This Day in Financial History
- By the spring of 1930, America was showing no signs of shrugging off devastating fiscal damage wrought by the Great Crash of 1929. In hopes of reviving the economy, legislators drafted the Smoot-Hawley bill, a fiercely protectionist piece of legislation that aimed to preserve the domestic market for American-made goods by raising duties on imports to astronomical heights. While Smoot-Hawley had its share of powerful allies, including President Herbert Hoover, it also had its share of detractors, including a sizable cadre of economists who argued that Smoot-Hawley would slam shut the door to international trade and ravage the global fiscal order. Hoover and his allies dismissed such claims, arguing that Smoot-Hawley would revive the domestic economy and thus enable the U.S. to help stabilize global finances. The president's counter-arguments proved persuasive, and by early May the successful passage of the tariff legislation seemed like a fait accompli. But, Smoot-Hawley's detractors did not give up on their crusade: on this day in 1930, 1,028 leading economists signed a petition that protested the tariff. While the petition didn't derail the bill--Smoot-Hawley passed into the law books the following month-the economists' warnings proved prophetic, as a number of foreign nations retaliated against Smoot-Hawley by enacting their own hefty tariffs and quotas on imports that successfully exacerbated America's fiscal woes.