No smoot-harly tariff

  • Thread starter Deleted member 1487
  • Start date

Deleted member 1487

What if Herbert Hoover did not sign this bill? Does the depression turn into a recession?
 
No, but the long term character of the Great Depression would be quite different, beyond the United States itself.

While Smoot-Hawley was far from good policy, and set off a destructive round of economic isolationism worldwide, the Great Depression had more grounding in monetary factors. Given that no S-H does not significantly alter the nature of national monetary regimes and their particular implementation of the Gold Standard, nor change the enormously risky debt structure that emerged out of WWI, there will still be a quite nasty shock that generally drives the world into massive contraction. Said contraction likely still pushes the abandonment of the gold standard, and plays great havoc with the necessary role of financial intermediation.

After what amounts to a catastrophic financial crisis and banking panic, prospects for recovery in the '30s would be somewhat better absent the trade environment engendered by S-H, provided tariffs aren't simply boosted later on.

An interesting question is if British Imperial Preference would be at all the same if international trade were less encumbered.
 
Last edited:

Deleted member 1487

Ah, but if the trade war had not started, what happens to the German economy? There were significant issues as they were still required to pay reparations but were not able to sell internationaly
 
Ah, but if the trade war had not started, what happens to the German economy? There were significant issues as they were still required to pay reparations but were not able to sell internationaly

Germany was already bankrupted by the WWI reparations, which is why its currency went through the floor so fast in the early 1920s.
 
Ah, but if the trade war had not started, what happens to the German economy? There were significant issues as they were still required to pay reparations but were not able to sell internationaly

Germany is still in trouble. Thanks to the experience of hyperinflation during the 1920s, the very idea of currency devaluation (as the UK, US, et al all did) was politically unacceptable. Further, the financial situation in the United States meant that German debt could not be serviced or rolled over through more American loans.

The fact that German exports would be then made overly expensive on international markets, and the Wiemar response of extremely tight fiscal policy would practically assure a critical situation during the early 30s regardless of American trade policy.

It would only be reasonable to note that just because the United States and its trade partners are not stabbing each other in the back through harsh barriers to trade, Germany's European neighbors may not feel quite so restrained regarding German exports.
 
Top