The End of Globalization: Lessons From the Great Depression by Harold James

Author:Harold James [James, Harold]
Language: eng
Format: epub, pdf
Tags: Business & Economics, Economic History, International, Economics & Trade, History, United States, 20th Century
ISBN: 9780674004740
Google: _0YfAQAAIAAJ
Publisher: HarvardUP
Published: 2001-09-15T21:03:13+00:00

Hullianism and Reciprocal Trade Agreements

The author of the House Ways and Means Committee minority view on the Hawley-Smoot trade bill in 1929, Cordell Hull, included in his report the statement that “American foreign policy can no longer ignore the fact that since 1914 we have changed from a debtor and small surplus Nation to the greatest creditor and actual or potential surplus-producing Nation in the world.”79 Eight million “idle American wage-earners” had been the victims, the “effects of the long years of virtual airtight tariff or similar protection.”80

As Roosevelt’s secretary of state he embarked on the task of tariff reduction with a notorious single-mindedness. In the 1930s, many observers concluded that the constant humiliations inflicted on Hull indicated that he was an irrelevancy in the Roosevelt administration, a “futile idealist who is allowed to make speeches which don’t represent the Government’s position.”81 Most historians have accepted this verdict, but it is an unfair one.

Hull’s approach recognized the responsibility of the United States for economic and political developments in Europe. It was a position formulated even more dramatically by his friend Ambassador William E. Dodd, who wrote to the secretary of state: “The tariff policy 1923–1930, the dangerous loans of 1923–1928, and the refusal of the Senate, 1921, to live up to the expectations of the election of 1920 are, therefore, the basic causes of Mussolini and Hitler, of British and French economic autarchies.”82 From the beginning of the administration, Hull believed that the tariff held the key to foreign policy. One of his first proposals was to alter the composition of the Tariff Commission in order to isolate it from special (that is, protectionist) interests by adding a Consumer Counsel who might object to proposed duties and conduct additional and supplementary investigations into the effects of a particular tariff.83

The scheme for a reciprocal trade bill to coincide with the London conference failed, but later in the year Roosevelt asked Hull to draft legislation on tariff reduction. The main point of the new bill was to transfer the initiative on tariff reduction from Congress to the executive, and it was defended on the grounds that this made negotiations with other powers much simpler. Congress had “thoroughly demonstrated by the Smoot-Hawley [sic] Act that there are enough commitments from members from the local standpoint relative to the rate situation to preclude and prevent the carrying out of any definite and certain emergency reciprocity policy.”84 A new policy would be in the national interest, for tariff reductions, as well as tariff increases, could be part of a sustained effort of economic nationalism: a bargaining for easier access to foreign markets by American goods. There was thus a substantial industrial lobby, concerned with exporting, prepared to support the new legislation. Some commentators have seen the first New Deal as the result of a historic compromise in which internationally minded and capital-intensive export business, led by figures such as John D. Rockefeller, Walter Teagle of Standard Oil, and Gerard Swope of General Electric, accepted the Wagner National Labor Relations Act, the Social Security Act, and free trade.

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