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John M. Leddy Oral History Interview

Oral History Interview with
John M. Leddy

Member of the staff of the Trade Agreements Division, U.S. Dept. of State, and participant in the negotiations to conclude the General Agreement on Tariffs and Trade and the International Trade Organization, 1945-58. Later Assistant Secretary of the Treasury for International Affairs, 1961-62, U.S. Ambassador to Organization for Economic Cooperation and Development, Paris, France, 1963-65, and Assistant Secretary of State for European Affairs, 1965-1969.

Washington, D.C.
June 15, 1973
by Richard D. McKinzie

[Notices and Restrictions | Interview Transcript | List of Subjects Discussed]


Notice
This is a transcript of a tape-recorded interview conducted for the Harry S. Truman Library. A draft of this transcript was edited by the interviewee but only minor emendations were made; therefore, the reader should remember that this is essentially a transcript of the spoken, rather than the written word.

Numbers appearing in square brackets (ex. [45]) within the transcript indicate the pagination in the original, hardcopy version of the Leddy oral history interview.

RESTRICTIONS
This oral history transcript may be read, quoted from, cited, and reproduced for purposes of research. It may not be published in full except by permission of the Harry S. Truman Library.

Opened October, 1976
Harry S. Truman Library
Independence, Missouri

[Top of the Page | Notices and Restrictions | Interview Transcript | List of Subjects Discussed]



Oral History Interview with
John M. Leddy

Washington, D.C.
June 15, 1973
by Richard D. McKinzie

[1]

MCKINZIE:  I would like to ask you why you chose a career in Government service, to hear something about your personal background, and how you came from Chicago to work in the Pan American Union, and then into the State Department,

LEDDY:  Well, I was born in Chicago, my family moved down to Florida when I was about ten or so.  I went to high school in Miami Beach.  It was a rural, community at that time, not like it is today.

[2]

MCKINZIE:  You mean the town was rural?

LEDDY:  Oh, yes, pretty much, yes.  Large open spaces.  Also open beaches, not that mass of concrete that you now find along the waterfront.  It was not built up that way in those days.

My father died when I was about sixteen or seventeen, and after I got through high school I took a short course in business school in Miami, mainly learning how to type, do a little shorthand, a little accounting, and that sort of thing.  This was during the depression years and I came up to Washington in 1933 or 1934.  My aunt lived up here (one of my mother's sisters) working for the National Wooden Box Association, as I recall, as a secretary to the manager.  I was able to come up here and look around for a job, and also start to school, which I wanted to do.  I wanted to go on to college.  So, I did that at night at Georgetown University and worked during the day, first as

[3]

a messenger at the Homeowners Loan Corporation, then I got a job at the Pan American Union.  I had known a little Spanish, I'd studied it in high school and also in college.  There I was able to work in the division of financial and economic information -- a very small outfit -- for three or four years.  We used to put out publications on Latin America.  We'd write our own economic pieces, or translate them from Latin-American publications, depending; and type it out ourselves on mimeograph.  There were about four of us in the office.  We did everything, three analysts, and a stenographer.

There I met somebody going out just as I was coming in.  One of the fellows -- H. Gerald Smith -- who was leaving was going to the State Department in the Trade Agreements Division, and we got to know one another.  When I got my degree from Georgetown he was successful in getting me

[4]

interviewed with Harry Hawkins at the head of the Trade Agreements Division, and a few other people there.  And I was able to get a job there at a very fine raise in salary, as a low grade professional assistant of some sort.  I’ve forgotten what they were called – P-2 or P-3 -- or something of that sort.

So that's how I got started in the Government, and it was partly a question not so much of sitting down and thinking what are you going to do in life, but how the hell are you going to survive.  I was interested, anyhow, in international affairs by that time, and, of course, in Georgetown I studied various international subjects.

MCKINZIE:  Do you have a particular interest in economics?

LEDDY:  Well, I had sort of acquired that, you see.

[5]

Partly because of the fact that I had been working in the Pan American Union on economic and financial information.  I am not a professional economist, although I took a number of economic courses at Georgetown.  I certainly never qualified as anything remotely resembling a trained economist.  But, at any rate, economics in the State Department is not really professional economics.  I mean, it would help a great deal to be a professional economist, but it isn't essential.  It's really a mixture of law, diplomacy and economics, and you need to know enough about economics to be sure you know what you are doing or to consult the people who do know; and also you pick up a great deal in studying and reading books during the course of your career. So, I would say I knew more about economics than I would, let's say, history.

But at any rate, that was how I got started

[6]

in Government, and I was fortunate in getting in the Trade Agreements Division, because it was very active.  They had a fine group of people there, especially the head of that division, Harry S. Hawkins, whom I came to know very well -- he is a man about twenty years older than I am.  I think he's about 79 now.

MCKINZIE:  He's living in California isn't he?

LEDDY:  Yes.  Northern California, and we keep in touch with them.  Our family and their family are great friends.  But at any rate, in my judgment he was probably the most influential and important man second to Cordell Hull, in launching, operating, and administering the Reciprocal Trade Agreements program.  I had gone into this partly as a matter of my own education when I came in in 1941.  I came in the Latin American Division, naturally enough, working with H. Gerald Smith, and he was a

[7]

Latin American expert.  He had married a girl who was the daughter of a former Cuban diplomat; he spoke Spanish well; and he was familiar with the area.  So, I worked on Latin American things for a while.  Worked on the Peruvian trade agreement and the Mexican trade agreement, and one thing or another.  Then I went to work with Marc [Honore Marcell] Catudal who is a lawyer, an international lawyer.  He had written articles on the unconditional most-favored-nation clause and, generally speaking, his office looked at all of the legal aspects, and the so-called "general provisions" of trade agreements -- the legal framework and that sort of thing.  I worked with him, and began to study very carefully all of the provisions of the old trade agreements.  The general provisions, what they were supposed to accomplish, what they meant. Their interpretation; how they tied one with another, in other words, the framework of international commercial

[8]

policy.  The trade agreements program can be learned through that method, as well as the history of these provisions -- how they started and developed.  For example, the old arguments of conditional versus non-conditional most-favored-nation clause; the origins of the idea of a multilateral convention, etc.  So, in that way I acquired a good historical background and it was out of this that I discovered the way in which the trade agreements program got born.

One of the key problems in the trade agreements program was this issue: if you granted tariff concessions in a trade agreement with one foreign country and the benefits had to be extended to other countries under the principle of equality of treatment (the unconditional most-favored-nation clause), how did you meet the arguments of opponents that these other countries were getting something for nothing?

[9]

Harry Hawkins figured out the solution for that problem by a technique of granting tariff concessions on those products of which the other trading partner, the one you were negotiating an agreement with, was the principal supplier.  And from his studies on the complexity of international trade you usually found that for any given commodity, any particular specific commodity -- and of course, they are all broken down in considerable detail in the tariff -- you would find that one or -- two, possibly, maybe three, countries made up the bulk of the whole imported supply.  They were the chief and most effective competitors, and that, therefore, you would not lose much bargaining power by extending the concession to others.

It was quite important to avoid discriminating among different countries, partly for economic reasons but also because of the political frictions that would result.  So, he worked out this notion of the "principal supplier" rule and from my

[10]

recollection of talking to him, and looking into the background, he had talks with Cordell Hull about it when Cordell Hull was in the Congress, before he became Secretary of State.  (As you know Hull had very strong convictions, you know, on the need for reducing trade barriers.  The Tariff Act of 1930 was a great shock to all those who believed in liberal trade.  In the South in those days, of course, the "liberal traders" believed in this passionately as against the Northern, and especially the northeastern industrialists.  They felt that historically the manufacturers had tended to penalize them by putting high tariffs on the things they bought, and impeding their ability to export.)  At any rate, because of Cordell Hull's leadership, convictions, and determination, he defended the trade agreements program against hell or high water.  But with Hulls leadership at the top,

[11]

and with Harry's expertise, and technical skills, as well as his superb negotiating ability -- he's one of the best I've ever seen in bilateral negotiations -- the reciprocal trade agreements program was an outstanding success.  I know it was criticized, of course, by protectionists; it always has been. But it was handled extremely well, and Harry was the man who very largely did it.  He was the head of the Trade Agreements Committee, the interagency committee in working out these agreements, and each one of which would be approved by Cordell Hull, and then of course, by the President as you have to do under the law.

Therefore, when the time came for postwar planning Harry was the fellow who was in charge of doing this in the area of commercial policy.  It was very largely under Harry's supervision and guidance that most of us in the State Department

[12]

and in other agencies worked in developing the origins of the General.  Agreement on Tariffs and Trade, and also, in a larger sense, the International, Trade Organization Now there were many parts of the ITO.  This was a complex negotiation in which other people played a leading role, like Clair Wilcox, who was the head of the delegation; but Harry by that time had left the Department.  I think he rejoined the Foreign Service, for some reason or another.  He joined the Foreign Service, then resigned from it, and became a civil servant.  Then toward the end of his career in trade agreements he rejoined the Foreign Service and became the first U.S. economic minister posted in London.

MCKINZIE:  Do you recall how you happened to get into the drafting of those trade agreements?

LEDDY:  Well, very naturally because we had still during the war, the trade agreements program which

[13]

had been going rather strongly up through about 1940.  I think in ‘41 and ‘42, we still negotiated some agreements.  Some with Latin American countries, which helped to ease some of the trade barriers, the normal peacetime trade barriers that were in fact interfering with war procurement. Like reducing the duty on lead and zinc in the trade agreement with Mexico, and that sort of thing.  But our normal activity had tended to slow down; and on the other hand there was the question of what were you going to do after the war?  And within the Department, of course, I think Leo Pasvolsky had a good bit to do with heading up this whole thing,

MCKINZIE:  Sumner Welles had some interest in it, too, for a while, as I understand.

LEDDY:  He may have had some interest; I doubt that he had very much influence on really postwar economics,

[14]

political planning, as I recall.  I never thought of him as a planner, myself.  He seemed to be mostly an operating fellow, an administrator and a Latin American specialist.  But that's as may be.  I don't know his role in some of the postwar planning activities.

MCKINZIE:  He was in and out shortly.  He and Hull as you know, had some difficulties.

LEDDY:  Yes, I know.

MCKINZIE:  One smallish incident involved some of these postwar planning committees.

LEDDY:  Well, it could have.  Anyhow there was Pasvolsky and Herbert Feis.  And there was a fairly large system of postwar planning running the whole gamut of international relations, including planning for the United Nations, and the Economic and Social Council, the Food and Agriculture

[15]

Organization, which was the first of the postwar organizations, strangely enough, to be set up. We were all puzzled about it, I remember.

It was set up in 1943, and logically agriculture is part of a larger setting, and it should have been a part of the pattern.  But I think what happened was that [Franklin D.] Roosevelt got enamored of this notion of food and agriculture.  I think it was Gifford Pinchot, a conservationist of note, governor or something or other, I think, from one of the states.  Anyhow, I think it was Pinchot -- I'm not absolutely certain -- who thought that the first and most urgent thing was to do something about agriculture, and therefore they went ahead with the Food and Agriculture Organization even before Bretton Woods, and before the U.N.  That was built on the foundations of an earlier multilateral organization in Rome.  I think it

[16]

was.  I've forgotten the name of it.

MCKINZIE:  Yes, there was a predecessor organization.

LEDDY:  And perhaps it wasn't so difficult.  But to get back to the point I was making, what we had to do was to figure out a commercial policy for the postwar period, and the means of implementing that policy.  One of the parts of that preparation, an important part, was to conduct discussions with the British.  I was in those talks as an assistant to Harry Hawkins from the very beginning on the elements of the postwar trade plan.   And this is how I got into that, because I was a part of the team.  I used to make minutes of the meetings, and also try to formulate solutions.  I've worked with the general provisions, I knew what the preference issue was all about, and that sort of thing.  So, this is how I got involved in that process.

[17]

MCKINZIE:  Is it fair to say that there was a purist position among some of those people that the British should give up the imperial preference system, to bring about more integration of the world’s economy?  I keep reading, you know, Will [William L.] Clayton's position on these things.

LEDDY:  Yes.  I had a very -- you might call it a simplistic position, I guess it was.  We all had that position.  This goes back in history a good bit.  Later on I improved my historical background on the preference system.  I knew pretty much about it at that time, but later on many years later, I spent a year or two up at Fletcher School, of Law and Diplomacy, again under Harry Hawkins who was Will Clayton's professor up there.  And I tracked back the British preference system to its origins at the turn of the century, I guess it was.  It

[18]

was in many ways related to the increase in tariff levels throughout the world, and especially in the United States.  And it was intensified greatly after the passage by the United States of the Tariff Act of 1930.  Britain originally was considered pretty much a free-trade country; but in '31, I think, they passed a rather stiff British tariff.  When they put on a tariff they were able to grant preferences to the overseas Commonwealth, and the overseas territories -- the Empire it was then called -- to a much greater degree than ever before.  And they had, of course, been receiving preferences in many parts of the Empire; Canada, Australia, New Zealand, India, and colonies throughout, for some time.  But we felt that in any move to dismantle the whole structure of tariffs and trade barriers in general the British preference system ought to be eliminated, because it was essentially discriminatory.  In other words, it was a way for British industry to get a

[19]

lock on particular foreign markets which happened to be politically related to it -- the Empire and the Commonwealth.  This affected the underdeveloped world as well, and not just the U.S.  All non-British areas were discriminated against in the British market by the preference system. Because the preference is nothing more or less than a tariff discrimination.  Therefore, we felt that if tariff barriers and trade barriers were to come down all over the world then preferences ought to be eliminated, as a part of that process.  The ideal being that you should, generally speaking, between separate customs territories at any rate, or quasi-independent areas, apply the principles of the unconditional most-favored-nation clause, or nondiscrimination.  So that was our position.

MCKINZIE:  Was there any opposition to that position within the Department that you recall, of significance?

[20]

LEDDY:  Not really.  I don't know, maybe Herbert Feiss or a few people may have challenged it. But I think the only economic argument against it was that, if preferences have to be eliminated by raising a tariff instead of by eliminating a tariff -- in other words, by raising the lower tariff instead of lowering the higher tariff -- I think that economic argument has a considerable amount of validity.  But there are many theses.  Jacob Viner, I believe, wrote on this subject to a considerable extent, that tended to show that if you have different tariffs from different countries the difference is in effect a protective tariff.  The difference itself is a tariff in that it protects the industry of the exporting country that benefits from it.  Thus you were eliminating protection, by eliminating the preference, even though you may have to raise the lower tariff rate to do it.  So that the economic argument against raising the lower tariff rate is not fool-

[21]

proof either.  But the great bulk of opinion in the State Department and in the Government, and I must say I think, indeed, in the Congress as well was that the British preferential system was an imperial system.  It was a colonialist system.  It was one that had bred a great deal of friction between us and the British, and that it ought to be junked.  So that was our position.

MCKINZIE:  Could you talk about some of the negotiations on that?

LEDDY:  Yes, of course.  Now, the British position was that if the imperial preference system was to be junked the scope of the action on the tariff, and on other trade barriers had to be very, very substantial, and very deep, and across the board.  No piecemeal operation like the previous bilateral trade agreements program would work.  They felt that what was required was an across-the-board (we used to call it horizontal cut) of at least 50 percent of all

[22]

tariffs of all the main countries; but notably beginning with the United States, with possibly some limitation on the lowest rates.   Let's say that all tariffs would be cut by 50 percent, but no tariff would have to be reduced below 10 percent ad valorem or something like that.  That's a significant duty now, in today's terms, 10 percent ad valorem, but in those days we had tariffs, very high tariffs, you know.  Cutting every tariff in the book by 50 percent across the board was a revolutionary idea.  Because previously they had been cut selectively on a product-by-product basis, carefully-drawn piecemeal cuts of 20 percent, 10 percent, 15 percent.  All very carefully done so that the opposition to liberalization wouldn't overwhelm the whole process.  But here we were dealing with a new postwar world.  So that very bold and very liberal action was required -- politically possible, because you were trying to reconstruct the postwar economy, and

[23]

because it was needed.  Everybody saw that in the postwar period the countries would have to have greater access to world trade, and, therefore, it made a lot of sense.  Now the British also held to the notion that -- and this was the nub of the problem on the issue of preference versus tariff reduction -- that the preferences would come down as the tariffs were reduced.  You understand what I mean?

MCKINZIE:  Yes.  I understand exactly what you mean,

LEDDY:  All right.  You'll have a system in which a tariff is 40 percent, and let's say the general tariff is 40 percent, and the preferential tariff is 20 percent.   If you cut the general tariff by 50 percent the preference would be eliminated, right?

MCKINZIE:  Right.

[24]

LEDDY:  If you only get 25 percent it doesn’t get eliminated, and so on.  So that they accepted that as far as general tariffs went down the preference was to be eliminated.  We agreed with that.  Fine.  They also agreed that the legal right to preferences -- they did this with some reluctance, and with a great deal of prodding, and, indeed, action by Canada -- that the international right underlying the preferential system should be relinquished.  In other words, there would no longer be a legal claim by the United Kingdom for preferences in Canada, or a legal claim by Canada for preferences in the United Kingdom.  In other words, this severed the international legal basis for the preferential system.  And the British didn't particularly like that idea.  But, as I recall, the Canadians simply took matters into their own hands, and gave a termination notice on those legal rights

[25]

so far as they were concerned.  There was no longer any commitment to Britain or vice versa, because all of these, I suppose, had some sort of terminal provisions in their agreements, whatever they were, the British Empire agreements.  But in any rate, that idea was accepted.  The severance of these commitments had a legal effect, and also had a practical effect.  Let's say, if you were country A, and you are negotiating with country B, that gave a preference to C.  When you were negotiating with country B, it could no longer claim that it had to consult its partner country C, and get permission, and that in order to obtain that permission you had to pay country C, for what it was losing in country B.  So, as I say, severance had a legal effect and a practical effect.

Now, where the British were adamant, and although they seemingly agreed to this they did not in fact agree to it in the final understandings

[26]

standings that emerged, was the business of elimination of the preferences that would be left after taking account of the effect of the general tariff reduction, whatever it was.  And that issue, I would say, was resolved in Britain's favor, because no action was taken so far as I know, by the United Kingdom or the Empire to go ahead and eliminate those residual preferences.  Now the U.S. did.  We and Cuba eliminated our preference system.  We had had for many years, going back to 1904, or thereabouts under the old Cuban-American Commercial Treaty, and later in the trade agreements with Cuba, a preference system in which we automatically got 20 percent off the tariff on the whole Cuban tariff, and other industrialized countries shipping to Cuba had to pay a 20 percent higher rate; and vice versa in this market we gave Cuba a minimum 20 percent preference on everything.  That agreement with Cuba,

[27]

by agreement with Cuba, and as a part of the negotiations, was eliminated, and the Cuban preferential tariff ceased to exist.  And, similarly, in the case of the Philippines, the Philippine preference system that we had was phased out.  Whether there are still remnants of it, I don't know.  It was, again by mutual decision, phased out and terminated.  So that, among other things, these had political meanings, because it meant there was no remnant of the old colonial and imperial system of which the preference system was a symbol.  This was one of the elements in the whole business of the building up the colonial empire, the great metropoles in Europe competing for markets and territory all over the world for purposes of economic exploitation.  It was all wrapped up in that connotation.  So, that was an important reason, also, why we took the position we did.  The British took

[28]

a different position but not for colonial imperial reasons at all.  I think a lot of their economists like James Meade, and Lionel Robbins, and [John Maynard] Keynes, and others, felt it was nonsense to go about raising tariffs anywhere.  And it was better to live with the residual discrimination rather than increase the tariff on imports from some of these areas.  And I think possibly they are quite right.  I think that that would be my feeling today about some of the preferential systems in Europe.  The way to go about them is not to raise the lower tariffs, but to reduce the upper tariffs.

MCKINZIE:  Did the State Department make official protestations to Britain about that, though, do you recall?

LEDDY:  No, no, no.  You see this was a key sticking point throughout the negotiations with the British

[29]

in the period of postwar planning up to the time when we concluded the implementation of the master lend-lease agreement.  You remember, starting with the Atlantic Charter, which really wasn't as some people seemed to think, an Atlantic Charter at all; it was a world charter which happened to be announced in the Atlantic area. I mean in Argentia, [New Foundland], I think it was.  And I'm sort of amused at the Atlantic Charter notion being connected with the Atlantic Alliance.  It wasn't at all.  It was a world idea.  It just happened to be announced by Roosevelt and [Winston] Churchill.  But beginning with that, and then following with the lend-lease agreement, and the master lend-lease agreement in Article VII had laid down as a principle -- I don't know whether you have the text of that, but I'm sure it's easily available -- that one of the elements in a settlement of lend-lease instead of being a payment of dough or something

[30]

like that from the British to us, to make up for the supplies and all that sort of thing (as we did after World War I with the World War I debts -- and everybody was conscious that that was a stupid thing -- in fact that was the reason for lend-lease), was to make as a part of that settlement a commitment of the two parties to work toward a sound world economic system.  A world system not a U.S.-U.K. system or an Atlantic system, but a world system directed to the reduction of tariffs and trade barriers, and the elimination of discrimination.  And it was that word "elimination of discrimination" that was read by us as meaning the junking of the imperial preference system, and the way the British read it in effect was that this was action directed toward that end.  And of course, if you keep on working toward the elimination of tariffs and trade barriers and eventually achieve

[31]

it, why there is then nothing left to discriminate with, is there?  At any rate in the implementation of the postwar arrangements Article VII was the framework within which we were operating, The master lend-lease agreements must have been negotiated in '41 or '42.

MCKINZIE:  I think '41.

LEDDY:  Something like that.  And I was not in on the negotiations on that particular clause; Harry Hawkins was.  And I think if you went into the history you might find there some disagreements between Harry on the one hand, and people like Herbert Leis on the other.  But Harry carried probably more clout than anybody in the Department with the Secretary of State on these issues.  I think that his views prevailed.  I think the Article VII was a very good article, as a matter of fact.  I think it was very well done.  Anyhow,

[32]

that was the framework within which we conducted our private talks with the British.  I think the first of them began about 1942, and they kept up during ‘42, and '43, and '44.  We had talks with the Canadians, intensive ones; and I think as I mentioned to you before, the Canadians had a great deal to do with this whole thing and with the settlement of one of the key formulas that led to the GATT.  We also had talks with Australians, who managed to get up to Washington.  They were a skeptical crowds by and large.  But the British once they got into it, as is quite usual with them, I mean once they agreed to Article VII they threw themselves into it wholeheartedly, and they fielded a formidably competent team.  I've seldom met abler people in this field of commercial policy, or any other field, than the teams that the British sent over here, including a fellow named Percival Leisching, and

[33]

R.J. [Robert Jones] Shackle.  And then they had on the broader, financial side, people like Keynes, Lionel Robbins, James Meade, and several others, who, taking them all in all, were just about as good as you can get in this world.  We had long talks with them about the framework and out of those talks emerged the proposals for an International Trade Organization, a suggested charter, and that sort of thing, I think that was in 1945.  Then we held in London the first meeting of the preparatory committee in 1946.  Clair Wilcox headed up that delegation, and I went with him.  Harry Hawkins served on the delegation although Harry at that time had become Economic Minister in London.  I think the timing of Harry's departure and Clair's arrival was almost simultaneous.  Although Harry had been Chairman of the Trade Agreements Division and Clair was Director of a larger office called the Office of International Trade Policy.  Trade Agreements under

[34]

that became just one division, and we had a Commodity Division, and one on Restricted Business Practices.  In other words, the trade agreements had become a segment of pure commercial policy in a larger structure at that particular juncture, whereas, earlier Harry had had, more or less, most of these subjects under his jurisdiction.  But at any rate, that was it.

In this whole business a key problem here was how to handle the tariff.  Up until that time all of the tariff negotiations, both ours and others, had been on the selective, product-by-product, basis, with individual items lowered by varying amounts and very carefully.  The British, the Canadians felt strongly, and almost adamantly that this absolutely would not work.  That you had to have an across-the-board action on the tariff, and that you had to have a multilateral agreement to get at the key issue of

[35]

quotas.  In other words, if you were going to eliminate quotas, which was the agreed objective between us -- we had no quarrels about that -- if you were going to eliminate quota systems around the world you could only do that through a multilateral agreement in which all of the major countries participated.  And in order to get quotas eliminated you had to deal with tariffs, and you could not deal with tariffs on a selective product by product basis in a multilateral negotiation.  People threw up their hands, and were appalled, and said, "How can you do that?" I mean, you can’t have ten or fifteen countries all negotiating bilaterally with one another on these long lists of things.  I mean this was an impossible thought, it couldn't be done.  So we, for a while, Harry and the others, played around with the idea, "Can't you have just a commitment on the tariff?"  For example, you would have a multilateral agreement to eliminate quotas,

[36]

and a lot of other things; and also a multilateral commitment to conclude selective bilateral agreements on the tariff and take a long time to work those out.  The British said, "No.  They won't work either.  Everything has to be done simultaneously, otherwise you will lose the connection between the quota and the tariff, and they have to be treated alike and at the same time."  So we agreed with them.  When I say we, Harry Hawkins, Clair Wilcox, and all the rest of us below the political level agreed that the British were right on this, and we strongly pressed for action by the top level of the State Department to support a bill in Congress, or a convention, if necessary, submitted to Congress, incorporating the British idea of a horizontal cut of all tariffs by 50 percent, but not less than a floor of say 10 percent.  We worked it out in great detail.  In fact, we worked through a long convention on

[37]

commercial policy, through the interagency system that was in effect at that time in the Government, the Executive Committee on Economic Foreign Policy; and which, incidentally, became the basis for all the commercial policy parts of the U.S. proposals and the suggested ITO Charter, and the key part of that was this tariff formula.  But it was quite clear that the President had no authority to implement an across-the-board tariff formula under the Trade Agreements Act.  He would have to go to the Congress.  He would have to go to the Congress in advance if he wanted to get the authority that way, or he would have to negotiate the convention, and then submit it to Congress.  So this was the political issue involved in this whole thing that came to the top of the U.S. Government in 1945 when the Trade Agreements Act was scheduled to expire.  The top political people, namely [Dean] Acheson and [William] Clayton in the

[38]

State Department at that time.  Who was Secretary?

MCKINZIE:  In ‘45 [Edward, Jr.] Stettinius would have been Secretary.

LEDDY:  Yes, Well, you see, if Cordell Hull had been around he would have been in it, and I don't remember that he was, so it must have been Stettinius.

Acheson and Clayton; so there they were faced with a deadline on the Trade Agreements Act.  If they let the deadline expire they were afraid that the protectionists would never let it get born again.  Whereas, if you went to Congress and said, "The Act is going to expire.  The President's full authority will expire," you would have pressure in getting legislation.  And that I think was the advice they also got from the Ways and Means Committee.  Don't let the Act

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expire.  You must come up with your bill.  You have to come up now.  You can't delay.  All right, so they had to move in 1945.  The question: how do we move?  Do we go up there and ask for authority to cut all tariffs by 50 percent across the board without this careful selective product-by-product approach we've had before, that the Congress is familiar with?  On the theory that the new place is needed internationally; but we have nothing to put before the Congress, nothing to show, no agreement, no nothing?  Or do we go back for  the kind of authority we've had before?  And they -- Acheson and Clayton -- decided to go for 50 percent authority to cut tariffs, but on a selective basis, product by product. There were last minute appeals to the Department by the British and Canadians.  Notably, one I recall, when Norman Robertson of Canada (Under Secretary of State in Canada at that time) came down here in a very strong appeal to Clayton that this was

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a disastrous decision.  That if we went ahead on this basis that the chances of getting a really effective postwar agreement would be gone, go glimmering, and therefore, he appealed.

He said, "Almost anything would be better than what you seem to be thinking of doing."

And Clayton said, "Well, I'm sorry but this is the way it is in this country.  We just have no choice.  We have no choice except to either throw up our hands at getting some kind of an improvement in the international situation or this, even though it may not meet your desires for a horizontal reduction,"  And so the Canadians just sighed and went back home, and were really downhearted about this, but we put up the legislation and got it through.  I worked on the Ways and Means Co