The year 1913 found the Democrats in control of the presidency and of both branches of Congress. President Wilson promptly called Congress in special session, and a new tariff measure was enacted which was widely hailed as marking the beginning of a new era in American tariff policy. Announcing the principle of a "com petitive tariff," and declaring their intention to injure no "legiti mate industry," the party in power yet proceeded to a downward revision looking to definitely moderate protection. Wool was ad mitted free; and woollens after Jan. r, 1914, were to pay a straight ad valorem rate of 35%. Sugar, the duty on which, with the growth of the beet industry, had become a protective one, was to be free after May r, 1916, by which time it was thought that the newly enacted income tax would be in running order and would be yielding income effectively. Cottons were sharply reduced ; though most of the reductions were nominal the new rates meant the probability of increased imports of the finer goods. Silks were cut somewhat, though the general rate was still 45%. Coal and lumber were freed, and leather and boots and shoes followed hides to the free list. Iron ore and crude iron and steel products likewise were made free, and rates were cut to a maximum of 20% on the advanced products. To meet the farmers' wishes, agricultural implements, by a harmless gesture, were carried to the free list ; but at the same time wheat, flour, cattle and meats were freed in response to the demand for a lowered cost of living, thus intro ducing the possibility of a less restricted border trade. The "jokers," special rates imposed at the behest of particular favoured producers, which had become so conspicuous and unpleasant a feature of protective acts, for the greater part disappeared. The act repealed the maximum and minimum provisions of 5909, and in 1916 a tariff commission was established. While many of the reductions of the Underwood act were politically rather than economically important, it represented a genuine though cautious attempt at a wider freedom of trade.
After the outbreak of the World War, for half a decade Ameri can industries, despite reduced duties, had no European compe tition whatever. Various of the so-called "war babies," notably the chemical industry, grew enormously to meet immediate needs. With the return of peace, some of them faced sharp foreign com petition. The spectacular fall of prices in 1920 plunged agriculture into distress, and the farmers turned to protection as a supposed remedy. When the Republicans returned to power in 1921, they promptly laid high duties (quite incapable of raising prices under the circumstances) on various farm products that had been freed in 1913, notably wheat, corn and meat, as also wool and sugar.
This "emergency" measure was followed by the Fordney-McCum ber tariff of 1922, following the lines of the Act of 1909, but sur passing it in the application of protection. Agricultural rates were higher than in 1909. Generally without economic significance, they did in fact mean the probability of higher prices for such products as California fruits, wheat on occasion, and notably sugar. Wool was given increased protection, and the elaborate
system of compensating and protective duties on woollen manu facture was restored. Textiles generally fared about as in 189'7 and 1909. Iron alloys and specialties subject to foreign compe tition, like cutlery and firearms, were raised above the rates of 1909, as were china ware, jewellery, toys and laces, the last-named paying 9o% ad valorem. Coal-tar products, dye-stuffs and chemi cals, which had sought absolute prohibition, were granted ex tremely high rates.
The Act authorized the President, after investigation by the tariff commission, to raise or lower rates (within the limit of 5o% of the prescribed duties) as might be necessary to equalize costs in the principal competing country. Under this provision the president raised rates in a number of cases, but lowered them in no important instance.
The farmers failed to share the prosperity of the twenties, and early in his administration President Hoover called Congress in extraordinary session to revise the tariff for their benefit. Con gressional action promptly took the form of a general upward revision of duties, giving rise to a fierce legislative struggle. Ex port manufacturers urged moderation, financial experts pointed out the necessity of increasing imports in view of the creditor position of the United States, protests against threatened in juries came from forty foreign countries, and more than a thou sand economists signed a memorial advocating the defeat or veto of the measure. Nevertheless it was enacted in 1930, after a noto rious process of log-rolling. According to the calculations of the tariff commission, the Act raised the average rates in every schedule, the increase being greatest on agricultural products.
Sugar, cattle, dairy products, grains, lemons and other California products, wool, woollen and silk goods, manganese and tungsten bearing ores, and pig iron all went up. Lumber, brick, cement, hides, sole leather, and boots and shoes, all of which had been free, were subjected to duties.
There were increases on many small manufactured products, like watch and clock movements, cheap toys and matches, unim portant to the United States, but highly important to certain foreign exporting countries.
The flexible tariff provision was retained. The raising of Ameri can duties at a time when international trade was already declin ing caused sharp resentment abroad, and was promptly followed by higher tariffs in many countries. From 1929 to 1933 the foreign trade of the world, according to League of Nations figures, fell by 25 per cent in quantity and 65 per cent in value.
In 1934 a reciprocity act was passed authorizing the President for three years to make trade agreements with other countries; this act was later extended to 1940. Under it 19 nations made re ciprocal trade agreements with the United States up to Jan. 1, 1939.