Electrification, Tractorization, and Motorization: Revisiting the Smoot-Hawley Tariff Act
Abstract: The Smoot-Hawley Tariff Act of 1930 has been typically viewed as being the Republican Party’s policy response to weak farm prices which – via political logrolling – snowballed into a full-fledged, across-the-board tariff bill, wreaking havoc at home and abroad (Irwin 2011; Shattschneider 1935; Taussig 1930). Empirical evidence, however, has failed to confirm this hypothesis (Callahan, McDonald and O’Brien 1994; Destler 1986; Pastor 1980). Rather, voting patterns in the Senate have been consistent with the “party platform” hypothesis. This paper presents an alternative account of the origins of the Smoot-Hawley Tariff Act of 1930, which is in keeping with the “party platform” hypothesis, and whose results are consistent with the “log-rolling” hypothesis. Specifically, I argue that the demand for protection on the part of U.S. farmers and manufacturers in the late 1920s, and the subsequent supply of protection by the Republican Party, were the direct result of a general-purpose technology shock – namely, electrification whose diffusion throughout the 1920s led to significant excess capacity in manufacturing and agriculture. In manufacturing, more productive firms became increasingly constrained on product markets. The resulting tractorization of U.S. agriculture and the motorization (trucks and automobiles) of transportation throughout the 1920s wreaked havoc on an already weakened agricultural sector (owing to lower post-war exports) by decreasing the demand by 48,294,887 grain- and hayequivalent acres. The proposed tariff bill sought to increase domestic firms’ market share in these industries by reducing imports.