How did a decision made by Hoover in 1929 collapse the entire world?

The 31st President of the United States, Hoover, has now become a meme. During his administration, he encountered the stock market crash and originally intended to rescue the market, but the policies he implemented turned out to be increasingly absurd.

Imagine this: In September 1929, the US stock market soared from over 60 points in 1921 to 376 points, a fivefold increase over eight years, with Americans trading stocks as if in a dream. When Hoover took office, he boasted, “Every household has two chickens, two cars, and goes to the movies.” Yet, less than a month later, on October 29, the “Black Tuesday” arrived, and the stock market crashed.

In just 10 trading days, $30 billion in wealth evaporated (equivalent to the entire cost of the US military during World War I). Some people jumped off buildings because of stocks, while others returned home to find themselves broke. The unemployment rate soared to 25%, over 86,500 companies went bankrupt, and a wave of bank failures swept the nation.

What did Hoover do at this time? He trusted the advice of a devout Mormon congressman, Smoot, to push foreign goods out. In March 1930, the U.S. passed a tariff bill that raised the average import duty from its previous level to 57.3%, with the highest tariff being four times the highest in U.S. history.

It looks like protecting the domestic industry? Wrong. Immediately, 34 countries around the world united to protest and then entered a trade retaliation mode. Canada, Germany, and the UK all raised tariffs. The once prosperous international trade is gradually suffocating under a single bill.

Data speaks: In 1929, the United States imported $1.334 billion worth of goods from Europe, which fell to $390 million by 1934. Exports dropped from $2.341 billion to $784 million. By 1934, global trade volume had shrunk by more than 60%.

What is the most ironic? The US economy has not recovered and has actually worsened. Without export markets, unemployment remains high. This tariff war has also shattered the international trust system, accelerating political radicalization in Europe – Hitler came to power after this.

In 1933, Hoover stepped down and was scorned by the public. After Roosevelt took office, he quickly understood the root of the problem: to save the economy, it was necessary to break down tariff barriers. In 1934, the Reciprocal Trade Agreements Act was introduced, and the United States began negotiating trade liberalization agreements with over 30 countries, gradually lowering tariffs, which allowed the economy to slowly recover.

The ironic pattern emerges: When the U.S. is strong, it promotes free trade to reap benefits; when the economy is in trouble, it erects trade barriers for self-protection. The problem is that in the era of globalization, such practices will only lead to mutual destruction.

Looking at this history again? Seems a bit familiar.