86
    Smoot-Hawley contributed to the early loss of confidence on Wall Street and signaled U.S. isolationism. By raising the average tariff by some 20 percent, it also prompted retaliation from foreign governments, and many overseas banks began to fail. (Because the legislation set both specific and ad valorem tariff rates [i.e., rates based on the value of the product], determining the precise percentage increase in tariff levels is difficult and a subject of debate among economists.) Within two years some two dozen countries adopted similar “beggar-thy-neighbour” duties, making worse an already beleaguered world economy and reducing global trade. U.S. imports from and exports to Europe fell by some two-thirds between 1929 and 1932, while overall global trade declined by similar levels in the four years that the legislation was in effect.

    In 1934 President Franklin D. Roosevelt signed the Reciprocal Trade Agreements Act, reducing tariff levels and promoting trade liberalization and cooperation with foreign governments. Some observers have argued that by deepening the Great Depression the tariff may have contributed to the rise of political extremism, enabling leaders such as Adolf Hitler to improve their political strength and gain power.

    The Editors of Encyclopaedia Britannica
    There is no spoon.

  31. #87
    Quote Originally Posted by CCTelander View Post
    Isn't it strange how it's always the ones who most loudly declaim others as "leftists," "communist collaborators" or "virtue signaling shills for globalist tyrants" who passionately support the most collectivist, socialistic policies? Just a simple observation.
    TRUTH.
    There is no spoon.

  32. #88
    MAY 7, 2016 3:27PM
    The Smoot-Hawley Tariff and the Great Depression
    By ALAN REYNOLDS SHARE
    [Reprinted with permission from Alan Reynolds, “What Do We Know about the Great Crash?” National Review, November 9, 1979]

    Many scholars have long agreed that the Smoot-Hawley tariff had disastrous economic effects, but most of them have felt that it could not have caused the stock market collapse of October 1929, since the tariff was not signed into law until the following June. Today we know that market participants do not wait for a major law to pass, but instead try to anticipate whether or not it will pass and what its effects will be.

    Consider the following sequence of events:

    The Smoot-Hawley tariff passes the House on May 28, 1929. Stock prices in New York (1926=100) drop from 196 in March to 191 in June. On June 19, Republicans on the Senate Finance Committee meet to rewrite the bill. Hoping for improvement, the market rallies, but industrial production ( 1967 = 100) peaks in July, and dips very slightly through September. Stocks rise to 216 by September, hit*ting their peak on the third of the month. The full Senate Finance Committee goes to work on the tariff the following day, moving it to the Senate floor later in the month.

    On October 21, the Senate rejects, 64 to 10, a move to limit tariff increases to agriculture. “A weakening of the Democratic-Progressive Coalition was evidenced on October 23,” notes the Commercial and Financial Chronicle. In this first test vote, 16 members of the anti-tariff coalition switch sides and vote to double the tariff on calcium carbide from Canada. Stocks collapse in the last hour of trading; the following morning is christened Black Thursday. On October 28, a delegation of senators appeals to President Hoover to help push a tariff bill through quickly (which he does on the 31st). The Chronicle headlines news about broker loans on the same day: “Recall of Foreign Money Grows Heavier-All Europe Withdrawing Capital.” The following day is stalemate. Stocks begin to rally after November 14, rising steadily from 145 in November to 171 in April. Industrial production stops falling and hovers around the December level through March.

    On March 24, 1930, the Senate passes the Smoot-Hawley tariff, 222 to 153. Debate now centers on whether or not President Hoover will veto. Still, stocks drop 11 points, to 160, in May. On June 17, 1930, despite the vigorous protests of a thousand economists, Hoover signs the bill into law, noting that it fulfills a campaign promise he had made, and stocks drop to 140 in July.

    The Commercial and Financial Chronicle dated June 21, 1930 led off with the major events of the week –”the signing by the President of the Smoot-Hawley tariff bill” and “a renewed violent collapse of the stock market.” Without ever quite linking the two events, the Chronicle did observe that “if the foreigner cannot sell his goods to us he cannot obtain the wherewithal to buy our goods.” Other sections noted that international stocks were particularly hard hit, that 35 nations had vigorously protested the tariff and threatened retaliation, and that Canada and other nations had already hiked their own tariffs “in view of the likelihood of such legislation in the United States.”

    It may be hard to realize how international trade could have so much impact on the domestic economy. For years, in explaining income movements in the Thirties, attention has instead been focused on federal spending and deficits. Yet on the face of it, trade was far more important: exports fell from $7 billion in 1929 to $2.5 billion in 1932; federal spending was only $2.6 billion in 1929 and $3.2 billion in 1932. In 1929, exports accounted for nearly seven percent of our national production, and a much larger share of the production of goods (as opposed to services). Trade also accounted for 15 to 17 percent of farm income in 1926-29, and farm exports were slashed to a third of their 1929 level by 1933.

    Even these numbers, however, understate the significance of trade. Critical portions of the U.S. production process can be crippled by a high tax on imported materials. Other key industries are heavily dependent on exports. Disruptions in trade patterns then ripple throughout the economy. A tariff on linseed oil hurt the U.S. paint industry, a tariff on tungsten hurt steel, a tariff on casein hurt paper, a tariff on mica hurt electrical equipment, and so on. Over eight hundred things used in making automobiles were taxed by Smoot-Hawley. There were five hundred U.S. plants employing sixty thousand people to make cheap clothing out of imported wool rags; the tariff on wool rags rose by 140 per cent.

    Foreign countries were flattened by higher U.S. tariffs on things like olive oil (Italy), sugar and cigars (Cuba), silk (Japan), wheat and butter (Canada). The impoverishment of foreign producers reduced their purchases of, say, U.S. cotton, thus bankrupting both farmers and the farmers’ banks.

    It should be obvious that an effective limit on imports also reduces exports. Without the dollars obtained by selling here, foreign countries could not afford to buy our goods (or to repay their debts). From 1929 to 1932, U.S. imports from Germany fell by $181 million; U.S. exports to Germany fell by $277 million. Americans also had little use for foreign currency, since foreign goods were subject to prohibitive tariffs, so the dollar was artificially costly in terms of other currencies. That too depressed our exports, which turned out to be particularly devastating to farmers-the group that was supposed to benefit from the tariffs.

    There had already been some damage done (particularly to farm exports) by the tariff legislation of 1921 and 1922. As Princeton historian Arthur Link points out, however, “its only important changes were increased protection for aluminum, chemical products, and agricultural commodities.” Smoot-Hawley broadened the list to include 3,218 items (including sauerkraut), and 887 tariffs were sharply in*creased, on everything from Brazil nuts to strychnine. Clocks had faced a tariff of 45 percent; Smoot-Hawley raised that to 55 percent, plus up to $4.50 apiece. Tariffs on corn, butter, and unimproved wools were roughly doubled. A shrinking list of tariff-free goods no longer included “junk,” though leeches and skeletons were still exempt.

    A crucial consideration is that many tariffs were a specific amount of money per unit rather than a percentage of the price. As prices of many traded goods fell by half (or more) from 1929 to 1933, the effective rate of tariff doubled. If imported felt hats sold for $5, including a tariff of $2.50, a fall in price to $2.50 would confiscate the entire revenue from selling in the U.S. market. Without the dollars from selling in the U.S. market, the foreign hat manufacturer couldn’t buy anything here.

    A number of seemingly separate explanations of the Great Crash fit together quite well once the importance of anticipated tariffs is acknowledged. Charles Kindleberger, in Manias, Panics, and Crashes, describes some structural collapse in the financial system: “Lending on import, for example, seems to have come to a complete stop.” But refusal to finance imports makes perfect sense if lenders were correctly anticipating steep tariffs ahead. There were early cancellations of import orders in 1929 that likewise reflected rational expectations, and import prices were among the first to fall.

    A lot of stock was being bought on margin-that is, the buyer put up 25 to 50 per cent of the price and his broker went to the bank to borrow enough to cover the rest temporarily. The chairman of the Federal Reserve Board had warned the banks to curb these broker or “call” loans as early as February 1929, and the Fed nearly doubled the discount rate from 1927 to August 1929, partly in the hope of curbing stock market “speculation.” Most of the broker loans in 1928-29 were not from the banks themselves, how- ever, but were instead re-lent to brokers on behalf of domestic business and foreign banks, businesses, and individuals.

    The massive withdrawal of foreign lenders from the broker-loan market in early October probably reflected the correctly anticipated decline in the value of the collateral for those loans (stocks), and the fear among foreign capitalists that they would have to liquidate such assets to stay solvent in a world of high tariffs. The process contributed to the crash as both cause and effect. There was a scramble for liquidity by both the lenders and the owners of stocks. As stock prices fell, brokers required that their customers put up more money to meet the margin requirement. If stockholders couldn’t come up with the cash, brokers could sell the securities to raise the money. Either way, owners and brokers were pressed to unload stocks, thus perhaps accelerating (but not causing) the stock market decline.

    The market suffered continual policy assaults after 1930. In early April of 1932, the Commercial and Financial Chronicle reports “the market fell into a complete collapse . . . owing to the approval by the House of Representatives of an increased tax on stock sales.” The Dow bottomed on July 8, when (as the Chronicle of the following day reported) there had been some good news –the Tariff Commission had trimmed 18 tariffs, and a House subcommittee was looking into ways to cut taxes by eliminating duplication with states. On Tuesday, September 19, candidate Roosevelt called the tariff “the road to ruin” and pledged to negotiate reductions in tariffs as soon as he took office. The following Saturday, the Chronicle was astounded that the “market again sharply reversed its course, and on Wednesday prices suddenly surged upward in a most sensational fashion.”

    https://www.cato.org/blog/smoot-hawl...eat-depression
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  34. #89
    The Senate Passes the Smoot-Hawley Tariff
    June 13, 1930

    A memorable scene from the movie Ferris Bueller’s Day Off has a high school teacher vainly struggling to get some response from his dazed students. He says: “In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the... Anyone? Anyone?... the Great Depression, passed the... Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act. Which, anyone? Raised or lowered?... raised tariffs, in an effort to collect more revenue for the federal government. Did it work? Anyone?... Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression.” This amusing scene managed to omit the U.S. Senate, but it was on June 13, 1930, that the Senate passed the Smoot-Hawley Tariff, among the most catastrophic acts in congressional history.

    How did this happen? After Herbert Hoover became president in 1929, he called Congress into special session to deal with a troubled farm economy that had fallen into depression during the otherwise prosperous 1920s. President Hoover proposed a “limited revision” of the tariff on agricultural imports to raise rates and boost sagging farm prices. He then made the tactical error of trying to distance himself from the tariff debates. Republican protectionists, who controlled the House Ways and Means Committee chaired by Representative Willis Hawley, put the farm issue aside and took the opportunity to raise industrial tariffs to new highs. Hoover’s failure to object encouraged other economic interests to lobby the Senate Finance Committee, chaired by Utah senator Reed Smoot, for further tariff hikes. In protest, low-tariff Democrats and progressive Republicans slowed the tariff debate over a tedious 15-month process of congressional bargaining.

    A thousand economists signed a petition, drafted by a Chicago economist, and future U.S. senator, Paul Douglas, that implored the president to veto the tariff. “Poor Hoover wanted to take our advice,” Paul Douglas mused, but he could not bring himself to break with his own party’s congressional leadership. Ignoring the experts, Hoover signed the tariff on June 17, 1930.

    As the economists predicted, the high tariff proved to be a disaster. Even before its enactment, U.S. trading partners began retaliating by raising their tariff rates, which froze international trade. The tariff fight solidified Hoover’s ties with Republican regulars, but it shredded his standing among his party’s progressives. Most of the progressive Republican senators who had campaigned for Hoover in 1928 wound up endorsing Franklin D. Roosevelt for president in the next election. Nor did the tariff sit well with the voters. In 1932 they turned the majority in both houses over to the Democrats, by large margins. The voters also made clear their disdain for the Smoot-Hawley tariff by booting both Reed Smoot and Willis Hawley out of office that year.

    https://www.senate.gov/artandhistory...ley_Tariff.htm
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  35. #90
    The return of Republicans to national power in 1920 led to a resumption of protectionist legislation. By now a power in the Senate, Smoot was a close economic adviser to Presidents Harding, Coolidge, and Hoover. In 1923 the Fordney-McCumber Tariff raised rates again, including those on Cuban sugar, a direct competitor with Utah's beet sugar industry. With Smoot's ascension to the chairmanship of the Finance Committee even higher rates were assured. In 1930 President Hoover signed the Smoot-Hawley Tariff which boosted average duties on imports to 53 percent, the highest in American history. While Smoot saw this legislation as the culmination of his protectionist career, most economists then and since have assailed the tariff's disastrous effect on world trade at a time when the domestic economy of the U.S. was already suffering. The higher rates, about one-third greater than previous duties, made it more difficult for foreign nations to purchase American goods and pay off their war debts. In retaliation, some twenty-five nations raised their duties, making American goods more expensive. By the time the Democrats took power in 1932 and lowered the tariffs under the Reciprocal Trade Agreements Act in 1934 the world economy was in a tailspin.

    http://historytogo.utah.gov/utah_cha...ariff1930.html
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