In this special episode of the Trade War Podcast from the Information Technology and Innovation Foundation, host Stan McCoy recontextualizes a 1947 speech by President Harry Truman in interview format. In this exercise, McCoy explores the roots of the post-World War II economic order, the inseparability of peace, freedom, and trade, and the risks of economic isolationism.

Mentioned

Harry S. Truman, “Address on foreign economic policy,” (Baylor University, March 6, 1947)

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Stan McCoy: Hello, and welcome to a very special episode of the Trade War Podcast from the Information Technology and Innovation Foundation. I'm your host, Stan McCoy, and this is the podcast where we explore the roots and realities of today's. Global trade conflict and today we're going to get deep into the roots.

This is a response to some remarks by the Prime Minister of Canada just after the big April 2nd, tariff announcement where the Prime Minister spoke of the sad reality that America has surrendered the leadership on global trade that it held for some 80 years post-World War II, and his remarks, whether you agree with them or not, got me thinking, wouldn't it be great if we could go back and speak to some of those leaders of the greatest generation who brought us that post-war economic order and understand why the concept of trade peace was so important to them.

So, I found a speech that Harry Truman gave back in 1947, where he laid it all out and explained why creating a peaceful world order on trade was vital to him and to the leaders of his generation. I've recut that speech into an interview so that we can recontextualize President Truman's views into the context of today's global trade war.

I hope you'll like it. I hope you'll find it insightful and please by all means, if you want to see the whole context for President Truman's remarks, follow the link in the show notes to the National Archives where you can listen to the entire audio of that speech. In the meantime, I want to thank you for joining us and I hope you enjoy this interview.

Now let's get on with it. Mr. President, I want to welcome you to the Trade War Podcast. This is our first head of state on the podcast, and we're really delighted to give you the opportunity to, retake the mic, explain to us, in the context of a new global trade war, the likes of which we haven't seen since your lifetime.

Your views on matters of. Trade, war and trade peace, particularly since, you and your team, Dean Atchison, George Cannon and others were in many ways the chief architects of the post-war liberal economic order that has prevailed for the last 80 years, in fact, until just last week.

Mr. President.

Harry S. Truman: I can't tell you how very much I appreciate this honor which you're conferring upon me.

Stan McCoy: The honor is all mine. Mr. President. I want to first ask you to put yourself in the world as you saw it just after World War II. You are the leader of the free world at this extraordinarily delicate moment in history. You have so much to worry about, rebuilding Europe, the Soviet threat, making sure that all those returning GIs have a prosperous future. What is the place of trade policy in your mind? In the midst of all of these challenges?

Harry S. Truman: At this particular time, the whole world is concentrating much of its thoughts and energy on attaining the objectives of peace and freedom.

These objectives are bound up completely with a third objective: reestablishment of world trade. In fact the three: peace, freedom, and world trade, are inseparable. The grave lessons of the past have proved it.

Stan McCoy: There are people today who would say, I think, Mr. President, that the situation is different now and today we can't let the foreign policy interests that may be exist out there allow us to shy away from taking strong unilateral action to defend our interests on trade issues. How did you see that in your times?

Harry S. Truman: There still are those who seem to believe that we can confine our cooperation with other countries to political relationships that we need not cooperate where economic questions are involved.

Such a statement simply does not make sense.

Stan McCoy: So for you, diplomacy and national security are deeply interwoven?

Harry S. Truman: Our foreign relations, political and economic are indivisible. We cannot say that we are willing to cooperate in the one field and are unwilling to cooperate in the other.

Stan McCoy: So let me turn then to this question.

What does trade war mean to you? How does a trade war get started, for example?

Harry S. Truman: Economic conflict is not spectacular, at least in the early stages, but it is always serious. One nation may take action in behalf of its own producers without notifying other nations or consulting them, or even considering how they may be affected.

It may cut down its purchases of another country's goods by raising its tariffs or imposing an embargo or a system of quotas on imports. And when it does this, some producer in the other country will find the door to his market suddenly slammed and bolted in his faith, or a nation may subsidize its exports, selling its goods abroad below their cost.

When this is done, a producer in some other country will find his market flooded with goods that have been dumped.

Okay. Some markets get flooded, uh, others close. What happens next?

In either case, the producer gets angry just as you or I would get angry if such a thing were done to us. Profits disappear.

Harry S. Truman: Workers are dismissed. The producer feels that he has been wronged without warning and without reason. He appeals to his government for action. His government retaliates. And another round of tariff boosts . Embargoes quotas, and subsidies is underway.

Stan McCoy: So it's a downward spiral.

Harry S. Truman: This is economic war. In such a war, nobody wins.

Stan McCoy: Nobody wins. And I know this was not an abstract issue for you, Mr. President. You personally lived through our last major period of trade war in the 1920s and 1930s, Mr. President, you saw how it affected people, didn't you?

Harry S. Truman: Certainly nobody won the last economic war. As each battle of the economic war of the thirties was fought, the inevitable, tragic results became more and more apparent.

From the tariff policy of Hawley and Smoot, the world went on to Ottawa and the system of imperial preferences. From Ottawa to the kind of elaborate and detailed restrictions adopted by Nazi Germany. Nation, strangled normal trade and discriminated against their neighbors all around the world. Who among their peoples were the gainers?

Not the depositors who lost their savings in the failure of the banks, not the farmers who lost their farms, not the millions who walked the streets looking for work.

Stan McCoy: Would you say that you blame the Great Depression on the trade war?

Harry S. Truman: I do not mean to say that economic conflict was the sole cause of the depression, but I do say that it was a major cause.

Stan McCoy: Well, speaking of things that cause economic hardship and unemployment, I think lots of people nowadays, seem to feel that with trade we're in a zero sum game where, imports take away US manufacturing jobs and those cheap imports are the real problem. What would you say to that, Mr. President?

Harry S. Truman: Many people, it is true, are afraid of imports. They're afraid because they have assumed that we cannot take more products from abroad unless we produce just that much less at home. This is not the case. The size of our market is not forever fixed. It is smaller. When we attempt to isolate ourselves from any other countries of the world, it is larger.

When we have a thriving foreign trade, our imports were down to a billion dollars in 1932. They were up to five billions in 1946. No one would contend that 1932 was a better year than 1946 for selling goods or making profits or finding jobs. Business is poor when markets are small.

Stan McCoy: And what about US jobs on the export side of the ledger, how do they fare in a tariff war?

Harry S. Truman: Millions of Americans in factories, on the railroads, in export and import businesses in shipping, aviation, banking, and insurance. In wholesale establishments and in retail stores depend upon foreign trade for some portion of their livelihood. If we are to protect the interest of these people in their investments and their employment, we must see to it.

That our trade does not decline. Take one of these groups as an example. We exported in 1,946, over $3 billion worth of agricultural products alone. Mostly grain, cotton, tobacco, dairy products, and eggs. If we should lose a substantial part of this market, this foreign market, the incomes of over 6 million farm families would be materially reduced, and their buying power for the products of our factories greatly curtailed.

Stan McCoy: Mr. President, interestingly, in your times you were concerned about non-market practices, foreign governments that were manipulating the post-war economy through, non-market economic interventions. We face a very different form of that challenge today.

In fact, we have one trading partner in the world, the People's Republic of China that has, an express policy of trying to dominate key sectors of the global market by 2025, the year that we're sitting in now as we have this conversation. And, they've also sought to corner the market on certain raw materials that have become very critical to the modern technologies of our times.

So I'd like you to please share with us your thinking about the consequences in the post-war economy of allowing non-market economic practices to proliferate.

Harry S. Truman: If this trend is not reversed, the government of the United States will be under pressure sooner or later to use these same devices to fight for markets and for raw materials.

And if the government were to yield to this pressure, it would surely find itself in the business of allocating foreign goods among importers and foreign markets among exporters and telling every trader what he could buy or sell and how much and when and where.

Stan McCoy: So you're worried about a slippery slope toward the kind of government directed economy you saw from pre-war Nazi Germany.

Harry S. Truman: This is precisely what we have been trying to get away from as rapidly as possible. Ever since the war. It is not the American way. It is not the way to peace.

Stan McCoy: You mentioned Smoot Hawley in 1930, Mr. President. Our president today sometimes goes back farther than that. Echoing the pro tariff policies and 19th century mercantilist rhetoric of President McKinley, who was elected in 1896 when you were about 12 years old.

So what do you think in the aftermath of World War II about those policies and that rhetoric?

Harry S. Truman: Many of our people here in America used to think that we could escape the troubles of the world by simply staying within our own borders. Two wars have shown how wrong they were. We know today that we cannot find security in isolation.

If we are to live at peace, we must join with other nations in a continuing effort to organize the world for peace. Science and invention have left us. No other alternative times have changed. Our position in the world has changed. The temper of our people has changed. The slogans of 1930 or of 1896 are sadly out of date. Isolationism after two World Wars is a confession of mental and moral bankruptcy.

Stan McCoy: A confession of mental and moral bankruptcy, strong words, Mr. President. So where does that leave us now? What is the most important thing going forward?

Harry S. Truman: Now, as in the year 1920, we have reached a turning point in history. National economies have been disrupted.

The future is uncertain everywhere. Economic policies are in a state of flux. In this atmosphere of doubt and hesitation, the decisive factor will be the type of leadership that the United States gives the world.

Stan McCoy: I hear you on that, Mr. President. One of the inspirations for this conversation is that the Canadian Prime Minister says that we've surrendered that position of leadership in the world.

I think a lot of people are asking in the United States, why does it fall to the US to be the leader? Shouldn't America look out for its own interests? First and foremost.

Harry S. Truman: We are the giants of the economic world, whether we like it or not, the future pattern of economic relations depends upon us. The world is waiting and watching to see what we shall do.

The choice is ours. We can lead the nations to economic peace, or we can plunge them into economic war.

Stan McCoy: Economic peace or economic war, that's quite the choice. And it reminds me of that sign you used to have on your desk that said 'the buck stops here'. You are the man who gave the order to drop the atomic bomb.

You're no stranger to hard choices. What would you do if the decision of trade, war, or trade peace landed on your desk again today, President Truman?

Harry S. Truman: There must be no question as to our course. We must not go through the thirties again.

Stan McCoy: And I thank you for reminding us as you did a few minutes ago, Mr. President, how traumatic those times were. Could you please leave us with your parting thoughts as one of the primary architects of the post-war world on the path that we should follow today?

Harry S. Truman: Peace and freedom are not easily achieved. They cannot be attained by force. They come from mutual understanding and cooperation.

From a willingness to deal fairly with every friendly nation in all matters, political and economic, let us resolve to continue to do just that now and in the future if other nations of the world will do the same. We can reach the goals of permanent peace and world freedom.

Stan McCoy: Well, I can't thank you enough, Mr. President, for being with us. It's been an honor. And all of you watching this, I hope you've enjoyed this little digital seance with the 33rd President of the United States, Harry s Truman. And I do encourage you to follow the link to the US National Archives and hear his speech in its full context from 1947.

And I guess just a last note at the end, say, you know, the purpose of doing this is not to say that Truman or his generation got everything right or that the post-war order that they designed was flawless. It wasn't, it was deeply flawed. It needs significant revision to be fit for purpose in the 21st century.

But I think it is revealing to go back and understand the mindset of leaders like Harry Truman in the aftermath of the 1930s, the Great Depression, World War II, on the choice between trade war and trade peace.