‘American trade restrictions worsened the 1929 market crash and accelerated its spread to Europe’

It was a time when American farmers were fed up with international competition. After the First World War, European farms had gradually returned to business and were beginning to send their surpluses to the US. An “unfair competition,” thundered the Americans.

In 1928, Herbert Hoover, a self-made man who had made his fortune in mining, capitalized on this anger in his campaign for the White House. His campaign promised Americans would have “a chicken for every pot,” and a car parked in every American garage. His recipe for achieving this was simple: lower taxes and more protective tariffs, especially on foodstuffs.

Two years later, just as the Great Depression of 1929 had begun, the American president kept his promise. The Hawley-Smoot Act was passed, increasing US tariffs by some 20 points, even though they had already been raised in 1922.

An instructive parallel

“But once the tariff schedule revision process got started, it proved impossible to stop. Calls for increased protection flooded in from industrial sector special interest groups and soon a bill meant to provide relief for farmers became a means to raise tariffs in all sectors of the economy,” recounted the Office of the Historian – an office that was staffed by professional historians expert in the history of US foreign policy and the State Department, working closely with other federal government history offices, the academic historical community, and specialists across the globe. It was closed in 2017.

Admittedly, Hoover’s personality was nothing like Trump’s. The man had worked abroad for more than two decades, in Australia, China, and the UK, prided himself on being a “technocrat,” and was noted for his generous food aid to Europe during and after the First World War.

Yet in the end, the parallel with the protectionism of the time is instructive. After the Hawley-Smoot Act, the Europeans retaliated with tariffs of their own. This escalation led to the collapse of world trade: between 1929 and 1932, trade between the US and Europe was cut to a third of its previous level. American trade restrictions worsened the 1929 market crash and accelerated its spread to Europe.

Did American protectionism contribute to the rise of Nazism? Historians are still debating this, and the link is not direct. Still, the Great Depression was one of the seeds planted for the catastrophe to come. Hence the importance of learning the lessons of that era, said Gilles Moëc, chief economist of the Axa insurance group: “In the 1930s, we all made huge collective mistakes [by retaliating blow for blow on tariffs]. We ended up with international trade in tatters. We don’t have to do it again.”

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