Southern Cotton and Japan

by DAVID L. COHN

1

WHEN Miss Margaret Truman was married in an Italian-made gown to Mr. Clifton Daniel, she received several letters saying, in effect, “You ought to be ashamed.” A genu-wine American girl, according to the writers, would have been married in a genu-wine made-in-America dress.

If this idiotic form of insularity were confined to idiots such as Miss Truman’s correspondents — representative though they are of a numerous clan — little harm would be done. But it has been given solemn sanction by at least two states. South Carolina and Alabama, large producers of cotton textiles, have decreed that stores selling Japanese textiles, or garments made from them, must post a sign reading “Japanese textiles sold here.” The sign must be displayed “in a conspicuous place upon the door” in letters “not less than four inches high.” Thus Captain Boycott, in Confederate uniform, protects Southern cotton mills against foreign invaders.

The boycott statutes show that the South is still torn by the politico-economic contradiction which plagued it long before The War Between the States. Its cotton farmers sought low tariffs so that they might export cotton and buy imports at competitive prices. Its cotton textile manufacturers sought high tariffs so that they might protect their home markets. When, therefore, the builders of a new cotton mill near Athens, Georgia, in 1827, plumped for high tariffs, the local newspaper editor, disturbed by the conflict of interest, wrote: —

A sense of safety and a feeling of independence combined with an expectation of profit have urged gentlemen to an undertaking with which their convictions are at war. . . . We are authorized to state that these sentiments have, by no means, undergone a change; that their project is certainly not to give countenance to a system they have always denounced, but is to be regarded as a measure unquestionably defensive.

Today the South is the nation’s principal cotton grower and cotton textiles producer. And today, so acute has become its ancient politico-economic contradiction that, resolving it in favor of the mills, two Southern states use the dangerous weapon of boycott at whatever cost to farmers. In 1955, Japan, the largest single market for American cotton in a period of declining exports and increasing surpluses, bought 647,000 bales, 26 per cent of the total exported.

If ever the farmer needed a buyer, it is now. By August 1, 1956, the end of the current cotton year, the surplus stock from 1955 and previous years will probably total a record 14.5 million bales. Most of this surplus will be carried under the government loan program. The carry-over, plus the anticipated 1956 crop, likely will make a total of some 27.5 million bales of cotton available for next year. If 5 million bales can be exported during the coming year, and 8 to 9 million bales are domestically used, there would still remain a surplus next year of nearly 14 million bales.

Exports are being increased only through radical price-cutting. Cotton that has been selling here at about 35.25 cents a pound is being exported at 25 cents a pound. Thus exporters are buying cotton about 10 cents a pound cheaper than domestic consumers. The next step in this aberrant process is now being taken by the Department of Agriculture. It is working on a program to subsidize cotton textile exports to help overcome the domestic industry’s handicap in world sales. Yet while we dump, we boycott our best cotton customer at whatever damage to our farmers and to America’s relations with other countries, including Japan.

Even if the statutes should be ignored — and they are being ignored — they are harmful. The laws, as Tokyo has indicated, contravene our treaty of 1953 with Japan. It accords to Japanese goods in our market treatment no less favorable than that received by exports from any other country. The statutes therefore undermine our pledged word.

Treaties of amity and commerce, such as the one with Japan, protect American trade everywhere. If we should violate them, other nations would retaliate against us to the peril of the whole trade structure upon which much of our prosperity and the growing strength of the free world is based. There are other considerations, equally grave, that affect our relations with Japan.

The facts of her economic life reveal why Japan is alarmed by our restrictive legislation. Her essential dilemma is simple and stark: Japan has too many people, too little land, too few resources. Her territory has been reduced to the size of Montana. Her four narrow islands cannot provide the things needed for the livelihood of her present population of approximately 90 million.

This is the famous “point of explosion” that Japanese militarists threateningly forecast in the thirties. Then Japan’s population was only 65 million and she ruled Manchuria, Korea, Formosa, South Sakhalin, and the island colonies. Today the Japanese, instinct with proud patriotism, independence, and the spirit of self-sacrifice, are working harder than most of the world’s people. They must do so in order to live. They may be driven far from the path that they would like to take — and that we would like them to take — if we attempt to keep them from filling their rice bowls through an exchange of goods and services with us.

Overpopulated and war-impoverished, Japan is inflexibly dependent upon imported food and materials. She can get them only by exporting goods and services. But not once during the post-war decade has she been able to balance her normal trade. Thus, while Japan has recently been in an export trade boom, her imports exceeded exports for the period January—September, 1955, at an annual rale of nearly $600 million. This gap was almost entirely closed through purchases by American forces stationed in Japan and expenditures by American official personnel there. But dollar income will shrink as we reduce our forces and aid, so that Japan must close the gap through her normal trade.

This is difficult. But still more difficult is Japan’s task of finding employment for an ever-rising labor force increasing by more than 700,000 annually. (By 1960 Japan’s population will be approximately 93 million.) Although her population in creases by 1 per cent annually, new job-hunters increaseby 2 per cent annually. And — ominously for the future — 28 million Japanese are today under fourteen years of age. Relatively soon they will be seeking homes and a livelihood.

Living, moreover, for millions of Japanese, is bleak. Most wage earners get no more than $33.50 monthly, and 6 million persons, in this most advanced of Asian countries, exist on a bare subsistence level.

2

WHERE shall jobs be found for 700,000 new workingmen annually? Great numbers of Japanese are chronically underemployed. In business, a surviving remnant of the samurai code partially accounts for the paternalism between management and labor and for the large underemployment in industry. Since management’s social responsibilities to labor are generally recognized, it cannot fire excess hands. For then management would lose face with labor and with its own social group for failing to protect those to whom it was obligated. Yet, obviously, chronic underemployment is indicative of an economy that is not expanding fast enough to meet the needs of the people.

Primary industries such as fishing and farming are overcrowded. Commerce, banking, and the services offer little prospect for more jobs unless the economy should further expand. Manufacturing almost alone must absorb the new labor supply. Such a task is formidable. Even if half of the new labor force of 700,000 should be so employed, this would mean a yearly employment increase of more than 5 per cent — an increase possible only through constant expansion of Japan’s exports. Yet the achievement can be indefinitely delayed only at the risk of grave internal discontent and the turning away of Japan from the free world.

Meantime, not only do we enact boycott laws, but the Wall Street Journal recently reported House Minority Leader Joseph W. Martin (R. Mass.) as saying the Administration is planning “definite and concrete moves” to protect the American textile industry against Japanese textile imports. The moves would appear to be a subsidy for cotton textile exports. Thus the world’s richest country, the country that is forever crying out for freedom of trade, would resort to dumping. This wretched device, which we denounce, is usually employed only in desperation by hard-pressed economies. The mere official consideration of it — let alone its use — is indicative of a parochialism dangerous to us and to other countries in the free world.

In historical perspective, our behavior is the more strange. Recently we risked a world war in Korea in order, among other things, not to leave Japan exposed to Communist, aggression. But we are apparently willing to risk the loss of Japan to the free world in order not to leave American textile mills and garment manufacturers — all of whom hold themselves out to be defenders of free enterprise — exposed to Japanese competition.

As we seek our national self-interest in great affairs, so do the Japanese. To them — unlike us exports are a matter of life or death. With eagerness born of necessity, they seek the job that will assure them a full rice bowl, clothing, shelter; and here any contrast between the United States and Japan in terms of wealth of land and other resources is startling. Understanding this, the Soviet Union and Red China are sparing neither money nor energy in seeking Japan’s favor.

It would be unfortunate for us if we should fail to realize the powerful psychological spell wrought by the massive strength of continental China, with her huge land mass and 600 million industrious people, upon all of Asia, including Japan. China, to hundreds of millions of Asians, is what U Nu, the former Prime Minister of Burma, called it : “Big China.” It would be unfortunate for us, too, if we should forget that the Japanese are Asians, and that much of their culture stems from China.

Japan Quarterly notes that “relations between Japan and Communist China have made much progress, at least in terms of exchange of people and materials. . . . Japan’s exports to Communist China in 1955 came to $29,500,000 and imports to $80,840,000, an increase of $10,000,000 and $40,000,000 respectively over the previous year.” And in 1955, official Japanese visitors to China numbered 390 as compared with 90 in 1954.

Everywhere in Asia the Soviet Union (and Red China) is mounting a successful trade offensive. One reason for its success is Soviet emphasis on mutual expansion of trade, proceeding upon the basis of “trade, not aid.” The Russians appear to be more “capitalist” than we are and avoid the stigma that so often attaches to us when we hand out aid in Asia — the stigma of the rich-man-poorrelative relationship. At the same time, many of us oppose both trade and aid. The Soviet Union, however, scores a psychological success with its trade agreements wherever they are made. The Russians emphasize equality between the parties to agreements and write into them a clause calculated to create good will among the signatories: that the agreements “should mutually increase cultural and economic relations to the end of deepening cooperation and understanding among nations.”

All this is part of a wide, carefully planned trade offensive to draw uncommitted Asian nations into the S viet trade bloc. It has already made great headway in India and Burma. It is causing second thoughts in Thailand, perhaps our chief ally in Southeast Asia; in Pakistan, western anchor of the Southeast Asia Treaty Organization; and in Afghanistan. It must have its effect in Japan if we proceed with no more direction than that of a blind dog in a meat house.

We can, of course, restrict Japan’s access to our markets, since the freedom to behave stupidly, as well as wisely, is a privilege of sovereignty. But while denying her access to our markets, we cannot at the same time continue to deny her also access to continental China’s markets.

Before the war, China took one fourth of Japan’s exports and was her principal supplier of coal, iron ore, salt, soya beans, bean oil, and so forth. It is unlikely that Japan’s China trade could ever assume its former scale within foreseeable time. Yet, even upon a diminished basis, it could be important to her. But Japan is a member of the free nations group that bans trade with Communist China, particularly in strategic materials, the things China especially needs. Thus Japan is debarred from exchanging steel sheets, electric generators, and ships for Chinese coal and other materials.

Not unnaturally, many Japanese clamor for a removal of trade barriers with China. But if we sharply restrict Japanese trade opportunities in our market (and Western markets generally), does anyone suppose that a Japanese politician would not make hay by urging that Japan destroy her agreement with the West debarring sales of strategic materials to China? Isn’t it likely that the politician, succeeding in this, would then advocate for his country a neutralist or pro-Asian policy that might easily become an anti-American policy?

At present an overwhelming majority of the Japanese support the policy of maintaining close coöperation with the United States. Japanese sentiment is now anti-Communist and anti-Russian. But might it not change against us if the people should come to believe that, to paraphrase Clausewitz on war, American trade restrictions upon them are a continuation of the occupation by other means?

Joseph Stalin is now everywhere disparaged. Yet he gave us an invaluable warning in 1952, when he addressed the Cominform. He then said, in effect, that the destiny of mankind would turn upon the fate of Japan and Western Germany. But, he continued, as they become more competitive economically with the West, the West in its greed and stupidity will deny them the fullest trade opportunities. Then, concluded Stalin, we shall draw them into the Soviet orbit by offering them the widest trade opportunities.

It would be rash to predict the eventual realization of Stalin’s prophecy. But the accuracy of his analysis has recently been confirmed by a Japanese authority. Toshikazu Kase, writing in Foreign Affairs, says: “The paramount aim of the Communist effort is to detach Japan from the United States, then to neutralize her and eventually win her to the Communist camp. Thus our situation is closely analogous to that of West Germany. The fate of Europe will be decided by the disposition of the German question; the destiny of Asia will depend on the orientation of Japan.”

It would be strange indeed if we should lose the friendship of 90 million Japanese and gain exclusive control of the domestic market for cotton dishrags.