Aftermath: Difference between revisions
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:As talks over the bill continued, the United States economy began to slow down. By the fourth quarter, there were signs | :As talks over the bill continued, the United States economy began to slow down. By the fourth quarter, there were signs which showed that the economy was having serious issues. Then, in October of 1929, the Stock Market crashed. | ||
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:The effect of the Hawley-Smoot Tariff has been widely discussed. Protectionists Alfred Eckes and Pat Buchanan, argue that the crash happened in 1929, before the actual signing of the Hawley-Smoot Tariff into law, in 1930. In fact, the National Bureau of Economic Research discovered that the initial economic decline of the Great Depression began in August 1929, well in advance of the Stock Market crash or the signing of Hawley-Smoot into law [[HSref|( | :The effect of the Hawley-Smoot Tariff has been widely discussed. Protectionists Alfred Eckes and Pat Buchanan, argue that the crash happened in 1929, before the actual signing of the Hawley-Smoot Tariff into law, in 1930. In fact, the National Bureau of Economic Research discovered that the initial economic decline of the Great Depression began in August 1929, well in advance of the Stock Market crash or the signing of Hawley-Smoot into law [[HSref|(33)]]. | ||
: | :Other economists believe that the Hawley-Smoot Tariff was directly responsible for the crash. Economist Alan Reynolds demonstrated in 'The National Review' in 1979 that actions which favored the defeat of the bill correlate with positive performance in the Stock Market, while actions favoring passage of the tariff bill correlate quite well with declines in the stock market, culminating with the Stock Market Crash of 1929 [[HSref|(34)]]. Steven Forbes pointed out that when it looked like the tariff bill was sidetracked in late 1929, the markets began to revive [[HSref|(35)]]. | ||
:On May 5, 1930, 1028 American economists wrote a letter to Congress attacking the bill, predicting dire consequences if the bill were passed. They were correct in this position, and many contemporary economists agree that Hawley-Smoot in fact hurt the economy and deepened the Depression. One of the major ways it deepened the Depression was due to retalitory measures by the United States' trading partners. By 1931, 61 countries had raised their import restrictions as retalitory actions to the Hawley-Smoot Bill [[HSref|(36)]]. In an article written in December 1997 in the Journal of Economic History, Judith McDonald, Patrick O’Brien and Colleen Callahan argue that tariffs were raised directly in response to Hawley-Smoot [[HSref|(37)]]. This lead to a drastic decline in international trade. United States imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932. Between 1929 and 1934, world trade declined by 66%, thanks in part to these new import restrictions [[HSref|(38)]]. | |||
:Many economists have written pieces discussing the Hawley-Smoot Tariff's impact on the economy, forming two sides of the debate. | :Many economists have written pieces discussing the Hawley-Smoot Tariff's impact on the economy, forming two sides of the debate. | ||
:One side says that the impact of the tariff on the economy was negligible and possibly even expansionary | :One side says that the impact of the tariff on the economy was negligible and possibly even expansionary | ||
:*Mario Crucini, in an article in the American Economic Review written in June of 1994, agrees with Eichengreen, saying, "the Hawley-Smoot Tariff Act of 1930 did not have the massive deflationary implications that are widely attributed to it [[HSref|( | :*Barry Eichengreen, writing in the Research in Economic History in 1989, argued, "the impact of [Hawley-Smoot] on the rest of the world and feedbacks to the United States, the direct effect of the tariff on the U.S. economy is likely to have been expansionary [[(HSref|(39)]]." | ||
:*Mario Crucini, in an article in the American Economic Review written in June of 1994, agrees with Eichengreen, saying, "the Hawley-Smoot Tariff Act of 1930 did not have the massive deflationary implications that are widely attributed to it [[HSref|(40)]]." | |||
:The other side of the debate says that Hawley-Smoot caused serious harm to the economy | :The other side of the debate says that Hawley-Smoot caused serious harm to the economy | ||
:* | :*Douglas Irwin, writing in the Review of Economics and Statistics in May 1998, argues that, "...because tariff increases were specific monetary amounts, deflation had the effect of increasing their real effect by 30% ... Hawley-Smoot responsible for at least 40% of decline in imports after 1930 [[HSref|(41)]]." | ||
:*Interestingly, Mario Crucini switched sides of the debate in 1996 in an article written in the Journal of Monetary Economics. Crucini, writing with James Kahn, argued that, "the impact of [Hawley-Smoot] was magnified by its effects on capital goods and imports of business inputs." Crucini argues that Hawley-Smoot generated a sharp decline in world trade and the United States economy. | |||
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{{HawleySmoot}} | |||
Latest revision as of 17:21, 27 April 2006
- As talks over the bill continued, the United States economy began to slow down. By the fourth quarter, there were signs which showed that the economy was having serious issues. Then, in October of 1929, the Stock Market crashed.
- The effect of the Hawley-Smoot Tariff has been widely discussed. Protectionists Alfred Eckes and Pat Buchanan, argue that the crash happened in 1929, before the actual signing of the Hawley-Smoot Tariff into law, in 1930. In fact, the National Bureau of Economic Research discovered that the initial economic decline of the Great Depression began in August 1929, well in advance of the Stock Market crash or the signing of Hawley-Smoot into law (33).
- Other economists believe that the Hawley-Smoot Tariff was directly responsible for the crash. Economist Alan Reynolds demonstrated in 'The National Review' in 1979 that actions which favored the defeat of the bill correlate with positive performance in the Stock Market, while actions favoring passage of the tariff bill correlate quite well with declines in the stock market, culminating with the Stock Market Crash of 1929 (34). Steven Forbes pointed out that when it looked like the tariff bill was sidetracked in late 1929, the markets began to revive (35).
- On May 5, 1930, 1028 American economists wrote a letter to Congress attacking the bill, predicting dire consequences if the bill were passed. They were correct in this position, and many contemporary economists agree that Hawley-Smoot in fact hurt the economy and deepened the Depression. One of the major ways it deepened the Depression was due to retalitory measures by the United States' trading partners. By 1931, 61 countries had raised their import restrictions as retalitory actions to the Hawley-Smoot Bill (36). In an article written in December 1997 in the Journal of Economic History, Judith McDonald, Patrick O’Brien and Colleen Callahan argue that tariffs were raised directly in response to Hawley-Smoot (37). This lead to a drastic decline in international trade. United States imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932. Between 1929 and 1934, world trade declined by 66%, thanks in part to these new import restrictions (38).
- Many economists have written pieces discussing the Hawley-Smoot Tariff's impact on the economy, forming two sides of the debate.
- One side says that the impact of the tariff on the economy was negligible and possibly even expansionary
- Barry Eichengreen, writing in the Research in Economic History in 1989, argued, "the impact of [Hawley-Smoot] on the rest of the world and feedbacks to the United States, the direct effect of the tariff on the U.S. economy is likely to have been expansionary (39)."
- Mario Crucini, in an article in the American Economic Review written in June of 1994, agrees with Eichengreen, saying, "the Hawley-Smoot Tariff Act of 1930 did not have the massive deflationary implications that are widely attributed to it (40)."
- The other side of the debate says that Hawley-Smoot caused serious harm to the economy
- Douglas Irwin, writing in the Review of Economics and Statistics in May 1998, argues that, "...because tariff increases were specific monetary amounts, deflation had the effect of increasing their real effect by 30% ... Hawley-Smoot responsible for at least 40% of decline in imports after 1930 (41)."
- Interestingly, Mario Crucini switched sides of the debate in 1996 in an article written in the Journal of Monetary Economics. Crucini, writing with James Kahn, argued that, "the impact of [Hawley-Smoot] was magnified by its effects on capital goods and imports of business inputs." Crucini argues that Hawley-Smoot generated a sharp decline in world trade and the United States economy.
