Читать книгу Economics and the Public Welfare - Benjamin M. Anderson - Страница 22
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The whole of the year 1923 was one of strong industrial activity in the United States. The Federal Reserve Index of Industrial Production,1 based on physical volume shows 1923 standing high above 1922 and high above 1924. A sharply declining tendency showed itself in the early part of 1924, and the summer of 1924 revealed a real slump. We had reached the end of the time when we could make strong progress with the world outside slipping downward, and we had reached the end of the time when city industry alone could move forward with agriculture depressed by its bad export market.
Trade Balances, Tariffs, and Export Trade. From the end of the war it had been clear to economists and to bankers in the great financial centers that the United States, having changed from a prewar debtor position to a postwar creditor position, must maintain a liberal foreign trade policy or else suffer a great loss in export trade. Before the war we had sent out a surplus of exports over imports because we were in debt. Countries which before the war had an export surplus or a so-called favorable balance of trade were the United States, Brazil, British India, Haiti, and Guatemala—debtor countries, which like an individual debtor, could not afford to consume all that they produced and had to turn over a part of what they produced to their creditors. Countries which had the so-called unfavorable balance of trade, or import surplus, were Great Britain, France, Germany, Switzerland, the Netherlands—capitalist countries, creditor countries, which like an individual capitalist could afford to consume more than they produced with their own labor—and liked it. In prewar days Great Britain regularly sent out about $2 billion worth of exports and received about $3
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billion worth of imports—an import surplus of a billion dollars. This did not diminish the ability of the British people to buy their own products. The excess goods were sold in the British market, but the money was turned over in the form of interest and dividend payments to Britishers, increasing the national income by the same amount as the surplus goods which came in, and leaving their buying power for British goods undiminished. The import surplus represented a net addition to the welfare of the British Isles.
If, in the United States, we tried to prevent our foreign debtors from sending us goods with which to pay interest and amortization on their debts, by raising our tariffs to keep out their goods, then we necessarily ruined our export trade. They could pay their debts and continue to buy goods in our market only if they sent us a larger volume of goods than they had sent us in prewar days.
The Abortive Reeducation of the Republican Leaders. There was a pretty clear understanding of these points in 1920, both in financial circles and in Washington. The old Republican leaders understood it. Senator Boies Penrose of Pennsylvania understood it, and decided that it was necessary to have a reversal of Republican policy on the tariff.2
A report was made to the Republican National Convention in 1920 by an advisory committee on policies and platform (of which Ogden L. Mills was chairman of the Executive Committee, Samuel McCune Lindsay, staff director, and Jacob H. Hollander, associate staff director) which contained an important section on international trade and credits produced by a subcommittee, of which Frank A. Vanderlip was chairman. This report will be found in the Republican Campaign Textbook of 1920 (pp. 379-97), which discusses in a realistic way the shift of the United States from a debtor position to a creditor position, and the significance of that shift for our future trade balances. The able men of the Republican Party were really studying economics before the Republican National Convention met. It was clear that they knew that the Republican Party must reverse its position regarding tariffs if we were to continue to have a satisfactory export trade.
So well was this understood that there appeared in the Republican platform of 1920 a remarkable and unprecedented plank—the substance of which was that in view of “the uncertain and unsettled condition of international balances” the Republican Party could not say what it would do about the tariff a year hence—a cautious plank, a compromise designed to avoid unnecessary friction in the convention. The plank even included a reaffirmation of the Republican Party’s belief in protective tariffs. Neither
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the plank nor the committee report definitely drew the conclusion that the tariffs must not be raised above the rates of the Underwood Tariff of 1913—which rates, incidentally, included a great deal of protection. But both the committee report and the tariff plank were definitely designed to foreshadow a radical change in Republican attitude toward the tariff and were intended to serve notice that the tariffs were not to be raised.3
This plank traced especially to the work of four extraordinarily able and enlightened men: Ogden L. Mills, William Allen White, Professor Samuel McCune Lindsay of Columbia University, and Professor Jacob Hollander of Johns Hopkins University.4
Well-laid plans, however, are not always successful. The election of 1920 was a great landslide which brought into Congress a great many new and untried and inexperienced Republicans from the West and from the South. Penrose died and the old leadership lost its control. The election also brought into the White House a man little trained in economics, who looked at economic issues from the standpoint of political tradition and emotion, Warren G. Harding.
Following the election the four men named above, who were especially responsible for the tariff plank of the Republican platform in 1920, visited President Harding to urge upon him that the plank be respected and that the tariffs not be raised. One of the four remembered that President Harding said that he had always had an affection for the protective tariff as a political issue, and all four of them remembered that President Harding said, “But what would the Home Market Club of Boston say?”
The Tariffs of 1921 and 1922. And so the tariffs were raised, first by an agricultural tariff bill in 1921, which had relatively little significance because agriculture was an export industry, and, second, by the Fordney bill of 1922, which raised rates sharply on a wide range of manufactured goods, the kind of goods we ought to have been importing from Europe.
Even the agricultural tariff law made immediate trouble. At the Minnesota Bankers Convention of 1921 there was great complaint that Canadian wheat, which had formerly come to the Minneapolis mills to be ground, was being diverted to England, taking work away from the mills and transportation from the railroads which would have brought the grain to Minneapolis and would have taken the flour for export to the seaboard. And there was complaint too on the Montana border that cattlemen on the
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Montana ranges were prevented by the tariff on Canadian cattle from bringing in the lean Canadian cattle to feed on the Montana ranges.
The Seeds of Death Planted. But the great harm came from the Fordney bill of 1922. This imposed a grave barrier against European industrial revival, and it imposed a deadly handicap on the export trade of the American farmer whose market was primarily in Europe—an export trade which amounted to sixty percent of the cotton produced, forty percent of the lard, more than twenty percent of the wheat, forty percent of the tobacco. The seeds of death were introduced into our industrial revival when this tariff bill was passed.
The high protective tariff of 1922 was one of three major mistakes in international policy which the United States contributed to the evil days that were to come. The two others were (a) our rejection of the League of Nations, and (b) our mishandling of the problem of the inter-Allied debts, the debt created by the approximately $10 billion which our government loaned to Allied governments during the war and in the post-Armistice period down to June 30, 1919.
Woodrow Wilson and the League of Nations. Woodrow Wilson had certain personal qualities which irritated and antagonized to an extraordinary degree those people who did not like him. But he was the greatest man, the most upright man, and the most far-seeing man who has held great public office anywhere in the world within the memory of men now living.5
Wilson doubtless erred in going in person to Paris. He doubtless erred in not taking with him important Republican leaders. He doubtless erred in taking too uncompromising a stand against amendments proposed to the League of Nations by honest opponents in the American Senate—among whom we should emphatically not include Henry Cabot Lodge. But Wilson’s failure to accomplish his great purposes primarily arose from a different sort of weakness—he had a grave sickness, probably his first apoplectic stroke, in the midst of the peace negotiations in Paris. This was not publicly known at the time. A few people knew it. One man closely associated with President Wilson in Paris said in 1920 that in the early part of his stay there Wilson was alert, flexible, resourceful, eager for information, open-minded to suggestions. Then for a prolonged period nobody saw him. When he could be seen again he was aloof, remote, inflexible, uninterested in new ideas, dogmatic in his insistence on fixed purposes. This man was sure that Wilson had had his first stroke in that interval. Subsequent confirmation of a grave and disturbing sickness in Paris has come from two sources. Mrs. Wilson in her My Memoirs6 gives a brief account of this sickness. The second confirmation comes in a series of
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Saturday Evening Post articles7 by former President Hoover. Had Woodrow Wilson had his full energies we should have entered the League of Nations.
The young student of economics, sociology, and history is easily impressed with the doctrine that history is made by impersonal social forces, irresistible in character. When one sees history being made from the inside it is impossible to avoid the conclusion that a vast deal depends upon the strengths and weaknesses of the leading participants. As this book proceeds, a good many such cases will be cited. The failure of the League of Nations was the failure of Woodrow Wilson’s health, just as the passage of the tariff of 1922 traced primarily to Warren G. Harding’s abysmal economic ignorance.
Ruinous Effect of Our Staying out of League. Our absence from the League of Nations left that organization with inadequate strength, and, above all, left it unduly weighted by France.
The peace treaties contained many dangerous and impossible provisions. They split the Austro-Hungarian Empire, which had been a great free trade area, into a large number of small succession states which, hating one another and fearing one another, erected high tariff barriers against one another. Instead of having one currency system, they had a large number of fluctuating currencies which each tried to protect, not merely by orthodox currency measures, but also by shifting restrictions on international payments and on the free movements of funds as well as commodities. Eastern Europe was Balkanized.
Austria, cut off from the great region of which she had been the governmental, financial, and trading center, found herself with an immense problem of readjustment. For many years she was incapable of solving the problem, and to a considerable extent lived on international charity. After ten years she appeared to have worked it out by a great reduction in the population of the city of Vienna, as city activities diminished, and by an increase in the proportion of her agricultural activities as her people moved from the valleys up the mountain sides to thinner land where meager crops could be obtained.
The heart of the problem left by the Treaty of Versailles centered about the relations between France and Germany, and the problem, above all, of reparations payments by Germany to France.
The problem of reparations was one which could be solved only if a very realistic economic policy were adopted. But French policy was primarily political. France still feared a stricken and beaten Germany. She was much more concerned about keeping Germany politically weak than she was about getting real reparations out of Germany. Real reparations from Germany could come only from a Germany which was economically strong.
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It is not easy to assert that these French fears were foolish fears in the light of developments since 1936, or for that matter since early 1933. Similar fears were clearly shared by Denmark, which refused to take full advantage of the Treaty of Versailles. The treaty restored to Denmark Schleswig-Holstein, which Bismarck had wrested from her in 1864. Denmark, looking forward twenty years, sought to avoid German resentment by holding a plebiscite, leaving the people of Schleswig-Holstein themselves to decide whether they wished to stay with Germany or to return to Denmark, with the result that only the northern part returned to Denmark.
The two significant points from the standpoint of the American participation in the League of Nations are: (1) if we had been wholeheartedly in the League of Nations, France would have had much less fear regarding her future security, and (2) if we had been active and powerful in the League of Nations, we and the British, acting together, could have controlled League of Nations policy, and could have forced upon France a much more reasonable attitude toward the question of reparations and the question of Germany’s industrial revival than England alone was able to do.
As will be seen later, the democratic Germany of the Weimar Constitution, the Germany of Ebert, of Wirth, of Stresemann, and of Bruening, was a Germany with which the world could have lived at peace, and was a Germany which could have endured, had outside pressure, and above all, French pressure, been less remorseless.
