By Will Weissart
WASHINGTON (AP) — Early in the Great Repression, Republicans from Oregon, Rep. Willis Holy and Utah Republican Sen. Reid Smoot thought they had landed in ways that would protect American farmers and manufacturers from foreign competition.
President Herbert Hoover signed the Smootholy Tariff Act in 1930, but many economists warned that taxation encouraged retaliatory tariffs from other countries. The US economy has plunged deep into a catastrophic financial crisis that has not retreated until World War II.
Most historians look back at Smoot Holy as a mistake that further exacerbated the bad economic situation. But tariffs have a new champion on President Donald Trump.
Like Trump, Hoover was chosen primarily for his business insights. An international mining engineer, investor and humanitarian, he took up the position of an energetic CEO in 1929, hoping to promote public-private partnerships and use the government lever to promote economic growth.
“Everyone should not only be rich, but they should be rich,” he declared in his inauguration speech before convening a special session of Congress to better protect American farmers “with limited tariff changes.”
Instead, the 31st President was subjected to a great pression.
Now defending his own drastic tariffs that have sent the global market into tailspin, Trump claims that the US was established with a sudden import tax on goods from overseas.
However, when they created federal income taxes in 1913, the country began to abandon them, the president says. “In 1929, it all ended very abruptly with Great Fear Presion, and if they had stayed with tariff policy, it would never have happened,” Trump said last week that he announced his tariff plans.
Referring to Smoot Holy, he added: “They tried to get back the tariffs to save our country, but it was gone. It was gone. It was too late. We couldn’t do anything – it took us years to get out of that depression.”
However, America’s high tariff history has actually continued well since 1913, and what caused Trump’s Great Repression and what caused Washington’s response during the Hoover era doesn’t really reflect what happened.
Gary Richardson, a professor of economics at the University of California Irvine University, said the US has long maintained high tariffs.
“When we were the most powerful soon after World War II, we enforced a low tariff regime in most of the world because we thought it was our profit,” said Richardson, a former Federal Reserve historian. “Now we’re going back to something else.”
The customs date is 1789
George Washington signed the Customs Act of 1789, the first major law approved by Congress. This imposed a 5% tax on many goods imported into the US without federal income tax. The policy protected American producers from foreign competition while finding a source of income for the government.
After the war of 1812 disrupted US trade with Britain, the US approved more tariffs in 1817, with the aim of protecting domestic manufacturing, particularly from textiles.
High tariffs remained for decades, especially as the government tried to increase its revenue and pay off the debts that had arisen during the civil war.
The Customs Act of 1890 raised taxes to 49.5% on more than 1,500 items. The move was defended by Ohio Republican Rep. William McKinley, “The Protectionist Napoleon,” an Ohio Republican lawmaker who was elected president in 1896 and one of Trump’s heroes.
However, the movement has led to prices rising and the US economy has fallen. It got worse after the panic in 1893, when the unemployment rate reached 25%. Historians called this era the “great pression” and replaced it with the actual great pression.
Income tax will replace customs duties
The national income tax was not permanent until Congress passed the 16th Amendment in 1909, and it was ratified four years later. Despite what Trump suggests, the continued economic growth that followed was supported by advances in technological advances like telephones and increased consumer spending after World War I.
The construction boom, and the rise in manufacturing production — especially for consumer goods, including cars — has helped to trigger “twenties.” The Dow Jones industrial average has increased six times. It rose from 63 points in August 1921 to almost 400 points in September 1929.
It was the ban and jazz era, and even if agriculture was an important economic factor, it was a period of urbanization. Working conditions were often poor, but the standard of climbing was raised because of the middle class who enjoyed innovations such as broadcast radio and washing machines.
High tariff policies also persisted, and Congress approved the Fordney McCumber Act of 1922, raising the highest taxation in US history on many imports to further strengthen domestic manufacturing. This prompted retaliatory tariffs from major US trading partners. This reflects the modern China and other countries’ responses into Trump’s new taxation.
“Black Tuesday” and Great Fear Prepression
The economy began to slow when the Fed raised interest rates in 1928 and the following year.
The idea was to ease the stock market bubble primarily by reducing lending to brokers and companies that buy stock in companies. However, it caused higher interest rates in the UK and Germany, helping slow global consumer spending and production, and began a recession in the US in the summer of 1929.
The Great Repression began on October 29th, 1929, “Black Tuesday.” Panic Seller Off caused a stock market collapse, wiping out thousands of investors who borrowed a lot. As consumer demand fell, manufacturers fired workers and idled factories.
Over the next few years, the unemployment rate in the US reached 25% and economic output plunged to almost 30%. Thousands of bank failures and widespread business closures have left millions of Americans homeless.
Smoot Holy
With his homemade wealth and global sympathy, Hoover cuts a very different person from Trump.
Hoover was orphaned at 9am and led the humanistic food relief efforts of World War I while living in London. He also served as Secretary of Commerce before running for president. He may be dynamic in small groups, but is reserved in public.
“There’s no theatre at Herbert Hoover,” said David Hamilton, a history professor at the University of Kentucky.
Hoover pushed Congress to raise farm tariffs in an attempt to maintain the promise of a campaign to protect farmers. But the main goal was to encourage farmers to produce new types of crops, and Hoover didn’t consider sudden US tariffs to be incompatible with global trade, Hamilton said.
“He’s not weaponizing trade in the way we see it today,” said Hamilton, author of “New Day to the New Deal: American Farm Policy from Hoover to Roosevelt, 1928-1933.”
Hawley, chairman of the House Ways and Means Committee, originally sought agricultural protection. However, the completed bill went far further, using high tariffs to protect manufacturing. I passed the house in May 1929.
Smoot, who chaired the Senate Finance Committee, helped oversee the passage there in March 1930. The settlement of the law that became Smoot Holy’s customs law ended that June.
Hoover came into conflict, especially after more than 1,000 American economists signed letters urging their veto. However, he signed the statement in a statement saying, “Under the current system, there will be no customs bills or be perfect.”
It’s all about Trump’s turn to real estate moguls and other businessmen who never worked for the government before winning the presidency in 2016 and a reality TV star.
Trump has long defended tariffs as a way to protect the US economy and manufacturing at the expense of its global trading partners. He then declared an “economic emergency” to bypass Congress, potentially modify the scope of his policy objectives, and unilaterally establish a “economic emergency.”
Smoot-Hawley has raised import duties by an average of 20% on thousands of goods, retaliating many of the top US trading partners. Richardson said international cooperation on non-trade issues on defense issues will also be reduced, making it clearer the way to Hitler’s rise.
“There were some industries where they made money,” Richardson said of Smoot Holy. “But overall, the people in the US and the people around the world were losers.”
US manufacturers were slugging out production as foreign markets of goods evaporated, consumer spending was even more sank. Holy lost the 1932 Oregon Republican primary in his district, and Smoot was defeated in November.
Smoot, Holy and Hoover continued to defend tariff policy for the next year, blaming international trade policy and external financial forces, as well as Democrats on the economic pain of America. The economy did not begin to recover until the outbreak of World War II in 1939 increased demand for factory production.
“The economic recession cannot be cured by legislative measures or declarations of enforcement,” Hoover said in December 1930.
Original issue: April 8, 2025, 11:24am EDT
