Some Considerations of Foreign Economic Policy
EXPANDING WORLD ECONOMY DEPENDS ON BRITISH AND AMERICAN COOPERATION
By EDWARD RILEY, Vice President, General Motors Corporation
Delivered before the Forty-ninth Meeting of the National Association of Manufacturers, on The War and Reconversion Congress of American Industry, New York City, December 8, 1944
Vital Speeches of the Day, Vol. XI, pp. 211-213.
OUR subject this afternoon is, in all conscience, a timely one. The formulation of a positive, dynamic foreign economic policy is. an urgent need facing the United States today. We must have learned from our experience after the last World War that no nation, not even the United States, can muddle through the field of international affairs on a catch-as-catch-can basis. What we needed then and what we need today is a foreign economic policy realistically conceived and related to our national safety, security and welfare. The well-being of the world for the next generation or two will, to a large extent, depend upon the wisdom with which we here in the United States do formulate such policy.
What objectives do. we seek in our political and economic relations with the other nations of the world? What do we citizens of the United States want, and how much do we want? The answer to these questions must be clear in our minds before we can intelligently consider the policies by which we hope to achieve our ends. We must make up our minds as to what we want and how much we want it.
Our first American "want" is national safety and security. Of that I have no doubt. The people of this country would, I believe place this "want" at the top of the list. I suggest that our second American "want" is opportunity for the individual—an opportunity for him to work in peace and security and to earn a good living; an opportunity to develop his own well-being and to find the maximum of his own security through his own endeavor; an opportunity to again find satisfaction in the old-fashioned concept that "what I work for and save is mine."
These American goals are, of course, shared in varying degree by people everywhere. Our own American safety and security and our own American opportunity for the individual can best be achieved through policies which will serve our own enlightened interest in the United States and which will also serve the interests of the world of which we are a part.
We did not have such policies in the period between the wars. We followed a hit-or-miss course, the consequences of which are well-known to us all. We deliberately expanded our exports and at the same time deliberately restricted our imports. We failed to recognize that our exports were in reality nothing but deferred imports. The results reacted disastrously upon our own internal economy and upon the economies of the other nations of the world.
It seems to me that this experience must have demonstrated that we cannot isolate ourselves from the rest of the world. We are a part of the world in which we live, and our own economy and the economies of other nations are interlocked and interdependent. After this war we must resolutely face the need for intelligent, constructive American participation in world affairs. This need demands the formulation now of a realistic, coherent foreign economic policy, centered in one department of our Government for coordinate control and administration, and having the support not only of the business interests of the natron, but of agriculture and labor as well. It is essential, if this policy is to have maximum effectiveness m serving the welfare of us all, that it be defined and adopted with the active cooperation and assistance of industry, labor and agriculture.
As businessmen, it is our responsibility to reach agreement among ourselves as to the need for pursuing such a course and to offer our advice and counsel based upon such agreement.
Because of the close and interdependent relationship between our foreign policy and our foreign economic policy in the United States, it is impossible to think of one except as related to the other. Foreign policy is largely concerned with questions of international politics. Foreign economic policy is largely concerned with questions of international trade. The two cannot be unscrambled.
We have discovered by now that whether we like it or not, our safety and security here in America is inextricably bound up with the safety and the security of the other nations of the world. Our foreign policy today is based on this conception, and we are already committed to a course of international cooperation as distinct from a course of national isolationism. We have recognized that this is in our own enlightened self-interest. If, however, we are to be successful in pursuing this policy, we must aggressively seek to establish a realistic basis for international cooperation, not only in the political sphere but in the economic sphere as well. We cannot hope to find a basis for world cooperation politically, if at the same time we adopt a foreign economic policy which denies, by its narrow nationalistic concepts, the broader purposes we have in view. Nor can we risk temporizing with the situation by delay in reconciling these political and economic objectives—the world has moved so fast, in its annihilation of time and space, that we shall not have the leisure to pause and flounder, as we did after the last war, without courting a new disaster that would come this time with terrible swiftness and finality.
This, then, is why the need exists so urgently for the adoption here in America—and for the adoption by the peoples of Britain and Russia as well—of positive, dynamic foreign economic policies that will give substance to the common urge for international cooperation. This urge exists in the hearts of the people of all the United Nations. In the final analysis; however, such cooperation can be realized only by effective foreign economic policies which have broad popular support among all elements of the population of each land. It is most unfortunate, therefore, that here in the United States and in Great Britain the basis for such support does not exist today. There are wide differences of opinion, in the minds of the public and in the minds of businessmen in both countries, as to certain essential factors related to the formulation of desirable foreign economic policy.
The difference here in the United States is between those, on the one hand, who are willing to face the eventual import implications of our position as a creditor nation committed to underwriting a greatly increased volume of postwar exports of both goods and capital; and on the other hand, those who are unwilling to face these implications.
There can be no difference of opinion as to the need for such exports. They will be called for not only in the normal course of our commercial trade, but also as emergency measures for relief and rehabilitation. They will be required for reconstruction and development, and for the restoration of productivity in many foreign lands. They will be essential to the development of a sound and enduring basis for international peace and stability upon which our own national security depends.
So long as these exports continue at the high level in prospect, their favorable effect in the form of employment and profits here in the United States will be considerable. But such exports will not for long be tolerated by our own people here unless a reasonable prospect is seen to exist for receiving payment for them. Such payment can be made only if we are willing to accept imports in the form of goods and services which our own people can consume and enjoy, Unless we do accept such imports, our exports will represent a giving-away of our own substance to the peoples of other lands—and the American people will not be long in recognizing them as such.
This difference, between those who do face the realities of our creditor-nation position and those who do not, must be reconciled if we are to find united support for policies which will enable us to take our essential place in the world economy, and thus implement our own national security and safety. Unless we do face the implications involved, we shall be courting the eventual danger of a widespread revulsion against our participation in the world economy, and a retreat into economic isolation which might easily destroy the very basis for the international political security we are seeking.
Obviously, the tariff structure that comes to prevail after the war will be an important consideration in the problem of our imports, but it is not by any means the only consideration. Regardless of tariffs, our imports will increase as the level of business activity increases. There will also be a high volume of imports in the form of American tourist travel abroad, and other indirect services. Then, too, we may look to an increase in imports through the stock-piling of certain critical raw materials and by more intelligently serving our national need for better conservation of our natural resources. The experiences of the war have brought home to us the need for guarding this real national wealth, and for the first time in our history we are recognizing that these resources are not inexhaustible. Whether or not our tariffs are lowered to still further stimulate an increase in our imports, the simple fact remains that imports must be increased and our historic trade balances reversed, if we are not to find the whole structure falling down on our heads as it did as a result of the amateurish policies we pursued after the last war.
In Great Britain, the difference of opinion regarding desirable British foreign economic policy is between those who, on the one hand, favor an expansive world economy, and who feel that they can successfully compete in world markets on the basis of efficient, low-cost quality production; and those who, on the other hand, favor the restrictive course of preferential trading with less efficient, higher cost, cartel-protected production.
It is important to us here in this country how this difference of opinion in Britain is finally resolved. If the advocates of restriction have their way, the prospects for an expanding world economy could be seriously impaired. But we must not forget that the British advocates of restriction, and of bilateral and preferential trading, find their greatest strength in their well-founded doubts as to our willingness here in the United States to accept the import trade balance which our position as an important creditor nation demands. Our prospect of getting the United Kingdom to go along with us on the course of an expanding world economy is largely dependent on our giving the British some specific evidence of our willingness to appreciably increase our imports.
Unless the differences of opinion that exist both here and in Britain are healed, the outlook for the development of positive, dynamic foreign economic policies in both countries will be far from encouraging, and the chances for the maintenance of a world economic system on which international peace and security can be firmly built will be measurablydecreased. The consequent threat of less freedom of opportunity for the individual, and the weakening of the concept of a private enterprise economy, is the more alarming when we consider that the United States and Great Britain may prove to be the last outposts of these concepts in the troubled post-war world.
The first crying need here and in Britain, when the war is over, will be the need for a high level of employment, and this will require, for its attainment, the full expansive forces of a high level of domestic and international trade. Increased employment can result only from increased production, increased trade and increased consumption. Any barriers that stand in the way of these goals will cause a lower level of employment, and this in turn will have social and political consequences which it would be well to recognize now. It is not too much to say, therefore, that political and economic freedom in Britain and in the United States depend critically upon the British adopting an expansionist, free-enterprising economy, and upon the United States recognizing that our creditor status demands an early reversal of our traditional trade balance position. If either nation fails to do what is so clearly indicated, the security and freedoms of both will surely be jeopardized.
As far as we are concerned in this country, and as representatives here today of American business interests, we should, I believe, reconcile the differences that exist within our own ranks, so as to present a united front in support of a positive, dynamic foreign trade policy which gives recognition to the economic realities. We should face up courageously and realistically—and regardless of individual attitudes on the tariff question as such—to the critical need for an excess of imports over exports.
If we do recognize this fundamental economic reality, the first step will have been taken toward cooperation and collaboration with government, which is our topic for discussion here today. Whatever ways and means may be developed for further cooperation with government—and I do not intend to discuss here the details of such ways and means—there is nevertheless a further prerequisite to effective cooperation and collaboration. This is the achievement of mutual trust and confidence on the part of government and business. Such mutual confidence cannot be won without the display of understanding and good-will on both sides. Businessmen, for their part, must realize that their own interests, for the longer term, can be served only by serving the interests of the country as a whole. The representatives of government, for their part, must act in a spirit of justice for all, and without prejudice to any class or segment of the economy. The responsibility rests heavily upon government, in its relations with business, to designate as its representatives men who really want the advice and experience of the business world. All too often, representatives of business have had to carry on their dealings with those within government who have appeared to be rather too preoccupied with the furtherance of some social bias or ism.
The primary function of government is to lay down a framework of law and order, to provide protection and security for the interests of all, and to foster economic abundance. This function, as it relates to the formulation of foreign economic policy, must be discharged first of all with a view to supporting and giving effect to our foreign policy with which it is so closely interwoven. From the standpoint of our domestic economy, it must be focused upon the need for bringing benefit to the consumer, upon whose welfare the welfare of industry, labor and agriculture alike depends. Such interests of government will have wholehearted and sympathetic support from all of us in business who believe in international cooperation and who hold the interests of the consumer to be paramount.
Now is the time for government and business to collaborate in the formulation of a foreign economic policy, realistically conceived in the enlightened self-interest of all the American people.