International Bridge of Freedom

MR. STARK: Today the Canadian Club and The Empire Club mely open the firm's new Canadian plant which has been constructed at Brampton, and we congratulate him on this latest achievement. While his company is not yet a member of the so-called "Big Three" in the automobile industry, at the rate he moves, this may still happen.

Our guest was born in Mexico, of American parentage, fifty-three years ago. He attended Latter-Day Saints University, University of Utah, and George Washington University. In 1930 he commenced his business career with the Aluminum Company of America, and he represented that company in Washington for eight years. But the automobile industry held attractions, and our guest entered it in 1939 by becoming, first, Detroit Manager and, then, General Manager of the Automobile Manufacturers Association. In addition to that position, in 1941 he helped organize and became Managing Director of the Automotive Council for War Production. He helped create the Automotive Committee for Air Defence just before the United States entered World War II.

Like many of our own leading industrialists, he has always participated vigorously in community affairs, interesting himself in community needs and in public education. Long active in religious affairs, Mr. Romney is President of the Detroit Stake of the Church of Jesus Christ of LatterDay Saints.

When American Motors Corporation was formed in 1954 through a merger of Nash-Kelvinator Corporation and Hudson Motor Car Company, Mr. Romney became Executive Vice-President and a member of the Board of Directors. Then on October 12, 1954, he was elected to the post of President, which he now holds.

I now present to you this "big man" with the penchant for "small cars", Mr. George Romney, who will speak to us on the topic, "International Bridge of Freedom".

MR. ROMNEY: I am very conscious of the fact that you Canadians are currently going through a searching reappraisal of your economic and foreign policies. As one Canadian correspondent has put it, "Canada is locked in a vital and complicated debate on the whole problem of American economic penetration and its ultimate effect on Canadian sovereignty."

Nevertheless, I venture to speak plainly today because I believe your debate has world significance. To do so, I need to give you some personal background and review some of the common background of our two countries.

On the personal side, I was only a small boy when my family and our entire American community was dispossessed and thrown out of Mexico by Pancho Villa. As a youth, in Utah, I felt the resentment of the people of the West against Eastern industrial interests who seemed to have no further interest in the state than removing its natural resources. As a young man, I spent two years in the British Isles on a mission for my church, living with the common people of Scottish coal fields and textile mills. I served as U.S. employers' delegate at three meetings of the International Labor Organization in the U.S. and abroad, participated in by representatives of employers, unions, and governments around the world. For more than ten years, I have enjoyed a summer home in Canada.

These experiences and others have perhaps given me an above-average American sensitivity to the need of our awareness of the aspirations of other peoples as well as an awareness of the rights and powers of their governments.

In addition, would it be reasonable for me to assume that some of you are probably aware that I haven't always agreed with my bigger competitors? For one thing, I have some unorthodox views of the responsibilities of an "organization man". I think citizenship comes first and takes precedence over obligations to business, industry or other private organizations.

In the main, our two countries have a common heritage. We are both the beneficiaries of religious freedom having been established before our nations were founded. Primarily through the British Commonwealth, we have basically similar political convictions, philosophies, and institutions. Recent events have made me particularly conscious of the historic world-wide political contribution made by our common parent.

As a part of this common family, we matured somewhat ahead of you. As a result of facing different circumstances, we took different means of asserting our maturity and independence. The subsequent recognition by the British government and people of the determination of peoples and nations to govern themselves and resist political domination resulted in voluntary withdrawal of British power and control. In this process, one of the great services rendered mankind in recent decades has been the enlightened policy followed by the British Empire in preparing other people for self-government and voluntarily granting it.

As a consequence, your country, along with others, has a deeper attachment to the home country and the Commonwealth than if you had suffered on the battlefield.

I am personally convinced that sooner or later, just as separate nations and peoples will resist foreign political domination, they will also resist foreign economic domination or even what they consider excessive influence. Fashioning methods of preparing, developing, awakening and helping nations achieve economic freedom is one of the greatest challenges that we jointly face. However, our own common heritage of economic freedom has probably prepared us better than any other nation to devise the means by which this can be done.

Both of us are experiencing economic recession and agricultural constipation. We are confronted by some common problems. Occasionally, the world has experienced changes of tidal wave proportions. We are both in such a period. We are confronted by adversaries who seek the destruction of our way of life and freely boast that our grandchildren will live under Communism. As a result, we have established joint hemispheric defences.

The awakening and developing nations of the world have been aroused by our successes to what has been termed a "revolution of expectations". Max Ways in his book, Beyond Survival, says: "All of Asia and Africa thinks it is on a march which will make the winning of the West look like a dream of quiet waters. If our only signal is 'You, too, can be rich and powerful', we had better douse our light because the world already believes that message rather more thoroughly than the facts warrant."

I believe Khrushchev means it when he says that he expects to bury us through economic competition, and in winning, through economic assistance and development, the uncommitted nations of the world. I think it is logical to conclude that in their strategy, economic subversion is second only to the use of their resources for military preparation.

Despite the fact that our nations differ in their resources and talents and despite our tendency in the past to take you for granted, and treat you as a kid brother, Canada has come of age.

I was pleased to read these words of your Canadian columnist, Bruce Hutchison. Referring to the United States, he described it as Canada's "most powerful ally and closest friend".

This was less than two weeks ago, and I sincerely want to believe he is one of your ablest and most objective reporters. Certainly Americans consider Canada their closest km and ally.

In the bleak days of 1940, Sir Winston Churchill expressed this thought: "If the present sits in judgment of the past, the future is lost." Individually and as countries, we cannot live in the past, we can only live in the present and future. We cannot change the past. From such opportunity as I have had to read the views of responsible Canadians, their participation in your great debate is not for the purpose of criticizing the past but rather for the purpose of shaping the future. I have the same objective. Believing the future can be improved does not represent failure to appreciate the past.

I believe most Canadians would agree that, generally speaking, American investment in Canada has speeded your economic development, increased your national and individual wealth, enlarged your exports, magnified your national and international importance, and expanded your opportunity for future growth and world-wide contribution.

I am not personally acquainted with the complete history of American investment in Canada, but I am sufficiently familiar with the history of the U.S. automotive investments in Canada to very briefly remind you of their origin, magnitude, and benefits. The first American car company investment in Canada was in 1904. Two other companies entered in 1911 and 1918. The industry grew steadily and reached a peak in 1956, when 35,000 Canadians were employed in Canadian motor vehicle plants and their wages totalled around $150,000,000. In addition, there were approximately 21,000 employees of Canadian companies producing automotive parts. Canadian car dealers employed more than 65,000 people in selling and servicing cars and trucks. Petroleum and rubber products employed another 36,000. When you add the thousands employed by service stations, garages, commercial truck operators, used car dealers, tire shops, and accessory stores, the Canadian Automobile Chamber of Commerce concludes that one out of every, seven jobs in Canada is the result of automotive transportation.

Since the peak in 1956, production has been held down by European imports, and this plus your present economic slowdown, accounts for the appointment of the Royal Commission to study ways and means of increasing automotive employment in Canada.

As we take part in the debate that will shape the thinking, policies, and relationships of the future, I think most will eventually decide that the economic strength and security of both the United States and Canada will depend on enlarging international trade and keeping our domestic economies growing and strong. Neither of us can afford to forget that there is no real weakness except from within. For example, the increase in motor vehicle imports into the United States was not stemmed by a reversion to some form of economic nationalism, but rather by the internal development of a more desirable product--the compact car. That's done the job for the time being.

In the growing world-wide economic competition, we will find the Communist nations tough, integrated competitors who seek, through any means, to win the friendship, dependence, alliance, and ultimate domination of the developing and awakening nations.

This becomes a particularly important aspect of our common outlook when we analyze the attitude of many of these nations. Christopher Dawson in his book, The Movement of World Revolution, says:

All these new powers are animated by hostility to the magnitude of western governmental leadership and influence and an intense desire to assert their national independence. But at the same time they are not opposed to the new cosmopolitan civilization which is the fruit of the western expansion. It is rather that they wish to be active partners in it and to appropriate their full share in the material benefits that it has brought.

What we do as citizens, as business organizations, and what our governments do, must conform, in my opinion, with this attitude and determination on the part of such nations.

Separately and jointly, we have the best means in the world of helping these nations achieve their objectives. The advanced private economic development in our own countries has created hundreds of industrial organizations capable of enlarging their economic activity on a world basis that will not jeopardize the political independence of nations. However, I believe it will be necessary for governments and private organizations to develop new patterns of foreign economic investment and relationship.

I say this as the result of our experience as an international corporation and one that has used many of the conventional forms of international economic organization. As a result of recent developments, including the discussions ocurring in your country, we have been restudying and re-evaluating the patterns of international economic organization and operation. We are convinced that the world picture and our common problems make the current debate over the economic relationship between our two countries vital and urgent.

If other nations get the impression that United States economic activity in Canada has jeopardized your economic welfare, it will intensify our common world problems. For that reason, it seems to me that the future economic relationship between our two governments should have a very high priority on the must-list of our new President and your Prime Minister. It is also a reason why private organizations should thoroughly re-appraise their own international policies and relationships and search out and test new and better answers.

I am hopeful that between us we can develop patterns for use in many other countries, particularly those in North and South America, as well as Africa and Asia.

How we can expect any other nations of the world to establish economic patterns for their relationships, both governmental and private, superior to those that we can develop between our two countries?

Undoubtedly, one reason for the debate in your country is that the factors affecting international economic investment and trade have changed rapidly. The circumstances are quite different from what they were sixty years ago; twenty years ago, five years ago, or even two months ago. Recent changes, and the realization on my own part of the importance of avoiding a revival of economic nationalism, intensifying foreign resentment and expropriation or other general retaliatory measures, and fostering international trade have changed my own thinking.

As I have already pointed out, American Motors is an international corporation, and it is our hope to make it a bigger and more important one. However, we do not want to be the kind currently being proposed in a few American circles. These are those in American industry who are convinced that to be a significant industrial enterprise in the future, a company must become not only an international company but an international company that treats the world market "exactly as the (American Company) does the United States market today, i.e., to evolve a system of production and distribution based squarely on where supplies can best be obtained and customers best served with as little regard to national boundaries as political realities of time and place will permit."

Those with this viewpoint also assert that "the firm that starts sidestepping national boundaries (to the greatest extent possible) today, is the one that will wind up at the top of the heap.... An immediate problem is that of equity ownership of overseas manufacturing facilities. The administrative and operational flexibility necessary to a purchasing, production and distribution system that ignores national boundaries, demands complete centralization of control ownership. Local stockholders of local subsidiaries, even when they have only a minority interest, can seriously impair management's freedom to effect the most economical and profitable arrangements."

Some U.S. international organizations are apparently organizing themselves on this basis. In the case of several significant industries, the bulk of production for the U.S. market-because of the steady wage-cost-price spiral and other factors-has moved from the U.S. to foreign locations.

At a press conference in New York on December 15, I said this was the policy of our two major competitors. For the nation's sake, I am happy to tell you today that I was mistaken. Because of my deep personal concern about the consequences of this approach, I was pleased at their reaction to my assertions, even though their personal reactions were not exactly pleasant and not entirely unjustified. I spoke out bluntly to halt an incipient trend-to keep the best horse in the stable of U.S. industry from getting out of the barn. One company stated flatly that they resented such an assertion and declared plainly that they will not sidestep their responsibilities in the United States. The other company, to the best of my present knowledge, though considering elements of such a programme, has not taken a final position.

As the head of American Motors, I want to avoid any policy or approach of the above character. I believe, personally, that it is bound to stimulate adverse national and international reactions, and if applied broadly as indicated, without restraint, it will jeopardize U.S. relations with many nations around the world.

As a citizen, I have reached some basic conclusions that I hope will become American Motors policy. I put it that way because circumstances have prevented the completion of our Board of Directors' consideration of the emerging policy questions involved in an enlarged and rapidly changing international programme.

However, I am inclined to believe that the opinions I express will have a little more influence with the Board of American Motors than those of the average American!

Let me express those personal convictions as they relate to the opening and dedication of our new Canadian Rambler production facilities. These facilities represent the capacity for just a little more than the minimum volume necessary for the production efficiencies and costs that will enable us to meet the Canadian demand for Canadian-built Ramblers, with the maximum practical Canadian content.

It is our confident expectation that Rambler sales in Canada will grow and that we will need to make considerable expansion of these facilities in the years ahead.

Now it has been necessary for us to supply all the capital for this resumption of Rambler production in Canada, despite the fact that I would have preferred to share the undertaking with Canadian owners. Because of this desire; we consulted some of the most reputable and competent banking and financial institutions in Canada, with the purpose of offering equity participation to Canadian investors. Without exception, these Canadian financial institutions advised that this was not the proper point at which to invite Canadian investment.

In essence, they said: "It is impractical to seek Canadian investment at the outset when volume is low because no equitable standard of earnings or investment has been established for this business."

Consequently, we have undertaken the financing on our own. We should, in this first year's production of Ramblers, release $15,000,000 into the Canadian economy, while operating at an expected loss.

We are doing this because of our confidence in the future of the automotive market in Canada, and in the fact that the increasing wisdom of Canadian car buyers will lead to greater Rambler sales.

It is my desire to carry out future expansion of our operations by bringing Canadian owners into full and equal partnership and participation, and to operate under Canadian management, control, and direction. The latter we are already doing.

As I have already indicated, I think that the whole area that we are considering here today, and the operation of modern international firms in whatever form, is so new that better ways are certain to be discovered as we grow in experience and understanding. In our effort to find a better way, we have developed the concept that we describe as an international economic bridge.

One new approach we feel merits thorough study would involve international company-to-company arrangements, with the elimination of tariffs and barriers. This arrangement would permit companies to set up an international manufacturing bridge, with tariff-free exchange of production between the foreign and domestic companies, limited exactly to equal production values flowing in each direction. Outside of that interchange, they would be subject to the usual tariffs and other restrictions.

Under this system, each country would be encouraged to produce not only the product or component which it is best able to produce, but also to develop the basic and natural skills of manufacturing, rather than depending exclusively and disadvantageously on the elemental art of assembly alone. The least important thing you can do in developing industrial skill is to assemble an automobile. That is the thing every country seems to want to do. That is the thing that requires the most volume to do efficiently. Yet the important skills are in making materials and components.

We think this approach would develop local industry basically and practically, rather than artificially. Because it would be self-controlled by the mutual character of the flow between companies, it would build equally on either side of a border-in Canada and elsewhere, but particularly in the developing nations around the world. It would extend to the consumer in each country the advantages of aggregate volume we have been able to build up in our countries. It would achieve balanced and basically sound economic growth and well-being. It would enable people in the developing countries to buy products that depend for low cost on high volume on the basis of adequate volume. They would not be penalized by dependence on their own initially low-volume market potential.

In any event, it is my conviction that we need to take a fresh look at our attitudes toward world trade. An approach based on excessive nationalism or short-range economic objectives would be not only self-defeating, but positively harmful, and would prevent the development of international economic relationships that could prove a pattern for the free world in its coming struggle with a highly-integrated communist economic structure.

A fundamental advantage of our economic freedom is the absence of insurmountable barriers to the devising, testing, and adopting of new and better ways. Furthermore, the incentive of competition acts as a constant generator of economic progress.

For these and other even more basic reasons, we are bound to ultimately prevail in the world-wide struggle for survival-despite what we may have to go through in the meantime.

Whether some like it or not, the destinies of our nations are intertwined.

We have a common heritage. We share a common impatience with weaknesses, a common spirit of independence--and an uncommon opportunity for world service. It would be a pity to waste our strength in the humdrum arena of the age-old differences inherent in human nature, and in excessive nationalism and partial, relatively new, and far from adequate international economic methods and organizations, when there is so much of importance for both of us to achieve.

Our situation is much like that Churchill described in 1940:

The British Empire and the United States will have to be mixed up together in some of their affairs for mutual and general advantage. For my own part, looking out upon the future, I do not view the process with any misgivings. I could not stop it if I wished; no one can stop it. Like the Mississippi, it just keeps rolling along. Let it roll. Let it roll on full flood, inexorably, irresistible, benign, to broader lands and better days.

I welcome your current debate. I think we should join it where our mutual interests are at stake because only out of our joint knowledge and experience can we find the positive answers to our problems and to the infinitely more pressing economic needs of so many others.

But our debate must be positive, not negative.

The reason there is so much sin, poverty, conflict, disease, and misery throughout the world is because it takes hard thinking, personal involvement, and strenuous effort to develop positive programmes-whereas negative thinking is the result of inertia.

We need much more personal and national understanding, and that results largely from intelligent, relevant discussion.

THANKS OF THE MEETING were expressed by Mr. H. H. Wilson.