Cold Open

It’s the morning of October 29th, 1929 on Wall Street in Lower Manhattan.

Reporter Jonathan Leonard makes his way along the crowded sidewalks outside the New York Stock Exchange. He’s been covering the stock market long enough to see its mood swing from exuberance to anxiety, but he’s rarely witnessed anything like what he saw yesterday.

On October 28th, the stock market took a dive, with panic selling dominating the trading floor. Over 9 million shares changed hands as major stocks plunged in value. Now, Jonathan wants to see if the crisis is passing or getting worse.

Clutching his notebook, Jonathan pushes open the doors to the Exchange. And immediately, a wall of sound hits him—traders yelling, papers flying, and the endless metallic jangle of the stock ticker machines. On the floor, men shove their way through the crowd, desperate to reach the trading posts. Some are red-faced with anger. Others are white with fear. One man is just slumped on the ground in despair.

Jonathan approaches the traders with questions, but none of them give him a second look. None have the time.

The numbers are collapsing faster than anyone can comprehend. Messenger boys race past with fistfuls of paper. There are no buyers. Just crowds of desperate men pressing forward, shouting, pleading to sell anything, at any price.

This is not just another bad day. This is something else entirely. This is a collapse.

Over the course of the day, over 16 million shares will be sold, and around $14 billion in market value will be lost. This crash will come to be known as Black Tuesday and will shatter public confidence in the US economy and mark the beginning of the Great Depression.

In the months that follow, Americans will demand action, and Washington will scramble for answers. Sweeping legislation will raise America’s trade barriers to unprecedented heights. But instead of protecting the economy, the Smoot-Hawley Tariff Act will only push the world further into crisis when it's enacted on June 17th, 1930.

Introduction

From Noiser and Airship, I’m Lindsay Graham and this is History Daily.

History is made every day. On this podcast—every day—we tell the true stories of the people and events that shaped our world.

Today is June 17th, 1930: The Smoot-Hawley Tariff Act.

Act One: The Decline

It’s May 23rd, 1927, inside a grand hall in Geneva, Switzerland, two and a half years before Black Tuesday.

From the podium, Belgian statesman Georges Theunis surveys the crowd before him—a chattering sea of delegates from 50 countries. Georges straightens his papers and then clears his throat. Slowly, the voices quiet, the shifting of chairs stills, and all eyes turn toward Georges, President of the first-ever World Economic Conference.

This conference has been convened by the League of Nations, a fledgling international body born in the aftermath of World War I. It's been tasked with preventing another global catastrophe. But taking the principles of peace and putting them into practice has proven difficult.

In the years since the war’s end in 1918, economic tensions have mounted. Nationalism and isolationism are on the rise. And in country after country, governments have responded by throwing up trade barriers and slapping tariffs on imports.

Many economists worry that these trade restrictions threaten to destabilize the postwar recovery. So, for the past three weeks, delegates from fifty nations have gathered to discuss the issue. Now, it's time for Georges to deliver the closing remarks.

He begins by commending the delegates for their collaboration. Despite the many differences between their respective countries, they have found common ground. They’ve agreed on the need for reforms, on reducing tariffs across the board, and on lifting barriers to foster international trade. In Georges’ view, the conference has been a success.

But the spirit of international cooperation on display in Geneva fails to carry beyond the conference hall. The delegates produce a report rich with lofty ideals and economic recommendations. But in the end, it’s just a report. There are no binding commitments, no enforcement mechanisms. Just words on paper.

And the report's arguments fail to sway many governments, including the United States, which is already pursuing a different path.

Five years ago, US Congress passed the Fordney-McCumber Tariff—a sweeping law that raised import duties to historic highs in an effort to protect American industry. And even after these delegates in Geneva call for liberalization and lower barriers to trade, Washington shows no signs of reversing course.

Six months after the World Economic Conference, in November 1927, Republican candidate Herbert Hoover is elected president of the United States.

He comes to office promising “protective” tariffs that will boost farming and predicts “a final triumph over poverty.” In the months following Hoover’s inauguration, the US economy does indeed seem unstoppable. The stock market surges in what people call the “Hoover bull market.” Across the country, Americans of all classes pour their savings into Wall Street. Many even borrow money to buy more stocks. And on September 3rd, 1929, the stock market reaches record heights.

But soon after, cracks in the economy begin to show. Stock prices dip. Then, in late October, they plunge. In a matter of weeks, the stock market loses nearly half its value. Lifelong savings vanish, and a decade of optimism evaporates almost overnight.

Still, Hoover insists the economy is “fundamentally sound” and resists government intervention. He, like many others, expects that the market will correct itself.

But no such correction occurs. Instead, Hoover’s campaign promise of enduring prosperity unravels rapidly. Investors tighten their belts, as does the general public. And without the support of investors or consumers, businesses suffer. Layoffs begin and unemployment skyrockets.

The atmosphere of scarcity sends Americans rushing to withdraw their money from the banks, fearing they might go under. But the more money is pulled out, the closer banks slip toward insolvency.

With turmoil mounting, politicians turn to familiar tools. In Congress, Republican Representative Willis Hawley and Republican Senator Reed Smoot start to brainstorm a bill that will raise tariffs even higher. By placing expensive taxes on imported goods, Smoot and Hawley think they can shield American jobs and revive domestic production.

Their bill begins modestly, aimed at protecting struggling farmers. But it quickly balloons. Lobbyists flood Washington, with each industry demanding its own safeguard against cheap imports. By the time the so-called Smoot-Hawley Tariff Act clears Congress, the bloated legislation proposes higher tariffs on over 20,000 imported goods.

Economists warn it will backfire. More than a thousand sign a petition urging President Hoover to veto the bill. Meanwhile, the automobile tycoon Henry Ford declares it “an economic stupidity” and spends an entire evening trying to persuade the president not to sign the bill. 

Hoover starts to waver, but the political pressure on him is mounting. With unemployment rising and public confidence plummeting, protectionism offers the allure of a potentially simple solution. So, Hoover decides to move ahead.

What began as an attempt to help struggling farmers will become one of the most consequential acts of his presidency. It was signed in the belief that protectionism can bring stability in a time of crisis, but instead, it will test the very foundations of the global economy.

Act Two: The Fallout

It’s June 17th, 1930, at the White House in Washington, DC.

President Herbert Hoover sits at his desk in the Oval Office, a fountain pen in hand. Before him lies an almost 200-page document: The Smoot-Hawley Tariff Act. It has just been passed by Congress, and all it needs to take effect now is Hoover’s signature.

If signed, the act will raise tariffs on a wide range of imports, increasing the average tariff from 40 to nearly 60%. It’s an extreme measure, and Hoover knows it.

For days, economists, executives, and foreign leaders have pleaded with him not to sign the bill. Even before they voiced their opposition, Hoover had his own reservations. He doesn’t want to undermine his commitment to international cooperation. And in private, he’s even described the bill as “vicious, extortionate, and obnoxious.”

But the pressure to act, to do something, is immense. In the face of one of the greatest economic crisis in history, Hoover finds himself boxed in by politics. This new bill has strong Republican support. And if the President vetoes it, he risks alienating his own party. But if he signs it, he’ll be gambling with the global economy.

To Hoover, it feels like there is no good option available. And if that’s the case, he decides he should at least fulfill the promises he’s made to support struggling farmers. So, with a stroke of his pen, Hoover signs the Smoot-Hawley Tariff Act into law and raises US tariffs to their highest level in a century.

The international reaction is swift. One after another, nations raise their own trade barriers in response. Canada quickly slaps tariffs on American goods. Cuba, Mexico, Italy, Spain, Switzerland, Argentina, and Australia all follow suit with their own retaliatory tariffs, quotas, and boycotts. The following year, the major economies of the United Kingdom and France do the same.

The Tariff Act promised relief for the American economy. But all it’s done is kick-start a global trade war.

And as the tit-for-tat restrictions continue to escalate, US exports decline steeply as American farmers and manufacturers lose access to critical foreign markets. Businesses lay off even more workers. And what was once hoped to be a passing recession develops into something far worse. The Great Depression is now a global crisis, with no end in sight.

To make matters even worse in the United States, a severe drought sends dust storms sweeping across the Great Plains. Fertile farms are transformed into wastelands, and thousands of people flee their homes. Shantytowns spring up on the outskirts of cities to house them, and people begin calling them “Hoovervilles” in a bitter nod to the man in the White House, who once promised to end poverty in America.

Through it all, President Hoover clings to his belief in limited government. He resists large-scale federal intervention, convinced that voluntary cooperation among businesses and local relief efforts can turn the tide. But as breadlines grow and shantytowns swell, that philosophy begins to ring hollow.

By the summer of 1932, Hoover is a man under siege. His approval rating has plummeted, and the Republican Party is fracturing over the correct response to the deepening crisis. And while signing the tariff bill strengthened Hoover’s ties with some Republican leaders, the ensuing economic decline has destroyed his standing with many of the party’s more progressive members.

Into this vacuum of leadership steps a charismatic challenger: the Democratic Governor of New York, Franklin Delano Roosevelt.

Where President Hoover is cautious, Roosevelt is daring. Hoover speaks of balanced budgets and market corrections, while Roosevelt promises a New Deal for immediate relief. Roosevelt's campaign gains support not just from the Democratic Party, but from Republicans as well.

And as Roosevelt and Hoover begin their battle for the Oval Office, many of the progressive Republican senators who campaigned for Hoover in 1928 endorse Roosevelt instead. Voters, too, begin to shift. Weary of hardship and impatient with government inaction, a growing number of Americans are looking for bold new leadership.

And on Election Day, the people render their verdict.

In a landslide for Roosevelt, Hoover is crushed at the ballot box. He takes just six states, while Roosevelt wins more than any first-time presidential candidate before him.

President-elect Franklin Roosevelt will arrive in Washington, DC, facing a nation in ruins—but unlike his predecessor, Roosevelt will be eager to act. With the American people behind him, he will sweep into office with a mandate for change and a vision for global economic recovery.

Act Three: Changing Course

It’s June 12th, 1934, in Washington, DC, two years after Herbert Hoover’s electoral defeat.

Inside the Oval Office at the White House, President Franklin D. Roosevelt leans over his desk and signs his name with a flourish. The pen scratches across paper, finalizing a piece of legislation that marks a dramatic reversal in U.S. economic policy.

In the very same spot, four years ago, President Herbert Hoover signed the Smoot-Hawley Tariff Act – an aggressive protectionist measure that raised U.S. tariffs to historic highs. The fallout was swift and brutal: international trade collapsed, retaliation spiraled, and the global economy sank deeper into depression.

But President Roosevelt believes he can now chart a new course.

The legislation he just signed effectively repeals the Smoot-Hawley Tariff Act. Titled the Reciprocal Trade Agreements Act, it gives Roosevelt unprecedented power: for the first time, the President can negotiate directly with foreign governments to lower tariffs without needing congressional approval.

This act signals a major philosophical shift that sees trade not as a threat, but as a tool for diplomacy and recovery. Rather than walling off the American economy, Roosevelt wants to open it up on fair terms. If other countries agree to reduce their own tariffs, then US will respond in kind. It’s a bet on cooperation, and it works.

Over the next decade, Roosevelt’s administration negotiates trade agreements with 19 countries, including key trading partners. It’s a first step toward a more interconnected world economy and a preview of the liberalized trade policies that will define the global order in the aftermath of World War II.

Slowly, the American economy will begin to stabilize. And by the early 1940s, spurred by a combination of reform and global events, the United States will emerge from the economic collapse that began on Wall Street and was intensified in the Oval Office when the Smoot-Hawley Tariff Act became law on June 17th, 1930.

Outro

Next on History Daily. June 18th, 1982. The body of Italian banker and convicted fraudster Roberto Calvi is discovered hanging from a bridge in London.

From Noiser and Airship, this is History Daily, hosted, edited, and executive produced by me, Lindsay Graham.

Audio editing by Muhammad Shahzaib.

Sound design by Mollie Baack.

Supervising Sound Designer Matthew Filler.

Music by Thrumm.

This episode is written and researched by Alexandra Currie-Buckner.

Edited by Joel Callen.

Managing producer, Emily Burke.

Executive Producers are William Simpson for Airship and Pascal Hughes for Noiser.