The Economic Nationalists

Indiana's Senator Homer Capehart, presiding over a 122-man business advisory committee meeting on foreign-trade policy in Washington last week, nodded toward the heavy eyebrows and invited John L. Lewis to say a few words. John L. rose, surveyed the businessmen surrounding him, and talked for 30 minutes without pause. When he sat down, his audience gave him the heaviest applause of the afternoon. Reason: without ever mentioning the horrid word "tariff," Lewis had managed to roll together all the old demagogic arguments against free trade and give them a fine, patriotic ring.

"I do not quite agree," he rumbled, "with the theory that the only way to increase our export of goods is to increase [foreign manufacturers'] opportunity to have their goods admitted into the U.S. I think every shipload of consumers' goods that comes to these shores from Germany, Japan, India, Italy or elsewhere is going to lay idle a corresponding number of American workmen and affect American business in the same ratio . . .

"Every country that has been rehabilitated--Japan with its 80-odd million, India, the Mediterranean, the Baltic, European countries--is increasing its production with facilities acquired by the help of our Government. What is going to become of those goods? [Those countries could not absorb their increased production], so they are going to sell in the world markets at any price that will move those goods . . . That means that American goods will be frozen out of those markets, just as they are being frozen out in South America."

Lewis warned that U.S. foreign trade was falling off "substantially in the consumers' goods but perceptibly in the capital-goods industry." He brought forth a strange trade-policy recommendation for the world's leading economic power barter. "I don't think that Brazil has a right to take that $70 million which we give for coffee annually . . . without an agreement to spend an equivalent amount here. I think we have to modernize some of our trade relationships ... I don't know that we are going to be able to secure, at the best, an outlet for any more of our goods than we buy elsewhere in volume, unless we revert to some basis of exchange in kind ..."

A Tear for Taxes. Lewis saved his coldest fury for his warmest subject, coal. "The coal industry," said he, "should be exporting 50 million tons of coal this year instead of a fraction of that amount. It would make the difference between reasonable employment and subnormal employment . . . We give Italy and France and Yugoslavia and the Low Countries money. They take that money and buy Czechoslovakian coal . . . Now there is no reason why [Japan] shouldn't get [coal] from the U.S. except that we don't have the aptitude to furnish the coal, so we give her money and she buys Manchurian coal from the Russians. Our mines are idle, our railroads don't haul the coal, our businessmen in the mining communities don't have the trade, and the Treasury Department doesn't have the taxes ..."

In talking coal, Lewis exposed a weak point in a major argument advanced by all economic nationalists. U.S. coal never had much of an export market. Coal has been an increasingly sick industry--in part because Lewis' continued demands for wages and pension funds have priced it out of the U.S. market; consumers have turned to oil and gas for cheaper fuel. The sickness was happily concealed immediately after World War II because both European and Asian coal mines were out of commission, and the U.S. exported shipload after shipload of coal to fill the gap. Now foreign mines are going again, and no amount of barter could induce foreign purchasers to pay the price for, and the freight on, U.S. coal. And no greater damage could be inflicted on a shaky, free world economy than to saddle nations with high-priced U.S. coal. (It costs about $20 a ton in Japan.)

A Thought for Congressmen. Does this mean that coal, and many another U.S. product which has no natural export market, is to be shut out of benefits of an expanded foreign trade? Not at all. The trade-not-aid program assumes (correctly) the existence of a wide and intense demand for certain products, e.g.. automobiles and refrigerators, which the U.S. can make at a price attractive in free world markets. If the U.S. lowers its trade barriers, and imports those products which other nations make better and cheaper, then foreign buyers will have enough dollars to satisfy their demand for U.S. products. Coal's stake in all this lies not in forcing uneconomical coal on foreigners, but in feeding the prosperous steel mills which furnish steel for a prosperous, heavy-exporting industry.

Lewis' sort of talk is bound to be heard more frequently as the debate over trade gets hotter. It is the kind of talk which has a particular appeal to Congressmen who think, erroneously, that their districts have no stake in the export market. Already the economic nationalists have slowed the Administration's campaign to get freer trade. If the campaign is to succeed, the Administration must speak its answer to Lewis and his fellow economic nationalists clearly and often.

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