Through the Curtain

Three top U.S. businessmen last week called for a new foreign economic policy for the U.S. All three agreed that the U.S. should accept and promote the expansion of East-West trade.

P: Said Trans World Airlines' Chairman Warren Lee Pierson, head of the U.S. Council of the International Chamber of Commerce: "We should go slow in preaching the value of free enterprise and of competition abroad while we erect unreasonably barriers to competition with our own markets. We should not insist that friendly nations shut off trade with Iron Curtain countries unless we are will ing to assist them in finding alternate markets."*

P: Said Hotelman Conrad Hilton, who operates 27 hotels in three nations and will soon open one in Istanbul, only a few miles from the Iron Curtain: U.S. businessmen should take a "calculated risk" and start trading with Iron Curtain nations. "The circulation of food to the hungry of the captive nations would be more effective than H-bombs in the destruction of Communism."

The third voice was that of Clarence Randall, foreign economic adviser to the President, who has tried harder than any other businessman to steer the U.S. toward freer trade. In his new book, A Foreign Economic Policy for the U.S. (University of Chicago; $1.95), Randall says that the U.S. must move from a "mosaic of improvisation'' to a policy that will produce "a nation that is secure."

As part of that policy, the U.S. should relax East-West trade restrictions. For example, said Randall: "Emotion and political controversy seem to block our disposal of agricultural surpluses by direct sale to Russia or other Communist-controlled countries in exchange for gold. Yet here are markets which we might be able to enter without serious damage to our friends ... It is sometimes said that by taking Russian gold we somehow strengthen their economy. But the effort put into production of gold in Russia would by hypothesis be effort withdrawn from the field of heavy industry or munition making."

Trade & Peace. East-West trade is coming anyway, says Randall, "and there is little we can do about it unless we risk the whole temper of our international relationships by strict attempts to interfere . . . The experience of mankind leads one to think that trade makes for peace. The more points at which the Iron Curtain can be penetrated and the more individuals there are who cross it to deal with individuals on the other side, the more chances there would seem to be of ultimate mutual understanding."

A keystone of U.S. policy, in addition to gradual tariff reductions, simplified customs procedures and relaxations of the "Buy American" policy, should be a flow of private American capital into the world economy. But Government must provide incentives for capital by such changes as a reduction in the corporate tax rate on foreign earnings. In calling for tariff reductions, Randall points out how high tariffs can transfer burdens from one part of the economy to another. When the U.S. banned imports of Danish bleu cheese, for example, the Danes banned U.S. coal (see below), thus transferred Wisconsin's problem to West Virginia.

Whose Fault? Businessman Randall made plain where he thinks the chief blame lies for the failure of the U.S. to develop a broad trade policy. Says he: "The greatest roadblock of all ... is the inability of our business community to place the national welfare above self-interest . . . We must look to the companies and to the individuals in question to govern by self-restraint the exploitation of their own interest when the general welfare is at stake."

*Last week the Department of Defense made the first move toward relaxing its "Buy American" policy. It awarded a $1,000,000 contract to Britain's English Electric Export and Trading Co., Ltd. for two turbines at Table Rock Dam on the Mississippi-Arkansas line. "Buy American" gives preference in Government contracts to U.S. manufacturers so long as their bids are no more than about 20% above foreign competitors. But the British bid won the turbine contract with a bid only 11.8% below the lowest American offer.

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