If we don’t remember the past we may repeat it

The great fiscal stimulus package … of 1929 – MarketWatch

Lately, whenever the market has a bad day, the reflex among financial-news editors is to compare our current situation with 1987 and wonder if a “Black Monday”-style crash is on the horizon.
But some observers draw a darker metaphor, noting that much of what we are seeing now also took place in 1929. As we know, that meltdown — unlike the 1987 crash — was not followed by a happy ending, but rather by a decade of poverty, shantytowns and sporadic famine.

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Published:: 01.28.08 / 1pm

By:: Zombie16

Category:: Money, Politics

DragonTHC 28.January 2008

This was only a small factor in the great depression. The Smoot-Hawley Tariff act was the major cause. This raised the tariffs so high on imports that other nations stopped trading with the U.S. and destabilized the foreign exchange. The American stock markets crumbled as a result.

Chromium 29.January 2008

There is not universal agreement as to the impact of the tariff. According to the U.S. Statistical Abstract, the effective tariff rate was 13.5% in 1929 and 19.8% in 1933. From 1821 through 1900 the United States averaged 29.7% effective tariff rates and peaked in 1830 at 57.3%, dwarfing the Smoot-Hawley rate. In addition, imports in 1929 were only 4.2% of America’s Gross National Product (GNP) (although this does not include the effect of other countries’ retaliatory tariffs on US exports). Smoot-Hawley’s impact on the entire U.S. economy was dwarfed in comparison to the monetary policy of the Federal Reserve System.

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If we don’t remember the past we may repeat it

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