In 1930, the Smoot-Hawley Act raised tariffs on over 20,000 imported goods.
Up until that point the American manufacturer was producing at record levels. The American consumer was consuming at record levels. Regardless of whether you could afford it or not through lay-away, systematic payout or even simple credit, one’s wants became one’s needs.
Third shifts and overtime became part of the daily lexicon as demand out-stripped supply.
Picture the inside of a car traveling 90 miles per hour and the brakes being hit hard. You now have an idea of the worldwide impact and turmoil created by Smoot-Hawley. Every Country applied the same strategy as the US.
To say we were OVERSUPPLIED would be an understatement.
Simply put, a majority of the Great Depression could be laid at the doorstep of Smoot-Hawley.
Without sales there was no need to produce. Without production no need for employees. Without employees no wages, without wages no sales and so forth and so on. A vicious cycle, which once entered, was almost impossible to escape.
Eighty-five years later, we face an oversupply that is almost unimaginable and make the thirties look very simplistic.
Not only are we OVERSUPPLIED with finished products but also with the raw materials that make them up. Unlike then oversupply pervades every facet of our economy.
The energy that provides the distribution of products, oil, is at an overproduction level never before seen in history.
College graduates continue to flood the job market in non-existent careers such as Psychology, Theater Arts, Sociology, Liberal Arts, to name just a few. They walk the streets, collect in local bars or cocoon in their parent’s basement fixated on their smart phones in the hopes that something will change.
The number of new cars that sit on the dealer’s lots, even after subprime giveaway programs, continues to set channel stuffing records.
New restaurants, baffling to many, continue to be built as one man’s dream is another man’s nightmare. The last vestige of credit and savings is being spent on a night out and the restaurateur’s hopes springs eternal.
The impact of a worldwide manufacturing oversupply in the Great Depression created a depth of despair and uncertainty not seen since.
Are we approaching a period that the impact of today’s oversupply will make the ‘30’s something that is longed for?
Only time will tell….
Did we really need to graduate another lawyer?