History shows that the crash was much more likely due to the inability of Congress to pass a tariff bill at all than because of the possibility that Congress might pass a high tariff bill. A business community and its nation perceived a lack of leadership, gridlock, and political maneuvering, rather than tending to the needs of the country.
Records show that when Representative Hawley’s bill passed the House Chamber five months before the stock market crashed, the Dow climbed over 5 points to 298.87. After Senator Smoot proposed an even more protectionist Senate version, the market peaked at 381 points. However, a republican Senator from Idaho, William Borah, formed a coalition of constituents to defeat the bill. On October 3, the Dow lost 15 points. The front page of the New York Times stated: “Hoover Defeated on Flexible Tariff; Coalition in Senate, 47 to 42, Takes From President Duty-Fixing Power.”
Although Hoover sustained veto power, the perception was that he had no majority in Congress to pass the tariff bill. Democratic Senator George Norris tacked on an agricultural subsidies program, and Senator William Borah and his coalition of agrarian Republicans took charge of writing the tariff. The stock market did not crash out of fear of higher tariffs. If anything, it crashed due to the perception that Congress lacked the discipline and leadership to pass any tariff bill at all!