Mr. Hull Calling London

FOR the last twelve months Secretary Hull has subjected the British Government to a pressure without equal in Anglo-American annals. The pressure has been intended to persuade the British to open formal negotiations for a trade agreement. It became so relentless in October that a Washington correspondent used the phrase ‘virtual ultimatum’ to describe Secretary Hull’s last message to London before going on his first vacation in three years.

Now the heat has begun to produce results. During October reciprocal protestations that nothing would give Cabinet Ministers greater satisfaction than a commercial treaty with the United States began to appear in House of Commons debates. Apparently the Cabinet had taken the matter out of the Board of Trade’s hands. Premier Chamberlain was pictured as burning the midnight oil over a dossier on BritishAmerican trade. Finally, on Secretary Hull’s return from Pinehurst, announcement came from Washington and London that formal negotiations had begun. The date may or may not be what John Morley used to call a turning point in world history. In case it is, it might as well be put down: November 18, 1937.

In London last summer I heard the reactions to Mr. Hull’s pressure. On the whole they were rather petulant. Even pacific ultimatums from Mr. Hull seemed to be put in the same class as the bombshells that Britain was getting daily from continental Europe and the Far East. Both played havoc with British summering. The Prime Minister, as ardent a fisherman as Lord Grey, had constantly to interrupt his Scottish holiday, and spend much of his time on the London sleeper.

Never did I address a question about Mr. Hull to a public man or publicist that it did not provoke a frown. ‘Mr. Hull!’ repeated a leading editor, testily. ‘Oh, Mr. Hull! He’s a relic of the eighteenth century.’ Another person equally renowned in the journalistic world said, ‘Your people over there don’t seem to realize that our immediate job is to build a storm cellar, not a world economic organization.’ The idea behind this remark likewise came to the mind of the publisher of London’s leading financial paper with whom I talked. ‘Foreign trade with us,’ he said, ‘is important nowadays only if we can get it in wartime. How can we square a commercial treaty with the United States with your Neutrality Act?’ This argument was such an idée fixe in England that I was constantly called upon to correct it. The neutrality law, even if it is invoked to the full, would still allow British cash and British ships to buy and carry away any amount of American merchandise except actual munitions. But my publisher friend did not appear convinced.

In government circles the petulance over Mr. Hull’s ceaseless inquiries took the form of complaints that were voiced in the London Times of November 8: ‘It is therefore absurd to speak, as too many of the critics of economic nationalists are accustomed to speak, as if the removal of trade barriers and the revival of international commerce and of international finance would of themselves usher in an era of abiding peace and goodwill.’ This is directed, of course, at Secretary Hull; for he more or less believes just that. To British officialdom, economic demobilization is as quixotic a panacea as pouring rose water on a hurricane. In more specific terms, officials grumbled that the British position vis-à-vis a commercial treaty was misunderstood in America. ‘What Mr. Hull wants from us,’ remarked a Treasury official, formerly in close touch with the Prime Minister when he was Chancellor of the Exchequer, ‘is what only the Dominions can provide.’

He meant that Secretary Hull was asking for a share of the British market for American farmers and primary producers at the expense of the Dominions. Under the Ottawa pacts the British Commonwealth had virtually ringed itself around as a closed trading group. The effect upon the Pacific lumber business will show the effect upon America. Thanks mainly to Ottawa, the United States in 1936 supplied only 6 per cent of the British Commonwealth demand for North Pacific lumber, against 75 per cent in 1929. Secretary Hull wants to be let into this trading group — if not on the ground floor, at least somewhere out of the cold. But the Dominions, secure with their preferences, have a bigger say on that subject than the British Government.

It is often assumed in America that Mr. Chamberlain is anti-American. All kinds of myths have crowded around the assumption. One myth is that as a young man he came to the United States and lost in Wall Street a dollar-lined shirt given him by his famous father. It must be said that the Prime Minister’s occasional particularities about the United States have strengthened the legend. The charge that he is anti-American also receives negative support from the crusade for an Empire economic bloc which is associated with the name of Chamberlain. In London, however, I was assured that the Prime Minister was really the head and front of the procommercial treaty school. A friend of mine showed me a letter which he got from Mr. Chamberlain by way of acknowledgment of an article telling of Chamberlain’s alleged anti-Americanism. ‘I hope,’ said the Prime Minister, ‘to prove that charge abysmally wrong.’ I was told that if I had been present at the Imperial Conference in May I should have heard the Prime Minister upsetting the legend himself. He wanted the Conference to go on record for a commercial treaty with the United States. ‘Mr. Chamberlain is not an eloquent speaker,’ said one of the delegates, ‘but you would have heard real eloquence if you had heard that plea.’

Nevertheless British eloquence could not shake the Dominions. Not only did they refuse to permit such a resolution to appear in the record; they showed no disposition to relax their grip on the aces in the British market which the Ottawa agreements had given them.

Now the difficulties in the way of starting formal negotiations have been overcome. It has been said that British acquiescence is due to a more acute realization in the British Commonwealth that a commercial treaty with the United States would be another anchor to windward in this troubled world. That, I am sure, is not the whole story. For the British were living just as dangerously in the summer as in the fall.

Two reasons, I would hazard, explain Britain’s decision: first, the American business reaction, which, in its repercussions all over the world, is persuading the neo-nationalists that they cannot recover alone, and people in general that the extension of the market place is a better recovery agent than its constriction; secondly, the Dominions have been promised compensations for sharing the British market with American primary producers.

What form these compensations will take must be left for time to reveal. On the American side a hint of American compensation is given in the announcement of parallel United States-Canadian negotiations to revise the existing trade agreement. Canadians feel that they got the short end of the Hull-Mackenzie King arrangement, despite Mr. Hoover’s sally that that arrangement realized the more abundant life for Canadians. Figures seem to lend color to the Canadian case. For the first nine months of 1937, United States exports to Canada increased by 38 per cent. Canadian exports to the United States show an increase of 21 per cent. Canadians feel that if Canada is buying more the United States ought to give the Dominion a better chance of paying for the increased purchases in goods. Compensations may also be forthcoming from the British for Dominion willingness to let the United States into the trading organization of the British Commonwealth on better terms.

Secretary Hull’s anxiety to make a new deal with the British Commonwealth is to be explained in terms of his trade-agreement programme. Sixteen agreements are already in force. They cover 40 per cent of America’s foreign trade. When Congress early in 1937 renewed the time limit of the enabling act, however, the programme had virtually been brought to a standstill. For the other 60 per cent of America’s foreign trade was almost entirely confined to trade with the United Kingdom and with non-British countries in a tied relation with the United Kingdom. Secretary Hull had therefore to lay siege to the British in an effort to save his programme from collapse.

Those who know the Secretary of State are agreed that behind his suave Southern demeanor there resides a determination which has been girded by nearly half a century of political battles.

I once remarked to him that in the original form the Wages and Hours Bill appeared to be a stumblingblock to a trade agreement with England. The Bill would have given a Labor Standards Board carte blanche in changing tariffs. ‘Don’t forget,’ he responded, with a twinkle, ‘that I’ve been running into difficulties for forty years.’ His faith in the philosophy behind the trade-agreement policy explains his firmness of purpose. It is a philosophy that partakes of religious fervor. As statesman after statesman has fallen away from Cobdenism, he himself has seemed to gather strength in his solitary beliefs. In him Richard Cobden’s ideas unite with George Washington’s. The Washington of the Farewell Address pleaded that ‘our commercial policy should hold an equal and impartial hand, neither seeking nor granting exclusive favors or preferences.’ Cobden saw world peace ensured by freer trade. In pounding away at England Mr. Hull perhaps spared himself a few ironical chuckles that his labors were devoted to trying to reëxport Cobdenism back to the land of its birth; but the chuckles were probably few and far between in his twoyear bombardment.

I have intimated that Secretary Hull’s work has to do with something more than the reduction of American customs duties, which, even before the advent of Hawley-Smootism, the President called ‘exorbitant.’ That something more is greater in his preoccupations than dollars and cents. He looks to the end. With the Latin poet he can say, ‘I seek high things, a higher life.’ It is a new world organization that he is trying to build up — no less. At present there is no such thing. The world is operating on what Santayana would call a ‘nosystem,’ with the nations

The new world at the end of Mr. Hull’s rainbow would be tied together with the unconditional most-favored-nation clause, sometimes called equality of treatment.

A new world based upon the unconditional most-favored-nation clause might seem a kind of anticlimax. It looks like a mouthful rather than a system. The phrase came out of the jargon of the economic specialist during the last presidential election. I am afraid that it did not impress many people. A politician said that the American electorate could not possibly get excited about the unconditional most-favored-nation clause. He was right. What impressed people about the trade-agreements policy was Mr. Hull’s plain story of the dollars-andcents advantages of world trading. A Southern editor once said to me, ‘Governor London’s worst mistake was to send Mr. Hull out on the stump.’ The key to Mr. Hull’s practical speeches, however, was to be found in the phrase ‘unconditional most-favored-nation clause.’ He wants to see that clause govern the world’s commercial relations.

The clause means that all the tariff favors exchanged between two nations shall be passed on automatically to other nations. It is thus a kind of master rule of world economic organization. Such a rule would encourage nations to trade together as the sporting rule of a free field and no favor encourages them to play together.

At present the rule is upheld only in American trade agreements. The rival no-rule is the exclusive swapping of tariff favors which George Washington deprecated. Of all nations, the United Kingdom is the busiest discriminator. As compared with Mr. Hull’s multilateral agreements, the British have negotiated twenty-three bilateral agreements, or exclusive deals. Thus the British have done more than abandon their traditional free trade. They have assisted the totalitarian nations in breaking down the prop of world economic organization.

In theory the British agree that this no-system is bad for world trade and world peace. Last summer the London Times wrote of ‘the cramping effects of bilateralism.’ Why, then, pursue it? Because of the storm-cellar attitude of mind which has come over Great Britain. Slowness to change is always balanced in British policy by adaptability when conditions seem to force change. Britons work on the lesson taught by Lord Salisbury, a famous Foreign Minister, that ‘the commonest error in statesmanship is to cling to the carcasses of dead policies.’

In Denmark last summer I ran into the consequences of this new British treaty making. Denmark used to provision England’s breakfast table with what Chesterton called ‘our glorious heritage’ of bacon and eggs. In 1932 the Commonwealth decided to try to do more of the provisioning. Accordingly Danish imports were reduced by fixed quota. So hurt was Denmark that it was forced to put its own economic system under discipline. If you wish to buy a Ford car in Denmark nowadays, you have to get a special permit. Danish importers of building materials are told from what country they may buy lumber. No exchange ever seems to be available for buying American corn and American cottonseed cake. A tied and a virtually closed economy is little Denmark nowadays. Meantime, when I got back to England, I found that the more abundant life of agricultural regimentation was making bacon scarcer because it was becoming dearer.

This new policy as practised by Britain is not consistent with a rôle of world responsibility. Harold Nicolson in a recent issue of the Atlantic¹ quoted the axiom of Sir Eyre Crowe, one of Britain’s greatest Permanent Secretaries. Crowe said that the policy of a world power like Britain must be closely identified with the primary and vital interests of a majority of other nations. Freer trade was, of course, one of those interests.

It has been left to Secretary Hull to try to realize the counsel of Sir Eyre Crowe. A world system may be dead, but Mr. Hull is not conscious of it. However, since the United States and the United Kingdom share world power, his effort to resuscitate it was stymied till the British Government agreed on negotiations.

To what extent there will be a meeting of minds on the unconditional most-favored-nation clause will be shown during the negotiations. Preferences within the Commonwealth will certainly not be given up. But preferences as such are not necessarily inconsistent with world organization based upon nondiscrimination. They are admitted exceptions to the master rule when exchanged among members of groups of states bound by political ties. Preferences indeed qualify the American system. In relations with Cuba, for instance, there are tariff privileges which do not apply to outsiders. The utmost that the United States can expect in any new deal with the British Commonwealth is the amelioration of the Empire preferential system for the benefit of the bursting farm production of the American West.

In return the United States must agree to reduce its Chinese wall against British manufactures. The inquirer in England does not have to remain long to be reminded that the British still buy more than twice as much from the United States as Americans buy from Great Britain. It is unfair, of course, to invoke merely visible trade. Invisible trade must be taken into account, such as tourist traffic. To an undetermined extent the tourists, by buying British goods direct, make up for the deficit between American importers and British.

I offered this suggestion in conversation in London. ‘But we don’t want to be merely hotelkeepers and curio dealers for Americans,’ responded a City man. ‘And shippers, too?’ I countered — and he had to agree that invisible trade ought to be put in the reckoning. Incidentally, Mr. Kennedy’s shipping policy will undoubtedly figure in the negotiations.

An agreement on American tariff reductions must likewise include the unconditional most-favored-nation clause. This means that any reductions in duty on the American side would inure to the benefit of non-British manufacturers. In the north of England this argument was advanced to me as a reason against a trade agreement. But there is a long line of goods in which Britain faces little or no competition with other foreigners in the American market. Professor P. W. Bidwell has compiled a list of about sixty items of which Great Britain is America’s principal external supplier. Thus a reduction in tariff rates on those items would in effect come as a benefit solely to Great Britain.

No conference in modern history has ever taken place after so much groundwork. A posse ad esse! It is usual to count only the commercial advantages arising from trade agreements. But an Anglo-American pact would have political advantages as well. In both countries the march toward a closed economy would suffer a setback. If America must choose, as Secretary Wallace once asserted, so Britain also must choose. The world strength of Fascism is due to much more than brass-lunged vehemence; it is due to clearcut ideas and exertion in keeping them alive. In consequence, those ideas are becoming very pervasive. I have actually heard persons speaking Fascist ideology in the course of advancing democratic arguments! By contrast political ideas in the democracies are muddied and their economic systems muddled. Moreover, in John Stuart Mill’s pungent phrase, we seem to be ‘unequal to the exertions necessary for preserving liberty.’