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Fordney–McCumber Tariff

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Title: Fordney–McCumber Tariff  
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Subject: Smoot–Hawley Tariff Act, Roaring Twenties, Depression of 1920–21, Customs war, American Jobs Creation Act of 2004
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Fordney–McCumber Tariff

The Fordney–McCumber Tariff of 1922 was a law that raised American tariffs on many imported goods in order to protect factories and farms. Congress displayed a pro-business attitude in passing the tariff and in promoting foreign trade through providing huge loans to Europe, which in turn bought more American goods.[1] The Roaring Twenties brought a period of sustained economic prosperity with an end to the Depression of 1920–21; the prosperity ended in late 1929, and the tariff was revised in 1930.


The first sector of the economy that was hit by a fall in post-war demand was agriculture. During World War I, the American agricultural industry enjoyed prosperity, through the raising of prices which led to increased output which Americans used to supply Europe. Farmers borrowed heavily to expand their acreage; they had great difficulty paying back the loans when prices fell. Some of the post war problems for the American agriculture come from the great surplus of farm goods that could not be absorbed in the national market, because European countries had recovered sufficiently from the war, and their markets no longer required large quantities of American agricultural products. Gross farm income in 1919 amounted to $17.7 billion. By 1921, exports to Europe had plummeted and farm income fell to $10.5 billion. Other sectors of the economy wanted to avoid a similar fate. The 1920 election put the conservative pro-business and pro-farm Republicans in control of Congress and the White House.[2]

The hearings held by Congress led to the creation of several new tools of protection. The first was the scientific tariff. The purpose of the scientific tariff was to equalize production costs among countries so that no country could undercut the prices charged by American companies. The difference of production costs was calculated by the Tariff Commission.

A second novelty was the American Selling Price. This allowed the president to calculate the duty based on the price of the American price of a good, not the imported good.[3]

The bill also gave the president the power to raise or lower rates on products if it was recommended by the Tariff Commission.

In September 1922, the Fordney–McCumber Tariff bill (named after Joseph Fordney, chair of the House Ways and Means Committee, and Porter McCumber, chair of the Senate Finance Committee) was signed by President Warren Harding.[4] In the end, the tariff law raised the American ad valorem tariff rate to an average of about 38.5 percent for dutiable imports and an average of 14% overall. The measure was defensive tariff rather than an offensive. An ad valorem tariff was determined by the cost of production and market value.

Economic effects

The Roaring Twenties brought a sustained period of economic prosperity principally to North America, but also to London, Berlin and Paris, with the end of the Depression of 1920-21 in the U.S. and a robust American economy. For agriculture, the tariff raised the purchasing power of the farmers by two to three percent, with other industries raising the price of some farm equipment. In September 1926, economic statistics were released by farming groups that revealed the rising cost of farm machinery. For example, the average cost of a harness rose from $46 in 1918 to $75 in 1926, the 14-inch plow doubled in cost from $14 to $28, mowing machines went from $45 to $95, and farm wagons from $85 to $150.[5]


The tariff was supported by the Republican party and conservatives and was generally opposed by the Democratic Party and liberal progressives. One intent of the tariff was to help those returning from World War I have greater job opportunities. Trading partners complained immediately. European nations affected by World War I sought access for their exports to the American market to make payments to the U.S. for war loans. Democratic Representative Cordell Hull said, "Our foreign markets depend both on the efficiency of our production and the tariffs of countries in which we would sell. Our own [high] tariffs are an important factor in each. They injure the former and invite the latter."

Five years after the passage of the tariff, American trading partners had raised their own tariffs by a significant degree. France raised its tariffs on automobiles from 45% to 100%, Spain raised tariffs on American goods by 40%, and Germany and Italy raised tariffs on wheat.[6]

In 1928, Henry Ford attacked the Fordney–McCumber Tariff, arguing that the American automobile industry did not need protection since it dominated the domestic market, and their interest was in expanding foreign sales.[7]

Some farmers opposed the Fordney- McCumber Tariff, blaming it for the agricultural depression. The American Farm Bureau Federation claimed that because of the tariff, the raised price of raw wool cost to farmers $27 million. Democratic Senator David Walsh challenged the tariff by arguing that the farmer is the net exporter and does not need protection because they depend on foreigner markets to sell their surplus. The Senator pointed out that during the first year of the tariff the cost of living climbed higher than any other year except during the war, presenting a survey of the Department of Labor, in which all of 32 cities assessed had seen an increase in the cost of living. For example, the food costs increased 16.5% in Chicago and 9.4% in New York. Clothing prices raised by 5.5% in Buffalo, New York, and 10.2% in Chicago. Republican Frank W. Murphy, head of the Minnesota Farm Bureau, also claimed that the problem was not in the world price of farm products, but in the things farmers had to buy. Republican Congressman W. R. Green, chairman of the House Ways and Means Committee, acknowledged that the statistics of the Bureau of Research of the American Farm Bureau that showed farmers had lost more than $300 million annually as a result of the tariff.[8]

See also


  1. ^ Dollar 1973.
  2. ^ John D. Hicks, Republican Ascendancy, 1921–1933 (1963), ch 1
  3. ^ United States. Congress. Senate. Committee on Finance (1922). American valuation; Dyes embargo. U.S. Government Printing Office. p. 218. 
  4. ^ Rothgeb, 2001, 30–32
  5. ^ Edward S. Kaplan "American Trade Policy, 1923–1995." 1996, p. 8-10
  6. ^ Rothgeb, 2001, 32–33
  7. ^ Edward S. Kaplan "American Trade Policy, 1923–1995", 1996, p. 13
  8. ^ Edward S. Kaplan "American Trade Policy, 1923–1995", 1996, p. 2-8

Further reading

External links

  • Fordney-McCumber Tariff (EH.Net Encyclopedia of Economic History)
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