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Mr. ROBERTSON. On page 224 of your book you say: Under the reciprocal trade agreements amendment, tariff changes have since then been made nominally by the President, but in fact by the State Department under the guise of making trade agreements, and the largest tariff revision downward since the Civil War has been made by bureaucratic fiat without the general public knowing what was happening.
In view of the explanation given us last week by the vice chairman of the Tariff Commission, Dr. Edminster, on the operations of the Committee for Reciprocity Information, the policy of the Tariff Commission and the interdepartmental committee that advises with the State Department before the final adoption of a treaty, do you think that is a really fair and accurate statement, to say that these agreements are made by bureaucratic fiat?
Mr. CROWTHER. I think it is absolutely an accurate statement, yes. The scenery that you put around the bureaus does not change them any. You, as a Member of Congress, have no vote on those. As a man in the street, a plain citizen, I had no chance to know whether I would vote for you, presuming that you came from my district, on your action in that. The public to an extent was permitted to sit in the theater and watch the show, but they could not change a line.
Mr. ROBERTSON. You are entitled to your opinion, but the testimony of those who negotiate these agreements presented to us in open hearings does not sustain your opinion.
I turn now to page 227 of your book.
Mr. CROWTHER. Wait a moment. You asked me a moment ago what was my general attitude on exports and imports.
Mr. ROBERTSON. If you will let me proceed with this, I will develop it from your book.
Mr. CROWTHER. I can develop it here. Mr. ROBERTSON. You can comment whether you want to stick by what you wrote in the book, or modify it.
Mr. CROWTHER. You read all of it, and I will find nothing to change.
Mr. ROBERTSON. It is a very interesting book, and it develops your general background and viewpoint, and that is what I think counts the most. If you want to change or modify any of this, all right.
I am now quoting from page 227:
In the 1840's the Cobdenites, who were mostly textile manufacturers, took advantage of a series of bad crop years and high-food prices to bring about the repeal of the corn laws and throw the British market open to foreign foodstuffs. They called the result by the excellent phrase "free trade.” It was not free trade. There was no competition by foreign manufactured goods in the British home market. The maneuver simply gave to the British industrialists the chance to trade their products abroad for the foodstuffs that had formerly been raised at home and sought to keep down wages at the expense of the British farmer.
Now, do you know of any economist or historian that will back you up in that contention? If so, who?
Mr. CROWTHER. Well, I have not the slightest concern with what economist backs it up. The facts back it up. The difficulty with our general economic knowledge in this whole free-trade theory is that we are trying to import a practice that was excellent for England, at the time, into our economy, without seeing whether it fits.
Mr. ROBERTSON. Is it not a factMr. CROWTHER. Let me answer that. You have given me exactly what I want to present to you. Let us go right back and see the reasons for foreign trade. It is to import what, according to your scale of living, you can not make or grow. Now, you must export to pay for that. If you go beyond that you will have to displace a portion of your economy.
Now, Cobden headed a group that found that the British textiles were saturating the market, and that they would have to import foodstuffs to pay for them. Therefore, he took advantage of a corn famine—a wheat famine—in England to put through what they called free trade, and I think the evidence of how free that trade was you'll find in the shriveled bodies in the black country of England. There is your testimony to free trade on the evidence of the human being.
You had a colloquy the other day with Mr. Hull. You went right back to that period.
Mr. ROBERTSON. Is not Frank W. Taussig the first Chairman of the Tariff Commission, for years professor of economics at Harvard University, one of the greatest authorities on the tariff that this Nation has ever had ?
Mr. CROWTHER. What do you mean by an authority? Is he a man to whom you transfer your right to reason?
Mr. ROBERTSON. I mean a man who is qualified to speak for the gencral interests and not for special interests. I mean a disinterested man.
Mr. CROWTHER. Certainly he is.
Mr. ROBERTSON. Then, Mr. Chairman, I ask, rather than take the time of the committee, permission to insert at this point in support of my challenge of the witness free trade in England proposition, a comment from Dr. Taussig on that point.
Mr. COOPER. Without objection, it is so ordered. (The matter referred to follows:) Forty years ago the doctrine of free trade seemed to be triumphant, alike in the judgments of thinkers and in the policy of the leading countries. The school of Adam Smith and Ricardo had swept the board in Great Britain, and its conclusions, as set forth in John Stuart Mill's Principles, were thought to represent the definitive outcome of economic inquiry. Among these conclusions, the one least open to doubt seemed to be that, between nations as between individuals, free exchange brought about the best adjustment of the forces of production; and international free trade was regarded as the one most potent means of increasing the efficiency of labor. In legislation the triumph seemed to be no less assured. England, after a series of moves in the direction of lower duties, had at last taken the sudden plunge to free trade in the dramatic repeal of the corn laws in 1846. Not long after, France, by the commercial treaty of 1860 with England, had replaced the old regime of rigid protection and prohibition by a system of duties so moderate that the free trader might feel that his ideal, if not quite attained. yet cowd not be long delayed in complete realization. The treaty between France and England was soon followed by others of similar import between the various countries of Europe, spreading over all the Continent a network of reciprocal arrangements that greatly lowered the tariff barriers in the civilized world.
Source: Free Trade, the Tariff, and Reciprocity, pages 1-2, F. W. Taussig, 1927. Mr. ROBERTSON. Now, we will move on.
Mr. CROWTHER. Presumably you are leading up to some point where you can justify taking this whole question from our people.
Mr. ROBERTSON. Taking what?
Mr. CROWTHER. This whole question of tariff and the nature of our economy from the people.
Mr. ROBERTSON. Oh, no.
Mr. CROWTHER. I am not going to be diverted. You are trying a free-trade protectionist's argument. I will stay with you on that as long as you like, but do not let us lose sight of the real thing.
Mr. ROBERTSON. Do not tell me what I am trying to do. I am not trying to take the question from the people, and I am not trying to advance the proposition of free trade.
Mr. CROWTHER. There can only be free trade or protection. If you lower a duty to a point where it does not operate it is free trade no matter what you call it.
Mr. ROBERTSON. That has been the stock arıswer of all the high protectionists. If you want to cut down a tariff, then you will have free trade. But Mr. Hull is called a free-trader; I am called a free-trader. I refuse to admit that I am a free-trader, for the simple reason that the most we have done in reducing the inordinate rates of tariffs that you support has been an average of about 25 percent, and
Mr. CROWTHER. Why do you use the word “inordinate"?
Mr. ROBERTSON. Because they were inordinately high, higher than we had ever had before, and some of them amounted to exclusion. When it amounts to exclusion, I call that inordinate.
Mr. CROWTHER. Is it not for Congress to call it inordinate; not you!
Mr. ROBERTSON. I take the position that the Congress has called it inordinate, that Congress voted to lower it in 1934, that Congress approved the program in 1937, that Congress approved the program again in 1940, and that Congress will approve it again in 1943.
We refuse to let those who are opposed to reciprocal trade agreements dismiss us with the label "free-traders” because it is not a correct name. It is a phrase like your friend Stuart Chase referred to in his book, The Tyrany of Words. You do not get down to the fact that the import rates under the Hawley-Smoot Act went up to 59 percent ad valorem and we reduced them to 36 percent and gave some relief to the consumers, and put efficient business on a sound basis without protecting inefficiency units. You dismiss us by saying-“Away with you, 'free-traders,' away with you."
Mr. CROWTHER. May I ask you if you have the same objection to the use of the word "isolationist” that you have to the word “freetrader"?
Mr. ROBERTSON. Well, that is just the broader attitude of this program that I was going to get together with you on. In your book, if I read it correctly, you take the position that you are opposed to international trade, and I am going to quote you a section from
Mr. CROWTHER. I would like to see that section.
(1) If we exchange one hour of American labor for one hour of foreign labor, we have done a useful thing only if the hour of foreign labor could not have been performed by an American.
(2) If we exchange one hour of American labor for an hour of foreign labor that might have been performed by an American, we have done a harmful thing, for we have withdrawn the opportunity to create wealth in this country.
(3) If we exchange 1 bour of American labor for 2 or more hours of foreign labor that might have been performed by an American, we are not driving a good bargain, but, on the contrary, we are doing a harmful thing, in that we are postponing the opportunity to create wealth in this country until such time as our wage rates can be lowered to the foreign level. And, in the meantime, in depriving the American workman of his opportunity, we also deprive Poth industry and agriculture of its spending power. That spending power, expressed as it is in houses, transport, food, clothing, and a thousand other directions, means more to us than getting cheap foreign goods.
(4) The single reason for exporting is to gain the means to buy what we do not grow or make.
I say that those four points in your book add up to the fact that you want a tariff so high on everything that we possibly can produce in this country that not one dollar of goods made by foreign labor can get over the top on that tariff, and that our foreign trade will then be limited to tea, coffee, bananas, rubber, and items of that kind. I say when you take that position you mean no foreign trade, and if you mean "no foreign trade," you are against it.
Mr. CROWTHER. Pardon me for saying so, but that is hopelessly a wrong interpretation. Now, read that last point again.
Mr. ROBERTSON (reading):
The single reason for exporting is to gain the means to buy what we do not cr cannot grow or make.
Mr. CROWTHER. There is the whole thing, as I said to you, exactly that.
Mr. ROBERTSON. That is the reason I say that is the philosophy of the isolationist. We must not trade with anybody except for the very few things like bananas, and so forth, that we cannot grow or make, but we must draw a tariff wall around everything that we can grow or make, regardless of what it costs us to make it, and make the consumer pay the difference. You do not give them the opportunity to buy from some foreign manufacturer that in some particular line will sell us and leave our workers to do something in which they excel-oh, no—there must not come in anything of a competitive character, only those items like bananas and coffee that we cannot grow. Let a few of those in, but nothing more. I say that is the position of the isolationist. That is the position of those who at heart are opposed not only to international cooperation but to foreign trade.
Now, is that a fair summary or not? If it is not, tell me where it is wrong
Mr. CROWTHER. It is an extremely lucid summary, and I think wrong in every step of its development. I will try to explain that to you. I think that your mind is rooted in the days before we advanced the technology-I think it is rooted in the early days of England and the steam engine, when it was believed that certain countries were endowed by God, let us say, not only with ability, but the right forever to make this thing or that thing, while other countries were directed by God to grow only certain things. In the natural course of events, and particularly with the problems brought about by chemistry, that has all broken down. It broke down long ago.
Now, I say to you that anything that we cannot make or grow shall come in free and the American tariff policy as formulated by the American people says just that. But if we can make it or grow it, put a tariff on it, and my belief is that the tariff should be very high in order that we may stimulate a competition that will bring really cheap goods, and that has always happened.
Let us take a case in point. A good many years, I guess it was in the nineties, was it not, we had a tremendous furor about the tinplate trust, and that the tinplate tariff deprived the American people of tinplate.
Mr. KNUTSON. That was in 1889.
The early tinplate makers made an inferior tinplate and they made some money. Because they made money, others got into it and today we have not only the finest tinplate in the world but the cheapest.
Take automobiles. Exactly the same thing happened there.
Now, if you get around to saying that is isolationism, if that means being an "isolationist,” then I want to be one.
Mr. ROBERTSON. I cannot help but view your philosophy by what has been called by Dr. Taussig the mercantilistic fallacy of the "home market theory," and if you are so sure of your position that it is to the interest of-I will leave the farmers out and just center on the manufacturers of this country-if it is to the interest of manufacturers of this country to adopt that theory that we must not let a thing in that we can make here under any circumstances, how do you account for the fact that the National Association of Manufacturers that opposed this program in 1934, 1937, and 1940 have now endorsed it?
Mr. CROWTHER. I am quite without the ability to make a pathological diagnosis, which you are asking me to do. What you say, sir, is this, and
you state it extremely well: My position, not so well stated, is this: I say let the American people decide. You say let a bunch of supermen decide.
Mr. ROBERTSON. Did you correctly diagnose from a pathological or an economic standpoint, my good friend, Dr. John Lee Coulter, when you said at page 249 of your book—and I am referring to his testimonyhe presented it as a tariff expert for the National Association of Manufacturers, and, therefore, he could be considered as a partisan witness.
Was that a correct diagnosis of Dr. Coulter's testimony?
Mr. CROWTHER. You misread my work. I quoted before that two men, Dr. Coulter and Dr. Bliss, who represented no one.
Mr. ROBERTSON. Well, I just wanted to know whether you had him diagnosed. He is a very clever witness, and I was interested in your viewpoint that he was representing something.
Mr. CROWTHER. The emphasis is on the word "could," and I did not say “was.”
Mr. ROBERTSON. I see; that he could be?
Mr. CROWTHER. There is a form of argument, you know, which I detest, which neglects the facts and goes to who said it.
Mr. ROBERTSON. Mr. Chairman, rather than take the time of the committee, and time now is of the essence because I believe the tax issue is up here, and is uppermost in our minds and the minds of the American people at the moment, I ask permission to insert at this point a brief excerpt from Dr. Taussig's writings bearing on the witness's contention that foreign trade is not desirable from the public standpoint, and a chart prepared by the United States Tariff Commission showing the degree to which foreign trade and indexes of domestic economic conditions move together.