Foreign Trade 



By Geo. N. Peek, 



Special Adviser to the President on Foreign Trade 



OEO. H. PEEK 



This is the Mcond and last installment of Mr. 

 Peek's article discussinff the problems inTolved in 

 restorins normal exports of American farm prodacts. 

 —Editor. 



NOW I come to the point of what 

 we are trying to do in Xyashington 

 to improve conditions. I have in- 

 dicated that there are more than fifty 

 governmental bodies working on one 

 angle or another of foreign trade. These 

 are scattered throughout ten regular de- 

 partments of the Government, three in- 

 dependent agencies, 

 and seven emergency 

 agencies. In recent 

 months serious ef- 

 forts have been made 

 toward their coordi- 

 nation. Much prog- 

 ress has been made 

 in this direction and 

 more may be antici- 

 pated. 



I have indicated 

 that we have no ade- 

 quate system of na- 

 tional bookkeeping for foreign trade. 

 Much valuable information has been ac- 

 cumulated in one form or another and is 

 on file throughout the various depart- 

 ments and agencies. I am glad to tell 

 you that within the last few weeks ar- 

 rangements have j?een made for keeping 

 books, country by country. Commodity 

 studies of a comprehensive nature are 

 being made simultaneously, so that, as 

 in » private business, we shall know the 

 volume and value of particular commod- 

 ities moving in both directions. 



' Should Know Trend 



This means that as soon as this work 

 is well under way responsible authorities 

 sh«uld be able to know, at frequent in- 

 tervals, the condition and the trend of 

 trade and financial relations with each 

 country. It will be possible then for the 

 American public to understand what is 

 happening in our relations with partic- 

 ular countries, as well as with the world 

 as a whole, and to guard against such 

 violent movements of capital as occurred 

 in recent years with such disastrous 

 effect upon the nation. 



I have mentioned exchange restrictions 

 in other countries as one of the principal 

 barriers to our foreign trade. These 

 present one of the most difficult and 

 complex problems with which we are con- 

 fronted. The Administration is keenly 

 alive to this problem and is consistently 

 using all appropriate methods to bring 

 about a relaxation of' these controls. 



Further than this, in the Cuban Trade 

 Agreement recently negotiated, a clause 

 was inserted protecting the interests of 

 both countries in the event of currency 

 depreciation or exchange restrictions in 

 either country. Undoubtedly, provision 

 will be made in future reciprocal trade 

 agreements for the protection of Amer- 

 ican exporters against exchange restric- 

 tions that may be encountered. Where 

 general trade agreements cannot be 

 reached or are subject to long delay, 

 specific agreements may be negotiated 

 independently and in advance of the gen- 

 eral trade agreements. Indeed, personally 

 I would go further and say that in the 

 ■ case of countries exercising exchange 

 controls against us, the satisfactory solu- 

 tion of the exchange problem should be 

 made a prerequisite to the negotiation 

 of any general trade agreement. This is 

 particularly true in the case of nations 

 having favorable trade balances with us. 



Problem Not Easy 



In too many cases these favorable bal- 

 ances have been used for the payment 

 of obligations in other countries without 

 regard to the interests of our own 

 exporters and investors. In the case 

 of nations having favorable trade bal- 

 ances with us, we are in a position to act 

 effectively. We should be prepared to do 

 so if necessary. The problem is not an 

 easy one, but we are working on it and 

 I am hopeful of results. 



We are considering other barriers to 

 foreign trade found in the high tariffs 

 existing throughout the world, in the 

 quota systems and other restrictive meas- 

 ures adopted by various governments in 

 their efforts to improve or balance their 

 trade. We are seeking to minimize these 

 through negotiation of the reciprocal 

 trade agreements providing for mutual 

 changes in tariff duties and modifica- 

 tion of other trade restrictions.' Active 

 negotiations for such trade agreements 

 are in progress with a dozen or more 

 countries and will be undertaken with 

 other countries as soon as time and op- 

 portunity permit. 



A more serious problem is presented 

 by the extensive practice of foreign gov- 

 ernments in making special and exclusive 

 trade agreements with other countries, 

 the benefits of which are not extended to 

 our citizens in spite of existing most- 

 favored-nation treaties. We cannot ex- 

 pect to get something for nothing; and 

 accordingly until we are ready to do busi- 

 ness with other countries on a quid pro 



quo basis, we cannot hope to obtain the 

 advantages, or the trade, involved in 

 these special agreements. We are en- 

 deavoring to meet this situation by the 

 negotiation of special agreements of our 

 cwn with foreign countries. 



It may be that to make these serve 

 American interests effectively under 

 existing conditions, we may be obliged 

 to resort temporarily at least to our 

 earlier policy of extending most-favored- 

 nation treatment only to nations which 

 reciprocate in fact. If this proves to be 

 the case there need be no undue alarm. 

 Foreign trade policy must be based on 

 actual conditions and not upon theories. 

 There is no one formula to solve our 

 foreign trade problems. Foreign trade is 

 fully as complicated as domestic trade, 

 and it has the additional complexity of 

 using differing systems for the measure- 

 ment of values and differing media for 

 their expression. 



In another important field, through 

 the Export-Import Banks, to which I re- 

 ferred at the beginning of my remarks, 

 our Government is now in a position to 

 offer adequate facilities for financing 

 American exports on intermediate and 

 long-term credit bases. 



Our present credit machinery, designed 

 at a time when we were a debtor nation 

 and a heavy exporter of raw materials, 

 was never overhauled after we became 

 a creditor nation and a potential exporter 

 of finished products. The Export-Import 

 Banks are ready to handle sound business 

 in the foreign trade Tield, to assist in 

 barter transactions, and to cooperato with 

 commercial banks and other Hnancial 

 institutions in handling business which 

 on account of its maturity, its size or 

 other unusual conditions can qualify for 

 consideration. 



Will Not Subsidize 



The banks definitely do not propose to 

 subsidize exports at the expense of the 

 taxpayers, to furnish capital for wild- 

 cat promotional developments in foreign 

 lands, or to act as a collection agency 

 for old slow accounts. With the record 

 of the past decade clearly in our minds 

 we would rather handle a little good busi- 

 ness than a lot of bad business. A good 

 merchant never oversells a customer, and 

 a good cr^it man helps a customer to 

 remain a good risk. 



I have tried to outline to you some of 

 the high lights in the confused and con- 

 fusing field of foreign trade. In closing 

 I shall present to you some of the per- 

 sonal conclusions I have reached with 

 respect to our future foreign trade 

 policy. 



In the first place, it seems clear that 

 foreign trade has become a definite and 

 direct concern of our Government. Under 

 modern conditions, our exporters com- 

 pete with nationals of foreign countries 

 (Continued on page 17) 



JANUARY, 1935 



