The Role of Tariffs in the Great Depression

Introduction

• Setting the Scene: The Great Depression's impact on American families and economy.
• Main Question: Did tariffs cause the Great Depression, and can they do it again?

The Great Depression Overview

• Economic Collapse: Stock market crash, bank failures, and massive unemployment.
• Impact on Families: Income plummets, savings wiped out, and increased abandonment.

The Forgotten Depression (1920-1921)

• Economic Downturn: Stock market drop, corporate profits fall, and high unemployment.
• Government Response: Spending cuts and interest rate hikes led to industrial collapse.
• Recovery: Federal spending cuts laid groundwork for the Roaring 20s.

Tariffs: A Historical Perspective

• Early Protectionism: US historical oscillation between free trade and high tariffs.
• Underwood-Simmons Tariff (1913): Move towards free trade, disrupted by WWI.
• Post-WWI Economic Changes: Emergency Tariff Act (1921) and Fordney-McCumber Tariff (1922).

Fordney-McCumber Tariff Act (1922)

• Increased Tariffs: Aimed to protect domestic industries, but hindered European exports.
• Global Economic Impact: Strain on global economic recovery post-WWI.

The Great Depression and Tariffs

• Roaring 20s Growth: Rapid economic growth and increased stock market investments.
• Stock Market Crash of 1929: Beginning of economic collapse.

Smoot-Hawley Tariff Act (1930)

• Legislative Intent: Originally to help farmers, but expanded to 20,000 goods.
• Global Retaliation: Other nations imposed tariffs, reducing US exports significantly.
• Economic Impact: Major hit to global trade, exacerbating economic decline.

Debate on Tariffs' Role in the Great Depression

• Tariffs as a Catalyst: Some argue tariffs worsened the economic situation.
• Economic Debate: Varying views on whether tariffs caused the depression or worsened it.

Roosevelt's Response

• New Deal Initiatives: Focused on reversing tariff damage and restoring trade.
• Reciprocal Trade Agreements Act (1934): Negotiated tariff reductions to facilitate trade.

WWII and Economic Recovery

• War-Time Economic Boost: Increased demand and government spending stimulated recovery.
• Post-War Economic Boom: Expansion of global trade and investment.

Current Relevance

• Modern Tariffs: Concerns of history repeating itself with current US trade policies.
• Economic Interconnectedness: Today's complex global supply chains could exacerbate tariff impacts.

Conclusion

• Tariffs and Economic Stability: History shows tariffs can lead to economic downturns.
• Future Implications: Need to learn from past to avoid repeating tariff-driven economic crises.