American Trade Policy: 1923-1995

By Edward S. Kaplan | Go to book overview

1
Background to the Hawley-Smoot Tariff

On September 21, 1922, President Warren Harding signed the Fordney-McCumber Tariff Act into law. He praised it as one of the greatest tariff acts in the history of the United States and declared that it would contribute to the already-growing prosperity in the nation. In truth, this bill set the highest tariff rates known up to that time, and unlike the president, most economic historians criticized the bill, claiming that it would do more harm than good for both the national and international economy. 1 The purpose of this chapter is to discuss the effects of the Fordney-McCumber Tariff on the economy and the events leading up to the Hawley-Smoot Tariff.


THE FORDNEY-McCUMBER TARIFF AND THE AGRICULTURAL DEPRESSION

Though the 1920s were prosperous for the country as a whole, the American farmer suffered, for the most part, through this decade. In fact, the depression for the American farmer began almost ten years prior to that for everyone else. During World War I agriculture enjoyed high prices as the American farmer fed Europe. After 1910 farmers had increased total acreage harvested by almost 15 percent, and the war encouraged the continuation of production. The recession of 1920-1921 marked the end of prosperity for the American farmer because Europe had recovered sufficiently from the ravages of war and no longer required large quantities of American agricultural products. The surplus of farm goods could not be absorbed in the national market, and agricultural prices dropped rapidly in the United States. Gross agricultural income fell from $17.7 billion in 1919 to $10.5 billion in 1921. From June to July 1920 the index of farm prices dropped ten points, and by August it fell another thirty points. As prices fell, the burden of taxation and debt grew. The number of farm foreclosures per thousand told the harrowing story of the farmer's plight. From 1913 to 1920 it averaged only 3.2 per thousand farms, increasing to 10.7 per thousand from 1921 to 1925 and 17.0 per

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American Trade Policy: 1923-1995
Table of contents

Table of contents

  • Recent Titles in Contributions in Economics and Economic History ii
  • Title Page iii
  • Contents vii
  • Preface ix
  • 1 - Background to the Hawley-Smoot Tariff 1
  • Notes 18
  • 2 - The Hawley-Smoot Tariff 38
  • 3 - The Building of a Liberal Trade Policy 43
  • Notes 60
  • 4 - The Trade Expansion Act and the Kennedy Round 65
  • Notes 86
  • 5 - The Trade Reform Act and the Tokyo Round 89
  • Notes 108
  • 6 - Fair Trade and the Uruguay Round 113
  • Notes 132
  • 7 - The North American Free Trade Agreement 137
  • Notes 156
  • 8 - A Return to Unilateralism 159
  • Notes 167
  • Bibliography 169
  • Index 173
  • About the Author 177
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