June 17, 1930: Hawley-Smoot Tariff becomes law

On this day in 1930, President Herbert Hoover signed the Hawley-Smoot Tariff into law. Many economic historians now view it as a terrible mistake that extended the scope and length of the Great Depression.

In the 1928 elections, Republicans promised to protect American farmers by raising agricultural tariffs. It was a successful pitch, and the GOP increased its power in both houses and took the presidency.

Hawley, from Oregon, was the head of the House Ways and Means Committee, and Smoot, a Utahan, was the chair of the Senate Finance Committee. Their final bill raised tariffs not only on agriculture, but on industry as well – to levels not seen since the Act that prompted the Nullification Crisis a century earlier.

Debate and rumors around the bill might have caused big swings in the stock market in the days leading up to the crash in October 1929, and those fears were realized: foreign trade decreased by more than half, as other countries raised their tariffs as retribution.

For more on Hawley-Smoot, visit The Economist.

Image: National Photo Company (1929) via Wikimedia Commons