View of America: Down and Out or Up and Punching

View of America: Down and Out or Up and Punching?

On Aug. 14, the U.S. was a world champion boxer taking punishment in the corner of the ring. On Aug. 15, by one movement, it had gained the middle of the ring and room for maneuver --a true heavyweight able to dictate the fight. But will its legs stand the next hard round?

WITH this vigorous analogy, Sir Reay Geddes, chairman of Britain's Dunlop Holdings, a huge, diversified rubber concern, summed up many Europeans' views of President Nixon's new economic program and its impact on other countries. Sir Reay was one of 27 top European businessmen who returned to their offices and reported to their governments last week the opinions they had formed during TIME'S Report on America News Tour. These economic leaders, brought to the U.S. by TIME, met and questioned many policymakers, including Treasury Secretary John Connally, Secretary of State William P. Rogers, Defense Secretary Melvin Laird, House Ways and Means Committee Chairman Wilbur Mills, and Senators Mike Mansfield, Hugh Scott, Hubert Humphrey, Edward Kennedy, Henry Jackson and Jacob Javits. The businessmen then spent a morning discussing with TIME editors and correspondents their conclusions about the future.

WILL A TRADE WAR BREAK OUT?

Most of the guests were deeply and fearfully convinced that if the U.S. does not soon remove the import surcharge and other restrictive trade barriers, its trading partners will retaliate with similar measures. Some argued that until the surcharge is scuttled, the world will not find an effective solution to its monetary problems. All agreed that moves made in the next three or four months are crucial, because they will determine whether tensions rise or fall. But the Europeans' fears were soothed somewhat by their interviews with American political and business leaders.

"Those people whom we saw seemed sincerely to understand that if no solution is reached by, say, the end of January, the continuing uncertainty may trigger a trade war," said Count Rene Paul Boel, of Belgium's giant Solvay chemical company. "Nobody wants a trade war, so I consider that there is a willingness on both sides of the Atlantic to push trade and monetary negotiations as fast as possible. I feel there is a real possibility of bilateral or other negotiations being opened on the subject of revaluation of currencies."

Gerrit A. Wagner, of the Royal Dutch/Shell Group, agreed with Count Boel, but warned: "The U.S. means business. This is no flash in the pan. I believe the Europeans should realize that the trade and monetary initiatives taken by the U.S. are irreversible for a long time to come. We can argue about the manner in which they are being done. We cannot argue about the direction in which this country has decided to go. We had better ask ourselves how we can live with this."

Dr. Alfred Schaefer, of the Union Bank of Switzerland, echoed that emphasis: "The U.S. has thrown a stone in the pond of international trade and financial relations. But all of us cannot just lie back and watch what has happened. We have to work together quite fast. If we do not, the waves provoked by the stone could be quite dangerous for the world's economic and financial structures."

IS JAPAN A KEY TO AGREEMENT?

Japan's plight was well understood by the Europeans, who realized that Japan has been hit hard by U.S. trade and monetary action. The visitors stressed that in its race to become a preeminent industrial power, Japan has strained its social and economic framework, leaving itself peculiarly vulnerable to a slowdown in world trade.

"We should not be totally mesmerized by the Japanese," said Sir Reay Geddes. "They are not gods and they have their weaknesses. If their industries lose sales beyond a certain point, they could very quickly disclose severe weaknesses." Furthermore, said Sir Reay, a turndown in economic growth could create grave social and political unrest in Japan.

Looking at its vulnerability, the Europeans seemed confident that Japan would make trade and monetary concessions. Said Frederik J. Philips, of The Netherlands' Philips company, Europe's largest electronics concern: "The Japanese do not like to make enemies. They come to terms when they feel it is absolutely essential. Until then, they postpone decisions."

The Netherlands' Gerrit Wagner reminded the discussion group: "In terms of income per capita, Japan is No. 20 on the world list." He added: "In the trade field, there could be one American solution in Europe and quite another in Japan."

IS THE U.S. BECOMING PROTECTIONIST?

Sir Arthur Norman, chairman of the De La Rue Co. of London, commented somberly: "Over the past few years, the U.S. free-trade lobby has been very successful, generally speaking, in holding back the protectionist tide. That tide has now overtaken us temporarily--and we have to ask how long 'temporarily' will be." Belgium's Count Boel suggested: "I think the U.S. will remain faithful to a doctrine not of free trade, but of fair trade, to gain equality. We and the Americans recognize that the world has changed, that a new approach has to be made."

Pierre Waltz of Switzerland's Societe Suisse pour I'Industrie Horlogere, a holding company of watch manufacturers, warned: "We have to assume President Nixon's good faith internationally. But we have also to add that if he does not succeed, this country will almost certainly go protectionist." Gerrit Wagner agreed: "We should take back to Europe a message that though the situation is serious, the U.S. has the best intentions. However, if it is confronted with a choice between a national and an international solution, it will opt for the national one."

IS THE U.S. BECOMING ISOLATIONIST?

The prospect of an isolationist America perturbed the Europeans. Giuseppe Bertola, of Switzerland's Brown Boveri, said: "I have always found in America a certain missionary zeal. The First World War made the world safe for democracy and revived in Europe the truth about the American dream, the American way of life, and so on. Now it seems that this missionary zeal has been lost in the big changes through which we are passing. America speaks no more of leadership, but of partnership. Everybody is confused by what is intended, because just at a moment when it is necessary, you are giving up your missionary work."

Count Boel commented: "The U.S. is not growing isolationist. But the U.S. now wishes for a doctrine of equality, to be one among the others, sharing the burden and keeping NATO as the cornerstone of this new policy. If I had to give a definition of that policy it would be, 'partnership, strength, and a willingness to negotiate.' Most of the people we met in Washington were in favor of a carefully considered, negotiated withdrawal of U.S. and Soviet troops from Europe."

The prospect of a diminishing U.S. role alarmed Alfred Heineken, of The Netherlands' Heineken Breweries, because he foresaw that a power vacuum would develop. "I have heard everybody from potential Presidents to Congressmen talking about the Europeans and what they should do, and what our contributions to NATO should be. But the fact is that propaganda from Eastern Europe and Russia has been so successful --at least in my country--that it worries me. We fight that, those of us who have slightly capitalistic tendencies, but the task is made harder by what I call masochistic American writing. A lot of negative comments about America penetrate the European brain. I would be extremely happy if America would reestablish some sort of dream. We all know this country is not run by a bunch of fools, but by responsible people. For the world's sake, America should not create a negative impression about itself because that makes things impossible for us in Europe. We do not want to see NATO end. We do not want to become socialists."

CAN AMERICA AFFORD BUSINESS AS USUAL?

The Europeans were generally impressed by the quality of American leadership.

Dr. Joachim Zahn, of Daimler-Benz, remarked: "Inflation is a test for the capability of free enterprise and of its superiority to all planned or socialistic societies. I say frankly that I admire your President for daring at such a moment to announce a wage-price freeze, to declare that profit is indispensable for progress, and to warn, 'We cannot afford business as usual.' It is our corporate responsibility to support such an approach."

Assessing America's future, Sir Reay Geddes said: "America is powerful, energetic and, like Muhammad Ali, a little apt to talk during the fight. In terms of economic and military resources, of skills, tools and weapons, the U.S. is obviously strong. The political system is sometimes noisy and sometimes negative, but it is adaptable and bipartisan in emergency. We are seeing now that ability to respond to emergency. There is spreading from the White House a purity of purpose. The purity may get a little blemished as it spreads, but that is how new ideas start. Senate leaders told us that spirits would rise and confidence grow as the disengagement from Viet Nam was completed and as economic growth came along; the American idea would begin to reassert itself, broadened to include responsibility for the less fortunate. While we were talking about theories, abstractions and statistics, we in this group were worried. When we met the people who do things, we all felt better."

Nevertheless, the visitors were disturbed by the rise of protectionist sentiment. They feared that, once unleashed, protectionism could not be easily restrained, and would lead to a trade and monetary battle that might severely damage the world economy.

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