Peddling Protectionism: Smoot-Hawley and the Great Depression
Douglas A. Irwin
Princeton, N.J.: Princeton University Press, 2011, 244 pp.
Let me preface this review with a confession: As an advocate of free trade, I love to link the 1930 Smoot-Hawley tariff bill with the Great Depression at every opportunity. More than 80 years after its passage, the bill still evokes negative feelings about protectionism.
After reading Douglas Irwin's Peddling Protectionism: Smoot-Hawley and the Great Depression, I can see I need to curb my enthusiasm. Irwin does not defend the bill, far from it. He concludes that it failed to achieve its objectives and that it did, in an incremental way, make the Great Depression worse. But in the careful language of the professional economist and historian that he is, Irwin documents in rich and often colorful detail that the most infamous trade bill in American history had less impact than either its advocates or its opponents understood at the time or understand today. Even so, the story of Smoot-Hawley offers valuable lessons for today as our politicians seek to craft U.S. trade policy in the 21st century.
Irwin is superbly qualified to write the definitive history of what was officially the Trade Act of 1930. A professor of economics at Dartmouth College, he has authored Against the Tide: An Intellectual History of Free Trade (1996), and Free Trade under Fire (3rd ed., 2009).
Peddling Protectionism is a gem of a book, both concise and thorough. It offers telling and frequently amusing details and sound economic analysis, yet it is readable and accessible for the noneconomist. It contains one simple formula and dozens of helpful and illuminating charts, cartoons, and photos. The author tackles the subject in four chapters: on the domestic politics of Smoot-Hawley, on its economic impact, on foreign reaction to it, and finally on its aftermath and legacy.
Many misunderstand the origins of the law. It was not a response to an economic downturn or to lobbying by U.S. industry. It was first proposed in 1928 as an election-year plan by Republicans to appease farmers, who were suffering through years of low commodity prices despite the otherwise booming economy.
In a perennial lesson for modern-day lawmakers, the process quickly became a special-interest feeding frenzy. American manufacturers soon joined farmers to plead for tariff protection no matter how dominant their domestic market share. Vote trading and vote buying were rampant. One of the chief ringleaders was Senator Joseph Grundy (R-Pa.), former president of his state's Manufacturers' Association. As Irwin coolly observes, "Without apology or embarrassment, Grundy implied that any organization that made campaign contributions was entitled to get its money back in the form of a higher tariff on their products" (p. 64).
Throughout 199.9 and into the spring of 1930, the bill moved first through the House Ways and Means Committee, chaired by Representative Willis Hawley (R-Ore.), and then through the Senate Finance Committee, chaired by Senator Reed Smoot (R-Utah). The Finance Committee heard from more than 1,000 witnesses, resulting in 8,618 pages of testimony published in 18 volumes. The full Senate alone cast 257 roll call votes on different tariffs, sometimes readjusting the same tariff multiple times. Senator Smoot even targeted the importation of books deemed to be obscene, such as Lady Chatterley's Lover, which resulted in the newspaper headline "Smoot Smites Smut."
The final bill, signed by President Hoover in June 1930, was more than 200 pages and set specific rates, almost all of them far higher than before, for more than 3,300 tariffs. The bill's final passage brought, not cheers, but sighs of relief and resignation from exhausted lawmakers. What emerged was one of the ugliest, most unwieldy pieces of legislation in American history.
As contradictory as it sounds, Smoot-Hawley caused a steep hike in tariff rates with but a modest impact on the U. …