THE MOST FAVORED NATION POLICY Some criticize Mr. Hull's definition of "most favored nation." His liberality in this definition is in line with Mr. Hull's belief that general prosperity is being retarded not only by tariff barriers between us and other countries but by barriers between all countries. I am told that Mr. Hull is following the interpretation of most favored nation firet made by Charles Evans Hughes, a Republican, when Secretary of State. This part of the program is one on which there can be honest differences of opinion. As a practical matter, our liberal definition of "most favored nations" seems to have done more to make our negotiators timid in making tariff concessions than it has to break down our tariff walls. When you reduce a duty from 45% ad valorem to 42% ad valorem, as was done in some cases, you do not change the direction of the stream materially. Indeed, anyone with strong anti-high tariff views might criticize the Hull agreements as being the result of attacking tariff barriers with garden spades instead of power shovels. And, again, if Mr. Hull wished to pose as a protectionist he could rightly claim that the tariff duties actually collected in 1937 were twice as high as under the Hawley-Smoot rates in 1933. They were the largest in any year since 1930 and were the ninth largest for any year in the history of the nation. I gave you impressive figures near the start of this study indicating the tremendous gains which exports of finished manufactures have made since the dark days of 1932. Exports of finished manufactures increased from an average of 620 million dollars a year in 1932 and 1933 to an average of one billion, 568 million in 1937 and 1938. Or an increase of 150%. Up to September, 1939, exports of finished manufactures since the Hull policy began were three billion seven hundred million dollars more than they would have been at the 1932-33 rate. Near four billion dollars' worth more of American finished goods business than we would have bad under the 1932-1933 conditions. Mr. Hull would not of course, claim that his efforts alone accomplished all that huge gain. Other factors helped. THE 60 CENT DOLLAR Our revaluing the dollar in line with the old par of the pound sterling carried enormous influence on our own export trade. For when in 1931 and 1932 the $4.86 pound was worth only $3.50, and Dominion currencies in like proportion, the British Empire became a good market to buy in, but a poor one to sell in. Also a recovery in the volume of world trade had begun in 1933, a year before the Hull program got going, as follows: Indeed, it might be used as an argument for the Hull program to point out that while our manufacturing production rises and falls with the volume of world trade, our manufacturing production has increased 25.6% since 1934, while world trade has increased only 17.9%. Even more impressive is the fact that in a period in which the volume of world trade increased 17.9%, OUR EXPORTS INCREASED 40%. But you ain't heard nothing yet. Listen to this: in those same 5 years our exports of finished manufactures increased 70%. FOREIGN TRADE IN 1939 In the first 9 months of 1939 here is how our foreign trade compared with the same period of 1934: That doesn't look like bad bargaining. For every dollar of increased imports from trade agreement countries, we have increased our exports to them by $2.76. The policy has not maintained peace, as Mr. Hull had hoped. But that, as Kipling said, is another story. It has not brought our imports up so they equal our exports. We continue, creditor nation though we be, to sell more than we buy and thus to add to our inordinate, unprecedented and unhealthy share of the world's gold. Again, if Mr. Hull wished to pose as a protectionist, he could point out that in 1938 we had the greatest so-called "favorable" balance of trade, that is excess of exports over imports, since 1922. It was larger than in any year under the Fordney-McCumber tariff or the Hawley-Smoot tariff unmodified. But such an unwieldy excess cannot but make the judicious grieve since it further upsets world economy and adds to our abnormal imports of gold. Thus in 1938 our net imports of gold amounted to one billion 973 million dollars which was the highest figure up to that time in the history of the nation (1939 went higher as war clouds gathered). WHAT RECIPROCITY MEANS TO LABOR The American Federation of Labor, as such, has taken no position on the reciprocal trade program. But Mathew Woll, an important A. F. of L. leader, is considered the mainspring of "America's Wage Earners' Protective Conference" which opposes it and claims to be supported by between 700,000 and 800,000 of the Federation's 4,000,000 members. It seems surprising that organized labor in the industries so largely dependent on export have not shown more militant support of the program. Look at the figures of employment and try and find the logic of labor not supporting reciprocity: Note that unemployment reached its low and employment its high in 1937, the year imports were largest, and that both got worse in 1938, the year imports fell off one billion dollars. Also note that from 1933 to 1937 unemployment fell off 5,000,000 persons, employment increased 10,000,000. It would take some doing to find an argument in those figures for labor opposing the Hull program. On the other hand, I wonder if the American Federation of Labor has ever made a study of the amount of employment lost to American factory workers by the American branch factories opened in Canada, England, Germany, Australia, and Argentina after 1930, as a result of the increasing difficulty of exporting American goods to those markets because of tariffs and dollar exchange troubles. Now COMES THE SCANDAL Now for the scandal in the situation. No, it is not a scandal of corruption or malfeasance. No Teapot Dome. It is an intellectual scandal. The scandal of ignoring present-day facts in favor of methods no longer applicable. From 1929 to 1933 every nation in the world was building its tariff walls higher and higher. And the higher they built, the worse business got. Then under Mr. Hull we set them a different example. We asked them to reduce those walls, not much, but about back to the levels of the prosperous years. And we offered to match them. And as the walls were reduced business got better and better. Yet in this country Mr. Hull proves once more the ancient saying, that a prophet is not without honor save in his own land. Mr. Hull stands, to a degree, in the place of so many other originators of new practical ideas down through the ages. Galileo was nearly burned at the stake because he insisted that the earth revolved around the sun. Columbus was buffetted from pillar to post in trying to persuade people that the earth was not flat and that it was possible to sail westward to the east. In the face of what has happened since the trade agreement program was begun, the attack on it now is an intellectual scandal on a par with the refusal of the medical profession for 20 long years to listen to Dr. Carols Finlay of Havana who had discovered that yellow fever was carried by mosquitoes, naming the one variety out of 800 which was the culprit. THE BRITISH ARE STUBBORN TOO It is an intellectual scandal on a par with the failure of the British Admiralty to listen to the pleas of Lloyd George for three years to try the convoy system to protect merchant shipping from U boats during the World War. Great Britain very nearly lost the war through this stubbornness. Yet when the system which the admirals had violently opposed was finally tried out, of 16,657 vessels convoyed only 138 were lost. More vessels were lost to U-boats in the single month of April 1917, before the system was adopted, than in the 18 months after it was placed in operation. It is an intellectual scandal on a par with the opposition of the British postoffice authorities to Rowland Hill's plan for the "penny post," to take the place of the cumbersome previous system for letters costing as high as 24 cents each to deliver. Post office authorities could not believe but that a system of low postage rates, the same rate for the entire United Kingdom, would do anything but bankrupt the post office. It is an intellectual scandal on a par with the failure of manufacturers to realize the importance of the work of Charles Goodyear. He produced hard rubber two years before a single person would believe him. And when his son worked out a clear plan for a complete machine-made shoe, leading shoe manufacturers looked upon his idea as a mere chimera. It is an intellectual scandal on a par with the indifference shown the Wright Brothers. At their first successful powered flight in spite of a general invitation to the public, only five persons showed up. It was four years later, and only after the Wrights had made successful deals with the British and French governments, that our own War Department would give them a hearing. Yes, and it's a political scandal, too. A political scandal in that after six years of such a successful demonstration of the policy's effectiveness in helping to restore trade, following the ghastly experience of 1931, 1932, and 1933, so many, in Congress and out, refuse to pay the slightest attention to the lessons of these past 10 years and would once more revert to the logrolling system of tariff adjustments, and in the face of world conditions as they are and are likely to be for some time to come, would once more hang the millstone of the Hawley-Smoot tariff around our necks. Note the following tables as to exports and imports in certain specific industries. Some significant comparisons Note that in the case of iron and steel semimanufactures, exports exceed imports by 43 to 1; steel mill products by 5 to 1; iron and steel advanced manufactures by 16 to 1, and tools by 15 to 1. Also electrical machinery and apparatus by 50 to 1; pigments, paints, and varnishes by 14 to 1; rubber manufactures by 30 to 1; petroleum and products by 9 to 1. How U. S. imports in certain industries compare Leather manufactures. Cotton manufactures. Glass and glass products. Iron and steel semimanufactures. Steel-mill products, manufactures. Iron and steel advanced manufactures. Tools Electrical machinery and apparatus.. Agricultural machinery and implements. Pigments, paints, and varnishes. Toys, athletic and sporting goods. U. S. Exports and imports (Underwood) 1922 (Payne-Aldrich) 1932 (Hawley-Smoot) 1933 (Hawley-Smoot). 1934 (“Hull" modification) 1935 ("Hull" modification). 1935 (Hull" modification) 1937 (“Hull" modification). 1938 (“Hull” modification). 1939 ("Hull" modification). In closing I want to quote these words from a great friend of American industry: "We must not repose in fancied security that we can forever sell everything and buy little or nothing . . . Reciprocity treaties are in harmony with the spirit of the times." These are not the words of any free trader. They are the words of a strong protectionist. They are words spoken by William McKinley in the last public address he ever made. The CHAIRMAN. In addition, the committee has received a number of briefs, statements, letters, and so forth, from various organizations and associations, some favoring the extension of this program; others opposing the program. These briefs and statements are submitted in lieu of personal appearances. Without objection, the clerk is |