Plain English with Derek Thompson - Plain History: The Smoot-Hawley Tariff and the Great Depression

Episode Date: April 11, 2025

The 1920s and the 2020s share a special kinship. One hundred years ago, the U.S. was grappling with a mix of growth, technological splendor, and generational anxiety—a familiar cocktail (albeit, from an era where cocktails were illegal). The era’s young people felt uniquely besieged by global forces. “My whole generation is restless," F. Scott Fitzgerald wrote in This Side of Paradise. “A new generation dedicated more than the last to the fear of poverty and the worship of success; grown up to find all Gods dead, all wars fought, all faiths in man shaken." America was changing. And change always implies a kind of loss. We were moving toward cars and cities and manufacturing. And that meant we were moving away from horses and farmland and agriculture. And so, in 1930, just months into the Great Depression, Herbert Hoover signed a new piece of legislation to restore farmers to their previous glory. It was a great big tariff—the Smoot-Hawley Tariff. Rather than save the economy, it deepened the depression. Today, the Smoot-Hawley Tariff is one of the most infamous failures in the history of American politics. To suggest that it holds lessons for this moment in history is to state the obvious. Our guest is Douglas Irwin, an economist and historian at Dartmouth University and an expert on the economic debates of the Great Depression. We talk about the economic motivations of the Smoot-Hawley tariff, the congressional debates that shaped it, the president who signed it, and the legacy it left. We talk about the economic instinct to preserve the past—an instinct that has never gone away in American history—and the profound irony, that some efforts to return America to its former glory can have the unintended effect of robbing America of a richer future. If you have questions, observations, or ideas for future episodes, email us at [e-mail]. Host: Derek Thompson Guest: Douglas Irwin Producer: Devon Baroldi Learn more about your ad choices. Visit podcastchoices.com/adchoices

All right, my birdie buddies, my car saving pals. My Eagle Enthusiast, it's Joe House here. Major season is finally upon us. The Masters, the PGA Championship, the U.S. Open, the Open Championship, and Fairway Rowan is here to break down all of the storylines. Offer a little help on those betting cards for every single major this golf season. Join me and our in-competting. comparable accomplice, our tour boots on the ground.

Nathan Hubbard, as we guide you from Augusta all the way to Northern Ireland, Royal Port Rush. Away we go. When we think about the most infamous laws in American history, that list is unfortunately not short. The Alien and Sedition Acts of 1798 criminalized forms of political criticism. The Indian Removal Act forcibly removed and direct. killed thousands of Native Americans.

America's history of slavery and racism, from the three-fifths compromise to the Jim Crow laws, is a long scroll of shame. But the complicated reality is that these laws, in many cases, achieved their goals, as sorted or hateful as those goals may have been. So what about the American law that most infamously backfired? The 1920s seemed like a good

The 1920s seemed like a good decade to scrutinize here. The decade began with the prohibition of alcohol, which led to an explosion in crime and bootlegging and corruption. And the 1920s ended with a very different law, an effort to protect American farmers from foreign competition, which failed so spectacularly, it's now practically a joke. Here's Ben Stein in Ferris Bueller's Day Off.

Passed the, anyone, anyone, a tariff bill, the Hawley-Smout Tariff Act, which, anyone raised or lowered, raised tariffs in an effort to... In the film, the Smoot-Hawley tariff is played for laughs. But for reasons I don't think I have to spell out for this audience. The motivations and outcomes of America's most infamous tariff have special... resonance today. The 1920s and the 2020s share a kinship. 100 years ago, the U.S. was grappling with a mix of technological splendor and profound anxiety, a familiar cocktail, albeit from an era where cocktails were illegal.

The era's young people felt uniquely besieged by global forces. Quote, my whole generation is restless, F. Scott Fitzgerald wrote in this side of paradise. A new generation, dedicated more than the last to the fear of poverty and the worship of success, grown up to find all God's dead, all wars fought, all faiths in man shaken.

End quote. It was an era of significant media innovation, especially for that periodical called The Magazine. Advertising revenues for magazines increased 500% in the 1920s, and the decade's new publications included Reader's Digest in 1922, Time Magazine in 1923, and the New Yorker, 1925. America was rich, even compared to other rich countries. According to the historian Bill Bryson,

every year in the 1920s, America added more new phones than Britain possessed in total. America made 80% of the world's movies and 85% of its cars. The state of Kansas alone in 1927 had more cars than the nation of France. Our kitchens and our houses were changing as much as our garages. Demand was surging for new devices called refrigerators and washing machines and vacuum cleaners

and radio sets. In another historical echo, it was a golden age of young men gambling. Stock investing took off and many young people, especially men, bought stocks on margin, borrowing cash to speculate. their fortunes rose and rose until in the crash of 1929. They collapsed. America was changing, and change always implies a kind of loss. We were moving toward cars and cities and manufacturing, and that meant we were moving away from horses, from farmland, from agriculture.

Farming was left behind in the roaring 20s economically, but that is very different from saying that it was left behind politically. And so in 1929, just months before the stock market collapsed that would kick off the Great Depression, a small group of congressmen, led by Willis C. Hawley of Oregon, got thinking about a new piece of legislation that would help restore farmers to the glory that they deserved. The idea was to create a great big import tax that would protect American farmers and help them compete in the modern economy. One year later, Holly's name would be emblazoned on one of the most infamous pieces of legislation in American history. And so the Smoot-Hawley tariff was born.

Today's guest is Douglas Irwin, an economist and historian at Dartmouth University, and a great expert on the economic debates of the Depression. We talk about the economic motivations of the Smoot-Hawley tariff, the congressional debates that shaped it, the president who signed it, the president who signed it, and the legacy it left. And we talk about the economic instinct to preserve the past, an instinct that has never gone away in American history, and the profound irony

that some efforts to return America to its former glory can have the unintended effect of robbing America of a richer future. I'm Derek Thompson. This is Plain History. Douglas Irwin, welcome to the show. Thanks. It's very nice to be here.

So let's get settled in the 1920s. The economy is experiencing significant sectoral shifts. America was born as a farming economy, but agriculture is fading as a share of employment in the 1920s. The manufacturing sector is surging. Construction is surging. The stock market is surging. What should we know about the U.S. on the eve of the October 1929 market crash that really

prepares us for the story of the Smoot-Hawley tariff? When we think of the 1920s, we think about the roaring 20s. We think about the jitterbug. We think about electrification. Cars are proliferating in the economy. Things seem dynamic, but not all as well, of course. And you pointed your finger on exactly the sector that's not doing well. It was still a large sector of the U.S. economy at the time.

I think about a third of the labor force was in agriculture. And this was a holdover or hangover from World War I. So during World War I, obviously there's a great conflict in Europe. The U.S. is sort of the breadbasket of the world. We're exporting a lot of our farm produce. Farmers are borrowing a lot of money to expand their operations, to buy new equipment, to get new land under cultivation. And the war suddenly comes to an end.

Commodity prices fall because commerce is restored in Europe. They don't need our imports quite as much. They go take the battlefields and put them back into agricultural production. and farmers are stuck. They're stuck with these huge debts, lower farm prices, and throughout the 1920s, they're really lagging. It's sort of a shrinking sector of the economy, still the migration from the rural countryside

into cities for work, and the story of Smoot Hawley is a story that starts with agriculture. There are at least three figures that I want to introduce in this story. President Herbert Hoover, Congressman Willis Hawley, and Senator Reid-Smout. And I want to introduce them in that order. Let's start with Hoover, whose modern reputation really belies his stellar reputation in the late 1920s. Herbert Hoover was kind of like the Forrest Gump of 1920s American politics.

You mentioned the fact that American farmers were exporting all of this food to Europe during World War I. Who oversaw that effort? It was Herbert Hoover. He led the effort to evacuate Americans out of Europe in 1914. during the war he oversaw the distribution of food relief in Europe. He sent millions of tons of American food to our European allies so much that the historian Bill Bryson wrote that by 1917, it was reckoned that Herbert Hoover had saved more lives

than any person in history. Under Calvin Coolidge of the 1920s, Herbert had so many jobs that he was known as the Secretary of Commerce and undersecretary of all other departments. He led the federal response to the great Mississippi flood of 1927. Like, it is hard to imagine somebody whose resume was more perfectly suited to the presidency. On top of all of that, or maybe just filling out the muscle on the bones of what I just laid out there. Doug, what should we know about Herbert Hoover to set us up for the big tariff debate of 1929, 1930?

He had a stellar reputation. He was known as being super smart. He was one of the best secretaries of commerce and the most influential. And his fingerprints are all over a lot of the good things that happened in the 1920s. So it seemed like sort of an obvious thing for the Republican Party to put him up for the presidency after Calvin Coolidge. He's sort of a natural for the role. He was smart. He knew how to manage.

He knew how to delegate and get things done. And so even though he's not the most charismatic of people, it seemed like he would sweep into the presidency and do a great job and manage the federal government. well. And so that's what happened. He runs for office in 1928, Republican landslide. They do very well, and he's elected president. So 1929, Herbert Hoover becomes president. His fame is built in part on the way that he has overseen the export of all of this food from America to Europe. He must know intimately the 10-year fortunes or misfortunes of the agricultural sector from the boom in the 19-teens to their struggles the 1920s. What attitudes does Hoover pull into the presidency with regard to America's farming sector? Well, he had campaigned on farm relief that we're going to do something to help

farmers. And the question is, what do you do? The Republicans had tried throughout the 1920s a couple of things to help out farmers. So Congress twice in 1920s passed price supports, that is subsidies for farmers, help them directly with their debts, help them directly with the prices they're facing. Twice, those bills were vetoed by President Calvin Coolidge. So the idea of using price supports or direct subsidies had some traction, but never passed through, got through the presidency. So they changed tack. If subsidies were not going to work or subsidies were not politically viable, the idea was, well, we'll go for tariffs, tariff equality. So tariffs were pretty high on manufactured goods, but they were lower on farm

goods. So the idea was, and the farmers actually had demanded this for some time, because they were purchasers of manufactured goods whose prices were inflated because of the tariff, should either lower the tariff on manufactured goods or raise the tariff on farm goods to get that tariff equality. And so that's where the idea in the 1928 campaign came about. We're going to help you, farmers, we're here for you, the Republican Party stands for you, and we're going to pass a tariff in your interests. There's something there that I think is really important for the general conversation around tariffs. We were tariffing manufactured goods, which had a first order effect of helping to grow the American manufacturing industry. But manufactured goods were in input to agriculture. And so it's

raising the cost basis of farming, which on top of the shifts in the European market, in the 1920s, is squeezing profit margins, it sounds like, for American farmers. Is that right? Exactly. So their costs are going up because of the tariff. The prices were going down because of the reconstruction in Europe. And so they were getting squeezed, forcing farmers to foreclose, forcing farmers off the farms, and to move into other sectors of the economy. I'm sure there's lots of American politicians who are saying that farming is America's true identity. This is the Jeffersonian ideal of America. If we can't protect, American farmers, we can't protect what's best about America. And this sets us up for Willis

C. Hawley in the House Ways and Means Committee, Chairman Willis C. Hawley of Oregon. Who is this man? What does he want? Well, he is a representative from the state of Oregon in the West, and he was actually a former economics professor. To have an economics professor introduce a tariff bill is sort of an unusual thing. Not many economists. make it into Congress, and not many economists would support higher tariffs in Congress, but there you have it in him. He's truly one of one. Right.

But, you know, he wasn't unique. It wasn't his idea. This is the Republican Party platform. This is the Republican Party position. And this goes back to well before the Civil War when the Republican Party was founded in the 1850s for more than, for many, many decades throughout the late 19th century into the 20th century, the Republican Party stood for high tariffs and protectionism to ostensibly help out American workers. And now they're going to extend that principle to the farm sector. And so that

was the goal of the tariff, as was originally introduced and considered by the House Ways and Means Committee in January of 1929. I want to make sure I understand the TikTok here. So Holly introduces this tariff to the House Ways and Means Committee in early 1929. Basically, he's even before the beginning of the Hoover administration, he introduces the tariff. And as you write in the book, it starts off relatively narrow. But as it winds its way through the house

and more representatives get their fingerprints on it, the tariff is like a Christmas tree that collects more ornaments. And your book is really great on this. So take us inside the congressional chambers of 1929. How does this initially narrow bill? to help American farmers grow to become the Smoot-Hawley tariff that we know today? Well, it's all behind closed doors.

So it's the House Ways and Means Committee that is the sort of central locus of where all these decisions are being made. The Republicans made the decision to exclude Democrats from having any say in the deliberations over what the tariff schedule is going to look like. But, of course, the members of the committee are communicating with the broader House about what could possibly pass. What do you want? And of course, here's where the concept of log rolling comes in. And the idea is, gee, if we're just throwing up a few tariffs on farm goods, how do we get more political support for this measure?

And the question is, you have to bring in members from states that don't have a big farm community, such as Pennsylvania. It was more steel-oriented textiles around Philadelphia and what have you. You have to win more states. And so more and more Republicans were saying, gee, if you want us to vote for this farm bill, it's going to help the Midwest, you have to help us, too, by having higher tariffs on manufactured goods as well. I'll scratch your back if you scratch mine. That's basically what it comes down to, and log rolling is just vote trading. So when they finally unveil the legislation to the whole house, it's not just this measure to increase tariffs on farm goods. It's a measure that increases

tariffs sort of across the board. Do you have top of mind? And truthfully, you can even research this or go back, dip into your book. Is there an example of, like, the most random thing that was tariffed in order to build support for this? Because I remember from going through your book that there were some very, very specific, like, types of wool that they had to tariff in order to build district by district support for this bill.

Give us a sense of just how broad and how esoteric the ornaments on the crystal. tree of this tariff bill actually got? Well, actually, I have a copy of the tariff bill right here in front of me. And if you threw it, it's about 300 pages long. It's got a very long index. But the tariff code had expanded the many, many pages with all sorts of very detailed list of specific commodities.

And behind every commodity, there was a representative whose producers were in his state or her state, and they wanted high tariffs to help that producer. So two that come to mind immediately are goldfish producers. Now, we don't really produce goldfish, but we farm goldfish. You raise goldfish. And apparently, there was some in Ohio that wanted a high tariff on imported goldfish so that their fishery could do better. The other one is clothespins. Now, here's a mundane little item. How many closed pin producers are in the United States? I have no idea. They're probably located in certain parts of the country. So someone in their district has closed pin producers. They were facing some foreign competition or

they want to squeeze out the remaining imports that were impeding their sales domestically. So they demanded a high price of or high tariff on clothespins. And so once again, you get all these different interest groups demanding from their representatives in the House to help us out, allow us to expand the number of jobs we have by keeping out imports in our particular narrow product segment. I have a question about the political economy of America in the 1920s that made a bill like this possible. I feel like today, if there were going to be a piece of legislation that had to get a bunch of different congressmen and congresswomen and senators behind it, that represented a broad tariff on a bunch of American goods, at some point, you would hear from a lobbying organization or group that represented consumers. America is an enormous consumer economy today, and we've been running a trade deficit for decades now.

In the 1920s, we didn't have a trade deficit. We had a trade surplus. We were becoming the biggest manufacturing economy in the world. We had just fed the entire continent of Europe for the entire 19-teens throughout World War I. Were there any groups that represented consumer interests that raised a lonely hand in 1929 and said, hey, you know, by the way, if you tariff 20,000 different new goods, you're probably going to end up raising prices for Americans. What's remarkable is no. The answer is no.

There was not representative of the consumer interest in Congress. There was not pressure from any consumer groups on members of Congress to temper how much they're going to raise tariffs. And there were even was a lack of representation among exporters. Exporters who would be indirectly hurt by tariffs, you think they would be the ones that would be clamoring for some sort of restraint on this process. They were largely absent as well. So there's a famous political scientist E. Schatznider who wrote a book called The Politics and the Tariff, and it's all about how things worked out in the committee and how the committee was hearing very few voices, just the voices that wanted higher tariffs and were not hearing voices that were saying something else. Keep the tariffs low, help out consumers, help out exporters. Tariffs are sometimes called, fairly or unfairly, a form of economic protectionism. They exist to protect specific industries.

How were the politicians of the 1920s talking about farming and agriculture? Why did they think this sector was so important to protect? So in the course of the research, I read a lot of the congressional debates and the congressional record and long, long speeches on this particular commodity or the importance of this sector for my state or region. And what you find is a lot of people invoking heartland values saying that we have to save the farm sector because it's so important. so central to American identity. And these are the true Americans. This is the backbone of society. And these are the moral upright people and the people in the cities are corrupt and, you know, money grubbing. And that's not the true America. And so that debate was being held at the time

exactly on those grounds. We talked about Holly. Let's talk about Smoot. Who is Reed Smoot? How does he get involved and earn his surnames attachment? this bill? Well, he is a senator from the state of Utah. He was a Mormon and very high up in the Mormon church, so very devout. He was known as the sugar senator because one of the things that they produced in Utah, it wasn't just all desert, is sugar beats. And that's because the U.S. had typically kept out foreign sugar, so the domestic price of sugar was very high as it is today. And one thing that happens when you develop that or have that is substitutes grow up. And so if you're growing sugar cane in Louisiana and Florida, you'll also raise the price and allow

sugar beet producers to become profitable in the Upper Northwest and in, of all places, Utah. So he was very much determined he cared about that one line, most importantly for him, that one line on sugar. And so we wanted those rates higher. But once again, a typical Republican believes in higher tariffs, takes the House bill and says we're going to fix it in certain ways, but the general principle, we're all on board with it. And Smoot was a kooky guy, as I understand it. He wasn't just interested in tariffing sugar. He also had a particular interest in terrifying pornography as well.

Can you explain this part? Right. He was, as I mentioned, very devout, and he was concerned about the importation of obscene material. And so it led to a very famous newspaper headline that said, Smoot, smut, smite. he wanted to ban importation of books such as D.H. Lawrence's later Chaddley's lover because it has these very risque scenes between a man and a woman and that offended his sensibility. And there were even poems written about him or verse. Ogden Nash, who was a famous poet at the time, was writing in the New Yorker, and he wrote this verse with respect to Smoot. Senator Smoot is an institute not to be bribed with Pelf. He guards our homes from erotic tomes by reading the them all himself. Smite, smoot, smite for you. They're smuggling smut from Balt to Butte. Strongest and sternest of your sex, scatter the scoundrels from Canada to mex. So this smoot, he really was a

protectionist of porn. He believed that he was America first when it came to pornography. He wanted it to be made here. He didn't want to import this stuff from the UK in France. I understand that. He was, he was a patriot. And we respect his position. I want to make sure that we think about this TikTok about the tariff bill, which is happening at the same time that the market is starting to wobble. So it's October 1929, right, seven, eight months after the beginning of deliberations on this tariff bill that we have the infamous market crash. How does the collapse of the stock market affect the debate around this bill? Well, in some sense, it made it more urgent, because now members of Congress begin to realize that, ooh, we're slipping into a recession, and it was just a

recession at this point. Yes, then the stock market crash, but a lot of the banking failures came later. So the idea was the economy is softening, and now manufacturers, we really do have to help them out, because if we keep out imports, we'll keep them more profitable, they'll keep their workers, and that's sort of an anti-recession device. So it sort of empowers the Republicans or emboldens them to say, yes, this is the right legislation for the time. It's something we should move forward with. So after the House passes, the House passes it very fast. This House Ways and Means Committee, they present it. It's an up or down vote. There's a lot of party discipline. There's very little debate about the provisions. They're set by the House Ways and Means Committee.

Boom, it passes by the House. The Senate procedures are very different. Every senator's powerful. So whatever the Senate Finance Committee reports, when it goes to the Senate floor, it's opened up. This is where the Christmas tree really happens. It opens up for individual votes. on the Senate floor on individual lines in this tariff code. And this is where the Senate was exposed to a lot of ridicule by the press of the day, because they would vote one day for a higher sugar tariff, and then a couple weeks later, they'd vote on the same provision and move it down. And then a couple weeks later, because Smoot didn't want that,

they'd vote on it a third time and raise the tariff back up again. So can you imagine a bill without hundreds of commodities, where each individual one is getting its own floor debate about the tomato tariff, about the roof tile tariff, about the aluminum tariff. It took up so much time. It took up basically from the late summer of 1929 until June of 1930, almost a year of the Senate's time sort of wasted going line by line through the tariff code. Just to pause you there before we return to Herbert Hoover,

is a reasonable interpretation of the story you just told that the cost of this tariff was not just what was in the legislation itself, but also the fact that it occupied so much of the Senate's time that they couldn't pass legislation that might have actually directly ameliorated the Great Depression that was just settling in. That's a great point, and I think you're right, because the Senate is focused on these little individual micro parts

of the tariff code, individual items, when the economy's collapsing. It is taking up a lot of time. And this is one reason. Even Congress at the time recognized, is this the right thing we should be doing? Should we be even talking about this? Is there another method for settling what the tariff rates would be? And so there's a dimming recognition at the time that, gee, maybe Congress doesn't do tariff policy very well.

This is not the way to go about things. And I think the economic collapse that was unfolding before their very eyes sort of convinced them that's the case. Were there other ideas in the ether where you think, if not for all the time occupied by this tariff, the Senate could have considered these other measures that might have been much more responsive to the crisis that was being created? Well, they were considering banking legislation, eventually became known as the Reconstruction Finance Corporation and other things to directly ameliorate the downturn in the economy.

But once again, this is unfolding in time. and so they're observing things, but once again, not acting quickly the way we'd expect the Federal Reserve or the Treasury to act today. And so the response was very meek and muted in terms of governments and Washington's response to the unfolding depression. I want to return to Herbert Hoover here. This is a bureaucratic extraordinaire, someone who understands economics, someone who understands international economics. He was responsible for overseeing. millions of tons of food exports during the 19thians. We're in the middle of 1930 now. The Senate has passed the tariff. Why does Hoover sign this bill? You know, in some sense, there was

almost no debate that he would. And here, the political system is very different than it was today. Congress is the Article I authority under the Constitution. Congress has the authority over tax rates and the tariff at the time. And this is very much respected. Congress was the institution that was supposed to decide what tariffs are going to be. Presidents from the 19th century, right up to Herbert Hoover, always took a back seat with respect to the tariff. They were supposed to reflect your party's position. You were not to presuppose what Congress would come up with. You were not to propose legislation.

So what's ironic about this is, as we're going into the Depression, the presidency is actually a sort of passive figure. But that's the way it had always been. It was really Congress's control. So when the bill comes to Hoover, this is a party measure. He had campaigned on it in 1928. The best in leading lights in the Senate and the House said, this is what we agreed upon. And for a Republican president to have vetoed a Republican piece of legislation at that point would have been outrageous. It would have been very odd.

And so, of course, the default position was, in fact, he admitted this when he signed it, he said, it's not a perfect piece of legislation. I would have done something maybe a little bit different. This is what our parties come up with, and this is what we're going to go with. So we signed it. Before we get into the fallout of this tariff going into law, the bill had opponents, most notably in the field of economics. In early 1930, the Depression is beginning to bite, and more than 1,000 economists from across the country sign a petition begging Hoover to veto the Smoot-Hawley bill.

If the bill passes, they say the U.S. is going to see. number one, higher consumer costs. Number two, foreign retaliation against U.S. exports. Number three, deepened economic slump. What did the economists get right about this prediction? What did they get wrong? You know, it's remarkable about that petitioners how much attention it got at the time. It was printed on the front page of the New York Times above the fold right in the center. It got a lot of attention at the time. Had over, as you mentioned, over a thousand signatories. and when you read it, there's no numbers in there. They didn't have a quantitative model,

but they reason through what the impact of the tariff would be. And surprisingly, they really nailed it. Just about everything they said in that petition came true later on. You mentioned a number of things that they got right, that there would be foreign retaliation, that really wouldn't help out industry. And they noted that for many producers, they were already serving the full domestic market.

Imports weren't really surge in. in, imports weren't a real threat to the domestic producers. There's no trade crisis, and they really wouldn't be able to expand much with the tariff that would justify imposing these high rates. Herbert signs the law. It goes into effect. How did other countries react initially in Europe, Canada, let's say. What was the international reaction? Well, as you might expect, it was very negative. were affecting the ability of other countries to export to the United States. And the grievances were widespread. European countries in particular were very upset because they had borrowed a lot of money from the U.S. during World War I.

Germany had to pay reparations. They have to pay back their loans. They have to pay back their reparations in dollars. How do you earn those dollars through exports? So here we are in a problematic world economy with financial problems creeping in. and now we're saying we're going to hinder your ability to repay your debts to us. And that was hurt their financial system, hurt their economies, and possibly even hurt the U.S. banking system by interfering with the loans that they were expected to be paid.

Our closest neighbor, Canada, was very much affected. Once again, just as today, back then, we had a lot of bilateral trade with Canada. They always thought they were a friendly nation, that we were a friendly nation to them. there was a liberal party, which was pro-American party in control in Canada, and they found their exports very much adversely affected by these tariffs, so much so that they retaliated against the U.S., so much so that actually an election was coming up in Canada, in which the pro-American party found its support slumping, and the British party suddenly finding a resurgence in the polls. And in fact, there have been studies by economic historians saying that there was enough of the retaliatory, there have been studies by economic historians that show that the anti-American sentiment was enough to swing that election towards the pro-British conservative party that then want to shift Canadian trade away from the United States towards the United Kingdom.

And the UK, Canada, and the other dominions sort of formed this trade block to exclude the U.S. since the U.S. was no longer open for business so much. So there was some retaliation in Europe, certainly retaliation by Canada, that adversely affected U.S. exports. And more importantly, we had this alliance system against the U.S. in terms of trade being formed by the British Commonwealth. There's a very strong interpretation of the Smoot-Hawley tariff that says that it caused the Great Depression, not only because of what was in the legislation, or not only because of the effect of the legislation, but also because fear of the incoming tariffs contributed to the stock market crash in October 1929. So that's the strong, strong interpretation.

There's also what you could call the weak interpretation, which is that, yeah, the tariff wasn't very good, but it didn't really do anything. The Great Depression was already great, and it would have been great, tariff or no tariff. Where do you come down in this debate? What do you think is the appropriate way to think about the economic fallout? I sort of take the Goldilocks approach. It's not one extreme or the other, not too hot, too cold. It's somewhere in the middle. So it certainly didn't cause the Great Depression.

We were already in the slump. And the slump continued despite the tariff. So the tariff certainly didn't constrain or mitigate the impact of the depression. But at the same time, it seems like the depression was not accelerated either right after the passage of the tariff. So it was a harmful measure. It probably exacerbated the Great Depression. certainly led to this trade war that led to this implosion of world trade, and that was not good for the world economy, and that was not good for the United States. But the question is,

given the monetary policies of the time, given the financial policies at the time, and we were on a gold standard at the time as well, and that was a very important component here, too, it was clear that the Depression was going to be this worldwide phenomenon. Things were not going to be good, and this trade war is just layering on another problem that we had to confront at the time. I want to bring back the farming economy. Was agriculture, in fact, helped by these tariffs? Well, agriculture was hired by the tariffs for two ways. First of all, just as today, other countries retaliated against U.S. farm exports.

It was one of our major exports at the time, food crops. That's a very tempting area in which to retaliate, because if you don't buy American wheat, you can always buy Canadian wheat. You don't buy American wheat, you can always buy Spanish or Australian wheat. In other words, there are substitutes around. Other countries retaliate. They want to retaliate against commodities where the cost on them is not very high. They just switched suppliers.

But more fundamentally, there's a flawed premise behind the tariff in the first place. And this goes back to the 1920s and the problems that the farm sector was facing. The United States was a net exporter of farm goods. We exported corn. We exported wheat. We exported soybeans. And these crops were not going to be affected by import tariffs. You're not going to help out the pricing position of domestic farmers who get the world price

by raising the tariff because we're not importing much of this stuff. Now, the only sectors that were affected by imports were wool and sugar, but those had already been tariffed at fairly high levels. So the whole idea that you could help out the whole agricultural sector by raising tariffs on goods that were not really importing much of, so your price is not going to go up, namely wheat produces and corn produces is fundamentally flawed. So even from the get-go, it wasn't really going to help agriculture. And this is where I do want you to bring us inside the minds of these 1920s legislators.

These people weren't stupid, but they passed a bill that not only exacerbated the economic crisis they sought to fix, but also, more ironically, directly damaged the one industry on whose behalf they were trying to fix it. So we're all shaped by the ideas that swirl around us, right? What ideas were swirling around the 1920s that made this law possible? Was there a mind virus of voodoo economics in the air? Was there a psychology of desperation? Like farming is struggling. Something must be done.

This is something. Therefore, it must be done. How did the entire Republican Party get behind an economic idea that enjoyed practically zero percent support among the community of economists? Well, once again, the farmers wanted relief of some sort. And they wanted subsidies. They wanted debt relief, something along those lines. The Republicans from up top, in some sense, were saying, we want to help you. Your constituents vote for us. We will help you. We're not going to consider those remedies that you're proposing, but we'll give you a tariff. And we'll get tariff equality, so you'll either reduce the tariff on manufacturing goods or raise

yours up. And the farmers bought it. It was sort of the best option they had at the time. We'll get something out of this. But even farmers, when it was going towards final passage, William Borah, a famous progressive senator, was saying, this is a fraud. We're not being helped by this. We should vote against it. But still, farmers and the farm community and the senators and representatives that wanted their support, pushed it through anyway, despite the fact that it was sort of revealed at the time, what was realized at the time, that this is not going to provide the relief necessary

to help farmers in the long run. It's almost like you're saying that an economic industry, deeply associated with America's historical identity, was in a state of long decline. And it created not only and economics of nostalgia, but also a sense of policy desperation. Politicians were willing to sacrifice consumer benefit

to narrowly support this one declining sector, but the tool they used, a tariff, ironically, hurt the very sector that it was supposed to help. Is it something like that? That's a great way of putting it, and once again, you can sort of see the echoes of today. When we have certain sectors that want help, there's one policy instrument that the politicians are willing to provide them, or at least one

politician, and that's not the instrument that will really help that sector in the long run. Well, without going into too much modern political analysis, we'll skip right over that. But I do want to talk about the legacy of Smoot-Hawley, because there's two pieces here that I think are really, really important. The first is the backlash to this tariff. seems to me to have paved the way for a new trade paradigm, starting with FDR. If you look at average tariff rates after the 1930s until the last few weeks, it's basically a jagged line down. It's just down, down, down, except for maybe a little blip in the middle of the 20th century. From just looking at that graph, and you're the historian, and I'm just a guy

who looked at one graph, but it seems like one ironic outcome of Smoot-Hawley is that it's so poisoned the case for protectionism in its time, that it created a sustained period of significantly freer trade. Is that a fair summary of one part of its legacy? It actually is. It took a little bit of time to play out. But recall, President Hoover signs this of June of 1930. What happens in November of 1930, there's midterm elections. The Republicans are wiped out. In fact, Holly loses his seat, Smoot lost his seat shortly thereafter. A tremendous backlash against the Republicans for not undertaking measures to alleviate the depression.

That's the midterm election. Then there's the general election in 1932. Once again, Republicans swept out. Franklin Roosevelt comes in. He'd campaigned actually sort of squeamishly against Smoot Hawley. But he was challenged by Hoover in the campaign saying, oh, so during a depression, you're going to get rid of the tariff? And what are you going to say to the workers who are thrown out of work because you're

allowing more imports in. So Roosevelt really had to hedge his way through that campaign, but his heart was with the Democratic Party, which is we want to have lower tariffs. And importantly, we need to lower the tariff on our exports that has grown up around the world, partly in retaliation to the U.S., but partly because we've had this trade war and this implosion with the Great Depression. So it's the Democrats who in 19, after the 1933 legislation to improve the economy, the New Deal, in 1934 they passed the reciprocal trade agreements act, which fundamentally shifts the whole nature of U.S. trade policy. It takes it out of the hands of Congress to some extent and puts it in the hands of the presidency and says, we authorize the president to negotiate with other countries to reduce our tariff in conjunction with other countries opening up their market

and reducing their tariffs. And that's the reciprocal trade agreements act. And that's almost the basis for the trade policy we've had until recently. You just touched on the second legacy piece. After 1932, Congress transfers greater negotiating powers from the legislator to the presidency. And you could argue that this expands what the historian Arthur Schlesinger has called the imperial presidency, the growing, growing powers vested in the executive branch. Can you expand on that how Smoot-Hawley didn't just strengthen the case for freer trade? It also strengthened the seat of the presidency. So one of the legacies of Smoot-Hawley was Congress realized it was completely irrational to spend a year and a half worrying about the tariff and fighting over the tariff and there's so many other more important problems.

So that's one reason why Congress was willing to turn over the tariff problem, if you will, to the presidency and say, we'll authorize you to reach these trade agreements. and it was a very gradual process by which the president would reach these agreements. Initially, they did not have to return to Congress for approval. There's a limit on what the president could do in terms of declaring tariff rates. But the president was still kept on a very short leash with respect to authorization by Congress. The Reciprocal Trade Agreements Act authority had to be renewed every three years. And so any agreement that the president would reach, he always wanted to make sure that it was appropriate and the Congress would agree to it, at least in principle,

because if the president reached some agreement that was so outside of the ballpark of what the American political system wanted to have, Congress could revoke that trade authority. So what have we missed? How else did Smoot-Hawley change American politics? So one of the other legacies of Smoot-Hawley is that delegitimized the idea of using tariffs for more than a generation of American politicians and indeed among the public at large. It was viewed as an experiment. We tried raising tariffs as we were going into the Depression, and instead of helping pull us out of it, we sank further into it, and it made matters worse by having other countries retaliate against us. And there were a lot of very young politicians

at the time who remembered that period and took it with them through other political careers, one of which was Ronald Reagan. So Ronald Reagan was president in the 1980. And despite the fact that we had this very severe recession in the early 1980s, which we later came out of, he never really embraced protectionism as a doctrine. He always said he was in favor of free trade because of the legacy of the 1930s. There were other members of Congress, Sam Gibbons from Florida, a very elderly gentleman by the time it was in the 1980s and 90s in Congress, but he always harkened back to the protectionism in the 1930s that made the world a worse place that hurt the U.S. economically, diplomatically. diplomatically, strategically, may have paved the road for World War II because of all the frictions, both economic and military that were arising during the 1930s. And Gibbons and others would always say we don't want to go down the road of protectionism because we have to learn

the lessons of the 1930s. Just as isolationism had been in their disrepute as a result of the 1930s, so was protectionism. And that really was a major force in the 1960s, 70s, and 80s in keeping the political system focused on trade agreements to open markets rather than protectionist measures to close markets. That pendulum is still swinging today. The protectionist experiment in the 1930s was designed to help a declining farming sector, but it failed and it set up decades of freer trade. And then decades of freer trade with the world, especially with China, have coincided

with the erosion of America's manufacturing sector. And now many people in power, notably the president, want to fix that. with protectionism. So we're dusting off the 1930s playbook, and the echoes could not be clearer to me. Manufacturing has declined as a share of employment over the last few decades, just as farming had declined,

as a share of employment over the decades prior to the 1930s. And so the tariffs today, just like the tariffs in the 1930s, are part of an effort to revive a version of the economy that was once core to the American identity. One of the lessons we might be learned today is that tariffs are a very blunt instrument and a very imprecise instrument that has a lot of collateral damage associated with it and really can't help reverse the declining fortunes of a particular sector of the economy in the long run.

Douglas Irwin, thank you very much. Thank you very much. It was a great pleasure to be here.