Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-24

we are III the InluSJ Oh severe
business depression, which is world
wide. The most serious obstacle in the
way of early recovery Is the state of
our foreign trade. The most serious
obstacle in the way of the revival of
our foreign trade is our high protective
tariffs. The quickest way to get out of
the existing depression is to reduce our
tariffs so that our foreign customers
may sell more goods here and get more
dollars with which 10 pay interest upon
their debts to us and with which to
buy our goods. If we do not buy We
cannot sell. If we don OF buy enough
We cannot sell enough" said Benjamin
M. Anderson, jr.. economist OF the
Chase National Bank, recently in an
address before the Foreign Policy ASSo-
citation at Philadelphia. The address
follows IN part:
Bankers and economists have been
telling the country this ever since the
World War. But the country has been
slow in learning the lesson. The propo-
sition was made in 1919, and the fact
did not seem to bear it out. Europe
bought from us on vast scale in 1919
and early 1920, without selling very
much to us. She bought without limit
Of price or quantity as long as we
would give her credit. And then, sud-
denly, we awoke to the fact that Europe
had overbought on credit, that she had
bought recklesSly and irresponsibly,
that, as result foreign currencieS in
our markets were dropping rapidly to
very great discounts, that our mer-
chants and our manufacturers, who
were selling to Europe on credit, were
themselves in debt because they were
unable to collect their debts in Europe,
and our seeming prosperity of 1919 and
early 1920 passed quickly into the great
crisis of 1920-21.
Foreign Trade on Credit.
I'VE learned no lesson from this.
Instead we raised the tariff in 1922,
And again the higher tariffs, for time,
seemed to impose no restraint upon our
exports. Our exports even grew. And
for six and a half years after 1922 our
export trade held we'll and even in
creased in volume. Fer another six and
a half years we sold in large volume to
the outside world without buying in
adequate volume from the outside world.
But once more we were doing 1t on
credit. A very unusual situation In the
money market, due to the fact that we
almost alone of the countries of the
world, were on the gold standard, and
that all the free gold Of the world was
flowing to us, made 1t possible for us
made 1t possible for us to take foreign
bonds on a great scale. We sent goods
to the outside world ann in exchange
the outside world sent us paper promises
to pay in the future. Then the gold
situation changed in 1929. and the
money market situation changed in the
United States. Our ability to take
forcing bonds was suddenly greatly re-
duced, and out appetite for foreign
bonds was greatly diminished. Begin
ming in the latter part Of 1929, the
ability of the outside world to buy from
US sharply and violently diminished.
This time, we were not faced with
reckless and irresponsible buying on the
part of Europe In 1919 and 1920 Eu-
rope was on the paper money standard,
and lacked the restraints, the restric-
items, which the gold standard imposes.
To-day, Europe Is on the gold stand
ard and determined to stay there. The
gold standard imposes sharp limitations
on the creation Of debts The gold
standard makes debtors responsible and
makes them feel responsible in a way
that they do not feel when the printing
press works freely and all difficulties
can temporarily be solved by printing
additional paper money.
Europe Is very responsible now, and
the outside world in general is very re-
sponSible. Having q limited supply
Of dollars, they conserve their dollars
They use their dollars, first, for the
most urgent purposes. The most ur-
gent purpose is the payment Of interest
and amortization upon debt previously
created-they have been busy borrow
ing, and we have been busy lending for
the past decade, and. for that matter,
since 1914. The debt of the outside
world to the United States is very great.
and the interest charge, that first
charge upon their limited supply Of dol
lars, is very great. Only what they
have left after paying debt service here
can they use in buying our goods.
Unbalanced Production.
"That is not enough to enable us TO
export enough OF our surplus products
to keep our export interests in good
shape. We are, therefore, in an I'M
balanced business condition Lacking
satisfactory export markets, we have too
large proportion Of our labor, capital,
and land geared up and equipped for
producing goods for export, and, unless
we can improve our export markets. we
must shift a very substantial proportion
Of our activities from producing for ex-
port to producing for the domestic
markets.
Given time, and given sound money,
security of property, and the enforce
ment of contracts, private enterprise
will adjust itself to almost anything.
No government can plan and direct the
economic life of millions of people.
Economic life goes on, and economic re-
adjustments are made, as individual en-
terprises study their peculiar problems,