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This article talks about international trade in the period between 1862-1879, or the greenback period. F.W. Taussig, a professor, concluded in 1917 that with the U.S., which was using inconvertible paper money as monetary standard, borrowing heavily and continuously from Great Britain, which was using gold as basis, there will be increased sterling supply in New York and lowered cost, in U.S. paper, of imported commodities. The author noted that when both countries are on a gold basis, there will be an influx of gold from Great Britain in the U.S. and general prices will rise, while they fall in Great Britain. He concluded that the large borrowing operations of the U.S. in the 1860s was an important factor in the disturbance of the normal course of trade.

Presents various econometric models of different countries. Problem of stabilization policy in underdeveloped countries; Productivity and comparative costs of Great Britain and the U.S. in international trade.

The article comments on the underlying theory and the conclusions on economic policy derived from the proposals by Professor Ragnar Frisch for a thorough study of balance of payments broken down by countries and currencies. Several countries, short of foreign exchange, balance their imports by state control at the amount available from exports and other sources; any increase in exports enables them to import more, any decrease in exports forces them to import less. In the U.S., on the other hand, the volume of imports is determined by private importers independently of the reserve position of the country; the total volume of imports is below the level determined by national income and relative prices, and no change of exports would influence the actual volume of imports. In these conditions, discrimination against imports from the U.S. will increase world trade.

Comments on an article about public pressures and values affecting forest management and timber supply in the United States. Effects of the criticism made by preservationists against industrial forest landowners; Discussion on legislative issues; Problems that log export trade faces.

This section introduces the articles which appeared in the March 1972 issue of the "Brookings Papers on Economic Activity." In the first article, William Branson estimates that the 1971 currency re-alignment, when fully effective, will bolster the United States merchandise trade balance by $7 billion to $8 billion a year. The effect of the devaluation of the U.S. dollar on the trade balance depends on how much it raises the dollar prices of U.S. imports, how much it lowers the prices of U.S. exports in terms of the currencies of buyers, and how responsive both buyers and sellers are to price changes -- that is, how large their price elasticities are. As Branson views the process, exporters set the price tags on tradeable goods in terms of their own currency. The paper by F. Thomas Juster and Paul Wachtel examines the effects of inflation and of transitory changes in income on consumer saving and spending behavior, with particular reference to the inflationary experience of recent years. The authors seek to explain consumer demand in several different ways, relying on both subjective data drawn from surveys of households and objective economic variables such as income, relative prices, and the rates of unemployment and of inflation. In the third article, Arthur Okun reaffirms analytically the desirability of an activist fiscal-monetary strategy. Like other Keynesian economists, Okun believes that fiscal and monetary policy should be shifted toward stimulus or restraint in light of observed and predicted economic fluctuations.

The article presents a summary of the papers presented at a round table conference on problems of the U.S. commercial policy. The Chairman remarked that two types of conflict had emerged in American commercial policy: the conflict between their foreign trade policy and certain of the objectives in New Deal domestic policy, and the conflict of their foreign policy with the foreign policies of the so-called "totalitarian" states. Professor Frank A. Southard, Jr.'s paper states that the trade policy of Germany has not been more successful than that of the United States. It has not succeeded in driving American exports out of foreign markets, nor has it prevented the United States from finding countries willing to support a non-discriminatory trade policy. Trade agreements have already been made with twenty countries, accounting for about 60 per cent of their foreign trade. E.D. Durand's paper dealt with "The European War and the Import Trade of the United States." The first World War resulted in a quantitative decrease in American imports, and sharp changes in the commodity composition of the trade. There was a marked decline (in terms of value) in the percentage of total imports furnished by Europe and a corresponding decline in the imports of the finished manufactured goods which are the typical products of that region. The shift from indirect to direct trade in such commodities as wool, tin and rubber was also responsible for the decline in imports from Europe.

The article discusses the work of the National Bureau of Economic Research in 1953. Seven reports were published by the National Bureau in 1953. The preparation of a number of others was effectively advanced during the period, and work on several new projects was started. New research in the field of international economic relations developed further in 1953. A project was begun that would develop index numbers of prices and quantities for the exports and imports of the United States, by commodity groups, beginning in 1869. Another project that involved construction of estimates of the Canadian balance of payments back to 1868 was completed. Plans were completed for a project on the structure of world trade and payments, and operations were begun with the aid of a special grant of funds. Plans for a study to determine the trends in the output of the Russian economy were drawn up and a special grant of funds was obtained to conduct it. A study of wages and productivity in the United States was planned in 1953 which would deal with money and real wages from 1860 to 1952 and with productivity from 1899 to 1952.

This article presents commentaries on the paper presented by Stephen P. Magee at the thirteenth conference of the Brooking Panel on Economic Activity, which studies the effects of outstanding contracts on the value of U.S. imports in the months immediately following a devaluation. According to William Branson, the paper makes a major contribution in pointing out the potentially large overstatements of imports after a devaluation, reflecting both the genuine effects of currency contracts and statistical errors. However, Branson found two problems in the paper. First, it seems that the capital losses during the currency-contract period may have little, if any, relation to the subsequent adjustment process. Second, the fact that Magee focused only on the import side of U.S. trade seems to imply that the adjustment process is somehow asymmetric. On the other hand, Lawrence Krause did agree with Branson that Magee deserves the thanks for tackling some nasty problems in the trade data. Though he may be telling the nonspecialist more than he wants to know about currency contracts, Magee is presenting valuable new evidence in an unexplored area. He shows convincingly that the errors in the import data can be large enough to distort unit-value indexes and perhaps large enough to explain, in part, why some econometric models were underpredicting U.S. imports for the periods after dollar devaluation.

This article reveals the effect of the 1971 dollar devaluation on the trade balance of the United States. The year 1971 saw a major realignment of exchange rates among the world's important currencies. The basic cause of these changes was the continuing deterioration of the U.S. trade and payments position, and their proximate cause the massive speculation against the dollar throughout the year and suspension of convertibility by the United States in August. The changes in exchange rates against the dollar -- the dollar price of foreign currencies -- are expected to initiate a major swing toward surplus in the U.S. trade balance and consequently to reduce substantially the surpluses of some other countries. In the first two major sections of the paper the analytics of revaluation are discussed, flrst from the point of view of a single revaluing country, with attention to the difliculties concerning export supply elasticities and the "pass-through" issue; and then from the standpoint of multilateral trade, using a model originally developed by Paul Armington. The next three sections focus on quantitative estimates of the long-run effects of the realignment. The first reports an extension of the Armington model, under several assumptions about the relevant demand, substitution, and supply elasticities; it develops a figure of a bit less than $8 billion for the swing in the U.S. trade surplus from a 1971 base, and consistent estimates for the whole trade matrix. Next comes a brief discussion of the empirical model for U.S. bilateral trade developed by Stephen Magee, which provides estimates of the U.S. row and column of the world trade matrix.

The annual meeting of the American Economic Association will be held in Chicago, Illinois, from December 29-31, 1919. On Monday, December 29, 1919 in a joint meeting with the American Association of University Instructors in Accounting, there will be a discussion on "The meaning of invested capital." At the afternoon session papers are going to be read on "The Effect on International Trade of Germany's Indemnity Payments," by F.W. Taussig and "Our Foreign Investment Policy," by H.C. Adams. In the evening H.B. Gardner of the American Economic Association and F.W. Blackmar of the American Sociological Society will deliver presidential addresses; this meeting is going to be followed by a smoker. At the evening session on Tuesday, papers will be presented by W.C. Mitchell on "Prices and Reconstruction" and H.G. Moulton on "The Price Question and Banking Policy." In the afternoon the subject for discussion is "Employees' participation in management," with a paper by Royal Meeker. At a joint meeting with the American Association for Labor Legislation in the evening the topic for consideration is "International Control of Labor."

The multinational corporation (MNC) has the choice of supplying foreign markets via either exports from the home market (US) or local production by a foreign subsidiary (FS). If the final (as distinguished from intermediate) U.S.-made and FS-produced goods are not identical the firm may do both. Two important questions in the analysis of the balance of payments impact of direct investment then arise. What determines this choice? And what is the impact of an increase in sales of the FS-product on sales of MNC exports? The purpose of this paper is to investigate these issues and especially the latter, the question of export displacement. [ABSTRACT FROM AUTHOR]

The article presents the author's response to a commentary made by economist F.W. Taussig on issues concerning international trade. According to the author, Taussig in his commentary states that the U.S. and England are two nations with paper money and in consequence of a loan of England to the U.S., English paper money suddenly depreciates relatively to American paper. According to the author, the diversification of value between two national currencies change in the same proportion the price of the wares imported to the two nations, but do not change the price of the home-made products. The author claims that if English exporters to the U.S. acquire, in exchange of the constant quantity of dollars immediately received for the exported products they will raise in the same ratio the price of these products in the British market; but then even the price of all other English. Moreover, according to the author the prices raised in the English market will be in exact proportion to the diminution of the external value of English money, while all prices will remain unchanged in the American market.

A conference paper about the role of coffee in Latin American trade is presented. The author notes the importance of the mutually beneficial relationship between the United States and Latin American countries who sell coffee to the U.S. Also discussed is the effect of overproduction of coffee on selling prices.

The authors have presented a very interesting and a very well done paper. Indeed it is so well done technically, that I have a difficult task as a discussant. I have no reason to doubt the accuracy of the computer that ground out the several simulations discussed in the paper, nor is it likely that the authors misunderstood the model employed since Professor Adams was one of the principal developers of the model while he was at the OECD. Rather my attempt to get a handle on the paper will start at a more basic level and I pose the question, why bother? Since history cannot be re-run, what is the purpose of simulating the past under more ideal conditions of macro economic balance? The authors state that they have a two-fold purpose in mind: to determine what were the causes of the deterioration of the U.S. trade balance between 1964 and 1969, and to determine what are the future prospects for the U.S. trade balance. The authors add that these determinations have 'obvious policy implications.' [ABSTRACT FROM AUTHOR]

The article presents authors' comments on three research papers on international trade and balance of payment by the U.S. by economists Hal B. Lary, J. Herbert Furth and Edward M. Bernstein. Lary has succeeded in putting many diverse elements of the U.S. balance of payments into a comprehensive and yet manageable form. In his analysis of the U.S. trade account, Lary says that the main influences that are perhaps amenable to economic analysis are income effects and price effects. Another interesting suggestion of Lary is that a faster rate of growth would make a positive contribution to the U.S. balance of payments. In another paper Furth suggests that payments deficit needs amendment if it is to be applicable to a reserve currency country like the U.S. He says that if the net cash decline involves a gold loss rather than an increase of foreigners' dollar balances, it may need more rapid correction than would otherwise be necessary. The paper by Bernstein says that the adequacy of reserves in the particular case of the U.S. cannot be tested in any simple or usual way. Two criteria have to be used relating to the state of the balance of payments and to the holdings of dollars by foreign countries.

The article presents a comment by the author on a paper that was previously published in The American Economic Review. In a recent paper, economist Paul Wells has presented an attempt at a general-equilibrium analysis of excise tax incidence, for a two-person two-factor two-commodity world, employing an ingenious geometrical technique similar in some respects to those commonly employed in international trade theory. Such attempts to broaden the theoretical approach to tax incidence are of course to be welcomed, and Wells has opened a promising new line of attack: but unfortunately, in constructing his geometrical model Wells has incorporated a fundamental confusion between income and output which invalidates his analysis, or at least makes it depend for its validity on a peculiarly unrealistic assumption about the way in which income is distributed in his model economy. In his analysis of market equilibrium in the absence and presence of excise taxes, Wells takes the point on the division-of-output function corresponding to the production point on the transformation curve as representing the initial stocks of output held by the two individuals in the economy, and proceeds to show how they would modify these stocks through exchange in the market along familiar contract-box lines.

Two papers on the role and status of the U.S. in the world economy during 1940 are presented. The first paper examined the role that war played in the position of the U.S. in international economy. In the second paper, the impact of more than a year of war on the international economic relations of the U.S. is described. The author believes that the most important element in the country's economic relations with the rest of the world is foreign trade. Significant changes in imports and exports have occurred during the war.

In this article, the author presents a reply to the criticism of his paper "An Economic Justification of Protectionism," published in the November 1958 issue of "Quarterly Journal of Economics." A number of comments on the paper which have reached the author orally or in writing seem to take as an article of faith that free trade is the optimum policy even where the conditions on which free trade is posited do not exist. They advance arguments which the writers would have recognized as invalid if their desire to support the sacred principle had not dulled their critical scrutiny. Researcher Anthony Y.C. Koo's comments, while the most serious of the lot, seem to the author not entirely free from this defect. One of the reasons for suggesting that Koo's data do not invalidate the original argument is that a comparison between the United States and other countries quite different from the one he made seems equally forceful. Even if used without the obviously necessary adjustments, in comparison with actual wage data they show that in the United States a very large farm-nonfarm differential in real wages exists.

This article presents literary publication related to trade and industry. Some of the literary publications were "The Growth of World Industry, 1938-1961" which lists internationally comparable data on almost 100 countries or territories. The figures measure growth in industrial output and employment, including changes in the mining, manufacturing, construction, electricity, and gas industries, "Yearbook of the united nations, 1962" presents a concise account of the United Nations and its agencies for 1962, "Reader's Digest Great World Atlas," edited by Alfred S. Dashiell, "Teleurope-Industry and Commerce in Europe" which is the eighth edition of a directory of business engaged or interested in foreign trade and "World Trade Data Yearbook" provides information on a variety of subjects of interest to international traders such as: American Chambers of Commerce abroad, arbitration in world trade, communications, conversion factors, electrical voltages in various countries, international advertising media, overseas trade and investment assistance, credit terms survey, avoiding collection troubles, foreign freight forwarders.

This article presents information on several papers and memorandums related to economic conditions in various countries. The Parliamentary documents for 1886 will contain a good deal of evidence of the increasing uneasiness as to the condition and prospects of the foreign trade of England. A Blue Book has been issued, giving the rates of duty levied on imports by the different European countries and the United States; and a second is to give the duties levied by the British colonies, these returns being on the plan of the similar documents published in 1882. The Commission on the Depression of Trade have also collected and published reports from the English consuls, showing the impediments to British trade in the different countries. Another snippet reports that the opening of fertile wheat lands in the United States, and the cheap transportation of grain to Europe have had an influence not only on England and Ireland, but on France, Germany, and Russia. French and German legislation has been invoked to protect the farmer. But now an interesting movement is in progress among the Russian peasants, by which the former serfs are becoming separated from the land. At the time of the emancipation of the serfs, Russia controlled the wheat markets of Western Europe; while the prices of agricultural products were high, and even rising.

On September 24, 1949, Frank D. Graham, Walker Professor of International Finance at Princeton University, at Princeton, New Jersey, died from a fall at Palmer Stadium at the close of the Princeton-Lafayette football game. During the last two decades of his life, Graham was concerned with some of the most difficult problems of recent times--unemployment, monetary stability, and international peace and prosperity. To these formidable tasks he brought an acute intellect, a deep love of truth, great courage in his convictions, and a warm concern for human welfare. Born of American parents in Halifax, Nova Scotia, on January 1, 1890, Graham received an A.B. in 1913 and an as in 1915 from Dalhousie University, and then an A.M. in 1917 and a Ph.D. in 1920 from Harvard University. Graham wrote his doctor's thesis on "International Trade Under Depreciated Paper: United States, 1862-79." Even in this early study, he was too independent and an original thinker. Graham's great critical and analytical powers developed early. Coming to Princeton University as an assistant professor in 1921, he was by the late twenties one of the outstanding graduate teachers on the Princeton campus.

This article presents an examination of how markets in Taiwan present new opportunities for American businesses. The author discusses the efforts made by the U.S. to increase their number of trading partners in Europe and the Far East. The author examines the investment climate of Taiwan, discussing the advantages and disadvantages that the country presents when compared to other underdeveloped countries. He examines the country's economic growth, industrial development and overall political climate. He discusses Taiwan's government policy for foreign investment and various import and export restrictions.

The U.S. trade surplus, which had run at a healthy $5 billion annual rate in the early 1960's, declined sharply after the middle of the decade until mid-1969, by which time it had eroded to virtually nothing. The magnitude of this decline has necessarily raised questions about its underlying causes and about the future trend of the U.S. trade balance. These questions are aimed at determining whether a fundamental and structural shift has occurred in the U.S. competitive position in world markets or whether the severe deterioration in the trade position is mainly a cyclical phenomenon, associated with the inflationary boom, which characterized the second half of the 1960's. Specifically, this paper addresses itself to the question of the effect of macro-economic conditions, here and abroad, upon trade flows. It is important to recognize and measure this effect not necessarily in order to tailor domestic economic policy to external constraints, but rather to be able to anticipate, and deal with, the balance of payments effects of domestic policy decisions. [ABSTRACT FROM AUTHOR]

This section presents comments and discussion on an article about the trends in U.S. trade by William H. Branson and Helen B. Junz. According to R. A. Gordon, the article deals with two separate but related topics. The first is concerned with long-term trends in foreign trade. Here the time dimension is important and the authors look at the entire spectrum of trade. In the second, the authors search for the sources of this country's comparative advantage in foreign trade. In their historical analysis of trends in net exports since 1925, the authors utilize the end-use classification developed by the Department of Commerce. Warren Smith questioned whether the analysis supported the policy conclusion that, to increase the trade surplus, heavier investment in human capital produced more results than the investment tax credit on machinery. The former did seem more important for increasing exports, but the latter might be as effective on the net balance by strengthening domestic industries that compete with imports. He expressed his personal opposition to resumption of the investment tax credit, and his preference for investment in human capital, but the consequences for the trade balance had no relevance to that choice. Lawrence Klein said that the investment tax credit proposal had so many dimensions and so many effects that it was really quite irrelevant to tie it to international trade considerations. He supported the authors' position in focusing on the trade surplus and on export stimulation in their comments on policy issues.

This paper tests the hypotheses of Wassily Leontief that a lower capital-labor ratio was required to produce a representative bundle of U.S. exports than was involved in producing a representative bundle of import-competing goods. The Heckscher-Ohlin was also considered in the context. The latter theorem includes sufficient conditions such as the following: 1) identical production functions throughout the world for each commodity as well as qualitatively identical productive factors; 2) production functions homogeneous of degree one with diminishing marginal productivity for each factor; 3) nonreversibility of factor intensities; 4) identity of consumption patterns among countries at any given set of international commodity prices; and 5) perfect markets, free trade, no transport costs, and complete international immobility of productive factors. The analysis strongly supports the view that a straightforward application of a two-factor factor-proportions model along Heckscher-Ohlin lines is inadequate for understanding the pattern of U.S. trade.

In his celebrated study of "The structure of U.S. foreign trade," Wassily Leontief came to the surprising conclusion that the U.S. specializes in labor-intensive lines of production. It would thus seem that this country resorts to foreign trade in order to economize its capital and dispose of its surplus labor. Since the U.S. is known to have a far higher capital/labor ratio than its trading partners, this finding contradicts the basic Ohlin model which explains international trade in terms of relative factor endowments. Under it a country would export those products which are intensive in its relatively abundant resource and import those which are intensive in its relatively scarce resource. A wealth of statistical and theoretical material has been published in the past decade in an attempt to reconcile the empirical finding with the Heckscher-Ohlin theorem. This paper is devoted to an empirical examination of Leontief's hypothesis concerning the superiority of U.S. labor. The problem does not easily lend itself to statistical measurement because of the difficulty of isolating the quality of labor from other factors affecting productivity.

This paper is concerned with the role of the escape clause in the trade agreements program, and more particularly with the interpretation of the escape clause during the first six years of its general use. The function of the escape clause in the trade agreements program has been to compromise the conflict between the need for freer international trade and the desire to maintain the status of domestic industries. Even when the advantages of the international division of labor are well understood, nations are unwilling to sign away unconditionally their right to increase protection in the event of unforeseen inroads on domestic markets. Some kind of escape provision is, therefore, almost an inevitable feature of any durable international agreement to reduce trade barriers. The escape clause was not an original ingredient of the U.S. trade agreements program, but was developed with experience. On the other hand, it was established from the very beginning that the line of compromise between freer international trade and the security of domestic industries would be drawn very much in favor of the latter.