Tag Archives | great depression

What was the end-result of the Smoot-Hawley Tariff Act?

As other countries placed tariffs on American exports in retaliation, these tariffs actually led to the reduction of American exports and thus jobs:

U.S. imports from Europe declined from a 1929 high of $1334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2341 million in 1929 to $784 million in 1932. Overall, world trade declined by 66% between 1929 and 1934. [US Dept of State]

With the reduction of American exports came also the destruction of American jobs, as unemployment levels which were 6.3% (June 1930) jumped to 11.6% a few months later (November 1930). As farmers were unable to pay back their loans to banks, their loan defaults led to increasing bank crashes, particularly in the West and Mid-West.

0 | free trade

What was the cause of the Great Depression of the 1930’s?

Anti-capitalist economists and historians claim the crash was the trigger of the great Depression of the 1930’s.

The Great Depression of the 1930′s was caused by the government’s intervention into the economy. The recession of 1929/1930 became “great” and prolonged by the government’s interventionist policies — from the Smoot-Hawley Tariffs to “The New Deal”– that prevented the market from restoring normalcy. Observe that in the 1920’s and 1987 Stock Market crashes there was no great depression, but minor recessions, because there was no great intervention.

0 | depressions