POST-WAR ECONOMIC POLICY AND PLANNING TUESDAY, OCTOBER 24, 1944 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FOREIGN TRADE AND SHIPPING ECONOMIC POLICY AND PLANNING, Washington, D. C. The subcommittee met, pursuant to notice, at 10 a. m. in room 1303, New House Office Building, Hon. Eugene Worley, presiding. Present: Dr. Vergil Reed, consultant, and Dr. G. C. Gamble, economic adviser to the committee. The CHAIRMAN. The committee will be in order. This morning the Subcommittee on Foreign Trade and Shipping of the House Special Committee on Economic Policy and Planning reopens the second of a series of its hearings. A preliminary examination of the functions of this subcommittee revealed the participation of a number of Government agencies in formulating policies in connection with our foreign trade; consequently, the first hearings consisted of testimonies from representatives of the Maritime Commission, the Department of Commerce, the Foreign Economic Administration, and the United States Tariff Commission. Because of the involved and intricate nature of the problem, the subcommittee is especially desirous of learning the points of views and projected programs of private enterprise. The subcommittee is primarily interested in measures to maintain employment at a high level and fully realizes the importance of the role which foreign trade and shipping can contribute to this goal. Recognizing the economic dislocation in this trade due to the war, we are desirous to learn the probable size and characteristics of our export and import trade after the war and gain some knowledge of the problems of expanding trade relationships, both from a post-war and long-time trend angle. As the first representative of private enterprise, we will hear from Dr. Alexander V. Dye of the National Foreign Trade Council. Dr. Dye, will you take a seat at the table? STATEMENT OF ALEXANDER V. DYE, CONSULTANT OF THE NATIONAL FOREIGN TRADE COUNCIL Dr. DYE: Mr. Chairman, I regret very much that due to illness the president of the National Foreign Trade Council, Mr. Eugene P. Thomas, is not able to be here this morning. He has, however, handed me a short statement which, with your permission, I shall read, and which represents no doubt, in part at least, what Mr. Thomas would have said had be been here, and is as follows: The National Foreign Trade Council was formed in 1914, as an organization nationally representative in character, for the purpose of coordinating the foreign trade promotion activities of the Nation. It was also charged with the organization annually of a national foreign trade convention, representative of the industrial and business interests concerned directly or indirectly with American foreign trade-exports and imports, direct investments, transportation, banking, and so forth. The thirty-first of these annual conventions was held this year on October 9-11, inclusive, attended by approximately 2,000 delegates, a large number of whom are not members of the council. At each of these annual meetings of American foreign traders resolutions are adopted, known as the final declaration of the convention. A copy of this year's final declaration, unanimously adopted, is submitted to this committee as a consensus of the views of the delegates to the convention on the major problems to be considered, in the effort to increase the foreign trade of the United States. The preamble to this series of resolutions relating to our major foreign trade problems is precise in its declaration that the goal of this and other nations is that of increasing living standards and the highest level of employment, by increased production, increased trade, and increased consumption. A prerequisite to the attainment of this goal, in the words of the final declaration of the convention, is The assurance of peace, of internal political and economic stability, of the equitable treatment of foreign capital, the elimination of restrictive and discriminatory trade practices, and of basic honesty among nations. It is further emphasized that we are a part of the world in which we live, that our own economy and the economies of other nations are interlocked and interdependent, and that a greatly increased volume of international trade is indispensable to support the increased production and the complete reconversion to the processes of peace that a healthy world economy demands. The idea of international cooperation, as opposed to isolationism, is considered to be basic to any sound planning for the future. In furtherance of these objectives, the convention strongly emphasizes the essential part that private enterprise must be free to take in bringing about the restoration and expansion of our international trade. It is recognized that changes may be found necessary in the relative positions of private enterprise and Government in business. For this reason it is held to be of the highest importance that the future line of demarcation between the two should be clearly defined in order that no unnecessary minimization or impairment of the freedom of private enterprise, as the traditional American way of progress, shall be permitted to harass private traders with uncertainty as to what constitutes the legitimate boundaries of Government in business. Arising out of this is the further problem of private enterprise in international trade; its relations with foreign markets in which the collective idea prevails under Government control. The declaration of the convention with respect to this is as follows: To trade with peoples who follow a different philosophy of government and trade, it is not necessary to dilute our own traditional methods of government and trade. On the contrary, we should firmly maintain the strength and the virtues of the American way of life. In this connection it should be recalled that we had no difficulty in the past in trading with Soviet Russia-a Government which has been meticulous in the observance of its obligations, and which in the future should form a most valuable market for our products, especially in exports of heavy industry goods. The difficulty in arriving at a post-war international trade policy is fully recognized. Until political conditions and future national economic boundaries are more clearly envisaged, any immediate progress will be by a process of gradualism and adaptation to exceptional circumstances in a world of varied national economies and conditions. It is important, however, that no emergency post-war policies, applied in exceptional circumstances, shall retard or render more difficult eventual approach to a long-term international trade policy acceptable to all the United States. The key factor in all planning for the future must be an international policy that will open the door in all countries to increasing production, trade, and employment. In our effort to reconstruct the channels of international trade and to establish stable and satisfactory trade relations with the rest of the world, the convention favors the extension in its present form of the Reciprocal Trade Agreement Act; that is, without requirement for either Senate ratification or congressional approval. The convention reaffirmed its belief that the reciprocal trade-agreements program is the most effective way yet devised in our history to bring about the reduction of tariff barriers here and abroad and to foster a greater volume of foreign trade. It is the contention of the delegates to the convention, that the war has accentuated the preponderant credit position of the United States in its relations with the rest of the world; that in order to maintain a high level of employment and a rising standard of living in the United States, we must greatly increase our imports as well as our exports. It is further pointed out that, in view of the creditor position of the United States, any excess of goods and services furnished to other nations beyond what we receive from them will eventually turn out to be an economic loss to the Nation. I respectfully refer the committee to the final declaration for the convention's views relating to other major problems involved in the effort to increase our foreign trade and to their proposals for a solution of them. These include: Integration of foreign-trade protection and promotion. Anglo-American combined boards. Lend-Lease and Government purchasing practices. Preserving distribution channels abroad for American goods. Government controls affecting export trade. Government controls affecting import trade. Export price control. Surplus stocks. That, gentlemen, is about the best I think I can do in trying to set forth to you the position of the National Foreign Trade Council. Unfortunately, I have with me only a very few copies of the final declaration and those, while they are incomplete in text, are without the index, but I shall be very glad to furnish for each member of the committee and any others you desire a complete set, just as soon as they come from the printer. I shall be very glad to answer any questions which the committee might like to ask and which are within my power to answer. The CHAIRMAN. I would like to say that we are very sorry that Mr. Thomas was unable to be here today. Dr. DYE. I shall so tell him. The CHAIRMAN. And we do appreciate his statement. The CHAIRMAN. Would you mind, Dr. Dye, giving us some idea of the nature of the Foreign Trade Council, for example, its membership and its functions? Dr. DYE. The National Foreign Trade Council was formed, as stated, in 1914. The leading spirit in that was the late Mr. James A. Farrell, who conceived the idea that all foreign traders would do well and advance their interests materially if they could consult with each other with regard to their common problems, so the National Foreign Trade Council was organized as a council of foreign traders to consider their problems among themselves and furnish each other mutually with information that might be helpful to some other member in similar circumstances. One of their first acts was to sponsor the holding each year of a national foreign trade convention to which all those who were interested in any way in foreign trade might come and consider their problems, and while the national foreign trade convention is sponsored by the National Foreign Trade Council it is distinct from the council. The council has about 1,000 members, scattered Nation-wide throughout the United States, consisting of those firms and individuals, mostly firms, who are interested in foreign trade. The CHAIRMAN. As I understand, you maintain a regular staff— a research bureau. Dr. DYE. It has only one office. There are no branches throughout the Nation. The head office is at 26 Beaver Street, New York City, and it has a staff of officers and a board of directors, and is a private educational corporation. The CHAIRMAN. It is supported by assessments? Dr. DYE. By membership dues. Mr. GAMBLE. Does it come under the category of trade organizations, or is it more of an educational organization? Dr. DYE. I should consider it more in the nature of an organization for disseminating information of mutual value to its members. It is not exactly a trade organization. It is not an organization for profit. Its main idea is for the mutual dissemination of information to its members. It publishes no periodicals regularly except the one volume each year of the proceedings of the national foreign trade convention which is published by the council. The CHAIRMAN. As I understand it, this declaration represents the unanimous vote of all the membership of your organization. Dr. DYE. Yes, it was adopted unanimously, but, of course, it was prepared by the declaration committee of 100, who then submitted the declaration to the convention for adoption and the convention adopted it unanimously. But naturally there are divergences of opinion among both the members of the council and the members of the convention. The council, I should state also, is nonpartisan in its organization and does not represent any particular trade except that of all those who are interested in foreign trade, both export and import. The CHAIRMAN. You have no minority report reflecting the disagree. ment with the declaration? Dr. DYE. None that I can recall. The CHAIRMAN. Then we can assume generally that this does reflect Dr. DYE. You may assume that this represents the well-considered opinion of the foreign traders of the United States as an organization. The CHAIRMAN. What problems did the association meet prior to the outbreak of the war which prevented foreign trade or disturbed foreign trade? Dr. DYE. Prior to the outbreak of the last World War the chief difficulties in foreign trade were caused by the fact that each nation tried to increase its exports and decrease its imports. While they must have had the intelligence to know that one nation's imports are another nation's exports, they apparently were not able to put that intelligence into effect in practice but, instead, restricted imports into each nation with the result that the total trade of the world was not able to expand in a satisfactory manner and commensurate with the progress of civilization in other directions. That is about as concise as I can put it. The CHAIRMAN. Then, no nation built up its export trade? Dr. DYE. No nation built up its export trade to the fullest extent with economic benefit to the nation. It is well known that Germany did develop her export trade for the purpose of military advantage. In other words, she subsidized her export trade and limited her imports, but that was of no economic value even to Germany, but was of military value, and she did increase her exports. I wouldn't say that no nation increased its foreign trade for the years immediately after the war. Of course, all nations did have a revival of foreign trade immediately after the war, due to the fact that foreign trade was practically nonexistent except for war purposes during the First World War, and immediately after, of course, all nations did increase. There was, however, no permanent increase in foreign trade which was commensurate with the general advance of civilization. The CHAIRMAN. Do you suppose we will make the same mistakes after this war? Dr. DYE. I don't think we will. The CHAIRMAN. Why not? Dr. DYE. I believe that the principal nations of the world are better advised, that they have considered this matter more fully. For instance, in the United States I tried, over the last 3 years, to keep track of the organizations that were studying post-war policy. When the number got up to some two-hundred-odd I lost track, but it shows the |