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PAGE 10
PASTOR GENERAL'S REPORT, SEPTEMBER 13, 1985
are putting the screws on their elected representatives. There�
!1Q.!!
180 trade protection bills under consideration in the House of
Re presentati ves
an.s
about
ill in ill.
Senate <many dealing with only
specific problem cases, but a few broader based.) Protectionism looms
as the major 1986 off-year campaign issue.
Many Republicans are
succumbing to the pressure and are coming out for •fair trade•--the
code phrase for protectionism.
The President is standing firm so far but the ground is beginning to
crumble beneath him.
He vetoed special protection for the ailing
domestic shoe industry (which is down to less than a fourth of the U.S.
market). But he did sign orders promising to retaliate against trade
allies such as Japan, South Korea and Brazil unless they open the doors
to certain U.S. products they allegedly restrict.
In turning back the shoe protection bill, Mr. Reagan evoked memories of
the Depression-era Smoot-Hawley Tariff Act by saying, "From now on, if
the ghost of Smoot-Hawley rears its ugly head in Congress, if Congress
creates a depression-making bill, I'll fight it.• Just how disastrous
the Smoot-Hawley bill was, and the devastating role it played in the
Great Depression, is explained in the September 5 issue of THE WALL
STREET JOURNAL, in an article written by the editor, Robert L. Bartley.
Here are key excerpts:
For nearly two generations a remarkable consensus domi
nated American thinking on foreign trade. Protectionism
is bad. There was no debate; everyone agreed, but we have
forgotten why. Today Congress is awash in protectionist
schemes, and it takes
an
old man to r ecall .tha.t the lesson
was painfully learned. •some of us remember the 1930s,
when the most destructive trade bill in history, the
Smoot-Hawley Tariff Act, helped plunge this nation and the
world into a decade of depression and despair,• President
Reagan told a radio audience••••
The stock-market crash of 1929 came in the midst of debate
in Congress over the tariff; it had spent the year adding
item after item to the protection list. In mid-1930 the
Smoot-Hawley Bill became law, with the highest tariffs in
the nation's history. What might have been an ordinary
correction--early 1930 showed a recovery in share prices
and stabilization in industrial production--turned into
the Great Depression. The economy fell until 1933, and
fully recovered only with World War II••••
[According to] Peter Fearon of the University of
Leicester:
·The origins of the great slump, which began
in 1929, are to be found in the United States, which, by
reducing its capital exports and imports of goods, placed
an impossible strain•••upon the world economy.•••••
Even if Smoot-Hawley was not the cause, it certainly
played a leading role in the ongoing contraction. When it
passed, stocks were still above 1928 levels, for example.