Accomplishment of foreign trade agreements has been the particular province of mild and affable Secretary of State Cordell Hull. Aside and apart from the confidence that this able statesman has engendered in every quarter of the country, we think that his exposition of the aims and accomplishments succinctly illustrate the value of the program he has been pursuing. This excerpt from a letter of his on the subject recently came to hand and we reprint it in the belief that it needs no comment, being sufficient unto itself. "The problem is one of promoting the economic welfare of the entire Nation through increase of purchasing power and expansion of markets, at home and abroad, to the benefit of American agriculture, industry, and labor. To do this requires that we exert every effort--without materially impairing, even temporarily, the interests of any established and reasonably efficient domestic industryto lower or remove excessive barriers to international trade. Agriculture, dependent as it is not only upon foreign markets but also upon the general prosperity of the Nation, has probably more to gain from such a program of trade liberalization than any other major branch of the Nation's economic life. "This is the central problem which we have been seeking to solve through trade agreements. It is because of the vital bearing of a constructive foreigntrade policy on our national prosperity that the President and his entire administration have made the trade-agreements program an essential part of their unceasing efforts to rehabilitate our agriculture and our whole economic life. "The trade-agreements program has had, and how has, no purpose more essential than that of benefiting American agriculture. Notwithstanding reckless and grossly unfair assertions to the contrary, we have made great headway in the face of difficulties of the most serious character. * * * Our Hawley-Smoot experience painfully demonstrated: First, that it is impossible to grant embargo tariffs to some groups and withhold them from others, and that, once political trading of this sort gets under way, there is no stopping short of prohibitive tariffs all along the line; and, second, that the net result of such an embargo tariff policy is a disastrous decline in our foreign trade which leaves in its wake a prostrate agriculture and a prostrate Nation. * * * The farmer's home market--as well as his foreign--is drastically reduced as a result of embargo tariffs. We have learned from experience that to embark upon such a policy is ruinous. Most of those who are today attempting to destroy our trade program by making insupportable charges that it is injuring agriculture are the same false prophets who solemnly assured the farmers that the Hawley-Smoot embargoes would guarantee to them full and permanent prosperity; whereas, in actual fact, within 2 years from the enactment of the 1930 tariff, millions of farmers found themselves in, or on the verge of, bankruptcy. * * * * "The plain truth is that farmers in this country have everything to gain and nothing to lose from a carefully administered program for the establishment of our own foreign trade to the fullest extent that international conditions will permit. It is either such a course of moderation, with expanding markets for American products at home and abroad; or else it is embargo tariffs all around, with consequences that we have already seen. * We have secured through trade agreements, extremely valuable benefits for agriculture, through the safeguarding and expanding of foreign markets for our farm surpluses. The improved facilities for the marketing abroad of the products of our farms were one of the major factors responsible for the rise in our agricultural exports from $662,000,000 in 1932 to $694,000,000 in 1933 to $828,000,000 in 1938, as contrasted with their drastic decline from a level of $1,693,000,000 in 1929. In addition, of course, the farmer's home market has expanded in consequence of * * * trade-agreement concessions obtained for American exports of both agricultural and nonagricultural commodities. "The total cash income from the marketing of all farm products, exclusive of Government payments, was $4,606,000,000 in 1932, $5,248,000,000 in 1933, $8,621,000,000 in 1937 and $7,538,000,000 in 1938. The latest estimated income for 1939 is $7,600,000,000. All major groups of producers participated in these increases, just as in the preceding 3 years they all shared in the calamitous decline of farm income from the level of $11,221,000,000 which was received in 1929. * ** Analysis of the results obtained under the trade-agreements program reveals that between 1935 and 1938 our exports of farm products to trade-agreement countries increased by nearly 50 percent, whereas to other countries they actually declined slightly." [From the Christian Science Monitor, January 9, 1940, Boston, Mass.] Cordell Hull, pan-Americanist, probably regrets more than anyone else the decision to abandon negotiations in Buenos Aires for a trade agreement between the United States and Argentina. * * * * * Does the United States want to trade, or not? That is the larger issue. If it wishes to develop the great opportunity for exports to Latin America it must learn to take imports. And if it wishes to build pan-Americanism on sound economic foundations the United States must put trade which would benefit the Nation as a whole ahead of local fears of competition. [From the Transcript (I. R.), Boston, Mass., December 9, 1939] IN DEFENSE OF TRADE TREATIES The object of the reciprocal-trade treaties has consisted in promoting commerce among nations through a reduction of tariffs. Like all economic problems broadly affecting the Nation it should be approached dispassionately. It is unfortunate, therefore, that Secretary of State Hull, who has labored long, arduously, and sincerely in behalf of the trade pacts, is now obliged to confront palpably partisan and unsubstantiated claims tending to disparage his accomplishments. That such is the case is evident from his address before the American Farm Bureau Federation at Chicago, and from considerable lobbying from sometime past. Assertions are being scattered around that the trade treaties have injured our farmers by narrowing the outlets for their products. Mr. Hull meets these charges in the only way they should be met by citing incontrovertible figures. In 1932, after 21⁄2 years of operation of the Hawley-Smoot tariff, our farm cash income had fallen to $4,600,000,000. By 1938, after 4 years, of trade-agreement policy, it had risen to $7,500,000,000. [From the News (I. D.), Chattanooga, Tenn., December 15, 1939] HULL POLICY HELPFUL The propaganda has been widely spread to the effect that the Nation's farmers are fighting Secretary Hull's trade treaties. Yet the Farm Bureau Federation, with delegates from 48 States, adopted a resolution which said in part: "From all facts thus far available, it appears that while the greatest portion of increased exports has been in industrial products, from which agriculture has only indirectly benefited, yet this study, together with other information available to the federation, reveals that the effect of the agreements has been helpful rather than hurtful." Senator Wheeler has pointed out that the percentage of the American market supplied by the American farmer in 1938 was 93, while in 1929 it was 90. Undoubtedly such opposition as has been voiced against the trade policy has come largely from farmers. But the Farm Bureau Federation says the effect has been helpful rather than harmful. [From the Times, Chicago, Ill., November 28, 1939] BACKWARD STEP A desperate struggle over Secretary of State Cordell Hull's power to negotiate reciprocal-trade treaties is expected in the next session of Congress. Every special interest in the Nation whose toes have been stepped on by one of the agreements already negotiated-and those afraid of being stepped on-is gunning for an end to Hull's authority. Secretary Hull has patiently been obliterating the traces of the tariff mess of the twenties. For the first time tariff problems are being handled honestly and scientifically. But his job is far from done. It would be a political and economic crime to go back to the scandalous methods of Smoot-Hawley days. [From the Enquirer (I. D.), Cincinnati, Ohio, November 29, 1939] A FAMILIAR PATTERN A burst of oratorical gunfire has been heard in Washington, aimed at the reciprocal trade-agreement program of Secretary Cordell Hull. Democrats from the copper-producing States are stepping into position alongside the Republicans who have opposed Secretary Hull on partisan grounds. The result may be a formidable combination in the next Congress, when the Reciprocal Tariff Act must either be renewed or allowed to expire. It is unfortunate that the tariff is being drawn once more into party politics, after a period of 5 years of relatively scientific tariff-making. The trade agreements have been imperfect, of course. But they represent an immense step forward from the logrolling tactics Congress used for decades previously in the framing of tariffs. They also represent the most important contribution the United States can make toward a more tolerable world order. [From the News (R.), Cleveland, Ohio, December 4, 1939] IMPORTANCE OF FOREIGN TRADE As always An old-fashioned debate on tariff appears to be in the offing. in such battles, the weapons will be slogans and catch phrases which have little relation to the issue. Early arguments for amending or abolishing the reciprocal trade program of Secretary of State Hull reflect a lack of clear and independent thinking that is startling. One of these changes would restore to Congress the right to determine tariff rates on each of the thousands of items in foreign commerce. This could bring only a return to logrolling politics, in which every Member of Congress could sweeten his home support at whatever cost to consumers generally and whatever detriment to national trade. Other suggestions are made, but all to the point of changing the plan by which foreign trade is slowly being won back, following a decade of world-wide depression and, in some degree, the errors of our own tariff policy in earlier years. That plan is the reciprocal trade program. It has three virtues that must be recognized by anyone who makes a serious study of national welfare. No permanent prosperity is possible without an increasing foreign trade. An increase is possible only by keeping tariff rates reasonably low, and this requires a gradual reduction in order to inflict the least possible pain on industries accustomed to overprotection. Whether the name "reciprocal trade program" endures is not important, but the principles will have to be retained. We have surpluses of industrial capacity and farm capacity. Either we market these surpluses abroad, or we must be content with want amid plenty. [From the News (R.), Cleveland, Ohio, January 8, 1940] THE TASK BEFORE CONGRESS 5. LET'S KEEP OUR FOREIGN TRADE One of the bitterest quarrels before Congress will concern tariffs and trade treaties. Before it is ended, there is danger that reason will have given way to emotionan unfortunate situation, because prosperity in this country must depend more and more on a careful handling of our foreign trade. Secretary of State Cordell Hull's reciprocal trade program, now in its fifth year, is under attack. This program's purpose is to increase all foreign trade, and our own profitable participation in it, by gradual and painless revision of tariff and quota barriers that have sprung up in recent years. Compared with predepression days, the procedure has been streamlined. Tariff rates used to be fixed by congressional committees. Now they are arrived at by committees of experts following exhaustive, nonpartisan studies, and after every affected citizen has had three chances to testify. It is all done without the help of Congress. Opposition has sprung from several sources. Farm spokesmen complain about the importation of Argentine beef and Canadian dairy products. Coal men fear an influx of Venezuelan oil will damage the fuel market, which has been in disorder for years. In addition, a number of congressmen see evil in the fact that Congress no longer has the power to fix tariff rates. These opponents intend to open up both questions-specific damage to American producers and possible flaws in the treaty-making procedure. Certainly the producers should be heard in full and any injustices removed. If the procedure will not survive a thoroughgoing inquiry, it needs changing. But all the results of such an investigation should be judged against the obvious, but often forgotten, fact that if we intend to sell abroad, we must also buy abroad. Likewise, an intelligent decision on what part Congress may play must be based on the answer to this question: Shall individual interests fix tariff rates to their own liking, let the volume of foreign trade fall where it may, or does volume of trade have a prior right as an item of national public welfare? Opinion is as deeply divided among Republicans as Democrats, for it is essentially an economic question. Although President Roosevelt and the G. O. P. leaders appear ready to make it a political issue, the News continues to believe that the reciprocal trade program's basic purposes are sound. That is: (1) Only an increasing volume of foreign trade will provide an outlet for America's increasing productive capacity; (2) that this can be achieved only by a gradual lowering of trade barriers, always with a proper protection for America's higher living standards; (3) that this is possible only through the modern procedure, for experience has taught us that tariff rates which are logrolled through Congress inevitably rise. We believe that stimulating foreign trade is an essential part of stimulating private enterprise. Whatever changes in procedure are made, and whatever substitute for "reciprocal trade" is considered, we urge members of Congress to preserve that principle. (This is the fifth of a series of editorials pointing out means by which Congress may legislate the United States back into a path of sustained recovery. The next will appear here tomorrow.) [From the Plain Dealer (I. D.), Cleveland, Ohio, January 9, 1940] The American Federation of Labor is doing a signally ill service to its membership in throwing its influence against the Hull reciprocal-trade agreements. Lining up with the tariff reactionaries in Congress, the federation not only opposes renewal of the legislation authorizing the trade program, but demands repudiation of all the existing agreements. These From a point of view of self-interest the federation's position is absurd. trade pacts are enlarging the markets for the products of American labor. increased employment resulting from this trade will far offset any immediate losses to labor as a result of larger imports of some varieties of foreign-manufactured goods. Such are the practical bread-and-butter facts which the federation ignores. From the long range point of view the argument for the trade pacts is even more impressive. They constitute one of the soundest achievements of the Roosevelt administration. For the first time in many years breaches are being made in the barriers of economic isolation erected by the Hawley-Smoot tariff law and its numerous ill-conceived predecessors. Such isolation is one of the primary causes of depression. Destroy foreign trade and it is impossible to sustain domestic prosperity. These are elementary facts of which the economic advisers of the federation are well aware. In joining the effort to scuttle the Hull agreements the federation leadership is permitting partisanship to cloud its good judgment. Because they do not like the administration these leaders are willing to betray the interests of their followers, as well as the general good of the Nation. This is a very sordid brand of labor statesmanship. [From the Times-Herald (I. R.), Dallas, Tex., December 30, 1939] WE CONTINUE TO SELL MORE THAN WE BUY Although exports from the United States for 1939 have shown a decline of 12 percent from last year, Secretary of Commerce Hopkins reports that they have, as usual, exceeded imports. During the first 11 months of 1939, this country shipped $2,809,725,000 worth of merchandise abroad and imported $2,071,193,000 worth. Last year, during the corresponding period, sales by this country abroad totaled $2,825,496,000 and imports were valued at $1,789,082,000. Our total foreign trade for 1938 was less than that of 1939. This country is so nearly self-sustaining that even when exports sharply decline, it, nevertheless, sells more to foreign nations than it buys from them. This is why our gold supply continues to pile up. Our customers cannot trade enough of their own goods for ours to square their accounts. There was a time when our favorable trade balance was highly beneficial to us. By selling more than we bought, we obtained needed capital for developing our resources. Today we have a surplus of capital as well as of goods. But the change that has come about in our relative position in world trade, does not mean that a decline in exports is encouraging. We are still greatly in need of a strong foreign market for our goods. This is especially true of Texas, which normally exports about 85 percent of its raw cotton. Increased buying of foreign goods is of no value to us, unless it helps us to sell more merchandise to other nations. [From the Democrat (D.), Davenport, Iowa, November 29, 1939] POLITICS BEHIND ATTACKS ON TRADE AGREEMENTS AND SECRETARY HULL The Hull reciprocal trade agreements are under fire in Washington, and the fire will get hotter and hotter as we get nearer and into 1940 with its conventions and election. The voter, therefore, will do well to remember several things when the proposed barrage is laid down against the Hull agreements. He should remember that politics has much to do with it. He should remember, when his selfish interests are appealed to, that what may touch him lightly, if at all adversely, may be for the good of the Nation, and the world, as a whole. As for imports, tariff adjustments have affected only about 8 percent of our agricultural imports, but more than 20 percent of our nonagricultural imports. Conceivably there have been some minor inequities, involving particular farm products; these are matters of detail and are righted as rapidly as possible. But if the farmer has any recollection of the early 1930's, he will take a long look before deserting the trade-agreement program. [From the Register (I.), Des Moines, Iowa, January 7, 1940] THINK IT OVER, FARMERS Again now, as in the 1936 campaign, the air is full of assertions that American agriculture is being victimized for the benefit of American manufacturing industries by the trade-agreements program, which aims at cautious lowering of international grade barriers. In 1936 the phrase was "Sold down the river." Since all the preposterous charges in that period about our farmers having been victimized proved false alarms, this phrase is less used now. But it will probably bob up again. And in any case a shift from one phrase to others is unimportant. The charges are the same. |