| Kasz216 said: You're missing the general arguement those economic historians make. It's not that we lost about 3.5% of our GNP. It's that the tariff act caused the stock market to crash.
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I agree that it contributed, but it is going way out on a limb to say that it caused the stock market crash. Its always convincing when someone tries to reduce something down to a simple 1-1 relationship that this caused that, but there were a lot more factors at play.
I mean look at that chart on p. 83 of the link you posted. It looks relatively similar to the two year history of the stock market currently (although the current one is certainly more gradual although the drop has been about as steep). When ever you get really large spikes in the market, it usually means that its an artificial spike rather than a real spike, hence the phrase bubble. You had a 100% rise of the DOW in one year. That looks like a bubble, smells like a bubble, and acts like a bubble.
Part of it had to do with the culture at the time. A lot of people were becoming involved in the stock market. The market wasn't normally used to that. It encouraged growth in the market and led to some of the highest prices the DOW had seen. But the last ones to join in on a craze are the first ones to go too.
Sounds a lot like the current implosion on the housing market. A lot of people, both regular Joes and investors, were getting in on a market even though they could care less about housing. They were speculating. You know there is a bubble looming when you hear regular people on the street saying they should get in on the housing market. Speculators are what drive a market to abrupt collapse (i.e. the oil market recently, great example of speculation leading to artificial highs and abrupt crashes). It was too good to be true. It was a bubble, something that was unsustainable and was bound to burst.
The Smoot-Hawley Tariff was a factor, but hindsight is not always your best friend. Many economists today who were spoon fed anti-protectionism are looking at the past with that on their mind. Its really easy to rub out a few dots and connect the ones you want to that way.
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
