International relations between all countries since Hitler rose to power have changed and reversed themselves so often that it has been difficult at times to determine whose friend is whom. The former loyal friend that we have always considered "good old China" would now destroy us if she could. A few years ago none of us believed that such a condition could be brought about and such animosity could be developed in a friend that we had stood by for so many years. Gentlemen, your decision on the Simpson bill is far more important than deciding how much or how little Venezuelan residual oil is delivered to the ports of the United States. It is far too important for us to weigh the wishes of a special group that have been employed full time whenever they were willing to work. With our fast-increasing population and our expanding industry this country can assimilate all of our coal that John L. Lewis can be induced to permit the miners to dig, as well as residual oil from Venezuela in equal or greater quantities than we have received from them in the past. To keep Venezuelan exports out means to keep our imports in, and naturally we do not want to do this. No nation can continue indefinitely to import more than they export. We are fast approaching a status of "one world." To continue to have all the good things we have been enjoying so long, we must enable our neighbors to have some of them also. We are recognized as the big, strong, and rich power that is in a position to impair the economy of smaller nations, especially those who cooperate with us. We are so accustomed to the wealth, prosperity, and production of our country that we take all of this for granted. All of this looks much bigger to the citizens of some of the small dependent nations, than it does to us because they have never enjoyed our enviable position. I am not pretending to say that they feel antagonistic toward us because of our many comforts that they do not enjoy; but they will fail to see why it would be necessary for us to curtail our purchases of a commodity to such a great extent when they know that we have had no surplus of that commodity in the past, and our needs each year for that commodity will be greater than they were in the year before. If I were a citizen of Venezuela, and the Congress of the United States passed the Simpson bill, I would wonder if the United States were, in fact, a true friend of my country, or was she a country whose attitude was subject to sudden change for little cause and without regard to the injury my country would suffer. In this regard, this committee should bear in mind that a trade agreement was concluded with Venezuela as recently as August of last year. When I began to talk to you, I told you of my manufacturing plant that enjoyed a modest exporting business. What is true of my company is true of several thousand other small companies that are in a like position as ourselves. None of these manufacturers and none of their employees would like to forego those additional customers. Undoubtedly you have been told that employment in the coal industry would suffer without the enactment of the Simpson bill, but I say to you that the aggregate employment of thousands of exporting manufacturers will suffer as a whole to a greater extent than the labor that mines coal. There possibly are times that the Congress must consider, in weighing legislation, the welfare of certain groups, and possibly at some time in the past or at some time in the future the coal producers and miners will be entitled to such consideration. I say to you with emphasis, gentlemen, that this is not the time for such consideration of this group. The present administration has been in office only a few months which is insufficient time to allow all the consideration required for changes in export and import legislation. H. R. 4294 is of such portent that at least a year should elapse in its consideration before adoption by the Congress. Not a year of active committee work such as you are now doing, but the lapse of time will give you and the other Members of Congress a perspective that you are not now in a position to have. Congressman John M. Robsion of Kentucky has introduced in the House, H. R. 4491, a bill for extending the authority of the President to enter into trade agreements under section 350 of the Tariff Act of 1930 as amended. The passage of the Robsion bill would maintain the status quo for 1 year which appears to be advisable. A year from now your thinking and the thinking of the rest of the Congress will have consolidated to a point of soundness that can only be attained by the passage of time. It is my sincere hope and the hope of many other businessmen, both large and small, that the Robsion bill will be recommended for passage. I have not gone into an analysis of the technical ramifications of the Simpson bill. I am sure that these aspects of this bill have been discussed with you by many former speakers. My thinking has been basic, and my approach fundamental. I have endeavored to give you the views of the average businessman. My appearance and presentation have been as a small-business man giving you the thinking, the beliefs, and the desires of a representative citizen. I trust that the committee will bear in mind the survey of the views of leading citizens in 25 of our cities, which was conducted by the Council on Foreign Relations and summarized in the Council's recent report entitled "Foreign Trade and United States Tariff Policy." As the committee is undoubtedly aware, the officers and directors of the Council include such prominent Americans as Elliott V. Bell, John W. Davis, Lewis W. Douglas, Allen W. Dulles, Thomas K. Finletter, Grayson L. Kirk, R. Č. Leffingwell, Philip D. Reed, and Myron C. Taylor. As I appreciate that the time of the committee is limited, I shall not read the following extracts from the Council's report, but I respectfully request that they be made a part of the record. The CHAIRMAN. Without objection, so ordered. We thank you, sir, for your very fine statement. (The information referred to follows:) FOREWORD The belief that the prosperity of this country is dependent on the protective tariff has been firmly held by a large part of our population for almost a century. For several decades after the Civil War the national political parties were sharply divided on the tariff, but with the increasing industrialization of the South and of other sections of the country, protectionists were to be found among Democrats as well as Republicans. The tariff became, in General Hancock's words, a local issue. The recognition of the true relation of foreign trade to the functioning of the domestic economy has been a slow process. The long-drawn-out battles in Congress produced millions of words in the newspapers and the Congressional Record, but the debate consisted mostly of the exchange of well-worn clichés which left the public none the wiser. In the universities, a succession of brilliant economists such as William Graham Sumner, Frank Taussig, and Jacob Viner exposed the fallacies of protection and put the case for freer trade forcefully and with great clarity. Hundreds more of teachers of economics made tens of thousands of undergraduates familiar with the theory of international trade. But this teaching had little impact on public opinion. The American business community, until recently, maintained a fairly solid protectionist front. It either ignored the professors or dismissed their arguments as "theoretical." It is against this background that the results of Mr. Barber's survey should be considered, for the answers of respondents, in the great majority of cases, add up to a clear repection of the protectionist thesis. The replies, as Mr. Barber has pointed out, show no regional differences. Residents of Providence and Boston express the same views as those of Indianapolis, Albuquerque, and Seattle. Of greater significance is the agreement among the various occupational groups. Businessmen constitute the largest group, 44 percent of the total. They include producers of oil, steel, chemicals, aircraft, textiles, machinery, and electrical equipment, as well as bankers and insurance executives. It would be an exaggeration to say that the businessmen now speak the same language as the educators. In general, the professors are still more liberal than the average of the community and the businessmen more conservative, but on the tariff issue, according to this survey, the divergence is surprisingly small. Many of the replies are interchangeable. For example, take these typical observations in response to the question, "Should it be United States trade policy to reduce import duties only if this does not damage domestic producers?" An educator in Omaha replied, "I do not think that inefficient producers, in nonvital fields, have any right to be subsidized by the taxes of the consuming public." A member of the financial community in St. Louis used practically the same words. He said, "Absolutely not. Uneconomic domestic producers have no right to be subsidized by the Government or the American people, much less by an indirect method so that the people are unaware of the subsidy.” A professor in Philadelphia replied, "Those producers who cannot face the competition of a free world market are simply levying a tribute on American consumers." A businessman in Seattle was equally emphatic. He said, “No, since ‘damage' can be construed to mean anything from a healthy increase in competition to bankruptcy, and some firms will suffer 'damages' with every reduction.” The findings of this survey, indicating the revised attitude of many businessmen on imports and foreign competition, are reinforced by such events as the October 1952 declaration of a committee of the National Association of Manufacturers "that the way must be found to improve the access of foreign producers to American markets, ***", and by Henry Ford II's recent advocacy of free trade. The causes of the apparent shift in business opinion are not far to seek. They have to do with our export surplus and the continuance of aid to Europe. The involvement of this country in the cold war requires that we have strong allies in Europe. They need dollars with which to buy food and raw materials. We have been meeting this need by annual subsidies running into the billions. Our allies prefer trade to aid, but thus far we have preferred to give them dollars rather than to allow them to earn the dollars by selling us their goods. Now public opinion, including business opinion, is showing reluctance to continue such large grants for economic and military aid. At the same time, as this survey shows, people are coming to recognize that a sudden decline in foreign aid would injure export industries. The only practicable way of escape from this dilemma seems to be the lowering of tariff barriers and the acceptance of more imports. THE INQUIRY In his state of the Union message to Congress on February 2, 1953, President Eisenhower declared that our foreign policy will recognize the importance of profitable world trade. This is a definition of objective with which it is hard to quarrel. It was delivered at a time when the participants in this inquiry were laboring with their responses, and it is doubtful if it assisted in crystallizing their views. One of the requirements of an inquiry of this kind is the avoidance of questions which place participants in the position of approving the good and decrying evil. When responses on as complicated a subject as foreign trade and tariffs are overwhelmingly in favor of a single persuasion-as was occasionally the case in this inquiry-the conclusion is warranted that the questions were of the good-or-evil variety, or they were otherwise less controversial than was commonly assumed. The latter is the more charitable assumption, for it implies that the evidence presented in the following pages brings into clearer focus attitudes and private convictions which were previously in the public domain as unconfirmed impressions. It remains to add that this report is not intended to contribute technical knowledge but rather to indicate the degree of support or opposition which the experts on trade policy are likely to encounter among many influential and representative Americans throughout the country. THE PARTICIPANTS The views under inspection are those of 825 men who are leading citizens in 25 cities from Boston to Seattle and from St. Paul-Minneapolis to Houston. All are members of informal discussion groups known as committees on foreign relations, which are affiliated with the Council on Foreign Relations in New York City. Approximately once a month from October through May members of each committee come together for an evening of concentrated discussion with a guest of special competence in the field of international affairs. The purpose of their meetings is to enable the men jointly to consider international aspects of United States political, economic, strategic, and financial problems, so that when there is occasion for them to express their views elsewhere, they may do so upon a basis of previous reflection and study.. Once a year the Council on Foreign Relations undertakes to ascertain the views of committee members on specific issues of major concern to the United States. To this end it asks the members to express themselves in writing, in response to a detailed inquiry prepared by the Council. This report is based upon their replies to such an inquiry. While a few of the men responding are "professionals" in the sense that their daily work keeps them in more or less close touch with economic developments here and abroad, the majority are to be considered as laymen without special training or qualifications as "experts" in the area with which this study is concerned. Some are men of national prominence; many are widely known throughout their own States. All have this in common: a sober concern for the best interests of the United States and the conviction that the more informed the individual, the likelier the prospect of his being able to recognize these interests. THEIR PROFESSIONS OR OCCUPATIONS Forty-four percent (363) of the 825 participants are businessmen. They include board chairmen, presidents and other executive officers of a wide variety of American corporations-large enterprises, moderate-sized and relatively small. For example, public utilities; oil, steel, chemical, lumber, automobile and insurance companies; aircraft and textile manufacturers; producers of building materials, machinery and electrical equipment; banks and banking houses; brokerage firms; publishers; and retailers. Sixteen and six-tenths percent (137) are lawyers and judges in Federal, State, and municipal courts. Sixteenth and six-tenths percent (137) are educators-presidents of State and private universities and colleges, deans, professors, and public-school administrators. Six and two-tenths percent (51) are newspaper and magazine editors, editorial writers, and radio commentators. Sixteen and six-tenths percent (137) are engaged in other professions or occupations, none of which is represented by more than 3 percent of the aggregate. They include engineers, physicians, clergymen, retired officers of the Regular Army and Navy, representatives of labor unions, farmers, and holders of Federal, State, and municipal offices. GEOGRAPHICAL DISTRIBUTION The participants are members of Committees on Foreign Relations in cities geographically represented as follows: New England: Boston, Providence. South Atlantic: Charlottesville, Atlanta. East North Central: Detroit, Indianapolis. West North Central: St. Paul-Minneapolis, Des Moines, Omaha, St. Louis. East South Central: Louisville, Nashville, Birmingham. West South Central: Tulsa, Little Rock, Houston. NATURE OF THE INQUIRY The inquiry on which this report is based consisted of declarative statements and questions, carefully calculated to bring out respondents' views on tariff reciprocity, congressional delegation of power to the Executive, export and import levels, the effect of reduced duties and increased imports, foreign competition in the domestic market, the removal of trade barriers within the free world, and allied issues. The composition of the inquiry was such as to oblige respondents to tests for themselves the consistency of their replies. Since the drawing up of an adequate questionnaire on the subject presented unusual difficulties, special pains were taken to bring out respondents' views generally, apart from questions designed to elicit a response that could be represented statistically. To encourage frank expression, the participants were assured that neither as individuals nor as committees would they be associated by name with specific findings. To facilitate classification and interpretation of responses, they were asked to indicate their professions and occupations. The respondents were reminded that the Council on Foreign Relations takes no stand, expressed or implied, on any aspect of American policy. CHAPTER 2. SUMMARY OF FINDINGS The findings below reflect the composite opinions of the majority of the 825 men who participated in this inquiry, and are based upon considerations represented in all categories of response, as set forth in the correspondingly numbered section of chapter 3: 1. It should continue to be United States policy after June of 1953, when the Reciprocal Trade Agreements Act expires, to reduce tariffs in return for reciprocal concessions by other countries. 2. Congress should continue, after June of 1953, to delegate to the President limited power to reduce United States tariffs. 3. The new administration in Washington should regard United States foreign aid which has largely financed the United States export surplus since World War II, as a temporary program. The administration should try to maintain United States exports at a high level, but not at the expense of having the Government finance exports. 4. The United States will not be able to maintain its exports at a high level unless it increases its imports, thereby enabling countries with dollar shortages to pay for United States exports in goods and services. Further development of United States private investments abroad and increased tourist travel would result in expenditures similar to imports and in effect would be helpful in maintaining a high export level. 5. Instead of trying to maintain an excess of exports over imports, it would be preferable for the United States to achieve a balance between exports and imports. |