Baa, Baa, Black Sheep

Under Secretary of State Will Clayton whipped back from Switzerland last week in haste and alarm. He left behind him the Geneva Conference which the U.S. State Department hoped would open new ways to world peace through freer world trade. The conference was stalled. It was stalled because of reports from the U.S. Congress. Largely due to the influence of Arthur Vandenberg late last winter, Congress had let the State Department go ahead with its reciprocal trade program. But even as Clayton arrived in Washington, Minnesota's irreconcilable Isolationist Harold Knutson warned: Congress will promptly raise any tariff the State Department lowers if it damages "a vital industry." As chairman of the House Ways & Means Committee, Knutson set up a subcommittee* to keep the watch on the tariff wall.

But Clayton was more immediately concerned about what had already happened while his back was turned. In one industry which was so vital to other countries that a breakdown in negotiations at this point could mean the breakdown of the whole Geneva Conference, Congress had virtually declared economic war. The industry was wool, of which the British Commonwealth nations annually produce more than 1.7 billion pounds, must export more than 800 million pounds.

Little but Loud. The background of Congress' action was enough to make World Businessman Clayton give up in despair. Wool-growing is not a vital U.S. industry. It is a small, uneconomic business which assays at less than 1/1000 of the national income. But it has powerful friends--Congressmen and Senators from 23 wool-growing states, who can bleat as loudly as storm-whipped rams while trading support of bills to protect Southern peanut-growers for bills to protect Western sheep-raisers.

Four years ago, in order to save their dwindling industry, they induced the Roosevelt Administration to begin a wool-buying program. The Commodity Credit Corporation bought every pound of domestic wool at a fixed price. But Australia, which is much more efficient at sheep-raising and must sell wool or go bankrupt, sold to U.S. manufacturers at a lower price, in spite of the tariff wall. Combed U.S. wool was priced at $1.20; combed Australian, generally a finer grade, was sold at $1.09, which included 34-c- tariff. U.S. manufacturers bought Australian wool while U.S. wool piled up in Government warehouses. Last spring the warehouses were stuffed with more than a year and a half's supply.

The question now was what to do with it. The CCC could be authorized to sell it below the parity price--at a loss of millions of dollars. Furthermore, British Commonwealth operators, determined to hang on to the U.S. market, would undoubtedly cut their prices below CCC's. U.S. wool-growers still clamored for Government support, which meant that more & more domestic wool would be dumped into the Government's lap, would have to be resold somehow, somewhere.

Hope Bill. Nevertheless, the Senate by a voice vote passed a bill proposed by Wyoming's Senator Edward V. Robertson, which directed CCC to go on buying wool through 1948, sell it at cut prices to meet the competition of foreign wool, and take the loss. The Robertson bill authorized $130 million to finance the program.

Harry Truman's own Under Secretary of Agriculture, Norris E. Dodd (of wool-growing Oregon), and others suggested an added device: an import quota which would limit the amount of foreign wool brought into the country. Behind complacent Ed Dodd stood the powerful National Wool Growers Association lobby. In the House, Kansas' Clifford Hope proposed a bill which directed the President not only to impose quotas but to impose import fees. It was the Hope bill in particular which brought Will Clayton flying home.

He wrote to South Carolina's Harold Cooley, minority member of the House Agriculture Committee: "If at this time, when we are actually negotiating with other countries at Geneva for the lowering of the trade barriers, we raise new barriers, as this bill proposes, we stand convicted of insincerity." The world would believe, despite all protestations, that the U.S. in the end would retreat into economic isolation.

Last week, despite Will Clayton and Congressman Cooley, the House passed the Hope bill. House and Senate conferees will iron out their two measures. In a few weeks the bill in sheep's clothing will be at Harry Truman's door. He might exercise his veto to save the Geneva Conference, but if he does he will risk the friendship of many a potent politico in 23 woolgathering states.

* Chairman of the subcommittee: California's case-hardened protectionist Bertrand Gearhart, who called the Geneva Conference a "round of cocktail parties for do-gooders." Members: Nebraska's Carl Curtis and Pennsylvania's Richard Simpson, both Republicans, both opposed to the Administration's reciprocal trade program; North Carolina's Robert ("Muley") Doughton and Tennessee's Jere Cooper, both Democrats, both supporters of the trade program, at least in principle.

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