The New York herald., 1922-02-15
Our Costs the Key to Exports.


The Department of Commences
prediction for another great rush OF
American exports for this year is
based upon the improvement in for
eign exchanges, making it easier
for foreigners to buy"
But this is only part of the story.
1t is true, Of course, that the more
a country's deprecated currency goes
up the greater it's purchasing power
becomes, but as matter of fact the
principal foreign exchanges have
been rising for the very reason that
the countries of such rising ey-
changes have drastically cut their
buying abroad and have relatively
increased their sales abroad, leaving
the debit balance against them to be
settled in gold or with loans very
much lower than it was before.
Take Great Britain, with the re-
cent sensational rise of the pound
Until last October the 1921 British
excess of imports of goods over ex-
ports was running anywhere from
$90000,000 a month to 100000, 900
month. This is what is called the
visible trade balance. But in Octo-
ber, November and December the fig
ures had been whitfield down respec-
lively to s6O,OOO,OOO, $SO,OOO,OOO and
again $S0,00O,00O. In January the
excess of imports was far down to
some $24,OO0,O0O.
Comparisons of recent months with
periods Of a year be-
fore and two years before make it
strikingly. clear why the British
pound has been rising. The adverse
visible trade balance for October,
1919, was $270,000,0OO and for 1920
sos, 100000, as against the $60,000,-
900 for October, 1921. December,
1919, showed $3.50, 100000, and De-
cember, 1920, $166, 100000, as against
the $50, 900, 900 for last December. Jan
uary, 1920, showed $260,000, 900, and
January, 1921, ST, 100000, as against
the $24, 100000 last month.
The plain English of it is that in
those months and years of heavy ad-
verse balances Great Britain was buy
ing more than she could pay for and
accordingly the pound had weights
tied to 1t. Now when Great Britain
buys relatively less abroad and sells
relatively more abroad she can pay
the small visible balance against her
and pay it with ease out of the in
visible balance in her favor-the in
terest and earnings srJm investments
abroad, shipping traffic income, insur-
ance charges, &c.
To assume that foreign countries
that have stopped overbuying from
us so as to dig themselves out Of
trade balance debts are going to
plunge headlong again into overbuy-
ing from us so as to rebury them
selves in trade balance debts is to as
sumo altogether too much. They will
still buy from us If they can sell to
us, but for the most part our prodig-
iously favorable trade balances are
a thing of the past.
Already the change is astounding.
In the first month Of this new year
of 1922 our exports fell off 1885,
100000 from January, 1921, going
down to $279,OO0.O00. Our imports,
however, went up from $209, 900. 900
in January, 1921, to s216,O00, 900 this
year. Our favorable trade balance of
$445, ,000,0 for January, 1921, thus
shrank for January this year to
S63, 900, 600.
One sure thing about our future
exports is that we can no longer sell
to the world on our own terms and at
any prices as we did during the war
and for some time after the war lip-
til other countries began to get on
their industrial feet again. We must
fight for our export trade henceforth
and fight for it hard.
Either we have got to get our costs
right or we have got to see more and
more of our favorable trade balance
fade away. 1t is not merely a case of
selling our exports only If and when
the price is right. Our own goods can
no longer meet the competition of
many foreign goods in our own home
market when our domestic price is
not right unless we build tariff
around the country as high as the
Chinese wall.
Rad Naxvs About WafevuoeIOps