M.F.N. Tariff Debacles from FDR to DJT

Given ‘woke’ education from soviet educators who truly believe in ‘Hammer & Sickle’ command economies as our nation embraced the path of transferring wealth to specific interests over the general welfare, most have heard the acronym MFN (Most Favoured Nation) trading status, yet have little education with this unconstitutional power. Fellow Gazette writer Johnny Taylor’s book https://www.google.com/books/edition/Union_at_All_Costs/DopXMQAACAAJ?hl=en is the best I’ve read documenting/explaining our transition from sovereign independence to hegemony which paved the way for abominations like MFN allowing a president to reduce a specific tariff up to 50% without Congressional approval, further abandoning uniformity. A great primer is Taylor’s https://www.alabamagazette.com/story/2023/05/01/history/lincoln-republicans-and-corporate-welfare/2542.html column on the newly formed/traditional big government Republican’s corporate welfare rhetoric to cloak special interest avarice.

History speaks for itself. The easily forgotten October 1987 crash recovery was more driven by market forces. With bond and interest rates increasingly more manipulated in our command economy, the herding mentality into equities/stocks is as distorted as ever and we witness another FDR style soviet with the DJT cult. ‘Circuit breakers’ and ‘curbs’ no longer allow short, well defined selloffs as was the case in 1987 - i.e., don’t expect to see another 23% one day drop where Wall St. spoke loudly. Furthermore, federal legislation which triggered the 1987 sell off was easy to stop allowing quick correction/return back up to the long-term trend line. Our current situation is more like the 1929 distorted economy and it appears the politburo is pushing toward even more Hoover/FDR type leviathan responses than using this event to bring an end to agencies, policies and programs which trigger more volatile results. No surprise to anyone understanding our ‘privatize distorted gains and socialize losses’ command economy. This isn’t sustainable and accelerates our path to the usual destination of all command and control economies.

The October 1987 Alabama Gazette column https://www.alabamagazette.com/story/2017/10/01/opinion/october-1929-v-october-1987-black-mondays-a-tale-of-two-crashes/1177.html?fbclid=IwAR3P5IvHuyVKWgvGQ-6KYp9kTpOwwSN2foj3IOBcQaiBUt9NwvbqX5KwpYU is intended to debunk myths of what triggered the two crashes soviet trained PhD economists and historians espouse. The 1929 crash began October 24, when the market opened 11% lower. Institutional investors and financiers attempted to attenuate the 'panic' sell-off with above market bids so the day's sharp losses were blunted and stocks rebounded the following two days. These feeble attempts failed to address the trigger (think fear) of this Wall St. sell-off. Hoover's 'jawboning' (similar to Trump’s current bloviating from another over-degreed/under-educated soviet) championing the Smoot-Hawley Tariff signaled further resolve toward another high-watermark of protectionism over ‘common sense’ Constitutional competition. Enacted June 1931, long after the October ’29 crash, unemployment immediately spiked up from about 6% to 14%. Well educated economic historians understand Wall St. investors respond to legislative events when they THINK it will pass, not when actually signed (7/17/30) into law. The following Monday, a.k.a. ‘Black Monday’ in retrospect, closed with the market down 13%, exacerbated by margin calls. Bids disappeared the next day (Black Tuesday) as the market fell another 12% starting the long-term trend line down hitting bottom in 1932 as investors who understood what happened saw the Democrat likely to win the nomination would not reverse the typical big-government Republican policies advanced by Hoover. FDR was just another big-government soviet from NY who was ‘black-balled’ by the republicans... now wearing the blue soviet jersey.

The month prior to the 1929 crash the market peaked September 3rd with the Dow Jones Industrial Average [DJIA] at 381.17. The bottom was recorded on July 8, 1932, where the DJIA closed at 41.22. A remarkable 89% drop from peak to trough with five ‘sucker rallies’ which was even more devastating for small-cap and speculative stocks, many were compelled to declare bankruptcy and unlisted from the Exchanges dropping them out of reported data. A quarter century later the DJIA returns to the 381.17 result on Nov. 23, 1954. A brief overview of some economic history is required to understand what shepherded us to the October ’29 crash as the US became a dominant player in world events, even if they didn’t realize their standing. When the newly formed Republican Party (morphed from the protectionist wing of the Whig Party) deployed federal armies to militarily accomplish their desired wealth transfers when exiting States proved it would not be achieved politically, other nations (most notably Europe) witnessed our experiment in independent sovereignty over empire and nation building finally fail.

As thoughts of reclaiming New World riches faded following the War of 1812 and how industrious the US revealed itself to be toward consolidation and empire (Lincoln-Lenin Brigade mentality made it clear the New World was leading the way to consolidated/soviet-style government) not to be trifled with again, Europe resumed their cycle of death and destruction instead of decentralized peace and stability. Technologies had ground European Armies to a halt, bankrupting their nations toward stalemate. Whenever Europe goes to war demand for US exports explode, WW I was no exception. Instead of simply benefitting from the folly of this war, the US entered to break the stalemate moving the end result to the Treaty of Versailles impossible for Germany to meet. This shepherded Europe to the more virulent national socialist results of WWII. Another historical thread of interest with so much zeitgeist discussion of China is Japan. President Fillmore’s 1853 naval expedition to Japan requesting trade and diplomatic relation with the ‘island nation’ that exhibited 200 years of independent stability without dependence on trade for sustainability would destroy the Russian Navy [1905 Battle of Tsushima] and allied with US in WWI. MFN will play a role in why Japan becomes an enemy as the now trade dependent nation suffers uncompetitive US tariff rate policies instead of uniformity.

The end of WWI meant return to normalcy, those who benefitted from the short-run boon of war must adjust. As Europe began to clear their fields and reallocate to a peacetime economy - i.e., more desperately interested in feeding themselves than producing arms, American farmers quickly noticed. The so-called “Emergency Tariff” [1921] was a response to Europe getting back on their feet later formalized under the “Fordney-McCumber Tariff” [1922] placing high tariffs on agriculture and raw materials which are our comparative advantage often exported. Republicans promised this would lead to great wealth for the American farmer as they’ve always asserted protectionism helps American jobs over a uniform tariff [Article 1, Section 8, Clause 1] to keep commerce regular as proscribed in the Constitution. Since our manufactured goods are usually inferior there’s less demand for them to be exported. Impeding the flow of refined steel, equipment, etc. increasing the price of inputs for production (esp. construction) has a negative impact on employment, ceteris paribus. The political rhetoric of the next boon in farming fooled ‘roaring twenties’ dumb masses as big govt. Repulocrats do today. Many reallocated capital, effort, time, savings, etc. into farming. ‘Sodbuster’ distortions increased prices for farmland, mortgages, tractors, etc. but had very visible negative consequences.

Once the reality of the usual/traditional Republican protectionist result unfolded, demand for US exports decline as other nations respond to our artificial trade barriers ‘in kind’ [some hear it as ‘reciprocal’ tariffs] raising protectionist policies in response. The folly is felt all the more when putting protectionist policies on one’s comparative advantage because it is often exported - protectionism on inferior manufactured goods less exported will not be as profound. Markets for our Ag and raw materials slowly closed as Europe further recovered from WWI, much of the newly ‘sodbusted’ land along with longer established farmland was foolish to plant giving rise to the true cause (in spite of ‘global warming’ claims to get soviet research grants) of the “Dust Bowl.” When struggling farmers press Hoover and the Republicans on where all the relief and promised prosperity was, Hoover’s response was tariffs clearly were still not high enough.

The Smoot-Hawley Tariff’s average dutiable rate of 60% was a little below the Tariff of Abominations highest recorded rate of 61% which triggered the Nullification Crisis. The stage for war between the States was set with the Tariff of 1828, but cooler heads prevailed and tariff reductions avoided conflict. Enter Lincoln (the greatest politician this nation has ever produced) and the Republicans wanting to return the tariff to 1828 levels evoking slavery rhetoric to cloak their avarice while militarily accomplishing their ends after political machinations failed. As Morrill Tariff average dutiable rate (more than double from the 20% benchmark rate to 47%) decreased revenue, the Republicans imposed the first federal income tax, fiat money, etc. to finance forcing States into our now hegemonic union.

More informed investors who understood what was happening correctly forecasted the Democrat likely to win the nomination wouldn’t reverse the typical big-government Republican policies advanced by Hoover and reduced Constitutional constraints with the Fed, income tax, etc. already in place. In his first 100 days Comrade FDR did nothing to address Smoot-Hawley; DJT’s 100 days this second (non-consecutive) term are closing with chainsaw shows, a few deportations and short-term firings instead of addressing the long term/fundamental issues. Just as warnings were sounded in the past, a thousand professional economist (before they ‘were all Keynesians’ as espoused today) sent an open letter to Hoover warning of the consequences (if history were any guide) of pursuing the path to yet another extremely protectionist tariff. Displaying his repute for blatant hubris, Hoover ignored the economists’ prophetic caveat saying he realized consumers would pay higher prices but would be made better off… sound familiar today? Whenever a politician claims higher prices will benefit consumers (or welfare in general) when those higher prices will NOT motivate more supply, innovation, etc. but are a result of wealth transfers from impeding commerce - hold onto your wallet and RUN AWAY!

Easy to understand special interests who receive the transfer championing these policies/programs, but it will not promote the general welfare and allocation (esp. in capital markets) of resources to higher valued use(s) in our economy. Among the most ardent lotharios of leviathan in our pantheon of presidents, Hoover went to his grave lamenting how many of HIS big govt. programs were attributed to FDR. Once it was clear Hoover and the Republicans would not back off of this new high-watermark of protection, a crash with no foreseeable correction (until a change in Executive and/or Congress) was a rational forecast. Investors in fact observed Hoover and Congress remain obstinate even with the huge selloff response on Wall St. Some argue a 1929 Congress made more comfortable by the recently established 435 limited House of Representatives, enjoying less competition/discipline from voters, aided and abetted these recalcitrant protectionists.

Onto some more myth busting w.r.t. Lincoln-like deification of FDR. It was an interesting time for the Democratic Party. After the Grover Cleveland era some considered a tipping point (as the only President to not serve consecutive terms as another popular vote v. Electoral College anomaly) a growing number of traditional Democrats grew tired of losing to the big govt. Republicans. The race was on to ‘out republican the Republicans’ and the socialists were accomplishing all the goals traditional big govt. Republicans (progressives) wanted without being elected under the Socialist Party moniker. It took four ballots at the DNC before FDR secured the 770 votes required to lock the nomination as Garner (who would be FDR’s VP for most of his four term presidency) finally released his delegates to FDR. It was clear the traditional Democrats (Jeffersonians who rejected corporate AND social welfare redistributionists) could not carry the day. Perhaps Garner thought the ills of progressivism were somehow different from deleterious results of the corrupt political machines. While the direction of the transfer matters to the specific recipient(s) the contraction to the economy is nonetheless profound - esp. among those least able to weather tough economic times.

Contracting economies induce the worst out of mankind. As unemployment reaches unbearable levels the word ‘racism’ [1936] enters our lexicon when competition and merit attenuate as determinants of employment. More explicit, vulgar fallacies of inherent superiority of race carry the day as progressives become more emboldened and empowered over peoples’ lives desperate to get or hold onto jobs. Progressives gave birth to the first federal minimum wage in this era, one of the more effective tools still today to enable discrimination against minorities, single moms, teens, etc.

Traditional Democrat voters, slow to see the realignments, think their candidate will come in and clean-up the usual mess of Republican protectionism. Voters, unlike investors, are generally more ignorant of what specifically drives economic results. They were in for a surprise. FDR was NOT a traditional Democrat, he was a big govt. Republican enamored with his Uncle Teddy’s progressive hard charging toward centralized command economy results. Much had already been accomplished (some say the ‘Revolution of 1913’ today) with a more certain federal income tax, direct election of US senators, federal reserve, debt less tied to specific federal projects, etc. Some of our top soviet economists say the Fed didn’t do enough with monetary tools at their disposal, but they DID - it failed because it was addressing a symptom, not the problem. DJT wanting artificially low interest rates also will not address the problems of our command economy.

Sharp increases in Discount rates, buying bonds, etc. were met with further increases in unemployment as it showed further resolve to continue the Republicans’ 1929 extreme protectionist policy. Tariff revenues declined - no surprise to anyone familiar with the Laffer Curve. The recently [1913] reestablished federal income tax is already in place (no delay/effort required to impose it as did Lincoln in our first federal income tax) to continue financing this tariff policy contracting the economy. The fiscal discipline designed in the Constitution to limit duration policies of this sort could be sustained was circumvented. The Federal Reserve was also already in place so no need to impose another Lincoln/Republican fiat currency. Some understand why Comrade Trump wants the Fed to steal from producers/savers as he did his first term. We now observe results of high tariffs AND the ability to increase a federal income tax/money supply when tariff revenue drops from protectionism. Indeed as the federal income tax was raised, unemployment climbed to an even higher new record providing short-run revenue for the federal government to continue operating in the 1930s.

Unemployment in fact spiked down in anticipation of electing a Democrat executive, but when president elect FDR is silent on reversing Hoover’s excessive taxation, unemployment returns to the record high level around 27%. Roosevelt takes office, still no promise of tariff reduction, as the bitter reality of no relief in sight for years sets in... Comrade FDR declares a Bank Holiday as marginal banks (about 6,000 already closed their doors 1929-32) hanging on will not survive a “New Deal” instead of relief from Republican protectionism. More unconstitutional policies/programs (y’all know the ‘alphabet soup’ many of us had to memorize in soviet schools - AAA, CCC, CWA, EBA, FCA, FDIC, FERA, FHA, FSRC, HOLC, NRA, NIRA, PWA, REA, SSA, TVA, et al) along with the revered Glass-Stegall Act, did nothing to address the source of the problem. Unemployment hovers around 25% from 1932 to late 1934 until MFN (Most Favoured Nation trading status) provides some tariff relief. MFN was also unconstitutional, but did reduce some specific tariffs (up to 50%) with other nations for reductions in kind at the pleasure of the executive (FDR was the first president to enjoy this empowerment) so finally unemployment slowly declined. This picking favorites sets in motion the problem for Japan dependent upon trade that takes the predictable path of acquiring inputs militarily. Imagine how long ago China would imploded if Nixon (and his over-degreed/poorly educated mouth-piece Kissinger) hadn’t opened China - treason if we’d declared war in Vietnam in the 1960s.

To those who’ve fought and died for our Constitution they took an oath to uphold and defend, it is despicable to think giving unconstitutional MFN power to Comrade FDR would be any different or less deleterious under Comrade Trump listening to his similarly over-degreed/under-educated soviet advisors. The downward trend-line in Depression era unemployment ends in 1938 as many State and local governments imposed minimum wage laws and the NLRB (soon after the Wagner-Connery Act was deemed OK by SCotUS) imposed our first federal minimum wage. Unemployment again spikes up, hovering around 20% until the storm clouds of war in Europe overshadow the ills of protectionism where once again demand for exports from America increase. WWII is what brings unemployment down and keeps it down for the duration. I pray younger readers learn and understand this economic history to come up with more sane ways to get out of failed unconstituional policies we appear to be headed toward yet again.

In closing, those who genuinely seek common sense may stop listening to Biden, Trump, et al soviets and look to the Constitution for guidance instead of chainsaw wielding parasites who suck up to oligarchs like AOC, Bernie, MTG, et al who enable them. A jealous parasite and failed businessman (who couldn’t succeed with tax breaks, eminent domain abuse, etc.) in the executive to broker these unconstitutional tariffs seems to headed toward another Comrade FDR result.

Postscript: Kudos to Goat Hill chilling the devastating effect of the ACCA, BCBS, et al Felon Hubbard type corruption destroying independent competitive pharmacies in our State not in the BCA crony network aided and abetted by our prostitute oligarchs in Congress. No Alabama journalist can compare to John Brice getting light shown on this despicable saga largely driven by our 'Moscow on the Potomac' legislators [https://www.alabamaexaminer.com/post/aipa-press-release-governor-ivey-has-signed-sb252-into-law] destroying our quality of life. Much like being the only reporter with the courage to break the story on the Martha Menefield garbage debacle arrests in East Alabama, Mr. Brice was the first to sound the alarm with his article about my local pharmacy in Beauregard, AL. With more John Brice caliber investigative reporters we may be able to reverse more harm of this sort in our command economy.

THE VIEWS OF SUBMITTED EDITORIALS MAY NOT BE THE EXPRESS VIEWS OF THE ALABAMA GAZETTE.