[harpseal]

Smoot-Hawley triggered retaliatory tariffs around the world, leading to 4% of the GNP just evaporating at a time when we couldn't afford to lose any more. It also did wonders for getting nutballs put in charge of Germany and Japan.

Smoot Hawley did no such thing the great deoression was well iunderway at the time and the effects f the Federal reserves tightening of credit more tah acoiunt for account for the evaporation of the GDP and while we are at it do not forget the income tax policy. Smoot-Hawley was passed in June 1930 the Depression was started on Black Tuesday in October 1929. If Smoot Hawley was harmful then teh Fordney McCumber should have been just as harmful. It however was combined with a cut of the income taxes and led to the boom years of the "Roaring Twenties" Now would you care to prove your assertion that Smoot Hawley caused that 4% drop in GNP. I would be very interested to see how you break out Smoot Hawley from the Federal Reserve's credit contraction which was continuing at this toime. I would also like to see how you isolate it effects from the cancelation of a proposed income tax cuts.

[Poohbah]

Smoot Hawley did no such thing the great deoression was well iunderway at the time and the effects f the Federal reserves tightening of credit more tah acoiunt for account for the evaporation of the GDP and while we are at it do not forget the income tax policy.

There was a $160,000,000 income tax cut put in place at the same time Smoot-Hawley was passed.

Smoot-Hawley was passed in June 1930 the Depression was started on Black Tuesday in October 1929.

October 1929 was a much-needed market correction.

Smoot-Hawley merely began the process of making that market correction into a global depression.

If Smoot Hawley was harmful then teh Fordney McCumber should have been just as harmful.

Any tax hike--be it tariff or income tax--at the start of an economic downturn is an extraordinarily stupid idea.

It however was combined with a cut of the income taxes and led to the boom years of the "Roaring Twenties"

You can get away with tax increases when the economy's up. The harmful effects are more difficult to spot then.

Now would you care to prove your assertion that Smoot Hawley caused that 4% drop in GNP.

Before Smoot-Hawley: trade accounted for 6% of GDP.

After Smoot-Hawley and retaliatory tariffs: trade accounted for 2% of a much smaller GDP.

So, I'm actually understating the effect of Smoot-Hawley: the actual loss was 4.62% of the base GDP. That works out to 77% of overseas trade evaporating against a 31% reduction in overall GDP. If Smoot-Hawley did NOT have a negative effect on trade, then trade should have lost something close to 31% and not more than double that figure.