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Strange as it seems, the infamous Smoot-Hawley Tariff might have had an expansionary effect on the U.S. economy. Basic macroeconomic principles indicate that the direct effect of a tariff increase is expansionary. This expansionary effect might be offset by retaliatory increases in foreign tariffs. Barry Eichengreen has recently questioned whether significant retaliation to Smoot-Hawley occurred. This article demonstrates that the tariff increases enacted during 1930 in Canada—the largest trading partner of the United States—were in direct response to Smoot-Hawley. The conventional wisdom that Smoot-Hawley hurt the U.S. economy may be right after all.

Apart from the Fugitive Slave Act, the 1930 Smoot-Hawley tariff bill is probably the most infamous piece of legislation in U.S. history. Despite Smoot-Hawley's notoriety, explanations for the bill's passage are scarce. Two of the best-known accounts are the early analysis of E. E. Schattschneider-who saw the bill as the result of out-of-control log-rolling-and the more recent account of Robert Pastor-who believes that the Republicans capitalized on their landslide victory in the 1928 elections to carry out their long-standing commitment to raising tariff rates across the board.' Barry Eichengreen's recent paper provides a thoughtful analysis of these earlier explanations and concludes by identifying the economic coalition he believes was responsible for passing the bill.2 Assessing the validity of these accounts is difficult, however, without an analysis of the actual vote on the bill. This article presents a simple model of the vote that can be used to distinguish between the various explanations of why Smoot-Hawley passed. Our results from estimating this model indicate, rather surprisingly, that contrary to Eichengreen's suggestions-and contrary to much other recent work that shows economic interests to be of great importance in explaining votes in Congress-Pastor's argument that Smoot-Hawley was the result of the Republicans implementing their 1928 party platform appears to be correct. There is not much dispute that the Republicans ran a strongly protariff campaign in 1928. Herbert Hoover had long been in favor of a protective tariff and as Secretary of Commerce in the Harding and Coolidge Administrations had espoused the view that the United States should largely confine its imports to those products that could not be produced domestically.3 Although Hoover focused on increases in agricultural duties during the campaign, the discussion of tariff revision in the 1928 Republican platform entailed broader increases

where X equals one of six categories of investment spending and the S's are dummy variables representing the periods during which the political shocks were thought to have had their influence. The test of the importance of the political shocks consisted of examining the t-statistics for the dummy variables. They found that none of the five negative shocks had a statistically significant (at the 1 percent level) effect on any of the six categories of investment spending. The only result consistent with the hypothesis was that the sole positive shock-the 1938 election-had a statistically significant effect on one category of investment spending. Mayer and Chatterji rejected "[tihe hypothesis that political shocks were significant factors in generating the low level of investment in the 1930s."3 There are, however, several problems with their analysis. Their formulation of the political explanation for low investment specifies that it resulted from the shock of specific events during the New Deal period. A more common formulation has the low investment resulting more from a general political demoralization. Joseph Schumpeter provided the classic discussion

Who wrote Alfred Sloan's My Years with General Motors? a. Alfred Sloan b. John McDonald c. Alfred Chandler d. A group of more than 20 persons, known and unknown Fans of the old Groucho Marx quiz show might be tempted to choose answer a. John McDonald, in his posthumous memoir being reviewed here, argues for b. But I am inclined to think the best answer is d.

Analysis of census data reveals that the size of the average factory in the United States grew more rapidly during the 1870s and 1880s than during any subsequent decade through the 1920s. While the average factory doubled in size between 1869 and 1889, it increased by only about a quarter between 1899 and 1929. These results support the view that the reaping of economies of scale was not an important motive for the great merger wave.