The Cost of Not Importing

In no other field except politics do Americans talk such "pure jabberwocky" as in discussions on international trade. So said Vergil D. Reed, vice president of the J. Walter Thompson advertising agency, before 400 businessmen at the 23rd annual Boston Conference on Distribution this week. The jabberwocky, said Reed, was a hangover from the pre-1914 days when the U.S. was a big debtor nation and had to strive for "a favorable balance of trade." As a result, said Reed, most Americans still "believe profoundly that exporting is desirable, that exporters are gentlemen, scholars and benefactors of the human race, that importing is undesirable, and that importers are liars, thieves and scoundrels taking food out of the mouths of American babies. Trading means both buying and selling, and without both there is no trade but merely gifts, grants, defaulted loans and the bitterness of misunderstanding as a reward for forced exports."

Reed's thesis was not new; many businessmen have been preaching it for years. Its virtue lay in its primerlike clarity--and some startling figures. From 1914 through 1950, he said, U.S. exports amounted to $300,700,000,000 while imports amounted to $191 billion. More than $30 billion of the gap of $109,700,000,000 represented exports paid for by dollars that foreigners had acquired through private U.S. remittances and investments and through U.S. purchases of gold. But some $78 billion of the gap, Reed calculated, was accounted for by U.S. taxpayers' dollars handed out to foreigners either in the form of grants or of (largely defaulted) U.S. loans. In postwar years, such gifts accounted for about a fifth of all American taxes.

The alternative to these subsidies is for the U.S. to cut exports--and thereby reduce other people's standard of life--or to cut tariffs, encourage imports and American tourist expenditure overseas, and balance the nation's exports with imports. Reed left his audience in no doubt as to which course he would choose: "Has it become easier for us Americans to give away our natural resources, our manufactures, our services, our capital, our taxes and our purchasing power than to think? Wouldn't we help other nations raise their standard of living ... far more by really trading with them rather than playing rich uncle to a resentful world? Just how long can we go on being export crazy and import blind?"

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