A stable price level, or the conditions that accompany it, would handicap the United States in its efforts to unite the free nations of the world against communism and to make these nations prosper so that communism cannot flourish within their borders. Ever since the end of the war, the United States has been giving economic aid in large volume to the rest of the world. Everyone realizes, of course, that economic aid is a stopgap. It is not satisfactory to either giver or receiver. In the long run it strains the generosity of the giver. Even more important, it is inconsistent with the dignity and independence of the receivers. The large grants of foreign aid by the United States must be replaced within several years by something else, and it is obvious what this "something else" must be. To some extent it can be investments by this country in other lands, but in the main, it must be greatly increased imports by the United States from other countries.
The needed rise of imports into the United States is about $4 billion or $5 billion a year. This is the increase in sales to us which would enable other countries to continue to purchase from us as much as they have recently been buying. Foreign countries can supply a multitude of goods that enterprises and consumers in this country would gladly buy—iron ore, aluminum, copper, machine tools, scientific instruments, gloves, lemons, cameras, toys, fish, cheese, hams, china, fine worsteds, silverware, glassware, fine furniture, wines and spirits, motorcycles, bicycles, and many other things. And the influx of a wide variety of foreign-made goods is precisely what the American system of free enterprise needs in order to make it still more competitive, still more enterprising, and still more dynamic.
But will American businessmen, farmers, and workers tolerate a large rise in imports? Are they willing to let the rest of the world sell to us as much as it buys from us? During the last year there have been disturbing signs that they will not. Last year Congress imposed quotas on foreignmade cheese. Furthermore, the Trade Agreements Extension Act of last summer requires the Tariff Commission to investigate applications from domestic industries for relief from injury by foreign competition. Fifteen industries have applied for such relief. A member of the Senate has proposed that all imports of commodities containing materials which are controlled by allocations to industrial users in the United States shall be restricted by quota to half of the pre-Korean War level. The idea behind this
proposal is to impose on foreign sellers a handicap roughly equivalent to the handicap imposed on American producers by the limited availability of certain materials. The proposed restriction, however, is so drastic that it would undo all the gains made by most countries in building up their sales to the United States in the past two years and more.
The proposals to limit imports into the United States must be good news to Russia. They come at the very time when Russia is endeavoring to tempt European countries to trade with her by offering to buy part of the output of their depressed consumer-goods industries. The United Nations' technicians estimate that the percentage increase in industrial production during the last year was considerably greater in Russia than in the United States. As Russia gains in capacity to produce, she will be able to offer more attractive trade deals to the countries of Western Europe. The United States must be ready to match these Russian offers—in fact, it should anticipate them by encouraging a large increase in sales by Western Europe (and Japan and other countries as well) to the United States. One can easily envisage the enormous good will this country would gain in Britain, France, Western Germany, Belgium, Italy, the Netherlands, Japan, and other countries by enlarging its purchases from them by several billion dollars a year.
A large rise in imports by the United States from the rest of the world is not simply something that would be desirable. It must actually happen; it must be the cornerstone of American economic policy. More imports by us are necessary to replace the inevitable reduction in our aid to other countries and to offset the more and more attractive trading opportunities Russia will be able to offer to Europe, Japan, and other regions. Americans should understand plainly that without a large increase in imports the foreign policy of the United States lacks a solid economic foundation.
How can a substantial rise in imports be brought about? Several steps are needed. One of them certainly is to maintain such a strong demand for the output of domestic industry that growing imports will not seriously disturb businessmen and will not greatly arouse American protectionism. But a strong demand for goods here means at least a slowly rising price level. Hence the success of American foreign policy requires the kind of market conditions that produce a slow advance in prices.