America's Economic Front
WE MUST NOT FEAR THE FUTURE
By JAMES A. FARRELL, Chairman, National Foreign Trade Council, Inc.
At the First General Session of the Twenty-Seventh National Foreign Trade Convention, Palace Hotel,San Francisco, California, July 29, 1940
Vital Speeches of the Day, Vol. VI, pp. 652-654.
TODAY, more than ever in the past, the necessity for clear thinking is impressed upon the minds of American business men by a situation confronting them abroad which had no parallel in the previous war and post-war periods. Superimposed on the disrupted world economy that ended so disastrously in 1929, we have had six years in which international trade was increasingly geared to the demands of military economies, in nations which we nowknow were preparing to risk all on a throw of the dice, in a mad attempt to subjugate the world to their ambitious lust for power.
The past decade presents the spectacle of a world torn by economic rivalries, with mounting momentum leading inevitably to the present war, to the preparation for which the totalitarian nations had mobilized their man-power and all their available resources and energies.
When war was declared, following the overthrow of Austria, Czechoslovakia and Poland, it was apparent to Americans that their front lines in European markets had been broken and that nothing was left but to guard with greater vigilance our lines of communication with other markets.
At the present time, estimated on a basis of the combined 1939 trade with Europe and the British Empire, a total volume of America's normal export and import trade, valued approximately at $2,500,000,000 is subject to the severe restrictions of an economic war, and to those imposed by our Neutrality legislation. For all practical purposes much of this trade, other than military necessities, may be written off our national ledger as an assured source of national income, until a military decision is reached and peace terms indicate what prospects remain for resumption of our peacetime trade with these nations.
Whatever the outcome of the military struggle, it is likely that efforts will be made at its close to establish an economic bloc in Europe. With Europe under a dictatorship, we would have to match the power of a European economic union with the combined power of this Western Hemisphere, in bargaining our way through to a reciprocal commercial understanding.
The uncertainty of our trade relations with the Orient, due to the Sino-Japanese war and the trade effects of the Philippine Independence Act, if carried through in its present form, calls for serious consideration of the direction in which we should look for a strengthening of our bargaining power with a European economic bloc comprising our former leading markets.
In these circumstances, with Canada remaining in close cooperation with Pan America, the balance of economic power in bargaining with a European bloc would be greatly strengthened by a trade agreement between the United States and all British Empire countries.
Australia, which is represented at this Convention by her Minister, the Rt. Hon. Richard G. Casey, who will address the Pacific Trade Session, has strongly advocated an agreement of this kind, as a logical approach to satisfactory trade relations between Empire countries themselves. It is no less essential to the economic security of the Western Hemisphere that future trade relations with British Empire countries, which were greatly improved by agreements with Canada and the United Kingdom, should establish an orderly and mutually profitable marketing system which would eliminate injurious competition. Pan America and the British Empire combined would establish an economic front to the rest of the world, with bargaining power adequate to secure equality of treatment and fair dealing in international commerce.
The situation in the Pacific does not tend to improve our trade relations in that area. It is not in professions of friendship, but in deeds, that we look for a change in this situation. Much has been said recently of the right of Europe and the Orient to proclaim the Monroe Doctrine for those areas. Our Government has raised no objection to such a plan, but it has challenged, and rightly so, the intention of either a totalitarian Europe, or a totalitarian Orient to adopt a Monroe Doctrine similar to that accepted by the twenty-oneAmerican republics. On the contrary, all the evidence points conclusively to the fact that there is no analogy whatever between the Monroe Doctrine of Pan America, and that which totalitarian governments in Europe and the Orient propose to proclaim.
An interpretation of our century-old Monroe Doctrine, of which the Americas approve, was given in unmistakable terms by the Secretary of State, Mr. Cordell Hull, at the Lima Conference. This bears no resemblance whatever to the aims and purposes of Governments in Europe and the Orient.
President Monroe was thinking primarily in terms of security for the United States. He was making no claim to a protectorate over the other Americas, no pretensions to hegemony. Recognition of the sovereign independence of the twenty-one republics, non-intervention in their internal affairs, close cooperation by means of consultation on all questions of general concern to Pan America; these are the basic ties of the democracies on American soil which are united in defense of their economic and political freedom.
The delegates to these annual conventions have a profound respect and admiration for the Secretary of State, who at Lima, while disclaiming any idea of economic or political advantage for the United States, urged that Conference to be on guard against the ominous shadow cast by the totalitarian Axis over the whole Western Hemisphere.
The policy of the United States is one of trading with the rest of the world, but on terms of equality. The problem that confronts the commercial world is not one of an impasse between its business men in reaching an understanding and agreement on matters of trade. Were world economic affairs directed by its business men, there would be little difficulty in establishing a system of international cooperation based on consultation, by which a new world order in commercial relations would prove of lasting advantage to all countries.
The futility of international economic conferences, dominated by Government representatives who give lip service to resolutions which they have no intention of implementing, focuses attention on the seat of the disorder from which the business world suffers. Whether we look to the Orient or to Europe, we find the paralyzing hand of a totalitarian government in control of all industry and trade. It would be to the advantage of the Orient and Europe to have normal trade relations with the United States. We would welcome trade agreements to this end. The National Foreign Trade Council and the Japan Economic Federation have laid the foundations for such an understanding on trade relations, by an exchange of Missions before the outbreak of the Sino-Japanese war. The friendships then established between the respective business communities may yet survive this era of military domination, provided peace in the Orient is founded on the principles of our Monroe Doctrine.
Expansion of trade within the Pan American area has engaged particular attention at the present time. While not encroaching on those who will speak at the session devoted to the Americas, I may repeat here what I said in 1928, that there is a mutuality of benefit in this exchange of commerce between the United States and the sister republics that fulfills the real intentions of business men in the United States toward our southern neighbors. The mistaken belief is frequently held that the previous war was the cause of the considerable growth in our trade with Latin America. His Excellency Senor Don Carlos G. Davila, Ambassador at that time from Chile to the United States, pointed out, in a pamphlet published by the National Foreign Trade Council, that the expansion of our trade was a logical advance, not a war growth. While the war gave a tremendous impulse to our trade with Latin America, it will be found that the maximum figures for the war peak, 1918, were $10,000,000 less than the figures for 1927.
American business men are keenly interested in the proposals of the Government for more scientific regulation of inter-American trade, but as this will doubtless be discussed at the Americas Session, I only wish here to emphasize the importance of avoidance of expectations of compensatory trade which can only be realized over a period of years of intense development of Latin American resources. In any consideration of future large loans or investments, for the purpose of stimulating our trade with Latin America, we should place no reliance on the generally accepted theory that trade increase invariably follows loans. While our loans to sixteen principal Latin American countries in the period 1925-29 amounted approximately to $970 million, the increase in our exports in that period amounted only to $166 million.
It is not my purpose to infringe upon the subjects allotted to other speakers. It has been my privilege since the inception of these annual conventions to be asked to give a keynote to the proceedings by a survey of our overseas trade. The situation today is one in which the outlook is obscured by an impenetrable fog. It is a situation, moreover, in which the past no longer serves as a safe guide to our course in the future. Our policies during the war will be dictated by our necessities; expediency, not fixed rules, will govern our action in meeting every emergency.
We meet in this convention to deal with broad issues that divide the world into separate camps. Of transcendent importance is an united front on the fundamentals of our peacetime relations with the rest of the world. No previous convention has been charged with greater responsibility in examining and deciding upon the course we intend to pursue as a nation, both during and after the war.
Great care has been exercised in the preparation of the convention program and in the selection of speakers, befitting the abnormal situation that confronts us in world affairs. In selecting the theme of the Convention, "America's Economic Front", which is the subject of my address, it was felt that the attention of the convention could be concentrated on no more important issue than that of seeking to find our legitimate place in a new world order that foreshadows so many difficulties for those upon whom the task falls of building its foundations.
It is evident that the new world order conceived by totalitarian nations, will be one in which their external trade will be under strict government control. Our future trade relations with Europe may be similar to that with Soviet Russia. It is not too soon to give serious study to this totalitarian economic revolution; to its effects upon our future trade, and to the discovery of the ways and means by which American individual enterprise, reinforced by effective organization of the Government's foreign commercial services, may continue to find outlets for the surplus products of the soil and of manufacturing industries.
In these times of doubt and uncertainty as to the kind of world in which coming generations are expected to live, there should be no defeatist attitude to any proposals which aim at the subversion of our democratic institutions, under which are guaranteed the right to life, liberty and the pursuit of happiness. We are too conscious of the greatness of our nation, of its vast potential resources, to fear what the future may bring or to doubt our own determination and ability as a nation to preserve the American way of life.