During the election of 1932, in a speech in Sioux City, Iowa,
Democratic presidential candidate Franklin D. Roosevelt
blamed President Herbert Hoover for the Great Depression
because he had signed the Hawley-Smoot Tariff into law.
Roosevelt claimed that the tariff had caused the Great
Depression, although Hoover argued that other events around
the world had precipitated the crisis.
Mr. Chairman, my friends in Sioux City, my friends in this
great State, and, indeed, all of you through the country who
are listening on the radio tonight, let me tell you first of all
that I appreciate this remarkable welcome that you have given
me, and I appreciate, too, the performance put on by the
mounted patrol of my fellow Shriners.
Two weeks ago, when I was heading toward the Coast, I
presented before an audience in the City of Topeka, what I
conceived to be the problem of agriculture in these United
States, with particular reference to the Middle West and West,
and what the Government of the Nation can do to meet that
problem of ours.
I have been highly gratified to receive from all parts of the
country and particularly from farm leaders themselves,
assurances of their hearty support and promises of cooperation, in the efforts that I proposed to improve the deplorable
condition into which agriculture has fallen. The meeting of
this farm problem of ours is going to be successful only if two
factors are present.
The first is a sympathetic Administration in Washington,
and the second is the hearty support and patient cooperation
of agriculture itself and its leaders.
I cannot avoid a word concerning this plight of agriculture—what it means to all. It means that the product of your
labor brings just half of what it brought before the war. It
means that no matter how hard you work and how long and
how carefully you save, and how much efficiency you apply to
your business, you face a steadily diminishing return. As a
farm leader said to me, you have been caught like a man in a
deep pit, helpless in the grip of forces that are beyond your
control. Still, my friends, it has meant that in spite of the
maxims that we have learned when we were in school, that we
ought to work and save, to be prudent and be temperate, in
spite of all of the rest of the homely virtues, the return on
these virtues has belied the hopes and the promises on which
you and I were raised.
That is one of the tragic consequences of this depression.
The things that we were taught have not come true. We were
taught to work and we have been denied the opportunity to
work. We were taught to increase the products of our labor
and we have found that while the products increase the
return has decreased. We were taught to bring forth the fruits
of the earth, and we have found that the fruits of the earth
have found no market.
The results of our labor, my friends, have been lost in the
smash of an economic system that was unable to fulfill its
purposes.
It is a moral as well as an economic question that we
face—moral because we want to reestablish the standards
that in times past were our goal. We want the opportunity to
live in comfort, reasonable comfort, out of which we may
build our spiritual values. The consequences of poverty bring
a loss of spiritual and moral values. And even more important is the loss of the opportunity that we hope to give to the
younger generation. We want our children to have a chance
for an education, for the sound development of American
standards to be applied in their daily lives at play and work.
Those opportunities can come only if the condition of agriculture is made more prosperous.
Now, the farmer—and when I speak of the farmer I mean
not only you who live in the corn belt, but also those in the East
and the Northwest who are in the dairy business, those in the
South who are raising cotton, and those on the plains who are
raising cattle and sheep, and those in the many sections of the
country who are raising cattle, all kinds of things, small fruits
and big fruits—in other words, the farmer in the broad sense,
has been attacked during this past decade simultaneously from
two sides. On the one side the farmer’s expenses, chiefly in the
form of increased taxes, have been going up rather steadily
during the past generation, and on the other side, he has been
attacked by a constantly depreciating farm dollar during the
past twelve years, and it seems to be nothing less than old-fashioned horse sense to seek means to circumvent both of these
attacks at the same time. That means, first, for us to seek relief
for him from the burden of his expense account and, second,
to try to restore the purchasing power of his dollar by getting
for him higher prices for the products of the soil.
Now, those two great purposes are, quite frankly, the basis
of my farm policy, and I have definitely connected both of
them with the broadest aspects of a new national economy,
something that I like to label in simpler words, “A New Deal,”
covering every part of the Nation, and covering industry and
business as well as farming, because I recognize, first of all,
that from the soil itself springs our ability to restore our trade
with the other Nations of the world.
First of all, I want to discuss with you one of the angles of
the mounting expenses of agriculture in practically every
community and in every State—the problem of taxes which
we have to pay.
Let us examine the proportion of our expenditures that
goes to the various divisions of Government. Half of what
you and I pay for the support of the Government—in other
words, on the average in this country fifty cents out of every
dollar—goes to local government, that is, cities, townships,
counties and lots of other small units; and the other half, the
other fifty cents, goes to the State and Nation.
This fifty cents that goes to local government, therefore,
points to the necessity for attention to local government. As a
broad proposition you and I know we are not using our present agencies of local government with real economy and efficiency. That means we must require our public servants to
give a fuller measure of service for what they are paid. It
means we must eliminate useless office holders. It means
every public official, every employee of local government
must determine that he owes it to the country to cooperate in
the great purpose of saving the taxpayers’ money.
But it means more than that, my friends. I am going to
speak very frankly to you. There are offices in most States that
are provided for in the Constitution and laws of some of the
States, offices that have an honorable history but are no
longer necessary for the conduct of Government. We have
too many tax layers, and it seems to me relief can come only
through resolute, courageous cutting.
Some of you will ask why I, a candidate for the office of
president of the United States, am talking to you about
changes in local government. Now, it is perfectly clear that the
president has no legal or constitutional control over the local
government under which you people live. The President has,
nevertheless, my friends, the right and even the duty of taking a moral leadership in this national task because it is a
national problem, because in its scope it covers every State,
and any problem that is national in this broader sense creates
a national moral responsibility in the President of the United
States himself.
And I propose to use this position of high responsibility to
discuss up and down the country, in all seasons and at all
times, the duty of reducing taxes, or increasing the efficiency
of Government, of cutting out the underbrush around out
governmental structure, of getting the most public service for
every dollar paid in taxation. That I pledge you, and nothing
I have said in the campaign transcends in importance this
covenant with the taxpayers of the United States.
Now, of the other half dollar of your taxes, it is true that
part goes to the support of State Governments. I am not
going to discuss that end. In this field also I believe that substantial reductions can be made. While the President rightly
has no authority over State budgets, he has the same moral
responsibility of national leadership for generally lowered
expenses, and therefore for generally lowered taxes.
It is in the field of the Federal Government that the office
of President can, of course, make itself most directly and definitely felt. Over 30 percent of your tax dollar goes to
Washington, and in their field also, items such as the interest
can be accomplished. There are, of course, items such as the
interest on the public debt which must be paid each year, and
which can be reduced only through a reduction of the debt
itself, by the creation of a surplus in the place of the present
deficit in the national treasury, and it is perhaps worth while
that I should tell you that I spent nearly eight years in
Washington during the Administration of Woodrow Wilson,
and that during those eight years I had a fair understanding
of the problem of the national expenses, and that I knew first
hand many of the details of actual administration of the different departments. Later in this campaign, I proposed to
analyze the enormous increase in the growth of what you and
I call bureaucracy. We are not getting an adequate return for
the money we are spending in Washington, or to put it another way, we are spending altogether too much money for
Government services that are neither practical nor necessary.
And then, in addition to that, we are attempting too many
functions. We need to simplify what the Federal Government
is giving to the people.
I accuse the present Administration of being the greatest
spending Administration in peace times in all our history. It
is an Administration that has piled bureau on bureau, commission on commission, and has failed to anticipate the dire
needs and the reduced earning power of the people. Bureaus
and bureaucrats, commissions and commissioners have been
retained at the expense of the taxpayer.
Now, I read in the past few days in the newspapers that the
President is at work on a plan to consolidate and simplify the
Federal bureaucracy. My friends, four long years ago, in the
campaign of 1928, he, as a candidate, proposed to do this
same thing. And today, once more a candidate, he is still proposing, and I leave you to draw your own inferences.
And on my part I ask you very simply to assign to me the
task of reducing the annual operating expenses of your
national Government.
Now I come to the other half of the farmer’s problem, the
increase of the purchasing power of the farm dollar. I have
already gone at length into the emergency proposals relating
to our major crops, and now I want to discuss in more detail
a very important factor, a thing known as the tariff, and our
economic relationship to the rest of this big round world.
From the beginning of our Government, one of the most
difficult questions in our economic life has been the tariff.
But it is a fact that it is now so interwoven with our whole
economic structure, and that structure is such an intricate
and delicate pattern of causes and effects, that tariff revision
must be undertaken, with scrupulous care and only on the
basis of established facts.
I have to go back in history a little way. In the course of his
1928 campaign, the present Republican candidate for
President with great boldness laid down the propositions that
high tariffs interfere only slightly, if at all, with our export or
our import trade, that they are necessary to the success of
agriculture and afford essential farm relief; that they do not
interfere with the payments of debts by other Nations to us,
and that they are absolutely necessary to the economic formula which he proposed at that time as the road to the abolition of poverty. And I must pause here for a moment to
observe that the experience of the past four years has unhappily demonstrated the error, the gross, fundamental, basic
error of every single one of those propositions—but four
years ago!—that every one of them has been one of the effective causes of the present depression; and finally that no substantial progress toward recovery from this depression, either
here or abroad, can be had without a forthright recognition
of those errors.
And so I am asking effective action to reverse the disastrous policies which were based on them. As I have elsewhere
remarked, the 1928 Republican leadership prosperity promise was based on the assertion that although our agriculture
was producing a surplus far in excess of our power to consume, and that, due to the mass and automatic machine production of today, our industrial production had also passed
far beyond the point of domestic consumption, nevertheless,
we should press forward to increase industrial production as
the only means of maintaining prosperity and employment.
And the candidate of that year insisted that, although we
could not consume all those things at home, there was some
kind of unlimited market for our rapidly increasing surplus
in export trade, and he boldly asserted that on this theory we
were on the verge of the greatest commercial expansion in
history. I do not have to tell you the later history of that.
And then, in the spring of 1929, ostensibly for the purpose
of enacting legislation for the relief of agriculture, a special
session of Congress was called, and the disastrous fruit of that
session was the notorious and indefensible Grundy-SmootHawley tariff.
As to the much-heralded purpose of that special session
for the relief of agriculture, the result, my friends, was a
ghastly jest. The principal cash crops of our farms are produced much in excess of our domestic requirements. And we
know that no tariff on a surplus crop, no matter how high the
wall—1,000 percent, if you like—has the slightest effect on
raising the domestic price of that crop. Why, the producers of
all those crops are so effectively thrust outside the protection
of our tariff walls as if there were no tariff at all. But we still
know that the tariff does protect the price of industrial products and raises them above world prices, as the farmer with
increasing bitterness has come to realize. He sells on a free
trade basis; he buys in a protected market. The higher industrial tariffs go, my friends, the greater is the burden of the
farmer.
Now, the first effect of the Grundy tariff was to increase or
sustain the cost of all that agriculture buys, but the harm to
our whole farm production did not stop there.
The destructive effect of the Grundy tariff on export markets has not been confined to agriculture. It has ruined our
export trade in industrial products as well. Industry, with its
foreign trade cut off, naturally began to look to the home
market—a market supplied for the greater part by the purchasing power of farm families—but for reasons that you and
I know, it found that the Grundy tariff had reduced the buying power of the farmer.
So what happened? Deprived of any American market, the
other industrial Nations in order to support their own industries, and take care of their own employment problem, had to
find new outlets. In that quest they took to trade agreements
with other countries than ourselves and also to the preservation of their own domestic markets against importations by
trade restrictions of all kinds. An almost frantic movement
toward self-contained nationalism began among other
Nations of the world, and of course the direct result was a
series of retaliatory and defensive measures on their part, in
the shape of tariffs and embargoes and import quotas and
international arrangements. Almost immediately international commerce began to languish. The export markets for
our industrial and agricultural surplus began to disappear
altogether.
In the year 1929, a year before the enactment of the Grundy
tariff, we exported 54.8 percent of all the cotton produced in
the United States—more than one-half. That means, Mr.
Cotton Grower, that in 1929 every other row of your cotton
was sold abroad. And you, the growers of wheat, exported 17
percent of your wheat, but your great foreign market had been
largely sacrificed; and so, with the grower of rye, who was able
to disposed of 20 percent of his crop to foreign markets. The
grower of leaf-tobacco had a stake of 41 percent of his income
overseas, and one-third of the lard production, 33 percent,
was exported in the year 1929. Where does that come in? Well,
it concerns the corn grower because some of us, even from the
East, know that corn is exported in the shape of lard.
How were your interests taken care of? Oh, they gave you
a tariff on corn—chicken feed—literally and figuratively, but
those figures show how vitally you are interested in the
preservation, perhaps I had better say the return, of our
export trade.
Now, the ink on the Hawley-Smoot-Grundy tariff bill was
hardly dry before foreign Nations commenced their program
of retaliation. Brick for brick they built their walls against us.
They learned the lesson from us. The villainy we taught them
they practiced on us.
And the Administration in Washington had reason to
know that would happen. It was warned. While the bill was
before Congress, our State Department received 160 protests
from 33 other nations, many of whom after the passage of the
bill erected their own tariff walls to the detriment or destruction of much of our export trade.
Franklin D. Roosevelt on Hawley-Smoot Tariff 607
Well, what is the result? In two years, from 1930 to May,
1932, to escape the penalty on the introduction of Americanmade goods, American manufacturers have established in
foreign countries 258 separate factories; 48 of them in
Europe; 12 in Latin American; 28 in the Far East, and 71
across the border in Canada. The Prime Minister of Canada
said in a recent speech that a factory is moving every day of
the year from the United States into Canada, and he assured
those at the recent conferences at Ottawa that the arrangements made there with Great Britain and other colonies
would take $250,000,000 of Canadian trade that would otherwise go to the United States. So you see, my friends, what
that tariff bill did there was to put more men on the street
here, and to put more people to work outside our borders.
Now, there was a secondary and perhaps even more disastrous effect of Grundyism. Billions of dollars of debts are due
to this country from abroad. If the debtor Nations cannot
export goods, they must try to pay in gold. But we started
such a drain on the gold reserves of the other Nations as to
force practically all of them off the gold standard. What happened? The value of the money of each of these countries relative to the value of our dollar declined alarmingly and
steadily. It took more Argentine pesos to buy an American
plow. It took more English shillings to buy an American
bushel of wheat, or an American bale of cotton.
Why, they just could not buy goods with their money.
These goods then were thrown back upon our markets and
prices fell still more.
And so, summing up, this Grundy tariff has largely extinguished the export markets for our industrial and our farm
surplus; it has prevented the payment of public and private
debts to us and the interest thereon, increasing taxation to
meet the expense of our Government, and finally it has
driven our factories abroad.
The process still goes on, my friends. Indeed, it may be
only in its beginning. The Grundy tariff still retains its grip
on the throat of international commerce.
There is no relief in sight, and certainly there can be no
relief if the men in Washington responsible for this disaster
continue in power. And I say to you, in all earnestness and
sincerity, that unless and until this process is reversed
throughout the world, there is no hope for full economic
recovery, or for true prosperity in this beloved country of
ours.
The essential trouble is that the Republican leaders
thought they had a good patent on the doctrine of
unscaleable tariff walls and that no other Nation could use
the same idea. Well, either that patent has expired or else
never was any good anyway; or else, one other alternative, all
the other Nations have infringed on our patent and there is
no court to which we can take our case. It was a stupid, blundering idea, and we know it today and we know it has
brought disaster.
Do not expect our adroit Republican friends to admit this.
They do not. On the contrary, they have adopted the boldest
alibi in the history of politics. Having brought this trouble on
the world, they now seek to avoid all responsibility by blaming the foreign victims for their own economic blundering.
They say that all of our troubles come from abroad and that
the Administration is not in the least to be held to answer.
This excuse is a classic of impertinence. If ever a condition
was more clearly traceable to two specific American-made
causes, it is the depression of this country and the world.
Those two causes are interrelated. The second one, in point of
time, is the Grundy tariff. The first one is the fact that by
improvident loans to “backward and crippled countries,” the
policy of which was specifically recommended by the
President, we financed practically our entire export trade and
the payment of interest and principal to us by our debtors,
and even in part, the payment of German reparations.
When we began to diminish that financing in 1929 the
economic structure of the world began to totter.
If it be fair to ask, What does the Democratic Party propose to do in the premises?
The platform declares in favor of a competitive tariff
which means one which will put the American producers on
a market equality with their foreign competitors, one that
equalizes the difference in the cost of production, not a prohibitory tariff back of which domestic producers may combine to practice extortion of the American public.
I appreciate that the doctrine thus announced is not
widely different from that preached by Republican statesmen
and politicians, but I do know this, that the theory professed
by them is that the tariff should equalize the difference in the
cost of production as between this country and competitive
countries, and I know that in practice that theory is utterly
disregarded. The rates that are imposed are far in excess of
any such difference, looking to total exclusion of imports—in
other words, prohibitory rates.
Of course the outrageously excessive rates in that bill as it
became law, must come down. But we should not lower them
beyond a reasonable point, a point indicated by common
sense and facts. Such revision of the tariff will injure no legitimate interest. Labor need have no apprehensions concerning
such a course, for labor knows by long and bitter experience
that the highly protected industries pay not one penny higher
wages than the non-protected industries, such as the automobile industry, for example.
But, my friends, how is reduction to be accomplished? In
view of present world conditions, international negotiation is
the first, the most practical, the most common-sense, and the
most desirable method. We must consent to the reduction to
some extent of some of our duties in order to secure a lowering of foreign tariff walls over which a larger measure of our
surplus may be sent.
I have not the fear that possesses some timorous minds
that we should get the worst of it in such reciprocal arrangements. I ask if you have no faith in our Yankee tradition of
good old-fashioned trading? Do you believe that our early
instincts for successful barter have degenerated or atrophied?
I do not think so. I have confidence that the spirit of the stalwart traders still permeates our people, that the red blood of
the men who sailed our Yankee clipper ships around the
Horn and Cape of Good Hope in the China trade still courses
in our veins. I cannot picture Uncle Sam as a supine, whitelivered, flabby-muscled old man, cooling his heels in the
shade of our tariff walls. We may not have the astuteness in
some forms of international diplomacy that our more experienced European friends have, but when it comes to good
old-fashioned barter and trade—whether it be goods or
tariff—my money is on the American. My friends, there cannot and shall not be any foreign dictation of our tariff policies, but I am willing and ready to sit down around the table
with them.
And next, my friends, the Democrats propose to accomplish the necessary reduction through the agency of the Tariff
Commission.
I need not say to you that one of the most deplorable features of tariff legislation is the log-rolling process by which it
has been effected in Republican and Democratic Congresses.
Indefensible rates are introduced through an understanding,
usually implied rather than expressed among members, each
of whom is interested in one or more individual items. Yet, it
is a case of you scratch my back and I will scratch yours. Now,
to avoid that as well as other evils in tariff making, a Democratic Congress in 1916 passed, and a Democratic President
approved, a bill creating a bipartisan Tariff Commission,
charged with the duty of supplying the Congress with accurate and full information upon which to base tariff rates.
That Commission functioned as a scientific body until 1922,
when by the incorporation of the so-called flexible provisions
of the Act it was transformed into a political body. Under
those flexible provisions—reenacted in the Grundy tariff of
1930—the Commission reports not to a Congress but to the
President, who is then empowered on its recommendation to
raise or lower the tariff rates by as much as 50 percent. At the
last session of Congress—this brings us down to date—by
the practically unanimous action of the Democrats of both
houses, aided by liberal-minded Republicans led by Senator
Norris, of Nebraska, a bill was passed by the Congress, but
vetoed by the President, which, for the purpose of preventing
log-rolling provided that if a report were made by the Tariff
Commission on a particular item, with a recommendation as
to the rates of duty, a bill to make effective that rate would not
be subject to amendment in the Congress so as to include any
other items not directly affected by the change proposed in
the bill. And in that way each particular tariff rate proposed
would be judged on its merits alone. If that bill had been
signed by the President of the United States, log-rolling
would have come to an end.
I am confident in the belief that under such a system rates
adopted would generally be so reasonable that there would be
very little opportunity for criticism or even caviling as to
them. I am sure that it is not that any duties are imposed that
complaint is made, for despite the effort, repeated in every
campaign, to stigmatize the Democratic Party as a free trade
party, there never has been a tariff act passed since the
Government came into existence, in which the duties were
not levied with a view to giving the American producer an
advantage over his foreign competitor. I think you will agree
with me that the difference in our day between the two major
parties in respect to their leadership on the subject of the tariff is that the Republican leaders, whatever may be their profession, would put the duties so high as to make them
practically prohibitive—and on the other hand that the
Democratic leaders would put them as low as the preservation of the prosperity of American industry and American
agriculture will permit.
Another feature of the bill to which reference has been
made, a feature designed to obviate tariff log-rolling, contemplated the appointment of a public counsel who should
be heard on all applications for changes in rates whether for
increases sought by producers, sometimes greedy producers,
or for decreases asked by importers, equally often actuated by
purely selfish motives. And I hope some such change may
speedily be enacted. It will have my cordial approval because,
my friends, it means that the average citizen would have some
representation.
Now, just a few words in closing. I want to speak to you of
one other factor which enters into the dangerous emergency
in which you farmers find yourselves at this moment. For
more than a year I have spoken in my State and in other
States of the actual calamity that impends on account of farm
mortgages. Ever since my nomination on the first day of July,
I have advocated immediate attention and immediate action
looking to the preservation of the American home to the
American farmer. But I recognize that I am not at the head of
the National Administration nor shall I be until the March
4th next. Today I read in the papers that for the first time, so
far as I know, the Administration of President Hoover has
discovered the fact that there is such a thing as a farm mortgage or a home mortgage.
I do not have to tell you that, with the knowledge of conditions in my State which ranks fifth or sixth among the agricultural States of the Union and with the knowledge I have
gleaned on this trip from coast to coast, I realize to the full the
seriousness of the farm mortgage situation. And at least we
can take a crumb of hope from his proposal for just another
conference, a conference of some kind at least to discuss the
situation. Seriously, my friends, all that I can tell you is that
with you I deplore, I regret the inexcusable, the reprehensible
delay of Washington, not for months alone, but for years. I
have already been specific on this subject, upon mortgages, in
my Topeka speech. All that I can promise you between now
and the fourth of March is that I will continue to preach the
plight of the farmer who is losing his home. All I can do is to
promise you that when the authority of administration and
recommendation to Congress is placed in my hands I will do
everything in my power to bring the relief that is so long
overdue. I shall not wait until the end of a campaign, I shall
not wait until I have spent four years in the White House.