The Place of the Mississippi Valley in Post-War World Trade
CENTRALIZING EXPORT-IMPORT ACTIVITIES
By R. S. HECHT, Chairman of the Board, The Hibernia National Bank, New Orleans, La.
Delivered at the Chicago World Trade Conference, Chicago, Ill., February 14, 1944
Vital Speeches of the Day, Vol. X, pp. 396-401.
ALL of us in the Mississippi Valley are tremendously interested in World Trade and its effect on the prosperity of our section in the Post-War Era. No recent statistics on the volume of that trade are available. But even if the totals of our exports and imports for the past few years were published they would be so distorted by our enormous lend-lease operations that the figures would not be of great value from a commercial viewpoint. However, I think we are safe in assuming that approximately 10% of our country's production figured in world trade in normal pre-war years. It is hardly necessary to point out to an audience such as this the old principle that in the long run our exports must largely be paid for by our imports, and we know that it is not a mere coincidence that our total imports ordinarily represent about 10% of our consumption. Those of us whose work requires us to be familiar with our national economy have always realized that notwithstanding the inherent richness of our country we are far from being self-sufficient, but the exigencies of the present war have once more given us some painful illustrations of how great has been our dependence on some of the foodstuffs and raw materials of foreign lands, and especially of those available in other American republics. In any event it would not be safe to assume that the importance of our export and import trade can be measured by its relatively small percentage of our total business; first, because we badly need most of that 10% fn imports to supply certain types of food and to give us the required raw materials to carry on some of our essential industries, and, secondly, because that 10% representing out exports spells the difference between having to deal withprice-depressing surplus on the one hand or bringing about stable prices and a sound home economy on the other.
No one knows better than this audience that for the time being our normal export and import trade has been greatly curtailed, and none can tell how long our lend-lease operations will dominate the export and import business, or how long we shall have to operate under the burdensome government licenses and restrictions after the war .is over. Nor are we yet close enough to the end of this terrible struggle to safely analyze its effect on the commercial fate of the nations involved or predict what trade barriers we shall face when peace comes. However, it is hard to be optimistic over the prospect of rebuilding our trade with these unhappy devastated countries, whose economy has been destroyed and whose currencies have become all but worthless. The road back is bound to be painful and slow, and it is difficult to foresee how we shall be able to resume our private export trade to these impoverished nations until a way has been found to reestablish a new and stable value for their currencies which will truly reflect their purchasing power. However, I shall not attempt to take your time to discuss this perplexing problem because I know that this afternoon you will hear a very enlightening talk on the financial aspects of our world trade by Mr. Wilbert Ward, who is eminently qualified for this task.
Trade Prospects in Latin-America and Africa
Fortunately the prospects for resuming our former international trade as soon as peace comes look very different if we turn our eyes from battle-scarred continents of Europe and Asia to South and West Africa, and especially to our own western hemisphere.
In the African continent, we find that as a result of the war, there has been a tremendous increase in their industrial production and although in a sense they may compete with some of our manufacturers, yet, there are numerous articles for which the demand has increased by leaps and bounds and which that Continent will continue to purchase in the postwar era.
The Western part of Africa has been an especially great asset to us in our war efforts with their minerals, chromium, asbestos and manganese, and the development of these resources has substantially enhanced the purchasing power of that vast territory.
Under the stimulus of the war our Government's trade relations with all Latin-American countries have increased enormously, and our military needs have been such that our imports from there are doubled and trebled. The consequence is that instead of having been drained of their financial resources, as the rest of the smaller nations of the world have been, their economic condition has improved beyond our most optimistic expectations; their currencies have been stabilized; and they have built up dollar balances that exceed those of any previous period. The enormous expansion of our trade with other American Republics during recent years is best illustrated by the following figures:
(Millions of Dollars)
In 1943 there has been a further substantial increase and during the first nine months of that year our imports from Latin-America exceeded our exports to Latin-America by 371 million dollars as compared to 221 million dollars in the same period of 1942. It takes no particular optimism, therefore, to foresee an extraordinary heavy flow of goods in both directions between the Latin-American countries and the United States just as soon as presently necessary license requirements and government controls can be removed. The unprecedented prosperity enjoyed by these countries has created a huge pent-up demand for consumers' goods, just as it has in our own country and it stands to reason that as soon as peace comes we shall get inquiries from every Latin-American country for a great variety of exports which they need badly but which we have not been able to send them because of wartime restrictions and shortages at home, and because of lack of safe transportation. In pre-war days both Germany and Japan enjoyed a large part of this trade, but since their competition, for a long time at least will be eliminated, our American exporters and importers should be able to increase their volume substantially, and should be able to hold on to this trade long after the first emergency orders have been filled.
Some of our exporters have become alarmed because under the exigencies of war some of the countries which up to now were largely agricultural have made great progress in developing new home industries, which has enabled them to produce some of the articles they formerly imported from us. But far from reducing our volume of trade with these nations these developments have opened new vistas and new fields for export and import business with these nations. A few days ago I had the pleasure of a visit with the Hon. Jefferson Caffery, our Ambassador to Brazil. He spoke in glowing terms of the great industrial development that is taking place in the country to which he is accredited, and he mentioned that several products formerly imported from the United States are now being successfully manufactured right there. But, he added, don't think for a moment that this will mean any curtailment of the trade between Brazil and the United States, On the contrary, for every such article that was formerly bought abroad and is now made at home there are ten more articles that the country wants to import and now has the means to pay for, just because of its increased productive power and the improved standard of living of its people.
Keen Competition Ahead for World Trade
This does not mean, however, that we shall not again in the future have the keenest sort of competition for this business. True, we shall not for a long time be bothered by barter arrangements, discriminatory quotas, and special currencies, such as the Axis resorted to before the war, but you may be sure that every surviving commercial nation will strive harder than ever to rebuild its foreign trade and thus protect as far as possible its own international exchanges. And the keenest competition of all is certain to come from our British cousins who will have to stimulate their exports to pay for the food and raw material they need and who will surely move heaven and earth to reestablish themselves with all their old customers and gain as many new ones as possible. We may as well understand, therefore, that an entirely new and keen struggle for the international trade of the Western Hemisphere will start as soon as the European war is over; and we had better realize that the success of the American international trader will depend upon the vision, and the leadership he can develop in this field, and upon his thorough understanding of the temperament and desires of his clients. We had the same sort of opportunity 25 years ago after the First World War, when we furnished Latin-American countries most of the merchandise they formerly bought elsewhere; however, we lost a large part of this new business
because we did not give heed to the difference in the requirements between domestic and foreign purchasers, and because our European competitors, who for long years before the war had catered to the needs and wishes of these customers, sent their representatives into those countries and gave the buyers exactly the sort of attention they wanted. We must profit by this past experience and right now send men who speak their language to our customers abroad so as to learn at first hand what their markets and requirements are and comply with all their reasonable requests so that they may not again be tempted to later divert their business elsewhere.
The Mississippi Valley's Opportunity
It is against this background of increased opportunity for American world trade that we in this great Mississippi Valley must appraise our own place in this future struggle and map out a broad and constructive program so that our section may in future participate in this international trade to the full extent to which its natural resources, its commanding position and the vision of its people entitle it.
The progress of the entire Mid-Continent section along agricultural as well as commercial lines has been truly remarkable. Since the war started it has fared particularly well in the location of new industries and has reached a degree of industrialization undreamed of 10 years ago. Our great task now is to prevent these plants from becoming idle after the war. We just cannot afford to let this great productive capacity be destroyed and permit our industrial activity to sink back to pre-war levels. It would inevitably mean wholesale unemployment and economic chaos. It was difficult in the past to persuade existing industries located elsewhere to move into our territory, but now that billions have been spent on these plants it would be most unfortunate if we did not have the energy and the resourcefulness to convert them from war to peace-time production, especially since there has been created a considerable pool of skilled labor from which a permanent efficient industrial organization can be built. These industries are so located as to have cheap and easy access to all overseas markets through the various ports of the Gulf of Mexico, besides in most cases enjoying competitive access to the Atlantic Seaboard as well.
There is no reason, therefore, why many of them could not be converted advantageously to peace-time use for the production of articles of export. But in making these plans we should as far as possible depend upon private enterprise and not look to our federal government for leadership. To be sure, we cannot hope to return to complete freedom from governmental restrictions and regulations as soon as the war ends, but the foundations of post-war international trade will be far sounder if we build them upon the initiative and ingenuity of American exporters and importers rather than on the support oi government agencies.
Cooperation of Government Departments
This does not mean that we shall not continue to need the whole-hearted cooperation of all the government departments interested in foreign trade. Our State Department, our Department of Commerce, the Foreign Economic Administration and the Export-Import Bank ail have contributed greatly to our efforts in the past and will, I am sure, do so in the future. In our Latin-American trade efforts, during the past few years we have had particularly fine cooperation from the office of Coordinator of Inter-American affairs.
Unfortunately, the general public knows too little of the valuable work which this office has accomplished since 1940 under the dynamic leadership of Mr. Nelson A. Rockefeller. Only those who are in intimate touch with international affairs can appreciate the important contribution that office is making towards Inter-American understanding and economic cooperation and towards the development of new enterprises which will further add to the possibilities of international trade between the Americas. It is all the more unfortunate, therefore, that the public recently has been given some inaccurate and misleading information concerning our Government's financial operations in these neighboring countries. Time will not permit a detailed discussion of this incident, and it is readily conceivable that in the magnitude of these operations some waste and some errors of judgment have crept in, but one must indeed be blinded by partisan prejudices to deny the great amount of good that has been accomplished politically as well as economically by the good neighbor policy of the present administration.
Another government department on whose continued efficient functioning depends the future of our world trade is our Maritime Commission. Mr. Taylor has just covered this subject very ably and exhaustively, but I want to add a few words of hearty approval of the able manner in which the affairs of that Commission are handled, and at the same time emphasize how necessary for the prosperity of the Mississippi Valley is a strong and consistent merchant marine based on continued private ownership and operation of our fleet, with only such government support as is necessary to overcome the inequality of labor cost and standards of living between this and other countries.
For the present all of our efforts in the Mississippi Valley, as elsewhere, are directed to the winning of the war, but that should not prevent us from thinking beyond these pressing immediate needs and making suitable plans for the solution of the international trade problems which inevitably will confront the commercial world when peace comes. Naturally, no one knows what sort of world order we shall be working under, except that, happily, we now can feel assured that in any event it will not be the kind of world order which the totalitarian states conceived and expected to force on us. But certainly it is none too soon to give serious study to the rebuilding of our export and import business, for we cannot afford to wait until the war is actually over and then expect to wave a magic wand to bring back the trade which more than five years of war have destroyed. And so it is up to us to start now to plan to build for the future and to weld new trade links between the Mississippi Valley and the rest of the world.
Deeper Interest in World Trade
I think we have not in the past participated in this trade to the extent that we should, but I am greatly encouraged by the clear indications that our people up and down the Valley have become much more internationally minded than in the past, and consequently are taking a far deeper interest is our foreign trade, our merchant marine, and our International air service, than ever before. Here at Chicago and within a radius of 300 to 400 miles of this great mid-West market, you are now no more than twelve hours from Guatemala City, twenty hours from Panama, thirty-two hours from Lima, Peru, twenty hours from Venezuela and Colombia, actual flying time, through our new international air gateway at New Orleans. The southern half of the hemisphere literally is at our door-step. I am convinced that our leaders have made up their minds to see to it that we shall assert our place and obtain our rightful share of this trade on every continent as soon as world conditions permit the resumption oi private trading between all commercial nations. But while we propose to participate in all the foreign tradethat can be rebuilt after the war we may as well be realistic and admit that it is next to impossible to make plans now for trading with those countries whose wealth and economic life have been destroyed,—to such an extent that we have no present means of estimating their purchasing power or finding a suitable basis for putting a value on their currencies. It is but natural, therefore, that we should, for the present at least, focus our primary attention on the trade with the Western Hemisphere and the continent of Africa. Just as the Pacific states naturally will look for their greatest development from the territory adjacent to the Pacific, so does our most attractive field lie to the south of us. We are nearer to them geographically and we understand them better because of the closer relations we have had with them. Besides, our economies supplement each other advantageously since we need many of the raw materials and foodstuffs which they export, and we can and do manufacture many of the articles which they are very anxious to import.
When it comes to a discussion of the commodities which the Mississippi Valley can export there is almost no limit, and it would be "carrying coals to Newcastle" to enumerate them to this audience. Some of your agricultural products, nearly all the durable goods that come from your steel mills and heavy industries, and innumerable items of consumer goods manufactured throughout this section, can find a ready market in foreign countries if the right effort is made. In fact this section can produce almost everything the world needs.
There are many manufacturers throughout the Mississippi Valley section who in normal times exported a part of their product, and who are thoroughly familiar with every phase of the export and import trade. There are many others who also have products suitable for export who have not in the past taken the trouble of learning the intricate details connected with direct sales abroad. But because of the enormous increase in our capacity to produce we must encourage all such manufacturers to take an active interest in the cultivation of the foreign markets as an outlet for their surplus outputs. Even the experienced exporter will find that his knowledge of pre-war conditions is no longer sufficient, and that in order to reengage in private export trade he must reorganize his staff, redevelop his markets, and study anew the up-to-the-minute information which affects his particular product. The manufacturer who has not up to now attended to the multitudinous details connected with export shipments must either look around for experienced personnel to attend to all such matters direct or, if his volume of export business is not sufficient to justify a fully organized export department, he can take his problem to one of the export and import houses who are specialists in that line and are able to analyze for the manufacturer his possible markets, his competition, the style and packing required to make his product acceptable to foreign buyers, and even to check his credits and to finance the transaction. I mention these details only because all too often in the past the manufacturer who might have sold some of his product abroad decided against the idea merely because he knew nothing of the details of foreign transactions or credits and did not want to be bothered with them.
New Orleans—Port of Exit and Entry
We in New Orleans view foreign commerce as a very important segment of our business life and we are deeply interested in seeing a greater development of the export and import business between the Central West and the rest of the world. We believe that notwithstanding the competition of eastern ports New Orleans will be the port of exit and entry for most of the products involved in such trade, and we propose to leave no stone unturned to make it advantageous to your manufacturers to route their shipments that way.
First of all, we are fortunate enough to have excellent railroad service rendered by eight different railroad systems entering our port and the present freight rate structure is such as to make it cheaper from most Valley points to ship through the Port of New Orleans than it is through Atlantic ports.
Second, we have in New Orleans unexcelled port facilities and have every reason to believe that in the post-war era our steamship sailings to all parts of the world will be equal in speed and regularity of service to those of any other American port. Furthermore, New Orleans is at the heart of a great system of inland waterways which affords the most economical transportation, thus supplementing in a constructive manner the port's other shipping facilities. The proposed Alexander Seaway from New Orleans to the Gulf will provide a shorter and more economical deep tidewater channel to the sea, and thus facilitate the flow of the vastly augmented trade with Latin-America and the other Countries of the World.
Third, the banking facilities in New Orleans have developed greatly and although a large part of the credits opened in this country by foreign banks still come through New York institutions, such credits can now in many cases be arranged through mid-western or southern banks if the seller insists on this being done. In any event there is no difficulty in negotiating, and, if desired, discounting foreign drafts through New Orleans or other Mississippi Valley banks.
Fourth, New Orleans, which has always been one of the country's great seaports, has now become a great skyport as well, with several new air fields and new airlines, thus making it one of the important international air and surface transport gateways to all points of the Western Hemisphere and affording fast communication for buyers and sellers to get together.
Fifth, there are in New Orleans a number of important export and import houses and responsible forwarding agents to handle the intricate details of the export and import business for those manufacturers who are not versed in such transactions.
Sixth, we have recently established in New Orleans what we believe to be a very worthwhile organization for stimulating international trade known as
A group of forward-looking business leaders familiar with the needs of the Mississippi Valley as well as the requirements of the Port of New Orleans came to the conclusion that just talking about post-trade opportunities would get us nowhere, and that something should be done, and done now, to translate into practical operation some of the wishful thinking and abstract discussions we have long been indulging in throughout the land concerning the need for a better understanding between the nations of the world in general and those of the Western Hemisphere in particular. And so they decided to incorporate "International House," a non-trading and non-profit organization dedicated primarily to the cultivation of closer cultural, social and business relations between the people of the Mississippi Valley and the rest of the World.
Over the entrance to its building is being inscribed the simple slogan: "A Center for Interchange of Culture and Trade." Through its doors soon will pass the representatives of all friendly nations, and they will be welcomed by representatives who speak their languages and who will seek to understand their needs and problems. And since International House is not a New Orleans institution but definitely a Mississippi Valley organization I feel justified in taking a few minutes of your time to tell you a little about this new and unique enterprise.
Up to now no funds have been solicited from any individuals or corporations not having offices in the City of New Orleans, nor have any invitations been issued as yet for active memberships. The reason for this is that the organization committee felt that it was up to the citizens of New Orleans—where the headquarters will be located—to show their faith in the organization by subscribing to the first $250,000 before asking others in the Mississippi Valley to contribute any funds towards its creation and development. About ten days ago the founder members, who thus far have subscribed well over $300,000, met and elected the first board of directors, leaving 9 vacancies to be filled later by other representatives of the entire Valley. The directors in turn have elected William G. Zetzmann, one oi the outstanding civic leaders of New Orleans, as President, and as Vice-President Mr. A. E. Hegewisch, an expert in matters of foreign trade and a linguist of note. Immediately afterwards Columbia Broadcasting System arranged for a 15 minute program over its own nationwide system and over short wave throughout the world, in which announcement was made that the Mississippi Valley and New Orleans were dedicating "International House" to all the friendly people of the earth as a meeting place to learn at first hand about the trade and culture of other lands. Participating in this broadcast were Ambassador Messersmith on behalf of the State Department, Mr. Nelson A. Rockefeller on behalf of the Coordinator's Office, and Mr. William G. Zetzmann on behalf of International House. If you were not as busy as you are, I would have liked to reproduce this truly excellent radio program for you, which the New Orleans delegation Drought with it in the form of discs containing the electrical transcription of the three notable addresses.
Suffice it to say that we have the wholehearted cooperation of the various authorities in Washington who are interested in foreign relations, and who seem to think we are doing a good job in planning to bring about a better understanding between nations and in cultivating good will and lasting friendships between individuals dealing with each other in international trade.
The Citizens Bank Building, in the heart of downtown New Orleans has been bought and is now being remodeled to meet the requirements of the business and social functions of the organization. Its facilities will include a library and reading rooms containing reference books, periodicals, and important current newspapers from all countries, meeting rooms of all sizes for its committees and its guests, offices for the temporary use of important visitors, with secretaries capable of taking dictation in the visitors' own languages, and last but not least large and small dining rooms, with an excellent cuisine. It is expected that thus it will become the center of ail social and business activities of an international character as well as the meeting place for businessmen from the Mississippi Valley, interested in international relations and who come to New Orleans to confer with their foreign friends or local representatives.
The activities of International House will be many-sided. Included in its plans is the closest cooperation with the State Department and the Coordinator's office, and it is expected that both will have special representatives located in International House. Special committees will be set up for each country so that any problems arising in trade and cultural relationships can be promptly dealt with by members who are thoroughly familiar with the political, social and business problems of the respective countries. It will also encourage the program of exchange students and professors, and will work closely with the colleges and universities of the Mississippi Valley. Constant efforts will be made to encourage the study of the history, literature and languages, and to quicken in every way the cultural interests and cooperation between the American republics.
In addition to these specialized activities International House will have a broad and comprehensive program to make available to individuals and organizations throughout the Valley all of its information and data on the commercial, industrial and financial situation of the various countries which will assist manufacturing enterprises, exporters and importers, and thus serve and bring into closer contact all those in the Mississippi Valley who are interested in foreign, trade.
Likewise it will encourage Latin-American buyers to make International House their headquarters and meeting place to talk over their problems, and thus ultimately make International House a center for international information and an integral part of all foreign relations activities between the entire Mississippi Valley and the rest of the world in an atmosphere entirely free from local, national, or international political influences, and through an organization conceived and administered exclusively by businessmen.
When world conditions become normal again it is hoped to further expand this idea by creating a permanent International Exhibit Building, where Americans may see continuous exhibits of the commercial products, natural resources and cultural attainments of foreign countries, and in turn display American accomplishments for the benefit of our visitors.
Last, but not least, International House expects to make known to each other not only the richness of their culture and traditions but also the physical beauties and attractions of North, Central and South America, in the hope that we may induce more North Americans to journey southward and in turn draw more Latin-Americans to our shores. Particularly do we hope to encourage such men as those in this audience to make commercial trips to the Latin-American countries so that you may become acquainted with your prospective customers and in turn invite them to come up for a visit to your establishments. If we can accomplish this two-way traffic, by air, by sea, by railroads, or by the new high ways, we shall do much towards bringing about a happier relationship between Latin-American nations as well as a better understanding of each other's history, attainments, culture, resources and trade. Some of our own people need to know more about the glory of the Aztec, Inca and Mayan civilizations which were old before this country started on its marvelous development, and about the art, literature and learning which was well established in South and Central America before the Pilgrims set foot on our shores. On the other hand it is equally important to correct some of the fantastic ideas our southern neighbors have about us "Yankees," to see our way of life, and let them learn at first hand the great progress we have made in the fields of industry, commerce and culture. We sincerely believe that there is no better way to lay the foundations for a permanent closer relationship among nations than to encourage this two-way travel, for we are optimistic enough to believe that in this case at least "to know each other better is to life each other better." It is certainly not within the scope ofour work to in anywise try to affect international political decisions, but we believe that in the long run it is public opinion which decides the spirit in which nations deal with each other officially, and if travel can bring closer ties of friendship between individuals we believe it will in the end create closer relations between countries. Moreover, the greater we can make the desire for this two-way travel the more we will encourage the teaching of Spanish, which should become obligatory in all North American high schools, and the teaching of English, which should be compulsory in all Latin-American schools.
Commerce Follows Same Trail as Culture and Education
We are convinced that such travel will greatly benefit our foreign trade because the more we interchange men and ideas, and the more we know about-the places and the people with whom we wish to do business, and the better we understand their traditions, practices and ideals, the safer will be the business transactions we shall have with them. Thus you can see that commerce in a sense can travel over the same trail as culture and education, and it is wise and advantageous to all that we should encourage a two-way traffic for all three.
Thus international trade will grow and prosper as our cultural and social relations get closer and as it becomes understood that the exchange of goods, like the exchange of knowledge, can benefit both sides, and that commerce can be the means of enriching the world and spreading good will among nations.
That in any event is the hope and aspiration of the founders of International House, and I am sure that every member of this audience will heartily endorse our objectives, which are to make permanent the hemisphere solidarity which has so laboriously been achieved by cultivating the closest possible relations with our neighbors on the basis of equality and mutual understanding, and thus make the world a better and more peaceful place in which to live for generations to come.
Nor will our efforts for cultivating good will and close cooperation be confined to the nations of the Western Hemisphere alone. On the contrary, it is planned to include in its scope of work similar relationships with the business people of all the friendly nations of the world to the end that International House will become symbolic of the American spirit of good will, friendship and cooperation, and that it will in time become a powerful influence towards eliminating international suspicions and fears and putting confidence and sympathetic understanding in their place. Its initial efforts are modest, but we believe that its prestige and usefulness will grow and that International House will become an integral part of the international relationships of the entire Mississippi Valley.
We in New Orleans have sown the seed. We look to you in the Mississippi Valley to help us cultivate the soil, so that the flower of international good will may spring from it and become a healthy perennial plant.
And the time for you to cultivate this fertile field is NOW—not in the post-war era.