PRESIDENT HERBERT HOOVER is mistakenly presented in standard history texts as a laissez-faire president, but he signed into law so many costly and foolish bills that one of Franklin Roosevelt’s top aides later said that “practically the whole New Deal was extrapolated from programs that Hoover started.”
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really subscribe to a "hands-off-the-economy," free-market philosophy? His
opponent in the 1932 election, Franklin Roosevelt, didn't think so. During the
campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting
the national debt, choking off trade, and putting millions on the dole. He
accused the president of "reckless and extravagant" spending, of thinking "that
we ought to center control of everything in Washington as rapidly as possible,"
and of presiding over "the greatest spending administration in peacetime in all
of history." Roosevelt's running mate, John Nance Garner, charged that Hoover
was "leading the country down the path of socialism." Contrary to
the conventional view about Hoover, Roosevelt and Garner were absolutely right.
AMERICANS VOTED for Franklin Roosevelt in 1932 expecting him to adhere to the Democratic Party platform, which called for less government spending and regulation.
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The crowning folly of the
Hoover administration was the Smoot-Hawley Tariff, passed in June 1930. It came
on top of the Fordney-McCumber Tariff of 1922, which had already put American agriculture
in a tailspin during the preceding decade. The most protectionist legislation
in U.S. history, Smoot-Hawley virtually closed the borders to foreign goods and
ignited a vicious international trade war. Professor Barry Poulson describes
the scope of the act:
The act raised the rates on the entire range
of dutiable commodities; for example, the average rate increased from 20
percent to 34 percent on agricultural products; from 36 percent to 47 percent
on wines, spirits, and beverages; from 50 to 60 percent on wool and woolen
manufactures. In all, 887 tariffs were sharply increased and the act broadened
the list of dutiable commodities to 3,218 items. A crucial part of the
Smoot-Hawley Tariff was that many tariffs were for a specific amount of money rather
than a percentage of the price. As prices fell by half or more during the Great
Depression, the effective rate of these specific tariffs doubled, increasing
the protection afforded under the act.
Smoot-Hawley was as broad as it
was deep, affecting a multitude of products. Before its passage, clocks had
faced a tariff of 45 percent; the act raised that to 55 percent, plus as much
as another $4.50 per clock. Tariffs on corn and butter were roughly doubled.
Even sauerkraut was tariffed for the first time. Among the few remaining
tariff-free goods, strangely enough, were leeches and skeletons (perhaps as a
political sop to the American Medical Association, as one wag wryly remarked).
linseed oil, tungsten, and casein hammered the U.S. paint, steel and paper
industries, respectively. More than 800 items used in automobile production
were taxed by Smoot-Hawley. Most of the 60,000 people employed in U.S. plants
making cheap clothing out of imported wool rags went home jobless after the
tariff on wool rags rose by 140 percent.
Officials in the administration
and in Congress believed that raising trade barriers would force Americans to
buy more goods made at home, which would solve the nagging unemployment
problem. But they ignored an important principle of international commerce:
Trade is ultimately a two-way street; if foreigners cannot sell their goods
here, then they cannot earn the dollars they need to buy here. Or, to put it
another way, government cannot shut off imports without simultaneously shutting