Antecedents of Present Commercial Policy, 1922-1934
Present United States commercial policy had its origins in the period from 1922 to 1934. During these years the principles upon which current policy is based were formulated and adopted. These principles are non- discrimination, opposition to quantitative restrictions, and negotiated tariff reductions. This chapter is concerned with this policy background and deals with (1) tariff policy in the 1920's and early 1930's; (2) adoption of the unconditional most-favored-nation (MFN) policy; (3) policy in regard to quantitative restrictions; and (4) the reversal of earlier tariff policy.
Maintenance of a high tariff dominated United States commercial policy in the 1920's and early 1930's. This found its expression in the Fordney-McCumber Tariff Act of 1922 and the Hawley-Smoot Act of 1930, which marked a return to the upward movement in the level of the United States tariff since the Civil War.
Before 1860 the United States tariff was relatively moderate. Rates were increased during the Civil War, and they continued to rise during the latter part of the nineteenth and the early part of the twentieth centuries. The only significant deviation from this long-term upward movement was the Underwood-Simmons Act of 1913, in which the Wilson Administration attempted to reverse the direction of United States policy and return to a tariff for revenue only, the traditional position of the Democratic party. World War I and the consequent disruption of trade, however, made this legislation virtually inoperative. The war itself, by reducing or stopping completely the importation of many articles, had a protective effect for many industries that was greater than any previous tariff legislation.
After World War I there was less economic justification for high tariffs than at any time in the nation's history.1 Almost overnight the____________________