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Press Releases. vol. XIX. p. 299
Address Delivered by the
Secretary of State at New York, November 1, 1938
As the world relaxes from the tension of last
September when the peace of one of its most important regions hung in perilous
balance, many observers in this country not unnaturally raise the following
question: Has the swift succession of events so altered the world situation
that some of the basic policies we have so far pursued have become no longer
applicable and need to be discarded or revised in the light of new
developments?
This question frequently relates to the
outlook for the future of our trade-agreements program and the general prospect
of world developments in the field of international commerce. The problem thus
presented is of crucial importance for the economic well-being of our country,
for our broad national welfare, and for the promotion of peace, which is the
primary objective of our foreign policy.
For upwards of 4 years, our country has been
carrying out a vigorous and comprehensive program of policy and action in the
sphere of international economic relations. The central aim of this program has
been the restoration and expansion of healthy and mutually beneficial trade
among nations.
[39] Not printed.
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We embarked upon this program at a time when
our country and the whole world were in the grip of a profound economic
dislocation. The situation which we faced at the low point of the depression
required a combined program of domestic and international action. To combat
unemployment, to create conditions of security and well-being for our farmers,
workmen, and businessmen, to enable the entire Nation to replace a vista of
despair with a prospect of economic and social advancement, it was necessary to
restore solvency and stability in our financial structure, to introduce
essential reforms in our economic and social organization, to rehabilitate the
processes of production and trade, and thus to rebuild the Nation's income.
Domestic measures, however necessary and far reaching, would not have alone
sufficed to accomplish these vital purposes. They had to be supplemented by a
determined effort to repair the shaken and all but shattered structure of
international economic relations.
It was clear that the disruption of
international commerce had been as much responsible as any other single factor
for the advent and the intensity of the great depression. In the course of
generations, national economies had become geared to a growing volume of
interchange of commodities across national frontiers. Without expending
international trade, the steady rise of living standards—that outstanding
characteristic of economic and social progress—would have been impossible. The
sharp decline of international commerce, which accompanied the depression, was
bound to produce a profound impairment of economic organization and activity
within nations and to depress living standards everywhere. There could be no
prospect of full and stable recovery, to be followed by sustained prosperity,
unless mutually beneficial commerce among nations could be restored to its
great role as an indispensable instrument for the promotion of economic welfare
within nations.
The trade-agreements program was the
principal means which we adopted for attaining this objective. The program was
directed toward overcoming the two factors which had been primarily responsible
for the collapse of world commerce. The first of these was the trend toward
national economic self-sufficiency, toward so-called autarchy. The second was
the growing tendency on the part of nations to enter into narrow trade pacts,
based upon exclusive treatment for the parties to such arrangements and
consequent discrimination against all other nations. Both of these trends
produced effects disastrous not only to world trade, but also to the domestic
economies of all nations.
The trend toward economic self-sufficiency
involved efforts to de-
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velop, behind unscalable walls of exaggerated protectionism, the
production of natural or synthetic substitutes to replace imports from other
regions of the world—no matter at what sacrifices of quality or cost to the
consumers. The discriminatory basis of trade served inevitably to divert the
currents of commerce from the channels of natural advantage, and thus to cause
an irresistible contraction of the total volume of world trade.
By placing upon our statute books the Trade
Agreements Act of 1934 and by inaugurating reciprocal trade-agreements
negotiations, we announced to the world our willingness to reverse the policy
of raising ever higher barriers to trade, which had been pursued by this
country for some years with disastrous results. But our offer to reduce, in
favor of foreign countries, the excessive barriers to trade represented by some
of our tariff rates was made contingent upon the willingness of other countries
to reduce in our favor their tariffs and other trade barriers.
In announcing our trade-agreements program,
we also proclaimed our determination to continue our firm adherence to the
practice of equal treatment, embodied in the unconditional most-favored-nation
principle. But here again we announced that we were willing to negotiate
reciprocal trade agreements only with such countries as were willing, in turn,
to extend to us this type of treatment under the guarantee of that principle.
It was in this reciprocal and eminently
equitable manner that we sought to make our attack upon the ruinous practices
of exaggerated protectionism and discriminatory treatment and against the
dangerous drift toward national economic isolation.
Our decision to make the rule of equal
treatment—that is to say, the unconditional most-favored-nation principle in
its broad application—the cornerstone of our program was dictated, first of
all, by an immediate and practical consideration: in the absence of guarantees
of nondiscriminatory treatment, our export trade cannot escape being constantly
exposed to unpredictable dangers. But our decision was also dictated by the
conviction, derived from the study of universal experience in the field of
international commercial relations, that trade among nations can develop and
prosper only as all nations can be assured fair dealing and equality of
commercial treatment.
Apart from the purely economic aspects of the
trade-agreements program, there is another and even more profound reason for
the emphasis which we have been placing upon the need for restoring
international commerce upon a sound and healthy basis. Many of
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our citizens must wonder why, being concerned with the conduct of our
country's foreign relations, it is necessary for me to devote so much of my
time, thought, and effort to economic problems and to questions of foreign
trade. It is because I know that without economic security and well-being there
can be no social or political stability in national life, and that without
economic, social, and political stability and security within nations there can
be no peaceful and orderly relations among nations. It is because I know that
without expansion of international trade, based upon fair dealing and equal
treatment for all, there can be no stability and security either within or
among nations. It is because I know that the withdrawal by a nation from
orderly trade relations with the rest of the world inevitably leads to
regimentation of all phases of national life, to the suppression of human
rights, and all too frequently to preparations for war and a provocative
attitude toward other nations.
Two opposing tendencies continue to influence
the course of international economic relations. One is the effort which we and
many other countries are making toward placing such relations upon a sound and
constructive basis and thus enabling trade to make its fullest possible
contribution to the economic well-being, stability, and peace of all countries.
The other is the continuation of policies under which trade—and, therefore,
economic welfare—are being sacrificed to such other objectives as vast
armaments and the supremacy of force.
In the presence of a persistent operation of
this second tendency, it is not difficult to fall prey to despair. It is not
difficult to come to the plausible but erroneous belief that, as a result of
this tendency, the course of world development must be toward maximum
self-sufficiency for each and every country; that trade among nations is doomed
to extinction or at best to a precarious existence subject to the arbitrary
whim of control authorities; that the principles upon which we have founded our
commercial policy have been rendered antiquated and ill-adapted by the apparent
implications of the developments which are occurring elsewhere in the world;
and that, therefore, no other course of action is open to us than to fall back
upon a system of ever-increasing economic isolation.
As I see the world picture, there is no
justification in fact for such counsel of despair. The world is at a crossroads. But its
power of choice is not lost.
One of the roads that wind into the future is
that of increased reliance upon armed force as an instrument of national
policy. So long as the construction of armaments for such a purpose continues
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to be the center of national effort in some countries, a policy of arming
inescapably becomes a universal evil. Other nations find themselves compelled
to divert to preparation for self-defense an increasing part of their substance
and effort. All this requires—in varying degrees, but in all countries
alike—ever greater sacrifice of what mankind universally has regarded as the
central objective of civilization and progress—namely, a rising level of
national welfare and of the well-being of the individual. All this
imposes—again in varying degrees, but in all countries alike—a growth of
autarchy, an ever more complete regimentation of national life, an impairment
of personal liberty, a lowering of every standard of material, cultural, and
spiritual existence. If the nations continue along this road, increasingly
strewn with the wreckage of civilized man's most precious possessions, they
will be marching toward the final catastrophe of a new world war, the horror
and destructiveness of which pass human imagination.
The other of the two roads is that of
ever-increasing reliance upon peaceful processes and upon the rule of law and
order in the conduct of relations among individuals and among nations. As such
reliance becomes more effective, the vast productive forces with which nature,
science, and technical skill have endowed mankind, can become released, in
greater and greater measure, for the advancement of the human race. As trust in
the pledged word and order under law replace the doctrine of armed force and
the practice of lawlessness, the human mind can turn once more to the arts of
peace, and the human soul can soar once more to ever greater achievements of
the spirit.
We in this country are fortunate beyond
measure in that we are less immediately affected than are most other nations by
the tensions which prevail in other parts of the world. Yet even for us there
will be no escape from a dismal outlook if unhappily the rest of the world
should choose the road that must lead to another major armed conflict.
Things being as they are, it is undoubtedly
our duty to ourselves to render adequate the armed forces needed for our own
security and defense. But it is equally our duty to ourselves not to relax by
one whit our efforts to exert our maximum influence toward helping mankind to
choose the road of peace and justice rather than the road of war.
In no field is effort toward accomplishing
this crucial purpose morn essential than in that of restoring economic
strength, political stability, and social security within nations through a
promotion of
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healthy economic relations among nations. The task is neither easy nor
simple. Political antagonisms, national ambitions, the vast armament programs,
and many other phases of narrow nationalism present powerful obstacles. But all
these obstacles, enormous as they are, will be more readily overcome if there
is constantly kept alive the concept of a future for mankind happier than that
of an inexorable drift toward economic impoverishment and a military explosion,
and if tireless efforts are made to bring about the realization of such a
future.
It is my considered judgment that nothing
that has occurred in recent years or in recent weeks has served to discredit in
any way the principles on the basis of which we are seeking to bring about a
restoration of sound economic conditions as a necessary foundation of durable
peace. Nothing that has occurred has impaired my profound belief that these principles
will sooner or later become firmly established as the foundation of
international commercial relations. The world's need for the translation of
these principles, as well as of all other basic principles of peaceful
relations among nations, into practical realities is more urgent and more
pressing today than it has ever been.
Nor is the present outlook in this respect
devoid of hope. In spite of plausible indications and pseudo-logical inferences
to the contrary, the drift toward complete national self-sufficiency is far
from making ready headway in the world as a whole. While excessive barriers to
trade continue to weigh heavily upon international commerce, the major part of
world trade is still carried on by countries which are not attempting to be
self-contained regardless of cost.
Only a few countries proclaim the attainment
of autarchy as their avowed purpose. But these very countries are, at the same
time, making desperate efforts to enlarge the volume of their foreign
commerce—not only within the limited areas actually or potentially under their
immediate influence, but with other parts of the world as well. The striking
paradox of the present situation is that in their attempts to find foreign
markets and sources of materials indispensable to their national existence,
such countries employ methods of forced and artificial stimulation, which
inescapably prevent trade from making its full contribution even to their own
well-being and economic stability.
As experience accumulates, it becomes increasingly
clear that trade methods of this type steadily exhaust the countries which
practice them and arouse ever more intense resistance and retaliation on the
part of other countries. Whether employed in conjunction with
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openly proclaimed programs of national or group autarchy or in the
absence of avowed desire for self-containment, such methods of trade inevitably
defeat themselves. They are, in a full sense, the instruments of destructive
economic warfare, adopted by nations in the mistaken belief that. they are
capable of enhancing national security and strength.
Autarchy and other forms of economic armament
create but an illusion of strength and security. They uproot far more than they
build. They discourage rather than generate enterprise. By placing passable
barriers to the world flow of material and financial resources, by tending to
split up the world into abnormally limited areas of trade relations, they
undermine confidence and stability. They make all nations progressively weaker.
The very difficulties which constantly
multiply in the application of such policies and methods create powerful
pressures in the direction of their abandonment. No nation can prosper or
maintain other than a visibly falling standard of living for its population
when the world is broken up into air-tight economic compartments.
The program which we advocate offers the only
practicable alterative to a drift toward the anarchy of economic warfare, with
all its disastrous consequences for the peace and progress of man. Its
workability has been demonstrated beyond a shadow of doubt. It can be embraced
by all nations alike, without exception, and to the benefit of each and all.
Not by compromising with any of our basic
principles, not by joining a retreat to self-imposed poverty of economic
isolation, not by attempting to employ the destructive practices of forced
trade, can we make our contribution toward rendering brighter and more hopeful
the outlook for ourselves and for the world.
Our own best interests and the concern which
all of us must feel for the future of the human race imperatively require that,
far from abandoning our trade-agreements program, we put redoubled vigor into
our efforts to enlarge its scope and its effectiveness. We should not relax, we
should intensify our endeavors to influence all nations, by example and by
every appropriate means of persuasion open to us, to return to the tested basis
of healthy and sound trade, of monetary stability, of financial order and
probity—in brief, to that type of international economic relationships which
have been incontrovertibly shown by experience to be the only possible
foundation of peace, progress, and well-being among mankind.
No nation and no individual can escape a
share of responsibility for the fashioning of mankind's choice as to the road
which the
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world will follow. There is nothing more desperately needed today in all
countries than clear thinking and a profound sense of national and individual
concern for the course of future developments.