British Trade and American Policy
by RAYMOND P. BALDWIN
1
» On most of our joint commissions with the British, it is a common experience to find the British united and the American representatives divided. If a lack of teamwork results, who is to blame?
THE United States and Great Britain are engaged in this war on the fullest partnership basis that has ever existed between two sovereign nations. Without that partnership and its mobilization of resources, even the gallantry of Allied troops would have been unavailing to stop the German war machine. The pooling of men, minds, and materials has turned a fear of defeat into a hope of early victory over Japan as well as Germany.
Now the partnership is facing a serious test. In the conduct of the war so far, the mutual confidence of the Americans and British has increased. It would, however, be unrealistic to assume that it will continue into a period of post-war trade unless a proper foundation is laid for post-war coöperation. And if, as victory becomes more certain, each country pursues, or suspects the other of pursuing, a selfish trade interest, friction may develop which will hamper the joint war effort, cause doubts among the Allies, and endanger the ultimate peace.
To fight the war, England has stripped herself of a large part of her foreign investments. She has put her patents, technical skills, and productive capacity into the joint effort. She has cut home consumption to the barest necessities. The present outlook for her people is a long post-war period of privation, during which for five years or more they must continue to be rationed even in those articles of common use which they need and which England herself produces, in order that she may, through exports, earn the money necessary to import the things she lacks.
What that privation means in British homes we can guess if we imagine how we should feel were we to see cigarettes, butter, meat, and new cars being produced here for shipment to Europe and South America, and yet were unable to buy any for our own use. Present British privation is, in part, for our common good. Post-war British restrictions will not be; and it would be naïve for us to assume that Britain is not already taking steps to improve her own post-war position in the world.
Britain has her interests, and we have ours. In the winning of the war those interests appear to be identical; but they are identical only in the end results of the surrender of Berlin and Tokyo, not always in the means necessary to accomplish those end results. Britain is dependent on trade with her far-flung empire and with the rest of the world. If one military move will help that trade, and another injure it, she will prefer the former.
But we, too, have an interest in trade. The export of 15 per cent of our production spells prosperity for the United States, If we shut our eyes to the facts, and disregard our own interests, it would be childish for us later to complain that Britain has prudently guarded her interests. Let us see the facts now, and avoid if we can the disillusionment of feeling later that we have been outsmarted.
If all negotiations between the United States and Great Britain could be carried on between Mr. Roosevelt and Mr. Churchill, we might come off rather well, assuming the President has as firmly in mind what he wants for America as the Prime Minister has what he wants for Britain. But the daily transactions between the two governments are so numerous and so complex that it would be impossible for any two men to master the details necessary even to pass upon them, to say nothing of spending the time required to work out solutions in each case. There must be left to subordinates, often far down on the working level, thousands of individual arrangements and decisions.
Ever since the passage of the Lend-Lease Act, and particularly since Pearl Harbor, American businessmen and others, working on temporary wartime service in Washington, have been dealing with representatives of British missions, determining the allocation of raw materials, manufactured goods, food supplies, and shipping, deciding responsibility for the purchase and development of strategic materials, and trying to solve the incidental questions of ultimate cost and the post-war effect on trade, at least to the extent necessary to keep considerations of trade from interfering with the movement of goods necessary to the winning of the war.
These dealings between representatives of the United States and British governments have to a large extent been working-level meetings of subcommittees of the several Combined Boards, regional committees dealing with the problems of particular areas, and special committees organized to cope with specific problems. Frequently a dozen or more representatives from several American governmental departments or agencies have met with two to four representatives of Great Britain.
If there is one thing about the British representatives on which the Americans who deal with them in Washington are in agreement, it is that when they attend a joint meeting, whether on the working level or on the policy level, they come into the meeting knowing what they want, fully briefed, with a large bound file containing all the data essential to the decision, and prepared to put forth the strongest arguments for their position, in the least offensive manner.
It is also generally agreed among our men in Washington, though not always admitted to others, that the American representatives commonly come to such meetings (usually direct from administrative duties to which they are devoting more hours a day than government regulations require) without adequate preparation, without full clearance within their own organization, without having discussed the matter with the other American representatives, and without the guidance of a clear governmental policy on matters affecting our foreign trade.
The usual result is that the representatives of various American departments and agencies will argue among themselves at a joint meeting, and that when the confusion is at its peak one of the British representatives will modestly make a suggestion which will be seized upon by the chairman of the meeting as the only rational solution of the problem at hand. From that point on, although there may be criticism and modification of the British suggestion, the ultimate decision is usually made from the British frame of reference. Evidence from London and from the field generally indicates that this experience is not limited to Washington.
The dispassionate American comes to feel, not that the British are reprehensibly smart, but that we Americans are disorganized and inept. We may deviate from the British road, but we are always returning to it because we have laid out no road of our own.
2
IN ORDER to understand this condition, we must realize that Britain’s very life depends on her foreign trade; that the British, once they get a political or commercial foothold in a foreign country, intend to keep it; and that there is no conflict between British government and British business. The British Board of Trade dates in its present form from 1786. It represents every significant part of British industry; at the same time it is an integral part of British government. Its primary purpose is to foster Britain’s foreign trade.
The British are realists. Because Great Britain cannot survive as a great nation without a very substantial increase in its export trade, the British representatives make no bones about their intention to see that Britain’s trade does increase. Their policy is that everything within reason must be done to win the war, but that where there are two courses, one of which will benefit British trade without material detriment to the war effort, they should do what they can to further British interests.
In contrast with this simplicity of policy and singleness of purpose of the British representative, the position of his current American counterpart amounts practically to schizophrenia. On the one hand he has, whether by nature, politics, or conviction, a great urge to be altruistic — to behave as though every act must be judged by the criterion of what will result in the greatest good for the greatest number, whether the greatest number be American or foreign, civilized or backward — with the scales perhaps tipped in favor of the foreign and the backward. On the other hand he experiences resentment at the advantages taken by the British, and others, in favor of their own trade.
He feels puzzled. Should he insist that the British also behave altruistically; or should he jettison altruism and seek a competitive advantage for American trade? Nothing in the expressed policy of his department or agency, or of his government, gives him any clue. If he takes the altruistic line, American trade interests howl with displeasure. If he favors American trade too aggressively, he soon gets criticized within his own organization, or his organization is criticized by another United States department or agency.
The British do not always get what they want. When they prevail, it is usually not so much through brilliant maneuvering as through good sense and clarity of objective.
The Americans are frequently as astute as the British. They see, and in fact are frequently told, the realistic British motive. They know that a proposed action may work to the disadvantage of some future American objective. But they feel that their government has given them no policy; their agency has adopted no plan; their superiors have made no decisions. They must either, on their own working level, presume to adopt a policy for our government — which may be opposed by other agencies or repudiated by their own; or they must take a purely negative attitude and be branded as obstructionists; or they must agree to action in accordance with British policy.
An American eager to protect American interests often gets a feeling of helpless frustration. He does not blame it on his British colleagues, whom he likes, admires, and trusts; but he sometimes wishes that we Americans also had a stark need and a clear purpose.
3
WHERE is this state of affairs leading us? Let us look at some of the broader developments in British policy.
After the fall of Dunkirk, in June of 1940, the British military position was desperate. France fell, and Yugoslavia. The British troops in Greece and Crete were defeated.
In September, 1940, the United States swapped fifty destroyers for 99-year leases on seven British bases.
By the end of 1940 the British were running short of cash; and on March 11, 1941, the Lend-Lease Act was passed to permit the President to make supplies available to them on terms satisfactory to the President.
Before the Lend-Lease Master Agreement was signed with Great Britain, the President and the Prime Minister met at sea and on August 14, 1941, proclaimed the Atlantic Charter, by which they forswore for their countries “aggrandizement, territorial or other,” recognized the “ right of all peoples to choose the form of government under which they will live,” and undertook “with due respect for their existing obligations” to further the enjoyment, by all states, of access, on equal terms, to the trade and to the raw materials of the world.
A week after the fall of Singapore, Great Britain signed the Lend-Lease Master Agreement, pledging itself, among other things, to seek, through conversations with the United States, the best means of attaining the objectives of the Atlantic Charter, and of reducing tariffs and trade barriers, by agreed action open to participation by all other countries of like mind.
The Atlantic Charter represented the high point of Britain’s acquiescence in the American ideals of a post-war world of free peoples and free markets. From that point on, as the military situation improved, the British became more concerned with their own post-war trade. By the autumn of 1942 the Allies were gaining control of the air over Western Europe; Lend-Lease supplies were reaching the British in Egypt, and Rommel was in retreat; the Russian Army had shown a promising ability to stop the Germans; and the Congressional elections in the United States appeared to indicate a swing away from New Deal liberalism. On November 10, 1942, Mr. Churchill, on being questioned in the House of Commons on Britain’s colonial policy, replied with old-time British confidence: “I have not become the King’s first minister in order to preside over the liquidation of the British Empire.”
From that time on, the British became increasingly confident that the war would be won and the Empire preserved, and they have become progressively more outspoken in their determination to maintain Britain’s trade position.
How does Great Britain operate, in wartime, to benefit her post-war trade?
The illustrations that follow are not intended as adverse criticism of the British on the one hand or of our own government on the other. Let it be said at the outset that the war has, at least temporarily, deprived the United Kingdom of many export markets, particularly in South America, and that through Lend-Lease shipments many American goods have become known in former British markets where they were never sold before the war.
The British methods are not so much to be deplored as emulated, unless happily we may be able to work out with Great Britain a continuing partnership or a general system which will put the trade of all nations on a less restricted and less nationalistic basis. The following examples merely indicate a few of the ways in which the British, more prudently than we, work together for their common good, coördinating business and government, utilizing the services of skilled men, and adapting their methods to the circumstances of each situation.
When, for instance, French North Africa was sufficiently liberated to permit the shipment from its ports of food and strategic materials, American representatives told the French to ship strategic materials on the returning ships, and we would pay them “world prices.” Shipments were made, but disputes arose as to quality; and a year later we had no agreement with the French as to what the prices should be. In contrast, the British sent to North Africa a man expert in the purchase of sardines. He dickered for days with the French, agreed on specifications, worked out a price down to the nearest ten-thousandth of a franc per sardine.
If the United States should wish to purchase cocoa or mahogany from French West Africa or the Ivory Coast, and British companies had similar supplies in the British dependencies of Nigeria or the Gold Coast, British diplomatic representatives might find reasons against our purchases from the French, and the British Ministry of War Transport might not be enthusiastic about making shipping available from the French ports.
If an American representative in, let us say, the Belgian Congo, were to attempt to encourage the Belgians to deal directly with the United States, perhaps in a way which might ultimately threaten the supremacy of British interests in that area, it would not be unheard of for the British Foreign Office to request the recall of the American representative as uncoöperative with the British in their efforts to obtain essential war materials.
If the war situation should make it advisable that some country in the Middle East be closed to normal commercial foreign trade, the United Kingdom Commercial Corporation might be used to take British goods to that country and to market them, as nearly as possible, through normal trade outlets.
If Ethiopia should wish to sell hides to American importers for dollars, in order to buy cotton textiles from American exporters, it might be found that ships could carry Ethiopian hides only to British Aden, where the Ethiopians must sell them to British firms for East African pounds which the Ethiopians could not exchange for dollars.
If American air transport companies should be negotiating with the government of a neutral country for air bases on its island possessions, the diplomatic situation might be found to be too delicate for them to continue the negotiations. Later Great Britain might acquire the air bases by treaty from the neutral government.
4
IN THESE and in many instances like them, the British are constantly on the watch for the interests of British trade. In every instance they have a sound reason for their position. In no instance is there the slightest question us to their integrity or the truth of their representations. They are honest men. But they never miss a point, and they never give up. If a diplomat is their ablest man in a place where they have a job to be done, they let him do it; if a businessman, they use the businessman. If they have several men, all pull together.
If brains, teamwork, hard work, and fair play can bring her to the top, Great Britain will come out of this war with flying colors and with an integrated organization of trained civil servants and businessmen determined and able to lift from her shoulders the tremendous burden which the sacrifices of war have placed upon them.
They regard the Atlantic Charter as an expression of an ideal which can be realized, if at all, only in the distant future and by agreement among many nations— not as a declaration of policy capable of use as a criterion for present action. Likewise they regard as impractical our attitude that trade decisions can wait till the war is won. They want to be sure that peace will find them in a strong trade position, with maximum dollar balances, foreign investments, raw materials, friendly markets, ships, trade facilities, and spheres of influence — and with a minimum of uncontrolled competition.
If we can assure them the markets and the financial assistance needed to put Britain on her feet, they will lay their cards on the table and play the game our way. If not, they will keep their commercial and financial figures to themselves and will take every opportunity to build up their trade and their post-war bargaining strength by every means at their command, even though such means call for present agreements which Great Britain cannot later undo.
If we believe that we can work out a program of mutual advantage to us and the British, or if we decide that as a practical matter the Atlantic Charter and relative freedom of trade will benefit the whole world, including ourselves and Great Britain, then we must find the way to persuade the British to our view. If we can do that, we shall have an ally on whose ability we can depend. If we cannot, we shall have a rival whose ability we must not underestimate.
Meanwhile, as the war progresses, one decision after another has to be made — or one action after another has to be taken without decision — on matters which affect the future of American trade and our national defense. How we shall come out ultimately will depend to some extent on how far Britain will have gone along the road of an independent trade policy before we determine just what our own trade policy is to be, and on how far we are willing to go in order to work out a joint program to our mutual advantage.
Our problem is not an easy one to solve, as we can see from the meager results of the international business conference held at Rye, New York, in September, 1944. We must first make up our minds whether, in order to fulfill the American ideal of free competitive markets, we are willing to make such adjustments in our tariff that British goods can compete in our domestic markets. If not, the British will insist on Empire preference to the exclusion of American goods.
We must also decide whether we are willing to continue some system of international control of commodities, in the face of persistent opposition by some American business associations to all forms of governmental control. The British are convinced that there can be no rational post-war economy without controls of some kind. If we cannot agree upon international controls in which we shall have some voice, as we have now in the Combined Boards, Britain will, through import permits, sterling bloc exchange controls, cartel agreements, shipping allocations, separate trade treaties, and other devices, build up or continue her own system of controls for the protection of her own interests. Every step she takes in this direction will make more difficult the task of implementing the broad objectives of the Atlantic Charter and the LendLease Master Agreements, which contemplate the stimulation of world trade as a means to world peace.
5
THE Administration has not been idle. The appointment of Mr. Stettinius as Secretary of State and his reorganization of the State Department to include men of outstanding ability give promise of a firm, realistic policy. And though the Dumbarton Oaks conference dealt primarily with questions of security, the Bretton Woods financial conference, the petroleum conference, and the recent international air traffic conference have all been steps in the right direction. These are apparently to be followed by a United Nations trade conference.
If we go into such a trade conference determined to insist upon the freedom of competitive trade to which all the United Nations are already committed in principle, and willing to make the concessions necessary to render such trade practicable, we can get what we want, and in all probability benefit both our trade and Great Britain’s beyond anything yet conceived.
But let’s not delude ourselves. Time is short. Once the war is over and Lend-Lease stops, it will be too late to get Great Britain to adopt any broad, idealistic program. She will control trade facilities through the world. And she will be getting on with her own interests in her own practical way. If we want her coöperation, we must get it now.
Whatever our future action is to be, we need three things if we are to protect our interests: (1) a definite, practical trade policy, (2) a growing understanding between government and business, and (3) competent men in key government positions. Britain has all three.
Whatever minor points of friction or misunderstanding may exist between Great Britain and the United States, it must be said in fairness to the British that they do not like taking candy from babies. They have on many occasions begged us to determine our policy, and they ask nothing better than to have competent men representing us, with whom they can work on a reasonable and effective basis.
If a wise policy requires that we appropriate two billion dollars a year for five years to help a partner who has suffered more than we shall ever know, and who has given her blood and resources for our common defense, then let us adopt that policy and carry it out. But if we do that, let us do it straightforwardly and competently, knowing what we are willing to do for our partner and knowing what we expect our partner to do for us, rather than pulling our punches on every deal and tacitly inviting the British to lower their high standards of honesty in order to outsmart us and survive.
In view of our hope for a reasonably early victory over the Germans, it is only natural that we should find our minds turning more and more frequently to thoughts of what is to follow victory. A generation ago we thought: After victory, peace. Peace and reconstruction; a return to the normal ways of life. But in this war we know that victory over Germany alone will not bring peace. There is still Japan. And there is still reconstruction. We all assume that the United States will play its full part in the peace, as it has in the prosecution of the war. But whereas in prosecuting the war we have worked with our allies in full coöperation toward a common end, we realize that in the adjustments to peace we have not yet agreed upon a common end, and that if a common purpose cannot be found, we shall find ourselves competing rather than coöperating with our present allies.
To be sure, the Atlantic Charter was agreed to by Mr. Churchill and has been accepted by all the United Nations. But will it stick — or is it merely a vague expression of American idealism adhered to by Britain in a moment of desperation, to be rendered futile and lost sight of in the post-war jockeying for position by the great powers?
Whatever problems arise in the future between the United States and Russia, France, Holland, or China, and however powerfully their ultimate solution may affect our welfare, they are more remote and less complex than the issues that will face the United States and the British Commonwealth and Empire. Britain’s possessions and interests in the Western Hemisphere, her tenuous but very real control of far-flung territories, and her long-estabished trade connections throughout the world have already raised, and will continue to raise, issues on which our interests and hers will be either divergent or similar, depending on whether we compete for advantage or coöperate, with common purpose, to our mutual benefit.
Great decisions must be made. In the conferences and negotiations leading up to these decisions, how far can we trust the British? Shall we benefit by altruism or must we take care not to be outsmarted? Or both?
The United States could be the most powerful and prosperous country in the world. It could, by exercising its power to implement the Atlantic Charter and the objectives of the Lend-Lease Master Agreements, go far toward assuring a measure of prosperity to all nations. But unless, before the last dollar has been spent on Lend-Lease and the last shot has been fired to win back distant islands to British, French, and Dutch sovereignty, we have made sure that we have the military bases necessary to our defense, and freedom for Americans to trade on an equal footing throughout the world, we shall wake up one day to find that we are an isolated nation of disillusioned altruists, taking in one another’s washing to pay off a debt of 300 billion dollars.
At present, as one Britisher has said off the record, Britain is like a weak man who must use a lever and fulcrum to move a great object; the United States is like a giant who does not need them, even though he might move the object more easily by their use. If, however, we persist in relying on the strength of our great resources, and deliberately disregard the lever and fulcrum of combined business prudence and governmental common sense, we may one day find ourselves the weak man, with a heavy burden but without the skill with lever and fulcrum which the British are developing to so high a degree. And it will be our burden, not theirs; for no nation will want an improvident partner.
Are the British smarter than we are? Individually, no. Not smarter; perhaps better chosen for their tasks, more confident of their position. Collectively, yes. And they will continue to be so unless and until we determine on a realistic national trade policy and entrust its execution to the men best suited to carry it out.
If we can do that, we can go forward with the British in a continuing partnership, with mutual trust and esteem, to our common benefit and that of the other United Nations.