- Smoot-Hawley Tariff -

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1 7 Figure 1. - Smoot-Hawley Tariff - US TARIFF RATES (percent) June The history of tariffs in the US shows that the Smoot-Hawley Tariff was an extreme outlier. Average Tariff Rate On Dutiable Imports 3 Average Tariff Rate On All Imports Source: Statistical Abstract of the United States. Figure. WORLD EXPORTS (trillion dollars, annualized) September 1, The post-wwii global economic boom was fueled by freer trade and soaring exports. 1 Oct Source: International Monetary Fund. Page 3 / February 3, 9 / Smoot-Hawley & Lehman www.

2 - Smoot-Hawley Tariff - Figure 3. DOW JONES INDUSTRIALS AVERAGE The Great Crash occurred after Congress enacted the Smoot-Hawley Tariff (SHT). DJIA fell.3% from September 199 peak through May 193. It then plunged.% through July June Source: Haver Analytics. Industrial Production fell 1.9% from its peak of July 199 through May 193. After SHT, it plunged 37.% through Figure. INDUSTRIAL PRODUCTION (=1) June Source: Board of Governors of the Federal Reserve. 3 Page / February 3, 9 / Smoot-Hawley & Lehman www.

3 - Smoot-Hawley Tariff - 3 Figure. PRODUCER PRICES: FARM PRODUCTS (19=1) 3 Farm prices dropped.% during the six months prior to SHT. Then they plunged 37.% through June Source: Bureau of Labor Statistics. Figure. PRODUCER PRICES: GRAINS (19=1) Grain prices dropped 19.% during the six months prior to SHT. Then they plunged 9.% through June Source: Bureau of Labor Statistics. Page / February 3, 9 / Smoot-Hawley & Lehman www.

4 - Smoot-Hawley Tariff - After passage of SHT, industrial commodity prices dropped % through April Figure 7. PRODUCER PRICES: INDUSTRIAL COMMODITIES (19=1) June Source: Bureau of Labor Statistics. Iron & steel prices dropped 1.% after passage of SHT through May Figure. PRODUCER PRICES: IRON & STEEL (19=1) June Source: Bureau of Labor Statistics. Page / February 3, 9 / Smoot-Hawley & Lehman www.

5 Figure 9. - Smoot-Hawley Tariff - FEDERAL RESERVE DISCOUNT RATE (percent) June 193 Interest rates were volatile after SHT, and headed toward zero Source: Haver Analytics. Figure 1. THREE-MONTH TREASURY BILL RATE (percent) June Source: Haver Analytics. Page 7 / February 3, 9 / Smoot-Hawley & Lehman www.

6 1 Figure 11. S&P INDEX - Lehman Collapse - 1 The S&P was down.% from its October 9, 7 peak prior to Lehman s failure. Afterwards, it lost another.% through the end of January September 1, / Source: Thomson Financial. The Fed cut the federal funds rate from % to zero after Lehman failed. 7 Figure. FEDERAL FUNDS RATE TARGET (percent) September 1, / Source: Board of Governors of the Federal Reserve System. Page / February 3, 9 / Smoot-Hawley & Lehman www.

7 .. Figure 13. FED S ASSETS (trillion dollars) - Lehman Collapse -.. The Fed expanded its balance sheet dramatically after Lehman failed September 1, 1/ Total Assets US Treasury Securities Held Outright I II III IV I II III IV 9 1/.. Figure 1. DEPOSITORY INSTITUTIONS: CASH ASSETS (billion dollars) The banking system fell into a Liquidity Trap after Lehman failed. 1 September 1, 1/1 1/ 1 Total Cash Assets of Banks Deposits at Federal Reserve Held by Depository Institutions I II III IV I II III IV 9 Source: Federal Reserve Board. Page 9 / February 3, 9 / Smoot-Hawley & Lehman www.

8 - Lehman Collapse - Figure 1. CONTINUING CLAIMS (thousands, sa, four-week moving average) September 1, 1/17 Joblessness soared after Lehman failed Source: US Department of Labor. 1 Figure 1. DURABLE GOODS ORDERS (billions of dollars, sa) September 1, Factory orders plunged after Lehman went under Dec Source: US Department of Commerce, Bureau of Census. 1 Page 1 / February 3, 9 / Smoot-Hawley & Lehman www.

9 - Lehman Collapse - 13 Figure 17. INDUSTRIAL PRODUCTION September 1, 13 United States (=1) United Kingdom (3=1) 11 Germany (=1) 11 Dec Global industrial production in freefall after September. Source: Haver Analytics Figure 1. INDUSTRIAL PRODUCTION Japan (=1) September 1, 1 13 Korea (=1) 11 Taiwan (=1) Dec Source: Haver Analytics. Page 11 / February 3, 9 / Smoot-Hawley & Lehman www.

10 - Lehman Collapse -.. Figure 19. CRB INDUSTRIALS SPOT PRICE INDEX (197=1) September 1, / Commodity prices plunged after mid-september. Source: Commodity Research Bureau Figure. WEST TEXAS INTERMEDIATE CRUDE OIL PRICE (dollars per barrel) September 1, / Source: Wall Street Journal. Page / February 3, 9 / Smoot-Hawley & Lehman www.

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