285. Memorandum of Telephone Conversation Between the Under Secretary of State for Economic Affairs (Ball) and Marquis Childs0
Childs: I have been looking a little bit into the retaliation on the chickens and I was told by one of your admirers on the Hill that you felt this was a very ill-advised course and counseled against it.
Ball: Oh no, not at all. As a matter of fact, I told the President the other day that I was all for it.
[Page 612]Childs: I’m disappointed in you. What’s the matter with you?
Ball: Well I think that at some point…. I would hope that as a result of our getting into the business of examining the withdrawal of concessions, that we can really pull the Europeans back to a position where they are going to face this thing rationally. They have really been…in a very irresponsible fashion here and they have let their own lobbies dominate them. We are not going to start a trade war. I think this thing is blown up out of proportion, partly because there has been too much talk about it on this side, but even more important because it has become a play between the Germans and the French with two agricultural lobbies working at times against one another and at times with one another. But what is going to happen, is that these problems have to be faced at the political level and the Europeans have really refused to face this at the political level; they have left it at the level of secretaries of agriculture who are always going to be…in a situation of this kind.
Childs: Don’t you think it can become a trade war?
Ball: No. I don’t think so. In the first place, we have no intention of letting it become a trade war and the Europeans are not going to in my opinion, because they will have enough responsibility once they get a little sense of shock. But you know I would feel a little more concern about this if we hadn’t been through the…glass experience where the shoe was on the other foot, and we were excoriated all over Europe for raising these rates even though they went through…procedures.
Childs: And they retaliated.
Ball: And they retaliated. And that was all right; that was part of the game. I hate to see this thing go on a retaliation route because it makes no sense from the point of view of commercial policy, but I think it is the only way we have of bringing this matter to a decision at the political level and giving the government a club to beat their agricultural lobbies over the head with and for that reason, I think it is very important that from time to time we take a tough line. And while the chickens are…is not a big item in total trade, it is only at the most something like $50,000,000 and it is probably a vanishing market anyway, because the Europeans are going to acquire the same technology of producing chickens on an assembly line basis as we are.
Childs: Well, of course, they are.
Ball: Nevertheless, I think it is useful to have a confrontation at this point on an item which is at least symbolic of what the larger problem is going to be. The European market for the Department of Agriculture is extremely important and if the European governments are going to let their price structure and their regime of protection of agriculture be fixed at the level of the most inefficient producer, which is the situation here that I think…for a very bad time and we might as well face that now as later. The net result of all this pulling and hauling is very likely to be that [Page 613] this thing will be raised up to the proper political level and I’m not sure we will save the poultry, but I think we will have saved some other things.
Childs: Yes. They are now in a position, however, to take up a trade war and this is what de Gaulle would like, don’t you think?
Ball: I think he might like it, but the Germans would hate it. Their problem is this and I don’t think de Gaulle really wants it either. I think that he talks a kind of…game, but there is a good deal of—particularly among the larger European producers—there is a good deal of sense…liberal trading world and there is always a latent French protectionism, but it is nothing like as strong as it used to be and the Germans who are the real offenders in many ways on the chicken side. The industrial Germans, of course, are by definition liberal traders, so that the pressures in Germany are going to be for a liberalization and they are going to want to avoid a trade war. We’ve got to have a crisis here and this is a good point to have it, I think. I would just as soon that it came now and sort it out. I don’t think it is going to have great consequences but I do think it is going to act as a kind of restraint on the lobbies and what it is going to mean is that governments are going to look at these things politically at the right political level sooner than they might otherwise and not just leave them to the level of Ministers of Agriculture, Secretaries of Commerce and what not.
Childs: Yes. Well, of course, I know it is…these farm lobbies are so powerful everywhere, including here.
Ball: That’s all right.
Childs: Now the thing that Freeman has been lobbying around up there on the Hill about this. He got up that telegram…53 Senators.1
Ball: Yes. I think, but then again I mean he’s just being the counterweight to the Ministers of Agriculture in Europe. Up to this point, this has been a case where the lobby on one side has been against the lobbies—combined lobbies—on the other, and I think the time has got to come when this thing has to be settled by the political leaders—the governments, because you can’t have a commercial policy problem these days in this kind of interdependent world that doesn’t become a political problem when big nations are involved. This just has to be looked at as a political problem.
Childs: You know I saw your friend Jean Monnet in June and I have never seen him, George—I have seen him many times—I have never seen him so agitated. I brought up the chickens, chickens, chickens.
Ball: I know.
Childs: He is usually so calm.
[Page 614]Ball: He sees the chickens as creating a source of friction between the government of the United States. Of course, sitting where I sit—much committed as I am to the idea of a United Europe, nevertheless, the point of view of protecting American commercial interest—this is one we really couldn’t take lying down. Too much has been talked about it—said about it and I think we have tended, perhaps to make too many speeches. Nevertheless, I think the principle of the thing is absolutely right. I don’t see how we can avoid moving on it.
Childs: What I couldn’t help but feel was that he doesn’t understand the pressures over in this country. I said, Jean, the next thing you will get is the feed grain. He said you can’t go on expecting to export all that agricultural produce to Europe. If we can’t, Jean, we will be out of Europe.
Ball: Well, the real problem is that down the line, if you look far enough, there is bound to be a certain probable reduction in American agricultural exports to Europe or at least they wont increase at the rate they have been increasing, simply because they have gone up very fast since the war. Since the agricultural technology hit here before it hit Europe and whether or not there had been a common market, we would be facing problems in our agricultural exports because we have now reached a point where over here one farmer can produce ten times what a farmer could produce in pre-war days and it is beginning to happen in Europe.
Childs: It is happening in France right now.
Ball: Now there are two trends and it is really quite interesting that one counteracts the other. On the one hand Europe is going to begin to apply the new technology and greatly increase productivity and that would tend to move Europe to self sufficiency, but at the same time counteracting the fact that as the standard of living in Europe rises, the Europeans are going to shift their diet from direct cereal consumption into protein consumption. In other words, instead of eating pasta as they do in Italy which is simply the cereal grain cooked, they are going to eat meat and the fortunate thing is that quite a bit of American agricultural export is…. A cow is extremely interesting in that it takes something like 5 lbs. of grain to produce a pound of meat, so then if you have a big counterpart…and since cereals are one of the major exports, the total amount of cereal is going to go up with the rising standard of living.
Childs: I see. This is a possibility. Jean talked about a World Food Conference.
Ball: We may have to have. And so De Gaulle may be trying to use the threat of torpedoing the liberal trade policy or even torpedoing the Common Market, unless the Germans agree to a common agricultural policy. We get caught in this bind—right in the middle of this thing to some extent. This is part of the difficulty.
[Here follows discussion unrelated to the poultry problem.]