Cincinnati Enquirer, Cincinnati, Ohio, December 6, 1942. "If we are to escape the stultifying trade barriers which resulted from the First World War, and had so much to do with fostering the second, we must begin early and take those steps which will ensure the reduction of trade barriers immediately on the restoration of peace. * "It is also essential to sell the idea of freer international trade to the American people-and the American Congress. Failing in this we shall surely see the very essence of the program destroyed by the noncooperation of our own Congress. "In 1919 the American Government induced the victor nations to embark on a wise, far-reaching plan for organized peace. But the American people, through their Senate, repudiated the program and sowed the seeds of its failure. It will be the same with economic program being painstakingly built by our State Department, if the underlying idea is not accepted whole-heartedly by the American people and their representatives in Congress." Excerpts from Raymond Clapper's column in the Washington News of January 5, 1943. "TRADE AGREEMENTS "The Trade Agreements Act expires in June and the issue of renewing it therefore is an immediate one for the new Congress. President Roosevelt is ready to make a fight for another extension. The act was first passed in 1934 and twice extended. * "The temptation is strong to make a political issue and to show by a clearcut and dramatic action that the Republicans are in the saddle in fundamental policy making. Repeal of the Reciprocal Trade Act would please a number of special high-tariff groups. If the Republicans want to follow the isolationist trend-and there are undoubtedly a considerable number of silent isolationist votes left in the country-this is the chance to raise the issue and take charge. "Most Republicans once would have leaped at the chance. The only question is whether a good many Republicans will feel that circumstances have changed and that now the national interest would be better served by continuing the program, especially in view of the conservative course followed under it by Secretary Hull. "Considerations higher than politics may deter more thoughtful Republicans from junking the trade program. For several years before the war it was the one sane effort to break through the economic barriers that were constricting the world and driving nations into desperation. The trade program still stands as the symbol of America's desire to trade with other nations, to make friendly adjustments for mutual benefit so that trade may be a profitable two-way venture and so that we may have customers. Because we cannot hope to sell if we do not buy. More than that, repudiation of the program now in the midst of the war would be taken abroad as notice that the United States was going back into isolation. It would mean that the United States could not be counted on to play any part in helping to prevent a third world war. "Republicans may not wish to move openly to kill the Hull program and may try to do it by indirection, by requiring all trade agreements to be approved by both houses of Congress or by a two-thirds vote of the Senate. Those are only hypocritical methods of getting rid of the Trade Agreements Act without doing it openly, as of course everyone around Congress knows." Pittsburgh Press, January 4, 1943. "The administration's authority to make recirocal trade agreements with foreign nations will expire next June, and President Roosevelt is expected to ask the new Congress to renew it for another 3 years. "Here is an issue upon which we agree completely with Vice President Wallace, who says that the response of Congress will decide the first round in the battle for a just and lasting peace. * We have seen no evidence to support Mr. Gearhart's charge that this one of the administration's powers-first granted by Congress in 1934, and twice renewed since has been abused. On the contrary, we think it has been used with great wisdom, and to much good effect, under the guidance of Secretary of State Hull, author and zealous trustee of the reciprocal-tradeagreement project. American foreign trade cannot continue permanently on a one-way basis. We are now doing a huge volume of export business, paying for the exports ourselves, and enjoying an illusory sort of prosperity. But we can't keep that up forever. When the war ends we'll have to start taking more imports in exchange for our exports—or we'll have to stop exporting. 46* * * We think that the Hull trade agreements-the 25 now in effect, the 3 now being negotiated, and the others that should be negotiated-will be essential to enable the United States to play its proper post-war role as a force for world peace and domestic prosperity. If the Republican Party hopes to live up to its present responsibility, let alone to realize on its future opportunities, it cannot afford to follow the advocates of economic isolation.” Washington (D. C.) Evening Star, January 14, 1943. To kill this Reciprocal Trade Agreement Act would be a sad commentary on the probable attitude of this country toward other Nations after the war. The immediate effect would be to prevent the negotiation, renewal, or amendment of such agreements. * * * In the opinion of many, failure to renew the act would be disastrous, a poor start, indeed, on the improvement of international relations after the war is over." Philadelphia Record, January 9, 1943. 66 * The fight on the reciprocal trade agreements is largely a fight on the tariff issue. Although those trade agreements have worked well; although they have helped our domestic economy instead of harming it, some still think the President should go back to the old Coolidge-Hoover program-of trying to sell to other nations without buying from them in return. "If we haven't learned the impossibility of one-sided trade-then we haven't learned one of the basic causes of the last world slump and the present world war." Atlanta Journal, January 16, 1943. * * A fair exchange of products among the nations, arranged by fair and open agreements, is essential to the peace of the world. Most children know that now, but not, it seems, a good many of our politicians. A dispatch from Washington begins: "Reports that President Roosevelt would ask Congress soon to renew his authority to negotiate reciprocal trade agreements with foreign countries brought predictions from Republicans that the request would touch off one of the bitterest fights in the seventy-eighth Congress.' "So here emerges that bloc of most unsavory ancient memory, the tariff bloc. With its higher tariffs levied in the 1920's these had great influence in bringing on the economic collapse of 1929. Our own and the tariffs of Europe helped greatly to bring on this war. Now the tariff bloc, having learned nothing, is to rally again against the Nation's prosperity and the world's peace." STATEMENT SUBMITTED BY J. RAYMOND WALSH, DIRECTOR OF RESEARCH, CONGRESS OF INDUSTRIAL ORGANIZATIONS A STATEMENT REGARDING THE RENEWAL OF THE TRADE AGREEMENTS ACT (H. J. RES. 111) TO THE CHAIRMAN AND MEMBERS OF THE WAYS AND MEANS COMMITTEE OF THE HOUSE OF REPRESENTATIVES BY THE CONGRESS OF INDUSTRIAL ORGANIZATIONS The Congress of Industrial Organizations wishes to record its approval of the act of renewal of the trade agreements and its hope that your committee will recommend to the Congress of the United States that it be enacted into law. Two consideraions lead us to take this position. First, the act is designed to facilitate the reduction of tariff obstacles to international trade and increases the world-wide exchange of goods and services. Second, it establishes a means of achieving this objective with dispatch and discrimination, within a general framework of policy laid down by the Congress itself. We do not wish to make extended comments upon these matters. Your hearings are already filled with evidence and expert testimony concerning them. A few words will suffice to make clear the reasons for our position. Obstacles to trade are invariably costly to a nation. If no considerations were important other than those of raising a nation's standard of life, there would be no strong and sufficient argument whatever against free trade throughout the world. This has been the almost unanimous consensus of informed opinion for over a century. Trade, if entirely unfettered, would lead every nation to specialize in the production of those things in which it is most efficient. Thus, by inducing maximum productiveness, the highest possible standard of living would be realized by every nation. Any impediment to free trade and specialization reduces productiveness and impairs living standards. It requires exceptional / reasons, therefore, to justify artificial obstacles in the way of free international trade. Considerations of national defense as is well known constitute such a reason. As long as war is possible, a nation which fails to encourage, by protection if necessary, the domestic production of critical defense items does so at obvious risk. Temporary protection during early stages of an industry's development constitutes another valid although risky expedient. We have learned also that a nation may feel obliged to interfere with international trade in order to protect itself against foreign economic disequilibrium and to insure itself freedom to fight and control its own business cycle. There are few, if any, other legitimate arguments in favor of tariffs, ancient comments to the contrary notwithstanding. We believe that the American policy of tariffs in the past has worked to diminish the full productive possibilities of the Nation. We believe that it has injured popular welfare. We, therefore, view with favor the reversal of that policy in the past 9 years. Our trade agreements record since 1934 demonstrates that tariff reduction increases international trade and that this is accompanied by an increase of domestic employment, national income, and general well-being. The factual data upon which this conviction rests has been furnished your committee by other expert witnesses. Free trade, even if desirable, is out of the question inasmuch as we are not confronting this question from scratch. The United States already has a complicated structure of tariffs. Many of these rates are relatively high. It is, of course, imperative that modifications of these rates be introduced with great care and discrimination. Past actions impose the necessity for present cautions. Tariff reductions, in short, must be made so as not to injure unduly workers and capital already committed to lines requiring protection. But, unless strong considerations of national interest require continuance of such protection, we believe our policy should be to reduce that protection gradually and thus to encourage a shift to other more productive lines or to stimulate improvements of efficiency so as to render further protection unnecessary. As a long-run policy, this would increase the efficiency with which our national resources are used and improve the standards of life of the American people. The present act is designed to make this possible. It is frequently said that most or a large proportion of workers in the United States depend upon tariff protection for their employment. This is an imposition upon credulity. Only a small proportion of American workers are in the so-called protected industries. The census of 1940 listed 45,000,000 persons as gainfully employed; 25,000,000, at least, were employed in construction and transportation, wholesale and retail trade, personal and professional service, finance, real estate, and the like. Foreign competition cannot and does not touch them. Tariffs, no matter how high, give them no protection whatever. On the contrary, such trade restraints hurt them by reducing the stream of commodities which they handle and increasing the costs of goods which as consumers they buy. Eight of the remaining 20,000,000 workers were listed as farmers. Only a small fraction of these are capable of being "protected." The vast majority are producers of cotton, tobacco, rice, wheat, hogs, fruit, and the like, all of them export crops dependent upon foreign markets and benefited by open trade. Other thousands of farmers produce milk, fresh vegetables, meat, and eggs for nearby markets beyond the range of distant producers in other lands. Tariffs simply injure these farmers by reducing their markets and making the goods they buy more costly than they would otherwise be. Twelve million workers are left in manufacturing, mining, forestry, and fishing. These are the only areas of industry except for the small segment of agriculture mentioned above that could possibly derive even temporary benefit from tariffs. However, almost half of these 12.000.000 are in automobiles, steel, electrical equipment—all of them highly efficient export industry. Others are in such purely domestic industries as newspaper publishing and food processing clearly free from foreign competition. These 6,000,000 workers like most of their brethren in agriculture are harmed, not helped, by tariffs on international trade. $6405-43- -68 Of the remaining 6,000,000 workers employed in industries that might conceivably benefit in the short run from tariff protection, the great majority are independent of such protection. In the flat glass industry sheltered by tariffs since 1798, foreign competition is limited principally to coastal areas and to certain types of glass. In textiles, foreign competition is confined to goods principally of the luxury class. In iron and steel, it is limited in the main to certain alloy products. Many foreign goods are at a competitive disadvantage with domestic goods even aside from the import duties to which they may be subject. In addition to overseas freight to our own country, they must pay the cost of transportation to interior points; they must meet consumer preferences as to style and so forth; they must comply with sanitary, pure food, and other regulations, in addition to meeting the competition of domestic goods more advantageously situated. It is surely a generous estimate that the maximum number of workers employed in industries whose goods compete with similar goods produced abroad is no more than 3,000,000, probably nearer 2,000,000. More careful analysis and more detailed statistics than are now available would undoubtedly reduce this figure. American workers, then, are sheltered to but a limited degree by tariffs, whereas all workers (as consumers) are injured by excessive tariffs. We maintain, in short, that American workers will gain by careful tariff reductions both in employment and in higher standards of life. In no sense do we wish this to be interpreted as an endorsement of a laissez-faire position on international trade. We believe, indeed, that the years ahead will require a large amount of Government control both of the domestic economy and the economic relationships between the United States and the rest of the world. Therefore, the tariff adjustments we support should be made with a steady determination to plan those adjustments and preserve a pattern of control in the national interest. Granted that the freeing of international trade is in the interest of Americans as workers and as consumers, the present act is, in our opinion, the best, possibly the only, way in which that object can be achieved. The Senate Finance Committee spoke wisely in 1937 when it observed that "general tariff policies can be and should be formulated by the legislative branch. On the other hand, to attempt to require in every instance senatorial disposition of the manifold and constantly changing details involved in the carrying out of such policies and principles would frequently be to render the legislative branch incapable .of effective exercise of its functions." Our tariff history amply supports this penetrating judgment of the committee. United States treaties for reciprocal action on tariffs have been concluded on only three occasions in the last century and a half. Failure has been the repeated result of most efforts. By contrast, executive agreements have been concluded more than 50 times. Their success is a striking testimony to the suitability of the method. Under the markedly unfavorable world conditions after 1934, our Government effected more than 30 such agreements with over a score of countries. This device works. It works flexibly and with adaptability to changing conditions. Of necessity, it works faithfully to congressional intent else the delegated power would be, as it can be, revoked. It would be a mistake, therefore, to revert from the successful trade agreement to the unsuccessful treaty method of regulation. In conclusion, we wish to comment on the proposal of Senator McNary that Congress retain the privilege of passing on trade agreements once made by the executive under the act. This proposal seems to us a desirable one. It would preserve for Congress that participation in over-all policies which it is the essence of our democratic government to protect. It proposes majority rule which is not to be confused with the minority veto, which characterizes the treaty power. It is true that congressional making of tariff has almost always been a local issue effected by pressure groups and therefore never planned and carried out in the general national interest. The proposal of Senator McNary is not to be confused, however, with this for it would bring the Congress into effective touch with trade matters at a point least likely to permit the play of narrow interests and most "likely to elicit action in terms of a national welfare. But, amended or not, passage of this Trade Agreements Act is of the utmost importance, not only for the reasons already adduced, but because it would have a salutary effect upon world opinion. It will state to those nations which look to us for leadership in the post-war world as they depend uopn it now in the war itself, that we intend to fulfill our promises and work steadily and unflinchingly to establish international cooperation in place of competition, rivalries, fears, and their bitter sequel wherein every nation attempts futilely to protect itself behind bristling armaments periodically to burst into the flame of war. We repeat our hope that your committee will recommend passage of the act and Congress act upon the recommendation. J. RAYMOND WALSH, Director of Research, Congress of Industrial Organizations. ROBERT L. DOUGHTON, Chairman, Ways and Means Committee, United States House of Representatives, Washington, D. C.: This chamber respectfully urges that favorable action be taken on the proposal to renew for a further period of 3 years the Trade Agreements Act of 1934. It is the firm conviction of this chamber that international trade unimpeded by the influence of restrictive barriers is essential to world peace and that the Trade Agreements Act is a powerful instrument by means of which the United States can demonstrate now its intention to assume international responsibilities, particularly regarding economic stability and international security, without which a just and lasting peace can neither be achieved nor maintained. Such a demonstration at this time should unite even more closely the nations that are struggling against the forces of aggression. THE CHAMBER OF COMMERCE OF THE UNITED STATES Hon. A. WILLIS ROBERTSON, United States House of Representatives, NEW YORK, N. Y., April 26, 1943. Washington, D. C.: The American Chamber of Commerce of Cuba at their annual meeting held April 21 unanimously adopted the following resolution: "Whereas the Trade Agreements Act of the United States, June 12, 1934, has been reciprocally beneficial to our country and to other nations with which such agreements have been concluded; and "Whereas this act is regarded throughout the world as a symbol of a world economy based on fair treatment of commerce; and "Whereas the act fosters well-balanced and enterprising international trade, increasing purchasing power and a rising standard of living, thereby creating a sound economic foundation indispensable for enduring peace: Therefore, be it "Resolved, That the authority to enter into reciprocal trade agreements as granted to the President of the United States by the Trade Agreements Act of June 12, 1934, should be continued." If possible, would appreciate including the above resolution with my testimony before the Ways and Means Committee on April 21. Respectfully yours, MAURICE T. MCGOVERN. LETTER FROM J. S. DAVIS, DIRECTOR, FOOD RESEARCH INSTITUTE, STANFORD UNIVERSITY FOOD RESEARCH INSTITUTE, STANFORD UNIVERSITY, The Honorable R. L. DOUGHTON, Chairman, Ways and Means Committee, House of Representatives, DEAR SIR: May I emphatically urge the early renewal of the Trade Agreements Act, without severe restrictions upon its administration? Having been a director of the Food Research Institute at Stanford University since 1921, I speak not only as an economic theorist but as a long-time student of American agriculture, agricultural policy, and foreign trade, of world food developments, and of international economic and political relations. |