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Value of total imports for specified foreign countries and the proportion coming from

The United StatesContinued


Mr. GEARHART. Now, in testing whether or not we have prospered under the so-called Reciprocal Trade Agreements law, I want to get back to when the recovery was made, such recovery that we did achieve, after we hit the bottom of the depression in 1932.

I asked the Tariff Commission to make this study for me, and I am going to call your attention to the facts and figures from the chart that they have furnished me.

I have asked them to show on the chart, the recovery that was made between 1932 and 1938, with a separate calculation for the years of 1932 to 1935, and for the years 1935 to 1938, and I have asked them to do the same thing on the same basis and make the same calculations with respect to the years from 1932 to 1939.

Now, in national income, we find that the increase to 1935 in the total increase to 1938, was 65 percent.

In agriculture, the increase that was made between 1932 to 1935 was 99.6 percent of the total recovery to 1938.

And in manufacturing, the recovery between 1932 and 1935 was 89.4 percent of the total recovery to 1938.

Take it by distributive shares. The net income of incorporated businesses. The recovery that was made by incorporated businesses between 1932 and 1935 of the total recovery of 1932 to 1938 was 100.2

Then the net income of unincorporated businesses, we find that the recovery that was under the Smoot-Hawley Tariff Act during the years 1932 to 1935, was 87.7 percent of the total recovery to 1938.

Now, I just wanted to ask you in view of these figures, and there are many, many more classifications that I am passing over for the sake of brevity, if this so-called Smoot-Hawley Act was so terribly bad that in a great many instances all of the recovery we achieved up to 1938 was made under its provisions and before there was any reciprocal trade act on the statute books, does that indicate that we were being retaliated against and they were invoking measures to get even with us and all sorts of things of that kind?

Mr. CLAYTON. Recovery from what?

Mr. GEARHART. From where we were when we hit the bottom in 1932.


Mr. GEARHART. On the way upward. There is only one way to go, and that was forward.

Mr. CLAYTON. That was recovery:

Mr. GEARHART. And we got up higher quicker and faster under the Smoot-Hawley Act than we did after the Trade Agreements Act was enacted.

In many instances full recovery was achieved under the SmootHawley Act and before the Trade Agreements Act was enacted. It can even be said that those trade agreement years were in many an instance merely a drag on recovery.

Mr. CLAYTON. Have you finished?
Mr. GEARHART. Contributing nothing to recovery.
Mr. CLAYTON. May I speak?
Mr. GEARHART. I am waiting patiently.
Mr. CLAYTON. Thank you, sir.
Mr. GEARHART. I would like to hear your explanation of that.

Mr. CLAYTON. Recovery, Mr. Gearhart, from the most terrible depression that the world has ever known, induced partly by the Smoot-Hawley Tariff bill, which was enacted in 1930.

You have got recovery from 1932 on. Let us see what happened from 1930 down to 1932 under the Smoot-Hawley Tariff bill.

Mr. GEARHART. And it was still in effect?
Mr. CLAYTON. And it was still in effect.
Mr. GEARHART. And all the world came down with us.

Mr. CLAYTON. And, as I say, there was only one way to go, as you said, after 1932, because we know we hit bottom then.

Mr. GEARHRÁT. That is right.

Mr. CLAYTON. There was only one way to go and it went, and in 1932, under the Smoot-Hawley Tariff bill, which was enacted in 1930, and had 2 full years to run.

Mr. GEARHART. All right, I am still asking you the question: How do you account for the fact that all of the recovery in many important classifications was made under the Smoot-Hawley Act and before you got the Trade Agreements Act on the statute books, and, also, that in many instances, this in important classifications, there was no recovery made at all when the Trade Agreements Act was in effect?

Mr. CLAYTON. Yes; but in the important particular with which the Reciprocal Trade Agreements Act was expected to deal, foreign trade, there was a very substantial recovery from the time it was enacted up to the beginning of the war. It was a very substantial recovery, and we think the reciprocal trade agreement had a great deal to do with that.

Mr. GEARHART. Then, in the face of the record, you say that, despite the record, that the Smoot-Hawley Act had nothing to do with recovery?

Mr.CLAYTON. I beg your pardon?

Mr. GEARHART. In the face of the statistics, the Smoot-Hawley Act had nothing to do with recovery. We had recovery already, did we not?

Mr. CLAYTON. Not in foreign trade. Not in exports. In exports, we had a very substantial recovery in our exports from this country, from 1934 up to the time the war began and we think the reciprocal trade agreements program played a part in that recovery.

Mr. GEARHART. And still you insist in saying that though I have just introduced in evidence the figures showing the percentages in reference to the total out-of-country purchases of all of the important countries in the world, which show that we lost instead of gained.

Mr. CLAYTON. By the percentage; yes. I believe the actual amount was much bigger.

Mr. GEARHART. Yes; but the national income and the world income had gone up all the way across the board. Increased purchasing power ought to account for larger purchases, should it not?

Mr. GEARHART. It was expected to come up.

Mr. CLAYTON. But our increase was much more with countries we had trade agreements with.

Mr. GEARHART. I am going to take that up with you, and I think we are going to reach the conclusion that that is a rather extreme statement.

Mr. Chairman, I ask that this tabulation from the Tariff Commission, supplied at my request, may be put in the record of the meeting at this point.

Mr. REED (presiding). Without objection, it will be inserted at this point.

(The table is as follows:)

United States foreign trade: National income by industrial divisions and distributive

shares, and farm income; actual and percentage increases in selected years

Actual increase of various years over 1932, the

low point of depression

Increase to 1935 as a percentage of total increase



1935 over 1932

1938 over 1932

1939 over 1932



Percent Percent 45.0

43. 1 113. 7 72.7 65.0


$667,000,000 $1, 481,000,000 $1, 547,000,000

724,000,000 637, 000, 000 995, 000.000 15, 756,000,000 24, 237,000,000 30, 866,000,000 2, 609,000,000 2, 619,000,000 2, 876,000,000 6, 573, 000, 000 7, 353, 000, 000 10, 748,000,000

380,000,000 1, 391,000,000 1, 496,000,000
4, 589,000,000 10, 154,000,000 13, 209,000,000
5, 314,000,000 5,304,000,000 7, 874,000,000
4, 627,000,000 5, 273,000,000 6, 302,000,000



45. 2

Foreign trade of the United States:

Exports of United States mer


General imports.
National income (total)
By industrial divisions (total):


By distributive shares:

Salaries and wages.
Net income of incorporated

Net income of unincorporated

Farm income and net cash available to

persons on farms after farm expendi-
Cash income, including Govern-

ment payments...
Cash income from farm market-

ings (excluding Government payments).

34. 7

100. 2




2, 916,000,000

3, 425,000,000


85. 1



2, 943,000,000

3, 134,000,000




Wages, factory and farm:

Factory (average weekly wages) -
Farm (average monthly wages

without board).


$5. 25



45. 2

1. 36


6. 94



1 Average national income, 1932–35, inclusive, $47,129,000,000; average national income, 1936-38, inclusive, $66,879,000,000.

Source: Statistical Abstract of the United States, Agricultural Statistics and Bureau of Labor Statistics

Mr. GEARHART. Now, we are going to go into that tariff, the terrible Smoot-Hawley Act. Would you call that a high tariff?

Mr. CLAYTON. Certainly I do, because in 1932, it was an average of 50 percent or a little over 50 percent of the value of all dutiable imports to the United States. I call that a high tariff.

Mr. GEARHART. It was just a 1.6 percent higher tariff, higher than the preceding tariff under which we enjoyed the greatest prosperity that the world ever knew.

Mr. CLAYTON. On the average. On the average, we enjoyed the prosperity, Mr. Gearhart, the greatest prosperity that the world ever knew, in spite of the tariff we enjoyed it, because we made foolish, reckless loans abroad throughout that period, of enormous sums of money, billions of dollars which we could not recover, and with the proceeds of the loans, the foreigners bought our goods.

Mr. GEARHART. Mr. Clayton, if you had placed the greatest blame on the loans, I would go along with you, but when you put the blame on the poor Smoot-Hawley Act, you are not fair, I think, because it is just the same tariff bill as the preceding bill, increasing just a few levies on a few agricultural products. It is practically the same old Fordney-McCumber Tariff Act.

Mr. CLAYTON. I can point out to you, Mr. Gearhart, and I can give you the facts from our records that on many industrial products, the duty under the Smoot-Hawley Tariff bill, exceeded 100 percent of the value of the product. If that is not a high tariff bill, I do not know what it is.

Mr. GEARHART. All right. Let us apply that test to the different tariff bills in the different countries.

Let us take the United States and call it a par of 100.

Spain's tariff rates on that basis were 465; Turkey's tariff rates were 359.6; Germany's tariff was 279; Brazil's tariff was 239.4; Greece's tariff was 166; Hungary's tariff was 160; Italy's tariff was 150.5; Mexico's tariff was 149, Egypt's tariff was 130; Switzerland's tariff was 128; United Kingdom was 118.3; Argentina was 110; then you get to the United States, 100; Japan's tariff crowds us at 98; Belgium is 96; France is at 85; and Canada is at 76.3.

And then we get down to the Netherlands and Sweden. They are respectively, 37.4 and 32.8.

Mr. CLAYTON. That has an answer, Mr. Gearhart.

Mr. GEARHART. Now, if the United States had, as you say, such an awfully high tariff that all of the other countries were angered and retaliated against us for that reason, how do you account for the fact that most of them were complaining when they had higher tariffs than we did?

Mr. CLAYTON. All these countries, in Europe particularly, and I am not sure about South American countries, but all of these countries in Europe had a much higher percentage of their imports composed of absolutely free items, than we had in the United States.

Mr. GEARhart. That brings us to an interesting point. Do you know whether or not the Smoot-Hawley tariff bill increased the free list or decreased it?

Mr. CLAYTON. Well, I do not know, but I do not think there is any substantial change, so far as the value of the imports is concerned.

Mr. GEARHART. I have that here for you, too.

I have the exact figures, and I want to be accurate. If you will bear with me.

Under the Fordney-McCumber Act, 63.8 percent of the items were on the free list. Under the Smoot-Hawley Act, 66.7 percent on the free list.

So, did the increasing of the free list make all of these other countries that had higher tariffs than we had want to retaliate against us?

Mr. Clayton. I am only telling you, Mr. Gearhart, and I can give you chapter and verse on it, that there were protests and retaliations on the part of over 30 countries in the world against the SmootHawley tariff bill.

Mr. GEARHART. Have you divided those between those that were anticipatory from those that were made after the act was on the statute books?

Mr. CLAYTON. No; I think all of them were made after the law was passed, or the bill was passed.

Mr. GEARHART. Well, then, what right has any country to protest an American tariff which is lower than theirs, and which places twothirds of the importable items on the free list?

Mr. CLAYTON. I have not examined your figures of percentages of tariff. I assume they are correct, of course.

Mr. GEARHART. These are correct.

Mr. CLAYTON. But there are many different ways of arriving at these calculations, and making combinations, and so forth. I have not had an opportunity to examine them, so I cannot comment very much on them. I am only telling you these things as facts.

Mr. GEARHART. I am hoping to get you to see the light. I know that these figures are correct. These figures have stood the test of time. They have never been questioned heretofore.

Mr. CLAYTON. I am only telling you as a fact, that over 30 countries did protest against the Smoot-Hawley tariff bilí.

Mr. GEarhart. Though the Smoot-Hawley tariff bill only increased the levies 1.6 percent, and also increased the free list 2.9 percent, you say that kind of a tariff is one which would and did arouse anger and wrath all over the world, despite the fact that the preceding tariff, under which we carried on with them a colossal trade, was quite objectionable. Can you explain why?

Mr. CLAYTON. Mr. Gearhart, it could be very easily true. I am sure that the figures you have given me are correct.

You could very easily increase the number of free items from 62 percent or 63 percent to 66 percent and still have the percentage of imports into the country with the tariff much smaller under the Smoot-Hawler bill than the other bill, and I would just like to work those figures out, and I think we will find that is true.

I do not have them before me. I think we will find that is true.

For the most part, any increase in the free items in the SmootHawley tariff bill were negligible items which did not bring much in the way of imports.

Mr. GEARHART. Well, on the dutiable articles the rate was 40 percent. As I said, slightly higher than the preceding tariff, but only on agricultural products. If that 40 percent angered all of the outside world, why did they not retaliate against us when we had a still higher tariff of 40.7 percent, the Payne-Aldrich Act? We did not anger them then, did we?

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