Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1922-01-02
Americas Prosperity and
Foreign Trade

Americas industrial progress is in
extricably linked with her foreign
trade and it is impossible for the
United States to achieve its pre- war
prosperity by revival of domestic
business alone, DR.. Henry a. f.
Chandler, economist Of the National
Bank of Commerce in New York,
says.
DR.. Chandler takes issue with those
who believe that, since foreign trade
represents not more than 10 to IS per
cent. of Americas total commerce,
the loss of a part of it would leave a
sufficient percentage Of the whole to
insure reasonable prosperity In the
January number of the banks mag
azine, Commerce Monthly, he points
out that economic investigation
proves that seven during periods of
depression, volume Of national bust
ness, after allowing for price
changes, seldom departs from normal
by more than Is per cent; and often
by smaller percentages; and seem
ingly small reduction in the percent
age of gross business may have great
significance when translated into
terms of net profits and thus into
final buying capacity.
"In view Of the decline in foreign
buying capacity it has been suggest
ed that we may have to reduce our
output to conform much more nearly
to domestic demand and thus in the
future prevent the accumulation OF
SURPRISES similar to those that have
so recently demoralizd some of our
principal markets." he continues"
Undoubtedly such reduction can
be effected in part and indeed, to
some extent has already been done,
but as a practical movement upon a
| large scale it is beset with great dlf-
ficulties.
IF, for example, we lose only 3
per cent. of our total national bust
ness through the reduction in our
foreign trade it does not mean that
each industry loses only per cent.
! The relative Importance of foreign
trade varies widely as between diff
ferent Industries. In some the pro-
portion of foreign to total trade IS
insignificant while in others it is as
high as one third or nearly one half
1t is possible, therefore, that re-
duction in foreign trade, amounting
to no more than 5 per cent. of our
total trade, may SO effectively cripple
some of our basic industries as to
wipe out all profits and even to
bring heavy losses.
Our domestic trade will of
course, continue to be Of much the
larger Importance in our economic
life, and even if international econ
omic affairs should remain in a
highly unsettled condition we would,
undoubtedly, make important substi-
tutions and establishments within our
own territory that would contribute
TO the relief Of our domestic business
situation. Such readjustments are
in part already under way. Indeed
it is not at all clear that the uncer-
tainty as to the international situation
. is an unmixed evil. In forcing us to
look more closely for possible read
juStments at home, consequent effic-
iency may, in the end bring us some
lasting benefits.
"On the other hand we must not
overlook the fact that establishments
leading to increased efficiency may
still, leave in important cases 4 pro-
ductive capacity in excess of domes-
tic demands. Under these conditions
individual producers cannot be ex-
pected to reduce their output simply
because there exists an excess in the
aggregate, at last not until they have
been convinced that they may not
capture a larger proportion of the
home trade than they have heretofore
obtained. Those who are familiar
with the history of the destructive
competition among railroads and in
dustrial plants that led to the for
nation of the pools, the trusts and
other forms Of combinations between
1870 and 1900 will not have difficulty
in visualizing what would happen
if individual producers should start
out to capture larger share Of do
nestle trade that in the aggregate is
insufficient for them ALL
at is true that radical amend
ment of our antitrust acts might
render possible price controlling
agreements that would lessen the de-
structive effects Of competition Such
arrangements, however, would still
leave the problem of surplus products