means and not by tariffs and import quotas. I believe that normally this is sound. However, I have appointed a special Cabinet committee which is now surveying the whole field of our minerals policy and have drawn their attention to these recommendations.1 AGRICULTURE Perhaps no sector of our economy has a greater stake in foreign trade than American agriculture. In recent years, for example, one-third of our wheat, forty percent of our cotton and rice, and one-fourth of our tobacco and soybeans have been exported. It is highly important to maintain foreign markets for our agricultural products. Any program designed to serve the interests of American agriculture must take due account of the necessity for export markets. Put in the words of the Commission, "It is necessary to harmonize our agricultural and foreign economic policies without sacrificing the sound objectives of either." I am convinced such reconciliation is possible. Acceptance of the recommendations in my agricultural message of January 11 will, I feel certain, help accomplish this objective.2 MERCHANT MARINE With respect to our ocean shipping, we must have a merchant marine adequate to our defense requirements. I subscribe to the principle that such support of our merchant fleet as is required for that purpose should be provided by direct means to the greatest possible extent. Such a policy, however, requires a careful analysis of the means available for providing direct support, its possible effects on foreign flag vessel carryings, and its total costs before a specific program can be recommended. The Department of Commerce has already studied this problem at length. Its findings will be further reviewed within the Executive Branch in order to develop specific recommendations to transmit to the next session of the Congress, in addition to the proposals submitted by the Executive Branch that are now before the Congress.3 INTERNATIONAL TRAVEL International travel has cultural and social importance in the free world. It also has economic significance. Foreign travel by Americans is a substantial source of dollars for many countries, enabling them to pay for what we sell them. 1 The Cabinet Committee on Mineral Policy was appointed, Oct. 26, 1953. Its membership consisted of the Secretary of the Interior (Chairman), the Secretary of State, the Secretary of Commerce, and the Director of the Office of Defense Mobilization. The Secretary of the Treasury and the Director of the Bureau of the Budget served as consultants. The committee submitted its final report to the President, Dec. 1, 1954. For a summary of its findings, see the Department of State Bulletin, Dec. 27, 1954, pp. 988-990. 2 H. Doc. 292, 83d Cong., 2d sess. See the two amendments to the Merchant Marine Act of 1936 (PL 664 and PL 781, 83d Cong., 2d sess., Aug. 26 and Sept. 3, 1954; 68 Stat. 832 and 1267). 1 While the promotion of tourism is primarily a responsibility of the countries which welcome visitors, and is a function for private enterprise, there are some specific governmental actions which can be helpful. For example, there is H.R. 8352 which increases the duty-free allowance for tourists from $500 to $1,000, exercisable every 6 months. I recommend its passage. From time to time I may have other recommendations for legislative action to stimulate travel. Meanwhile, in the executive branch, I shall instruct the appropriate agencies and departments, at home and abroad, to consider how they can facilitate international travel. They will be asked to take action to simplify governmental procedures relating to customs, visas, passports, exchange or monetary restrictions and other regulations that sometimes harass the traveler. ECONOMIC AID AND TECHNICAL ASSISTANCE Assistance extended in the past by the United States to other free nations has played an effective part in strengthening the national security, developing important resources, and opening up significant opportunities, for ourselves and for others. It has also carried with it, in many instances, particularly in technical cooperation and famine relief, a deep humanitarian response by our people. However, economic aid cannot be continued indefinitely. We must distinguish between an emergency and a chronic malady, between a special case and a general rule. I subscribe, therefore, to the principle that economic aid on a grant basis should be terminated as soon as possible consistent with our national interest. In cases where support is needed to establish and equip military forces of other governments in the interest of our mutual defense, and where this is beyond the economic capacity of another country, our aid should be in the form of grants. As recognized by the Commission, there may be some cases in which modest amounts of grant aid to underdeveloped countries will importantly serve the interest of security. I further agree that in other situations where the interest of the United States requires that dollars not otherwise available to a country should be provided, such support to the maximum extent appropriate should be in the form of loans rather than grants. In extending such loans, we must be careful not to interfere with the normal lending activities and standards of the Export-Import Bank. The International Bank is the primary institution for the public financing of economic development. The Export-Import Bank will consider on their merits applications for the financing of development projects, which are not being made by the International Bank, and which are in the special interest of the United States, are economically sound, are within the capacity of the prospective borrower to repay and within the prudent loaning capacity of the bank. I approve the recommendations of the Commission on Foreign Economic Policy that the United States participation in technical 1 Did not become law. cooperation programs should be pressed forward vigorously. Such programs should concentrate on providing experts and know-how rather than large funds or shipments of goods except for necessary demonstration equipment. They should not provide capital for investment but should be so administered as to fit into the programs of development of the assisted countries and they should be related to any private or public investment likely to be forthcoming. Review of the requirements for the Mutual Security Program has been conducted with these principles in mind and substantial reductions in grant aid have been made by this administration. The legislation which I shall later propose for the Mutual Security Program will reflect these principles.1 EAST-WEST TRADE In viewing the problems of other nations of the free world, we are forced to recognize that the economies of some of them have been weakened by the disruption of the broad historic pattern of trade between East and West. Curtailment of our aid programs will increase the pressures for resumption of such trade. A greater exchange of peaceful goods between East and West-that is, goods not covered by the Battle Act nor otherwise considered strategic so far as it can be achieved without jeopardizing national security, and subject to our embargo on Communist China and North Korea,3 should not cause us undue concern. I shall, of course, take appropriate action to ensure that our security is fully safeguarded. CONVERTIBILITY The Commission rightly regards positive progress toward currency convertibility as an indispensable condition for a freer and healthier international trade. Steps toward enabling holders of foreign currencies to convert them freely into other currencies deserve our encouragement. The Commission has correctly observed that the initiative and responsibility for introducing currency convertibility must rest with the countries concerned. I am happy to say that such initiative is being taken. The British and other members of the Commonwealth of Nations have met twice, in London and in Sydney, to consider plans for convertibility of the pound sterling. The United Kingdom and other important nations of Europe have discussed their aims with us. Individually they are taking constructive steps affecting their own currencies. In addition, discussions among them which are now under way in connection with the renewal of the European 1 See the Mutual Security Act of 1954; infra, pp. 3105-3140. 2 Act of Oct. 26, 1951; infra, pp. 3101-3105. See supra, pp. 2622-2626. The London meeting was held Nov. 27-Dec. 11, 1952; the Sydney meeting, Jan. 8-14, 1954. Payments Union are being largely influenced by their desire to prepare the way for convertibility. I have approved the Commission's recommendations for cooperation in strengthening the gold and dollar reserves of countries which have prepared themselves for convertibility by sound internal and external policies. These recommendations do not call for new action by the Congress. Authority and procedures for this purpose already exist. The United States will support the use of the resources of the International Monetary Fund as a bulwark to strengthen the currencies of countries which undertake convertibility. In addition, a study is now being made, as suggested by the Commission, of the possibility of standby credits from the Federal Reserve System. CONCLUSION What I have outlined to you is a minimum program which should be judged as a whole. Its various parts are interrelated; each requires the other. Conceived as a whole, this program consists of four major parts: Aid-which we wish to curtail; Investment-which we wish to encourage; I consider it essential that we achieve each of these objectives, which we must clearly understand are closely interlocked: As we curtail our aid, we must help to close the dollar gap by expanding our foreign investment and trade. This expansion will be facilitated by a return to convertibility of foreign currencies. The return by our friends abroad to convertibility will be encouraged if our trade policy leads them to expect expansion of our foreign trade and investment. Unless we are prepared to adopt the policies I have recommended to expand export and import trade and increase the flow of our capital into foreign investment, our friends abroad may be discouraged in their effort to reestablish a free market for their currencies. If we fail in our trade policy, we may fail in all. Our domestic employment, our standard of living, our security, and the solidarity of the free worldall are involved. For our own economic growth we must have continuously expanding world markets; for our security we require that our allies become economically strong. Expanding trade is the only adequate solution for these two pressing problems confronting our country. 1 The May 5-6, 1954, session of the Ministerial Council of the OEEC extended the life of the EPU to June 30, 1955. 5. AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954, AS AMENDED IN 1955: Public Law 480 (83d Congress, 2d Session), July 10, 1954; Amended by Public Laws 25 and 387 (84th Congress, 1st Session),2 April 25 and August 12, 19553 AN ACT To increase the consumption of United States agricultural commodities in foreign countries, to improve the foreign relations of the United States, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Agricultural Trade Development and Assistance Act of 1954." SEC. 2. It is hereby declared to be the policy of Congress to expand international trade among the United States and friendly nations, to facilitate the convertibility of currency, to promote the economic stability of American agriculture and the national welfare, to make maximum efficient use of surplus agricultural commodities in furtherance of the foreign policy of the United States, and to stimulate and facilitate the expansion of foreign trade in agricultural commodities produced in the United States by providing a means whereby surplus agricultural commodities in excess of the usual marketings of such commodities may be sold through private trade channels, and foreign currencies accepted in payment therefor. It is further the policy to use foreign currencies which accrue to the United States under this Act to expand international trade, to encourage economic development, to purchase strategic materials, to pay United States obligations abroad, to promote collective strength, and to foster in other ways the foreign policy of the United States. TITLE I-SALES FOR FOREIGN CURRENCY SEC. 101. In furtherance of this policy, the President is authorized to negotiate and carry out agreements with friendly nations or organizations of friendly nations to provide for the sale of surplus agricultural commodities for foreign currencies. In negotiating such agreements the President shall— (a) take reasonable precautions to safeguard usual marketings of the United States and to assure that sales under this Act will not unduly disrupt world prices of agricultural commodities; (b) take appropriate steps to assure that private trade channels are used to the maximum extent practicable both with respect to sales from privately owned stocks and from stocks owned by the Commodity Credit Corporation; (c) give special consideration to utilizing the authority and funds provided by this Act, in order to develop and expand con 1 68 Stat. 454. 269 Stat. 44 and 721. Mutual Security Legislation and Related Documents, compilation prepared by the Office of the General Counsel of the International Cooperation Administration, Dec. 29, 1955, pp. 113-118. This title succeeded sec. 550 of the Mutual Security Act of 1951; see sec. 502 of the Mutual Security Act of 1954, as amended (infra, p. 3129). |