The Cio Response to the Private Investment Imperative in Us International Development Policy, 1949-1954

A FAILED FIGHT FOR WORKER-CONSCIOUS GLOBALIZATION: THE CIO RESPONSE TO THE PRIVATE INVESTMENT IMPERATIVE IN US INTERNATIONAL DEVELOPMENT POLICY, 1949-1954

Melanie Sheehan

A thesis submitted to the faculty at the University of North Carolina at Chapel Hill in partial fulfillment of the requirements for the degree of Master of Arts in the Department of History

Chapel Hill 2019

Approved by:

Benjamin C. Waterhouse

Erik Gellman

Michael Cotey Morgan

ABSTRACT

Melanie Sheehan: A Failed Fight for Worker-Conscious Globalization: The CIO Response to the Private Investment Imperative in US International Development Policy, 1949-1954 (Under the direction of Benjamin C. Waterhouse)

This thesis traces how corporate leaders, industrial labor representatives, and US government officials influenced the formulation of US international economic development policies between 1949 and 1954. It argues that, in the context of an international dollar shortage and the intensification of the Cold War, US government policies favored corporate formulations of international economic expansion over industrial unionists’ alternative, but nevertheless

Americanizing, vision of globalization which paid greater heed to wages and working conditions.

Congress of Industrial Organizations (CIO) labor representatives welcomed US policies to facilitate the expansion of foreign direct investment (FDI) in developing regions. Yet they insisted that the US government couple such policies with international labor protections to ensure the gains of development benefited workers. The CIO’s inability to place adequate labor protections on the government agenda helped make possible the exploitation of foreign workers by US firms, often as a corporate strategy to reduce labor costs.

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ACKNOWLEDGEMENTS

When I began work on this project, I did not foresee writing extensive acknowledgements. Then again, I also did not foresee the literal and figurative year-long journey ahead of me, which touched seven states and saw the incredible generosity of dozens of people.

This project would not have been possible without generous funding from the Truman

Library Institute, the Eisenhower Foundation, Penn State University Libraries, and Hagley

Museum and Library. I am also grateful to the Eisenhower Foundation Host Committee for providing airport transportation, and I owe a particularly enormous debt of gratitude to Mr. and

Mrs. Dean and Bernie Nogle for their generous hospitality throughout my time in Abilene.

Special thanks also to the wonderful archivists and staff with whom I worked at the Harry S.

Truman Presidential Library, the Dwight D. Eisenhower Presidential Library, Penn State

University, the National Archives in College Park, the University of College Park at Maryland, and Hagley Museum and Library. I greatly appreciate your diligence, professionalism, and patience.

This project would also not have been possible without the support of the History

Department faculty at UNC-Chapel Hill. I am indebted to my adviser, Benjamin Waterhouse, for his guidance and commitment at every stage of this project’s development. Among his many contributions, Dr. Waterhouse’s insistence that I consistently consider the larger importance of my research made this thesis far more than it might have otherwise been. I am also grateful to my committee members, Michael Cotey Morgan and Erik Gellman, for their generous willingness to help throughout the thesis process. W. Fitzhugh Brundage also deserves special

thanks for reading drafts at various points, as well as for offering the gifts of both feedback and time at crucial junctures.

Additionally, this project has benefited enormously from my peers at UNC-Chapel Hill and Duke University. Jessica Auer, Robert Colby, Maikel Fariñas Borrego, Ashton Merck, and

Joe Stieb read a full draft of the thesis and offered insightful criticisms that helped to improve it immensely. The students of my cohort have also offered feedback throughout the thesis process, and I am especially grateful to Ian Gutgold and Joshua Sipe for reading grant proposals and talking through undeveloped ideas in the project’s earliest stages. I am far more thankful, however, for the friendship my peers have offered through the highs and lows of graduate study.

Family and friends outside academia offered a great deal of patience and support. Thank you to James and Anna for hosting me in Washington, DC and for making a potentially mundane research trip a wonderful week spent with family. Thank you also to Vanessa and Amy for always being a phone call away and to Daniel and Pat for making me laugh about anything other than history.

My parents deserve an entire acknowledgements section to themselves. They have done more for me than I would ever have space to explain, and I am certain that I could not have written this thesis without their uncompromising support. Everything good in this thesis is as much theirs as it is mine, and all its flaws are mine alone.

TABLE OF CONTENTS

List of Abbreviations…………………………………………………………………………….vii

Introduction………………………………………………………………………………………..1

Context: The Road to Point IV…………………………………………………………………..11

The Contest over the Act for International Development……………………………………….20

The Gray Commission and Point IV as a Solution to the Dollar Gap Crisis…………………….28

The International Development Advisory Board and Korean War-Era Development Policy…...34

The Randall Report and “Trade, Not Aid” in Eisenhower’s First Term………………………...48

Conclusion: The End of the Dollar Gap…………………………………………………..……..62

Bibliography……………………………………………………………………………………..70

LIST OF ABBREVIATIONS

AFL American Federation of Labor

AFL-CIO American Federation of Labor-Congress of Industrial Organizations

CED Committee for Economic Development

CIO Congress of Industrial Organizations

CTM Confederación de Trabajadores de México

ECA Economic Cooperation Administration

ERP European Recovery Program

FDI Foreign Direct Investment

GATT General Agreement on Tariffs and Trade

ICA International Cooperation Administration

ICFTU International Confederation of Free Trade Unions

IDAB International Development Advisory Board

ILO International Labor Organization

IMF International Monetary Fund

NAC National Advisory Council on International Monetary and Financial Affairs

NAM National Association of Manufacturers

NFTC National Foreign Trade Council

TUC British Trade Unions’ Congress

UAW United Auto Workers

USW United Steelworkers of America

WFTU World Federation of Trade Unions

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INTRODUCTION

In late May 1951, Ernst Schwartz of the United Packinghouse Workers traveled to

Mexico City for a three-week meeting of the United Nations’ Economic Commission on Latin

America. He spent the next three weeks “attempt(ing)…from my sickroom” in a Mexican hospital to have the conference papers sent to him, having fallen acutely ill immediately upon his arrival. With assistance from international trade union officials, however, Schwartz managed to piece together a sufficient understanding of the meeting’s proceedings to submit a report on the conference to Mike Ross, the director of the Department for International Affairs of the Congress of Industrial Organizations (CIO).

Schwartz reported that, much to the frustration of Latin American delegates, US Assistant

Secretary of State for American Republic Affairs Edward G. Miller made clear that the encouragement of private investment rather than large-scale foreign aid would define US economic development policies toward Latin America. Private interests should, in Miller’s view,

“be granted full freedom” to develop Latin America as they saw fit to maximize production.

Given the region’s rich resources, Miller suggested investors would likely expand the economy most effectively through raw material development, and he criticized tariffs erected to protect burgeoning Latin American industries on the grounds that specialization and trade would most efficiently promote international growth. Miller’s recommendations flew in the face of the expressed desires of the Latin American delegates present, who sought to diversify their national economies to escape their dependence on commodity exports. Frustrated with the United States’ push “for all-out production of raw materials” during the Korean War, they criticized the United

States’ “meager” foreign aid appropriations and demanded greater assistance for industrial development.

Overall, Schwartz offered a mixed assessment of the conference. He saw “much” that

“should be welcomed by labor.” While not rejecting Miller’s stance on private investment outright, he did note “the demand for national planning” and “for restriction of private enterprise and investment to fields suitable to both” as positive developments. He also praised the conference discussions on “better distribution of income,” “just taxation and land reform,” and the elimination of “discriminatory practices.” Yet while he took some comfort in “the repeated assertion” that economic development “must serve the people,” Schwartz expressed concern that

“the central position of labor and the human factor were far from being fully understood and appreciated.” Delegates from both the United States and Latin America had devised strategies to promote economic growth. In his view, though, the problems delegates sought to address “only can have meaning while constantly considered in relation to increasing the welfare of the large majority of people represented by labor.” He thus stressed that government planners needed to focus on the challenges facing non-Communist labor organizations, since unions needed to play a fundamental role in the development process for economies to prosper and living standards to improve.1

As Schwartz’s account reveals, early Cold War economic development policy planning became a site of fierce battles over the ideologies that would shape the post-World War II international economy. Debates went beyond the dichotomous contest between Communism and capitalism to tackle more nuanced questions about the relative importance of private investment

1 Report on the Meeting of the Economic Commission for Latin-America, Mexico City, May 28-June 16, 1951, enclosed in Ernst Schwartz to Michael Ross, August 22, 1951, Folder 17, Box 7, CIO International Affairs Department, UMD.

and government planning, the tensions between national development and international integration, and the relationship between economic growth and improved living standards. These questions absorbed not only government officials but also businesspeople, economists, workers, labor union officials, and a host of others. While the Cold War influenced post-World War II development programs, a variety of other factors motivated and shaped these policies. Moreover, debates about the formulation of development policies had lasting importance, as the path that development would take would transform the global economy, and, in so doing, would influence the daily lives of people everywhere.

This thesis examines the CIO’s efforts to influence US economic development policies.

By exploring the ways CIO representatives facilitated and contested proposed legislative and administrative actions to encourage US foreign direct investment (FDI), this paper contributes to recent scholarship that explores how US Cold War-era foreign policies furthered the expansion of multinational corporations, the exploitation of foreign workers by US firms, and the United

States’ shift from an industrial to a service economy.2 The CIO represented US industrial workers most directly affected by import competition. It also remained one of the few political interests in the US advocating for workers in developing states, even as it at times subverted the

2 Jason Scott Smith, “The Liberal Invention of the Multinational Corporation: David Lilienthal and Postwar Capitalism,” in What’s Good for Business: Business and American Politics since World War II, ed. Kim Phillips- Fein and Julian E. Zelizer (New York: Oxford University Press, 2012), 107-122; Jason Scott Smith, “The Great Transformation: The State and the Market in the Postwar World,” in James T. Sparrow, William J. Novak, and Stephen W. Sawyer, eds., Boundaries of the State in US History (Chicago: University of Chicago Press, 2015), 127- 151; Vanessa Ogle, “Archipelago Capitalism: Tax Havens, Offshore Money, and the State, 1950s-1970s,” American Historical Review 122, no. 5 (December 2017): 1431-1458; Betsy A. Beasley, “At Your Service: Houston and the Preservation of US Global Power, 1945-2008,” PhD dissertation, Yale University, 2016; Betsy A. Beasley, “Service Learning: Oil, International Education, and Texas’s Corporate Cold War,” Diplomatic History 41, no. 2 (April 2018): 177-203. For the broader discussions of the role of the state in structuring economic life, see William J. Novak, “The Myth of the ‘Weak’ America State,” America Historical Review 113, no. 3 (2008): 752-772; Paul A. Kramer, “Embedding Capital: Political-Economic History, The United States, and the World,” The Journal of the Gilded Age and Progressive Era 15, no. 3 (July 2016): 331-362. See also Mira Wilkins, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (Cambridge, MA: Harvard University Press, 1974); Geoffrey Jones, Multinationals and Global Capitalism: From the Nineteenth to the Twenty First Century (New York: Oxford University Press, 2004), 16-42.

preferences of labor organizations in these regions. An investigation of the CIO’s role is thus crucial to understanding the domestic political processes underpinning global economic change.3

Such an examination reveals that the United States’ post-World War II international economic expansion came at the expense of an alternative, but nevertheless Americanizing, vision of globalization which paid greater heed to wages and working conditions than did corporate formulations.

I argue that the CIO’s support for policies to encourage FDI in developing regions between 1949 and 1954 aided the expansion of US multinational enterprise. Although CIO representatives advocated for increased foreign aid appropriations, they welcomed policies to stimulate FDI because they recognized the enormity of global development needs, the political unlikelihood of development aid on the scale of the Marshall Plan, and the contributions US capitalism had made to promoting growth domestically. Still, these union leaders distrusted US corporations to act benevolently toward foreign workers. They therefore insisted that the US government couple methods to encourage FDI with international labor protections to ensure the gains of development benefited workers. Yet government planners largely disregarded the CIO’s concerns for worker protections. Instead they adopted a business-friendly vision of development that prioritized maximizing efficiency and economic growth over wealth distribution. The CIO’s support for FDI and its inability to place adequate labor protections on the government agenda

3 Historian Mira Wilkins defines “direct investments” as “investments by US companies involving management responsibility, the possibility of a voice in management, and direct business purpose.” FDI differs from “portfolio investments,” which Wilkins defines as “investments in bonds and stocks that did not carry the power to influence decisions.” Wilkins demonstrates that multinational corporations responded to US government policies that encouraged foreign investment by capitalizing on these incentives to expand their global reach. Significantly, government planners in the immediate post-World War II years focused their efforts on stimulating FDI because they recognized that the collapse of bond markets during the Great Depression had left investors more reluctant to invest in foreign bonds than to invest in enterprises over which they could maintain managerial control. See Wilkins, The Maturing of Multinational Enterprise; “Financial Aspects of the Point IV Program,” NAC Staff Document No. 325, April 6, 1949, Box 15, Records of Gordon Gray, HST.

thus helped make possible the exploitation of foreign workers by US firms, often as a corporate strategy to reduce labor costs.4

By highlighting the CIO’s efforts to couple FDI with international labor protections, I describe the CIO’s involvement in Cold War-era foreign policymaking and its commitment to international organizing as a strategy to check US corporations’ global activities and to defend foreign workers against unsavory business practices. This interpretation marks a major divergence from previous works on US labor internationalism. Scholars rightly suggest that US government officials, labor representatives, and corporate leaders cooperated in efforts to export productivity-based growth liberalism through its post-World War II reconstruction and development programs.5 Yet they have not adequately discussed the fundamental differences and persistent distrust that lie at the core of corporate-CIO relations within this corporatist structure.6

4 For capital flight as a corporate strategy, see Jefferson Cowie, Capital Moves: RCA’s Seventy-Year Quest for Cheap Labor (New York: The New Press, 1999).

5 Michael J. Hogan, The Marshall Plan: America, Britain and the Reconstruction of Western Europe, 1947-1952 (Cambridge: Cambridge University Press, 1987); Steven J. Bachelor, “‘We Speak the Same Language in the New World’: Capital, Class, and Community in Mexico’s ‘American Century,’” in Workers across the Americas: The Transnational Turn in Labor History, ed. Leon Fink (New York: Oxford University Press, 2011), 81-102. For the ideology of development programs as rooted in ideas of the New Deal order and domestic liberal consensus, see Charles S. Maier, “The Politics of Productivity: Foundations of American International Economic Policy after World War II,” International Organization 31, no. 4 (1977): 607-633; Anthony Carew, Labour under the Marshall Plan: The Politics of Productivity and the Marketing of Management Science (Detroit, MI: Wayne State University Press, 1987); Michael Latham, Modernization as Ideology: American Social Science and “Nation Building” in the Kennedy Era (Chapel Hill: The University of North Carolina Press, 2000); Nils Gilman, Mandarins of the Future: Modernization Theory in Cold War America (Baltimore, MD: The Johns Hopkins University Press, 2003); Elizabeth Borgwardt, A New Deal for the World: America’s Vision for Human Rights (Cambridge, MA: The Belknap Press, of Harvard University Press, 2005); Michael Adas, Dominance by Design: Technological Progress and America’s Civilizing Mission (Cambridge, MA: Belknap Press of Harvard University Press, 2006); David Ekbladh, The Great American Mission: Modernization and the Construction of an American World Order (Princeton, NJ: Princeton University Press, 2010). For growth economics within the US, see Robert M. Collins, More: The Politics of Economic Growth in Postwar America (New York: Oxford University Press, 2000).

6 Scholars have emphasized the negotiation of interests within government-labor and government-business cooperation, but they have not adequately examined the tensions between private interests cooperating in Cold War efforts. Brandon Kirk Williams discusses the international efforts spearheaded by the Oil, Chemical, and Atomic Workers Union as an effort to defend workers against US multinational oil firms, but he does not link these struggles to self-interested concerns about import competition or capital flight. Steven J. Bachelor, meanwhile, notes how the United Autoworkers assisted Mexican auto unions in collective bargaining efforts, but he is less interested in intra-US dynamics than the activism of Mexican workers. The analysis he does offer of US labor internationalism

While historians of US labor-management relations have devoted much analysis to the dynamics of this conflict in domestic affairs, foreign policy scholars have yet to seriously grapple with its relevance for international relations.7 Exploring the corporate-CIO struggle in US international

assumes a corporatist structure driven primarily by Cold War anticommunism but also by concerns about import competition. See Brandon Kirk Williams, “Labor’s Cold War Missionaries: The IFPCW’s Transnational Mission for the Third World’s Petroleum and Chemical Workers, 1954-1975,” Labor: Studies in Working-Class History of the Americas 7, no. 4 (2010): 45-69; Bachelor, “We Speak the Same Language in the New World;” Edmund F. Wehrle, Between a River and a Mountain: The AFL-CIO and the Vietnam War (Ann Arbor, MI: The University of Michigan Press, 2005); Ted Morgan, A Covert Life: Jay Lovestone: Communist, Anti-Communist, and Spymaster (New York: Random House, 1999); Hugh Wilford, The Mighty Wurlitzer: How the CIA Played America (Cambridge, MA: Harvard University Press, 2008), 51-69; Anthony Carew, “The American Labor Movement in Fizzland: The Free Trade Union Committee and the CIA,” Labor History 39, no. 1 (1998): 25-42; Quenby Olmsted Hughes, In the Interest of Democracy: The Rise and Fall of the Early Cold War Alliance between the American Federation of Labor and the Central Intelligence Agency (Bern, Switzerland: Peter Lang, 2011); Thomas C. Field, Jr. “Transnationalism Meets Empire: The AFL-CIO, Development, and the Private Origins of Kennedy’s Latin American Program,” Diplomatic History 42, no. 2 (April 2018): 305-334; Emily Rosenberg, Spreading the American Dream: American Economic and Cultural Expansion, 1890-1945 (New York: Hill and Wang, 1982); Kim McQuaid, Uneasy Partners: Big Business in American Politics (Baltimore: Johns Hopkins University Press, 1994).

7 For recent critiques of the liberal consensus that focus on international relations but do not consider business and labor organizations, see Andrew Preston, “Containment: A Consensual or Contested Foreign Policy?” in The Liberal Consensus Reconsidered: American Politics and Society in the Postwar Era, ed. Robert Mason and Iwan Morgan (Gainesville, FL: University Press of Florida, 2017), 148-162; William M. McClenahan Jr. and William H. Becker, Eisenhower and the Cold War Economy (Baltimore: The Johns Hopkins University Press, 2011), 183-224. For works stressing corporate liberalism as a source of peaceful labor-management relations, see Robert M. Collins, The Business Response to Keynes, 1929-1964 (New York: Columbia University Press, 1981); Kim McQuaid, Big Business and Presidential Power: From FDR to Reagan (New York: William Morrow and Company, Inc., 1982); Stephen B. Adams, Mr. Kaiser Goes to Washington: The Rise of a Government Entrepreneur (Chapel Hill: The University of North Carolina at Chapel Hill Press, 1997); Thomas Ferguson, “Industrial Conflict and the Coming of the New Deal: The Triumph of Multinational Liberalism in America,” in The Rise and Fall of the New Deal Oder, 1930-1980, ed. Steve Fraser and Gary Gerstle (Princeton, NJ: Princeton University Press, 1989), 3-31. For the labor- management accord as evidence of labor weakness, see Nelson Lichtenstein, State of the Union: A Century of American Labor (Princeton, NJ: Princeton University Press, 2002), 98-140; Lichtenstein, Walter Reuther, 271-298. For rejections of the labor-management accord on the grounds of persistent business antiunion efforts and conservative political organizing, see Howell John Harris, The Right to Manage: Industrial Relations Policies of American Business in the 1940s (Madison, WI: Wisconsin University Press, 1982); Cowie, Capital Moves; Jennifer Klein, For All These Rights: Business, Labor and the Shaping of America’s Public-Private Welfare State (Princeton, NJ: Princeton University Press, 2003); Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W.W. Norton and Company, Inc., 2009); Elizabeth Tandy Shermer, Sunbelt Capitalism: Phoenix and the Transformation of American Politics (Philadelphia: University of Pennsylvania Press, 2013); Elizabeth Fones-Wolfe, Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945-1960 (Urbana: University of Illinois Press, 1994); Gilbert Gall, The Politics of Rights to Work: The Labor Federations as Special Interests, 1943-1979 (New York: Greenwood Press, 1988), 55-128. For works that acknowledge persistent labor-management tension but nevertheless discuss the post-World War II era as a unique era of general labor-management peace, worker prosperity, and organized labor strength, see Benjamin C. Waterhouse, Lobbying America: The Politics of Business from Nixon to NAFTA (Princeton, NJ: Princeton University Press, 2015), 14-45; Jefferson Cowie, The Great Exception: The New Deal and the Limits of American Politics (Princeton, NJ: Princeton University Press, 2016), especially 153-177; Jack Metzgar, Striking Steel: Solidarity Remembered (Philadelphia: Temple University Press, 2000), 217; Robert H. Zieger, The CIO, 1935-1955 (Chapel Hill: The University of North Carolina Press, 1995).

economic policy formulation reveals how contested the meaning of US capitalism remained.

Further, highlighting the outcomes of the corporate-CIO conflict brings to light key policy decisions that made possible the expansion of US multinational enterprise at the expense of workers worldwide.

I suggest that an ideological conflict over the relationship between growth and living standards, intertwined with labor-management competition for resources, remained central to corporate-CIO interactions. Corporate leaders regarded economic growth as the primary guarantor of improved living standards. They therefore called for states to limit regulations and to grant private investors the freedom to invest, to develop and implement their own business strategies, and to compete on the basis of efficiency as a means to maximize productivity and thereby raise living standards. In contrast, while CIO leaders accepted productivity, growth, and private ownership as necessary elements for economic prosperity, they insisted that rising production alone would not guarantee a widespread improvement of living standards. In their view, government leaders could only improve social welfare by coupling growth-oriented policies with measures to regulate working conditions and to guarantee workers a fair share of production gains.

Examining the CIO’s efforts to influence US international economic policies offers new opportunities to understand the economic motivations of US labor internationalism. Previous works offer much insight into political impulses driving US international labor activism during the Cold War.8 Yet scholars have too often reduced discussions of economic factors to the quest

8 Ronald Radosh, American Labor and United States Foreign Policy (New York: Random House, 1969); Jeffrey Harrod, Trade Union Foreign Policy: A Study of British Trade Union Activities in Jamaica (Garden City, NY: Doubleday & Co., Inc., 1972); Rose T. Yu, “Foreign Labor Aid and the Philippine Experience,” Philippine Social Sciences and Humanities Review 47 (1983): 193-207; Ronald L. Filippelli, American Labor and Postwar Italy, 1943-1953: A Study of Cold War Politics (Stanford, CA: Stanford University Press, 1989); Federico Romero, The United States and the European Trade Union Movement, 1944-1951, trans. Harvey Fergusson II (Chapel Hill: The University of North Carolina Press, 1992); Lichtenstein, Walter Reuther, 327-345; Ben Rathbun, The Point Man:

for foreign raw materials and markets.9 While such motivations were significant, they do not offer a complete understanding of how US labor unionists envisioned international trade unions operating in a globalizing economy. Explorations of the economic aspects of US labor internationalism have been lacking in part because historians have devoted overwhelming attention to the international efforts of the American Federation of Labor (AFL) and the post- merger AFL-CIO, both of which pursued overtly political international programs under the guidance of former Communist Jay Lovestone.10 Yet shifting attention to the pre-1955 CIO reveals that industrial union leaders recognized poor wages and conditions abroad as a threat to the United States’ comparatively high standards as international trade and investment increased.

They therefore sought to influence and capitalize upon US foreign policy to defend the interests of workers both in the United States and abroad against expanding international business.

Irving Brown and the Deadly Post-1945 Struggle for Europe and Africa (London: Minerva Press, 1996); Carew, “The American Labor Movement in Fizzland;” Morgan, A Covert Life; Yevette Richards, Maida Springer: Pan- Africanist and International Labor Leader (Pittsburgh: University of Pittsburgh Press, 2000); Daniel Garcia, “Free Trade Unionism in the Third World: The Cold War National Security State and American Labor in Asia, 1948- 1975,” PhD diss., University of California at Berkeley, 2003; Wehrle, Between a River and a Mountain; Wilford, The Mighty Wurlitzer, 51-69; Steven J. Bachelor, “Miracle on Ice: Industrial Workers and the Promise of Americanization in Cold War Mexico,” in In from the Cold: Latin America’s New Encounter with the Cold War, ed. Gilbert M. Joseph and Daniela Spenser (Durham, NC: Duke University Press, 2008), 253-272; Williams, “Labor’s Cold War Missionaries;” Hughes, In the Interest of Democracy; Bachelor, “We Speak the Same Language in the New World;” Robert Anthony Waters, Jr. and Geert van Goethem, American Labor’s Global Ambassadors: The International History of the AFL-CIO during the Cold War (New York: Palgrave Macmillan, 2013).

9 For rare exceptions, see Lichtenstein, Walter Reuther, 338-340; Bachelor, “We Speak the Same Language in the New World.”

10 Some historians have noted distinctions between AFL and CIO policies, though they largely focus on the personal rivalries between Walter Reuther of the CIO and George Meany and Jay Lovestone of the AFL, on divergent responses to Cold War neutralism, and on the AFL’s persistent suspicions of European socialism. See Alessandro Brogi, “The AFL and CIO between ‘Crusade’ and Pluralism in Italy, 1944-1963,” in Waters and van Goethem, American Labor’s Global Ambassadors, 59-83; Lichtenstein, Walter Reuther, 327-345; Anthony Carew, “Conflict within the ICFTU: Anti-Communism and Anti-Colonialism in the 1950s,” International Review of Social History 41 (1996): 147-181; Garcia, “Free Trade Unionism;” Morgan, A Covert Life, 215-225, 285-289; Carew, “The American Labor Movement in Fizzland;” Romero, The United States and the European Trade Union Movement. For first-hand accounts of such differences, see Victor G. Reuther, The Brothers Reuther and the Story of the UAW (Boston: Houghton Mifflin, 1976); Irving Brown, in Rathbun, The Point Man, 198-199.

Understanding Cold War era international organizing as, in part, an economic strategy challenges prevailing assumptions about industrial labor unions’ responses to the expansion of international trade and investment in the post-World War II period. Judith Stein and others suggest US government officials sacrificed the welfare of US industrial workers to strengthen

Cold War allies by promoting European and Japanese industrial production through unilateral tariff reductions. Such works generally critique labor leaders who supported these efforts toward a more open system of international trade and investment.11 Yet the Cold War did not blind industrial union officials to the potentially detrimental effects of import competition on US manufacturing employment, nor did they ignore these issues in the formulation of CIO policies.

Rather, CIO officials promoted international economic expansion despite potential unemployment in some industries in part because they had witnessed the devastating economic and political impacts of protectionism during the Great Depression and the Second World War.

They thus called for trade adjustment assistance and improved foreign labor standards as an alternative to economic nationalism.

While a lack of support among government officials and some business leaders challenged the CIO’s efforts to promote labor protections, the CIO’s own assumptions also weakened its ability to promote the welfare of workers abroad. At various moments, the CIO called for multilateral efforts to establish international labor standards and unilateral policies holding US investors accountable to worker protections. Yet, encouraged by their own bargaining successes within the US, the CIO leadership primarily sought to check private

11 Judith Stein, Running Steel, Running America: Race, Economic Policy, and the Decline of Liberalism (Chapel Hill: The University of North Carolina Press, 1998), 197-228; Judith Stein, Pivotal Decade: How the United States Traded Factories for Finance in the Seventies (New Haven, CT: Yale University Press, 2010), especially 1-8; James C. Benton, “Fraying Fabric: Textile Labor, Trade Politics, and Deindustrialization, 1933-1974,” PhD dissertation, Georgetown University, 2016.

investors and redistribute profits in developing regions by organizing free trade unions. They supported unions abroad through independent efforts and through cooperation with US government agencies and international labor organizations.12 CIO leaders were cognizant that their involvement in the labor affairs of other countries drew charges of imperialism. Still, they maintained that their work with foreign labor movements would convince workers abroad that the US would not replicate European imperialism.13 Further, CIO leaders insisted that free trade unionism was sufficiently pliable to be translated to diverse national contexts, but they simultaneously pushed to export the US-inspired privatized bargaining model. Ultimately, the internal contradictions within the CIO vision, exacerbated by the 1955 AFL-CIO merger, hampered the organization’s international efforts and contributed to its inability to challenge multinational corporations.14

Over the course of this thesis, I examine CIO representatives’ advocacy of FDI and international labor protections by tracing their efforts to shape the legislative and administrative policies underpinning the Point IV Program, the first US economic development assistance program for Asia, Africa, the Middle East, and Latin America. After introducing the domestic and international context from which the Point IV program emerged, I explore the political

12 Recent scholars of the ICFTU have described the organization not simply as a political tool of anticommunism but as a bona fide labor international that had imbued the social democratic tradition of its predecessors, the International Federation of Trade Unions (IFTU) and the pre-split WFTU. Yet these works continue to paint US labor activism within the ICFTU as focused solely on political aims. In so doing, these scholars prove too quick to overlook the economic function that many key US unionists intended for the ICFTU, even as anticommunism perhaps remained its primary concern. See Anthony Carew, et al., The International Confederation of Free Trade Unions (Bern, Switzerland: Peter Lang, 2000); Magaly Rodríguez García, Liberal Workers of the Word, Unite?: The ICFTU and the Defence of Labour Liberalism in Europe and Latin America, 1949-1969 (Bern, Switzerland: Peter Lang AG, International Academic Publishers, 2010).

13 IDAB First Meeting, November 29, 1950, IDAB Transcripts, Box 1, Records Relating to IDAB Meetings: 1950- 1951, RG469, NARA; “Sixteenth Meeting of the Trade Union Advisory Committee on International Affairs,” January 16, 1952, ILO Conference 1952, Box 48, Maurice Tobin Papers, HST.

14 Williams, “Labor’s Cold War Missionaries;” Lichtenstein, Walter Reuther, 327-345; Nelson Lichtenstein, A Contest of Ideas: Capital, Politics, and Labor (Urbana, IL: University of Illinois Press, 2013), 235-241.

battles between the CIO and the National Foreign Trade Council (NFTC) over the 1950 Act for

International Development authorizing it. I then follow the economic development imperative through three commissions tasked with planning US international economic policies between

1949 and 1954. By studying the work of policy planning commissions, this thesis offers a view into the broad array of potential policy actions considered to address the global challenges of the post-World War II years. It thus offers a means to understand not only what Point IV became but also the policy visions for the program that never proceeded beyond the government planning process.15

CONTEXT: THE ROAD TO POINT IV

The four short years between the end of the Second World War and the inception of the

Point IV program witnessed pressing crises and major transformations in international relations,

US industrial unionism, and the global economy. The onset of Cold War influenced not only the

CIO’s positions on international relations but also its organizational philosophy, as rising tensions between non-Communist and Communist unionists culminated in the expulsion of the latter from the CIO in 1949. Simultaneously, European weakness exacerbated by an international dollar shortage threatened to curtail industrial US exports and undermine US defense interests.

This section outlines key events of these four years. In so doing, it offers critical context for the emergence of US economic development policies and the development of the CIO’s post-World

War II global vision.

As World War II wound to a close, US and British officials led multilateral efforts to devise a new international economic system that would redress the defects of the interwar gold standard. The United States’ Harry Dexter White and Great Britain’s John Maynard Keynes

15 For a theoretical framework for examining policy processes, see John W. Kingdon, Agendas, Alternatives and Public Policies, 2nd ed. (New York: HarperCollins College Publishers, 1995).

sought to revive international trade and investment, which had collapsed as countries had turned inward in response to the Great Depression. Many now pointed to economic nationalism as a major reason economic recovery had proven difficult and war had erupted. Yet Keynes and

White rejected a return to the gold standard, the rigidity of which had precluded the use of monetary policy to stabilize national economies in response to the economic crisis. To resolve these issues, they devised the “adjustable peg.”16 Under this system, the dollar remained fixed to gold, and the values of currencies relative to the dollar were pegged at established rates to stabilize international exchange. Unlike the interwar gold standard, however, the new system allowed countries to revalue their non-dollar currencies relative to the fixed dollar as needed to stimulate domestic economies.17

The Bretton Woods Charter, signed in 1944 by representatives of nearly thirty countries, enacted this monetary system and established new multilateral institutions to further encourage international trade and investment. The system’s architects designed the International Monetary

Fund (IMF) to balance international payments. All participants in the Bretton Woods system would contribute to the IMF, which would loan funds to countries experiencing payments deficits. The Charter also set up the International Development Bank for Reconstruction and

Development (World Bank). The Bank would borrow funds in private capital markets to provide governments with loans for infrastructure improvements to promote economic growth.

Governments receiving World Bank funds would provide loan guarantees, and the Bank itself, managed by experienced bankers, would diversify investments. The World Bank would thus

16 Jeffry A. Frieden, Global Capitalism: Its Fall and Rise in the Twentieth Century (New York: W.W. Norton & Co., 2006), 253-260; Borgwardt, A New Deal for the World, 93-113.

17 Frieden, Global Capitalism, 253-260; Barry Eichengreen, Globalizing Capital: A History of the International Monetary System, 2nd ed. (Princeton, NJ: Princeton University Press, 2008), 91-100.

facilitate the flow of private funds for reconstruction and development by reducing the investment risks associated with international development ventures.18

But the IMF proved inadequate to address the post-World War II “dollar gap” monetary crisis, and as a result US officials continued to devise new methods to promote international stability.19 The dollar gap emerged as Western European states sold their foreign properties and drained their treasuries to fund the war effort. They now faced the enormous task of recovery cut off from traditional Eastern European trading partners, and they lacked dollars desperately needed to balance their international payments and to purchase US goods. US government officials looked upon the dollar gap with particular concern, as Europe’s dollar shortage threatened to derail recovery efforts. As the Cold War intensified, US officials regarded a stable and non-Communist Western Europe as a bulwark against Soviet expansion. They sought not only to strengthen Europe’s military defenses but also to improve living conditions on the grounds that poverty heightened the appeal of Communist ideology and invited political instability. Additionally, European inability to purchase US products had ominous economic implications for US investors and export-oriented industries. European states struggled to fund imports, and many had maintained—and, in some cases, tightened—import barriers and restrictions on the convertibility of their currencies to limit further dollar outflows.20 For both political and economic reasons, then, the US government sought to promote dollar flows to

Europe and to redress the Continent’s persistent payments imbalances.

18 Frieden, Global Capitalism, 253-60; Eichengreen, Globalizing Capital, 91-100; Borgwardt, A New Deal for the World, 121-127; Richard N. Gardner, Sterling-Dollar Diplomacy: The Origins and Prospects of Our International Economic Order, New, Expanded Edition (New York: McGraw-Hill Book Company, 1956, 1969), xxx-xxxi.

19 For the IMF as inadequate, see Frieden, Global Capitalism, 254-270; Eichengreen, Globalizing Capital, 91-133.

20 European states had imposed exchange restrictions in response to the Great Depression. For restrictions on convertibility, see Frieden, Global Capitalism, 173-194, 264-268; Eichengreen, Globalizing Capital, 94-100. For the dollar gap, see Frieden, Global Capitalism, 254-270; Hogan, The Marshall Plan.

The US government responded to the dollar gap by taking the unprecedented action of using large-scale public aid to fund European imports to support relief and recovery. Post-World

War II aid marked a critical juncture at which the US diverged from its traditional reliance on private financiers in international economic affairs. Policymakers had already challenged this tradition in extending Lend-Lease aid beginning in 1941, but postwar relief assistance dwarfed the Lend-Lease Program in its scale and was offered during ostensible peacetime.21 US aid efforts began with a $3.75 billion loan to Great Britain in 1946, continued with assistance to

Greece and Turkey in 1947, and culminated in the $13 billion European Recovery Program

(ERP), initiated in 1948. Significantly, each of these policies faced challenges from a core group of Congressional Republicans intent on limiting, though often not outright rejecting, US aid spending. Still, humanitarian, economic, and Cold War concerns for a stable Europe convinced many that the United States needed to assume a more active role in the international economy.22

Nevertheless, the US government relied heavily upon private businesspeople and labor unionists to plan and implement the ERP. The Economic Cooperation Act of 1948 had established the Economic Cooperation Administration (ECA) as an independent agency authorized to make all operational decisions and to work with public officials in the formulation of ERP policies. Harry S. Truman appointed Studebaker president Paul G. Hoffman as ECA administrator at the recommendation of Senate majority leader Arthur Vandenberg, an internationalist Republican from Michigan who had insisted that the administrator “come from the outside business world…and not via the State Department.” Vandenberg had also stressed the

21 For the shift towards more direct US state involvement in the international economy, see Borgwardt, A New Deal for the World, 101; Rosenberg, Spreading the American Dream, especially 161-201.

22 Michael J. Hogan, A Cross of Iron: Harry S. Truman and the Origins of the National Security State, 1945-1954 (Cambridge: Cambridge University Press, 1998), 69-118; John Lewis Gaddis, The United States and the Origins of the Cold War, 1941-1947 (New York: Columbia University Press, 1972, 2000), 342-346; Hogan, The Marshall Plan, 88-101.

significance of the ECA’s independence from the State Department. For the ECA to most effectively promote economic growth, Vandenberg had reasoned, it needed to be administered by business experts rather than government officials, whose expertise lie elsewhere.23 Hoffman, in turn, appointed business leaders to leading roles in the various ECA divisions, missions, and advisory commissions. Most led major multinational industrial firms. They generally belonged to such moderate business organizations as the Business Advisory Council, the Committee for

Economic Development (CED), the Council on Foreign Relations, and the National Planning

Association. Still, representatives from the more conservative National Association and

Manufacturers (NAM) and US Chamber of Commerce also took active roles in the ECA and worked closely with European productivity teams to improve efficiency.24

Similarly, labor union officials from both the AFL and the CIO worked closely with government and business leaders to promote a non-Communist, economically prosperous

Europe. They accepted appointments to ERP advisory boards and to those ECA divisions dealing with European labor affairs. As a number of historians have suggested, AFL and CIO involvement helped to legitimize the ERP by undercutting the leftist contention that self- interested capitalists drove aid efforts. US unionists forged ties to European labor unions and propagated the value of productivity as a key to raising living standards. They also encouraged

European workers to defer immediate concerns with wages and conditions on the grounds that rehabilitating industry and promoting production would bring greater long-term gains.

Additionally, both labor federations established independent offices in Europe and, after the 1947 founding of the CIA, accepted covert government funds to undercut Communist power

23 Hogan, The Marshall Plan, 108.

24 Hogan, The Marshall Plan, especially 136-151.

in European labor movements. Jay Lovestone and Irving Brown of the AFL’s Free Trade Union

Committee offered financial backing to non-Communist factions in the French Confédération

Générale du Travail and the Italian Confederazione Generale del Lavoro Italiana, and they supported the factions’ breaks from the national federations to form independent unions.25 While the AFL acted independently in backing these splits, both the AFL and the CIO supported non-

Communist unions where they existed and offered both union and CIA funds for their organizing drives. Differences persisted, however, as the AFL generally backed Christian Democrats while the CIO allied more closely with European Socialists.26

Some scholars suggest domestic political considerations influenced the CIO’s support for the Marshall Plan. The CIO had come under political fire after wrenching inflation and a massive strike wave in 1945 and 1946 inspired Republican antiunion attacks that harped upon the CIO’s associations with Communism. After winning Congressional majorities in the 1946 election, these Republicans had moved swiftly to pass the Taft-Hartley Act in 1947. The Act, among other things, allowed states to pass right-to-work laws and mandated that all labor leaders sign a loyalty oath stating that they were not Communists.27 Many non-Communist CIO leaders, already disillusioned by Communist adherence to the Soviet line on such issues as the 1939

Nazi-Soviet Pact, now considered continued cooperation with Communists a political liability

25 Morgan, A Covert Life, 177-194; Lichtenstein, A Contest of Ideas, 238-241.

26 Lichtenstein, Walter Reuther, 327-345; Reuther, The Brothers Reuther, 329-359; Lichtenstein, A Contest of Ideas, 238-241.

27 The law also outlawed the use of union funds for political donations; allowed the president to order delays on strikes during “national emergencies;” and banned secondary boycotts, jurisdictional strikes between unions, and closed-shop provisions in contracts. The law also classified many workers in supervisory roles as “management,” thus denying them the right to organize. Employers, meanwhile, won the rights to initiate decertification proceedings, to lobby workers against voting to organize, and to seek injunctions on strikes. See Zieger, The CIO, 247; Nelson Lichtenstein, Labor’s War at Home: The CIO in World War II (New York: Cambridge University Press, 1982), 238-241.

that threatened the organization’s survival. They therefore tightened the group’s ties to the

Democratic Party, moderated social-democratic demands, and in early 1949 initiated proceedings to expel Communist affiliates.28

Coinciding with the ousting of Communists at home, the CIO broke ties with Communist organizations in the international labor movement. In the optimism of the post-World War II moment, the CIO had worked with the British Trade Union Congress (TUC), the Soviet All-

Union Central Council of Trade Unions, and a number of trade unions from the developing world to found the World Federation of Trade Unions (WFTU). However, relations within the organization had grown tense as the Cold War intensified, and in January 1949 the CIO and TUC walked out in response to Communist unions’ refusal to support the Marshall Plan. The CIO subsequently joined the AFL, TUC, and non-Communist unions from developing regions in organizing the International Confederation of Free Trade Unions (ICFTU). The ICFTU rested upon the concept of “free trade unionism,” or unionism uninfluenced by outside interests, as an explicit rejection of the cooptation of labor movements by Communist and fascist parties.

Certainly, the AFL, CIO, and TUC alike cooperated with their own governments and at times compromised their own values to preserve these relationships. Nevertheless, they viewed their own activities as fundamentally different from those of Communist and fascist organizations, which they believed prioritized the interests of their parties over those of the rank-and-file.29

28 Harvey A. Levenstein, Communism, Anticommunism, and the CIO (Westport, CO: Greenwood Press, 1981), 208- 307; Lichtenstein, Walter Reuther, 248-270; Zieger, The CIO, 253-293, 372-377; Eric Arnesen, “Civil Right and the Cold War at Home: Postwar Activism, Anticommunism, and the Decline of the Left,” American Communist History 11, no. 1 (2012): 5-44.

29 Anthony Carew, “The Schism within the World Federation of Trade Unions: Government and Trade-Union Diplomacy,” International Review of Social History 24, no. 2 (1984): 297-335; Peter Weiler, “The United States, International Labor, and the Cold War: The Breakup of the World Federation of Trade Unions,” Diplomatic History 5, no. 1 (1981): 1-22; Hogan, The Marshall Plan, 145-151, 201-204; Wehrle, Between a River and a Mountain.

The CIO’s rejection of radicalism in favor of the liberal order ushered in a new era of relative labor-management peace that affirmed union leaders’ commitment to a growth-oriented agenda. Beginning with the 1949 “Treaty of Detroit” contract between General Motors and the

United Auto Workers (UAW), unions conceded to management the power to make shop-floor production decisions in exchange for bread-and-butter wage and benefit gains. As a result of productivity-based growth, unionized workers participated to an unprecedented degree in a burgeoning consumer economy. The labor-management “accord” between unions and major corporations lasted until roughly 1957 and rested upon the mutual assumption that reducing labor strife through collective bargaining would benefit workers and investors alike by encouraging production. According to this belief, workers and businesspeople would contribute to improved living standards through rising productivity, as they would provide society with an abundance of consumer goods. In turn, by expanding workers’ purchasing power and encouraging mass consumption, corporations could maximize profits.30

While US foreign policymakers in the immediate post-World War II years had focused primarily on Europe, they increasingly shifted their attention to the developing world in 1949.

Intent on ending the ERP by 1952, US officials strove with renewed vigor to place Europe on a self-supporting basis. Recognizing that the dollar gap had worsened despite improved European productivity, ECA planners pushed to integrate developing regions more fully into international trade as sources of raw materials and markets to promote dollar flows to Europe.31 Yet

30 Lichtenstein, Walter Reuther, 271-298; David L. Stebenne, Arthur J. Goldberg: New Deal Liberal (New York: Oxford University Press, 1996), 78-187; Lizabeth Cohen, A Consumer’s Republic: The Politics of Mass Consumption in Postwar America (New York: Alfred A. Knopf, 2003), especially 112-165.

31 Hogan, The Marshall Plan, 208; Robert J. McMahon, The Limits of Empire: The United States and Southeast Asia since World War II (New York: Columbia University Press, 1999), 38-39; Mats Ingulstad, “The Interdependent Hegemon: The United States and the Quest for Strategic Raw Materials during the Early Cold War,” The International History Review 37, no 1 (2015): 59-79.

anticolonial activism and demands from within developing regions for industrialization threatened such designs. Nationalist fervor in Southeast Asia drew particular concern in the wake of the establishment of the People’s Republic of China. Activists in Indochina, Malaya, Burma, and Indonesia resisted attempts by Great Britain, France, and the Netherlands to reassert power in the aftermath of Japanese occupation. The Marxist-inspired ideology of some leading revolutionary leaders only intensified US concerns about the future of the region, as did the importance of Southeast Asian resources for Japanese recovery.32

At the same time, many political leaders in developing regions demanded international assistance to promote economic development. The experience of commodity-producing regions during the Great Depression had demonstrated the vulnerability of the non-industrialized world in the global economy. Commodity prices had plummeted dramatically, and as a result developing regions had suffered particularly acute distress. Much of Latin America, as well as

Turkey, Egypt, Siam, and colonial India and Algeria had responded to the crisis by pursuing import substitution, in some but not all cases by design.33 The importance developing regions’ leaders placed on industrialization had only intensified over the course of the 1930s and 1940s,

32 Melvvn Leffler, A Preponderance of Power: National Security, the Truman Administration, and the Cold War (Stanford, CA: Stanford University Press, 1992); H. W. Brands, Bound to Empire: The United States and the Philippines (New York: Oxford University Press, 1992), 227-264; Nick Cullather, Illusions of Influence: The Political Economy of United States-Philippines Relations, 1942-1960 (Stanford, CA: Stanford University Press, 1994), 72-153; Kai Dreisbach, “Between SEATO and ASEAN: The United States and Regional Organization of Southeast Asia,” in The Transformation of Southeast Asia: International Perspectives on Decolonization, ed. Marc Frey, Ronald W. Pruessen, and Tan Tai Yong (Armonk, NY: M.E. Sharpe, Inc., 2003), 241-256; Michael Schaller, Altered States: The United States and Japan since the Occupation (New York: Oxford University Press, Inc., 1997), 13-24, 47-61; Walter LaFeber, The Clash: U.S.-Japanese Relations through History (New York: W.W Norton & Company, 1997), 257-295Andrew Roadnight, United States Policy Toward Indonesia in the Truman and Eisenhower Years (New York: Palgrave MacMillan, 2002); McMahon, The Limits of Empire; Campbell Craig and Fredrik Logevall, America’s Cold War: The Politics of Insecurity (Cambridge, MA: The Belknap Press of Harvard University Press, 2009), 102-138; George Herring, America’s Longest War: The United States and Vietnam, 1950- 1975, 5th ed. (New York: McGraw-Hill Education, 2014).

33 Frieden, Global Capitalism, 220-228.

as the desire to minimize their economic dependence on the industrialized world increasingly became tied to their political goal of national sovereignty.34 From this confluence of US political, economic, and humanitarian concerns, the Point IV program emerged.

THE CONTEST OVER THE ACT FOR INTERNATIONAL DEVELOPMENT

On January 20, 1949, Harry S. Truman took the oath of office as President and subsequently uttered a speech that would reverberate throughout the world. Among the “major courses of action” he proposed as part of his four-point “program for peace and freedom,” the fourth and final point—an idealistic flourish conceived by speechwriters—gained the most attention. Truman called for “a bold new program” to extend American technical assistance “for the improvement and growth of underdeveloped areas.” He called upon businesses, private investors, agricultural organizations, and labor unions to assist in the effort to “increase the industrial activity in other nations” and thereby “raise substantially their living standards.” Yet he stressed that “The old imperialism—exploitation for foreign profit—has no place in our plans.” The gains of economic development had to serve “the interest of the people whose resources and whose labor go into these developments.”35

From the outset, State Department officials dampened developing regions’ hopes for a broad economic aid program by placing private investment and self-help at the center of its Point

IV vision. A month after Truman’s address, Assistant Secretary of State Willard Thorp made clear in a speech before the United Nations Economic and Social Council that “the bulk of the effort,” including “much of the financing,” would necessarily “come from the people themselves

34 Christopher R.W. Dietrich, Oil Revolution: Anticolonial Elites, Sovereign Rights, and the Economic Culture of Decolonization (New York: Cambridge University Press, 2017), 26-60.

35 Harry S. Truman, “Inaugural Address,” January 20, 1949, online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=13282.

and from their own governments.” The US government would outlay funds to facilitate the international exchange of technical knowledge to promote health, sanitation, education, and infrastructure improvements and to spread US-style governance, management, and labor techniques. Nevertheless, these areas would have to accumulate foreign exchange to import capital goods by running continual export surpluses, by welcoming FDI, or by borrowing funds raised in private capital markets. In Thorp’s rendering, then, the Point IV Program would not be a massive public aid program for Asia, Africa, the Middle East, and Latin America, as the

Marshall Plan had been for Europe. Rather, it would primarily aim to encourage movements of private capital, technology, and administrative expertise from US businesses, investors, agriculturists, and labor unions to nonindustrial regions.36

The Point IV program quickly emerged as an early battleground in the contest between

US business and labor organizations over the meaning of economic development. Corporate-CIO tensions came to a head in committee hearings on two separate bills, H.R. 5616 and H.R. 6026, each of which proposed authorization of a distinct understanding of the Point IV concept. The administration bill, H.R. 5616, mirrored the idealistic rhetoric of Truman’s inaugural address and granted the administration wide authority to promote development as it saw fit. The bill declared

US commitment to international cooperation in pursuit of global economic development and encouraged participation of private interests toward this end. Further, H.R. 5615 authorized the

President to pursue “activities…which are designed primarily to contribute to the balanced and integrated development of the economic resources and productive capacities of economically underdeveloped areas,” which “include, but need not be limited to…surveys, demonstration,

36 “Statement of the Honorable Willard L. Thorp, United States Representative in the Economic and Social Council, on Economic Development and Technical Cooperation,” Folder 2, Box 160, National Foreign Trade Council Records, HML; Dean Acheson, Present at the Creation: My Years in the State Department (New York: W.W. Norton and Company, Inc., 1969), 264-266.

training, and similar projects.” Although the bill included no specific funding appropriations, it authorized the President to enter into contracts with foreign governments and to “make advances and grants-in-aid of technical cooperation programs to any person, corporation, or other body of persons, or to any foreign government or foreign government agency or to any international organization.”37 The administration bill thus offered the administration broad power to shape the program, outlined in rather vague and open-ended terms, however it saw fit.

Republican Representative Christian A. Herter of Massachusetts proposed H.R. 6026 in direct response to what he considered “too large commitments in rather fuzzy language” in the administration bill.38 Seeking an alternative approach, Herter and his staff drew heavily upon the

May 1949 recommendations put forth by the National Foreign Trade Council (NFTC), a trade organization composed of business leaders in such major multinational industries as oil, steel, rubber, autos, electric, chemicals, and finance.39 Herter’s reliance on the NFTC approach is unsurprising, given the mutual admiration that marked his relationship with the organization. In his own committee testimony, Herter stressed the NFTC’s views as “of the utmost importance” because the organization represented “the largest group in this country, without any question,” that would have to decide whether to invest in developing regions.40 The NFTC, in turn, granted

37 H.R. 5615, reprinted in US Congress, House of Representatives, Committee on Foreign Affairs, International Technical Cooperation Act of 1949 (“Point IV” Program): Hearings on H.R. 5615, Part I, Before the Committee on Foreign Affairs, 81st Cong., 1st Session (1950), 1-4.

38 International Technical Cooperation Act: Hearings (statement, Christian A. Herter, Representative in Congress from the state of Massachusetts), 195.

39 For more on the composition of the NFTC, see Report on the 36th National Foreign Trade Council Convention, December 9, 1949, M-2169), Folder 40, Box 78, NFTC, HML; Report on the Thirty-Eighth National Foreign Trade Convention, December 7, 1951 (M-3991), Folder 42, Box 78, NFTC, HML; Report on the Thirty-Ninth National Foreign Trade Council Convention, December 12, 1952 (M-4818), Folder 52, Box 78, NFTC, HML.

40 International Technical Cooperation Act: Hearings (statement, Christian A. Herter, Representative in Congress from the state of Massachusetts), 184.

Herter its annual Captain Robert Dollar Memorial Award “for distinguished service to the advancement of US foreign trade” in December 1949.41

In line with NFTC recommendations, the Herter bill made clear that the US would assist countries only after they accepted US terms for treatment of foreign investment through bilateral agreements. These treaties, in the NFTC’s view, offered the most effective means to establish

“definite, stable, and fair rules of the game” to eliminate “arbitrary and capricious government interference” in international trade and investment.42 Eligibility for aid would be contingent upon adherence to international standards for patent, trademark, and copyright protection and upon agreement to bilateral treaties of friendship, commerce, and navigation. Participating countries would need to guarantee just and prompt compensation for investors suffering losses as a result of property expropriation or competition from state-run or state-supported enterprises. The US would also require free convertibility and repatriation of investment returns, a major concern among US investors as countries responded to the global dollar shortage by restricting the outflow of dollars. And, the bill mandated participating countries agree to a bilateral taxation convention, by which both the US and the aid-receiving countries would agree to eliminate discriminatory taxation on foreign investments and to collect income tax only on income earned within its borders.43 Once countries met these terms, they could request that the US jointly sponsor studies of investment conditions and “technical missions in the fields of health,

41 “Presentation of Captain Robert Dollar Memorial Award to Honorable Christian A. Herter,” November 2, 1949 (M-2038), Folder 1, Box 34, NFTC, HML.

42 “Private Enterprise and the Point IV Program,” May 1949, Folder 2, Box 160, NFTC, HML.

43 H.R. 6026, reprinted in International Technical Cooperation Act: Hearings, 174-180.

sanitation, agriculture, and education,” fields circumscribed by the NFTC as those in which the

US government “has already demonstrated competence.”44

Further, the Herter bill drew upon the NFTC’s recommendations for program’s administrative structures. Both the NFTC and the Herter bill recommended developing an agency within the Department of State—the NFTC referred to it as the “Foreign Development

Administration,” the bill as the “Foreign Economic Development Administration—to be headed by a single “Administrator.” In both programs, a “Board” of twelve private citizens with “broad and varied experience in the foreign trade of the United States” would “advise and consult” the

Administrator. The Herter team did soften some of the NFTC’s recommendations; for instance, they moderated the NFTC’s Board of “American businessmen” to one of “private citizens.” On the whole, though, Herter had placed the NFTC program before Congress for legislative consideration.

Socony-Vacuum Oil Co. of New York general counsel Austin T. Foster testified in favor of H.R. 6026 on behalf of the NFTC during the bill’s committee hearings.45 Foster criticized the administration bill for solely addressing the government aspects of the Point IV program and offering only minimal consideration of methods of stimulate private involvement, “on which it has been stated primary emphasis should be placed.” Foster further endorsed the Herter bill’s measures conditioning aid on the acceptance of US terms regarding the protection of foreign investment interests. Representative Walter Judd, an internationalist Republican from Minnesota, pressed him on this issue, likening extracting such terms to “the philosophy of the dentist who

44 Ibid; “Private Enterprise and the Point IV Program.”

45 Although no NAM representatives testified, internal documents suggest NAM representatives recognized the parallels between the Herter bill and its own development program. See Point Four Legislation, Point IV Program: 1949, Box 77, NAM, HML.

tried to get the patient’s fee while the tooth was still aching.” Yet Foster resolutely backed the

Herter proposal on the grounds that “if we do not get” concessions while countries still need aid,

“we probably will not get it later.” He recognized the reluctance of developing states to accept

US terms but suggested the US capitalize on the weakness of these areas to force its agenda upon them regardless. Like many business advocates of FDI, he justified a policy emphasis on FDI with an idealized memory of nineteenth century British investment in US industries as “a great illustration” of foreign investment’s importance in fostering economic development.46 In this view, the US had replaced Great Britain as the world’s leading creditor by the end of World War

II and thus carried a responsibility to replicate British-American success in the post-World War

II developing world.47 Ignoring the labor plight that marked nineteenth century industrialization,

Foster upheld FDI as a mutually beneficial means to aid developing states. He thus supported the

Herter bill’s proposed methods to stimulate FDI in these regions irrespective of their own antipathy towards such policies.

UAW Washington Representative Donald Montgomery testified on behalf of the CIO and denounced the Herter proposal, even as he welcomed some measure of private investment to supplement a public, internationally-integrated development program. Montgomery urged

Congress to “offer straight goods with clean hands,” as the emerging contest with Communism

46 International Technical Cooperation Act: Hearings (statement, Austin T. Foster, chairman of the treaty committee, National Foreign Trade Council), 99-120.

47 In a 1951 speech Assistant Secretary of Labor for International Affairs Philip M. Kaiser qualified the optimistic vision painted by the business community and called for more humane policies in the developing world, as he suggested, “We must make sure that the social injustice and economic folly which accompanied the industrial revolution in the past are not repeated in the developing countries.” See Philip M. Kaiser, “Labor’s Role in International Affairs,” February 11, 1951, Speeches 1950, Box 2, Philip M. Kaiser, HST. For further examples of the business reliance on an idealized memory of nineteenth century development, see Curtis Calder to Trygve Lie, Capital Export Potentialities after 1953, March 21, 1949, International Relations Department: Point IV Program 1949, Box 77, NAM, HML; Curtis E. Calder, Financial Policies in Relation to Productivity Panel, First International Manufacturers’ Conference, December 3-5, 1951, Box 71, NAM, HML; Harvey Firestone, Broadening of Markets Panel, Second International Manufacturers’ Conference, Box 71, NAM, HML.

had rendered “holding out false hopes” or “penny pinching and shrewd bargains” dangerous options. Montgomery criticized the Herter bill first for its preference for bilateral negotiations over cooperation with the United Nations, which Montgomery described as “the perfect formula of how to lose friends and influence nobody.” Only by working alongside other nations as a partner rather than as an exclusive financier would the United States avoid becoming “feared and suspected as the world’s new master banker.” He similarly denounced the bill’s proposal that

Export-Import Bank loans be contingent on “onerous and impossible guaranties to American corporations” required of developing states with no assurance that they would receive any capital in return. Montgomery condemned it as “a one-way street following the survey lines of nineteenth century imperialism,” a conclusion he suggested the people of developing regions would similarly draw. Still, Montgomery did not reject the value of FDI outright. He maintained that “there are things that government does well and there are things private capital does well,” a conclusion he regarded as a widely-recognized lesson of history. Further, he used his own acceptance of FDI’s value as a means to undercut his ideological opponents, as he charged

Herter with “inject(ing)…this old, ideological war” over whether government should play any role at all into the economic development debate.48

Montgomery ultimately endorsed the administration bill on the condition that a provision be inserted to explicitly protect and promote the rights of workers by supporting the development of free trade unions. He invoked Truman’s insistence that “guaranties to the investor…be balanced by guaranties to the interest of the people whose resources and whose labor go into these investments,” and he claimed that “the best way” to achieve Truman’s avowed aim would

48 US Congress, House of Representatives, Committee on Foreign Affairs, Act for International Development (“Point IV” Program): Hearings on H.R. 5615, H.R. 6026, H.R. 6834, H.R. 6835, and H.R. 7346, Part 2, Before the Committee on Foreign Affairs, 81st Cong., 1st and 2nd Sessions (1950) (statement of Donald Montgomery, Washington representative, United Automobile Workers-CIO), 437-448.

be to instruct workers in developing regions “how they may take part and speak for themselves.”

He recommended the development of free trade unions “trained and equipped to bargain collectively with management and to settle grievances.” Montgomery refused to place trust for a fair distribution of the gains of productivity in “the paternalistic concern of employers” or “the agencies which administer the aid we render.” Only by establishing policies to encourage free trade union organizing, in his view, could the United States facilitate the living standard improvements that lie at the heart of the Point IV program’s mission.49

Corporate activism ultimately left its mark on the 1950 Act for International

Development. As H.R. 5616 recommended, Point IV aid would fund “economic, engineering, medical, educational, agricultural, fishery, and fiscal surveys, demonstration, training, and similar projects” that would further “the development of economic resources and productive capacities of underdeveloped areas.”50 Yet private investment had been largely absent from H.R.

5616, which had referred only to a general desire for “the participation of private agencies and persons.”51 In stark contrast, the final act included several points proposed in the NFTC program.

The Act encouraged “the exchange of technical knowledge and skills and the flow of investment capital” to those countries “where there is understanding of the mutual advantages” of assistance for both the offering and receiving country. Of utmost significance was mutual “confidence of fair and reasonable treatment and due respect” for the respective interests of each party. The Act specified several guarantees that assistance-receiving countries should offer investors “through intergovernmental agreements or otherwise” to inspire such “confidence,” including promises

49 Ibid.

50 An Act for International Assistance.

51 H.R. 5615, reprinted in International Technical Cooperation Act: Hearings, 1-4.

That they will not be deprived of their property without prompt, adequate, and effective compensation; that they will be given reasonable freedom to manage, operate, and control their enterprises; that they will enjoy security in the protection of their persons and property, including industrial and intellectual property, and nondiscriminatory treatment in taxation and in the conduct of their business affairs.

While the Act clearly defined safeguards for investors, its recommendations for protecting the interests of people in assistance-receiving countries proved far vaguer. “Investors” needed to adhere to “local law,” to “conserve as well as develop local resources,” to pay their “fair share” of taxes, and to “provide adequate wages and working conditions.” The Act made no mention of labor organizing, as Montgomery recommended it should, nor did it indicate how or by whose authority the meaning of “adequate” labor conditions would be determined.52 From the outset, then, policymakers designed the Point IV program in a manner that favored investors’ interests over those of workers, as businesspeople received a number of concessions for investment with minimal labor regulations.

THE GRAY COMMISSION AND POINT IV AS A SOLUTION TO THE DOLLAR GAP CRISIS

Even before the Act for International Development passed in June 1950, government officials and development economists began considering the Point IV program’s usefulness for addressing larger international concerns with global payments imbalances. In March 1950,

Truman appointed Secretary of the Army Gordon Gray to chair an interagency commission, composed largely of economists, tasked with developing a program to guide the administration’s international economic policy. The president made clear that attention to the dollar gap should guide the report’s recommendations, since it not only contributed to European instability but also hampered the United States’ ability “to sell our goods abroad, or receive a return on our public

52 An Act to Provide Foreign Economic Assistance.

and private investments abroad.”53 The Gray Commission, however, largely ignored the calls from the CIO and its foremost government ally, the Department of Labor, for greater attention to wages and working conditions.54 Instead, the Commission members took a growth-oriented approach on the flawed assumption that improved living standards would flow naturally from rising production. In so doing, they prioritized efficiency-maximization over humanitarian concerns with the distribution of production gains. Faith in the assumptions of burgeoning modern growth theory, combined with Cold War concerns with European reconstruction and the

Korean War, thus led government officials to endorse policies that failed to alleviate poor labor conditions in developing regions.55

From the outset, the Gray Commission focused its efforts on stimulating FDI in developing regions’ extractive industries through the Point IV program to address both the short- term problem of the dollar gap and the long-term aims of economic development. Despite the desires in many of these regions for industrialization and production for domestic markets, US planners set about reestablishing triangular trade patterns based on developing regions’ comparative advantage in raw materials.56 According to the triangular trade model, developing regions would produce raw materials for export to fuel industrial production in the US and

53 Harry S. Truman to Gordon Gray, March 31, 1950, https://www.trumanlibrary.org/publicpapers/index.php?pid=704; “Statement of the Problem,” Box 3, Records of Gordon Gray, HST.

54 While the CIA, the Department of Labor, and the Department of State all worked with labor unions to promote free trade unionism, CIO representatives consistently expressed frustration with the State Department’s pro-business proclivities and its preferential treatment toward the AFL. The CIA similarly worked more closely with the AFL. Much remains unexplored on CIO relations with the CIA, but available evidence suggests the CIA also had closer ties with the AFL than the CIO. See Meeting Minutes, November 1, 1951, Folder 20, Box 7, CIO International Affairs Department, UMD; Meeting Minutes, November 12, 1953, Folder 24, Box 7, CIO International Affairs Department, UMD; Lichtenstein, Walter Reuther, 330-331; Morgan, A Covert Life.

55 Smith, “The Great Transformation.” For modern growth theory, see Collins, More.

56 “Statement of the Problem,” Box 3, Records of Gordon Gray, HST.

Western Europe. US purchases of raw materials would result in an outflow of dollars to these developing regions, which would subsequently purchase European manufactures, thereby stimulating recovery on the continent.57 In this way, the US would encourage dollar flows to

European currency areas, promote European industrial rehabilitation, and stockpile raw materials to bolster its own defense and industrial might.58 Further, proponents of extraction maintained that expanding raw material exports would enable developing countries to accumulate capital, which they could subsequently invest in the development of domestic industries.59 The outbreak of the Korean War in June 1950 reinforced these arguments, as global commodity prices skyrocketed and such mineral-rich states as Indonesia, Malaya, and Brazil reaped large profits.60

Commission members thus suggested FDI in extraction would contribute to long-term economic

57 The economics of how triangular trade could address the dollar gap varied according to the status of the developing region and the currency it used. For instance, US purchases from any area using sterling would be cleared in London and thus contribute the dollar reserves in the British Treasury, even as it had no effect on British trade balances. Areas that did not use European currencies, however, could only contribute to European reserve shortages by converting their own currencies to dollars and subsequently converting these dollars into European currencies in transactions with European currency areas. In either case, though, US officials pressed for triangular trade patterns resting on raw material exports from developing regions to fuel US and European industrial might and to promote European manufacturing exports to developing regions. Works that note the dynamics of European currency areas include Hogan, The Marshall Plan and Eichengreen, Globalizing Capital. For an outline the areas within each currency area, see Raymond F. Mikesell to Kermit Gordon and Griff Johnson, August 3, 1950, Inter- Office Memos, Box 1, Records of Gordon Gray, HST. For previous works that discuss the pre-Korean War priority US and European policymakers placed on stockpiling raw materials as a solution to European payments imbalances, see McMahon, The Limits of Empire, 38-39; Ingulstad, “The Interdependent Hegemon;” Hogan, The Marshall Plan, 238-292.

58 For stockpiling as a politically-desirable alternative to imports of competitive manufactures, see Department of State, Special Report on American Opinion, “Public Attention Relating to Foreign Economic Issues,” July 31, 1950, Comments on September Draft—Gray Report on Foreign Economic Policies, Box 1, Records of Gordon Gray, HST.

59 Report to the President on Foreign Economic Policies, November 10, 1950 (Washington, DC: US Government Printing Office, 1950); Discussion Meeting Report, Third Meeting, January 4, 1950, Council on Foreign Relations— Study Group Reports, Box 6, Records of Gordon Gray, HST.

60 Report to the President on Foreign Economic Policies, 49-60.

growth and diversification in developing regions, even as others questioned the wisdom of exacerbating these regions’ reliance on export-driven commodity production.61

Reestablishing triangular trade to close the dollar gap appealed to Commission members because they believed it would prove an effective and politically palatable means to promote long-term international economic stability. Economists recognized rising imports or increased private investment abroad as the two potential means to increase dollar outflows, but they suggested import promotion would prove more effective. Repatriated profits and the costs associated with capital inputs and servicing investments would cancel some of the contributions

FDI in Europe or the developing world would otherwise make to closing the dollar gap.62

Domestic political considerations, however, led the Commission to stress imports of goods least likely to compete with US manufactures.63 While the Commission did encourage the import of

European manufactures to address the immediate dollar crisis, it recognized the promotion of triangular trade as a more permanent means to maintain the stability of the international system.

The Gray Commission’s final recommendations for “the underdeveloped areas and economic development programs” ultimately prioritized methods to stimulate FDI but recognized the necessity of some public assistance to developing regions. With the US budget stretched thin in the midst of the Korean War defense buildup, the Commission identified

“private investment” equipped with “the technical and administrative skills which are an

61 Walter S. Salant to Gordon Gray and Edward Mason, May 24, 1950, Inter-Office Memos, Box 1, Records of Gordon Gray, HST; Discussion Meeting Report, Third Meeting, January 4, 1950, Council on Foreign Relations— Study Group Reports, Box 6, Records of Gordon Gray, HST.

62 Walter S. Salant to Edward S. Mason, June 13, 1950, Inter-Office Memos, Box 1, Records of Gordon Gray, HST.

63 Department of State, Special Report on American Opinion, “Public Attention Relating to Foreign Economic Issues,” July 31, 1950, Comments on September Draft—Gray Report on Foreign Economic Policies, Box 1, Records of Gordon Gray, HST.

essential ingredient for effectiveness” as “the most desirable method of development.”64 It thus recommended intensified efforts to negotiate bilateral investment treaties and further study of the possibility of tax incentives for investment in developing regions, as well as legislation authorizing a government-backed investment guaranty program to insure US investments against the risks of nonconvertibility and expropriation. Still, Commission members recognized that private interests were unlikely to invest in much-needed agricultural and infrastructure projects.

Recognizing these limitations, the Gray Commission recommended World Bank and Export-

Import Bank loans, as well as limited grant aid, primarily in infrastructure and strategic material development.65

Throughout the drafting process, the Department of Labor praised the Commission’s work but criticized its inattention to labor standards. Secretary of Labor Maurice Tobin warned that workers in developing regions were “particularly vulnerable to Communist propaganda” that sought to paint the Point IV program as a US effort “to exploit” laborers in these regions. He thus considered “of considerable importance” the formulation of policies to ensure that “workers on projects undertaken with US capital (either privately or publicly financed) are better off than they would have been if the projects had not been undertaken.” He therefore urged the

Commission to include a section on labor standards after reading multiple drafts that included no such provision. Tobin proposed including a commitment to provide workers with “suitable food and housing and sanitary facilities” and to guarantee workers that were “recruited from a

64 Report to the President on Foreign Economic Policies, 61. For the shift in US spending from aid to defense, see Hogan, The Marshall Plan, 336-379.

65 Report to the President on Foreign Economic Policies, 13, 61-70. For more on the role of the Export-Import Bank in economic development, see McClenahan and Becker, Eisenhower and the Cold War Economy, 195-201; William H. Becker and William M. McClenahan, Jr., The Market, the State, and the Export-Import Bank of the United States (New York: Cambridge University Press, 2003), 77-109.

distance” the means “to bring their families with them.” He also urged close cooperation with the

International Labor Office to develop appropriate labor standards for each project.66

While Tobin stressed the Cold War implications of inadequate labor standards, Philip

Arnow, Chief of the Labor Department’s Trade Agreements Division, outlined the CIO’s stance favoring improved global labor standards to reduce international trade competition based on differential working conditions. Arnow, tasked with studying the feasibility of a trade adjustment assistance program, rejected such a policy on the grounds that it would be “politically infeasible and administratively difficult.” Worker opposition to tariff reductions would prove especially intense, in Arnow’s view, because American tariffs existed in part to compensate for wage differentials between US workers and lower-paid labor abroad. Nevertheless, Arnow noted the

CIO’s calls for the United States to “exert every effort to raise labor standards in the countries involved” on the grounds that it would enable “at least some industries” to compete on a more equitable basis. He reminded the Commission that the US had ratified International Labor

Organization (ILO) conventions, which bound the country by international law to abide by international labor standards—though the ILO lacked the authority to enforce them—and he encouraged more vigorous US efforts to promote workers’ protections globally.67

The Department of Labor’s complaints, however, fell upon deaf ears. The Commission at no point discussed wages and working conditions as a means to ensure a more equitable distribution of the gains of development, as Truman had suggested. Instead, the flawed assumption that improved living standards would flow naturally from growth spurred by

66 Maurice J. Tobin to Gordon Gray, November 6, 1950, Letters of Comment, Box 1, Records of Gordon Gray, HST; Maurice J. Tobin to Gordon Gray, September 8, 1950, Letters of Comment, Box 1, Records of Gordon Gray, HST; Philip Arnow to Dr. Edward S. Mason, September 27, 1950, Letters of Comment, Box 1, Records of Gordon Gray, HST.

67 Philip Arnow to Kermit Gordon, July 5, 1950, Department of Labor, Box 22, Records of Gordon Gray, HST.

investment underpinned the report. Its discussion of labor centered on determining the most efficient allocation of labor supply to maximize production and to promote long-run industrial expansion. Further, the report suggested improvements in health not as an end in itself but rather as a means to spur “considerable increases in the efficiency of individual workers.” Health improvements would contribute to “a decline in mortality, with a consequent increase in the proportion of the total population in the labor force.”68 The Gray Commission was perhaps not as blunt as the National Advisory Council on International Monetary and Financial Affairs (NAC)

Point IV Working Group memo from which it drew, which had gone so far as to suggest, “Labor that is debilitated by disease, illiterate or untrained may not be cheap labor even at low-wage scales…Improvement in the condition of the labor in foreign areas will result in more favorable cost calculations for foreign investment.”69 Nevertheless, in describing workers as a factor of production rather than as the primary intended beneficiaries of economic development policies, both reports submerged the primacy of workers’ human dignity in an unqualified drive to increase production, maintaining faith that rising production would raise living standards in the long run.

THE INTERNATIONAL DEVELOPMENT ADVISORY BOARD AND KOREAN WAR- ERA DEVELOPMENT POLICY

Organized labor had a greater voice in developing the International Development

Advisory Board’s (IDAB) program to outline the principles and methods that would guide the implementation of the Point IV Program. Authorized by the Act for International Development,

68 Report to the President on Foreign Economic Policy, 57.

69 “Financial Aspects of the Point IV Program,” NAC Staff Document No. 325, April 6, 1949, Box 15, Records of Gordon Gray, HST. The NAC Point IV Working Group was composed of representatives from the Departments of Commerce, State, and Treasury, the Security and Exchange Commission, the Economic Cooperation Administration, the Export-Import Bank, and the Federal Reserve Board. NAC was established to advise the administration on international economic matters. See Burton I. Kaufman, Trade and Aid: Eisenhower’s Foreign Economic Policy, 1953-1961 (Baltimore: The Johns Hopkins University Press, 1982), 18.

the presidentially-appointed commission included among its members CIO Committee on Latin

American Affairs chairman Jacob Potofsky. Now in his mid-fifties, Potofsky had immigrated to the United States from Russia at the age of eleven and had begun working in a Chicago clothing factory at the age of fourteen. He had since risen through the union ranks and now served as president of the Amalgamated Clothing Workers of America, a position he had held since the

1946 death of Franklin Roosevelt ally and WFTU founding member Sidney Hillman.70

Despite their vastly different backgrounds, Potofsky got on well with IDAB chair and oil magnate Nelson Rockefeller, as they shared a commitment to raising living standards and a particular interest in Latin America. As historian Elizabeth Cobbs has noted, Rockefeller sought to improve conditions in Latin America as an investor in the region. After a 1937 trip to

Venezuela, for instance, he established a public health program, invested in sanitation and infrastructure improvements, and worked with local businessmen to diversify the local economy to reduce its dependence on oil revenues. He had subsequently served as coordinator of the

Office of Inter-American Affairs, where he pushed for economic development programs for

Latin America, in line with Franklin D. Roosevelt’s Good Neighbor Policy. Certainly,

Rockefeller’s interest in development remained inextricably tied to his own pursuit of profit, and he remained committed to private development methods. Indeed, he believed US officials formulating the Point IV program needed to devise methods to get “more dollars” to developing regions “without just giving it to them.”71 Nevertheless, his views remained progressive within the business community, and his interest in Latin America proved particularly valuable for

70 For Potofsky’s biographical information, see Jacob S. Potofsky, IDAB, Box 3, Records of the International Development Advisory Board, RG 469, NARA.

71 Elizabeth A. Cobbs, The Rich Neighbor Policy: Rockefeller and Kaiser in Brazil (New Haven, CT: Yale University Press, 1992), especially 1-60; International Technical Cooperation Act: Hearings (statement, Nelson Rockefeller, former Coordinator of Inter-American Affairs), 79.

Potofsky in challenging State Department officials intent on concentrating Point IV efforts in

Asia.

Potofsky strove to shape the Point IV program along the lines the CIO had advocated from the program’s inception, but the outbreak of the Korean War and the military buildup associated with NSC-68 led him to link this vision more tightly to the US quest for strategic defense materials. Like Montgomery, he welcomed methods to stimulate FDI, even as he pushed for a broader, internationally-coordinated program of foreign aid. Further, Potofsky continued

CIO efforts to balance the expansion of US multinational enterprise with the expansion of a free trade union movement to ensure workers in developing regions benefited from the fruits of productivity improvements. In this effort, he worked closely with Lewis Hines, an AFL appointee to the Board. Yet in the changed circumstances of war, Potofsky justified broad development aid and living standard improvements in strategic terms as a means to nurture alliances with mineral-producing countries.

Potofsky’s efforts to extend development aid to Latin America vividly convey his belief that democracy, improved living standards, and Cold War anticommunism could not be separated. In several early meetings with government officials, Potofsky criticized the disbursement of US loans to Juan Perón’s Argentina and Francisco Franco’s Spain on the grounds that “fostering…totalitarian government” and “strengthening the corporate state on the lines of Nazi government” contradicted the United States’ “democratic approach” and undermined US efforts to “captur(e) the hearts and minds of the people.”72 Only by supporting democratic governance, Potofsky maintained, could the US win the support of the Latin

72 IDAB First Meeting, November 29, 1950, IDAB Transcripts, Box 1, Records Relating to IDAB Meetings: 1950- 1951, RG469, NARA; Meeting Minutes, 4/16-17/51, Box 2, Records Relating to IDAB Meetings, RG469, NARA. See also Minutes, CIO Committee on Latin-American Affairs, February 15, 1950, enclosed in Ernst Schwartz to Michael Ross, March 1, 1950, Folder 17, Box 7, CIO International Affairs Department, UMD.

American people, whose allegiance he considered more strategically significant than that of government leaders in the international fight against Communism.

Potofsky considered a lack of aid for humanitarian purposes as dangerous as offering aid to military dictators. During a subsequent meeting, Technical Cooperation Administration official Samuel P. Hayes, Jr. reported that Assistant Secretary of State Edward Miller and State

Department official Ivan White planned to advocate for “no program of economic development” in Latin America, except that which would “contribute directly to the production of defense means,” during an upcoming Inter-American Conference. Potofsky immediately took issue with such a policy and warned that inattention to “the social and economic problems facing this hemisphere” would have serious “political implications.” In his view, the United States needed to demonstrate “that we are not interested in profiteering but that we do wish to elevate the standard of living of the masses of the people.” At Potofsky’s recommendation, Board members passed a resolution that Rockefeller bring the matter to Truman’s attention, and Rockefeller subsequently reported that “the President agrees” that the United States needed to discuss Point

IV at the upcoming conference.73

In his work on IDAB, then, Potofsky drew upon his understanding of the desire for development aid expressed by noncommunist trade unionists of developing regions, even as he advocated for the spread of US ideas through development programs.74 From the outset free trade unionists in the ICFTU had praised the Point IV technical assistance concept, as set forth in

Truman’s inaugural, but they had expressed concerns that the program might prove an

73 Meeting Minutes, January 15-16, 1950, Box 1, Records Relating to IDAB Meetings, RG469, NARA; Nelson A. Rockefeller to Jacob Potofsky, January 19, 1951, Board Member: Jacob S. Potofsky (IDAB), Box 3, Records of the International Development Advisory Board, RG469, NARA.

74 For Potofsky on the export of US ideas, see IDAB First Meeting, November 29, 1950, IDAB Transcripts, Box 1, Records Relating to IDAB Meetings: 1950-1951, RG469, NARA.

imperialist tool for US investors to impose exploitative free market capitalism and undercut newly-won sovereignty. In an appeal echoed by numerous delegates at the Free World Labor

Conference, M. Kara of India’s Hind Mazdoor Sabha had stated that “American finance on a government basis for the welfare of the people will be welcome,” but she had called upon the unions of the entire Conference to “see that the Indian people will not have domination either of

Wall Street or of Soviet Russia.”75 Recognizing this desire on the part of labor activists for US public funds, Potofsky described a proposal in IDAB meetings for a program of $25 million in government aid as “nonsense,” since, in his view, the program needed to be of sufficient quantity to “capture the imagination of the masses throughout the world.”76 As US unionists increasingly concerned themselves with the Cold War implications of the United States’ image in the developing world, then, the interactions of international free trade unionists within the ICFTU contributed to the formulation of CIO development policies.77

Potofsky’s commitment to large-scale aid persisted even after the publication of the

IDAB report, as military considerations dominated implementation of Point IV. By the fall of

1951, the Panama Agricultural and General Workers’ Confederation passed a resolution criticizing the Point IV program as “another false promise…which will serve mainly to strengthen the dictatorships of Latin America,” after Congress appropriated sixty million dollars

75 Official Report of the Free World Labour Conference and the First Congress of the International Confederation of Free Trade Unions, November-December 1949, Folder 8, Box 122, USWA President’s Office: David J. McDonald, PSU. See also the testimony of D. Cavalcanti of Brazil in the same proceedings.

76 Meeting Minutes, December 18-19, 1950, Box 1, Records Relating to IDAB Meetings, RG469, NARA.

77 For more on US Cold War image-making, see Kenneth Osgood, Total Cold War: Eisenhower’s Secret Propaganda Battle at Home and Abroad (Lawrence, KA: University of Kansas Press, 2006); Laura A. Belmonte, Selling the American Way: US Propaganda and the Cold War (Philadelphia: University of Pennsylvania Press, 2008), 116-135; Marc Frey, “Tools of Empire: Persuasion and the United States’s Modernizing Mission in Southeast Asia,” Diplomatic History 27, no. 4 (September 2003): 543-568; Cohen, A Consumers’ Republic, 112-165; Mary Dudziak, Cold War Civil Rights: Race and the Image of American Democracy (Princeton, NJ: Princeton University Press, 2000).

in aid for Latin America, including forty million for military purposes. The resolution proclaimed that such action “arouses distrust on the part of the trade union and democratic forces who are fighting for freedom and human rights”78 Ernst Schwartz subsequently drafted a similar

CIO resolution condemning the low Point IV appropriations and their military nature, and

Potofsky assured the resolution made clear that “the general estimate of what is needed is about

$5 billion spread over 20-30 years.”79 While still a small figure in comparison to the Marshall

Plan, Potofsky’s recommendation demonstrates his commitment to foreign aid as a central component of development programs and his desire to project solidarity with his Latin American free trade union counterparts.

In meetings to prepare the IDAB report, Potofsky accepted proposals to stimulate FDI put forth by business and government representatives, but he insisted that US support for the establishment of free trade unions accompany such measures. “Labor is for private capital,” he conceded, but investment needed to “be regulated to provide fair terms for labor; and to avoid unreasonable profits.” Otherwise, it might prove “most damaging” politically.80 Potofsky therefore called upon IDAB to support “free trade unions “ and “collective bargaining as a means for raising the standard of living of the masses of the people.” By “export(ing)…modern techniques that we have developed in our country in industrial and labor relations,” the United

78 “Aid to Latin American Dictatorships Denounced,” ICFTU Information Bulletin No. 34, October 3, 1951, File 9, Box 122, United Steelworkers President’s Office, PSU.

79 Ernst Schwartz to Michael Ross, October 11, 1951, Folder 17, Box 7, CIO International Affairs Department, UMD.

80 Meeting Minutes, January 15-16, 1951, Box 1, Records Relating to IDAB Meetings, RG469, NARA.

States could counteract any “charge of imperialism” by giving workers the tools with which to protect themselves from exploitation by employers.81

Nelson Rockefeller responded to Potofsky’s suggestions by recommending US business and labor representatives cooperate to develop a code of labor standards to regulate the activities of US private investors in developing regions. Potofsky saw much potential in Rockefeller’s recommendation and suggested the US might go so far as to “condition our aid on changes being made in local laws and practices” to strengthen labor protections.82 Rockefeller discussed the prospect with a group of business executives representing such organizations as the NFTC and the CED the following month, and they suggested that the IDAB labor consultants outline “what they would like to have included in a code of fair practices” for further consideration.83

The task of drafting the proposed code fell to Elmer Cope of the United Steelworkers of

America (USW), whom IDAB had appointed as a consultant at Potofsky’s recommendation.84

Cope praised the Gray Report for addressing the problems of developing regions “in a realistic way,” but he criticized both the report and the State Department’s Point IV publications in general for “giv(ing) only limited attention to the labor problems” facing these areas.85 He therefore drew heavily upon a November 1950 report produced by the ICFTU entitled “The

81 IDAB Transcripts, Board Meeting November 29, 1950, Box 1, Records Relating to IDAB Meetings, RG469, NARA.

82 Meeting Minutes, IDAB Board Meeting January 15-16, 1951, Box 1, Records Relating to IDAB Meetings, RG469, NARA.

83 Notes of Luncheon Conference held at University Club, January 3, 1951, Cooperating Groups: Business and Industrial, General, Box 9, Records of the International Development Advisory Board, RG469, NARA.

84 Meeting Minutes, IDAB Board Meeting December 18-19, 1950, Box 1, Records Relating to IDAB Meetings, RG469, NARA; Oscar Ruebhausen to Elmer Cope, February 8, 1951, Labor, Box 9, Records of the International Development Advisory Board, RG 469, NARA.

85 For an exemplar Point IV publication, see “Point 4: Cooperative Program for Aid in the Development of Economically Underdeveloped Areas,” Point IV Program: 1949-1950, Box 7, NAM, HML.

Economic Position of Workers in Under-Developed Countries,” which he considered a more valuable basis upon which to build an economic development program.86 Cope also linked many of his principles to International Labor Organization conventions, grounding them in international law to establish their legitimacy, likely in anticipation of anti-labor criticisms from the US business community on the one hand and anti-imperialist charges of imposing a US system on the other.87

Like Potofsky, Cope expressed support for development policies that encouraged private investment but called for matching such guarantees with protections for labor, which he justified on Cold War grounds. Cope stressed that the US government “must make a particular effort” to protect workers directly employed by the US government or US corporations insured under the investment guaranty program, as well as those laboring on projects funded by US contracts and aid programs.88 He urged US private investors to “maintain fair labor practices and standards which will serve as a model for the indigenous enterprises.” In this way, public officials and private investors could “give clear proof that the ‘capitalist’ United States is genuinely interested in the welfare of the work in the underdeveloped areas.”89 In his view, then, labor protections

86 “Labor Principles for Underdeveloped Areas.” For the ICFTU report, see ICFTU Information Bulletin, November 29, 1950, Folder 8, Box 122, USWA President’s Office: David McDonald Papers, PSU.

87 Cope emphasized that “labor policies, like any other significant national development, must come primarily from the people concerned.” He therefore stressed the flexibility of his proposed principles “to many diversified situations and stages” and noted that “quite a number of” the ILO conventions and recommendations cited “have already been accepted for these areas.” See “Labor Principles of Underdeveloped Areas.”

88 For poor treatment of workers in developing states by US government employers, see Daniel E. Bender and Jana K. Lipman, Making the Empire Work: Labor and United States Imperialism (New York: New York University Press, 2015); Leon Fink and Julie Greene, eds., “Builders of Empire: Rewriting the Labor and Working-Class History of Anglo-American Global Power,” Special Issue, Labor: Studies in Working-Class History 13, no. 3-4 (December 2016).

89 “Labor Principles of Underdeveloped Areas.”

would serve US defense aims, even as some government officials regarded attention to humanitarian programs a distraction from military imperatives.

The protection and development of free trade unionism defined Cope’s program. “There is no better way to improve labor standards than through bona fide organization and collective bargaining,” Cope wrote, “and lasting progress in underdeveloped areas will only come through these actions.” He suggested an emphasis on private bargaining would minimize opportunities to use protective labor laws “as tools of totalitarian propaganda and domination, and as weapons against the foreign investor.” Of primary importance in his program was protection of workers’ rights to organize, to strike, and to bargain collectively, in addition to unions’ freedom to affiliate in national and international labor organizations. Still, Cope suggested the need for labor legislation to protect unorganized workers “to a higher degree than we would approve for industrially advanced countries” in the short term because labor organizing would inevitably require a great deal of time. To improve conditions for individuals, governments needed to outlaw forced labor, to regulate minimum wages and maximum hours, to guarantee overtime compensation and maternity protections, to restrict child and women’s labor, to establish industrial health and safety standards, to ensure compensation for those injured in the workplace, and to offer universal free education and training.90

In his discussion of grievance procedures and wage regulations in particular, Cope stressed the primacy of private rather than public protections whenever possible. Methods to improve wage rates held a place of importance in both Cope’s recommendations and the ICFTU report from which he drew, which noted that free trade unionists in developing states had offered

90 “Labor Principles of Underdeveloped Areas.”

“stirring indictments of wage conditions…at the London Congress of the ICFTU.”91 Yet Cope’s discussion of wages also reveals his deep faith in US-style collective bargaining, as he suggested minimum wage laws cover “all categories of workers…who can not obtain fair wages by collective agreement.” Cope was even more explicit about the limits of labor legislation in his discussion of grievance mechanisms. He recommended that mediation and grievance procedures be “regulated in the collective agreements and administered jointly by the parties involved” and stressed a government role in establishing such procedures “only where…unions are not yet strong enough to satisfy these needs.”92 Governments thus had little place in Cope’s ideal vision labor-management relations, in which states should serve only to protect trade union rights and to protect workers who had yet to organize.

Cope’s proposals, however, received only limited discussion in the final IDAB report. At the conclusion of a section entitled “Materials for Defense and Peace,” the report reduced Cope’s recommendations to five paragraphs suggesting “the continued encouragement of the free labor unions in the underdeveloped areas” and endorsing ILO standards “as a guide for minimum labor standards in the underdeveloped areas.” Neither suggestion provided workers adequate legal protections in an increasingly global economy. While the report’s free trade union provision placed impetus for improving labor conditions on activism by workers themselves, its endorsement of ILO standards offered no enforcement mechanism by which to hold exploitative employers accountable. It left the establishment of labor guidelines in developing regions to foreign governments and did not recommend the US government place any further obligations

91 “Labor Principles of Underdeveloped Areas;” “The Economic Position of Workers in Under-Developed Countries,” in ICFTU Information Bulletin, November 29, 1950, Folder 8, USWA President’s Office: David McDonald Papers, PSU.

92 “Labor Principles of Underdeveloped Areas.”

on US investors in their labor practices abroad, as Rockefeller had proposed. The report’s labor provisions further “stress(ed) the word ‘improving’ rather than ‘better living,’” since “hope is really our strongest ally” in undermining the efforts of “Soviet agents.”93 In this, IDAB revealed the tenuousness of its commitment to improving workers’ conditions, as it recommended protecting workers only to the extent necessary to maintain Cold War allegiances. They thus followed the Gray Commission’s precedent in describing advances in living standards as a means to achieve some other purpose—in this case, Cold War victory—rather than the end goal of economic development itself.

Ultimately, the wartime urgency of developing strategic material sources shaped the

IDAB report and overshadowed the humanitarian idealism that characterized Truman’s inaugural address. The report stressed that economic development and defense were “inseparable,” as

“virtually all of our natural rubber, manganese (upon which the manufacture of steel depends), chromium, and tin,” in addition to a host of other strategic materials including uranium ore,

“come from abroad, mostly from the underdeveloped areas.” Warning that “a waste of resources now may have to be paid for later in lives,” the report concluded that “wasteful or sentimental programs have no place…By the same strict accountancy, those programs of economic development which do make a significant contribution to world security should be pressed with all vigor.”94 Certainly some IDAB members stressed defense aspects of the program out of political necessity because they anticipated charges “that this is a ‘do good’ program that has no place in an emergency.”95 Nevertheless, the priorities laid out in the report carried major

93 Partners in Progress: A Report to the President by the International Development Advisory Board, March 1951 (Washington, DC: US Government Printing Office, 1951), 55. HathiTrust.

94 Partners in Progress.

95 Meeting Minutes, January 15-16, 1951, Box 1, Records Relating to IDAB Meetings, RG469, NARA.

implications for Cold War-era economic development policy in general and Point IV’s administration in particular.96

Methods to stimulate FDI as a means to increase raw material production became central to the IDAB recommendations. IDAB stressed that “the production of goods and services,” including the development of “strategic raw materials,” remained “primarily a function of free enterprise.” It estimated the outflow of US capital to developing regions totaled roughly

$3,500,000,000 between 1946 and 1950, an average of $700 million per year, and it recommended that such figures “be at least doubled, and perhaps tripled.”97 To encourage capital flows, IDAB recommended several measures proposed in the Gray report, including the negotiation of bilateral commercial and tax treaties and the development of a government-backed investment guaranty program. IDAB endorsed the principle promoted by the NFTC that businesses should pay income tax “only in the country where the income is earned,” thereby exempting returns on FDI from US income tax. Although IDAB recommended such incentives initially apply only to new investments “to avoid any drop in revenues…with defense expenditures mounting,” it urged the US Government to extend these exemptions to all investments “as soon as the emergency is official declared at an end.” It requested the Export-

Import Bank earmark one million dollars to offer investors insurance against inconvertibility of returns. It also recommended the establishment of an International Finance Corporation as an affiliate to the World Bank to extend loans and “make nonvoting equity investments in local currencies.” The establishment of the International Finance Corporation would thus obviate concerns about convertibility of returns and the need for convertibility guaranties and enable

96 Partners in Progress, 64, 78.

97 Partners in Progress, 78.

public officials to supplement funds provided by private investors as needed without interfering in business operations. Finally, IDAB encouraged the development of a new administrative position in the State Department’s Overseas Economic Administration tasked “with no duties other than to encourage the maximum and most effective use of private enterprise.”98 In stark contrast to its vague discussion of labor standards, then, IDAB’s recommendations on stimulating FDI outlined a clear program of specific policy options that conveyed a firm commitment to the expansion of private enterprise in developing regions.

The divergent criticisms launched at the final draft of the report from business and labor leaders laid bare the divergent emphases in their global development visions. William S. Swingle of the NFTC and H.H. Schell of the Inter-American Council expressed dismay that private investment did not receive fuller attention. They noted public loans to foreign governments would place a burden for repayment with interest on developing states, and suggested, in Schell’s words, that “our entire economic history has demonstrated that private enterprise does a more efficient and effective job.” They praised the report’s tax proposals but argued against investment guaranties on the grounds that they offered new investments preferable treatment and invited government interference in the economy. Swingle did qualify his free market vision in the emergency war situation, as he accepted investment guarantees for “projects of vital importance to our national security,” but he insisted such projects “should be considered individually on their merits.” Both also stressed the need for IDAB to distinguish its wartime program from its long-term development vision to ensure, in Schell’s words, that “emergency expedients are not frozen into the permanent pattern of our economic life.”99 While both

98 Partners in Progress.

99 H.H. Schell to Nelson A. Rockefeller, February 19, 1951, Folder 7, Box 131, NFTC, HML; William S. Swingle to Nelson A. Rockefeller, February 16, 1950, Folder 2, Box 160, NFTC, HML.

representatives praised the report’s attention to methods to stimulate FDI, then, they nevertheless considered its commitment to their free market vision too tenuous for their own comfort, particularly as they looked towards the post-Korean War era.

Potofsky, on the other hand, criticized the final draft of the report for placing “too much emphasis on private capital and too little emphasis on the humanistic approach.” He warned that the report, as drafted, would invite charges of imperialism. In his view, it needed to emphasize

“that we are coming to help them to elevate their standards of living and not just to obtain strategic materials for our own security.” He thus recommended greater attention to the labor and government aspects of the program, including a more explicit outline of “the basic principles of labor relations which should be observed in countries receiving aid,” to balance the interests of private capital in these regions. In this way, the US could convey its commitment to spreading

“freedom and democracy…by the establishment of decent standards of living.”100 Potofsky’s recommendations thus flew in the face of those put forth by Swingle and Schell, as he considered unregulated investment the most dangerous threat to the achievement of US Cold War and development aims.

Once released, however, Potofsky and other major labor figures took pride in the report’s minimal labor recommendations, as the mere inclusion of a labor provision marked a victory given the comparative lack of worker protections in previous development programming efforts.

Potofsky later suggested his experience on IDAB “proved to him what labor can accomplish,” as, in his hubristic telling, “the Board’s report had been completely rewritten to take into account the labor point of view” as a result of his efforts and those of Lewis Hines.101 He considered the

100 Meeting Minutes, February 9-10, 1951, Box 1, Records Relating to IDAB Meetings, RG469, NARA.

101 Trade Union Advisory Committee meeting minutes, May 9, 1951, in Maurice Tobin to James B. Carey, August 9, 1951, Maurice Tobin Correspondence, Box 1, James B. Carey Papers, HST.

report the most significant proposal to date in its contribution to international peace.102 Assistant

Secretary of Labor for International Affairs Philip M. Kaiser similarly suggested the report “does full justice to the importance of labor” and praised the efforts of Potofsky and Hines in this regard.103 Major labor figures thus praised the final report despite its weak commitment to labor protections, even as they had expressed concerns about its overwhelming emphasis on FDI throughout its drafting.

The report’s labor provision thus proved a far cry from Rockefeller’s suggestion of a code of labor standards setting out requirements for US investors seeking US government support or Potofsky’s recommendation for requirements that foreign governments implement particular labor reforms to receive US aid. Instead, the report endorsed a vague commitment to historically-inadequate and administratively unenforceable international ideals, and it made clear such commitment rested primarily on Cold War defense exigencies rather than an affirmation of workers’ human dignity. Labor protections thus assumed little weight on the policy agenda, as policy recommendations to promote FDI for raw material development became more closely associated with immediate national security requirements.

THE RANDALL REPORT AND “TRADE, NOT AID” IN EISENHOWER’S FIRST TERM

The January 1953 inauguration of Republican Dwight D. Eisenhower and the subsequent signing of the Korean War armistice in July brought about a reexamination of US international economic policy. European payments had balanced, in part as a result of economic recovery and

102 Meeting Minutes, April 16-17, 1951, Box 2, Records Relating to IBAB Meetings, RG469, NARA.

103 ILO Director-General David A. Morse of the United States described IDAB’s references to ILO standards as “particularly gratifying,” and Philip Kaiser suggested, “I think the report does full justice to the importance of labor and this is mainly a tribute to the very effective work of Mr. Potofsky and Mr. Hines.” See David A. Morse to Philip M. Kaiser, March 16, 1951 and Philip M. Kaiser to David A. Morse, March 23, 1951, ILO Correspondence, Box 2, Philip M. Kaiser Papers, HST.

defense exports but also because states maintained tight exchange controls and trade restrictions.104 US government officials and export-oriented business and labor groups thus called for continued efforts to address the persistent “latent dollar gap” as Europeans suppressed demand for US imports to maintain payments balances.105 The assumption that US military aid to Europe would decrease as a result of demobilization after the Korean War deepened concerns that payments imbalances would reemerge.106 Still, business groups and economists alike disparaged further government aid as economically unwise, on the grounds that such spending would drain the US Treasury and spur tax increases.107 Eisenhower himself expressed concerns about the effects of Truman’s vast military and defense expenditures on the federal budget and therefore advocated a “trade, not aid” approach to international economic policy.108

In this context, Congress authorized the establishment of a bipartisan Commission on

Foreign Economic Policy, composed of seven Presidential appointees, five Senators, and five

Representatives to study and prepare recommendations “on the subjects of international trade and its enlargement consistent with a sound domestic economy, our foreign economic policy, and the trade aspects of our national security and total foreign policy.”109 Republic Steel

104 Eichengreen, Globalizing Capital, 100-111; US Commission on Foreign Economic Policy, Report to the President and the Congress, January 23, 1954, 83rd Cong., 2nd Session, H. Doc. 290. HeinOnline.

105 “The World Dollar Problem,” Staff Papers Presented to the Commission on Foreign Economic Policy (Washington, DC: Government Printing Office, 1954), HeinOnline; Report to the President and Congress.

106 Report to the President and Congress.

107 Hearings before the Commission on Foreign Economic Policy, October 29, 1953 (statement of Henry W. Farnum, Member, Foreign Commerce Department Committee, US Chamber of Commerce), (statement of Henning W. Prentis, Jr., Chairman, International Relations Committee, National Association of Manufacturers), Transcript of Hearings 10/29/53 (1), Box 8, Commission on Foreign Economic Policy Records, DDE; Hearings before the Commission on Foreign Economic Policy, October 21, 1953 (statement of Charles Sawyer, Formerly Secretary of Commerce), (statement of Paul G. Hoffman, Formerly Administrator of the Economic Cooperation Administration), Transcript of Hearings 10/21/53 (1), Box 7, Commission on Foreign Economic Policy Records, DDE.

108 McClenahan and Becker, Eisenhower and the Cold War Economy; Kaufman, Trade and Aid.

109 Public Law 215, in Report to the President and Congress.

chairman Clarence Randall chaired the Commission, which also included among its members

Bank of America Executive Vice President Jesse W. Tapp, J.H. Whitney and Company senior partner John Hay Whitney, Kimberly-Clark Company Chairman of the Board Cola G. Parker, and Anderson, Clayton, & Company president Lamar Fleming, Jr. While business interests dominated the Commission, the president appointed one representative to represent labor’s views—David J. McDonald, president of the USW.

By 1953, McDonald had established himself as an expert on international labor affairs and a chief figure in the CIO’s business unionist wing. Sitting on both the CIO’s International

Affairs Committee and its Committee on Latin American Affairs, McDonald had become one of the organization’s leading experts on Latin America. He had traveled throughout the region during World War II to muster labor support for the Allies’ war effort, and his union had organized several South American affiliates to match the international expansion of US steel corporations. Domestically, McDonald proved a foremost advocate of the labor-management accord. He developed close working relationships with moderate steel executives and, in a highly symbolic act, toured US Steel’s plants in 1953 with the company’s chairman, Benjamin Fairless.

His more conservative approach often placed him at odds with the more social democratic

Walter Reuther, whom McDonald once criticized for his “patronizing attitude and tendency to lecture those of us among the unwashed.” In McDonald’s view, “closer relationships and increased understanding” with corporate executives enabled him “to negotiate better contracts” by encouraging greater respect for his “principles.”110

110 David J. McDonald, Union Man (New York: E.P. Dutton & Co., 1969), quotes 231, 237; George Kelly and Edwin Beachler, Man of Steel: The Story of David J. McDonald (New York: North American Book Company, 1954); Stebenne, Arthur J. Goldberg; Harrod, Trade Union Foreign Policy.

The Randall Commission ultimately reinforced the private investment imperative and the inattention to labor standards that had marked the Gray and IDAB reports. By 1953 the State

Department had begun to administer the Point IV program, which the Randall Commission endorsed in its final report. Nevertheless, the Randall Commission’s recommendations had significant implications for economic development programming during Eisenhower’s first term.

The Commission clearly laid out a commitment to trade liberalization, increased FDI, and reduced public development aid in US international economic policy broadly. Further, it offered minimal recommendations for protecting the workers’ interests either in the US or abroad despite concerns raised by the CIO and other organizations that the expansion of trade and investment might otherwise undermine their economic wellbeing. The end of the Korean War would thus bring renewed commitment to private enterprise rather than a shift from wartime emergency measures to humanitarian aid.

The tariff quickly emerged in letters, presentations, and hearings as the most hotly contested issue facing the Commission, and it pitted export-driven heavy industries against light industries threatened by imports.111 Proponents of trade liberalization suggested the national export gains that would result from freer trade would outweigh the losses to particular industries, which they dismissed as special interests.112 Ultimately, every major business and labor

111 The protectionist Committee of Industry, Agriculture, and Labor on Import-Export Policy, for instance, was founded in 1953 and counted both the United Mine Workers and the National Coal Association. See Hearings before the Commission on Foreign Economic Policy, October 28, 1953 (statement O.R. Strackbein, Chairman, The Nation-Wide Committee of Industry, Agriculture, and Labor on Import-Export Policy), Transcript of Hearings 10/28/53 (1), Box 7, Commission on Foreign Economic Policy Records, DDE; Kaufman, Trade and Aid, 24.

112 For appeals to the national interest over the special interest, see Hearings before the Commission on Foreign Economic Policy, October 29, 1953 (Henry W. Farnum), (statement of John S. Coleman, Committee for a National Trade Policy), Transcript of Hearings 10/29/53 (1), Box 8, Commission on Foreign Economic Policy Records, DDE; Hearings before the Commission on Foreign Economic Policy, October 28, 1953 (statement of Meyer Kestnbaum, Chairman of the Board of Trustees, Committee on Economic Development), Transcript of Hearings 10/28/53 (1), Box 7, Commission on Foreign Economic Policy Records, DDE.

organization invited to testify before the Commission, with the exception of NAM and such explicitly protectionist groups as the American Tariff League, supported trade liberalization in principle, even as they agreed that tariff reductions needed to proceed at a gradual pace.113 NAM representative Henning W. Prentis, meanwhile, refused to take a position on the tariff as a result of internal divisiveness among the organization’s membership, but he made clear his opposition to all non-tariff barriers to trade, including quotas and exchange controls.114

Still, the recovery of European industry had brought reinvigorated trade competition that deepened protectionist attitudes within the US, and persistent European import restrictions intensified frustrations.115 The Commission received a flood of letters from industry and labor representatives expressing opposition to further tariff reductions. Differential labor standards often lie at the heart of these arguments, as business and labor representatives alike claimed import competition would force US industries to either reduce labor costs or experience business failure and resulting job losses. Representatives from electric, coal, textile, wool, zinc, and bicycle industries, many of which already struggled due to technological advancements and mineral depletion, felt acutely threatened by import competition from regions with lower wage standards.116 Dissent also erupted within some of the organizations most supportive of trade

113 Hearings before the Commission on Foreign Economic Policy, October 29, 1953 (Henry W. Farnum), (statement of Warren Lee Pierson, Chairman, US Council of the International Chamber of Commerce), Transcript of Hearings 10/29/53 (1), Box 8, Commission on Foreign Economic Policy Records, DDE; Hearings before the Commission on Foreign Economic Policy, October 28, 1953 (statement of Boris Shiskin, Director of Research, American Federation of Labor), (Meyer Kestnbaum), (statement of Stanley H. Ruttenberg, Director, Department of Education and Research, Congress of Industrial Organizations), Transcript of Hearings 10/28/53 (1), Box 7, Commission on Foreign Economic Policy Records, DDE.

114 Hearings before the Commission on Foreign Economic Policy (Henning W. Prentis).

115 Thomas W. Zeiler, Free Trade, Free World: The Advent of GATT (Chapel Hill, NC: The University of North Carolina Press, 1999), 189-194; Kaufman, Trade and Aid, 12-26.

116 Boxes 34-36 includes summaries of each presentation and letter received, as well as an overall summary of the letters and presentations, which offered Commission members and staff a more concise means to gauge expressed opinions. See especially Summary of Presentations Made to the Commission with Respect for Foreign Economic

liberalization. Local and national union leaders from the Brotherhood of Painters, Decorators, and Paperhangers of America, the United Textile Workers of America, and the Seafarers

International Union of North America, all of the AFL, wrote to the Commission expressing opposition to further tariff cuts. Representatives of the Textile Workers of America expressed similar concerns in internal CIO International Affairs Committee meetings and subsequent

Reciprocal Trade Agreements Act hearings.117 Further, such major independent unions as the

United Mineworkers of America and the Brotherhood of Railroad Trainmen worked with oil and mining companies to stake out a strong position against tariff reductions, eyeing in particular the postwar influx of Venezuelan residual oil into the United States.118

Policy, enclosed in Donald Sham to Clarence B. Randall, February 15, 1954, Hearings—Presentations—Summary of Presentations, Box 35, Records of the Commission on Foreign Economic Policy, DDE. For references to differential labor standards, see, for instance, O. Glenn Saxon, “The Foreign Trade Position of the United States and the Electrical Manufacturing Industry of the United States,” in E.V. Huggins to Clarence B. Randall, December 10, 1954, National Electrical Manufacturers Association, Box 25, Commission on Foreign Economic Policy Records, DDE; Ernest Bentley (Boston Wool Trade Association) to Clarence B. Randall, December 28, 1953, Folder “B,” Box 19, Commission on Foreign Economic Policy Records, DDE; L.M. Raftery (Brotherhood of Painters, Decorators, and Paperhangers of America), December 12, 1953, Folder “B,” Box 19, Commission on Foreign Economic Policy Records, DDE; Enclosure, Paul M. Jones (Carpet Institute, Inc.) to Clarence B. Randall, December 2, 1953, Folder “C”, Box 19, Commission on Foreign Economic Policy Records, DDE; Hearings before the Commission on Foreign Economic Policy, October 29, 1953 (statement of H. Wickliff Rose, President, American Tariff League), Transcript of Hearings 10/29/53 (1), Box 8, Commission on Foreign Economic Policy Records, DDE.

117 For dissent within the CIO, see Minutes of Meeting, November 1953, Folder 24, Box 7, CIO International Affairs Department, UMD; US Congress, House of Representatives, Committee on Ways and Means, Hearings before the Committee on Ways of Means on H.R. 1, A Bill to Extend the Authority of the President to Enter into Trade Agreements under Section 350 of the Tariff Act of 1930, as Amended, and for Other Purposes, 84th Cong., 1st Session, (1955) (statement of Joseph Opilla, manager, Passaic Joint Board, Textile Workers Union of America, CIO): 1781-1799. For dissent within the AFL, see George H. Rogers (President, Local 1138, United Textile Workers of America, AFofL), List 8, December 8, 1953, Hearings—Presentations—Summary of Correspondence Received Lists 1-12, Box 35, Commission on Foreign Economic Policy Records, DDE; L.M. Raftery (Brotherhood of Painters, Decorators, and Paperhangers of America), December 12, 1953, Folder “B,” Box 19, Randall Commission Records, DDE; John Hawk (Secretary-Treasurer, Seafarers International Union of America, AF of L), List 11, December 14, 1953, Hearings—Presentations—Summary of Correspondence Received Lists 1-12, Box 35, Commission on Foreign Economic Policy Records, DDE.

118 W.P. Kennedy to Clarence B. Randall, November 23, 1953, Folder “B,” Box 19, Commission on Foreign Economic Policy Records, DDE.

Some proponents of trade liberalization suggested a government-funded trade adjustment assistance program could aid workers and industries displaced by import competition as they transitioned to more profitable sectors.119 Although the concept of trade adjustment assistance had swirled in policy circles since the late 1940s, it gained greater consideration in the early

1950s as Eisenhower sought freer trade in an era of growing competition.120 Meyer Kestnbaum of the CED drew upon the theory of comparative advantage in recommending such a program to the Commission. He suggested US craft and light industries most directly threatened by international competition might shift towards industrial production and service sectors, in which superior technological efficiency enabled US corporations to sell at lower prices than international competitors despite labor cost differentials.121

While the tariff drew much controversy, methods to stimulate FDI won widespread support as a solution to the latent dollar gap, a means to stimulate economic growth in developing states, and a method to ensure US access to foreign raw materials and markets.

Business organizations continued to regard FDI as a desirable alternative to continued foreign aid. Prentis rejected criticism of US foreign investors as “groundless,” as they contributed “to the social and economic improvement” of these regions and “conform and often exceed the requirements of law and local custom” in their treatment of labor.122 As in previous years, they stressed the need for bilateral treaties to guarantee investors’ ability to repatriate earnings and

119 Hearings before the Commission on Foreign Economic Policy (Meyer Kestnbaum), (John S. Coleman). 120 For earlier discussions of trade adjustment assistance, see Discussion Meeting Report, Fourth Meeting, January 25, 1950, Council on Foreign Relations Study Group Reports, Box 6, Records of Gordon Gray, HST; Philip Arnow to Dr. Edward S. Mason, September 27, 1950, Letters of Comment, Box 1, Records of Gordon Gray, HST.

121 Hearings before the Commission on Foreign Economic Policy (Meyer Kestnbaum).

122 Hearings before the Commission on Foreign Economic Policy (Henning W. Prentis).

convert income into dollars, to ease the burdens of double taxation, and to protect property from uncompensated expropriation.123

Labor federations also testified to the value of FDI for achieving US foreign policy aims.

AFL president George Meany called for convertibility and investment guaranties as he considered “the need for the US investment capital” to achieve “even a moderate increase in the living standards” in developing regions “enormous.”124 Stanley H. Ruttenberg, Director of the

CIO Department of Education and Research, meanwhile urged “the development of underdeveloped countries” as “potential markets for products of both the United States and

Europe” and recommended directing FDI “more toward the development of natural resources than industrialization.” By restoring triangular trade patterns, Ruttenberg suggested, the US could maintain payments balances and assure US and European access to essential markets and raw materials. When pressed about developing states’ desire to industrialize, Ruttenberg maintained that raw material production should necessarily take precedence in the short run according to the theory of comparative advantage. He asserted, “The raw materials are the greatest resource they have. Once they develop their natural resources, then it will be time enough to move into the industrialization field.” Still, Ruttenberg dissented from business groups’ calls for reduced public economic aid, which he recommended “not only be continued, but extended.”125

In part because the tariff proved so divisive, the Randall Commission centered its proposed solution to the latent dollar gap on methods to spur FDI. It recommended that the

123 Hearings before the Commission on Foreign Economic Policy (Henning W. Prentis), (Meyer Kestnbaum), (Warren Lee Pierson), (Henry W. Farnum). 124 In Hearings before the Commission on Foreign Economic Policy (Boris Shishkin).

125 Hearings before the Commission on Foreign Economic Policy (Stanley H. Ruttenberg).

United States continue to rely on treaty negotiations to encourage non-Communist states to welcome FDI and “make clear” to developing states that private investment must play the primary role in its economic assistance programs. To reduce the tax burden on foreign investors, the Commission recommended tax incentives on FDI, including a fourteen-percent corporate tax reduction on income earned abroad and an individual tax reduction or credit for income on foreign investments. It also recommended a time extension for the federal investment guaranty program, as well as an expansion of the program’s scope to cover “the risks of war, revolution, and insurrection.” Finally, it welcomed Export-Import and World Bank loans but underscored the need to “make abundantly clear to prospective borrowers…that public lending should not compete with, or displace, private foreign investment.”126 Like the Gray and IDAB reports, then, the Randall report laid out clearly defined policy recommendations intended to spur FDI in developing regions.

Although the CIO found common ground with major business organizations on trade and investment policies, it continued to push for the development of free trade unionism as a means to counter the negative effects such measures might have on workers in the United States and abroad. Ruttenberg suggested “the wage differential” offered foreign plants a competitive advantage over US-produced goods “in many instances,” even as productivity advantages enabled some US industries to successfully compete with imports from lower-wage areas. Yet he urged the Commission “to solve the problems created by imports through means other than increasing duties, tariffs or quotas” because trade restrictions might undermine the United States’

Cold War alliances. International labor organizing to balance international trade and investment flows, in his view, offered a desirable alternative to economic nationalism. While Ruttenberg

126 Report to the President and Congress.

noted the ILO’s role in setting international labor standards, he recognized that it “has no enforcement power and can only exhort countries to improve living standards.” He thus urged

US support for the ICFTU to ensure “labor standards of these countries can be improved through the development of sound trade unions.” Because the development of the international trade union movement would inevitably prove “a slow and tedious process,” Ruttenberg also recommended inserting a labor standards provision in the General Agreement on Tariffs and

Trade (GATT) as a near-term solution until workers could develop institutions to defend labor standards on their own initiative.127

In internal meetings, the CIO International Affairs Committee explicated the international free trade union movement’s potential to counter the negative effects of tariff reductions and FDI on workers. Humanitarian, economic, and Cold War strategic factors shaped these policy preferences. In a November 1953 meeting, for instance, the Committee discussed strengthening

Mexico’s Confederación de Trabajadores de México (CTM) as a solution to the challenges posed to US farmworkers and their unions by the influx of poorly-paid Mexican migrant workers, derogatorily termed “wetbacks,” crossing the border into the US Southwest.128 RJ Thomas of the

Retail, Wholesale, and Department Store Union lamented that the “problem” was “becoming important—wider than just wetbacks” as “American firms go into these countries and exploit the people” where “no strong unions exist.” Potofsky suggested that bolstering the CTM would prove a means of “helping both our economies.” Sol Barkin of the Textile Workers Union of

America pointed to the stakes of defending international labor interests for the United States’ international credibility. Action to “supply a balance to American business abroad” would prove

127 Hearings before the Commission on Foreign Economic Policy (Stanley H. Ruttenberg).

128 For more on Mexican migrant labor, see Mae Ngai, Impossible Subjects: Illegal Aliens and the Making of Modern America (Princeton, NJ: Princeton University Press, 2004), especially 127-166.

critical to counter anti-American sentiments arising from “behavior of individuals abroad” as

“American subsidiaries…employ over a million persons in various countries.” In Barkin’s view, the International Affairs Committee should devote its attention to “fight these groups in the industries which are principally involved: oil, auto, electric, textile, rubber, and steel.” It should direct efforts toward “developing a minimum labor law for American subsidiaries abroad” to counter attempts by American companies to “cover up bad labor policies.” O.A. Knight of the

Oil, Chemical, and Atomic Workers Union concurred, “We must impress upon them the fact that we have a common enemy and a common objective in fighting a common employer.” In addition to organizing through the ICFTU, the International Affairs Committee urged affiliates to develop closer ties to their International Trade Secretariats, devoted to particular industries, through which workers could support their international compatriots “with real, practical backing,” particularly during work stoppages.129 Developing closer ties with unionists abroad thus held a central place in the CIO’s economic and political vision of its future in a post-World War II, internationally-integrated world.

As a member of the Randall Commission, David McDonald strove to implement much of the CIO program.130 His positions on public aid and private investment convey this orientation.

McDonald dissented from the final report’s suggestion that the US government terminate all grant-based economic aid for purposes other than technical assistance since, in his view, the

United States’ self-interest encompassed “both the military security and the economic prosperity of all the nations of the free world.” Further, while the Commission supported the continuation of the Point IV technical assistance program, McDonald issued a dissent on the grounds that the

129 Minutes of Meeting, November 12, 1953, Folder 24, Box 7, CIO International Affairs Department, UMD.

130 David J. McDonald to Walter P. Reuther, December 2, 1953, Folder 12, Box 82, USWA President’s Office: David McDonald, PSU.

“recommendations…are too weak and negative.” Mirroring Potofsky’s position on IDAB,

McDonald proclaimed the Point IV program had “electrified the imagination of the world as did the Marshall Plan before it.” He thus called upon the US government to “do all that we can to strengthen it” and to make “more adequate appropriations to extend its usefulness.” Finally, even as he supported the report’s recommendations on methods to stimulate FDI, he warned against

“pinning too much hope upon foreign investment,” which he considered “at best…a relatively short-term solution to the problem of the dollar imbalance.” He suggested that in certain instances “public foreign investment is amply justified” and brought attention to economists’ predictions that increases in FDI would eventually lead the US to experience trade deficits to balance the inflows of earnings on foreign investments.131 McDonald thus recognized FDI as an important aspect of US international economic policy but did not believe it could prove the panacea others suggested it might. He therefore maintained the persistent need for prominent state action in the international economy.

McDonald himself was tasked with drafting the report’s section on labor-related issues, and he focused on devising methods to minimize the effects of trade competition on the US workforce by means other than trade restrictions. McDonald’s primary solution was the development of a trade adjustment assistance program, which mirrored the concept put forth in

Kestnbaum’s testimony. McDonald’s program reflected his own commitment to maximizing comparative advantage, influenced by his position as USW president. Indeed, the highly-efficient

US steel industry remained the exemplar of the United States’ technological superiority rendering labor cost differentials inconsequential. McDonald proposed federal assistance to guide import-affected communities toward new industries coupled with federally-funded

131 Report to the President and Congress.

unemployment compensation. The Commission “decided that it could not recommend the proposal to the Government” because it considered structural unemployment a result of a variety of factors inherent in capitalist economies. Trade competition thus represented “one phase of a much broader problem.” Nevertheless, the Commission did include McDonald’s draft in the report on the grounds that it “should be presented to the public.”132

McDonald and the staff members with whom he worked also considered methods to reduce trade competition by promoting labor standard improvements abroad. The Commission’s

Director of Research Alfred C. Neal studied the possibility that the US might “insist upon the right of labor in other countries to organize freely and to bargain collectively in order to improve their economic status as a quid pro quo for trade liberalization.”133 Such a program would mark a divergence from US precedent, as the country to that point had “generally been content to buy abroad at lowest available prices,” irrespective of “the principles of fair labor standards that are applied at home.” Neal ultimately concluded that the inclusion of specific labor provisions in trade agreements was “probably not feasible,” even as he recognized that a US refusal to reduce tariffs on certain goods “for the clearly-stated reason that they are produced under sub-standard conditions” might spur “improvement, not only in the country directly involved, but also in their countries anticipating negotiations with the United States.” He recommended working instead through “international organization, such as the ILO and the GATT, to secure adherence” to international guidelines governing labor standards.

132 Report to the President and Congress.

133 Alfred C. Neal to Members of the Commission on Foreign Economic Policy, December 14, 1953, Drafts of Report—Competition in International Trade on Basis of Differential Labor Standards 4-B (Area 6-No.9) (Batt), Box 51, Commission on Foreign Economic Policy Records, DDE.

McDonald’s drafts of the Randall report’s “Labor Aspects to our Foreign Economic

Policy” section reveal the degree to which Commission members and staff watered down his recommendations. Each draft, as well as the final report, included a provision that the US refuse to lower tariffs on goods produced by workers receiving compensation “well below accepted standards in the exporting country.” Yet the final report made no mention of situations when wages incommensurate with productivity levels prevailed throughout a country’s economy, as

McDonald’s early drafts had. Further, it diluted McDonald’s recommendations regarding the

United States’ role in multilateral efforts to raise labor standards. Drawing upon Neal’s studies,

McDonald’s December 21 draft rejected labor standards provisions “as a ‘quid pro quo’” in

“bilateral negotiations.” McDonald’s draft did, however, recommend:

“That the United States be a party to agreements with other countries to raise standards

generally. Such agreements might be arrived at in connection with multilaterally

negotiated tariff agreements, or could constitute the main subject of an international

conference, through such an instrumentality as the International Labor Organization.”134

Yet the final report uncoupled labor standards from multilateral tariff agreements, suggesting:

“It probably would not be wise for the United States, in trade negotiations, to insist upon

the raising of labor standards as a ‘quid pro quo’ for the lowering of its trade barriers. The

Commission recommends, however, that the United States attempt to raise labor

134 David J. McDonald to Members of the Commission on Foreign Economic Policy, Draft of Commission’s Report on the Labor Aspects to our Foreign Economic Policy, December 21, 1953, Drafts of Report—Labor Section of Commission Report (Batt), Box 51, DDE. For McDonald’s second draft, see David J. McDonald to Members of the Commission on Foreign Economic Policy, Draft of Commission’s Report on Adjustment in Cases of Injury Caused by Increased Imports, December 28, 1953, Drafts of Report—Labor Section of Commission Report (Batt), Box 51, Commission on Foreign Economic Policy Records, DDE.

standards through consultative procedures and cooperation in international conferences

such as those sponsored by the International Labor Organization.”135

The final report thus implicitly rejected the CIO’s recommendation, echoed in Neal’s memorandum, that the US pursue the negotiation of labor standards provisions in future GATT rounds. It offered no enforceable standards to which countries and employers could be held accountable and relied instead upon “cooperation” in the relatively weak ILO. Simultaneously, it supported trade liberalization through multilateral negotiations and the expansion of American capital through bilateral agreements that carried far greater weight on the international stage.

The Randall report thus marked a continuation of the principles underlying the Gray and

IDAB reports. In all three instances, stimulating FDI came to be defined as an urgent solution to the dollar gap, the early Cold War defense build-up, and the persistent problems of development.

At the same time, each Commission largely disregarded arguments for international labor standards. Labor concerns received minimal attention in each report, and, when included, remained iterations of idealistic platitudes rather than a clear outlines of feasible and enforceable policies. Although CIO representatives contested these policies, their moderate suggestions gained little credence. At the same time, their support for FDI policies facilitated the prioritization of such alternatives. These policies more effectively came to understood as necessary Cold War-era defense measures and won broad political backing from an array of economic interests.

CONCLUSION: THE END OF THE DOLLAR GAP

The policy processes in which the CIO participated between 1949 and 1954 shaped US government activities in the international economy in subsequent years. By October 1958,

135 Report to the President and Congress.

Export-Import Bank president Samuel C. Waugh reported that the Bank had partnered with

“such representative firms as the American Smelting and Refining Company(,) American and

Foreign Power, Bethlehem Steel, Firestone Rubber, Goodrich Rubber, Lone Star Cement

Company, Republic Steel, and the Utah Construction Company” to complete economic development projects.136 Under Secretary of State for Economic Affairs Douglas Dillon, meanwhile, reported that the US had successfully negotiated sixteen commercial treaties devoted to “improving conditions abroad for the investment of private capital for economic development” since 1945. Five additional treaties were in “an advanced stage,” and six others remained “in various stages of consideration.” The Department had also negotiated twenty tax treaties since the end of the 1930s and now turned its attention to ongoing and pending negotiations with

Pakistan, Mexico, Cuba, Peru, Ceylon, India, and several other Latin American states.137 And the

International Cooperation Administration (ICA) had negotiated agreements with thirty-eight countries to administer investment guaranty programs in these states, in addition to ongoing negotiations to establish similar programs in Brazil, Chile, Korea, Ceylon, Burma, Sudan, Iraq,

Morocco, Tunisia, Malaya, and Argentina.138 Although the ICA insured only $269 million in

136 Samuel C. Waugh to Clarence Randall, October 28, 1958, Committee on World Economic Practices #2 (7), Box 3, Subject Subseries, Randall Series, US Council on Foreign Economic Policy: Office of the Chairman Records, 1954-61, DDE.

137 More research is needed to explicate the relationship between US-European negotiations on the one hand and the dynamics of US-developing world economic relationships on the other, as US-European investment and taxation treaties at times applied to developing regions that remained under colonial rule. For indications in this direction, see “Investment Opportunities in British Africa,” April 1949, 1949 A-O, Box 84, Chamber of Commerce of the United States Records, HML; “Investment Opportunities in Belgian, French and Portuguese Africa,” 1950 A-N, Box 84, Chamber of Commerce of the United States Records, HML. For Dillon’s report, see “Activities of the Department of State which Stimulate and Assist Participation of Private Enterprise and Other Non-Governmental Activities in Overseas Economic and Related Activities,” enclosed in Douglas Dillon to Clarence B. Randall, October 27, 1958, Committee on World Economic Practices #2 (8), Box 3, Subject Subseries, Randall Series, US Council on Foreign Economic Policy: Office of the Chairman Records, 1954-61, DDE.

138 Walter Schaefer to James P. Grant, October 24, 1958, Committee on World Economic Practices #2 (6), Box 3, Subject Subseries, Randall Series, US Council on Foreign Economic Policy, Office of the Chairman: Records, 1954- 61, DDE.

investments, $106 million of this amount had come under the program “within the last three months in the underdeveloped countries of Trinidad, Iran, and French West Africa,” and the ICA continued to consider “pending applications in excess of $1 billion.”139 Further, the program now covered a wider range of investment risks and a larger geographic scope than it had at its inception. Initially enacted under the Economic Cooperation Act of 1948, it had offered insurance only against currency inconvertibility and covered only investments in Marshall aid recipient countries and their dependencies. But the Economic Cooperation Act of 1950 had expanded the program’s scope to cover losses due to expropriation and confiscation and to protect profits and licenses as well as initial investments and FDI, and the Mutual Security Act of

1951 had made the program available to free countries in the Middle East, Africa, Latin

America, and Asia.140

US advocates for international labor protections could count fewer victories. Labor leaders consistently expressed frustration with cuts in funding for free trade union programs in the Eisenhower years, and when implemented, these programs’ overtly political nature often limited their effectiveness as policies to raise living standards.141 The international politics of the

Cold War similarly marred the ILO, as some delegates from developing countries expressed frustration with US and Communist bloc efforts to vie for Cold War allies in ILO

139 L.J. Saccio, Acting Director, International Cooperation Administration to The Honorable Clarence B. Randall, November 13, 1958, Committee on World Economic Practices #2 (6), Box 3, Subject Subseries, Randall Series, US Council on Foreign Economic Policy, Office of the Chairman: Records, 1954-61, DDE.

140 For brief overview of legislative history of investment guaranty program, see Staff Memorandum on Investment and Informational Media Guaranties and the Mutual Security Program, April 25, 1956 (Washington, DC: US Government Printing Office, 1956).

141 Wehrle, Between a River and a Mountain, 51-74.

Conferences.142 Further, conservative US employer delegates pointed to the organization’s social welfare resolutions and its acceptance of Soviet delegates as evidence of “creeping socialism” that would undermine US sovereignty and threaten its capitalist system by imposing global governance.143 While the Eisenhower administration rejected their calls for withdrawal from the organization, it recognized and upheld the primacy of national sovereignty as the world’s dominant governing paradigm. Eisenhower himself argued against the ratification of ILO

Conventions because “our own Constitution and our own understanding of the UN Charter” barred the US from using international agreements to “purport to govern internal affairs of any nation.”144 Yet government planners between 1949 and 1954 had explicitly placed the promotion of international labor standards under the jurisdiction of the ILO. While bilateral agreements facilitated the expansion of FDI, then, labor protections remained within the realm of the international agency, plagued by international politics and marked by minimal enforcement power as sovereign states retained their leading role in governing world affairs.

Much remains unexplored, however, regarding the ways multinational corporations, US labor unions, and policymakers attempted to further their positions in the international economy.

At the policy level, historians must delve more deeply into business and labor efforts to influence

142 See, for example, “US Delegate Assails Polish Tactics,” US Department of Labor Press Release, March 19, 1951, ILO—Meetings of the Governing Body, 1948-1953, Box 4, Philip M. Kaiser Papers, HST; “Reply by ILO’s Director-General to Conference Debate,” ILO—Forced Labor Convention, 1956, Box 4, Philip M. Kaiser Papers, HST. 143 W. L. McGrath, “Meeting of the International Labor Organization Governing Body,” December 2, 1955, in W.L. McGrath to Fellow American, December 1955, 1955—International Labor Organization (October to December), and W.L. McGrath, “The Surprising Case of the ILO,” October 25, 1955, 1955—International Labor Organization (October to December), Box 89, James P. Mitchell Papers, DDE; Jill M Jensen, “International Labor Standards and the Building of Two Postwar Orders: The United States and the International Labor Organization, 1919-1954,” PhD dissertation, University of California at Santa Barbara, 2011, 285-337. For an alternative view, see Edward C. Lorenz, Defining Global Justice: The History of US International Labor Standards Policy (Notre Dame, IN: University of Notre Dame Press, 2001), 161-187.

144 Dwight D. Eisenhower to John Foster Dulles, April 27, 1956, Box 14, Dwight D. Eisenhower Diary Series (Ann Whitman File), DDE; Lorenz, Defining Global Justice, 180-181.

political processes shaping legislative and administrative actions under the Bretton Woods system.145 Scholars must consider evolving policy priorities of government, business, and labor interests within a shifting international context, as the dollar gap gave way to widening US balance-of-payments surpluses by the end of 1957.146 At the same time, Japanese and European recovery and low US tariff rates spurred import competition in light and heavy industries alike, and Americans soon began expressing concerns that corporations used FDI as a means to circumventing US labor standards, a grievance largely absent in debates at the start of the decade.147

Ultimately, a thorough exploration of such processes can offer a view not only into the immediate political forces shaping the passage and implementation of specific policies but also a window into the longer-term ways that failed policy proposals could nevertheless shape future policy efforts. Softening a proposal’s less politically palatable provisions, shifting lobbying emphasis from one agency or branch of government to another, and redefining economic proposals as solutions to new problems all might have proven successful means to nurse rejected proposals back to life.148 Indeed, the mere consideration of a particular policy option might

145 Burton Kaufman has offered a valuable view of international economic policymaking during the Eisenhower administration. However, his book focuses primarily on White House and Congressional activities, leaving private lobbying activities and intra-agency activities largely unexplored. Kaufman’s analysis also does not consider how private investment policies developed under the Truman, Kennedy, Johnson, and Nixon administrations. See Kaufman, Trade and Aid.

146 Francis J. Gavin, Gold, Dollars, and Power: The Politics of International Monetary Relations, 1958-1971 (Chapel Hill: The University of North Carolina Press, 2004); McClenahan and Becker, Eisenhower and the Cold War Economy, 216-224.

147 CFEP590—Policy on Movement of American Industrial Facilities to Low-Wage Countries to Supply US Market, Box 15, Policy Papers Series, US Council on Foreign Economic Policy Records, DDE; C. Edward Galbreath to Clarence B. Randall, April 8, 1960, Chronological File—March 1960 (1), Box 1, Chronological File, US Council on Foreign Economic Policy Records, DDE; McClenahan and Becker, Eisenhower and the Cold War Economy, 201- 216; Stein, Running Steel, Running America, 197-228; Stebenne, Arthur J. Goldberg, 188-232.

148 For a discussion of issue redefinition from the field of political science, see Beth L Leech et. al., “Organized Interests and Issue Definition in Policy Debates,” in Interest Group Politics, 6th ed., ed. Allan J. Cigler and Burdett A. Loomis (Washington, DC: CQ Press, 2002), 272-293. For discussions of “venue shopping” between Congress

contribute to a process of “softening up” that acquainted public officials and their constituents with new ideas, paving the way for future policy successes.149

Equally significant, historians must explore the ways businesses and labor unions used policies in place to further their own global economic interests. In this way, historians can better understand how policy battles influenced the global economic transformations leading up to the collapse of the Bretton Woods system. For instance, historians have yet to consider how protection of licenses under treaty and investment guaranty programs may have contributed to the slimming down of corporate structures that facilitated the rise of the US service economy.150

The intersections of corporate investment, international trade, and labor strategies as well as the ways such decision-making rested upon government actions merit further examination, as the example of the Westinghouse Electric International Company indicates. Westinghouse executives preferred the sale of licenses to FDI to accrue the gains of entering foreign markets while minimizing the costs and risks associated with FDI. Fortune magazine praised

Westinghouse’s licensing program as the embodiment of the Point IV concept in February 1950 because it offered developing regions technological expertise but encouraged businesspeople within developing regions to invest in and administer their own enterprises.151 Yet Westinghouse was by no means a simple paragon of liberal internationalism. Company executives pointed to import competition based on international labor cost differentials as a major threat to their

and executive agencies by interest groups seeking to find the most welcoming audience within government, see Frank R. Baumgartner and Bryan D. Jones, “Agenda Dynamics and Policy Subsystems,” The Journal of Politics 54, no. 4 (November 1991): 1044-1074. 149 Kingdon, Agendas, Alternatives, and Public Policies, 127.

150 For the slimming down of corporations, see Bartow J. Elmore, Citizen Coke: The Making of Coca-Cola Capitalism (New York: W.W. Norton & Co., 2015); Beasley, “At Your Service;” William Lazonick, “Innovative Business Models and Varieties of Capitalism: Financialization of the US Corporation,” Business History Review 84 (Winter 2010): 675-702.

151 “Westinghouse Abroad,” Fortune, February 1950, Westinghouse Abroad, Box 12, Ivan F. Baker Papers, HML.

profitability and thus vigorously lobbied for continued tariff protections. At the same time, the corporation’s major competitor, General Electric, embarked upon a major antiunion campaign under the direction of Lemuel Boulware.152 Consideration of how government policies influenced corporations’ pursuit of their interests thus offers a critical means to understand the impact of US policies on the international economy.

As corporations strategized methods to minimize costs, such major individual industrial unions as the UAW and the USW intensified their efforts to tighten their bonds with international trade unionists in their respective industries. They pursued solidarity not only to undercut the international appeal of Communism but also to defend US workers and labor standards in an era of worsening import competition and to undermine US corporate efforts to minimize labor costs by hiring workers abroad at lower wage rates.153 The economic motivations of these organizing efforts have been largely overshadowed by the dominant historiographical focus on the political aspects of the US labor program and the activities of the national AFL-

CIO, yet a more thorough examination of successes and failures at the individual union level is crucial for a fuller understanding of the post-World War II global economy. Further, scholars must continue to strive for more nuanced explorations of labor unions’ interactions with the array

152 Hearings before the Committee on Ways and Means on H.R.1 (statement of Gwilym A. Price, President, Westinghouse Electric Corp., accompanied by E.V. Huggins, Vice President of Corporate Affairs): 1056-1070; Lewis C. Mattison to E.V. Huggins, December 23, 1953, and “Suggested Preamble and Policy Statement on the Tariff and Related Issues of the Board of Directors of the National Association of Manufacturers, enclosed in Gwilym A. Price to Unaddressed, October 24, 1953, Presentations—National Electrical Manufacturers Association, Box 26, Commission on Foreign Economic Policy Records, DDE; “The United States and its Foreign Trade Position: The Electrical Manufacturing Industry,” November 1953, Presentations—National Electrical Manufacturers Association (2), Box 26, Commission on Foreign Economic Policy Records, DDE; Phillips-Fein, Invisible Hands, 90-114.

153 Lichtenstein, Walter Reuther, 338-340. For the USW see, for example, Meyer Bernstein to John K. Tettegah, October 3, 1958, File 25, as well as Enclosure, Meyer Bernstein to Howard R. Hague, November 21, 1958, and Meyer Bernstein to Dan Benedict, November 6, 1958, File 26, Box 1, United Steelworkers International Affairs Department Records, PSU.

of government agencies involved in international labor affairs to offer a more comprehensive view of US international labor organizing in these years.154

Just as scholars must consider the interactions of US government and private interests in developing and implementing US international economic policy, so too must they continue to explore economic development and global economic transformations as transnational processes.

The United States did not formulate economic development policies in isolation, as European states, anticolonial activists, and international agencies including the ILO and the United Nations

Economic and Social Council developed their own programs that competed with, influenced, and responded to US policies. A transnational approach can offer a more complex view of debates surrounding the relative roles of international agencies, bilateral aid, and private capital. In a similar vein, further exploration of the free trade union advocates in developing regions can offer a fuller view of international labor in these years. The ICFTU counted trade unionists from many colonial and postcolonial areas among its membership, and many attempted to use the organization to promote their own visions of anticolonialism and economic development. The successes and failures of these unionists in promoting their agendas within the ICFTU, as well as their successes and failures in developing viable trade union movements within their own countries to counter the activities of capital, demand further study.

154 While the ICA, Labor Department, and CIA all had international labor programs, onlookers within the Eisenhower administration noted “considerable tension” between these agencies. Historians, however, have not adequately examined the nuances of the various agency programs. See Clarence B. Randall, Memorandum for General Persons, March 30, 1960, Chronological File—March 1960 (1), Box 1, Chronological File, US Council on Foreign Economic Policy Records, DDE. See Field, “Transnationalism Meets Empire.”

BIBLIOGRAPHY

Archival Collections DDE: Dwight D. Eisenhower Presidential Library, Abilene, KS HML: Hagley Museum and Library, Wilmington, DE  NAM: National Association of Manufacturers Records  NFTC: National Foreign Trade Council Records HST: Harry S. Truman Presidential Library, Independence, MO PSU: Penn State University Libraries, State College, PA NARA: US National Archives and Record Administration, College Park, MD UMD: George Meany Memorial Archives, University of Maryland, College Park, MD

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