INTERNATIONAL ECONOMIC RELATIONS An essential characteristic of modern economic life is its interdependence, both internal and external. Just as the specialized citizens of a nation depend economically upon one another for their mutual survival and welfare, so do modern industrial nations depend upon other countries for raw materials and markets. International trade, however, has not proceeded in the unfettered matter one might suppose from the preceding observations. Considerable numbers of people, exerting important political pressure, have pressed for protectionist policies. The free trade—protectionist controversy is represented here by two classical statements. On the protectionist side is an excerpt from Friedrich List's famous National System of Political Economy, in which he presents his essential thesis. Subtly and ironically arguing for free trade is Frederick Bastiat, from whose Economic Sophisms an extract was taken.
The tariff is probably the most widely known protectionist device. Man's ingenuity, however, has discovered and applied numerous other techniques for achieving protection of domestic industries. Percy W. Bidwell, sometime director of studies of the Council on Foreign Relations, examines the variety of protectionist devices other than the tariff in The Invisible Tariff.
Controversy over the protectionist issue has long marked the foreign trade policies of the United States. In recent decades, the focus of attention has been centered on the Reciprocal Trade Agreements Program. Various aspects of the debate are brought out in Clair Wilcox's "Trade Policy for the Fifties," and recommendations are made in the Randall Report to the President and the Congress. William Hard, roving editor of the Reader's Digest and well-known journalist, explained the importance of the General Agreement on Tariffs and Trade (GATT) to the development of a freer flow of international trade.
Trade impediments resulting from war and depression so hindered international economic relationships that the Bretton Woods Conference of 1944 was called to seek methods for re-establishing a freer flow of trade. Two important institutions, the International Monetary Fund and the International Bank for Reconstruction and Development, were established as a consequence. The primary purpose of the first was to reduce foreign exchange difficulties. The first decade's experience of the Fund is described in The First Ten Years of the International Monetary Fund. The primary purposes of the second institution were: (1) to assist in the reconstruction of war-devastated countries and (2) to facilitate long-run economic development in the member countries. Its first decade's experience is summarized in the excerpt from the Tenth Annual Report, 1954-55.
A recent development, having enormous potential significance in the elimination of trade barriers, is the development of regional common markets. Perhaps the most dramatic instance of this development is the plan for the establishment of a West European Common Market. Jean Monnet, a foremost exponent of such arrangements, explains the logic behind the West European Common Market in "The 'Silent Revolution' in Europe."