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Power, Protection, and Free Trade: International Sources of U.S. Commerical Strategy, 1887-1939.

Power, Protection, and Free Trade: International Sources of U.S. Commercial Strategy, 1887-1939 David Lake has undertaken the ambitious task of attempting to provide a general theoretical framework for the analysis of international trade policy and to apply that framework to tariff policy in the United States during the period 1887 to 1939. In the process he has provided interested readers and scholars with a promising analytical approach to the complex business of explaining how trade policies emerge that balance internal special interests and international relations. He has also written a thorough and enjoyable account of the evolution of U.S. trade policy during the period of the nation's rise to a dominant position in world affairs.

The analytical objective of the book is expressed succintly by Lake in chapter 1: "The central proposition of this book is that the international economic structure and the position of nation states within it creates constraints and opportunities that shape the trade strategies of countries in important and predictable ways. The international economic structure is defined here as the configuration of nation states within the two dimensions of relative size [exports plus imports as a proportion of world trade] and relative labor productivity [output/worker/hour relative to the average for trading nations]" (pp. 29-30).

At the operational level, Lake presumes that special interest groups within the United States persuade the representative legislative body, Congress, to seek protection for domestic producers of importables. The foreign policy executive, the president and his staff, tries to use trade policy as an instrument of international political affairs. The executive acts strategically to promote U.S. interests as international conditions change.

With that approach in mind as indicated in the first two chapters of the book, Lake proceeds to describe the changing pattern of U.S. trade policy for four subperiods: 1887-97, 1897-1912, 1912-30, and 1930-39, in chapters 3 through 6. Because the author is concerned with international trade strategies as well as with internal political pressures for tariff changes, he provides a uniquely thorough discussion of the many forces that shaped U.S. trade policy during that period of American history. Those four chapters are extremely well written and informative.

The approach followed by the author is not without limitations. There is no explanation of the changes that occur in the pattern of protection across industries in this study. There is no explanation of the dynamic forces that change the international regime within which the foreign policy executive operates. The lack of insight into those dynamic forces makes the discussions of changes in U.S. policy from the Payne-Aldrich Tariff of 1909 to the Underwood Tariff of 1913 and from the Smoot-Hawley Tariff of 1930 to the Reciprocal Trade Agreement Act of 1934 somewhat tortured exercises.

The approach is also limited in predicting contemporary trade policy trends. For example, the book draws no connection between the shift from tariffs to income taxes in the early twentieth century to explain the more strategic use of trade policy after 1912. Freed from revenue needs associated with the tariff in its early history, the United States has continued to act strategically with respect to trade policy throughout the twentieth century. Freed of the need for tariffs to finance central government programs, the United States and other industrialized nations have developed new and more sinister means for manipulating international commodity markets, including voluntary export restraints, orderly market arrangements, and trigger price mechanisms. Lake's framework can accommodate those innovations in protectionism but it cannot explain them or other innovations that may arise in the future.

While the analysis behind the story being told in the book is descriptive and lacks predictive powers, it does help one to organize historical events in an orderly fashion. At the very least the reader will be rewarded with an extremely clear retelling of important historical events. The analysis is also a great step forward from previous work that focused on whether or not a hegemonic regime exists internationally. Lake's work should make such superficial discussions unacceptable in the future. And there is a good beginning here toward the development of a deeper and more fundamental understanding of the interactions between individuals and society that define policy at any point in time.

Edward john Ray is professor of economics at the Ohio State University. With Bennett D. Baack he has written a number of articles dealing with trade and related issues in the nineteenth-century America, including "The Political Economy of Tariff Policy: A Case Study of the United States," Explorations in Economic History (1983), "The Political Economy of the Origins of the U.S. Military Industrial Complex," Journal of Economic History (1985), and "Special Interests and the Adoption of the Income Tax in the United States," Journal of Economic History (1985). He has recently published U.S. Protectionism and the World Debt Crisis (1989).
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Author:Ray, Edward John
Publication:Business History Review
Article Type:Book Review
Date:Mar 22, 1990
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