Articles

HOW THE NEW U.S. GOVERNMENT WILL AFFECT CANADA

BLAIR FRASER February 15 1953
Articles

HOW THE NEW U.S. GOVERNMENT WILL AFFECT CANADA

BLAIR FRASER February 15 1953

HOW THE NEW U.S. GOVERNMENT WILL AFFECT CANADA

Articles

BLAIR FRASER

MACLEAN’S OTTAWA EDITOR

WASHINGTON

LAST NOVEMBER when the United States elected Dwight Eisenhower President, the gloom in Ottawa was thick enough to slice. It began before election day, as the wishful thinking about Adlai Stevenson waned.

“Eisenhower will win,” said a senior Canadian civil servant an hour before the polls closed, “and it will he a disaster.”

That was a typical comment. It was rooted in memories, still green after twenty years, of what a Republican administration can be like. Under Harding and Hoover American tariff walls were made high enough to bar almost all manufactured goods. Canada had fewer factories then than now,

but the indirect effect was no less severe. Our customers couldn’t earn the money to huy our exports. Calvin Coolidge, the silent Yankee who took over when Harding died, was remembered for his comment on the war debt then bankrupting Europe: “They hired the money, didn’t they?”

Recent memories were equally painful. Diehard Republicans always seemed to be opposed to what we regarded as the most enlightened acts of the Roosevelt-Truman regime, from the Reciprocal Trade Agreements Act of 1935 on down. It was unfair (after all, the Marshall Plan was launched by the Republican Congress of 1946-48) but most Canadians did tend to use “Republican” and “isolationist” as interchangeable terms.

Of course there were “good Republicans” like Ives of New York and Saltonstall of Massachusetts, but in the main these were the younger men. Congress is ruled by seniority. It was a certainty that in a Republican Congress the powerful committees would be dominated by the Old Guard.

These forebodings have come true. The committee chairmen of the eighty-third Congress, with one or two exceptions, are indeed a depressing array. Nevertheless the gloom of last November, far from deepening, has lightened perceptibly. The gravest fear of all turned out to be groundless — the fear that Eisenhower, the political neophyte, had fallen captive to Old Guard Republicanism, led and personified by Senator Robert A. Taft.

Already Eisenhower has proved beyond all doubt that he is running his own show. He has done it so bluntly in some cases as to create new problems that may he serious later on, but he has certainly set up an Eisenhower and not an Eisenhower-Taft Administration. Congress may look as discouraging as expected, but the Administration so far looks reassuring.

A neat example of this contrast is in the field of international affairs. Chairman of the Senate Foreign Relations Committee is Senator Alexander Wiley of Wisconsin, who headed the U. S. delegation to the United Nations Assembly in the closing weeks of the 1952 session. Senator Wiley looks and sounds like a refugee from the cast of Call Me Madam. Many stories about him are told in the delegates’ lounge at UN, some of them quite funny but all of them alarming.

Will the Republicans go back to isolationism and high tariffs? This frank look at the “Eisenhower men” and their Old Guard colleagues suggests that fears of a depression make radical changes unlikely

Until a few years ago Wiley was known as an extreme isolationist. Lately, and notably since he married a comely Briton, he has become a voluble lip servant of international co-operation, but the faith of this convert has very strict limits. Wiley was one of the advocates of the notorious “cheese rider” to the Defence Production Act an amendment which forced the U. S. Government to violate its own treaty obligation and bar imported cheese from the American market where it was competing with the cheese of Wisconsin.

But the man actually in charge of American foreign policy, Eisenhower’s Secretary of State, is a very different sort.

Did He Double-Cross Britain?

John Foster Dulles has been either delegate or official observer at all but one United Nations Assembly since the organization was founded. He was a member of the U. S. delegation at San Francisco in 1945 when the United Nat ions Charter was written. He was the principal negotiator of the Japanese Peace Treaty. Thus diplomats of t he free world have had a dose workaday acquaintance with him for nearly eight years.

Canadians get on well with him. He has a summer place in Canadaan island he owns in the St. Lawrence River, three hundred yards inside the boundary— which may give him a certain interest in Canadian affairs and which does give him a personal relationship with the Canadian Government. He and Mike Pearson are on first-name terms (Dulles is called Foster, not John) and he is also well acquainted with several other members of the present Canadian cabinet.

Not all Foreign Offices are enthusiastic about the new Secretary of State. The British dislike Dulles because they think he double-crossed them in Japan. The understanding was that the Japanese were to have free choice of which Chinese Government they would recognize. Japan chose Chiang Kai-shek. The British are convinced that Dulles exerted pressure on Prime Minister Yoshida to make a decision which Britain regards as idiotic.

“At least one allied government,” said a Washington columnist, “will now want to have everything not only in writing, but notarized.”

Even Dulles’ admirers concede that he has a casuistic streak. Despit« a lifelong association with piety he has sometimes employed undesirable means to reach a desired end (e.g., the campaign of rather startling invective by which he tried to win a New York Senate seat from Herliert H. Lehman). Friends also admit he has a rather chill and forbidding personality, though even his critics admire his penetrating intelligence.

But, aside from personal pros and cons, Dulles’ appointment was reassuring because Dulles has been a maker of American policy for years. He has strong views, but they are known; strong criticisms of his own country’s position, but they are often the same criticisms voiced, or inwardly felt, by other nations of the Western alliance.

To cite the most important example, Dulles thinks General MacArthur’s decision to drive for the Yalu River in Korea, two years ago last October, was a disastrous mistake. This opinion is shared by all other allied governments and by many individuals in the outgoing American administration. U. S. diplomats said at the time, with every appearance of sincerity, that the intention was to go no farther north than the narrow “waist” of the Korean peninsula, the nearest tenable line of defense.

Dulles’ friends say he would adopt this view and make it the means of breaking the Korean deadlock. He thinks it is essential, they say, to provide a specific and final objective in Korea, and this could be it: Push forward to the “waist” by force of arms,

but stop there; proclaim that, as far as the United Nations are concerned, this southern two-thirds of the peninsula shall be Korea. That would relieve China of the perfectly genuine threat of hostile bases on her Manchurian border, and would (Dulles thinks) be a reasonable basis for permanent peace.

Whether any such scheme will ever emerge as official U. S. policy is a matter of pure speculation. Obviously it would not please the “China Lobby,” the Syngman Rhee Government in South Korea, or the men who echo their views in the United States.

One friend of Dulles recently said, quite seriously: “It wouldn’t surprise me if in a year’s time Foster is just as unpopular as Dean Acheson was and for much the same reasons.”

Meanwhile, though, Dulles is in charge. Congressional “wild men” who would risk a major war on the Chinese mainland to restore Chiang Kai-shek to Peking will have little or no influence on American policy. (Indeed, some of them have tamed down remarkably since they have been in power instead of in Opposition.) The broad outlines and objectives of that policy will remain the same.

The outlook for international trade is less encouraging because here the primary power lies with Congress. Tariff laws originate in the Ways and Means Committee of the House of Representatives. Its chairman is Daniel Reed of New York, who is starting his thirty-fifth consecutive year as a Congressman and who stands firmly abreast of Herbert Hoover, or perhaps of William McKinley. Reed is one of the few Republicans left in Congress who personally voted for the Fordney-McCumber tariff law in 1922 and the Hawley-Smoot tariff in 1930.

In the Senate, tariff laws go to the Finance Committee chaired by Senator Eugene Milliken of Colorado. Milliken is one of the ablest men in the Senatea bald, pale man of owlish appearance and rasping voice, but formidable. He has a narrow but singularly tough and tenacious mind, and real talent for debate. I remember hearing him speak for a crippling amendment of the Reciprocal Trade Agreements Act in the Republican Congress of 1946-48, and his performance was disconcertingly good.

Milliken is a protectionist. He believes quite sincerely and consistently in protecting the American producer and letting the rest of the world take care of itself. Slogans like “Trade, Not Aid” cut no ice with Senator Milliken.

To questioners Milliken has a pat and plausible answer: “I’m in favor of the Reciprocal Trade Agreements Act with the ‘peril point’ escape clause.” This is Milliken’s own amendment, permitting tariff increases whenever an American producer is threatened by foreign competition. It is pretty difficult to increase sales in the United States without threatening some domestic product, but Milliken says quite bluntly that trade will be limited by the interests of the domestic producer and that there’s no use talking about vast increases in U. S. sales to solve the dollar shortage in western countries.

On the Administration side they admit, quite frankly, that prospects for removal of trade barriers are not bright in a Republican Congress. But the Administration’s own attitude is sympathetic. American critics have described the Eisenhower cabinet as “eight millionaires and a plumber,” and it is true that Eisenhower has drawn heavily on Big Business. It is not true that he has drawn from the ranks of reactionaries.

Charles E. Wilson, Secretary of Defense, has been president of General Motors. General Motors at Wilson’s instigation was the first big company to sign a labor contract with a cost-of-living escalator clause and a bonus for increased productivity. General Motors has a world-wide business and is keenly aware of the importance of world trade. Just after the election the Detroit Board of Commerce issued a formal resolution urging the U. S. to abandon all tariffs and trade restrictions and to adopt free trade. Wilson is a leading figure in Detroit.

“He’s a soft-spoken version of C. D. Howe,” said a Canadian who knows Wilson fairly well. Neither man would likely object to the comparison, be-

cause they a. several years.

Like Howe, Wilson consiuers fumself a production man and probably, like Howe, will find his patience sorely taxed by politicians. Shortly before the inauguration he visited Washington to confer with his predecessor as Defense Secretary, Robert Lovett. He asked how Lovett apportioned his working time. To Wilson’s horror, Lovett said he had to spend more than half his time dealing with Congress and only about ten percent of it dealing with straight production problems.

So there is some doubt about Wilson’s aptitude for the wholly new business of handling politicians. There is none about his executive ability or his attitude toward other countries.

Equally pleasing to the few Canadians who had ever heard of him beforewas George M. Humphrey’s appointment as Secretary of the Treasury. Canada has one special reason for being glad Humphrey is perhaps the strongest backer in the whole United States of the St.. Lawrence Seaway project. He is president of the M. A. Hanna Company which put up most of the money for the Labrador iron-ore development.

Steel and coal operators remember Humphrey as the man who “stepped out of line” and paid a wage increase demanded by the United Mine Workers a few years ago because, as he explained to indignant competitors, “we’ve got to get production going.” A publicity-shy man who belongs to few organizations and has few public activities, he has been active in the Committee for Economic Development. The CED is the voice of business liberalism in the United States, as the National Association of Manufacturers is the voice of conservatism.

Humphrey was originally described as “the Taft man” in the Eisenhower cabinet, apparently because he comes from Ohio where almost all businessmen are supporters of Senator Taft. Then it turned out that Taft knew nothing about Humphrey’s appointment and didn’t much like it. To many people, this too was a recommendation for Humphrey. It helped to allay fears that Eisenhower had surrendered to Taft at that famous breakfast in the Eisenhower home during the election campaign.

Taft at Boiling Point

But the classic demonstration of Eisenhower’s independence was another appointment, one which might otherwise have attracted little or no attention.

Martin P. Durkin, the new Secretary of Labor, is a plumber. Of late years he has been national president of the plumbers’ union, which entitled him to a luxurious paneled office and a salary high enough to support a house in the well-to-do Washington suburb, Chevy Chase. But he started life as a working plumber, two of his sons are practicing that craft in suburbs of Washington today, and Durkin himself puts on no airs. He has never been prominent in labor disputes but has made his way by speaking softly, finding compromises, smoothing over difficulties. He was perhaps the least known of top-ranking labor leaders in the U. S.

Eisenhower didn’t know him either, but he needed a Roman Catholic to balance his cabinet. Eisenhower had already decided to go back to the old Republican custom of choosing the Secretary of Labor from labor’s own ranks. He would have liked a labor leader who was also a Republican, but no such person could be found. Durkin was admoderate, relatively inactive Democrat. He was respectable, and he was a Roman Catholic. He got the job.

Senator Taft boiled over. “An incredible appointment,” he said in a formal statement to the Press. At Eisenhower’s request he had submitted a list of suggestions for the various cabinet posts, not one of which had been followed. But this choice of a Democrat who had openly supported Adlai Stevenson, and openly opposed the Taft-Hartley labor law, struck “Mr. Republican” as political lunacy.

EISENHOWER’S CABINET CHOICES REASSURED MANY WORRIED CANADIANS

Dulles, Secretary of State, gets on well with Canadians but is disliked by the British. He is expected to restrain the Republican “wild men.” Wilson, the new Secretary of Defense, former GM president, is keenly interested in world trade.

Durkin, Secretary of Labor, is a Democrat union leader. Taft called his choice “incredible.” The appointment was perfect evidence of Ike's independence. Now Secretary of the Treasury, Humphrey is Liberal, a backer of the Seaway

IN CONGRESS POWERFUL OLD GUARDSMEN MAY DILUTE IKE'S GOOD WILL

Taft, as leader of the Senate, can exert his influence on any legislation. He offered Eisenhower a slate of cabinet choices—not one made the grade. Any new tariff laws will go through Sen. Mil liken, known as a strict protectionist.

Reed, congressman for thirty-five years, heads vital Ways and Means Committee. He voted for tariff laws of 1922 and 1930. Wiley is now chairman of the Senate Foreign Affairs Committee. He used to be an extreme isolationist.

Taft’s outburst had immediate effects.

“Durkin’s best friend is Senator Taft,” a labor man remarked sardonically. “If it hadn’t been for Taft, Durkin would have been as obscure in the cabinet as be was in the labor movement. Now the two labor federations have closed ranks around Durkin and they’ll back him to the hilt. Taft put Durkin on the map.”

To that extent the Durkin appointment helped to unify the nation and sealed labor’s pledge to co-operate with the new regime. The unanswered question is: What did it do to the Republican Party? What did it do to Congress, and to the relationship between Congress and the White House?

A ranking Republican senator, an Eisenhower man from away back, told me quite frankly that the Administration had started out on the wrong foot on Capitol Hill. “Even before we took office,” he said, “quite a few important senators had their noses out of joint.

“It isn’t that we want to dominate the Administration or dictate appointments, but we do want fo know what’s going on. If our choice for a given job is going to be ignored, at least we want to be told. We want to be able to save our own faces by ringing up the guy who didn’t get the job and telling him why.

“Another thing —we politicians don’t always choose ward heelers, you know. We like to get good men too, and sometimes we know more about it than the Administration. In my own state, for instance, they were all set to appoint a man who looked all right on paper, but I knew the guy and I knew he wouldn’t do. I happened to hear about it before the announcement was made and the appointment didn’t go through, but some of the other fellows haven’t been that lucky.”

I asked him whether this was a result of political inexperience, or whether the Administration was deliberately setting out to show who was boss.

“In most cases, pure inexperience,” he replied. “If you ask them they will tell you it was never anything else. However, if you’re writing a dope story I think you could fairly say that there might have been some element of deliberate intent in the case of Taft.”

Senator Taft is a very powerful figure on Capitol Hill. Most of the Republican senators and congressmen were Taft men at the Republican convention.—and among those who

backed Eisenhower, several openly admitted they’d rather have Taft but thought he couldn’t win. It was perhaps necessary for the Administration to have a showdown with Taft right at the start.

On the other hand there is reason to believe Taft is a less powerful man now than he was this time last year.

Some years ago the late Republican Senator Arthur Vandenberg, father of the bipartisan foreign policy, made a great speech in the Senate on behalf of international co-operation. It was followed by a vote in which Vanden berg’s side won by a narrow margin. A reporter congratulated the aged statesman on this triumph of oratorical persuasion.

Vandenberg smiled. “I didn’t persuade a single man,” he said. “Some voted with me whose own opinion would have taken them the other way, but they didn’t do that because of rhetoric. They voted my way because they weren’t quite sure but what I’d be the Republican presidential candidate next election.”

A year ago every Republican in Congress, whether he favored it or not, had to reckon with the probability that Taft would be the Republican candidate. Today it is clear that he will never play that role. The logic that once favored Taft now favors Eisenhower.

The same qualification applies, for slightly different reasons, to a number of senators and congressmen with j reactionary voting records. Many, j perhaps a majority, are Republicans first and last. They voted against ! Democratic bills because they were Democratic, and would vote in favor of the same bills provided they were j Republican. Southern Democrats like Harry Byrd of Virginia could afford to j defy the Roosevelt-Truman Adminisj tration because they were invulnerable I at home. Few Republicans can feel ! equally independent of Eisenhower, | who ran ahead of his party in almost every state.

And there, of course, you have the biggest reason for the new cheerfulness about the Republican regime. Out of j the fogs and mists of campaign oratory, the distortions and refractions of expediency, have re-emerged the record, the personality and the strength of President Eisenhower himself.

Eisenhower is firmly committed to the ideal of international co-operation. Contrary to some early reports just after he came home from Europe, he lias a firm and clear grasp of the measures, economic as well as political, that are required to achieve this goal.

Men who have dealt with Eisenhower say he is impatient of detail but lias a rare gift for singling out the essential. Shortly before Christmas he and Dulles visited United Nations in New York. The Indian resolution on repatriation of Korean war prisoners was still being debated.

Dulles’ comments showed intimate knowledge of the subject and of every stage in the debate. He favored the resolution in principle but had some doubts about this sentence or that paragraph.

Eisenhower knew little of these details and cared less. He said merely, “It’s a good idea and we ought to accept it. We must keep India on our side.”

This was precisely the point which Canadian delegates had been urging on their American friends for weeks, so they were happy to hear it from the President-elect. And they were told it was typical of Eisenhower’s approach to a problem.

In the whole field of foreign policy and foreign aid Eisenhower played too 1 great a role in the making of present | policy to emerge now as its destroyer, j Changes will be in emphasis rather than in substance.

“We think we can give other nations the help they really need with less money,” a senior Republican said. “I was in Europe a couple of years ago and the American agencies were falling over each other’s feet. They had hundreds of people on staff and all of t hem from stenographers up were living like kings and queens.

“I think Harold Stassen (new Mut ual Security Administrator) will be able to clean that up and save a tremendous amount. Of course he’ll take a real hard look at the programs themselves, too. But I don’t think anything of real worth is going to be thrown overboard.”

That may be somewhat over-cheerful, but the fact is that foreign aid would have shrunk anyway, whichever party had won the election. President Truman, not President Eisenhower, presented the new budget to Congress last month. Two or three weeks before he had received a report from his own Secretary of Commerce, Charles Sawyer, which recommended immediate reduction and early termination of economic aid to allies.

Some types of aid may even be increased by the Republican regime. Weeks before the Republican convention Eisenhower told a friend that if he were elected he would do something j to help the French in Indo-China. He knew France couldn’t stand the drain I of that bloody inglorious war much longer; she must have U. S. help in greater volume than she’d had it so far.

On the purely economic side Eisenhower and his advisers are strong for the integration of Europe, the removal of trade restrictions. They may prove to be more insistent on it, than Europeans themselves will like. But at least they can IK; relied upon for a reasonable amount of consistency. They will do what they can to keep U. S. tariffs from going sky high at the very time they are exhorting Europe to wipe them out altogether.

The big question marks about the Eisenhower regime relate not so much to the principles of foreign policy as to the budgetary problem at home.

Eisenhower is pledged to balance the budget and cut taxes, in that order. Whether Congress will allow him to observe that priority remains to be seen. A number of special taxes, enacted after the Korean War broke out, will die in the calendar year 1953 unless Congress passes new laws extending them. Excess profits taxation, which Republicans especially dislike, will expire June 30. A post-Korea increase of eleven percent in personal income tax expires Dec. 31, and Republican politicians know they can hardly wipe out excess profits tax without doing something for the individual taxpayer too.

On opening day a bill went into the congressional hopper to make the personal income tax increase expire June 30 along with excess profits tax. Author of the bill was Daniel Reed, chairman of the House Ways and Means Committee where all tax laws originate.

These expiring taxes, plus the equally temporary increase in corporation tax, now bring $7.5 billions to the U. S. Treasury. The U. S. deficit for the current fiscal year will be about nine billions. Thus, if Congress lets exisfing war taxes die, Eisenhower will have to reduce spending by at least $16.5 billions to balance the budget.

John Taber, the economy-minded Old Guardsman who chairs the House Appropriations Committee, sees no reason why it can’t be done. “T am satisfied,” he said, “that we could save four to six billions that are now being wasted in the armed services’ purchasing system. Why, do you know there are ninety-three ordnance districts in the army alone, each with a big staff' of officers, each doing its own buying, ever bidding against each other?”

Taber also points to the swollen personnel of the U. S. government service “two thousand State Department people serving in a group of countries which have two hundred people accredited here.”

Most of all Taber looks at the huge volume of unexpended funds in the defense program, which now totals something more than one hundred billions for goods ordered but un-

delivered. The actual housekeeping of the armed services pay and allowances, clothing, food and services runs to only fourteen billions, it would be simple to balance the budget on paper, any year, simply by cutting out a few billion dollars’ worth of items that can’t be produced within twelve months anyway, and Taber is visibly tempted to do just that.

The catch is, of course, that the money is taken out of the budgetary pipeline and would have to be found later. Stable planning and stable budgeting would become impossible. Joseph Dodge, the ex-banker who is Eisenhower’s Director of the Budget, has already warned Americans not to expect any “sixty-day miracles.”

But behind the arithmetic of the 1953-54 budget there lies a problem in algebra. The X in the equation, the great unknown, is the level of the American economy in 1954.

Suppose for the sake of argument that Eisenhower finds a way to carry out his promise immediately and balance the budget without paralyzing the armed services. Presumably this would mean the sudden removal of sixteen billions from the total volume of U. S. investment. Some economists, even Republican economists, fear that this would precipitate a business recession of considerable magnitude. That in turn would cut federal revenues and create a bigger deficit than ever.

All Western countries are exposed to this threat nowadays, because all depend heavily on income tax. Canada gets more than half her federal revenue from personal and corporation income taxes, which of course would shrink like an April snowbank in a depression. But the United States is the most vulnerable country in the world in this respect. No less than eighty-three percent of all U. S. revenue comes from income tax, compared to forty-eight percent before the war.

This alone is enough to make Republican planners exceedingly careful about sudden and drastic changes in American policy. Even foreign aid, vulnerable this year under any administration, is an essential support to some major foreign customers; what would happen to certain American producers if these markets were abruptly cut off? Wise Republicans want an answer before anything irremediable is done.

For the one thing Republicans fear above everything else is another Republican depression. The last one kept them out of power for twenty years. Another, they feel sure, would ruin them forever. At all costs they intend to keep the economy running at full blast with full employment, high floor prices for farmers and all the rest of it.

Tf this should mean continuation of Democratic policies and the postponement of Republican ideals. Republican politicians will be distressed. But not so distressed that they will consciously, wilfully upset any applecarts.