The Brookings register. [volume] (Brookings, Brookings County, S.D.) 1903-1971, 1922-11-16

tary of the National Foreign Trade
Council, has returned recently from
South America where he made an eX-
tensive survey of the possibilities for
trade ~eXpenSiOn. The situation there
is similar to the situation in many
other lands. Mr.. Davis has combined
his information from world inveStlga-
tons and the result he has put tersely
III the following article.
The prosperity Of the people of the
United States depends fundamentally
upon the ability of our manufacturers
and other producers to sell subStanti-
ally all their product. 1t is the sale of
the last 20 per cent which determines
the profit for the whole operation.
Only as our producers sell subStanti-
ally all they produce, can they &C.
cupy their plants approximately full
time and thus give steady
tive employment to labor. This APP
plies to agricultural production as well
as to industrial.
AS a result Of plant expansion dur
ing the war, the productive capacity
of the United States is far in excess
of the requirements of the domestic
market. Either the surplus must be
sold in foreign markets or production
must be curtailed. There is no other
alternative. If the surplus is thus
sold, we shall have occupation, activ-
ity, prosperity and satisfaction. If it
is not sold, it will not be produced and
we shall have unemployment, stagna-
ton, and disaster at home.
| am inclined to believe that up
wards Of rs per cen Of the goods
which the United States is capable Of
producing could now be sold abroad
with immense benefit to every Amer
lean whose labor and machinery would
contribute to the production of the
goods. 1t certainly seems reasonably
clear that foreign trade must take
at last 20 per cent Of our pro-
-apacity, OF the sale of which
the prosperity Of American industry
and agriculture depends. 1t will not
be sufficient for us to export as much
as we exported in 1918; we are already
doing more than that. The foreign
trade of the United States, both ex
ports and imports, has been larger in
volume in 1921 han it was in 1913.
Yet in spite of this fact, we are every
where greeted with pessimistic state
ments that our foreign trade has col
lapsed and that our commercial isola-
ton is now becoming complete. The
truth of the matter is that the pro-
ductive capacity of the United States
has been so greatly increased since
1913 that our former normal exports
are not nearly enough to enable our
factories and farms to operate profit
ably at full capacity.
In order to sell our surplus in fore
eign markets, which is absolutely vital
to our domestic prosperity, We must
make corresponding purchases abroad.
Imports must pay for exports; trade
both visible and invisible must bal
ance. What then can we purchase?
1t is obvious that, for the security and
welfare of our own agriculture II in
dustry, our purchases in foreign mar
kets must consist, as far as possible,
of raw materials and merchandise
which do not compete with our own
products. But the quantity of non
competitive raw material and merchan-
disc which can safely be imported in
the United States at the present time
is definitely limited and cannot equal
the volume of our W products which,
we believe, it is necessary to sell
abroad. If, therefore, We are to avoid
industrial %stagnation at home, we
must try to maintain a steady excess
of visible exports yer visible i'm
ports, until such time as the increased
power of consumption of the United
States enables us to assimilate The
excess of visible imports which our
position as a creditor nation makes
inevitable sooner or later.
This present excess Of visible ok
ports over visible imports canot be
liquidated by gold importation-there
is not sufficient gold available out
side of the United States-nor would
II nelp american AGRICULTURAL OF III
dustry if such importation could be
made. l believe this liquidation can
be accomplished safely and profitablv
only by the importation of securities;
that is by the sale of foreign seCuri-
ties to American investors.
This method would not only main.
tain the current trade balance, and Sc
tend to prevent further distortion
of the exchange, it would also have a
beneficial effect upon the present ex'
change situation by reducing the huge
excess Of exports built up during the
last six years, which excess is, itself
a prime factor in producing the pres
ent disparity of exchange.
American investment in foreign
securities is the most practical and
effective method of dealing with the
current situation that has been sug
gested. 1t Is not IN artificial device