Hawley-Smoot Aftermath

A dozen steamers piled on extra steam crossing the Atlantic last week, racing against time to save money. The Olympic, notable winner, saved $130,000 for its clients. At Manhattan and other ports, men fighting noisily in the customs-houses raced to withdraw stored goods before the zero hour when duties would be higher; Manhattan customs receipts for the day were ten times the average.

The Hawley-Smoot Tariff Bill ("steal," its enemies called it) had become law. Some ships, having lost the race, turned out of U. S. ports, took cargoes elsewhere. Conversely, piles of chicle (for gum-chewers), piles of spice and other things nice on which the new law reduced or revoked duties, after long waiting came officially into the U. S. from customs warehouses.

The capitals of Europe, South America, Australia swarmed with angry activity which had its repercussions in Washington. Parliaments and ministers talked of retaliatory legislation against the U. S. All discussed an international trade alliance to combat U. S. protectionism. All feared that the U. S., greatest producer of comestibles, motors, radios and whatnot, not only would not buy in their markets, but would flood them with vast surplus stocks, bringing about a world panic.

In Washington, Senator William Edgar Borah, immediately challenging the Administration's much-vaunted flexibility clause in the new bill (TIME, June 23), obtained passage by the Senate of a resolution calling upon the Tariff Commission to investigate at once the rates on shoes, furniture, cement and farm implements. In effect this resolution said: "If the new tariff is flexible, let's see you flex it." The old Commission, which must be reorganized within 90 days by order of the new law, was thus confronted with a big eleventh-hour job.

Democrats in the Senate, particularly Mississippi's Pat Harrison, denounced the law, charged President Hoover with hypocrisy, promised to make the tariff a prime issue in the coming elections.

The Administration was quick to vocalize in the law's defense. Secretary Mellon announced: "The rates in the bill as it passed the House a year ago were higher than in the bill recently signed . , . yet business at that time did not take alarm. ... I have canvassed the situation with the Secretary of Commerce, and the notion that this law is going to destroy our foreign trade . . . certainly is without foundation. ... In so far as imports are concerned, foreign nations that do business with us would do well to remember that the all-important factor is the maintenance of the high purchasing power and standard of living of the American people."

Secretary Lamont echoed: "The old [flexible clause] did not work very well. The present clause is more effective, in that the commissioners have greater latitude in arriving at differences in costs of production as a basis for adjusting rates. If a foreign country believes that any of our tariffs are unduly high ... it can present its case to the reorganized Tariff Commission which . . . has the power, if the complaint is justified, to rectify the rates."

The White House promised to issue educational bulletins, explaining the new (20% higher) rates schedule by schedule.

Meanwhile in San Francisco, the voice of one who is as much an internationalist as a Democrat, as much a pure economist as an industrialist, was raised. Owen D. Young, addressing a convention of the National Electric Light Association, took occasion to discuss U. S. tariff problems in polite generalities but with points hard to miss at this particular time. Said he: "One cultivates his potential buyers. He does not rebuff them. If they have goods which he can take in exchange ... he makes it a point to take them. Is that the attitude of America today? . . . Are we creating good will or bad will? . . . When foreign obligations are coming to America, American surpluses are being moved out. Farmers and industries are being benefited. Instead of diminishing such movements, America needs right now to have them increased. It will be the salvation of any farm relief program. . . . We cannot have a world-wide economic program if it is to be defeated by a narrow political policy."

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