What was the Fordney-McCumber Tariff of 1922, and what was its primary objective?

The Fordney-McCumber Tariff of 1922 was a United States law that significantly raised tariffs on a wide array of imported goods. Its main purpose was to protect American factories and farms from foreign competition by making imported products more expensive.

Who were the key legislative figures after whom the Fordney-McCumber Tariff was named?

The tariff is named after Representative Joseph W. Fordney of Michigan, who served as the chairman of the House Ways and Means Committee, and Senator Porter J. McCumber of North Dakota, who chaired the Senate Finance Committee.

When was the Fordney-McCumber Tariff enacted, and by whom was it signed into law?

The Fordney-McCumber Tariff was signed into law by President Warren G. Harding in September 1922.

What was the stated intention behind the Fordney-McCumber Tariff concerning American industries and labor?

The tariff was intended to protect American factories and farms. It was also partly aimed at creating better job opportunities for American veterans returning from World War I.

What economic conditions in American agriculture following World War I contributed to the push for the Fordney-McCumber Tariff?

After World War I, American agriculture faced a decline in demand as European countries recovered and no longer required large quantities of U.S. farm products. Farmers had expanded their operations and incurred debt during the war, leading to falling prices, surpluses, and financial difficulties.

How did gross farm income change in the United States between 1919 and 1921?

Gross farm income in the U.S. saw a substantial decrease, falling from $17.7 billion in 1919 to $10.5 billion by 1921, reflecting the post-war slump in agricultural exports.

What political shift in the 1920 elections influenced the passage of protectionist legislation like the Fordney-McCumber Tariff?

The 1920 elections brought Republicans, who generally favored pro-business and pro-farm policies, into control of both the U.S. Congress and the White House, creating a favorable political climate for enacting high tariffs.

What were the two primary new mechanisms introduced by the Fordney-McCumber Tariff to protect domestic industries?

The tariff introduced two key protective measures: the 'scientific tariff,' designed to equalize production costs across countries, and the 'American selling price,' which allowed duties to be based on the price of a comparable domestic product rather than the imported good.

Explain the concept of the 'scientific tariff' as implemented by the Fordney-McCumber law.

The scientific tariff was intended to equalize production costs among different countries. This meant that the Tariff Commission calculated the difference in production costs, and tariffs were set to prevent foreign producers from undercutting American companies solely due to lower manufacturing expenses.

What authority did the Fordney-McCumber Tariff grant to the President regarding tariff rates?

The law empowered the President to adjust tariff rates, allowing him to either raise or lower them based on recommendations provided by the Tariff Commission.

What was the average ad valorem tariff rate for dutiable imports under the Fordney-McCumber Tariff?

The Fordney-McCumber Tariff increased the average ad valorem tariff rate to approximately 38.5% for imported goods that were subject to duty.

What was the average overall tariff rate imposed by the Fordney-McCumber Tariff across all imports?

The Fordney-McCumber Tariff resulted in an average overall tariff rate of about 14% when considering all imported goods, not just those subject to specific duties.

How did the Fordney-McCumber Tariff affect the purchasing power of American farmers?

According to reports, the tariff increased the purchasing power of farmers by an estimated 2% to 3%.

Despite potential benefits, what negative economic impact did the tariff have on the cost of farm equipment?

The tariff led to increased prices for certain farm equipment. For example, the costs of harnesses, plows, mowing machines, and farm wagons rose significantly between 1918 and 1926.

What international trade consequence arose from the Fordney-McCumber Tariff, often referred to as a 'tariff war'?

The Fordney-McCumber Tariff prompted American trading partners to retaliate by raising their own tariffs on U.S. goods. This reciprocal increase in duties created a 'tariff war,' escalating trade tensions.

Provide specific examples of how other countries increased their tariffs in response to the Fordney-McCumber Tariff.

Following the tariff's enactment, France raised its tariffs on automobiles from 45% to 100%. Spain increased tariffs on American goods by 40%, and Germany and Italy imposed higher tariffs on wheat imports.

What was the estimated annual financial loss for farmers attributed to the Fordney-McCumber Tariff, according to the American Farm Bureau?

The American Farm Bureau estimated that farmers suffered annual losses exceeding $300 million as a consequence of the Fordney-McCumber Tariff.

Which major political parties and ideologies generally opposed the Fordney-McCumber Tariff?

Opposition to the tariff came mainly from the Democratic Party, along with liberal and progressive political groups.

Why did European nations, particularly those affected by World War I, express concerns about the Fordney-McCumber Tariff?

European nations needed to export goods to the American market to generate revenue for repaying war loans they had received from the United States. The high tariffs imposed by the Fordney-McCumber Tariff made this more difficult, potentially hindering their economic recovery and ability to meet their financial obligations.

What warning did Representative Cordell Hull issue regarding the potential consequences of the Fordney-McCumber Tariff on U.S. foreign markets?

Representative Cordell Hull warned that the high U.S. tariffs would negatively impact the efficiency of American production and invite retaliatory tariffs from other countries, ultimately harming American foreign markets.

What was Henry Ford's perspective on the Fordney-McCumber Tariff in 1928?

In 1928, Henry Ford criticized the tariff, stating that the American automobile industry, which dominated the domestic market, did not need protection and that the tariff hindered its efforts to expand international sales.

How did some farmers express opposition to the Fordney-McCumber Tariff, and what specific cost increase did the American Farm Bureau Federation highlight?

Some farmers opposed the tariff, blaming it for the agricultural depression. The American Farm Bureau Federation specifically claimed that the tariff increased the cost of raw wool for farmers by $27 million.

What arguments did Senator David I. Walsh present against the Fordney-McCumber Tariff?

Senator David I. Walsh argued that farmers, being net exporters reliant on foreign markets, did not benefit from protectionist policies. He also contended that the tariff increased the cost of living, citing rising prices for food and clothing in major U.S. cities.

What was Frank W. Murphy's view on the root cause of agricultural problems related to the tariff?

Frank W. Murphy, who led the Minnesota Farm Bureau, believed that the primary issue for farmers was not the world price of farm products, but rather the increasing cost of the goods that farmers needed to purchase.

What was the role of the Tariff Commission in relation to the Fordney-McCumber Tariff?

The Tariff Commission was responsible for calculating production cost differences between countries for the 'scientific tariff' provision and could recommend adjustments to tariff rates to the President.

What was the purpose of the 'American selling price' provision within the Fordney-McCumber Tariff?

The American selling price provision allowed the President to base import duties on the price of a comparable American-made good, rather than the price of the imported item itself, serving as a protective measure for domestic producers.

How did the U.S. Congress attempt to promote foreign trade concurrently with the implementation of the Fordney-McCumber Tariff?

While raising tariffs, Congress also aimed to promote foreign trade by providing substantial loans to European countries. The intention was to stimulate their economies, thereby increasing their capacity to purchase American goods.

What was the impact of the Fordney-McCumber Tariff on the cost of a harness between 1918 and 1926?

The average cost of a harness increased from $46 in 1918 to $75 in 1926, illustrating the rise in farm equipment prices following the tariff's implementation.

What was the percentage increase in the cost of a 14-inch plow between 1918 and 1926?

The price of a 14-inch plow doubled, rising from $14 in 1918 to $28 in 1926, reflecting the increased costs of farm machinery.

By how much did the average cost of mowing machines increase between 1918 and 1926?

The average cost of mowing machines rose from $45 in 1918 to $95 in 1926, indicating a significant increase in the price of farm equipment.

What was the increase in the average cost of farm wagons from 1918 to 1926?

The average cost of farm wagons increased from $85 in 1918 to $150 in 1926, demonstrating the trend of rising prices for essential farm equipment.

How did the Fordney-McCumber Tariff affect the ability of European nations to repay their war loans from the U.S.?

By increasing the cost of European goods entering the U.S. market, the tariff potentially hindered European nations' ability to earn the necessary dollars to repay their war loans to America.

What was the overall goal of the 'scientific tariff' provision in the Fordney-McCumber Tariff?

The overall goal of the scientific tariff was to create a more equitable competitive environment by ensuring that import duties reflected the actual differences in production costs between countries, thereby preventing unfair price advantages for foreign goods.

What was the impact of the tariff on food costs in Chicago and New York, according to a Department of Labor survey?

A Department of Labor survey cited by Senator Walsh indicated that food costs increased by 16.5% in Chicago and 9.4% in New York during the first year the tariff was in effect.

What impact did the tariff have on clothing prices in Buffalo and Chicago, according to Senator Walsh?

Senator Walsh noted that clothing prices saw increases of 5.5% in Buffalo and 10.2% in Chicago, contributing to the overall rise in the cost of living attributed to the tariff.

What was the primary economic sector that experienced a decline in postwar demand, contributing to the push for protective tariffs?

The agricultural sector was the first to experience a significant drop in postwar demand, which played a role in the broader movement to enact protective tariffs like the Fordney-McCumber Tariff.

What was the significance of the 1920 election in the context of U.S. trade policy leading up to the Fordney-McCumber Tariff?

The 1920 election resulted in Republicans, who generally favored protectionist policies, gaining control of both the presidency and Congress, which facilitated the passage of high tariffs such as the Fordney-McCumber Tariff.

What was the nature of the Fordney-McCumber Tariff, described as 'defensive' in the text?

The tariff was characterized as defensive because its rates were determined by the cost of production and the market value of goods. This approach aimed to protect domestic industries rather than aggressively pursue foreign markets.

What does the term 'ad valorem' mean in the context of tariffs, and how did the Fordney-McCumber Tariff affect it?

Ad valorem refers to a tariff calculated as a percentage of the value of imported goods. The Fordney-McCumber Tariff significantly raised the average ad valorem rate for dutiable imports.

What was the purpose of the 'See also' section in the article regarding the Fordney-McCumber Tariff?

The 'See also' section provides links to related historical U.S. tariff and revenue acts, as well as broader topics like international trade and protectionism, offering additional context and related information.

What was the relationship between U.S. foreign loans after WWI and the promotion of international trade?

The U.S. government provided substantial loans to Europe after World War I to stimulate their economies. The goal was to enable European nations to purchase more American goods, thereby promoting international trade.

How did the Fordney-McCumber Tariff impact the German and Italian trade policies concerning wheat?

In response to the Fordney-McCumber Tariff, Germany and Italy raised their tariffs on wheat imports from the United States.

What specific cost increase related to wool did the American Farm Bureau Federation attribute to the Fordney-McCumber Tariff?

The American Farm Bureau Federation claimed that the Fordney-McCumber Tariff increased the cost of raw wool for farmers by $27 million.

What was the overall goal of the 'American selling price' provision in the tariff?

The goal of the American selling price provision was to protect domestic producers by setting import duties based on the price of a comparable American-made product, ensuring that imported goods faced tariffs calculated relative to domestic market prices.

How did the Fordney-McCumber Tariff contribute to international trade disputes?

By raising U.S. tariffs, the Fordney-McCumber Tariff prompted other nations to retaliate with their own higher tariffs, leading to escalating trade tensions and a 'tariff war'.

What was the stated purpose of the Fordney-McCumber Tariff in relation to American factories?

The Fordney-McCumber Tariff aimed to protect American factories by increasing the cost of imported goods, making domestically produced goods more competitive.

What was the average increase in the cost of farm wagons between 1918 and 1926, as an example of rising farm equipment prices?

The average cost of farm wagons increased from $85 in 1918 to $150 in 1926, illustrating the trend of rising prices for essential farm equipment that impacted farmers.

What was the primary reason cited by trading partners for their complaints regarding the Fordney-McCumber Tariff?

Trading partners complained because they needed access to the American market to export their goods, which was essential for generating the revenue required to repay war loans they had received from the United States.

Fordney U2013mccumber Tariff Wiki: The Fordney-McCumber Tariff: A Pillar of Protectionism

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The Fordney-McCumber Tariff

Defining Protectionism

The Fordney-McCumber Tariff of 1922 was a legislative act that significantly raised tariffs on a wide array of imported goods into the United States. Its primary objective was to shield American industries and agricultural producers from foreign competition, thereby bolstering domestic economic stability and growth during the post-World War I era.

Legislative Intent

The U.S. Congress, reflecting a strong pro-business and pro-agriculture sentiment following the 1920 elections, enacted this tariff. The legislation aimed to foster a favorable environment for American commerce by implementing protective measures, intending to support the nation's economic recovery and expansion through managed international trade.

Average Rates

Upon its enactment, the Fordney-McCumber Tariff law resulted in an average ad valorem duty of approximately 38.5% on dutiable imports. When considering all imports, the overall average tariff rate was around 14%. This structure was designed to be defensive, with rates determined by production costs and market values to equalize competition.

Post-War Economic Landscape

Agricultural Distress

The agricultural sector was the first to experience a downturn in demand following World War I. During the conflict, American farmers had enjoyed unprecedented prosperity, driven by high prices and increased output to meet European needs. However, as European nations recovered and their demand for American agricultural products waned, farmers faced significant challenges.

Falling Incomes and Debt

The expansion of farmland during the war, financed by heavy borrowing, became unsustainable when prices plummeted. Gross farm income dropped sharply from $17.7 billion in 1919 to $10.5 billion by 1921. This decline made it difficult for farmers to repay their loans, creating widespread economic hardship in the agricultural community.

Political Climate

The 1920 elections brought conservative, pro-business Republicans into control of both the White House and Congress. This political shift created an environment conducive to protectionist policies. Congress held hearings that led to the development of new trade protection tools, including the concept of a "scientific tariff" to equalize international production costs.

Economic Ramifications

Impact on Farm Equipment Costs

While the tariff aimed to increase farmers' purchasing power by 2-3%, other industries leveraged the protectionist environment to raise prices for essential farm equipment. For instance, the cost of a harness increased from $46 in 1918 to $75 in 1926, a 14-inch plow doubled from $14 to $28, and farm wagons rose from $85 to $150, significantly increasing operational costs for farmers.

Triggering Trade Wars

The imposition of higher U.S. tariffs initiated retaliatory measures from other nations, leading to a cycle of escalating trade barriers. France increased its automobile tariffs from 45% to 100%, Spain raised tariffs on American goods by 40%, and Germany and Italy imposed higher tariffs on wheat imports from the U.S. This protectionist spiral hampered international trade.

Cost of Living Increases

Critics argued that the tariff contributed to a rise in the cost of living. Surveys indicated significant increases in food and clothing prices across major cities shortly after the tariff's implementation. For example, food costs rose by 16.5% in Chicago and 9.4% in New York, while clothing prices saw increases of 5.5% in Buffalo and 10.2% in Chicago.

Farmer Losses

According to the American Farm Bureau Federation, farmers experienced annual losses exceeding $300 million as a direct consequence of the tariff. This was attributed to the inability to sell surplus goods in protected foreign markets and the increased cost of imported goods and domestic products affected by retaliatory tariffs.

Diverse Perspectives

Political Alignment

The Fordney-McCumber Tariff was largely supported by the Republican Party and conservative factions, who viewed it as essential for protecting American economic interests. Conversely, the Democratic Party, along with liberal and progressive groups, generally opposed the measure, arguing it would harm international relations and economic recovery.

Criticisms from Abroad

European trading partners voiced immediate objections. Nations affected by the war sought access to the American market to facilitate payments on war loans. Democratic Representative Cordell Hull cautioned that high U.S. tariffs would injure American production efficiency and provoke retaliatory tariffs from other countries, thereby undermining global trade.

Industry Opposition

By 1928, figures like Henry Ford began to criticize the tariff. Ford argued that the American automobile industry, which dominated the domestic market, no longer required protection and that expanding foreign sales was paramount. The tariff's restrictions hindered the industry's ability to compete internationally.

Farmer Opposition

Some farmers actively opposed the tariff, blaming it for exacerbating the agricultural depression. They pointed to increased costs for essential items, such as raw wool, which allegedly cost farmers an additional $27 million annually. Senator David I. Walsh highlighted that farmers, as net exporters, relied on foreign markets and that the tariff increased the cost of living for everyone.

Related Legislation

Legislative Precedents and Successors

The Fordney-McCumber Tariff did not exist in isolation but was part of a broader evolution of U.S. trade policy. Understanding its context requires examining preceding and subsequent legislation that shaped America's approach to international commerce and taxation.

Revenue Act of 1913 (Underwood Tariff): Lowered tariffs and reintroduced the federal income tax.
Emergency Tariff of 1921: A precursor that raised tariffs on agricultural products.
Smoot-Hawley Tariff Act of 1930: Significantly raised tariffs further, widely blamed for worsening the Great Depression.
Reciprocal Tariff Act of 1934: Marked a shift towards trade liberalization, allowing the President to negotiate lower tariffs.
General Agreement on Tariffs and Trade (GATT) 1948: An international agreement to regulate trade, promoting gradual reduction of tariffs.

Enactment and Signing

Presidential Approval

The Fordney-McCumber Tariff bill was officially signed into law by President Warren G. Harding in September 1922. The legislation was named after its key proponents: Representative Joseph Fordney, chairman of the House Ways and Means Committee, and Senator Porter McCumber, chairman of the Senate Finance Committee.

Key Provisions

The tariff introduced two significant tools for setting duties: the "scientific tariff," which aimed to equalize production costs between the U.S. and other countries, and the "American selling price" provision. This latter provision allowed the President, based on recommendations from the Tariff Commission, to adjust rates by basing duties on the domestic price of a good rather than its imported price.

Sources

Scholarly and Historical Accounts

Berglund, Abraham. "The Tariff Act of 1922." The American Economic Review, vol. 13, no. 1, 1923, pp. 14–33.
Taussig, F. W. "The Tariff Act of 1922." The Quarterly Journal of Economics, vol. 37, no. 1, 1922, pp. 1–28.
Dollar, Charles M. "The South and the Fordney–McCumber Tariff of 1922: A Study in Regional Politics." Journal of Southern History, vol. 39, no. 1, 1973, pp. 45–66.
Hayford, Marc, and Carl A. Pasurka Jr. "The Political Economy of the Fordney–McCumber and Smoot–Hawley Tariff Acts." Explorations in Economic History, vol. 29, no. 1, 1992, pp. 30–50.
Kaplan, Edward S. and Thomas W. Ryley. Prelude to Trade Wars: American Tariff Policy, 1890–1922. 1994.
Kaplan, Edward S. "The Fordney–McCumber Tariff of 1922." EH.Net Encyclopedia, March 16, 2008.
Kaplan, Edward S. American Trade Policy, 1923–1995. Greenwood Press, 1996.
Rothgeb, John. U.S. Trade Policy. CQ Press, 2001.

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References

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The Fordney-McCumber Tariff

💡 Dive in with Flashcard Learning! 💡

The Fordney-McCumber Tariff 💰

📜 Defining Protectionism

⚖️ Legislative Intent

📈 Average Rates

Post-War Economic Landscape 🌍

🌾 Agricultural Distress

📉 Falling Incomes and Debt

🏛️ Political Climate

Economic Ramifications 💸

🛒 Impact on Farm Equipment Costs

⚔️ Triggering Trade Wars

🏠 Cost of Living Increases

📉 Farmer Losses

Diverse Perspectives 🗣️

🤝 Political Alignment

🗣️ Criticisms from Abroad

🚗 Industry Opposition

🚜 Farmer Opposition

Related Legislation 🔗

📚 Legislative Precedents and Successors

Enactment and Signing ✍️

🏛️ Presidential Approval

⚖️ Key Provisions

Sources 📚

📖 Scholarly and Historical Accounts

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📜 Important Notice

Dive in with Flashcard Learning!

The Fordney-McCumber Tariff

Defining Protectionism

Legislative Intent

Average Rates

Post-War Economic Landscape

Agricultural Distress

Falling Incomes and Debt

Political Climate

Economic Ramifications

Impact on Farm Equipment Costs

Triggering Trade Wars

Cost of Living Increases

Farmer Losses

Diverse Perspectives

Political Alignment

Criticisms from Abroad

Industry Opposition

Farmer Opposition

Related Legislation

Legislative Precedents and Successors

Enactment and Signing

Presidential Approval

Key Provisions

Sources

Scholarly and Historical Accounts

Teacher's Corner

True or False?

Test Your Knowledge!

Gamer's Corner

Discover other topics to study!

References

Feedback & Support

Disclaimer

Important Notice