Fraser Forum

William Watson: The last protectionist businessman-president also did walls—it ended badly

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Thanks to the miracle of Internet word search—and it really is a miracle, isn’t it?—I learn that the United States’ first businessman-protectionist also made speeches about Mexico and walls. It didn’t end well.

In Des Moines, in his home state of Iowa, on October 4, 1932, President Herbert Hoover (above left) told 10,000 Iowans assembled in that city’s Coliseum, and millions more Americans listening to the NBC and CBS radio networks, that “There are at this minute two million cattle in the northern States of Mexico seeking a market. The price is about $2.50 per 100 pounds on the south bank of the Rio Grande. It is $4.50 on the north bank—and only the tariff wall in-between.” The problem in 1932 wasn’t Mexicans trying to get into the U.S., but Mexican cattle. A second difference between then and now is that Hoover’s protective tariff wall was metaphorical and already “built.”

Before running for president in 1928, the first and only elective office he sought, Hoover had been a successful mining engineer, building up a fortune, albeit a small one by Trump standards, estimated at $56 million in today’s dollars. Part of his wealth even came from a Russian connection—running a mine for Czar Nicholas, before leading Belgian war relief and then serving as Calvin Coolidge’s Secretary of Commerce. In 1928 Hoover had run on a platform of higher agricultural tariffs and, though not just because of that, had won in a landslide, with 58 per cent of the popular vote and 40 states to Democratic candidate Al Smith’s 8.

In 1932, Hoover was trying desperately to keep the Democrats and their presidential candidate, Franklin D. Roosevelt, from making deals with willing foreign governments to reduce agricultural and other tariffs, as their platform promised to do. He failed. A month and four days after his speech, he won only 39.7 per cent of the popular vote and just six states, Iowa not among them. The reason, of course, was the Great Depression. And part of the reason for the Great Depression—though to this day economists debate exactly big a part—was the Smoot-Hawley tariff that had gone into place in 1930, just after the financial crisis hit in October 1929. (Deservingly, both Senator Smoot and Representative Hawley also lost their seats in the 1932 election.)

Congress had effectively “seen” Hoover’s agricultural tariffs and then raised him with tariff increases, big ones, across virtually all goods. Hoover apparently opposed such aggressive protectionism but in the end didn’t veto it. Predictably, other countries responded, Canada being one of the first movers, and, with the international financial disaster still metastasizing, world economic rout was on.

The Des Moines speech is sad and a little pathetic as Hoover gamely tries to persuade his 120 million fellow citizens, 10 million of whom were out of work, that things could be worse. “Thousands of our people in their bitter distress and losses today are saying that ‘things could not be worse.’ No person who has any remote understanding of the forces which confronted this country during these last 18 months ever utters that remark. Had it not been for the immediate and unprecedented actions of our Government things would be infinitely worse today. Instead of moving forward we would be degenerating for years to come, even if we had not gone clear over the precipice, with the total destruction of every ideal we hold dear. Let no man tell you that it could not be worse. It could be so much worse that these days now, distressing as they are, would look like veritable prosperity.”

(Though these days we’d call that “alternative truth,” I must say it’s refreshing to read a plain-spoken presidential speech that is both literate and direct and assumes its audience is capable of understanding—and the president delivering it has mastered—complex ideas.)

Since the calamity of the early 1930s western elites have understood that trade wars are disastrous for the world economy. From bitterest experience Herbert Hoover eventually came to understand that. Will America’s latest protectionist businessman-president figure it out before it’s too late? 

 

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