Fordney-McCumber Tariff

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The Fordney–McCumber Tariff of 1922 raised American tariffs in order to protect factories and farms. Congress displayed a pro-business attitude in passing the tariff and in promoting foreign trade through providing huge loans to Europe, which in turn bought more American goods.[1]

As a result of the war, Americans had two main concerns. First, they wanted to ensure economic self-sufficiency so that no future enemy could manipulate the American economy. Second, many industries wanted to preserve the benefits of the increased wartime demand.



The first sector of the economy that was hit by a fall in post-war demand was agriculture. During World War I, the American agricultural industry enjoyed prosperity, through the raising of prices which led to increased output which Americans used to supply Europe. Some of the post war problems for the American agriculture come from the great surplus of farm goods that could not be absorbed in the national market, because European countries had recovered sufficiently from the war, and their markets no longer required large quantities of American agricultural products. Gross farm income in 1919 amounted to $17.7 billion.

By 1921, exports to Europe had plummeted and farm income fell to $10.5 billion. Other sectors of the economy wanted to avoid a similar fate. The 1920 election put the Republicans in control of Congress and the White House. Special interests began to petition an amenable Congress for trade protection.

The hearings held by Congress led to the creation of several new tools of protection. The first was the scientific tariff. The purpose of the scientific tariff was to equalize production costs among countries so that no country could undercut the prices charged by American companies. The difference of production costs was calculated by the Tariff Commission.

A second novelty was the American Selling Price. This allowed the president to calculate the duty based on the price of the American price of a good, not the imported good.

The bill also gave the president the power to raise or lower rates on products if it was recommended by the Tariff Commission.

In September 1922, the Fordney–McCumber Tariff bill (named after Joseph Fordney, chair of the House Ways and Means Committee, and Porter McCumber, chair of the Senate Finance Committee) was signed by President Warren Harding.[2] In the end, the tariff law raised the average American ad valorem tariff rate to 38.5 percent.

International reaction

Trading partners complained immediately. Those injured by World War I said that, without access by their exports to the American market, they would not be able to make payments to America on war loans. But others saw that this tariff increase would have broader deleterious effects. Democratic Representative Cordell Hull said, "Our foreign markets depend both on the efficiency of our production and the tariffs of countries in which we would sell. Our own [high] tariffs are an important factor in each. They injure the former and invite the latter."

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