An Authorized Statement of President Wilson's Plans

1916

L.' Ames Brown in Collier's.

No sane man doubts that the coming of peace in Europe will modify profoundly the present conditions of business enterprise in the United States.

Among economists, as well as publicists, opinions differ as to the extent to which the industries of the nations now at war will be re-energized when peace makes them again our competitors in business. Some of our prophets have broadcasted the prediction that European manufacture may then be so speeded up that the resulting flood of products will swamp our industries unless they are protected by a solid tariff bulwark. Others, including President Wilson, hold that America, having husbanded and conserved her great resources while other nations were passing through the travail of a great war, is better able than ever before to meet the pace of her international competitors.

President Wilson believes that the American position is sound, not only because our resources have not been impaired, as have those of the European belligerents, but because our manufacturers have been stimulated and trained by new demands the war has made upon them. They have learned to meet, not only the war needs of Europe, but also those wants at home which heretofore foreign industry satisfied for us. Finally, the President attaches great importance to the fact that the United States has become, by reason of the Federal Reserve Act, the great financial power of the world.

Keen-minded men of every viewpoint are agreed, however, as to the imminence of severe new tests for American industry and as to the necessity of preparation to meet these tests. A period of intense competition looms up ahead of the nation — a competition of peace times which probably will not be comparable to any international industrial competition the world has ever known.

President Wilson believes that preparation for national defense is the first and most essential requirement the Government is called upon to meet. This he regards as a sort of insurance against an irremediable conflagration. But once our house has been put in order, it becomes the paramount duty of the Government to see to it that the most efficient preparation possible is made for the peace which will liberate the energies of the European power for industrial activity. Mr. Wilson already has looked ahead to the manner in which this primary duty of the American Government is to be performed, and he has evolved a comprehensive plan of preparation. It is the privilege of the writer of this article to present from intimate knowledge the views President Wilson has formulated with the object of giving a new and fuller meaning to American efficiency.

As soon as industrial preparedness is mentioned the mind of the American business man turns to the tariff. The tariff is the first line of trenches of American industry, our business men believe, and the first duty of the Government officers at work upon an adequate preparedness policy is to consider the question of tariff revision. Neither the President nor the well-informed business man has ignored the lesson contained in the announcement that Japan already has revised her tariff to meet new conditions; that England is preparing to enact prohibitive duties upon the products of her enemies and moderate duties upon the products of neutral nations at the close of the war; that Germany will revise all of her commercial treaties in 1917; and that a strong sentiment exists in England, France, Russia, and Italy for the negotiation of a commercial alliance.

The Tariff Must Be Revised.

President Wilson considers himself bound by no commitments save to a competitive tariff policy. The Underwood-Simmons Tariff Law embodied his ideas of the competitive needs of our industries at the time its schedules were framed — when pre-bellum industrial conditions obtained. His mind is entirely open as to the extent to which competitive conditions may have been modified by the European War. He does not need to be convinced that these conditions may be altered. He is prepared to act upon the facts as they may be gathered and their value impartially assessed through the instrumentality of a nonpartisan tariff commission. He considers that an earnest of his open-mindedness on tariff revision has been given in his support of the measure adopted at the present session of Congress to levy higher duties on dyestuffs as a means of securing necessary industries in the United States. The President considers his position, as here outlined, to be in the strictest accord with the avowed principles of his party.

The Tariff Commission is the instrumentality through which the President expects the Government to gather the facts needed for guidance in adjusting the tariff schedule. That would be perhaps the chief purpose of the Tariff Commission's suggested journey to Europe, though that would be only one phase of its inquiries. President Wilson is now as thoroughly convinced as anyone that America is not at the period of her destiny when free-trade ideas can be applied in our tariff making consistently with the necessities of revenue. It is an obvious fact, to which a section of the Democratic leaders, not including the President, persistently has closed its eyes, that all tariff duties in some degree protect the industries concerned. Tariffs protect, whether drawn with an eye to protection or to revenue, and the wisely drawn tariff law — the competitive tariff law — is that which balances revenue features with the nicest sensing of the needs of developing commerce and industry. It can be said that the President will study the report of the Tariff Commission with the view of formulating an adjustment of necessary tariff levies which will effect the fullest measure of development.

"There are many paths which lead up the mountainside, but when we reach the peak the same moon we shall see," says a proverb of Old Japan. How applicable it is to the present tariff discussion! Some one has called President Wilson's attention to the fact that fully 50 per cent of arguments among individuals about the tariff grow out of misunderstanding of isolated facts and not out of differences on fundamental principles. He does believe that a clear presentation of the facts relating to the conditions of competition between the United States and foreign countries will go far toward weeding out differences of opinion attributable to lack of information; so far that it will be possible to formulate a tariff policy for the United States which will command the support of an overwhelming majority of the people of the country regardless of partisan affiliations. The possibility of such an approximate agreement on a subject that hitherto has divided the electorate into two antagonistic sections is attributable in large measure (the President considers) to the development of independent thinking among the voters.

The great body of the people (Mr. Wilson believes) have made up their minds that the industries of the country ought not to be hampered by a too strict adherence to abstract tariff theories, but that the fullest measure of opportunity should be opened to them so long as the conferring of special privileges is avoided. On the other hand (as the President understands the public mind) there is the conviction that our industries ought not to be fattened to the point where apoplexy is threatened; but again, the conviction is just as clear that it would be the height of national folly to lower the entire range of tariff duties to such an extent that, coincidentally, the Government would be deprived of an important part of its accustomed revenue and the industries of all of their accustomed re-enforcement. So much for the President's views on the tariff, which relate solely to the defensive preparation of American business for the tests to come at the end of the war. The President believes that the aggressive and buoyant spirit of American business is such that it will be more concerned with offensive measures, with preparation to wade into the markets of the world, and to establish American supremacy there.

The President's policy includes numerous legislative and executive steps through which this preparation is to be accomplished. Most important of these is his plan to procure definitive authorization for American firms to co-operate for foreign-selling operations without regard to the provisions Of the Sherman Anti-Trust Law. The President recognizes that in the past the American Government has been somewhat provincial in its attitude toward this need of our export business. The war and the vigorous investigation by the Federal Trade Commission have orientated the President and the Government, however. Now it is realized that the great competitive strength of Germany and the other industrial nations of Europe in the past has been due in large measure to the freedom with which their industries were permitted to organize for purposes of foreign trade. In Europe individual companies of one nation did not need to meet ruinous competition of other nations. They could present a solid national front. This was accomplished through the organization of syndicates and cartels which have flourished for decades in every great industrial nation except the United States.

Set Business Free.

The President's understanding of prospective post-bellum conditions holds up to his mind the probability that hereafter American industry may have to compete not only with those solid national organizations, but with international organizations. It is because he faces this prospect that the President believes it is high time for the American Government to strike from our industries some of the shackles in which they have labored because the Sherman Law failed to authorize the needed and wholesome processes of co-operative business organization.

President Wilson's attitude toward business organization as a principle for domestic as well as foreign application is different from that which has determined the policy of many Governmental officers in the past. Then the Government was so much concerned with eradicating the flaws in our business structure that it gave no large measure of thought to developing business opportunities. Under the President's inspiration the Trade Commission idea has been evolved, whereby the anti-trust division of the Department of Justice has been prevented from flourishing its sword over the heads of business organizations, merely because of the size of these organizations. Mere bigness is not held to be cause for suspicion by the Trade Commission, which is now the chief instrumentality of enforcing the anti-trust laws.

The Trade Commission has encountered little difficulty in straightening out kinks in commercial organizations which involve violations of law because business men have been made to realize that the main concern of this body has been the promotion of growth and the development of opportunity.

The Tariff Commission will find many ways of being useful to the business world if the plans President Wilson has formed for it are followed. The war has developed new industries in the United States, notably the dyestuff industry. Great benefit can be conferred on industries of this character, the President believes, if the Tariff Commission studies their methods of operation and subsequently the methods of operation and the economies which obtain among the European nations, where these industries have been longest established and are most efficient.

The President expects the Commission to go into the field of foreign tariff duties and to convey to American export organizations complete data as to the existence and effects of discriminating duties, commercial treaties, and preferential rates; the effects of export bounties and preferential transportation rates; and the effects of any special or discriminating privilege that may be used against the United States.

The scope of the Trade Commission's activities, according to the policy in the President's mind, includes the development of plans by which American business firms may best prepare themselves for the plunge into the international markets. For example the standardization of materials, manufacturing methods, and products, so that a uniformity of quality and price may be maintained in foreign markets, will obviate many of the difficulties experienced by American exporters in keeping up their historic endeavor to compete with one another. Another measure approved by the President is the development of a system of accounting which will enable the American business man to tell more accurately what it costs him to turn out his product. The President was surprised recently to learn from Federal Trade Commissioner Hurley that, whereas 50 per cent of German manufacturers can compute the exact cost of their products, only 10 per cent of American manufacturers can do so.

In general, the President intends that the Trade Commission shall apply itself vigorously to methods of reducing the cost and increasing the efficiency of production.

The President is wholly committed to plans for maintaining and developing the transportation facilities at the disposal of the nation's business. His views on the need for an American merchant marine such as will assure American manufacturers means of conveying their products to foreign markets without depending on other nations, are now well known, and the shipping bill which embodies his ideas is now before Congress. The public is not so well informed, however, as to the President's attitude respecting the conservation and development of our domestic transportation facilities, namely, the railroads. With a view to obtaining the real facts about the difficulties confronting our great railroad companies the President has brought about the creation of a Congressional Commission to make a thoroughgoing inquiry into all phases of railroad problems. The President does not ignore the fact that in many instances the State Railroad Commissions and the Federal Interstate Commerce Commission have worked at cross purposes, thereby seriously retarding the development of the roads as national utilities. The President's mind is open on the subject of Federal incorporation and he will embody in his constructive business policy the conclusions which may seem justified by the investigation of the Congressional Commission.

Welcomes "Dollar Exchange"

There are many other phases of the railroad problem, however, regarding which the President desires the public to be better informed so that the Government may be enabled more fully to do its duty by the roads. These relate to credits and methods of expansion, as well as to schemes of regulation; and most important of all, to the spirit in which the public is to approach all questions relating to the welfare of the common carriers.

Another phase of the President's plans centers around his desire to provide means of assuring to the country the most efficient exertion of its great accumulated financial strength at the end of the war.

The United States has more gold than either group of the European belligerents and her financial position is incomparably stronger than that of any European nation with which we are shortly to engage in competition. But the President faces the fact that this new and happy condition has been created by the war and that plans must now be evolved for expanding our credit structure if the nation's industries are to reap the full benefits of our great financial strength when peace comes. The President believes that one of the measures which should be taken toward this end is the establishment of joint agencies of the Federal reserve banks in Europe as soon as sufficiently stable conditions are restored there. He also favors the establishment of such agencies in South America. It is his policy further to encourage American banking institutions to establish foreign branches in South America, where American trade is endeavoring to establish new footholds, and in general to adopt the most liberal attitude permissible while observing the spirit of the Federal Reserve act. The development of "dollar exchange" he contemplates with real enthusiasm.

The Government Must Help Business.

The President's policy may be summarized in the statement that he desires the Government to assume the role of the vigorous and robust friend of American business men in their endeavors to cope with competitors from other nations. This general statement covers not only the measures which have been discussed in this article and the holding of financial conferences between the United States and countries with which our trade may be expanded, but other concrete ideas for legislative enactments and executive acts which will promote the same purpose.

The President believes that the measures which his administration has taken for conserving and energizing American labor are part and parcel of the policy which I have been permitted here to set forth.

—The Fryeburg Post, Fryeburg, Maine, Sept. 26, 1916, p. 8.