The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1922-01-08
A MERicAN PROSPERITY AND
FOREIGN TRADE. I'll

prosperity by a revival OF domestic
business alone, Or. Henry A. E. Chan
dler, economist of the National Bank
of Commerce in New York, says.
DR. Chandler takes issue with those
who believe that since total foreign
trade represents not more than 10 to
Is per cent of Americas total COM
merce. 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 bank
magazine, Commerce Monthly, he
points out that economic investigation
proves that ''even 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 a seemingly small
reduction in the percentage of gross
business may have great significance
when translated into terms of net
profits and thus into final buying ca
pacity
I'm view of the decline In foreign
buying capacity, it has been suggested
that we may have to reduce our out
put to conform much more nearly to
ture prevent the accumulation of sur
pluses similar to those that have so
recently demoralized some of our prin-
cipal markets" he continues. In
doubtedly such a reduction can be eff
fected in part and, indeed, to some ex-
tent has already been done. but. as
practical movement upon large scale
it is beset with great difficulties.
IF, for example, we lose only per
cent of our total national business
through the reduction in our foreign
trade it does not mean that ecah in
dustry loses only 5 per cent The rela-
tive Importance of foreign trade varies
widely as between different Industries
In some the proportion of foreign to
total trade is insignificant, while in
others it is as high as one-third or
nearly one half. 1t is possible. there
fore. that reduction 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.
sour domestic trade viii, OF course,
continue to be of much more the
larger Importance in our economic
life. and even if international eco
nomic affairs should remain in a high
ly unsettled condition we would, un-
doubleday, make important substitu-
tons and establishments within our
own territory that wsuld contribute to.
the relief Of our domestic business
situation. Such establishments are in
part already under way. Indeed, it is
not ct all clear that the uncertainty
as to the international situation is an
unmixed evil. In forcing us to look
more closely for possible readjust-
ments at home, consequent efficiency
may, in the end, bring US lasting bepe-
fits.
'sOn the other hand. we must not
overlook the fact that readjustments
leading to increased efficiency may
still leave in important cases pro-
ductive capacity in excess of domestic
demands. Under these conditions in
dividual producers cannot be expected
to reduce their output simply because
there exists an excess in the aggregate,
at least not until they have been con-
WINGED that that they may not capture
a larger proportion of the home trade
than they have heretofore obtained.
Those who are familiar with this his
tory of the destructive competition
among railroads and industrial plants
that led to the formation of the pools,
the trusts and other forms of combina-
tons between 1870 and 1900 will not
have difficulty In visualizing what
would happen if individual producers
should all start out to capture lrager
share of domestic trade that in the
aggregate is insufficient for them all.
1T is true that radical amendment
of our antitrust acts might render
possible price-controlling agreements
that would lessen the destructive eff
fects Of competition. Such arrange
ments however, would still leave the
problem of surplus products partly un-l
solved Moreover, the problem of
amending our present laws, with a
view to maintaining a wholesome de-
gree of competition and preventing
unreasonable price fixing without i'm
posing upon business men great un-
certainty as to what could be legally
done, is extraordinarily difficult. As
practical matter, therefore unless
we are to face the possibility of an In
dustrial competition of an intensity
hitherto unknown that indeed may
disslpate part of our productive en-
ergy-we must recover in the foreign
field sufficient trade to carry off the
output of our surplus productive ca
pacity.
1T may appear the easiest way in
our present dilemma to let interna-
tional matters take their natural
course and to concentrate upon the
Hama N, ark az IT may he well dn11hfad
however. that the final cost of such
course in money and energy viii be
less TO the nation than a course that
would call for our active cooperation
in the international economic and fl
nancial reconstruction that is neces-
sary to a recovery of the buying ca
pacity of the rest of the world. In
any event the policies Of hermit ma
tons do not lead into the path of
progress. Large industrial nations viii
continue to have political and, in some
cases. even racial boundaries but they
can M lansyeY- have economic boundaf-