Freer Trade or Far-Reaching Controls?


By JOSEPH S. DAVIS, Ph.D., Director, Food Research Institute, Stanford University, Stanford University, Cal.

Delivered at the 25th Annual Meeting of the Canadian Weekly Newspapers Association, Winnipeg, Can., August 17, 1944

Vital Speeches of the Day, Vol. XI, pp. 84-89.

MY last visit to Winnipeg, on the invitation of Premier Bracken, was nine months before Pearl Harbor. Then our countries were friends across the border, but not allies. The United States was already deeply involved in the war, but far from being in it with both feet. Painfully aware of this dangerous fact, I shocked some of you then by stating my academic view that the very outcome of the war must be considered in doubt. None of my Winnipeg audience displayed anything but sublime faith in Allied victory, remote as that was then. If this faith struck me as somewhat blind, it has proved supremely justified. Magnificent efforts, though short of anything approaching exhaustion of our vast resources of manpower, land, equipment, and "know-how," and splendid co-operation within and among the Allied nations, have at last brought victory in sight.

Now the urgent question is: What shall we do with the victory almost won? I shall not attempt to answer this question in all of its many phases, but it underlies all that I venture to say.

I will not presume to discuss Canadian questions, though I may spill over in spite of myself. I shall chiefly discuss United States conditions and policies that are relevant to your own conditions and prospects. You are in a favorable position to profit by our experience, avoiding our mistakes, which have been many and serious, and benefiting from our constructive examples. I earnestly hope that you will do so.

It is not generally realized how dangerous our prewar and wartime agricultural policies are for the period not far ahead. We have politically engineered a farm prosperity boom of extraordinary magnitude. I see not the slightest possibility of avoiding a radical deflation of this boom. Youdo well to be forewarned of this, to protect yourselves as best you can against its impact, and to guard against making it worse for yourselves.

I do express the hope that, in domestic policy and in international negotiations, Canada's weight will increasingly be thrown into the scales in favor of freer trade—domestic and foreign—not only because this is fundamentally important to Canadian interests, but also because you may thus influence our wavering policies in the direction of what is really our own long-run interest as well as the world's.


What part have governments to play in our postwar world? Two possibilities that I touched upon three and a half years ago hinged on complete or partial German victory. These I need not consider now. Also, I will not discuss the extremes of complete socialization and complete laissez faire, neither of which has ever been tried in the Western world. Two principal choices remain: (1) Will the world economy after the war-peace transition be "one in which government controls, intergovernmental arrangements, and ultimately economic and military power" are all-pervading if not "almost all-embracing," one in which governmental agencies buy and sell staple agricultural products and strictly regiment farm production? (2) Or will it be one in which the maximum reliance is placed on private enterprise, regulated only to the extent of insuring fair play, and supplemented by private and public measures designed to temper the swings of fortune that cursed our pre-war economy and to break the vicious circle of "poverty breeding poverty"? In brief, are we—in the United States, Canada, and the rest of the world—going to plump for or slide into far-reaching government controls, domestic and international? Or are we going to make definite, practical progress toward freer trade, within and among nations, than we had in the 1930's?

I strongly favor the second alternative. In my judgment, we do not know how to run what are termed managed economies, national or world, and we are not likely to learn how within calculable time. The recent example of Soviet Russia, favorably striking by contrast with the Czarist regime, does not move me to think we could advantageously import the Russian form of statism into North America. As a close student of United States policy, especially toward agriculture, I have sadly observed its incredible distortions, through pressure groups and politics, until we are building up to an agricultural crisis that was inherently avoidable. I have hadtwo considerable stretches in the public service, and numerous other experiences with our federal government and 7 am repeatedly and profoundly impressed by the extremely unfavorable contrast between the government and private business. I suspect that you do much better here in Canada, but I doubt if you do enough better to make my comments wholly beside the point.

There is no golden age of the past to which we can go hack. Even the booming twenties, not to speak of the dismal thirties, were not a "normal" period to which we would return if we could, or could if we would. There were serious mistakes and abuses in the twenties that we ought to avoid in the coming postwar decade. But the drift of the thirties, toward increasingly complex and extensive government intervention in economic life, was inevitably towards totalitarianism and war. I can see no reason why a postwar continuation of that drift should be viewed as inevitable, and even less reason why it should be considered desirable. Experience during the present war, as in the previous one, shows that very extensive government controls are essential to winning a great war; but even here the enlistment of individual enterprise has been vital to success, and the blunders and restrictions accompanying government controls make most people eager for their discard as soon as peacetime conditions will permit.

For the postwar period we need to be far more discriminating in our reliance on governments than we have been in the past twelve years. I do believe that we must "raise our sights" and seek a "new liberal economy" better than any in the past. "By a new liberal economy, as I said when I was here last, I mean one in which emphasis is put on steadily raising the consumption levels and the planes of living of the various peoples of the world, in the forms they severally prefer, and in which the maximum freedom of choice, enterprise, trade, and communication is permitted consistent with this progress and world harmony."


What I shall say refers primarily to the peace economy that will follow the transition from war to peace, not to the transition itself. I share the general conviction of economists that smoothing the war-peace transition will require some continuation of wartime controls, of course with suitable modifications, for periods ranging from a few weeks to a few years, rather than their abrupt termination. But the policies appropriate to the transition period will depend heavily on the prospective policies beyond it. Decontrol, like control, must be planned and vigorously carried through if it is the course that is chosen.

Here let me quote a few pertinent excerpts from an address a month ago by Charles P. Taft, Director of the Office of Wartime Economic Affairs in our State Department:

"Our business, industrial, and commercial relations are in a thoroughly planned and tightly controlled economy, organized for total war."

"How do we get out of those controls and back to the kind of free world we all want? When the war ends we know that the cessation of shooting ends the horrible waste that goes into the maw of destruction. In the course of time ships will be free and most shortages will be replaced by surpluses. But the trade controls will not stop automatically—that takes intelligent and directed effort, an effort that is not only essential but whose failure may destroy all our hopes for peace and freedom. In fact, these controls are economic war-fare, and, in the end, as with Germany, they help to bring real war."

"Our first objective is to eliminate our trade controls as fast as they are no longer necessary for the prosecution ofthe war . . .

"So our second objective is to devise a system for prompt and friendly discussion, with the British especially, through which we can work out this basic transitional problem effectively and promptly."

"But one of the most important objectives must be for each country to study sympathetically the financial and commercial problem of the other in the light of its own longtime interests and to work out measures in each country which can form the basis for world trade among them and the basis for approaches to the other trading nations for similar measures."

So ends my quotation from Mr. Taft, whose words deserve weight.

On July 1, 1939, the International Chamber of Commerce asserted, in a resolution at its Tenth Biennial Congress in Copenhagen: "The world can now produce enough raw materials and manufactured goods to supply the people of all countries with the necessities and comforts of life."

These were bold, brave words. Many would then have questioned their literal truth. I still have reservations about the huge backward populations of the earth, especially in Asia. But we have all been amazed by the wartime productivity of agriculture, industries, and transportation systems, not only in the British Empire and the United States but in Continental Europe and Soviet Russia. If nature has been outstandingly generous, that has been only part of the success tale of the war years. Today few would question that the world's production potential far exceeds any peacetime levels yet achieved. If "freedom from want" the world over is still a difficult, distant goal, it is far less, of a dream than it was five years ago.

But to translate potentiality into actuality will take sound, vigorous moves. Here let me quote two excerpts from a recent report (June 1944) on World Trade and Employment by the Advisory Committee on Economics to the Committee on International Economic Policy:

"There is no possibility of utilizing this productive capacity which modern science has made available, or of meeting the basic human needs of consumers the world over, unless the channels of international trade are opened, and kept open. The alternative is a world of restricted trade, and closed, or partly closed economic regions, organized primarily for defense.

". . . Peace, as well as prosperity and economic enterprise, is bound up with trading opportunity."

Shall we again resort to restrictionist devices, and deliberately turn abundance into scarcity, on a larger scale than before the war? Or shall we do our utmost to have the world's productive powers amply utilized for the benefit of the world's people? Neither fork of the road ahead will be easy to follow, but the common sense of mankind clearly tells us which fork to choose.

Mutual-aid arrangements under various names have been a gratifying feature of international co-operation during the present war. Bilateral international contracts for the war period have been necessary and proper. Extended for years ahead (as apparently in the case of several recent agreements), however, they can easily prove dangerous obstacles to the increasingly freer international trade on which the sound evolution of the world economy depends. I recognize their appeal to British Dominions in relations with the mother country. So far as Britain is concerned, they seem to rest heavily on mistaken assumptions, fostered by the British Ministry of Agriculture, regarding the degree and duration of food scarcity after the war. In addition, they may reflect one current of British opinion that favors perpetuation of regulated international trade. This drift I believe extremely unfortunate, but I do not expect it to determine Britain's postwar policy. Her interest lies, as heretofore, in the freest possible international trade. Such contracts breed other bilateral arrangements. In a network of this character, freer trade cannot be expected to flourish. Do I need to elaborate?


Back in California, as you know, all conversations sooner or later get around to the climate. In Winnipeg it is equally natural to talk of wheat. So I must now.

At our Food Research Institute we subscribe to two Australian farm weeklies—The Land (Sydney) and The Primary Producer (Perth), respectively the organs of the farmers' organizations dominant in New South Wales and in Western Australia. Last Saturday an item in The Primary Producer of June 22, 1944, caught my eye. Mr. J. G. Ross, a Saskatchewan farmer leading a Canadian Parliamentary delegation visiting Australia, was interviewed by The Land. His "considered opinion" was summarized thus:

"All wheat producing countries are in for a very prosperous postwar period and wheat farmers will be able to sell all the wheat they can produce. The days of surpluses are over for many years to come."

He was specifically quoted as saying:

" 'As a farmer, I don't look for trouble for a long time. The United Nations will have to get together and provide the necessary finance to feed the countries of Europe as they are liberated. They will also have to be re-stocked with livestock.'

" 'In fact,' said Mr. Ross, 'the only bar to a certain market for all our wheat is the physical impossibility of transporting it. In my opinion the days of wheat surpluses in the world are gone for at least five years.'

"'We had wheat surpluses before the war and immediately after [it began] because of war conditions in Europe, but I don't fear that there will be any surplus for many years to come. And that goes for Australian wheat as well.' "

Newspaper reports of interviews often distort, as I have painfully learned. Perhaps Mr. Ross was misunderstood. But if the views attributed to him in Australia are at all

widely held here in Canada, let me say that our studies lend them no support.

The world has been fortunate in having huge wheat supplies in the chief exporting countries throughout World War II. From these, great quantities could be diverted to feed use, to industrial alcohol manufacture, and even to fuel use in Argentina. Extremely heavy disappearance in these exceptional channels during the past crop year gave rise to exaggerated fears of genuine scarcity if nature turned niggardly in 1944. Now, thanks to amazing crop developments in the past three months, North America is harvesting bumper crops ample to assure abundance of grain for all prospective uses that transport facilities permit to be filled.

Moreover, the degree of Europe's cereal deficit is commonly exaggerated. (So also, we believe, is the prospective duration of food shortage, in any sense but that of inadequacy to supply all wants.) Unless we are badly mistaken, even if German resistance crumbles tomorrow and financing interposes no obstacle, total wheat shipments to Great Britain, Continental Europe, and Soviet Russia in the year ahead will not exceed 600 million bushels. It will surprise us if world net exports in 1944-45 (exclusive of United States imports from Canada) reach 750 million bushels. This whole amount could, if necessary, be spared from the carryovers in North America, Argentina, and Australia, without drawing at all on the big new crops. The end of hostilities in Europe seems certain to find overseas wheat-exporting countries holding large surpluses. They are here now. Only their size is in question. Let us keep out of the fool's paradise of denying their existence, and address ourselves in time to the important question of how best to deal with them.

In the face of this situation, wheat is extremely overpriced in the United States. Current American quotations utterly fail to reflect the economic facts of the wheat position, domestic or international. They are political prices, not economic prices. They reflect the politics of wheat, backed by legislation and public funds. Within recent weeks the loan rate on wheat, farm basis, has been twice raised—from $1.23 to $1.35 per bushel; and the Commodity Credit Corporation is now buying wheat in a desperate effort to support market prices at levels around $1.50. With the present wheat situation, these are outrageous prices. With a carryover of over 300 million bushels and an all-time record crop, the wheat price "floor" is higher than the "ceiling" should be. Thisbodes ill for you as well as for us. Is Canada in danger of following our bad example?


In the United States we have not acted in fear of low prices. We have insisted on high and still higher farm prices, regardless of the urgent need for holding inflation in check. This is true of many commodities other than wheat—of cotton most notoriously. Support prices of crops competing for acreage have had to be set correspondingly high. Revisions of support prices have been generally upward. The price inflation extends to wool, of which we are heavy importers. Farmers' incomes have been inflated by these measures out of all proportion to the requirements of justice or incentives to maximum production. This year the so-called "incomparity" for agriculture is expected to be exceeded by 40-50 per cent. We have refused to take advantage of our miscalled "ever-normal granary" and abundant production to insure moderate prices to consumers. Instead, the Treasury has been spending scores of millions subsidizing flour production so as to keep inflated wheat prices from disturbing the flow of grain to mills and from raising flour and bread prices in the cost-of-living index. Other subsidies are being similarly employed in attempts to offset the disadvantages to consumers and processors.

The best way to insure price collapse is to boost prices to abnormal heights, whether by private speculation or by government action, and then to try to hold them there. Of this we had grim experience in 1929-31. The best way to perpetuate emergency conditions is to see that one emergency breeds another. We are doing just these things, under Congressional mandates enacted into law under the pressure of interest groups.

Our farmers have been extraordinarily prosperous during the present war—even more so than in World War I, when farm prices of wheat went far higher. I could cite striking figures, but I will refrain. In part, this prosperity has been due to extreme wartime demands for farm products, to weather that has favored exceptional yields, and to hard, efficient work by farmers amid harassing difficulties. No one begrudges the farmers such degree of prosperity. Over and above this, however, their prosperity has been inflated by successive measures dictated by Congress. Prices of farm products have been forced abnormally high by government loans, purchases, and other devices, regardless of the cost and risk to public funds; and government payments direct to farmers, on systems devised when farm income was distressingly low, have not been tapered off but are this year expected to exceed the previous peak of $807 millions in 1939. This part of the farmers' prosperity I do begrudge them. By these various moves, we have stimulated a farm real estate boom, and are heading toward a recession that can easily become a crisis, with disastrous results to us, to you, and to the whole international situation.

Current levels of farm prosperity are too abnormal to persist. I will not predict an agricultural depression like that of the early thirties. But even if the decline should be only to levels that would have spelled prosperity in the 1930's, it will seem shocking. If a man's income drops from $10,000 to $5,000, he feels it severely. A fall from the fourth story to the third hurts as much as a fall from the second story to the first.

The legislative guarantee of price supports at 90 per cent of parity (for cotton now 92 1/2 per cent) for two years after the end of hostilities is grossly excessive. Its execution threatens to entail heavy government purchases, disrupting normal movements of products and complicating international relations. Except for donations and lend-lease shipments, we have already priced ourselves out of the export market. Continuation of present policies points to perpetuation of this barrier to commercial export except by dumping procedures. Our own agricultural policies constitute the biggest single barrier to our agricultural exports. Will Canada follow suit?

It is conceivable, but I think improbable, that our postwar price guarantees will prevent price declines already overdue. If they do, for a time, the collapse will be the more drastic when it comes. More probably they will cushion the declines but not prevent them. Meanwhile, government supports will involve increasing government handling of commodities. This is not because government operation is deliberately embarked upon, as the most efficient procedure. It is a mere by-product of price supports, in the face of general recognition that government agencies (in our country at least) cannot be as efficient merchants as private traders.

The historian Macaulay quoted Madame Roland as saying in the French Revolution: "O Liberty! Liberty! how many crimes are committed in thy name!" I recall this familiar quotation often when I see how many fine, high-sounding words and phrases are misused to smooth the path of mistaken national policies. "Agricultural adjustment" that perpetuates maladjustments and creates new ones, "stabilization" that means anything else but, "ever-normal granaries" that remain ever abnormal, "parity prices" that are rankly unfair: such phrases are now a stench in the nostrils of those who know what they mean in practice. Yet they are tending to gain currency in such widely separated countries as Canada, Australia, and Brazil.

You may be startled by some of my words. You do not read or hear them oftener because most of those who understand the situation are not free to speak as I am, or have no good sounding board. My views are widely shared by American agricultural economists, though by no means all who hold them would state them with equal bluntness. A man high in our federal service recently urged me to arrange a program at the next annual meeting of the American Economic Association on "The Dangerous Drift of Agricultural Policy." We already have a committee at work on the subject "Agricultural Price Supports and Their Consequences." In all soberness, the dangers are real, and I think I do not exaggerate them.


What shall we do with surpluses such as those which face us? With reference to wheat, the answer is simple if not easy: Let them flow into use, into all sorts of uses, everywhere, at the prices they will fetch. Let the countries with the lowest-priced wheat, quality considered, have the first call on available export markets, unhampered by export quotas fixed on historical bases. Let all the .merchandising enterprise available ferret out buyers of particular lots of wheat. Let wheat move freely into the food stocks of countries with low purchasing power, and into the feed bins of countries with high purchasing power.

In my judgment, we have been on the wrong track in one vital respect, particularly in our country. We have focused our attention on prices of farm products, and tried to raise farm prices to levels politically declared fair, damning the economic consequences. This inevitably leads to government trading, which in our country is far less efficient than private trading; to drains on the federal treasury; and to international complications. In peacetime, the most effective way of disposing of surpluses is to let prices alone, stimulating flows into export and into multiple domestic uses. If price supportsare included at all in a peacetime program, they should be at distinctly low levels designed to safeguard against real disaster, not at levels either we or politicians may think fair or reasonable. In so far as public aid to farmers is extended to protect them against extreme distress, it should be in such forms as crop-yield insurance (perhaps eventually some form of price insurance), supervised credit, public services, and limited direct payments to those in need when they are in need.

Having mentioned crop insurance, let me say a few words about it. In the United States we have already made an expensive experiment with federal insurance on wheat and cotton yields. It did not work well, and is now in a state of semi-suspension; but it is likely to be revived and extended. If well managed, crop-yield insurance for wheat is feasible without unreasonable or costly government guarantees. In large wheat-producing nations where crop yields are highly variable, it is very much in the interest of growers—so much so, indeed, that I think it should be virtually compulsory for wheat acreage subject to extreme variations in yield. If the beneficiaries are given incentives to hold down losses and administrative costs, it can be put on what is essentially an actuarial basis, with premiums carrying the entire burden over a period of years. But it cannot be effectually managed by a government corporation whose part-time directors are changing bureaucrats without insurance or business experience, interwoven with bureaucracy at headquarters and in the field. It cannot succeed if the beneficiaries can successfully indulge their propensity to "gyp the government." A private or quasi-public corporation subject to governmental accounting but operating on a business basis, perhaps with subsidiary co-operative units, could do far better.


When I was here in March 1941, my opinion was asked on the promise of an international wheat agreement, designed as a surplus-control measure for postwar application. I had to express my lack of faith in the virtues of any such covenant made on the pattern usually discussed.

The much-touted wheat agreement of 1933 failed miserably within a year; and when it died, it was left unburied to avoid the publicity attendant upon a funeral. Other experience in the past decade has not, as we have been able to appraise it, been reassuring. The International Sugar Agreement of 1937, in the making of which so much energy was expended over a period of years, proved of only minor consequence;* and it was not declared formally in effect until shortly before its initial five-year term expired. The Inter-American Coffee Agreement of 1940 helpfully served certain Pan American purposes during the war, but did not work as planned. Its administrative body has yet showed no signs of coming effectually to grips with the world coffee problem. The near-monopolies established with governmental support, under the international tea, rubber, and tin agreements of the early thirties, were much more successful from the standpoints of tea, rubber, and tin producers. But the last two groups clearly exploited their monopolistic position and conspicuously failed in their objective of stabilizing prices at reasonable levels; and there are various reasons why the tea control, the best managed of the three, cannot serve as a model upon which to establish other international commodity controls.

The International Wheat Agreements of June 1942 were born after protracted labors in secret, without anything approaching adequate consultation of the parties at interest. They comprised chiefly an interim agreement and a draft of an elaborate control scheme. Those of you who read my detailed analysis of these, published in our Wheat Studies of November 1942, are aware of my mixture of commendation and condemnation.

The interim agreement seemed to me desirable, by and large. Especially I welcomed the establishment of an International Wheat Council, though I was far from satisfied with its membership and especially the United States representation. To date, it seems to me, the Council has done little toward justifying my hopes. I have seen no evidence that it expressed itself on, or even seriously considered, several pressing questions of international importance within its scope that have arisen during the past two crop years, or exerted appreciable influence in the direction of right decisions, whether the decisions actually made were right or wrong.

If press reports are trustworthy, the Council is now struggling to fix maximum and minimum export prices of wheat. In that crucial decision, if it is reached, British and Canadian representatives will doubtless have a powerful voice. It will afford the first real test (1) of ability to secure specific agreement and (2) of the reasonableness of the agreed price schedule. I cannot predict the outcome. Like many of you, I eagerly await it. But I must confess to pained dismay when I read the position taken on this point by the General President of the Primary Producers' Association of Western Australia (J. W. Diver) two months ago:

"Australia should join forces with Canada in taking the fullest possible advantage of the market value of our produce. Our growers have, during the depression years, had a blistering time, and their debtor position has become an undue burden. Now, when the wheel has turned, they should take full advantage of it."

It will be tragic for later decisions if the minimum price fixed should be capable of being labeled a "hold-up price" by the importing countries of continental Europe.

The draft convention for wheat designed for later adoption and use, seems to me unsuited either to the war-peace transition or to the subsequent period of peace. It is built on a pattern calling for continuous and far-reaching control. It aims at maintaining needlessly large stocks of wheat, concentrated in the exporting countries, but to prevent these stocks from exerting their natural tendency to keep prices down. It provides for an extraordinarily complex system of export quotas and price fixing in international trade, such as could hardly fail to restrict the normal flow of wheat. It would almost certainly compel extensive government holding and trading, and interventions to enforce regulations that would frequently be uneconomic. It contemplates production control such as no country has successfully achieved. Its operation rests on assumptions that wheat production, trade, and consumption are predictable. After years of outlook experience, we believe these assumptions quite unfounded* The radical recent change in crop prospects gives fresh evidence on this point.

My faith in the virtues of international wheat controls is smaller because our own government has shown itself incompetent and untrustworthy in this connection. The most influential of the remaining spokesmen for this type of agreements in our government regards them as means of reinforcing our glaringly excessive legislative commitments on prices of cotton, wheat, etc. I hope they will not be so regarded in Canada. Their principal value to competing exporting countries lies in the fact that the United States is apparently willing to accept a limited quota of exports and thus set limits to the extent of our export subsidization—a device which I regard as a serious form of unfair competition that should be outlawed. On paper, much is said about

protection of consumers' interests, but no clearly effective mode of protecting them is yet in evidence. In our own actual wheat and cotton policies, we have consistently flouted consumers' interests. Even when our stocks were mountain-high, we kept forcing prices up. My faith in such agreements is further weakened by the fact that organized American farmers during the war, like the rubber and tin producers before the war, have taken every advantage of their strength of position when the tide was running in their favor, in effect, profiteering at the public expense. Is Canada going to follow our bad example?

The notion that intergovernmental agreements will be free from several vices of international business agreements has no justification in experience. Both are vulnerable to internal breakdown. Both are liable to overreach in exploiting their monopolistic position. But the intergovernmental agreements are the more likely to create fresh obstacles to freer trade. Among the international agencies most urgently needed in the postwar period is a body or bodies that will supervise the operation of all such international controls, private or intergovernmental, to see that they do not violate the principles of freer trade to which so much devotion is rightly expressed.


Though I regard as undesirable international commodity agreements on the model of the 1942 Draft Convention for wheat, I see various fields for advantageous use of international commodity agreements of other sorts.

There is use for them in international regulation of the manufacture of and trade in dangerous habit-forming drugs, and of the exploitation of renewable marine resources such as whales, fur-seals, halibut, and other fisheries.

I see considerable promise in the British-American agreement on petroleum, signed only nine days ago, which is expected to pave the way for a "world oil accord" signed by many nations. A few months ago it looked as if unilateral action by the United States in regard to oil in the troublous Middle East might upset our cordial relations with Great Britain and "get us in Dutch" with other countries. Now it appears that substantial agreement on important principles has been reached between the two governments, and that machinery adequate to deal with troublesome recurrent issues will soon be set up.

How it will work perhaps no one can foretell; but it seems clearly designed to promote freer trade than to multiply restrictions. It is not inconceivable that, on some such model, an international wheat agreement may yet be drafted that the Canadian Wheat Pools, the Winnipeg Grain Exchange, and the Food Research Institute would concur in approving!


In conclusion, I wish to compliment you on the enterprise of the Premier of Manitoba and the Governor of Minnesota, and on the guidance of the Presidents of the Universities of Manitoba and Minnesota, in initiating and conducting the studies on The Mid-continent and the Peace. I can emphatically endorse their basic conclusions that "domestic economic measures have had (and will have) resoundingly important effects upon the external world." With certain reservations I concur in the recommendations that "firm and abiding arrangements should be made for a much larger postwar import, by the countries of western Europe, of Canada's barley and wheat and the wheat, pork, and lard of the United States." But I believe much has yet to be done before this and other constructive proposals can be implemented. Consistent efforts toward freer trade, domestic and international, will facilitate this enlargement of outlets for potentially large agricultural surpluses. Such efforts will be gravely handicapped if not thwarted by long-term bilateral contracts and price fixing under the guise of price supports.

For my own part, I have little fear that we shall deliberately choose, in our country or in yours, to replace private enterprise by far-reaching controls. The Roosevelt administration has gone much farther in this direction than any of its predecessors, but the latest Democratic platform contains this plank: "We reassert our faith in competitive private enterprise, free from control by monopolies, cartels, or any arbitrary private or public authority." Even in Great Britain, where some influential groups openly favor cartelization, socialization, and various other types of public enterprise and controls, I do not expect them to dominate postwar policies.*

If the issue is clearly drawn, I believe that public opinion will register decisive majorities in favor of freer trade as against far-reaching controls.

The danger that we most need to guard against is rather that we shall unwittingly drift into government controls that breed more controls. There is a strong current pulling in this direction. We need to sharpen our awareness of it, and take suitable steps while there is yet time.

* In view of the dire pessimism sometimes expressed, let me add that I neither desire nor expect either to gloat or to weep at the bier of Britain or her far-flung Empire. Peoples and governments that have displayed such courage, vigor, and resourcefulness in war will not buckle or collapse over the less difficult tasks of peace. If, as some assert, Great Britain will emerge from the war financially bankrupt, she will have become so in the best cause on earth, and she will not long remain in that condition.