So there you go folks, not only will you find the truth, decent political discussions and proper History lessons at TRP, but also thought provoking Economics lessons.

Thank you, Cheryl!!

There is another chart you “may” want to look at. I say “may” because it is a chart for big girls only. Little girls who are not ready for the ugly side of life should avoid it. Free traders definitely rate this chart XXX and have been very conscientious at hiding it from the kids.

I refer to the chart showing history of US tariffs a copy of which is in the “Historical Statistics of the United States and Statistical Abstract of the United States 1991.” If you email me I will send you a copy I scanned. While I have seen the chart online from time to time it is a bit hard to find so I will describe it to you.

It seems that way back in 1828 one of the few things Andrew Jackson and Henry clay agreed on was that America needed protective tariffs. So they passed this thing called the “Tariff of Abomination” that was the highest tariffs we have ever had. Higher than the Smoot-Hawley tariffs a hundred years latter. These high tariffs upset the then Vice-President John C. Calhoun who set off a Constitutional crisis by urging nullification within South Carolina. They compromised and cut the tariff from 62 percent to about 40 percent.

As the chart shows tariffs went up and down but generally drifted lower in the following years ending at about 20 percent just before the Civil War. The tariff chart does not show it but, contrary to free traders, the economy was growing with higher wages, lower prices, and much innovation.

After the first few months of the Civil War Congress decided to protect industry from foreign competition in war time and passed the Morrill and War tariffs which jacked tariffs up to just under 50 percent. After the war tariffs oscillated but stayed high until the first decade of the twentieth century. Again the tariff chart does not show it but, contrary to free traders, the economy was growing with higher wages, lower prices, and much innovation. During this time we overtook free trade Great Britain.

In the first part of the twentieth century it was though that the way to respond to industrial monopolies was to expose them to foreign competition. Tariffs were lowered to below 20 percent. That cost jobs and was abandoned in favor of anti trust legislation. By the 1920s tariffs were back in the range of 40 percent where they were when Mr. Smoot and Mr. Hawley introduced their new tariffs that raised tariffs to just below 60 percent.

Smoot-Hawley tariffs went into effect in June 1931 but did not last long. In 1934 Roosevelt started lowering them. When the Great Depression got worse in 1937 tariffs were long back to pre Smoot-Hawley levels. Tariffs continued to decline to current low levels.

This chart shows that the notion that Smoot-Hawley was a major cause of the Great Depression is a misreading of history. The Great Depression protectionism was much less dramatic than claimed. The conventional story says that the economy collapsed because the US introduced the Smoot-Hawley tariffs in 1930. But this was more of the same protection we had always had and not a radical shift in policy. At the time America had been the most protectionist country in the world for more than a hundred years.

The history of US trade protection has been written by advocates of free trade and surprise, surprise protection comes out as a bad thing. That is wrong. Republicans were for free trade before they were against it. Every Republican presidential candidate from Abraham Lincoln to Herbert Hoover was a protectionist. During that long period of trade protection, contrary to the theory of free traders, the US had higher real wages, lower prices, and more innovation than the rest of the world. During that long period of protection the US ascended to the economic high from which it has descended during a short period of free trade.