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The state and American trade strategy in the pre-hegemonic era

Published online by Cambridge University Press:  22 May 2009

David A. Lake
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Trade policy is commonly seen as a product of domestic interest group politics. Despite the obvious economic distortions introduced by trade barriers, protectionism recurs, we are often told, because producers organize more readily than consumers and dominate the political process. In this “demand side” explanation of protection, the state is seen as the empty receptacle of societal bargaining with no independent voice or role.

Type
Research Article
Information
International Organization , Volume 42 , Issue 1 , Winter 1988 , pp. 33 - 58
Copyright
Copyright © The IO Foundation 1988

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References

An earlier version of this article was presented at the annual meeting of the American Political Science Association, New Orleans, 29 August-1 September, 1985. Parts of this essay are drawn from my Power, Protection and Free Trade: International Sources of U.S. Commercial Strategy, 1887–1939 (Ithaca, N.Y.: Cornell University Press, forthcoming 1988). I would like to thank Beverly Crawford, Jeff Frieden, Judith Goldstein, Joanne Gowa, Cynthia Hody, G. John Ikenberry, Wendy K. Lake, Michael Mastanduno, Timothy McKeown, John Odell, and four anonymous reviewers for their many helpful comments. They are, of course, absolved from responsibility for any and all shortcomings that remain. The generous financial support of the Academic Senate and International Studies and Overseas Programs at the University of California, Los Angeles, is gratefully acknowledged.

1. See Dixit, Avinash, “Strategic Aspects of Trade Policy,” mimeo, Princeton University, 01 1986Google Scholar; see also the growing literature on “strategic trade policy.” For a review, see Grossman, Gene M. and Richardson, J. David, “Strategic Trade Policy: A Survey of Issues and Early Analysis,” in Baldwin, Robert E. and Richardson, J. David, eds., International Trade and Finance, 3d ed. (Boston: Little, Brown, 1986), pp. 95–114.Google Scholar

2. In the historiography of American trade policy, the critical role played by Woodrow Wilson in the passage of the Underwood Tariff of 1913, which I shall discuss, is often treated as an anomaly. While Wilson's case is perhaps more self-evident than others, I argue that Wilson's actions were merely part of a larger history of important executive intervention in the process of trade policymaking.

3. Schattschneider, E. E., Politics, Pressures and the Thriff (New York: Prentice-Hall, 1935).Google Scholar

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5. Taussig, Frank W., The Tariff History of the United States, 8th ed. (New York: Putnam, 1931), p. 407.Google Scholar

6. This literature is now quite large. See, in particular, Caves, Richard E., “Economic Models of Political Choice: Canada's Tariff Structure,” Canadian Journal of Economics 9, no. 2 (1976), pp. 278–300CrossRefGoogle Scholar; Pincus, Jonathan J., Pressure Groups and Politics in Antebellum Tariffs (New York: Columbia University Press, 1977).Google Scholar

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8. Lavergne, Réal P., The Political Economy of U.S. Tariffs (New York: Academic Press, 1983)Google Scholar. Baldwin, Robert E., The Political Economy of U.S. Import Policy (Cambridge: MIT Press, 1985).Google Scholar

9. The conception of the state I develop reintroduces a degree of bureaucratic and “intrabranch” politics into the study of the state. On the former, see Allison, Graham T., Essence of Decision (Boston: Little, Brown, 1971)Google Scholar; and Halperin, Morton H., Bureaucratic Politics and Foreign Policy (Washington, D.C.: Brookings Institution, 1974)Google Scholar. For the latter, see Pastor, Robert A., Congress and the Politics of U.S. Foreign Economic Policy, 1929–1976 (Berkeley: University of California Press, 1980).Google Scholar

Another important element of the state may be the economic agencies, such as the Treasury Department, Office of Management and Budget, and the Federal Reserve Bank in the United States. Compared to the constituent agencies, the economic agencies possess broad, society-wide institutional mandates. Most of these agencies are primarily concerned with the macroeconomy, and specifically growth, employment, and inflation, or, before the Keynesian revolution, the stability of the government budget and money supply. Other economic agencies, however, such as the Japanese Ministry of International Trade and Industry, are also concerned with the long-term economic development of the country. Whether focusing on the macroeconomy or economic development, these broader mandates allow the economic agencies to avoid capture by particularistic interests, rendering the agencies at least relatively autonomous.

10. This assumption is central to Downs, Anthony, An Economic Theory of Democracy (New York: Harper, 1957)Google Scholar, and is now widely accepted in public choice models of politics. See also Mayhew, David, Congress: The Electoral Connection (New Haven: Yale University Press, 1975).Google Scholar

11. On bureaucratic capture, see Bernstein, Marver H., Regulating Business by Independent Commission (Princeton, N.J.: Princeton University Press, 1955)CrossRefGoogle Scholar; and McConnell, Grant, Private Power and American Democracy (New York: Knopf, 1967), pp. 246–97.Google Scholar

12. This distinction between the executive and legislature is hardly novel. See Baldwin, , The Political Economy of U.S. Import PolicyGoogle Scholar, and Pastor. But the argument I present departs from the existing literature and gives form and content to executive preferences by deducing them from the constraints and opportunities of the international economic structure.

13. Otto Hintze first made this point in “Military Organization and the Organization of the State,” in Felix, Gilbert, ed., The Historical Essays of Otto Hinize (New York: Oxford University Press, 1975).Google Scholar

14. The concept of the international economic structure is developed in Lake, David A., “International Economic Structures and American Foreign Economic Policy, 1887–1934,” World Politics 35 (07 1985), pp. 517–43CrossRefGoogle Scholar; “Beneath the Commerce of Nations: A Theory of International Economic Structures,” International Studies Quarterly 28 (July 1984), pp. 143–70Google Scholar; and Power, Protection, and Free Trade: International Sources of U.S. Commercial Strategy 1887–1939 (Ithaca, N.Y.: Cornell University Press, forthcoming 1988)Google Scholar. In the cases I shall discuss, I empirically develop the link between the international economic structure and national trade strategies. One can agree with the argument about the role of the foreign policy executive without necessarily accepting the theory of international economic structures, although I obviously believe the two are mutually reinforcing.

15. Krasner, Stephen D., Defending the National Interest: Raw Materials Investments and U.S. Foreign Policy (Princeton, N.J.: Princeton University Press, 1978), p. 12.Google Scholar

16. Katzenstein, Peter J., “Conclusion: Domestic Structures and Strategies of Foreign Economic Policy,” in Katzenstein, , ed., Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States (Madison: University of Wisconsin Press, 1978).Google Scholar

17. The trade strategy discussed in this section is developed in significantly more detail in chap. 3 of my book, Power, Protection, and Free Trade.

18. See Imlah, Albert H., Economic Elements in the Pax Britannica: Studies in British Foreign Trade in the Nineteenth Century (Cambridge: Harvard University Press, 1958)CrossRefGoogle Scholar; Saul, S. B., Studies in British Overseas Trade, 1870–1914 (Liverpool: Liverpool University Press, 1960).Google Scholar

19. See, for example, Diaz Alejandro, Carlos F., Essays on the Economic History of the Argentine Republic (New Haven, Conn.: Yale University Press, 1970), pp. 1–66.Google Scholar

20. On American policy towards Latin America, see LaFeber, Walter, The New American Empire (Ithaca, N.Y.: Cornell University Press, 1963).Google Scholar

21. Lake, , Power, Protection and Free Trade, chap. 3.Google Scholar

22. See Terrill, Tom E., The Tanff, Politics, and American Foreign Policy, 1874–1894 (Westport, Conn.: Greenwood Press, 1973), pp. 109–40.Google Scholar

23. Most telling in this regard is a letter from Harrison to Blame dated 17 January, 1889, reprinted in Volwiler, Albert T., The Correspondence Between Benjamin Harrison and James G. Blaine, 1882–1893 (Philadelphia: American Philosophical Society, 1940), pp. 44–45.Google Scholar

24. Cited in Terrill, , The Tariff, Politics, and American Foreign Policy, p. 134.Google Scholar

25. For a discussion of the International American Conference and its results, see Alice, Felt Tyler, The Foreign Policy of James G. Blaine (Minneapolis: University of Minnesota Press, 1927), pp. 165–90.Google Scholar

26. Terrill, , The Tariff, Politics, and American Foreign Policy, pp. 162–63Google Scholar; Tyler, , James G. Blaine, pp. 184–87Google Scholar; and David, Saville Muzey, James G. Blaine: A Political Idol of Other days (New York: Dodd, Mead, 1935), pp. 437–51.Google Scholar

27. Muzzey, , James G. Blaine, p. 442.Google Scholar

28. Congressional Record, 51st Congress, 1st session, 1890, pp. 4253–54.Google Scholar

29. Ibid., p. 4250.

30. Ibid., pp. 4253–54. Emphasis added.

31. Quoted in Muzzey, , James G. Blaine, p. 447Google Scholar; and Gail, Hamilton, Biography of James G. Blaine (Norwich, Conn.: Henry Bull, 1895), p. 687Google Scholar. This quotation has been widely reprinted. The original source, the speaker, and the context are never identified.

32. On Harrison's role in drafting the reciprocity amendment, see Harrison to Blaine, 23 July 1890, in Volwiler, , Correspondence, pp. 111–12.Google Scholar

33. Terrill, , The Tariff, Politics, and American Foreign Policy, pp. 109–11.Google Scholar

34. Parker, George F., Recollections of Grover Cleveland (New York: Century, 1909), p. 104.Google Scholar

35. LaFeber describes three episodes in American expansion, pp. 210–29 and 242–83.

36. The Senate was traditionally more protectionist than the House, even though economic interests tend to be more concentrated in the latter. Three explanations are generally given: 1) the Senate is a more individualistic institution with weaker committee chairs, 2) debate is unlimited, 3) an unlimited number of amendments are permitted on the Senate floor. See Baldwin, , Political Economy, pp. 15–17Google Scholar; and Pastor, , U.S. Foreign Economic Policy, pp. 162–63.Google Scholar

37. See Robert, McElroy, Grover Cleveland: The Man and the Statesman, vol. 2 (New York: Harper, 1923), p. 111.Google Scholar

38. Wilson wrote that “my services on the Conference Committee on the Tariff Bill gave me enough glimpses of [Gorman's] conduct in that contest to assure me that he was the bribed attorney of the Sugar Trust and of other trusts or jobbers, who wished their interests taken care of in the tariff revision.” Summers, Festus P., The Cabinet Diary of William L. Wilson, 1896–1897 (Chapel Hill: University of North Carolina Press, 1957), p. 60.Google Scholar

39. In nearly every tariff bill in American history, the conference committee has, in a very real sense, written the final bill. Often, what emerged from the conference room bore little resemblance to the two versions of the bill that went in. By accepting all the Senate amendments, the House circumvented this normal process of consensus building. It also resulted in numerous “jokers” becoming law even though that was not intended. Senator John Sherman of Ohio remarked that “there are many cases in the bill where enactment was not intended by the Senate. For instance, innumerable amendments were put on by the Senators on both sides of the chamber … to give the Committee of Conference a chance to think of the matter, and they are all adopted, whatever may be their language or the incongruity with other parts of the bill.” Cited in Henry, Jones Ford, The Cleveland Era (New Haven, Conn.: Yale University Press, 1919), p. 199.Google Scholar

40. On the Imperial Preference movement in Great Britain before the war, see George, Peel, The Tariff Reformers (London: Methuen, 1913)Google Scholar; and Alan, Sykes, Tariff Reform in British Politics, 1903–1913 (Oxford: Clarendon Press, 1979).Google Scholar

41. See Lake, , Power, Protection and Free Trade, chap. 4.Google Scholar

42. Selections from the Correspondence of Theodore Roosevelt and Henry Cabot Lodge, vol. 2 (New York: Scribner, 1925), p. 129.Google Scholar

43. Jessop, Philip C., Elihu Root, vol. 2 (New York: Dodd, Mead, 1938), p. 215.Google Scholar

44. On Taft's role in the passage of the Payne–Aldrich Act, see Coletta, Paolo E., The Presidency of William Howard Taft (Lawrence: University Press of Kansas, 1973), pp. 45–75Google Scholar. The quotation is found on p. 73.

45. See Peel, , Tariff ReformersGoogle Scholar; and Sykes, , Tariff Reform.Google Scholar

46. See Lake, , Power, Protection and Free Trade, chap. 5Google Scholar. In Britain, however, the war disrupted the normal course of trade politics. The McKenna duties, designed to raise revenue for the war effort, were adopted in 1915.

47. See Asher, Isaacs, International Trade, Tariff, and Commercial Policies (Chicago: Irwin, 1948), p. 215.Google Scholar

48. House Ways and Means Committee, A Bill to Reduce Tariff Duties, to Provide Revenue for the Government, and for Other Purposes: A Report to Accompany H.R. 3321, 63d Congress, 1st session, 1913, pp. xvi–xvii.Google Scholar

49. The figure of $123 was often cited in the debates. See, in particular, the opening speech of Simmons, F. M., chairman of the Senate Finance Committee, Congressional Record, 63d Congress, 1st session, 1913, p. 2552Google Scholar. Total imports for 1912 were $1,653.3 million. Statistical Abstract of the United States (Washington, D.C.: GPO, 1916), p. 328.Google Scholar

50. The Economist, 12 April 1913, p. 867.Google Scholar

51. Considerable debate in Congress also occurred over the role of the Democratic caucus in the tariff-making process. At the root of this Republican disgruntlement lay the frustration of its party allies in the business community. Where in the past business had faced a friendly Ways and Means Committee, it now confronted a committee committed to rolling back the favors the business people had previously enjoyed.

52. Link, Arthur S., ed., The Papers of Woodrow Wilson (WWP), vol. 27 (Princeton, N.J.: Princeton University Press, various years), p. 270.Google Scholar

53. WWP, vol. 23, pp. 641–42.

54. WWP, vol. 25, p. 38.

55. WWP, vol. 25, p. 341.

56. Congressional Record, 63d Congress, 1st session, 1913, p. 662.Google Scholar

57. Ibid., p. 2553.

58. Becker, William H., The Dynamics of Business–Government Relations: Industry and Exports, 1893–1921 (Chicago: University of Chicago Press, 1982).Google Scholar

59. These figures are derived from those in Foreign Commerce and Navigation of the United States (Washington, D.C.: GPO, selected years)Google Scholar and the Abstract of the Census of the United States (Washington, D.C.: GPO, selected years)Google Scholar. For a more detailed discussion of these data, see Lake, , Power, Protection and Free Trade, chap. 2.Google Scholar

60. Link, Arthur S., Wilson: The New Freedom (Princeton, N.J.: Princeton University Press, 1956).Google Scholar

61. Link, Arthur S., Woodrow Wilson and the Progressive Era, 1910–1917 (New York: Harper, 1954), pp. 35–36.Google Scholar

62. WWP, vol. 28, p. 35.

63. Link, , Wilson: The New Freedom, p. 185.Google Scholar

64. Quoted in Richard, Hofstader, ed., The Progressive Movement, 1900–1915 (Englewood Cliffs, N.J.: Prentice-Hall, 1963), pp. 156–57.Google Scholar

65. Quoted in Link, , Wilson: The New Freedom, p. 187.Google Scholar

66. Ibid., p. 189.

67. Ibid., pp. 189–90.

68. Krasner, , “U.S. Commercial and Monetary Policy,”Google Scholar and Joanne, Gowa, “Public Goods and Political Institutions: Trade and Monetary Policy Processes in the United States,”Google Scholar this volume, argue that the state is more autonomous and important in the monetary than in the trade issue-area. John, Odell, U.S. International Monetary Policy: Markets, Power, and Ideas as Sources of Change (Princeton, N.J.: Princeton University Press, 1982)Google Scholar, finds the three concepts listed in the subtitle important in explaining monetary policy. All three are consistent with a “statist” approach, although Odell does not use the term. Odell also finds that domestic politics and bureaucratic politics are relatively unimportant.

69. Kenneth, Arrow, Social Choice and Individual Values, 2d ed. (New Haven, Conn.: Yale University Press, 1963)Google Scholar. See also Robert, Abrams, Foundations of Political Analysis (New York: Columbia University Press, 1980), pp. 41–101 and 235–79.Google Scholar

70. In his contribution to this volume, John, Ikenberry, “Market Solutions for State Problems: The International and Domestic Politics of American Oil Decontrol,”Google Scholar finds a similar pattern.

71. See, for example, Judith, Goldstein, “Ideas, Institutions, and American Trade Policy,” this volume.Google Scholar

72. See Kenneth, Waltz, Theory of International Politics (Reading, Mass.: Addison-Wesley, 1979).Google Scholar