“Hawley”

raised import duties by as much as 50 percent, greatly adding to the downward spiral of the world economy in the 1930s. Conceived and passed by the House of Representatives in 1929 as a protective measure for domestic industries, including so-called aged industries, the Act contributed to the early loss of confidence on Wall Street and signaled American unwillingness to play the role of leader in the world economy. Combined with the drain of gold and foreign currency, it produced results that were catastrophic. Other countries retaliated with similarly high protective tariffs, and respected overseas banks began to collapse. Even today the Smoot-Hawley tariff is occasionally invoked as a symbol of the negative effects of protectionism.