History Daily: The Smoot-Hawley Tariff Act
Release Date: June 17, 2025
Host: Lindsey Graham
Introduction
In the episode titled "The Smoot-Hawley Tariff Act," host Lindsey Graham delves deep into one of the most consequential pieces of legislation in American history and its profound impact on the global economy. This detailed exploration uncovers the intricate political maneuvers, economic theories, and unintended consequences that shaped the course of the Great Depression.
The Pre-Crash Economy
The Presidency of Herbert Hoover
Herbert Hoover, elected President of the United States in 1929, inherited an economy that seemed robust. Under his administration, the "Hoover Bull Market" saw unprecedented stock market growth, with investors from all walks of life pouring their savings into Wall Street and even borrowing to buy more stocks. Lindsey Graham sets the scene:
"In the months following Hoover's inauguration, the US Economy does indeed seem unstoppable. The stock market surges in what people call the Hoover bull Market." [03:12]
The Fordney-McCumber Tariff
Five years prior, the Fordney-McCumber Tariff had already raised import duties to protect American industries. Despite international appeals for trade liberalization, the U.S. continued its isolationist and protectionist stance, laying the groundwork for future economic turbulence.
The Stock Market Crash of 1929
Events Leading to Black Tuesday
October 29, 1929, known as Black Tuesday, marked a catastrophic collapse of the stock market. Lindsey Graham narrates the chaotic atmosphere witnessed by reporter Jonathan Leonard:
"The numbers are collapsing faster than anyone can comprehend... This is not just another bad day. This is something else entirely. This is a collapse." [00:00]
Over 16 million shares were sold, resulting in a loss of approximately $14 billion in market value. This crash shattered public confidence, setting the stage for the Great Depression.
Immediate Aftermath
Hoover, confident in the economy's resilience, believed the market would self-correct. However, his optimism proved misplaced as the economic downturn deepened, leading to widespread unemployment and financial instability.
Hoover's Response: The Smoot-Hawley Tariff Act
Political Pressures and Decision-Making
Faced with escalating economic despair, Hoover found himself under immense political pressure to act decisively. Republican Representatives Willis Hawley and Senator Reed Smoot proposed a bill to raise tariffs on imported goods, aiming to protect American jobs and industries.
"So Hoover decides to move ahead. What began as an attempt to help struggling farmers will become one of the most consequential acts of his presidency." [11:40]
Despite personal reservations and opposition from economists and business leaders like Henry Ford, Hoover signed the Smoot-Hawley Tariff Act into law on June 17, 1930. The act increased U.S. tariffs from an average of 40% to nearly 60% on over 20,000 imported goods.
Content and Implications of the Act
Initially intended to aid struggling sectors, the Smoot-Hawley Tariff quickly ballooned due to lobbying from various industries seeking their own protections. The legislation, far from being a targeted economic aid, became a broad protectionist measure with severe international repercussions.
International Reaction and Global Impact
Internationally, the Smoot-Hawley Tariff Act ignited a global trade war. Nations retaliated by imposing their own tariffs, effectively stalling international trade. Countries such as Canada, Cuba, Mexico, Italy, Spain, Switzerland, Argentina, and Australia responded swiftly:
"International reaction is swift. One after another, nations raise their own trade barriers." [11:40]
The tit-for-tat restrictions led to a significant decline in U.S. exports, exacerbating the economic downturn both domestically and globally.
The Great Depression Intensifies
Domestic Effects
The repercussions of the Smoot-Hawley Tariff Act plunged the United States deeper into the Great Depression. American farmers and manufacturers lost critical foreign markets, leading to increased layoffs and soaring unemployment rates. The economic strain was further compounded by severe droughts and dust storms in the Great Plains, transforming fertile lands into wastelands and giving rise to Hoovervilles—shantytowns named derisively after President Hoover.
"Through it all, President Hoover clings to his belief in limited government... But as bread lines grow and shanty towns swell, that philosophy begins to ring hollow." [16:44]
Rise of Hoovervilles
The term "Hoovervilles" became synonymous with the widespread poverty and homelessness caused by the economic collapse, symbolizing public frustration with Hoover's policies and perceived inaction.
The Political Shift: From Hoover to Roosevelt
The 1932 Election
As the economic situation deteriorated, Hoover's popularity plummeted. The Republican Party fragmented over responses to the crisis, and Franklin D. Roosevelt emerged as a charismatic challenger advocating for bold new policies.
"Where president Hoover is cautious, Roosevelt is daring. Hoover speaks of balanced budgets and market corrections. While Roosevelt promises a new deal for immediate relief." [16:44]
Roosevelt’s New Deal and Policy Reversal
Roosevelt's victory in the 1932 election marked a decisive shift in U.S. economic policy. Upon taking office, Roosevelt swiftly overturned the Smoot-Hawley Tariff Act with the Reciprocal Trade Agreements Act, enabling the president to negotiate trade agreements directly with other nations.
"President Roosevelt believes he can now chart a new course. The legislation he just signed effectively repeals the Smoot-Hawley Tariff Act." [18:25]
This move aimed to restore international trade and economic stability through cooperation rather than isolationism, laying the foundation for the New Deal and the eventual recovery of the U.S. economy.
Conclusion
The Smoot-Hawley Tariff Act stands as a stark lesson in economic policy and international relations. Intended to protect American industries during a time of crisis, it inadvertently deepened the Great Depression and triggered a global trade war. Lindsey Graham's comprehensive narrative underscores the complexities of governmental decision-making and the far-reaching consequences of protectionist policies. As history unfolded, the act not only shaped the trajectory of the American economy but also influenced global economic strategies, highlighting the delicate balance between national interests and international cooperation.
History Daily is produced by Airship and Noiser, hosted by Lindsey Graham. For more insightful episodes on pivotal moments in history, subscribe and stay informed about the events that have shaped our world.