Red Lodge daily news combined with Carbon County news., 1932-04-21
TELEPHONE NUMBER NINE
AMERICA AS CREDITOR NATION

In the course of an interesting address at the Second
Industrial Research Council of Purdue University, as re-
ported in the printed copy of the proceedings which has
recently reached us, Mr.. John Moody, the nationally known
business expert, made some striking observations on THE
Trouble With the Business World"
Mr.. Moody said that during the World War and i'm
mediately following the United States became, for the
first time, a creditor nation, the position long occupied
by England. Vast loans abroad put this country in a
position where it could receive its pay for money loaned,
only in goods. On this account, Mr.. Moody said, and this
position is held by many economists, it would be necess-
airy for this country to collect its foreign debts in goods.
This position has its points, but there are some mod
flying circumstances to be considered. That international
debts can be settled as between two countries only by
trade balances is not entirely true, otherwise this country
could not have paid off the debts, very large for the time,
to which this country obligated itself during the period
of development following the Civil War, without a bal
ance of trade with the creditor countries for larger than
it really was. We have for many years sold much less to
certain countries than they have sold to us. There is such
a thing as internal production of surplus values, which
can be converted into gold and used in the settlement
balances. Trade is also often three or four cornered. A
nation may buy raw materials of us, employ them in
manufactures, and sell the product in some other country,
thus acquiring gold available for foreign payments, and
a third nation may pay us for imports with the money
it receives from a second.
In the imposition of a tariff on competitive goods, we
do not, necessarily, prohibit debtor nations from paying
us In goods. We only prescribe that the payment shall not
be in competitive products, made cheaper by cheapening
labor, than our costs Of production. This exclusion has
the effect of increasing our consuming power for nom
competitive products, which make up more than half our
imports; luxuries and essentials, including raw materials,
we do not produce, the purchase of which is greatly slim
ulated when our competitive industries are busy. Wei
must take into account, too, other items in the invisible
balance of trade, such as the hundreds of millions we
spend for tourist travel in prosperous periods, immigrant
remittances to dependents in Europe, and many other
similar items. With our competitive industries slowed
down, these shrink; with employment active in this coun-
try, they rapidly expand.
The point overlooked by many who discuss this matter
is that we have in this country not the cheapest but the
highest paid labor in the world, and that from 90 to 94I
per cent OF our trade is domestic, we cannot cheaper thati
labor materially without destroying consuming power
that would soon far out-balance the consuming powerl
we seek in exports, especially as that foreign consuming
power is so much lower, per capita, than our own. Europe
is nearly bankrupt, chiefly because while we have in
creased wages rapidly, Europe has reduced them, and
with greatly increased producing power, and lowered con-
Stunning power, an impasse is produced for which there !
is no solution but abandonment of competition based on
mere %cheapness, essential in most foreign trade. ID
1t must be remembered that the creditors of foreign a
nations in this country constitute a small per cent of the
permit an influx of goods in payment of the obligation r
hold which would displace in this country a similar +
quantity of commodities, and what is serious to us and
10 the whole world, destroy wages and consuming power :
two to eight times that required to produce these
goods abroad.
III IL