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Quotation of the Day…

… is from page 240 of the 2015 Fourth Edition of Douglas Irwin’s vital volume, Free Trade Under Fire:

During the 1928 election campaign, prior to the Great Depression, President Herbert Hoover called for increased tariffs on agricultural imports to help U.S. farmers.  Once Congress started considering higher duties, however, things began to spin out of control.  Logrolling coalitions pushed tariff rates higher and higher, resulting in the infamous Smoot-Hawley tariff of 1930.  Warning of the adverse economic consequences of the high tariffs, more than one thousand American economists signed a petition urging President Hoover not to sign the bill.  The warning was not heeded, and the Smoot-Hawley tariff helped push up the average tariff on dutiable imports to nearly 50 percent.  While economic historians do not believe that the Smoot-Hawley tariff caused the Depression, the high tariffs contributed to the downward spiral of trade as other countries retaliated against the United States.  The U.S. action made it easier for other countries to follow suit, thereby contributing to the worldwide rise in trade barriers.

DBx: Even if, contrary to fact, economic conditions are often such that protective tariffs can yield outcomes reasonably described as ‘on net beneficial,’ political conditions are never such as to make even a single occurrence of this outcome plausible.  The fact is that, while trade restrictions might be said to sometimes “work in theory” to improve the overall economic welfare of the people of the restricting country, there is no good reason to suppose that trade restrictions will ever work this way in practice.

For a much more complete history and analysis of the Smoot-Hawley tariff, see Doug Irwin’s excellent 2011 volume, Peddling Protectionism – which I reviewed here.

(Pictured above, in April 1929, are Rep. Willis Hawley [R-OR] and, to his left, Sen. Reed Smoot [R-UT].)