BISHOP, A. L. Outlines of American Foreign Commerce, Chap. I. CHANDLER, H. A. E. Domestic Trade and Our International Economic DUDENEY, F. M. The Exporters Handbook and Glossary, Chaps. I, II. FISK, G. M. International Commercial Policies, Chap. I. FORD, L. C., and FORD, T. F. The Foreign Trade of the United States, Chap. I. GARVIN, T. L. The Economic Foundations of Peace, Chaps. I, II. GRUNZEL, J. DE HAAS, J. A. DE HAAS, J. A. KIDD, H. C. Economic Protectionism, Chap. I. Foreign Trade Organization, Chap. I. Foreign Trade and Shipping, Chaps. I, II. PEPPER, C. M. American Foreign Trade, Chap. I. SAVAY, N. Principles of Foreign Trade, Chap. I. SPRAGUE, O. M. W. The Effect of Depreciated Exchange on Foreign Trade Annals of the American Academy of Political and Social Science, March, 1921. Pp. 51-54. UNITED STATES TARIFF COMMISSION. Depreciated Exchange and International Trade, 1922. WILLIAMS, J. H. Foreign Exchange, Prices and the Course of International Trade. Annals of the American Academy of Political and Social Science, May, 1920. Pp. 197-210. Trade. The concept of merchandising activities which involve shipment of goods in and out of a country as foreign trade, international in character, led the economists to formulate theories regarding this trade which followed closely the line of arguments used by the authorities on international law. For a correct understanding of their theories it is therefore advisable to consider the attitude of these authorities regarding the policies which a state should pursue in its relation with other states. Almost from the beginning, differences of opinion developed among legal writers on this matter. Some stated that each nation has an indusputable right to refuse to trade with other nations and that consequently a state can impose such conditions and restrictions upon its foreign commerce as it deems best for its own interests. Others asserted that the exchange of products between nations is based upon a natural right, that it is a common inheritance of humanity, and that therefore a nation which restricts its commercial intercourse with other nations, a nation which discriminates against some countries and gives preferences to others, undermines the very foundation upon which the peaceful development of humanity and the progress of civilization are based. These two principles are irreconcilable; they have been used time and again by economists and statesmen, the first principle in defense of protection, the second in defense of free trade. Unless qualified to meet economic realities, they are both unworkable dogmas. A sovereign state may be free to regulate its commerce without considering the needs and requirements of other states, but it can not escape the disastrous consequences which the pursuance of such a policy may bring upon it. If a nation can assume that it has an unqualified right to trade with another nation, then the freedom of exchange may degenerate into license. One country has no right to ship injurious products into another, just as it has no right to drain another country of resources in order to foster its own aggrandizement. Freedom of trade, like freedom in any other manifestation of the economic life of a people, must be scrutinized in the light of the conditions which it creates. When the political and industrial revolution in the second half of the eighteenth century introduced the idea of freedom of man and of contract, many were those who predicted that a millennium had come. The disillusionment was bitterly disappointing. The abuse of power on the part of those who could enforce their will led to ceaseless toil by women and children in mines, in mills, and in factories; it led to the breaking up of family life, to starvation wages. Without idealizing the time of slavery, of serfdom and of medieval guilds, one must admit that the immediate effects of the removal of restrictions on industry and commerce were not an unalloyed blessing to the mass of the people. Unrestricted freedom had to give way to legislative enactments regulating the manifold relations which arose because of the changes in the methods of production and distribution of commodities. Laws and regulations are necessary as long as men are endowed with capacities for evil as well as for good, as long as many of them are actuated not by ethical concepts but by predatory instincts. Mercantilists.-While customs duties were levied for many centuries before the formation of modern states, their first use as a factor of national commercial policies did not occur until the fall of feudalism and the concentration of power in the hands of what may be termed national authori ties. As long as nations were divided into small principalities, each leading an independent existence, as long as Western Europe was a continent of isolated communities, castles and cloisters, manors and burghs, a continent of insecure and often impassable highways separating one industrial center from another, there could be no concerted national effort in dealing with foreign commerce. Taxes and tolls were levied in order to meet the fiscal requirements of those who could enforce them, but nations as such did not exist. The fall of feudalism and clericalism led to the rise of the power of kings. They established themselves as rulers of centralized political units and in order to maintain their position they surrounded themselves with courtiers, governmental officials and mercenary soldiers. The kings had to pay in specie for the services of their supporters, and precious metals assumed a much greater significance than they had heretofore possessed. How to meet the requirements for gold and silver became one of the most important subjects of economic speculation; it led gradually to the formulation of the first system of economic thought, that of mercantilism. The most salient point of this system was an overestimation of the economic significance of money. This is not to be wondered at when one considers the conditions of the time when the mercantile doctrine arose and when one reflects that even now, after much economic training, there yet prevails in many minds a great deal of confusion regarding the real significance of money and the relation it bears to the actual wealth of a country. The more thoughtful of the mercantilists never proclaimed the doctrine so often erroneously ascribed to them, that precious metals were the only form of wealth; they taught that gold and silver were the most important and substantial part of the movable wealth of a country, indispensable because of their universal purchasing power. The overestimation of the value of precious metals and the adoption of measures intended to keep them within a |