Eh.net Book Review: Clashing over Commerce: A History of U.S. Trade PolicyReply-To: newsletter@eh.net
Published by
EH.Net (May 2018)
Douglas A. Irwin,
Clashing over Commerce: A History of U.S. Trade Policy. Chicago: University of Chicago Press, 2017. x + 860 pp. $35 (hardcover), ISBN: 978-0-226-39896-9.
Reviewed for
EH.Net by Alfred E. Eckes, Jr., Department of History, Ohio University.
At a time when concerns about trade wars unsettle financial markets and
engage media pundits, those seeking a deeper understanding of trade
issues may choose to consult Douglas Irwin’s hefty volume. Prospective
readers should be aware of the book’s strengths and limitations.
The author, a Dartmouth College economist, is interested more in the
“formation of trade policy rather than the consequences of any
particular policy outcome” (p. 4). He seeks to update economist Frank
Taussig’s classic
Tariff History of the United States, whose
eighth edition was published in 1931. His approach involves explaining
how changing regional economic interests and domestic political forces
have impacted average tariff levels over more than two centuries. These
changes transformed the tariff system during the 1930s and produced a
consensus in Congress for lower tariffs.
The book has three distinct sections. The first focuses on the U.S.
government’s reliance on tariffs from 1789 to the Civil War to generate
revenue. Irwin argues that Treasury Secretary Alexander Hamilton was
primarily concerned about securing adequate revenue for the new national
government, not in establishing a program of high tariffs to protect
infant industry. To promote industry Hamilton preferred subsidies to
tariffs. Irwin also says that Adam Smith’s writings were known to the
Founding Fathers and influenced early policy debates. While Irwin
stresses Smith’s influence, he gives little attention to Friedrich List,
the German economic journalist and railroad builder, who helped
mobilize U.S. support for protection in the 1820s. List’s thinking later
influenced the twentieth century mercantilist trade policies of Japan,
China, and other developing countries.
A second section examines the rise of protective tariffs during the
Civil War. This phase of restrictive tariffs continued with only brief
interruptions until the Great Depression, as Northern industry sought to
limit import competition. Irwin emphasizes that lobbyists representing
affected industries, mobilized in Washington and bombarded Congress with
requests for tariff protection. Here the author’s account seems one
sided since he overlooks the countervailing influence of Cobden Clubs,
funded and supported by British interests, eager to persuade U.S.
officials to adopt freer trade policies. The historian Marc William
Palen (2016, pp. 59-69) has shown that the membership of Cobden
organizations, extended from President James Garfield to leading public
figures, business leaders, and academics, including the renown
international economist Frank Taussig, who became President Woodrow
Wilson’s first chairman of the U.S. Tariff Commission.
Regarding the Hawley-Smoot Tariff (or Smoot-Hawley as many prefer)
Irwin agrees that the act had little impact on the Great Depression.
However, he believes that passage of the 1930 tariff spurred significant
retaliation from trading partners. On this point we disagree. In May
1931 the State Department asked consular officials at 96 posts to report
on foreign discrimination against U.S. exports, and little was
reported. Irwin has apparently not taken into account diplomatic records
in the National Archives that contradict his conclusion (see Eckes
1995, p. 125-29).
In a third section, Irwin emphasizes that the transition to a
reciprocity-based trade policy, begun with Secretary of State Cordell
Hull’s reciprocal trade program in 1934 and continued after World War II
as the U.S. sponsored the GATT/WTO multilateral system, which
flourished until recent years. Cordell Hull, a tariff-cutting enthusiast
from rural Tennessee, was a single-minded proponent of reciprocal
trade, and although Irwin notes that he had little influence on foreign
policy during the 1930s he left a huge imprint on twentieth-century
trade policy. His reciprocal trade program and the successor
multilateral trade initiative under the auspices of GATT and the WTO can
be credited to Hull’s vision and determination.
It is said that economist Paul Samuelson wore a green-eye shade to
White House discussions on tax policy during the Kennedy administration.
Irwin seems to have introduced the green-eye shade approach to tariff
policy. His massive 860-page volume rests on detailed research on
congressional debates and legislative proposals. His narrative is filled
with information about obscure provisions of long-forgotten tariff
bills. His bibliography lists a variety of relevant published materials,
including memoirs of participants, and scholarly articles. He appears
to have made excellent use of the data and secondary research of other
economists. But, his 123-pages of bibliography and end notes expose some
significant, and surprising, omissions.
Irwin has made little use of unpublished records in government
archives and presidential libraries. Documents in these facilities offer
an unexpurgated look at trade negotiations and policy implementation
issues at the working level. They enable research historians to peer
behind the spin in memoirs and to unearth discoveries that alter
conventional wisdom. Another major omission involves contemporary
newspaper accounts and periodicals. On-line databases such as
Newspapers.com
and ProQuest’s American Periodicals now enable researchers to access
easily a variety of primary sources, not examined extensively by
scholars, on topics such as customs fraud and smuggling that may skew
Irwin’s average tariff calculations.
In the nineteenth century, high tariffs invited extensive smuggling
and customs corruption, subjects not examined in this book. In 1865, for
example, Commissioner of Customs Nathan Sargent reported an extensive
system of smuggling along the Canadian border from New Hampshire to Lake
Superior. He said that hundreds of men of “pretended respectability”
were secretly engaged in smuggling liquors, teas, silks, spices, laces
and other light goods to evade payment of U.S. tariffs (see, for
example,
Buffalo Commercial, 1865). Researchers can find many
other accounts of smuggling and customs fraud by using newspapers,
periodicals, court, and Treasury records from the period. These detail a
wide range of enforcement issues from piracy to customs fraud.
Apparently, at the New York Customhouse, which processed two-thirds of
U.S. imports after the Civil War, fraud was rampant and continued over
an extended period. It involved undervaluation, kickbacks and bribery
(see Cohen 2010 and 2015). As a result, many of the trade data seem
suspect, and generalizations about tariff levels and the effectiveness
of protection do not take into account the significance of pervasive
corruption and circumvention.
Despite the claim on the book jacket describing it as the “most
authoritative and comprehensive history of U.S. trade policy to date,”
this book offers an incomplete account of U.S. trade history. The author
gives relatively little attention to non-tariff issues, such as customs
corruption, smuggling, and theft of intellectual property, which were
present even in the founding years of the American republic. In the last
hundred years — particularly, since the Great Depression — other
non-tariff issues such as export controls and strategic trade,
technology transfer, dispute settlement, and forms of managed trade that
distort the global market place have gained in importance. It is worth
emphasizing that Irwin’s focus on tariff levels largely overlooks some
of the difficult issues of policy implementation, including the free
rider problem growing out of Hull’s enthusiasm for the unconditional
most-favored nation policy.
Examples of free-riding involve the integration of Japan and China
into the GATT/WTO multilateral trading system. In the post-World War II
period, a series of U.S. administrations used tariff liberalization as a
tool to integrate former adversaries into the world trading system. In
GATT accession negotiations with Japan the Eisenhower administration
failed to open the Japanese market significantly for American
manufactures and agricultural exports. Japan, however, upon entering
GATT qualified for the lowest tariff levels in the American market. This
facilitated the rapid growth of Japanese manufactured exports, while
continuing to restrict U.S. exports to Japan. A similar asymmetry
resulted from the Clinton administration’s negotiations for Chinese
accession to the WTO.
Irwin’s book represents an impressive effort by an economist to
survey U.S. tariff history, but it breaks little new ground. Many
important areas of trade policy and implementation continue to invite
the efforts of scholars with the discipline to undertake archival
research and the training to employ the research methods of economics,
history, and law.
References:
Andrew Wender Cohen, “Smuggling, Globalization, and America\’s Outward State, 1870-1909,”
Journal of American History, 92:2 (September, 2010), 371-398.
Andrew Wender Cohen,
Contraband: Smuggling and the Birth of the American Century (New York: Norton, 2015), 122-35.
Alfred Eckes,
Opening America’s Market: U.S. Foreign Trade Policy since 1776 (Chapel Hill: University of North Carolina Press, 1995).
“Extensive Smuggling along Canadian Frontier,”
Buffalo Commercial (July 13, 1865), 2.
Marc-William Palen,
The ‘Conspiracy’ of Free Trade: The Anglo-American Struggle over Empire and Economic Globalization, 1846-1896 (Cambridge: Cambridge University Press, 2016).
Alfred E. Eckes, Jr., is an emeritus professor in the Department of
History at Ohio University, a former Chairman and Commissioner of the
U.S. International Trade Commission and author of several books on U.S.
trade policy.
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