More Inflation: Despite first signs of recovery, state intervention
continued in 1930. Early July, Congress authorized a USD 915 m public works program,
including the Hoover Dam (according to internet sources, a loaf of bread did
cost 9 US-Cents in 1930 …). Re-discount rates of the New York Fed fell from 4.5
to 2 %.
The Smoot-Hawley Tarif: Hoover continued his high tariffs
policy in 1930. With the Smoot-Hawley-Act, tariffs did go up for many
agricultural products, but also for industrial products. Tariff rates were
raised to a record level in US history – this being the signal for protectionism
all over the world.
Hoover in the Second Half of 1930: Hoover tightened immigration laws,
leading to a sharp drop in net immigration. By 1932, there was even a net
emigration of 77,000. Wage rates were still frozen and not allowed to drop, despite
high unemployment. Late in the year, Hoover started to launch further attacks
on the NYSE, specifically short-sellers. He forced the head of the NYSE,
Richard Whitney, to ‘voluntarily’ withhold loans of stock for that purpose.
While prices for farm goods did fall somewhat, the regulatory acts led to a
price level some 50 or 100 % above world market prices – thus hampering exports.
The Public Works Agitation: Working its way through Congress and
Senate in 1930, the Employment Stabilization Act was finally singed early 1931.
Several USD billion public work programs were under discussion at that time.
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