The Chief of the Division of Near Eastern Affairs ( Murray ) to the Secretary of State
Dear Mr. Secretary: I think you will be interested in reading the following excerpt of a letter of February 8, 1935, addressed by the American Commercial Attaché at Istanbul25 to Mr. Skinner, our Ambassador there, in which the Commercial Attaché takes issue with the Ambassador over the latter’s view that it should be the business of Turkey, or any other country, “to buy from those who buy from her.”
As you know, Turkey enjoys a considerably favorable balance in her trade with the United States due to our large purchases of Turkish tobacco. Both General Sherrill, our former Ambassador to Turkey, and Mr. Skinner have persistently urged upon us the desirability of bringing pressure on Turkey to utilize her dollar exchange balances by purchasing in the American market up to the amount of those balances. We have on various occasions pointed out to Mr. Skinner [Page 1045] the disadvantages of entering into any bilateral agreement with Turkey along the above lines, in view of the state of our trade balance with some of our most important customers in Europe and elsewhere.
“I have noted with interest that you favor General Sherrill’s view that it should be the business of Turkey or any other country to ‘buy from those who bought from her.’ Frankly, I do not agree with this idea and cannot share with you the acceptance of the principle of ‘buy from those who buy from you,’ as I believe it to be uneconomical and unsound. I take it for granted that it is generally accepted that to improve the world-wide economic and commercial depression it is desirable, if not necessary, to bring about an increase in international trade and commerce. The acceptance of the principle of ‘buy from those who buy from you’ seems to me to be a maxim which must eventually lead to trade isolation rather than to an increase in foreign trade. Such slogans as ‘buy American goods,’ or ‘buy British goods,’ or ‘buy from those who buy from you’ appear to me to be based on the idea of economic nationalism which carries with it the corollary of self-sufficiency. The various countries who have embarked or who have apparently embarked, upon a program of self-sufficiency by instituting various trade barriers such as high import duties, import quota restrictions, and exchange restrictions, and who have supplemented these high import tariffs and other restrictions to trade by special commercial agreements based on the principle of bi-lateral clearing and compensation accords have resorted to these measures with the idea of limiting their imports and ‘forcing’ the export of their raw materials and manufactured goods and so forth. In general it would appear that the motives impelling the imposition of import restrictions, and the considerations prompting the conclusion of commercial agreements and clearing accords based on the principle of compensation indicate a desire on the part of the nation concerned to maintain, and in fact to increase the volume of its foreign trade as a whole. It is my belief that the acceptance of the principle of ‘buy from those who buy from you’ and the negotiation of commercial agreements and clearing conventions based on the principle of bi-lateral trade balances, has been and is a serious deterrent to the restoration of international trade, and that the principle of reciprocal bi-lateral trade balances is unsound and inequitable.
“To illustrate my thoughts on this subject, I feel that trade between nations can be compared to commercial transactions between individuals. The idea and principle seems to me to be the same except that trade relations between nations is simply commercial transactions between individuals multiplied by a million, or two million or 100 million. If I was a butcher I do not see why I should be expected to buy my clothes from a tailor rather than from a department store simply because the tailor bought more meat from me than the owner of the department store, nor why if I was a butcher, I should call in a doctor or a dentist in whom I had no confidence simply because that particular doctor or dentist purchased my steaks or chops. It seems to me that this idea or principle of ‘buy from those who bought from you’ not only tends toward trade isolation but that it will actually prevent an increase in international trade, and will only result in a diversion of purchases from one country to another country and that in the final [Page 1046] analysis international trade relations will remain static, if not actually decrease.
“I think it is generally admitted by leading economists and experts in international trade and commerce that if the United States is to increase its exports it must increase its imports and purchases. Personally, I should dislike to see the principle of bi-lateral trade balances accepted or applied in connection with the trade relations between the United States and Turkey. It seems to me that this is a very dangerous principle to accept or to apply to Turkey. The total import and export trade of Turkey amounts to less than 1% of the total world trade and the share of the United States in the Turkish trade is extremely small, and as the balance of trade between Turkey and the United States is favorable to Turkey, we must not overlook the fact that the trade between the United States and Canada and the United Kingdom, and Japan and Germany and others are largely in favor of the United States. Personally, I am of the opinion that if Turkey should remove every trade restriction against the commerce of the United States, and impose no restrictions as to exchange and so forth, even in this preferred position we would not and we could not sell to Turkey at this time merchandise of the manufacture and origin of the United States in an amount equal to the value of our purchases from Turkey. I do believe, however, that we should continue our efforts to maintain the present volume of business that we are doing with Turkey and to make every possible effort to increase our sales to Turkey, and I think that you have made a very notable contribution to these objectives.”
- Julian E. Gillespie.↩