Fordney McCumber Tarif

Background: During World War I, the American Agricultural Industry prosperity. With the prices of goods raised due to high demand, it allowed for an increase output of American goods. With more goods being exported, farmers borrowed heavily to expand their land. However, with the end of the war and the economy of Europe slowly bouncing back and their price lower than American goods, the demand for American goods decreased. This made the farmers not only have a surplus of leftover goods, but also gave them difficulty paying back their loans. This was a topic that was crucial in deciding the outcome of the 1920 election. Fearing of having the same fate as farmers, other businesses voted the republicans, whom are pro-farm and pro-business, into office. As a response to the situation, the Emergency Tarif Act of 1921 was put into effect until a more compromising tariff could be drafted. The Emergency Tariff Act increased rates of raw goods from other countries in order to protect local producers.

Overview: In 1922, the Fordney McCumber Tariff was implemented in order to protect local producers by increasing the rates of imported goods. The tariff allowed the president to raise or lower the tariff rate by as much as 50% to balance domestic and foreign production. At the end, the tariff was raised to 38.5% which was well above the rate established in 1913.

Effect: The tariff enabled the growth of monopolies in many American industries. However, in Europe this tariff made it harder for foreign countries making it harder for them to pay back their war debt. As a result, foreign countries also raised their import tax to counter the one made by America which resulted in a decrease of foreign trade.


Sources:
http://www.u-s-history.com/pages/h1370.html
https://www.reference.com/business-finance/fordney-mccumber-tariff-eeb7a197440ed6cf#
http://www.u-s-history.com/pages/h1366.html
https://en.wikipedia.org/wiki/Fordney%E2%80%93McCumber_Tariff