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Signs of Leadership.docx

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Political Science
POLI 346
Mark Brawley

Signs of Leadership? US Foreign Economic Policy Evolves (Following WWI)  USD becomes as attractive as the British pound  trade expansion during WWI… then adjustment woes - pretty much everything the US produced was in demand during the war, during peace time production demand drops off  followed by the “Roaring Twenties”  stock market crashes on October 29, 1929 - borrowed money used to purchase stocks, stock prices get too high, bubble bursts, rush to unload stocks as people can‟t afford to payback loans without stock yield - the banks are in trouble - economy slows down, workers are laid off, demand drops further… downward spiral Response to the Crisis: Raising the Tariff  demands for assistance from farmers  other groups more organized than before (WWI mobilized firms to make bids on contracts, etc.)  now well mobilized to go make demands  Smoot-Hawley Tariff (1930)  wide range of products, very high tariffs - manufactured, agricultural, etc.  one of two things will happen (if not both): - intended to stimulate demand, or at least ensure that US market is left for American producers (protectionism) - also will encourage American employment  the SH tariff fails to stop slide – and triggers retaliations - other countries stop importing American goods, hurting export industry - thousands of economists signed a petition to block SH, they were ignored - Pres. Hoover pays the price Why this Response to the Crisis?  rival arguments concerning the tariff: - constructivist o emphasize republican ideology  Hoover was a republican, republicans supported higher tariffs - analytical liberals o stress domestic interests and institutions o a number of groups find protectionism appealing as they can‟t face competition like they used to o classic bottom-up political process  but so many groups asking for protection, who was asking for free trade? - there should be proponents for each position, but there were no recognizable free trade advocates - so does analytical liberal approach work?  the vote in congress was supported by both democrats and republicans – therefore the constructivist approach doesn‟t really work  logrolling  all groups asking for protection are going to their congressman with their concerns  I‟ll vote for protectionism on automobiles if you vote for protectionism on dairy farming  narrow interests are all coming together at once  legislators „I‟ll scratch your back if you scratch mine‟ ideology - this is why the tariff looks like it does, so broad Franklin Delano Roosevelt  after SH, people were fed up with the Republicans, so they voted FDR - elected in 1932  FDR had long „coa
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