Harry S. Truman Presidential Library & Museum


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 It may not be published in full except by permission of the Harry S. Truman Library.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

[39]

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

[40]

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 Committee report on that and wrote a good portion of it, partly based on previous reports.  But we got the bill through, and got

[41]

the maximum authority we needed.  So then the question was, well, now here's this authority.  It has to be on a selective, product-by-product basis, but is there any way in which it is possible to negotiate a multilateral agreement on this selective product-by-product basis?  Or is this utterly impossible?  Everybody thought that it was completely impossible before, but when this was the only thing you had, and since you were faced with the problem that you almost had to have a multilateral agreement, you did everything in your power to figure out whether something like that could be done.  And the solution really came in about July of 1944 -- I think I mentioned this to you earlier -- a meeting that I went up to with Roy [LeRoy Dean] Stinebower and a couple of others.  The genesis of this idea had come in '44.  I think one of Dean Acheson's assistants, a fellow by the name of [Herbert S.] Marks, as I recall.  I think he died, a relatively young fellow then.

[42]

The Canadians were probing around on this because they had known what the issue was, and some of their people came up with a notion that they called the nuclear approach.  In other words, everybody had been thinking about a very large international trade organization.  One that would encompass maybe forty or fifty countries, or something like that.  That kind of an approach.  And the Canadians said, "Well, if you are stuck with the selective, product-by-product approach, maybe the thing to do is to get the key trading countries together and see whether you can't make a "nuclear approach."  They said, "Why not just speed up your whole schedule the way you've been handling bilateral negotiations, speed up the whole schedule, and make everybody put simultaneous proposals on the table, but limit the number of countries to let's say seven or eight, or something of that sort."  So, when in the following year we knew

[43]

that we were dead on the horizontal approach this idea was revived.  And that is what gave birth to the notion of the GATT.  A way of simultaneously cutting tariffs on a broad basis, even though you had to look at each item together with multilateral commitments on quotas, and preferences, and all the rest.  You know, in the trade agreements program we always used to put out a list of products in which you are going to have public hearings about a trade agreement. Usually those lists would be about -- well, sometimes they are only three or four pages, sometimes there could be as many as ten oar twenty.  Well, when the list for the "nuclear approach" hit Clair Wilcox's desk it was about 3 inches thick, because it covered the whole damn U.S. tariff, you see.  Then he says, "Oh, my God, can't we put this on very light paper so that we can throw it in the air, and it just drifts away, and nobody will see it?"  He just

[44]

laughed and said, "Okay, full steam ahead.  Publish the list.  That’s what we’re going to do."

MCKINZIE:  Hearing on every item.

LEDDY:  Clayton backed him up, and what in effect we did was to have hearings on the whole U.S. tariff, and we had to list each item in the whole U.S. tariff in the process.  It was an enormous job.  Norman Burns worked in the Trade Agreements Division of the State Department at that time.  (He was an old-time tariff expert.  He used to work with and be a close friend of Oscar Ryder who was another very great guy incidentally, Chairman of the Tariff Commission.  He just died last year at an advanced age of eighty-three.)  Norman was the one put in charge of getting that published list out, and it was a beauty.  He did a great job, and we held the hearings, and we went ahead.  In GATT, it took six months I guess, but we had simultaneous

tariff negotiations among -- it must have been about eighteen countries, some of them large, of course, and some were smaller and less consequential; but it was done, and it could be done.  It isn't as good -- never has been as good as the original British idea of cutting everything by 50 percent.  That's a hell of a lot simpler and better; but it still hasn't been achieved, even in the Kennedy round.  But this was enough to get the GATT started and launched, and it was put into effect in October of '47, as I recall.  That positive action really was what laid the groundwork, and gave evidence of serious intentions on the part of the U.S. (and other major trading countries), to set up an International Trade Organization.  The ITO was a much bigger animal than the GATT.  The GATT was supposed to deal with commercial policies -- the trade agreement provisions.  And ITO, of course, got into full employment objectives,

[45]

development provisions, commodity agreements, restrictive business practices; accompanied by the elaborate machinery typical of UN. agencies.  It was an enormous global conference.  In those days seventy or eighty countries was regarded as a large number of countries, and I think that’s what we had in Havana.  But in the GATT talks we had the GATT negotiations going on side by side with the second preparatory meet­ing for the ITO Conference.  Side by side with the discussions on the ITO Charter.  So that that was how it proceeded.

MCKINZIE:  Then you drafted much of the GATT material which was included then, and ultimately in, the ITO...

LEDDY:  Yes.  Well, let's put it this way, I guess I was the guy who sort of pulled together and helped to guide through the interagency executive committee the old multilateral convention on

[46]

commercial policy, that I spoke to you about, including various provisions on M-FTN, national treatment, marks of origin, customs formalities, customs valuation, quotas, the whole lot, I don' t know whether you've ever looked at GATT.  I have a copy of it here, since I've been working on it recently.  We had in the U.S. Government worked on these provisions drawing them from the old bilateral trade agreements, as well as various multilateral instruments that had existed, like the Freedom of Transit Convention, the Convention on Abolition of Prohibitions and Restrictions, etc.  In other words, we drew from both U.S, and international sources.  I was mainly in charge there of the general provisions in working those through the Government, and worked with Marc Catudal, and had them vetted by people in the Customs Bureau on the customs provisions, and the Tariff Commission, and -- it was an interagency

[47]

effort; and I was sort of the State Department fellow that was working on them: for Harry Hawkins, to work this thing through under the supervision of Harry and then Clair Wilcox.  So, when it came time to prepare proposals, and to talk with the British about the framework of a commercial policy instrument, we had a great deal of preparatory work done that was well grounded in both U.S. and international practice, and was familiar to the British in general terms. We worked with them on refining these things.  And they became the basis for the Proposals for an International Trade Organization, which was a condensed version of what was later put out as the Suggested Charter for an International Trade Organization.

In other words, there were two documents; one, the Proposals, which I think was issued at the time of the final lend-lease settlement

[48]

with Britain.  And, either simultaneously or a little bit later, a U.S. -- I believe it was just a U.S. -- suggested Charter which spelled out these things, and the commercial policy section of what was spelled out was what I worked on mainly.  There were other parts, like restricted business practices.  Bob Terrill worked on that.  There were commodity agreement provisions, which had to be carefully fitted into general commercial policy, because they were an exception to the rule against quotas.  Different people worked on different chapters.  I worked on the commercial policy part in pulling the whole thing together into a draft instrument that we could put forward.  That was the origin of the provisions that are in GATT, and in the ITO Charter; but the latter never came into effect.  The precise provisions, of course, were hammered out and negotiated, and changed, and altered, and adapted, and fitted as a result of these intensive international

[49]

negotiations which began in London in December of '45, as I recall, the first meeting.  The second meeting was in New York at Lake Success, which I attended for the U.S.  And then the subsequent talks in Geneva, as the GATT negotiations went on.

The GATT negotiations divided into two parts.  One was the tariff negotiations themselves; that is, getting these enormous schedules with concessions negotiated.  I had nothing to do with those.

MCKINZIE:  Winthrop Brown was...

LEDDY:  I think Win Brown was the top tariff negotiator, as I recall.  He took Harry Hawkins place in the Trade Agreement Division.  He was Chairman of the Trade Agreements Committee, and he was the fellow who negotiated all of the tariff.  At the GATT meeting the first subject we dealt with was the tariff thing, and Win Brown really ran that.

[50]

On the general provisions side, which dealt with all of the things like most-favored-nation treatment, national treatment, quotas, all, the rest of it.  I sort of had a general role in that, and I also had a particular role for certain provisions, but many parts of it were broken up, as I recall.  John [Walker] Evans, for example, worked on the free-trade area provisions.  On the balance-of-payments provisions, the Treasury people played a big role.  On the agricultural provisions the Department of Agriculture played a big role in that, and so on down the line.  You know, we had an interagency team there, and these people were used to the best of their abilities in various different segments.  Clair Wilcox was the head of the whole delegation.  I suppose the really top man was Will Clayton, but I mean the fellow who was there every day and every week was Clair Wilcox, and then held report from time to time to Will.  That was the general structure and

[51]

Harry Hawkins came down as an adviser on the side.  He didn't try to get into the active negotiations.  And of course, we had many, many meetings, and working parties, and so forth on this, that or the other provision.  So, that's how those were handled.

MCKINZIE:  You were involved in that from the spring of '47 through March or so of 1948.

LEDDY:  Well, from December of '46 until March of '48.  Yes.  That was the beginning of the multilateral phase that began in December of '46, went through to complete the GATT in October of '47, and then through the ITO Charter negotiations which wound up in March of 1948.

MCKINZIE:  When I talked to you briefly before, you mentioned something about some peculiarities of the GATT document, which came from the fact that the ITO was not adopted.

[52]

LEDDY:  Well, the first thing about the GATT document is that it is basically, as you can see from looking at it still today, a trade agreement.  Almost all of its provisions relate to commercial policy commitments, the tariff, MFN, national treatment, the usual commercial policy commitments.  But unlike a bilateral, agreement it has to have some kind of way in which you can make an international decision other than through the normal bilateral discussion and agreement.  Being a multilateral instrument with several parties all adhering to common rules, with common rights on all these things, you had to develop some sort of an institutional device to make those common decisions.  And this is where the question came in of whether you were creating an international, organization or not.  If it was a formal international organization like the Monetary Fund, or the FAO, or things of that sort, normally

[53]

such a charter would be developed and submitted to the Congress, and would have its regular appropriation, and that kind of thing.  But this was a trade agreement entered into by the President pursuant. to advance delegation of authority from the Congress in the Trade Agreements Act of 1945.  And there was nothing in that that mentioned institutions . It simply dealt with commitments, but you had to have some way of arriving at a multilateral decision.  So, we wanted to avoid having this thing having the appearance of a formal organization, which it wasn't; because if it had been it would have had many more elaborate things about executive boards, and that sort of business in there like the ITO Charter did, which was supposed to come before the Congress.  We devised a system whereby you could make decisions by a majority vote.  The technique we invented was to use the

[54]

term "contracting parties," lower case, when describing the countries which assumed the trade commitments, but to use the term CONTRACTING PARTIES (upper case) when describing the same countries acting jointly for the purposes of administering the agreement.  This avoided the use of the word "members" which connotes an organization.

MCKINZIE:  Whose idea was that?

LEDDY:  Mine.

MCKINZIE:  Okay.

LEDDY:  I'm afraid I was also responsible for the name which was later criticized.

MCKINZIE:  Contracting parties?

LEDDY:  No -- General Agreement on Tariffs and Trade, because people didn't like "the GATT." They

[55]

thought that would be an ugly word.  It was an agreement on tariffs and trade.  It was not an organization, and so that's how we arrived at that thing.  Meeting jointly they are called the CONTRACTING PARTIES (upper case), and acting that way they do it by majority vote, sometimes qualified.  There was no other way.  And then there are various things throughout the agreement where particular provisions have to be applied by the CONTRACTING PARTIES (upper case).  And this upper case is used throughout instead of using a word like organization.

MCKINZIE:  Is it fair to say that one of your basic reasons for this was to avoid having to go to Congress?

LEDDY:  We couldn't go to Congress, because if we went to Congress the whole thing would have been torpedoed probably.  The whole concept of

[56]

the Trade Agreements Act is that you cannot bring tariffs to the Congress, because Congress will logroll them.  It was all this experience which led to the Trade Agreements Act in the first instance, an advance delegation of authority by the Congress to the President with limitations on how far he could go, and what he could do -- the various circumstances.  This is perfectly legal. The President has the authority to do what he did here.  But it had become the tradition that when you had a formal organization, and particularly with a budget that could be voted, and would be internationally binding on the U.S., as the U.N. budget is and all the other budgets are, that you go to Congress.  Now GATT had no budget provision.  There was nothing binding on the U.S. financially.  We today still go up and get the funds that we contribute to the GATT secretariat -- that was another device, the GATT

[57]

secretariat.  I'll explain that in a minute -- we still today go up and get that money out of, I think, the International Conference Fund of the State Department.  There is no regular appropriation for the GATT.  And a provision to that effect for a regular appropriation is now in the trade bill before the Ways and Means Committee, the new one, to cure that problem; because it's an anomaly, to have to go and do this every year as a part of a conference, from the International Conference Fund of the State Department.  But in any case, the legal difference is that there's no power in this organization to pass a budget, and then make that legally binding on its members, as there is in the U.N.  All these formal, organizations when they pass a budget the U.S. is bound to do it.  Whether or not they violate it is a different question, but they are legally bound.  You may have seen a lot of these arguments about

[58]

the ILO and so forth.  And how [George] Meany, I think, was instrumental in preventing an appropriation for the U.S. share of the ILO budget; contrary to our international obligations under the ILO Charter.  This was thoroughly vetted by our lawyers.  There was nothing illegal in it.  It was simply a question of trying to have GATT not purport to be what it wasn't, which was a formal international organization.  But being multilateral the parties had to act jointly, and to act jointly you had to have meetings.

Now, the question of under what aegis were these meetings held.  Well, all of the earlier part, this was regarded as a U.N. Committee.  The secretariat and all that for the negotiations of the ITO Charter and the GATT were all provided by the U.N., under preparatory committee funds for the International Trade Organization, which

 [59]

would have become a part of the U.N., you see.  So that's how that was done.  Then later on I think they prepared a GATT budget of some sort that was agreed to.  I think they worked out a formula, but we've had trouble with it on the Hill.  But at any rate there was no legal conflict, because if the Congress doesn't appropriate the money we can't pay the bill, that's it.  So, it was a sort of a hybrid.

MCKINZIE:  It's a very unique international -- wrong to call it an institution, I guess.

LEDDY:  It is unique.  Yes.  I don't know of anything like it.

MCKINZIE:  It doesn't have an international headquarters?

LEDDY:  Yes.

MCKINZIE:  It doesn't have international machinery as

[60]

such?

LEDDY:  It's also unique in that it's a provisional instrument still.  It was made effective in '47, was it?  Yes.  Well, it was concluded in '47, and I think made effective in October on a provisional basis, and it's still on a provisional basis.  What a provisional basis means is two things.  First that any country can get out of it on sixty-days notice.  And second, that the GATT rules (except for the tariff part, because on that we had clear authority, and everybody else had clear authority, to implement, and except for the most-favored-nation part, because we had clear authority and everybody else did to implement that), are to be applied only to the fullest extent possible without violating existing legislation.  That meant existing legislation at the time.  The pact reads that these provisions of GATT would

[61]

be applied to the fullest extent not inconsistent with existing legislation." That's what is now called the "grandfather clause."

We had a number of provisions which were desirable internationally, and were put in the GATT, but which our President couldn't change without going to Congress.  I think there were some provisions regarding American selling price, that's one.  American selling price is an arbitrary means of valuing imports for a certain range of commodities, mostly chemicals.  The effect of that method of customs valuation is to jack up the tariff about three or four times, because instead of basing the value on the foreign product when it's exported, it is based on the value of the domestic product at the higher American price, which reflects the tariff and everything else. That higher value is attributed to the foreign product and the duty is assessed on that

[62]

basis, so that maybe a 30 percent duty would be a 100 percent duty when you use that method of valuation.  Now the GATT provisions on customs valuation would rule that out, but we couldn't change that without going back to Congress.  There are a number of others.  As far as the laws of other countries are concerned I don't know to what extent this qualification has much meaning, but it does have a good bit in the U.S.  And that's the major reason why GATT is on a provisional basis.  It can be placed into effect on a definitive basis under a procedure in which you deposit acceptances by two-thirds of the countries, or something. It's a long drawn-out procedure and very formal.  The only way the U.S. could do that would be to remedy by legislation all, the differences between existing law and the GATT provisions, and then it might be in position to accept it definitively or put it to Congress, which

[63]

nobody is prepared to do.  Even though provisional GATT has lasted for almost twenty-five years.

MCKINZIE:  Yes.

LEDDY:  Yes.  Twenty-five years.  What's the French phrase?  Rien dure que le provisoire, "Nothing lasts except the provisional."

MCKINZIE:  May I sort of infer from that then that it wasn't too important to you that the ITO Charter was never accepted?

LEDDY:  It was important we thought.  There were many things in the ITO Charter that a lot of people attached a lot of importance to.  It was something strongly desired by many of the less developed countries.  When we had trouble in the GATT we'd always stick in a provision drawn from the ITO you see, and say, "Well, let's take this in GATT temporarily and then in the ITO we'll try to get

[64]

something done there."  For example, in those days there was much concern that the U.S. would not pursue a "full employment" policy and a clause on this appeared in the ITO Charter.  The passion attached to this now is less than before, mainly due to the fruits of a long education by Maynard Keynes.  The ITO Charter used the phrase "high and stable levels of employment" or something like that to avoid the term "full," which was very strong in the minds of the British led by Lord Keynes and the Australians, who were great full employment advocates.  Also many of the less developed countries were concerned on the grounds that if the U.S. ever let itself get into a 1930 type depression none of the commercial policy commitments would work.  It would all collapse.  You must remember they all had in mind the great depression of the thirties, and the fact that the U.S. was one of the biggest markets in the world,

[65]

and then the only open market in the world.  They saw the whole business of their marketing of primary commodities and everything else all hinging on the American economic machine, and its ability to sustain itself, and avoid depression.  So, full employment was in the ITO Charter in a great big way.  As I say, not in that exact language, but the notion, and a commitment in there. The notion was that if the objective of full employment wasn't achieved all the other commitments would go by the board.  It was that sort of connection.  Then there were provisions on commodity agreements.  Well, on full employment, again, I would say that the foreign countries were strong devotees of the Keynesian theme of full employment.  The United States had itself an employment act of '45, was it?

[66]

MCKINZIE:  '46.

LEDDY:  All right, '46.  But it was much more moderate in its approach to this problem, and it could not be said that in those days the Keynesian philosophy had taken hold as it has today.  To be sure nobody wanted another recession, but there were many economists and others who thought that an excessive concern with full employment would lead to rigid controls, and so forth and so on, and state planning, and socialist planning, and all the rest of it.  This was a controversy in those days that just has disappeared in the course of time.  It's no longer relevant.  So you got a commitment on full employment, what else is new?  I mean that would be the reaction today.   But in those days it was regarded as sensitive domestically, and many Congressmen and others would think this is a march toward socialism, and therefore, it had

[67]

to be handled rather carefully by us, and it certainly could not go visually in any rigid commitment in a trade agreement.  It had to be in an instrument that would come before the Congress, which was the ITO, and its language had to be carefully drafted so that it would be accepted.  Anyhow, foreigners felt strongly about that part of the ITO.  Another thing was the commodity agreement section, which envisaged that for many major commodities there could be commodity agreements between producers and consumers in which you would use quotas and price supports and that sort of thing, instead of the usual. international competitive system that applies to manufactured goods.  All those things had to be worked out carefully.  The producers and consumers together each had an equal voice, and when it was appropriate to have a commodity agreement and when it wasn't

[68]

appropriate.  All of this was spelled out in great detail.  But that was considered an important area of international economic policy, again, appropriate for an ITO Charter, but not for a trade agreement.  All the trade agreement did was to say, well, if there is an agreed commodity agreement then, of course, it isn't subject to rule against quotas.  But there was nothing in the GATT itself that tried to state a philosophy about commodity agreements.  Restrictive business practices -- here we were in the forefront.  We very much wanted an international agreement on restrictive business practices (i.e. cartels).  We had what we thought very fine antitrust clauses in the Sherman Act, and the Clayton Act.  We considered ourselves a model of how the restraint-of-trade problem should be handled.  Cartels ought to be outlawed, and the foreigners who sort of grew up in a cartel

[69]

atmosphere anyhow -- it was not their way of doing business to outlaw cartels automatically.  As a matter of fact, out of this exercise many of their economists got a good education on anti-trust. But their approach to it was not through outlawing everything.  It was a case-by-case procedure. If a restrictive business practice does harm, then you do something about it; but you don’t say that a restrictive business practice is outlawed per se, which was the U,S, approach.  The ITO Charter was a compromise on this, and what it was in effect was, as I recall, a long song and dance about the things that were generally harmful, and must be looked at carefully, and a complaint procedure setup.  They got the case by case look, but we got strong pressures to have a case by case look.  And I say it had a beneficial effect even though the ITO Charter never came into effect in that

[70]

many economists and foreign governments -- in Britain and elsewhere -- began to realize more than before the harmful effects of monopoly and restraint-of-trade practices.  For example, you will find antitrust provisions in the Treaty of Rome.  The European Economic Community began to look into this thing more closely.  They began to look at some of our experience; some of the cases that had come up that had been handled by the Justice Department, and some of the congressional investigations and a lot of them began to swing strongly behind it.

At any rate there were these provisions in the ITO Charter.  Then there were development provisions in the Charter.  We had had some escapes for development in the GATT, but the less developed countries were not satisfied with this.  When those things got to the ITO -- to Havana -- with many more less developed countries there, and so forth, they

[71]

knew they'd have a second crack at that.  And they worked on it and broadened it, and that provision was of importance to the less developed countries -- I've forgotten what we called them at that time, whether "underdeveloped," or "developing," or "less developed."  The name was changed but the countries are the same, the condition is the same.  They used to be called "backward countries," and everybody said, "Oh, no, 'backward' and 'advanced' will never do. 'Undeveloped,' no, that's not right, because they aren't totally undeveloped -- they are underdeveloped'."  So, alright, we lived with that for a while.

MCKINZIE:  I think you were living with that at the time.

LEDDY:  Underdeveloped.

MCKINZIE:  Yes.

[72]

LEDDY:  And then we went through the phase of "less developed," which still has a good currency.  And at some point the "developing countries" came into vogue, and that is obviously inaccurate.  All countries are developing one way or another.

Then there was the provision for having a regularized organization.  A regularized, durable and permanent budget system, executive committees, boards, assemblies, panels, ways of handling disputes, all of this worked out in great detail in the ITO Charter, drawing on models and other U,N, instrumentalities.  So all those things, one way or another, were thought to be worthwhile in the U.S,, and in other countries.  But nothing ever happened to it, because the U,S. never brought it to fruition.  There were a number of reasons for it.  One was that Will Clayton -- a fact which nobody seems to remember -- but Will Clayton and Clair Wilcox both left the Government

[73]

right after the ITO Charter negotiations were concluded for varying reasons.  I think Clair Wilcox was just plain exhausted.  He had been through this thing.  He was not a young man, and he just said, "Well, I've done my bit.  Now it's up to somebody else to go and work on getting this thing through the Hill.  Here it is."  Will Clayton left at the same time.  But it was put up to the Hill.  It was not put up that year, 1948.  It came too late in the session as I recall.  We finished up the ITO Charter in March.  Legislative preparation was an enormous problem.  The ITO was a great big hunk of international economic policy, and it required time for digesting, so that it slipped over that legislative year.  It was put up in 1949, but I think rather, in my opinion, it was done rather halfheartedly.  I have the feeling that...

[74]

MCKINZIE:  Mr. Acheson didn't push it.

LEDDY:  Dean Acheson did not really think that it -- I don't think he ever had any particular interest or conviction about it.  Not like Will Clayton.  I think if Will had been the Under Secretary for Economic Affairs in those years he would have gotten it done.  This could be just the difference.  Acheson was ready to send it up, and go and speak to it, and all that, but not with the kind of drive and conviction.  To get through a major piece of legislation like that requires more than a willingness to support it.  It takes a hell of a lot of determination and hard work Rounding up the votes and getting people to understand it, and making speeches; really making an all out effort, and that really was not done.

MCKINZIE:  Did you have anything to do with the congressional presentation of that?

[75]

LEDDY:  No.  I didn't really -- the ITO, because it never got to the point of having any...

MCKINZIE:  Well, that's true...

LEDDY:  I mean they got [Eugene D.] Millikin I think, or somebody, and this was going up to his committee.  You know what you are going to get out of him, which is "nyet, nyet, nyet."  He was more negative than the Russians in the cold war on a trade issue, because he was an out-and-out protectionist.  So all in all there were many reasons why.  You have to realize that Acheson's main preoccupation in those days was not with the -- not really with the long term beautiful world envisaged in the ITO Charter.  It was in the immediate world that faced him on getting dough out of the Congress for the Marshall plan, and getting the Marshall plan going, and European recovery, and the Atlantic Alliance.  He had

[76]

what he considered on his list of priorities -- I don't blame him for this one damn bit -- on his list of priorities this was just way down the line.  This was not a popular thing.  The ITO Charter was criticized all over the country by different groups for different reasons.  The business community didn't like the antitrust provisions.  They didn't like restrictive business practices on the hypocritical grounds that foreigners weren't really held to the tight standards that we were, and, therefore, what we should have done was relax our standards.  I mean, this is the kind of thing. They criticized it on that ground.  A lot of people criticized the full, employment provisions as socialist planning.  A lot of people criticized the many exceptions you had to give for the less developed countries.  Some said that the commercial policy commitments weren't strong enough, and that you should have

[77]

gone farther in eliminating all trade barriers right away.  Between the protectionists and the perfectionists the thing was torn to shreds in public opinion.  So that to overcome that, and to do the job of education was a major job, and I suspect that Acheson saw that and thought, "We just have so much bargaining power to spend on the Congress, and if I have to make a priority I'm going for the Marshall plan, and the North Atlantic Alliance, and this is going to have to come third."  And I don't say that that judgment was wrong at all.  Now for the people working on the ITO.  And not worried about the Marshall plan, and the Atlantic Alliance, of course, this was a cause for tears -- we hadn't gotten the ITO.  We tried once more in '50.  Acheson then decided that, having tried twice the ITO was not going to fly, that we shouldn't keep up the pretense and that we should drop it.  So we did.

[78]

Since the ITO wasn’t going to fly, we had to make changes in amendments here and there in the GATT to adapt to the situation, including incorporating some of the objectives of the ITO.  I think Article XVIII on economic development probably was adapted from the ITO.  A few things like that, but not the fundamental parts about employment, restrictive business practices, commodities, and the organizational. aspects.  Now, in 1955 we did decide to go to Congress and see whether we could get the purely organizational, parts of the GATT approved.  And, therefore, we worked out an international instrument called the Organization for Trade Cooperation, whose sole function was to administer the GATT, with a regular budget, and which did not contain any trade commitments in it, but just the organizational elements.  And that came in during -- this was post-Truman, it was Eisenhower.  That was submitted to the Congress.  We had 

[79]

testimony at the senior level, and I went up and was the main Government witness at the expert level on the provisions of this before the Ways and Means Committee.  It was put to the Ways and Means Committee, and I spent about a week up there on this, appearing in Executive Session chaired by [Wilbur] Mills. [John W.] Byrnes, I think was the senior Republican sitting in the committee at that time.  Anyhow, after a period of a week or ten days we put together a good report.  I worked with Tom Martin who was the staff man in the committee.  Mills was successful in getting an 18 to 7 vote in favor of this thing.  But he said to me, "I cannot get this through the House, and I will not bring it to the House floor unless I get better evidence that the President is going to use his weight up here to push it.  Because if he doesn't give enough impetus to it I can't get it through, and until I'm assured of that

[80]

I'm not going to bring it up."  He said, "Why don't you go and get this done?"

I said, "Well, that's just great.  I'll go back and inquire about this."  But I had nothing to do with how the hell you handle the top political decisions like this between the White House and the Congress.  But I reported all this to Gabe [Gabriel] Hauge who was in the White House and worked with me on this, and Clarence [B] Randall, I believe.  But the President never delivered. Again, I suppose he had what he considered higher priorities.  After all. it was a sort of a modest organizational thing, and we just flunked out again, and that was dropped.  So that's it.

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


List of Subjects Discussed
    Acheson, Dean, 37, 38, 39, 41, 74, 75-76, 77
    Argentia, Newfoundland, 29
    Article VII, 31-32
    Atlantic Charter, 29
    Australia, 18, 32, 64

    Bretton Woods Conference, 15
    Brown, Winthrop, 49-50
    Burns, Norman, 44
    Byrnes, John W., 79

    California, 6
    Canada, 18, 24-25, 34, 39, 40, 42
    Cartels, 69
    Catudal, Honore M., 7, 46
    Chicago, Illinois, 1
    Churchill., Winston, 29
    Clayton, William L., 17, 37, 38, 39, 40, 44, 50, 72-73, 74
    Clayton Act, 68
    Convention on Abolition of Prohibitions and Restrictions, 46
    Cuba, 26-27
    Cuban American Commercial Treaty, 26, 27

    Economic and Social Council, United Nations, 14
    Eisenhower, Dwight D., 78
    European Economic Community, 70
    Evans, John [Walker], 50
    Executive Committee on Economic Foreign Policy, 37

    Feis, Herbert, 14, 20, 31
    Fletcher School of Law and Diplomacy, 17
    Florida, 1
    Food and Agricultural Organization, 14-15
    Freedom of Transit Convention, 46

    General, Agreement on Tariffs and Trade, 12, 32, 43, 44, 45-63, 68, 70, 78-80
    Geneva, Switzerland, 49
    Georgetown University, 2, 3, 4, 5

    Hauge, Gabriel, 80
    Havana, Cuba, 45, 70
    Hawkins, Harry, 4, 6, 9-10, 11, 12, 16, 17, 31, 33, 34, 35, 36, 45, 47, 49, 51
    Homeowners' Loan Corporation, 3
    Hull, Cordell, 6, 10-11, 14, 38

    India, 18
    International Conference Fund of the State Department, 57
    International Monetary Fund, 52
    International Trade Organization, 12, 33, 37, 44, 45, 47, 48, 51, 58-59, 67, 70-71, 76-77, 78
    International Trade Organization Charter, 53, 63-65, 68, 69-70, 72-76

    Kennedy, John F., 44
    Keynes, John Maynard, 28, 33, 64
    Keynesian economics, 65-66

    Lake Success, New York, 49
    Latin America, 13, 14
    Latin American Division, Department of State, 6
    Leddy, John M:

      background of, 1-4
      and Catudal, Honore` Marcel, 7
      and the General Agreement on Tariffs and Trade, 45-63, 68, 70, 78-80
      and Georgetown University, 2, 3, 4, 5
      and Latin America, 6-7
      and the Latin American Division of the State Department, 6
      and Mexican trade agreements, 7
      and the Pan American Union, 1, 3, 5
      and the Peruvian trade agreement, 7
      and trade agreements, 7-8, 12
      and the Trade Agreements Division of the State Department, 3, 4, 6
      and trade barriers, 19-31
      and the United Kingdom, 16, 31
    Leisching, Percival, 32
    Lend-lease agreement, 29, 30, 31, 47
    London, England, 49

    Marks, Herbert S., 41
    Marshall plan, 75, 77
    Martin, Tom, 79
    Meade, James, 28, 33
    Meany, George, 58
    Mexican trade agreement, 7
    Mexico, 13
    Millikins, Eugene D., 75
    Mills, Wilbur, 79

    National Wooden Box Association, 2
    Newfoundland, 29
    New York State, 49
    New Zealand, 18
    North Atlantic Treaty Organization, 75, 77

    Office of International Trade Policy, 33
    Organization for Trade Cooperation, 78

    Pan American Union, 1, 3, 5
    Pasvolsky, Leo, 13, 14
    Peruvian trade agreement, 7
    Philippines, 27
    Pinchot, Gifford, 15

    Randall, Clarence B., 80
    Reciprocal Trade Agreements program, 6, 11
    Robbins, Lionel, 28, 33
    Robertson, Norman, 39
    Rome, Italy, 15, 70
    Roosevelt, Franklin D., 15, 29
    Ryder, Oscar, 44

    Shackle, Robert Jones, 33
    Sherman Anti Trust Act, 68
    Smith, H. Gerald, 3, 6, 7
    State Department, 1, 3, 5, 6
    Stettinius, Edward, Jr., 38
    Stinebower, Leroy Dean, 41

    Tariff Act of 1930, 10, 18
    Tariff Commission, 44, 46
    Tariffs, discussion of, 34-43, 49
    Terrill, Bob, 48
    Trade agreements, 7-13
    Trade Agreements Act, 37, 38-39, 53, 56
    Trade Agreements Committee, 19
    Trade Agreements Division, Department of State, 3, 4, 6, 49
    Treaty of Rome, 70
    Truman, Harry S., 78

    Union of Soviet Socialist Republics, 75
    United Kingdom, 33, 34, 39, 48, 64

    United Nations, 14, 15, 45, 56, 57, 72
    United States, 18, 22, 26, 30, 46, 48, 49, 56, 58, 64, 65, 72
      and tariffs, 44
      and trade barriers, 26-27

    Viner, Jacob, 20

    Ways and Means Committee, 38, 57, 79
    Welles, Sumner, 13-14
    Wilcox, Clair, 12, 33, 36, 43-44, 47, 50, 72-73

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