Smoot-Hawley Tariff of 1930: A Counterfactual Analysis

The Smoot-Hawley Tariff has been called one of "the most infamous pieces of Congressional legislation" in the twentieth century.¹ Economists have argued that the tariff, which was passed in June 1930, contributed to the depth and duration of the Great Depression.² This paper takes a counterfactual look at the tariff bill, considering the various points at which the bill might have failed as it progressed from the House, through the Senate, through conference, and to the President.

From the 1880s through the 1930s, Congress revised general tariffs approximately once every seven years.³ The last tariff before Smoot-Hawley was the tariff act of 1922; thus, tariff revisions probably would have been on the congressional calendar fairly soon, regardless of which party controlled Congress.

Both parties campaigned in 1928 on a protectionist platform, but the Republican platform explicitly called for tariff revisions.⁴ Given their landslide victory in the November 1928 elections—President Hoover carried forty of the forty-eight states, Republicans picked up thirty seats in the House for a 267 to 167 majority, and Republicans won seven seats in the Senate for a 56 to 39 majority ⁵—it is unsurprising that the Republican-dominated Congress immediately set to work on the tariff. President Hoover specifically called for an extra congressional session, focusing on two issues: help for farmers and limited tariff revisions.⁶

Although formally known as H.R. 2667, the bill was commonly associated with its chief sponsor, Representative Willis Hawley (R-Oregon), chairman of the House Ways and Means Committee.⁷

Because the bill was a strict party-line operation, there was very little that the Democrats could have done to change it or halt its progress. The bill was written entirely by the Republican members of the House Ways and Means Committee—Democratic members of the Committee did not even see it until it was presented to the entire House.⁸ The final vote was 264 to 147, largely along party lines: only twelve Republicans voted against, and only twenty Democrats voted for.⁹

Given the size of the Republican majority, probably the only way the bill could have been defeated was by a large-scale Republican revolt. Republicans representing New England's industries and the agricultural midwest were dissatisfied with the initial bill, but a mass revolt was unlikely after the Republican leadership agreed on a compromise package of ninety-one amendments to keep unhappy Republicans within the party fold.¹⁰

Hawley's counterpart on the other side of the Capitol building was Senator Reed Smoot (R-Utah), chairman of the Senate Finance Committee. Despite the nominal Republican majority in the Senate, Smoot could not rely on a party-line vote to ram the bill through. A group of ten to twelve Republican Senators from the agricultural midwest often voted independently—in fact, two of them had even endorsed the Democratic presidential candidate in the 1928 elections.¹¹

The early debate, from September 1929 onward, was controlled by a coalition of Democrats and the "insurgent" Republicans from the midwest. During the first six weeks, the coalition succeeded in pushing through key administrative provisions, including two amendments relating to farm debentures and the flexible tariff.¹² They then turned their attention to setting their own favored rates. The "regular" Republicans glumly conceded that they had lost control of the bill.¹³

Starting in early March 1930, however, the regular Republicans allied with sugar, oil, lumber, and cement interests to raise rates on specific goods. Contemporary observers called newly seated Senator Joseph Grundy "the directing genius" behind the formation of the new coalition.¹⁴ Making deals was nothing new for Grundy, who until three months earlier had been the one of the chief lobbyists for higher tariffs. The new coalition succeeded in getting the Senate to reconsider its prior votes on key goods like sugar and cement. However, they did not revisit the administrative provisions that had been passed in October of the preceding year.

The bill passed on March 24, 1930 thus reflected an uneasy compromise: the tariff rates were those favored by Grundy's new coalition, but the administrative provisions were the ones put in place by the old coalition of Democrats and insurgent Republicans. Eight of the insurgent Republicans voted for the bill on final passage, but they did so only because the farm debenture and flexible tariff provisions had been retained.¹⁵ The regular Republicans' willingness to keep those two administrative amendments was thus crucial to the passage of the bill. Absent that willingness, the final vote would certainly have been much tighter and it is possible that the bill would not have passed at all.

The final vote was not actually that close—the Senate passed it 53 to 31, with eight insurgent Republicans and seven Democrats voting for the bill.¹⁶ Four Democrats likely would have voted for the bill in any case: Senators Broussard and Ransdell of Louisiana favored the higher rates on sugar, Senator Trammell of Florida wanted the additional duties on fruits and vegetables, and Senator Kendrick of Wyoming was interested in protecting the wool raisers of his state.¹⁷ But assuming the eight insurgent Republicans plus the remaining three Democrats had voted against, rather than for, the bill, the vote would have been tied 42 to 42. Perhaps Vice President Curtis would have cast his deciding vote in favor of passage,¹⁸ as he did in a later vote.¹⁹ But it is also possible that Curtis would have voted against the bill, to indicate President Hoover's displeasure with the bill as it was passed by the Senate. Both before and after the Senate debate, Hoover hinted that he would veto any bill that changed his flexible tariff powers.²⁰

The House and Senate bills had at least eight major areas of disagreement.²¹ Moreover, conferences during that congressional session were unusually acrimonious,²² and the tariff bill was no exception. The conferees frequently had to return to their respective chambers for further instruction: one contemporary observer noted that "[d]uring [the] twelve weeks of conference, the bill crossed the threshold of each house on three separate occasions."²³ Ultimately, the debate came down to the two administrative amendments passed by the Senate, the farm debenture plan and the flexible tariff provisions. The pro-Hoover House insisted on deleting the provisions, both of which Hoover was known to disfavor.²⁴ The bill then went back to the Senate, where Smoot moved to release the Senate conferees from their promise to support the debenture and the flexible tariff.

This was, as the New York Times observed, a "vital test" for the success or failure of the tariff bill.²⁵ Predictions were made that "if the Senate fail[ed] to recede from its prior position, the tariff revision bill [would] be as dead as a door nail."²⁶ The vote was extremely close. Each provision was voted on separately: the Senate agreed to recede on the farm debenture by a 43-41 vote, but the vote was tied 42 to 42 on the flexible tariff provision. Vice President Curtis then broke the tie by voting in favor of recession.²⁷

Debate leading up to these two votes was limited, so it is not really possible to know what motivated the Senators to vote as they did. It may have been because they did not want to take responsibility for killing the bill—not after spending the better part of a year working on it, and particularly not in an election year.²⁸ It may have been because they had a number of other bills to consider and were eager to get out of Washington before the summer heat set in.²⁹ It may have been because they thought it better to save their arguments until after the conference report was completed and brought back to the Senate for a final vote.³⁰ But it is at least somewhat instructive to look at the votes of the Senators who "changed sides," i.e. those who voted in favor of the administrative provisions when they were first passed in October 1929 but who voted to recede in May 1930.

With respect to the farm debenture plan, four Senators changed sides: Thomas (R-Idaho), Broussard (D-Louisiana), Fletcher (D-Florida), and Trammell (D-Florida). It is probably not a coincidence that the first two came from states where sugar producers expected to benefit from the higher sugar tariffs,³¹ nor that the Florida Senators wanted additional duties on fruits and vegetables.³² All four had voted to pass the Senate bill on March 24, and all four would later vote to accept the final conference report. Given that the entire bill might have been at risk if they had voted to keep the debenture plan, it is unsurprising that they voted to recede.³³

With respect to the flexible tariff provision, two Senators changed sides: Dill (D-Washington) and Trammell (D-Florida). As the New York Times observed when the flexible tariff amendment was initially passed,

This statement is almost certainly true of Senator Trammell—he consistently voted with the regular Republicans once the new coalition started raising rates in early March 1930, and no one was surprised when he changed his vote on the flexible tariff provision.³⁵ Senator Clarence Dill's voting record, however, is more conflicted. On one hand, he was part of the lumber interests that allied with the regular Republicans in the new coalition.³⁶ On the other hand, Dill voted against the Senate bill on March 24, 1930 and against the final conference report on June 13, 1930. The Washington Post suggested that he traded his vote on the flexible tariff in return for a vote on lumber, noting that "[n]o one has heretofore been a stronger advocate [of the Senate flexible plan] than he."³⁷ If so, Dill may have been disappointed by the outcome of the logroll—the final tariff imposed no duty on shingles, although it did add a $1 tariff on lumber.³⁸

Of all the counterfactual pathways examined in this paper, the vote on the flexible tariff was the most likely to produce a different outcome. This is one of those rare instances where a single vote really did make a difference. Everyone else's votes were pretty much as expected; Dill's was the only surprise, particularly since he was not normally given to logrolling.³⁹ If he had voted against recession, the Senate vote would have been 43 to 41 against, and the regular Republicans and Vice President Curtis would have been powerless to do anything about it. Indeed, Dill's subsequent behavior suggests that he realized too late that he could have single-handedly blocked the tariff. As contemporary press reports noted, "The man is verging on the depths of despair. Twice now he has called out to his fellow senators to go ahead and get rid of the tariff bill. He has called out hysterically, beseechingly and run his hand through his hair."⁴⁰ The observation was perhaps meant sarcastically, but it is revealing nonetheless.

What would have happened if Dill had voted against recession? Most likely, the Senate conferees would have returned to the conference committee and reported that the Senate was unable to accede to the House's demands. At that point, the House conferees would have had only two choices: insist that the flexible tariff provision be removed from the bill, or ask the House to recede before the Senate's demands. Either way, the bill probably would have been doomed.

First, the House might have refused to accept the Senate's amendment. In that case, the conferees would have deadlocked. The flexible tariff provision was a binary option: either the President had the power to amend tariffs or he did not. It was not like a tariff rate, where the difference could be (and sometimes was) split down the middle. With both chambers having voted on and reconfirmed two irreconcilable positions, the bill probably would have died.

Second, the House could have accepted the Senate's amendment and passed a bill that stripped the President of his tariff-adjusting powers. There is a reasonable probability that President Hoover would have vetoed such a bill, however. From the beginning of his presidential campaign, Hoover had focused on "limited" tariff revisions;⁴¹ the rate changes ultimately adopted were anything but limited. Veto rumors swirled when the Senate's flexible tariff amendment was initially passed, because the President was counting on his tariff-adjusting powers to rectify any perceived injustices in the rates.⁴² In his memoirs, Hoover indicated that he was fully prepared to veto the bill if his power to adjust tariffs was taken away: as the conference neared its end, he noted, "I wrote out the provision I wanted [and] I sent word that unless my formula was adopted, the bill would be vetoed."⁴³ Post hoc rationalization or not, Hoover's memoirs suggest that he might very well have exercised his veto if the Senate's flexible tariff amendment had remained intact.

V. Likelihood of final conference report being accepted by both chambers of Congress: high.

Once the Senate agreed to recede on both administrative provisions, there was no question that the House would accept the final report. The final vote was 222 to 153, with fourteen Democrats voting for and twenty Republicans voting against.⁴⁴

The Senate vote was closer, 44 to 42. It was fairly clear that the regular Republicans were going to have enough votes to pass the bill;⁴⁵ the only uncertainty, ironically enough, came from the Senators for Pennsylvania, a state which had long enjoyed high protective tariffs for its industries. Senator David Reed, a Republican member of the Senate Finance Committee, announced that he was unsure about the tariff's benefits:

The other Senator from Pennsylvania was none other than Joseph Grundy, the architect of the new coalition, who had recently lost the Republican senatorial primary and would thus be out of a job after the November elections. Although he claimed to be worried about the farm rates being too high and the industrial rates being too low, most observers expected him to vote for the bill. They pointed out that he needed to vote for the bill in order to carry on his lobbying activities after he left the Senate; if he voted against, "he could never go to his high manufacturing friends for campaign donations which has been his life pursuit."⁴⁷

Reed ultimately consulted with President Hoover at the White House before announcing that he would vote for the tariff. The content of their conversation remains unknown, but in his subsequent speech to the Senate, Reed announced that he was voting for the bill, against his "strong inclination," because "American industry is entitled to be relieved of the agitation that has been going on now for nearly two years; . . . because it is almost better that tariff agitation be ended than that it be ended right." One wonders how much of that was the Senator's own weariness speaking. In the Senate alone, between September 4, 1929 and February 25, 1930, over 4 million words were spoken on the bill.⁴⁸ Even voting to kill the bill would not have ended the debate—as the Wall Street Journal pointed out, "Failure to enact a bill might interrupt, but would not end it, for the discussion probably would have to be resumed at an early date."⁴⁹ Finally, partisan politics probably played a role: for the Republicans to have promised tariff reform in the 1928 elections and then not deliver would have had disastrous electoral implications, especially given that they controlled both houses of Congress and the White House.⁵⁰ Despite the seemingly narrow two-vote margin, there was never really any doubt at this point that the bill would be sent to President Hoover for his signature.

Numerous editorials called for the President to veto the bill, mostly on the grounds that consumer living costs would rise but farmers would get no relief. Over ninety percent of the press disapproved of the rates that were passed by the House in May 1929, for example.⁵¹ A statement circulated by 1028 economists and professors asked Hoover to veto the bill; they predicted that the bill would result in increased consumer costs, declining American exports, increased unemployment, and international repercussions.⁵²

As discussed in Part IV, President Hoover did hint that he would veto the bill if the administrative provisions were not to his liking.⁵³ But he seemed less concerned about the rates themselves. About half of his signing statement was devoted to the virtues of the flexible tariff and how it could be used to remedy problems with individual rates: he predicted that the flexible tariff would be quicker, less vulnerable to log-rolling, less distracting for Congress, and better suited to remedy any foreign complaints about unduly high tariffs.⁵⁴ As contemporary observers pointed out, between the flexible tariff provision and his newly granted authority to reorganize the Tariff Commission, President Hoover could essentially rewrite most of the rates sixty days after the bill went into effect.⁵⁵ Simple public choice theory suggests that a veto was extremely unlikely.

Had Representative Hawley, Senators Smoot and Grundy, or President Hoover known how much blame would be heaped upon them for the Smoot-Hawley Tariff, they might well have thought twice before passing the bill. Given the circumstances of the time, however—the high-tariff plank in the Republican party platform, the perceived need to do something (anything) to boost the economy, the enormous sunk costs from the nineteen months of debate, and the seeming convenience of the flexible tariff—it is not surprisingly that the bill passed. The only point at which the enterprise might have failed was when Senator Dill voted to recede on the flexible tariff amendment; history suggests that he realized too late how crucial that one vote would turn out to be.

[1] Douglas A. Irwin & Randall S. Kroszner, Log-rolling and economic interests in the passage of the Smoot-Hawley tariff, 45 Carnegie-Rochester Conf. Series Pub. Pol'y 173, 173 (1996).

[2] For example, one contemporary analyst referred to Smoot-Hawley as "a major influence in making the world vulnerable to depression and intensifying the slump when it came." Sumner H. Slichter, Is the Tariff a Cause Of Depression?, 35 Current Hist. 519, 519 (1932). Another labeled tariffs as "among the active causes of our present disaster." Percy Wells Bidwell, Trade, Tariffs, the Depression, 10 Foreign Aff. 391, 398 (1932). Later economic historians picked up on the same theme. See, e.g., Allan Meltzer, Monetary and Other Explanations of the Start of the Great Depression, 2 J. Monetary Econ. 455, 469 (1976).

[3] Barry Eichengreen, The Political Economy of the Smoot-Hawley Tariff, 12 Res. Econ. Hist. 1, 6 (1989).

[4] The 1928 Republican platform included the following plank: "we realize that there are certain industries which cannot now successfully compete with foreign producers because of lower wages and lower cost of living abroad, and we pledge the next Republican Congress to an examination and where necessary a revision of these schedules." E.E. Schattschneider, Politics, Pressures and the Tariff 7–8 (1935).

[5] Colleen M. Callahan et al., Who Voted For Smoot-Hawley?, 54 J. Econ. Hist. 683, 684 (1994). In 1928, the House and Senate had 435 and 96 members, respectively. The remaining seat in each chamber was held by a member of the Farmer-Labor Party. U.S. Gov't Printing Office, 71st Congress, 2d Session Official Congressional Directory 154 (2d ed. 1930).

[6] Irwin & Kroszner, supra note 1, at 176.

[7] Because all revenue bills must originate in the House of Representatives, U.S. Const. art II, § 7, the bill should technically be called the Hawley-Smoot tariff. Due to Senator Smoot's greater prominence, however, "Smoot-Hawley" became the popular usage. Eichengreen, supra note 3, at 36 n.1.

[8] See Discontent Voiced over Tariff Bill, N.Y. Times, May 8, 1929, at 21.

[9] Tariff Bill Passes House 264 to 147 and Now Faces Long Delay in the Senate, N.Y. Times, May 29, 1929, at 1. Callahan et al.'s statistical study, controlling for the relative importance of agriculture, heavy industry, and light industry in each Representative's district, finds that unemployment conditions and party affiliation explain about ninety percent of the votes in the House. See Callahan et al., supra note 5, at 689.

[10] Republicans Heal Breach on Tariff in the House, N.Y. Times, May 24, 1929, at 1.

[11] See R.V. Oulahan, The Revolt in the Republican Party, N.Y. Times, Nov. 17, 1929, at XX1.

[12] The farm debenture essentially would have provided an export subsidy for farmers. The Senate had originally tried to include the debenture plan in the farm relief bill passed by Congress the previous year, but they were forced to recede after the House rejected the plan at conference. See Farm Debenture Adopted by the Senate, N.Y. Times, Oct. 20, 1929, at 1.

The second major provision related to the flexible tariff-making powers given to the President in the 1922 tariff act. If the Tariff Commission found that existing duties did not equalize the costs of production, the President was empowered to raise rates upward or downward by up to fifty percent. Robert A. Pastor, Congress and the Politics of U.S. Foreign Economic Policy, 1929–1976, at 76 (1980). Under the Senate's amendment, the Tariff Commission's recommendations would instead have gone directly to Congress, which would then act on each individual rate. See Hoover Defeated on Flexible Tariff, N.Y. Times, Oct. 3, 1929, at 1.

[13] See Surrender of Tariff Bill to Coalition for Rewriting Is Offered and Rejected, N.Y. Times, Nov. 10, 1929, at 1.

[14] Tariff Coalition Plans Final Fight, N.Y. Times, Mar. 10, 1930, at 2; see also Carlisle Bergeron, Senate Votes Cement Duty of Six Cents, Wash. Post, Mar. 8, 1930, at 1 ("A rejuvenated Senate Old Guard, led by the indomitable 'Joe' Grundy, who, with an augmented staff of experts and propagandists, has been working night and day for the past several weeks, was definitely in the tariff saddle yesterday.").

[15] See Senate Passes Tariff Bill, 53 to 31, N.Y. Times, Mar. 25, 1930, at 1.

[16] Id.

[17] Tariff Democrats Hamper Coalition, N.Y. Times, Sept. 9, 1929, at 12.

[18] The Vice President has no vote in the Senate unless the vote is tied. U.S. Const. art II, § 3.

[19] See discussion of May 19, 1930 vote to recede on flexible tariff provision, infra Part IV.

[20] See Farm Debenture Rejected in House Under Veto Hint, N.Y. Times, May 4, 1930, at 1 (reprinting letter from Hoover indicating that his anti-debenture position had not changed over the past year).

[21] Even after a month of conference, the conferees were unable to agree on "'silver, lumber, cement, the debenture, reorganization of the tariff commission, the McMaster amendment providing that all information before the tariff commission be accessible to Senators, the cost of production investigation and the flexible provision.'" Senate Puts Tariff Back to Conference, N.Y. Times, May 8, 1930, at 1 (quoting Senator Smoot, one of the Republican conferees).

[22] Arthur W. Macmahon, Second Session of the Seventy-First Congress, 24 Am. Pol. Sci. Rev. 913, 919 (1930) (noting that "[w]rangling regarding conference is not new, but the recent session evoked more than is usual").

[23] Id. at 920.

[24] Farm Debenture Rejected, supra note 20.

[25] Senate to Decide Tariff Fate Today, N.Y. Times, May 16, 1930, at 6.

[26] Id.

[27] Senate Drops Debenture and Its Flexible Tariff, N.Y. Times, May 20, 1930, at 1.

[28] See Early Passage of Tariff Seen, Wall Street J., June 11, 1930, at 1 ("Since the Republican platform promised tariff revision, the regular Republicans are bound to carry out that promise. It probably is better for them to pass a bill, even one which they must defend, than to go before the country admitting that they were unable to legislate."); see also The Tariff Fight, Wash. Post, Oct. 13, 1929, at S1 ("Agriculture demands tariff relief and the Democratic party, which claims to be the champion of agriculture, would have to do a good deal of explaining if it were to permit the bill to fail.").

[29] A New York Times editorial wryly noted

hot weather may cause even Senatorial oratory to wilt. As Mr. Taft said with a chuckle when he was President, there is nothing about Washington heat in the Constitution, but somehow it has the effect of ending sessions of Congress, just as if it had the mandate of organic law behind it.

New Tariff Terrors, N.Y. Times, May 9, 1930, at 21.

[30] See, e.g., Senate to Decide Tariff Fate Today, supra note 25 ("Senator Norris of Nebraska . . . declared that he considered it better strategy to make the fight on the tariff when the conferees brought a completed report back to the Senate.").

[31] See, e.g., Stiff Tariff Fight and Delay Forecast, N.Y. Times, Aug. 12, 1929, at 10 (quoting Senator Thomas of Idaho as saying, "In my state, the farmers are desperately interested in the prosperity of the domestic sugar beet industry").

[32] Tariff Democrats Hamper Coalition, supra note 17. The Florida Senators were likely facing significant pressure from lobbyists. For example, one lobbyist wrote that Senator Fletcher would be "delivered" for the tariff bill, that Florida interests "had built a fire" under the Senator, and that "the more he kicks the more we will work." Tried to Whip South into Line on Tariff, N.Y. Times, Nov. 2, 1929, at 1.

[33] In fact, it is actually more surprising that they voted in favor of the debenture in the first place. When the debenture plan was first debated in connection with the farm relief bill, supra note 12, all four had voted against it. See Hoover Wins Victory on Farm Relief, N.Y. Times, June 12, 1929, at 1.

[34] Hoover Awaits House Action on Flexible Item, N.Y. Times, Oct. 3, 1929, at 1.

[35] Carlisle Bargeron, Lumber Interests Hold Tariff's Fate, Wash. Post, May 21, 1930, at 1, 7.

[36] See, e.g., Reed Is in Doubt About Tariff Bill, N.Y. Times, June 7, 1930, at 4 (reprinting speech of Senator Fess, in which he listed a number of Democrats—including Senator Dill—who voted to raise tariffs on rayon, wool, cement, lumber, and sugar).

[37] Bargeron, supra note 35.

[38] Changes in Tariff Rates Fixed in Hawley-Smoot Bill, N.Y. Times, June 15, 1930, at 26.

[39] Carlisle Bargeron, The Listening Post, Wash. Post, June 5, 1930, at 7.

[40] Id.

[41] Richard V. Oulahan, Observations from Times Watch-Towers: Tariff Clouds Loom, N.Y. Times, June 2, 1929, at E1.

[42] See Hoover Defeated on Flexible Tariff, supra note 12; Laud Flexible Plan as Remedy of Tariff, N.Y. Times, June 2, 1930, at 4.

[43] Herbert Hoover, The Memoirs of Herbert Hoover: The Cabinet and the Presidency, 1920–33, at 295 (1952).

[44] House Passes Tariff Bill, 222-153, Ending Long Fight, N.Y. Times, June 15, 1930, at 1.

[45] Reed Is in Doubt, supra note 36 ("Senator Harrison, one of the Democratic conferees, said there were not enough votes in sight at the present to bring defeat to the long pending measure.").

[46] Id.

[47] Carlisle Bargeron, Reed Binds Hoover to Fate of Tariff, Wash. Post, June 12, 1930, at 1, 7.

[48] 4,219,000 Words So Far in Senate Tariff Talk, N.Y. Times, Mar. 4, 1930, at 21; see also Senators Polled 306 Times On Tariff in This Session, N.Y. Times, Mar. 16, 1930, at 26 (estimating that if each vote took six minutes, the Senators spent two and half days on voting alone).

[49] Early Passage of Tariff Seen, supra note 28.

[50] Id.

[51] Hint of Tariff Bill Veto Unless Rates Are Cut, N.Y. Times, June 4, 1929, at 1.

[52] 1,028 Economists Ask Hoover to Veto Pending Tariff Bill, N.Y. Times, May 5, 1930, at 1 (reprinting statement and listing signatories).

[53] Supra notes 41–43 and accompanying text.

[54] Text of Hoover Statement on Tariff Bill, N.Y. Times, June 16, 1930, at 2.

[55] Carlisle Bargeron, Hoover Review Bares Success with Congress, Wash. Post, June 1, 1930, at M2 ("He can remake the whole thing within 60 days after Congress leaves here, and he is reputed to be very good at economics. . . . There is no reason, certainly no legislative one, why the commission and Mr. Hoover can not entirely rewrite the entire bill.").