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Sat Jan 28, 2012, 10:58 AM

Fordney-McCumber Act, 1922 with its "scientific tariff" tied to the wages in the country of export

"Woodrow Wilson believed in low tariffs. He had reduced tariffs in 1913, and refused to increase them.

If ever there was a time when Americans had anything to fear from foreign competition, that time has passed. If we wish to have Europe settle her debts, governmental or commercial, we must be prepared to buy from her.

Woodrow Wilson, speaking in March 1921. Wilson had just vetoed the Emergency Tariff Bill, just before he handed over the Presidency to Harding.


As soon as he became President, Warren Harding passed an Emergency Tariff (May 1921) to increase duties on food imports, and in 1922 Congress passed the Fordney-McCumber Tariff. This had two principles:

a. 'Scientific tariff': this linked tariffs to the wages in the country of export. If wages in, say Italy, were very low, then Italian goods were given a proportionately higher tariff. This negated the effect of lower wages in competitor countries.

b. 'American Selling Price': this linked tariffs to the price of American goods, not to the cost of production. A German company might be able to produce, say, a certain chemical for $60, but if the selling price in America was $80, and the US tariff was 50%, the tariff would be $40. This meant that foreign imports were ALWAYS more expensive than American-produced goods, however cheaply they had been made.

The Fordney-McCumber Act established the highest tariffs in history, with some duties up to 400% and an average of 40%."

http://www.johndclare.net/America3.htm

The Fordney-McCumber Tariff was familiar but this is the first explanation of the "scientific tariff" in it that I have read.

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Reply Fordney-McCumber Act, 1922 with its "scientific tariff" tied to the wages in the country of export (Original post)
pampango Jan 2012 OP
Jackpine Radical Jan 2012 #1
pampango Jan 2012 #3
jwirr Jan 2012 #2
Morning Dew Jan 2012 #4
Motown_Johnny Jan 2012 #5
Morning Dew Jan 2012 #7
pampango Jan 2012 #9
Motown_Johnny Jan 2012 #6
Odin2005 Jan 2012 #8

Response to pampango (Original post)

Sat Jan 28, 2012, 11:45 AM

1. I have long proposed something like Fordney-McCumber

without realizing that it had a name & history.

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Response to Jackpine Radical (Reply #1)

Sat Jan 28, 2012, 01:12 PM

3. It is interesting how history and themes within it tend to repeat themselves. n/t

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Response to pampango (Original post)

Sat Jan 28, 2012, 12:45 PM

2. How did this idea work back then - was it success and when did it end?

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Response to jwirr (Reply #2)

Sat Jan 28, 2012, 01:15 PM

4. The tariffs were met with European tariffs

Locking out foreign products while locking in US products.

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Response to Morning Dew (Reply #4)

Sat Jan 28, 2012, 01:19 PM

5. The US is a much larger economy now

 



It hurts them more to lose business here than it hurts us to lose business there.


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Response to Motown_Johnny (Reply #5)

Sat Jan 28, 2012, 01:27 PM

7. Just something I remembered from a History book.

there was a cartoon of a tariff wall with the Europeans on one side saying "locked out" and the Americans on the other side saying "locked in".

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Response to jwirr (Reply #2)

Sat Jan 28, 2012, 06:59 PM

9. The "Roaring Twenties" were good economically though income inequality increased greatly

to a then record level by 1929. (There's a reason that it was republicans voting for the tariff rather than progressive taxes or something else. ) Of course, we have eclipsed that record inequality in recent years.

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Response to pampango (Original post)

Sat Jan 28, 2012, 01:21 PM

6. We should add in environmental laws as well

 

but this is the way to go if we are going to have any chance at all at saving our manufacturing base.

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Response to pampango (Original post)

Sat Jan 28, 2012, 02:17 PM

8. That is the kind of tariff we need now.

And increases my respect for Harding, despite the Teapot Dome scandal.

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