Eichengreen's Critical Review of Different Theories to Explain the Smoot-Hawley Tariff

Barry Eichengreen critically analyses different models that try to explain the Smoot-Hawley Tariff Act of 1930.

The first model that he criticizes is that of “reciprocal noninterference” developed by Schattschneider in his classical monograph about the Smoot-Hawley Tariff of 1935. The theory says that the drafting of the bill was a classical example of pork-barrel politics where each politician was trying to make its constituency happy by increasing the tariff for one particular good. Each sector wanted a share of the cake and that is how the Smoot-Hawley Tariff went out of control. Eichengreen criticizes this model because it does not explain why, if the vote was beneficial to everyone, it followed so closely party lines. Only 5 Democratic Senators voting in favor and 11 Republicans voting against.

The second model is the agricultural sector model. The 1920’s were years of economic development, but the prosperity was not evenly distributed across the nation. The agricultural sector, which expanded considerably during the First World War, was being affected by the recovering of agriculture in Europe. The increase in supply of foodstuff pushed prices down while in general prices of industrial goods were high. In 1922 the United States becomes a net importer of agricultural products, and the farmers start to lobby the government for greater protection. In 1929 they have their opportunity to make their final push for greater protectionism and this, together with an ever increasing mistrust in the market forces creates the necessary environment for Smoot-Hawley. The criticism to this view is that it does not explain why other products, other than agricultural goods, were also protected by a rise in tariff.

Some analysts have seen Smooth-Hawley as simply another example of party politics. The republicans had been traditionally protectionist and at that moment both the house and the senate were controlled by republicans and the president was republican. Smooth-Hawley had little obstacle to pass in this congress. This view, however, sees the congress as simply engaging in tariff revision every seven years (the average time between different tariff acts in the period 1883 - 1930) and it does not explain the timing of the bill nor its dimension.

Eichengreen, Barry "The Political Economy of the Smoot-Hawley Tariff"