Errata

p. 255, fourth line from bottom of main text: "incomplete" should be "complete."

p. 293, last line: "lending" should be "receiving."

p. 329, line 15: "unweighted average ratio" should be "unweighted geometric average ratio."

p. 341, line 20: "import duties" should be "revenue import duties."

p. 343, second line from bottom: "imported" and "native" should be transposed.

pp. 344-353: "duties on imports" should be "revenue duties on imports" throughout.

P. 350, line 16: "numerically" should be "algebraically."

pp. 353, lines 13 and 15: "English and German" should be "German and English."

p. 304, line 19: "adjusting" should be "disturbing."

p. 371, line 4: "average ratio" should be "geometric average ratio."

p. 429, line 13: "with one negligible exception" should be "with only one substantial exception."

p. 462, line 1: "e" should be "c."

p. 470, line 1: "(Om × Or) units" should be "(Om × mr) units."

p. 523, line 8: "productive combination" should be "combination of products."

p. 539, Chart XII: origin of E curve should be at 15 on y axis instead of at 10.

p. 548, footnote 24, lines 18-19: "The slope with respect to OX of the tangent to OE at a" should be "The slope with respect to OX of the vector Oa."

p. 574, line 18: "which E would have been willing to pay" should be "which G would have been willing to pay."

Preface

In this book I first endeavor to trace, in a series of studies of the contemporary source-material, the evolution of the modern "orthodox" theory of international trade, from its beginnings in the revolt against English mercantilism in the seventeenth and eighteenth centuries, through the English currency and tariff controversies of the nineteenth century, to its present-day form. I then proceed to a detailed examination of current controversies in the technical literature centering about important propositions of the classical and neo-classical economists relating to the theory of the mechanism of international trade and the theory of gain from trade. The annual flow of literature in this field has become so great in the last few years, and the claims on my time and energy from other unfortunately unavoidable activities of a quite divergent sort have been so heavy, that the completion of this book and the rendering of full justice to the recent literature have proved to be incompatible objectives. I hereby present my sincere apologies to the substantial number of economists who have in recent years made valuable contributions to the theory of international trade which are here either wholly neglected or treated more summarily than they deserve.

This book is not presented as a rival to, or substitute for, the excellent textbooks on the theory of international trade which are at last available. The main contributions of a good textbook are usually its contribution to general synthesis of doctrine, its illustrative material, and its restatement in compact, simplified, and systematic form of materials familiar to scholars. My objectives have been, rather, to resurrect forgotten or overlooked material worthy of resurrection, to trace the origin and development of the doctrines which were later to become familiar, and to examine the claims to acceptance of familiar doctrine. Since, until recent years, it was at first almost solely English writers, and later almost solely English and American writers, who were responsible for the development of the theory along the classical lines, there is but little reference to writings by Continental economists antedating the War. While my main objective in writing this book was that it should prove a useful supplement, for both teachers and students, to the textbooks on the theory of international trade, I hope that the extensive discussion of early monetary theories will make it of interest also to students of monetary and banking theory.

Acknowledgments are due to the University of Chicago Press and to the editors and publishers of Weltwirtschaftliches Archiv for their kind permission to include in this book the material which appeared in my articles "English theories of foreign trade before Adam Smith," Journal of Political Economy, XXXVIII (1930), 249-310, 404-57, and "The doctrine of comparative costs," Weltwirtschaftliches Archiv, XXXVI (1932, II), 356-414. Both articles, however, and especially the latter, have been substantially revised, recast, and extended, in the process of incorporation in this book.

My heaviest intellectual indebtedness is to Professor F. W. Taussig, who first aroused my interest in the field of international trade as long ago as 1914, who has done much by his writings and oral discussion to sustain it since and to set the mold for my thinking, and to whose teachings I have remained faithful in my imperfect fashion. As a gesture of gratitude in this connection, I have taken the liberty of dedicating the book to him. To Professor Bertil Ohlin's persistent refusal willingly to accept the same mold for his thinking in this field, and to his consequent persistent refusal to agree with me, I am also greatly indebted, for it has forced me repeatedly to think problems through more thoroughly than I would otherwise have done, and to revise—and perhaps even upon occasion to abandon—doctrines to which I was disposed to cling as long as it was still possible to do so without violating the intellectual decencies. I am greatly indebted also to a long line of able and sceptical students, who have pointed out my errors to me in the hope, not always realized, that I would find ways of correcting them. I am especially indebted to the following students, past and present, who have at one time or another accepted the responsibility of assisting me in checking my references, in meeting the physical burden of using libraries, and in keeping my errors of fact and analysis within the accustomed limits of tolerance: Leroy D. Stinebower, Michael L. Hoffman, Virginius F. Coe, Henry J. Wadleigh, Lily M. David, Benjamin F. Brooks, Arthur I. Bloomfield, The charts were drawn for me by Y. K. Wong, who has once more been patient with my mathematical ineptitude while refusing to make concessions to it. My thanks are due also to the Social Science Research Committee of the University of Chicago, who provided the funds which enabled me to recruit the aid of these students and also furnished the typing facilities.