Smoot-Hawley, Redux?

It is conventional wisdom that our current crisis -- even if it blossoms into World Depression II (Michael Kinsley's phrase) -- won't be as bad as the Great Depression.

After all, policy-makers have many more tools at their disposal, and we won't make the same mistakes (worrying about balancing the budget, restricting unemployment relief, and passing the Smoot-Hawley Tariff Act.)

The last of these -- Smoot-Hawley -- is seen as a symbolic, and prolonging, but not causing the Depression. While tariffs had long played a role in US economic development, Smoot-Hawley (ultimately passed in 1930) had the misfortune of being debated on the front pages of New York newspapers while the 1929 Crash was occurring. As one observer at the time said, the Act "'intensified nationalism all over the world.'"

But the continued threat of terrorism -- fueled by theocratic leaders that wish to 'return to an earlier age' -- may have some of the same effects as Smoot-Hawley. This morning's attack in Pakistan on a visiting cricket team from Sri Lanka will undoubtedly have a chilling effect on cultural exchanges in that part of Asia. (The Sri Lankans were actually replacing an Indian team that cancelled after last year's Mumbai attacks.)

Does "sports tourism" have a material effect on international economic activity? Of course not. But the symbolic effect of 'closing off' parts of the global economy may have some psychological effect that, like Smoot-Hawley, make take years to overcome.

And that doesn't even begin to account for the potential global ramifications of the first failed state with nuclear weapons.

The "Loyal" Opposition 2

Some, at least in the GOP, seem to have realized that intellectual bankruptcy will, if continued, give rise to electoral bankruptcy.

Here's some (off-the-record) strategy from Byron York at the DC Examiner:

"You're seeing a major doctrinal shift in how Republicans are going to focus all these debates," the strategist told me. "The key is to focus on winning the issue as opposed to winning the political moment. If you win the issue, people will think you are ready to govern."

I asked him to elaborate a little. "With the political moment, it's how can you find the one thing that gives you the momentary upper hand in terms of the coverage for the next six hours -- as opposed to engaging the electorate in creating a structural change in their opinion on which party is better able to handle an issue."

Whether this "change" in strategy makes it through the next news cycle will have to be examined, although York noted that House Minority Whip Eric Cantor (R-VA) apparently changed the subject rather than continue to talk about the stimulus package.

Worth remembering -- despite all the hot air about how effective the New Deal was or wasn't in combatting the Great Depression, there's one area where it was brutally effective: voting Republicans out of office.

In the 70th Congress (elected in 1928), the GOP had 56 Senate seats, against 39 for the Democrats (1 Farmer-Labor).

In the 71st Congress (elected in 1930), the 96 Senate seats were split 48 GOP, 47 Dem (with 1 Farmer-Labor).

In the 1932 election, 12 Republicans lost their seats, making the split 59 Dem, 36 GOP, 1 Fam-Lab.

By 1937, (i.e., just after the FDR re-election), the number of GOP had been reduced to 16.

Said another way, almost three-quarters of Republican Senators serving when Herbert Hoover became President were unseated within eight years.

Electing FDR

With shadows from 1929 appearing -- seemingly -- on the business (and front) pages every day, it is perhaps instructive to look back at the true "Great Depression", and the election held in 1932. (It is worth noting that there appears to be an increase in interest in the FDR era in pop culture at this time as well, from AMC's "Mad Men" and the "Hobo Code" to John McCain's memories of Pearl Harbor in his RNC Nomination Speech.)

Donald Ritchie's "Electing FDR: The New Deal Campaign of 1932" begins with the rise of Herbert Hoover, self-made man, shortly after the turn of the century. By the end of the First World War, Hoover (then just 43 years old) was entrusted with the Food Administration, and had become a national figure. By 1920, some Washington wags were discussing a potential Hoover-FDR ticket on the Democratic side; Hoover demurred, and eventually declared himself a Republican. (It was interesting to learn that Hoover and Roosevelt were social acquaintances.)

By 1927, Hoover helped organize relief for the Mississippi River flood (the previous 'big one' that was referenced during Hurricane Katrina), and became the GOP nominee in 1928. Facing Al Smith, the New York Governor and first Catholic to head a party ticket, Hoover won with the promise of a "chicken in every pot, a car in every garage."

Four years later, promises of the "Hoover economy" had collapsed into the bitterness of "Hoovervilles" and "Hoover blankets" (newspapers). But he was relieved when FDR won the Democratic nomination in Chicago (holding off a challenge from his former mentor, Al Smith); Hoover felt that FDR would not be a tough opponent.

FDR for his part did not underestimate the incumbent, although Hoover did not campaign vigorously (employing the Rose Garden strategy) until very near the end. Moreover events moved against Hoover: a "Bonus March" of WWI veterans was broken up -- albeit over Hoover's orders for non-violence -- by calvary commanded by Douglas MacArthur (with assistance from Dwight D. Eisenhower). Public opinion -- which incredibly seemed split evenly between FDR and Hoover, although polling was in its infancy -- began to move against the sitting President.

In the end, the country was ready to turn to a fresh leader (although one with a familiar name). FDR tallied 22.8M votes against just 15.7M for Hoover.

The transition, which lasted through March, when FDR was sworn in, was marked by a near assassination (in Miami, when Chicago Mayor Anton Cermak was struck and eventually died; the assassin was convicted and executed within 33 days after the shooting); and increasing tension between former associates Hoover and FDR.

Although the Depression would linger for much of the rest of the 1930s, the country was clearly headed in a new direction. Hoover's reluctant campaigning and bad luck (as evidenced by the Bonus March), combined with the crushing economic climate, made the result a foregone conclusion (in retrospect).

But the backstory -- and the personal relationship between the two combatants -- made the re-telling an interesting one, especially given the current business headlines.