Traders' Council

An angry, bull-necked Argentine denounced the U. S. Tariff last week in words so strong that the U. S. State Department grew worried. Half a dozen other speakers at the National Foreign Trade Council convention in Manhattan last week sided with him. From his bountiful cornucopia of good cheer Dr. Julius Klein, Assistant Secretary of Commerce, poured reassuring Tariff figures with which to uphold the Hoover Administration. When the Council adjourned and drew up its annual, lengthy, vague resolution, the fighting word "tariff" did not appear.

In economics things are not easily clarified. Even were the rivers of trade flowing smoothly it would be difficult to gauge what effect the Hawley-Smoot Tariff with its 20%, damming up has had on their courses. With Depression's storm agitating the rivers, translation of direct cause into direct effect is hazardous. Yet the Tariff issue remains big, promises to be 1932'$ political common denominator. Taking advantage of the flexibility clause, interested parties have caused 12 revisions since the bill passed, have had 181 applications turned down. A turndown last week was given to Brooks Bros., old-time Manhattan haberdashery, which had asked reduction in the duty on top and opera hats, now at 75% ad valorem plus $2 against the old rate of 65%.

Never has discussion of the Hawley-Smoot Tariff died down. Soon after it was passed, many big exporters, notably automobile men (biggest manufacturing industry), wailed their fears of foreign reprisals. Most drastic and clean-cut fulfillment of these fears came when Canada, biggest U. S. customer, frankly upped all her rates to match. France and England, though taking no action (except on cinemas in France), complained so loudly that much ill-will was bred. Australia's almost complete embargo was a nationalistic move after the U. S. pattern. Only a series of revolutions have checked wall-building in South America, but meantime ill-will has increased.

All last year the value of U. S. imports and exports, the volume of U. S. foreign trade, slumped and slumped. The first months of 1931 showed a slight gain, but not enough to recover more than fractionally the shrinkage of 1930. Total exports in March 1931 were $237,000,000 against $369,000,000 in March 1930; imports, $209,000,000 against $300,000,000. Since the U. S. exports about 10% of its goods, and the margin of profit in many industries is 10%, the effect on many a balance sheet is obvious.

Defense-- Dr. Klein defended the Hawley-Smoot Tariff with figures more specific than theoretical. Said he: "In 19 representative countries all over the world, comprising most of our leading customers . . . our share in their import totals last year was almost exactly 20%. . . . During 1924-27 [the U. S. share] averaged 20.7%. . . . Preliminary figures for 1931 show almost exactly the same trend." As to imports, his figures proved that for the first quarter of this year, "whereas the incoming European wares subject to duty fell 33%, . . . those coming in free of duties declined 41%."

"It is no time for rosy fantasies," he added. "... And even more emphatically it is no time for the lugubrious whimperings of those timid souls who see nothing but despair ahead. ... It is high time we segregate . . . the advocates of our retirement from the foreign field in the interests of our hard-pressed rivals overseas 'who need trade more than we do.' Perhaps for the purposes of identification we might decorate those noble-hearted altruists with the Grand Order of the Yellow Streak, while the rest of our more brazenly acquisitive tradesmen, with a full recognition of the gravity of the situation, turn to a consideration of the facts, not of the phantoms. . . ."

Attack. Differing sharply with Dr. Klein was Peter Fletcher, president of National Council of American Importers & Traders, Inc. Peter Fletcher wanted to see a prompt 25% reduction on ad valorem rates, 50%, on specific rates. He thought and said: "We are now in the midst of the greatest worldwide tariff war in history." Heartily in accord were Charles T. Riotte, lace & embroidery man; Howard S. Cullum, Commissioner of the Port of New York Authority; Philip le Boutillier, president of Best & Co.; Wallace Thompson, editor of Ingenieria International.

Bitterest of all was the Argentine speaker, Dr. Emanuel Malbran, Ambassador to the U. S. He pointed to the importance of Argentina's trade, which in 1929 took 40% of U. S. exports to South America. With chilly sarcasm, he spoke of the possibility that his country will raise a tariff wall: "In case it is adopted it should produce positive results, you would lose a good market. . . . but in exchange you would gain our gratitude for having taught us to make use of high tariffs. . . . It is perfectly logical that in my country they are thinking of following the example set by countries as advanced and progressive as yours."

The U. S. foreign traders squirmed when Dr. Malbran spoke of the good treatment Great Britain gives his country. Here was first-hand evidence of the salesmanship of Edward, Prince of Wales (TIME. March 23). Dr. Malbran further complained that whereas 86% of all South American exports to the U. S. enter duty-free, none of his country's products enjoy that classification.*

The word "tariff" was not used by Thomas William Lamont, but he softly voiced the House of Morgan's opinion that "artificial barriers against foreign trade" should be discouraged. "Some of our fellow-citizens think we can do all the selling and the other fellow all the buying. That has never been true," said he.

Steel's Voice-- As remarkable as the change of crude ore to polished steel has been the mental metamorphosis of President James Augustine Farrell of U. S. Steel Corp. in the past fortnight. Two weeks ago at the American Iron & Steel Institute meeting he spoke in a frank, uncompromising manner which was bearishly received (TIME, June 1). Three days later he made a radio speech telling of prosperity soon to come. At the Council he spoke once more. Waving the Tariff debate aside as "academic," he insisted that commodity prices must rise before recovery, but that "no one contemplating the vast resources of the United States, the basic soundness of our institutions . . . can have any doubt that we possess within ourselves the power to lead the world in trade recovery." These two ideas were incorporated in the Council's resolution. And as the Council adjourned Mr. Farrell made the additional statement that the resolution will mark the Turn, "already evident in many lines." Many an observer, puzzled by Mr. Farrell's change of tone, wondered if his ideas had not been subjected to the blast furnaces of powerful banking interests.

Topics. "It's Asia's century," said one-time Governor Wallace Rider Farrington of Hawaii, a bull on Pacific trade.

George W. Leman of Irving Trust spoke of Asia's silver problem.

Manhattan's gloom was discounted by Willis H. Booth, vice president of Guaranty Trust.

Farm prosperity would be the cureall, thought Horace Washington Bowker, head of American Agricultural Chemical, hard-hit by farm depression.

Eugene Peeples Thomas, vice president of United States Steel Corp., wanted bankers and traders to work in closer harmony.

Floyd B. Odium of Electric Bond & Share, just back from Rumania, said arbitration is a good solution to international trade difficulties.

Too many South American bonds were bought by the U. S., said Princeton's famed Dr. Edwin Walter Kemmerer, official financial diagnostician for many a nation. He showed how political upsets had halted public works programs in Latin America, blocked U. S. trade outlets.

Leis, Next year the Foreign Trade Council will convene in Hawaii. This year many of the members wore leis and flowers in anticipation. "I got the Hawaiian atmosphere the moment I entered the room," remarked Mayor James John Walker when he arrived 80 minutes late.

* Foreign envoys are supposed not to criticize publicly the policies of the countries to which they are accredited.

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