The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-03-14
INITIATION NOT
ALWAYS SOURCE
OF TRADE GAINS
Business lump Depends on
Nature of Slump in
Money Value.
BY WILLIAM PHILIP SIMMS
Scripps- Howard Foreign Editor

WASHINGTON. March 1.-the
cases Of France, England and Ger
many serve 10 show what would
happen to Americas foreign trade
should initiation depreciate the dol
lar in terms of foreign money.
The general theory is that where
a nations currency depreciates on
foreign exchange and prices remain
practically stationary at home, ex-
ports are greatly stimulated and
imports curtailed. But should
nations currency depreciate in value
at home as fast as it does abroad,
precisely the reverse may happen.
While the franc was falling IN
terms Of the dollar and other for
eign monies, France did a land !
Office business. From about five
francs to the dollar at the end of |
the World war, it fell to nearly so /
in 1926. The country was overrun
with foreigners, some of whom ac-
tually moved in" because living was
so cheap. SWarms of others came |
to buy for export.
Foreigners Cram Country
Frenchmen complained bitterly
that they were being crowded out |
OF their own country. They claimed
everything from cattle to art treas
ures was being bought with depre-
ciated francs and shipped abroad. /
Their fayorite restaurants were so
crammed with foreigners that the
French habitues could find no place /
to eat.
When Great Britain went off gold, |
and the pound slumped from $485
to around $3.50 a modified, but SINH
lar, thing happened. Prices in
terms Of pounds remained pretty
much at a standstill And, as more
pounds could be bought for the
same number of dollars or franc, ex-
ports picked up and imports fell off.
In Germany the contrary hap
pened. The mark dropped from "a
cents at the beginning of the war
to cents in 1919, and to less than
a cent in 1922. From that point
on it fell as a falling body falls
in vacuum, gaining momentum as
it plunged. 1t disappeared entirely
in 1923.
Printing Presses Roar
Yet, during those hectic years,
German exports diminished and
imports increased.
For this phenomenon two main
reasons are cited. First, the depre-
citation Of the mark began at home.
rather than on international ex-
change. That is to say, Germany
speeded her printing presses and
turned out fiat money with which to
meet current expenses. She bal
anced her budget in that way. Prices
inside Germany rose with the wild
spending that accompanied the roar
OF the presses, multiplying, save for
very limited extent, any advantage
that her deprecated currency other
wise might have afforded.
Second, Germany had few goods
Tor export. What she did have was
IN the nature of highly competitive
manufactured articles. These she
had TO sell at rock bottom prices. if
she sold them at all, thus, thanks to
constantly rising costs at home. her
exports Melted her loss as often as
they did a profit. At the same time
she was forced to buy raw materials.
1oodstuffs and borrow capital from
abroad-a costly operation under
prevailing conditions.
Almost Never Lasts
WhlIe II may be said in theory,
therefore, that depreciating cur
rency should mean increased ex-
ports and decreased imports, the
exact opposite can happen.
But this sort of boost is seldom
more than a shot in the arm It
almost never lasts. Time USUALLY
levels out prices. A depreciating
currency eventually is stabilized, and
production costs soon adjust them
selves to the new conditions.
Another obstacle in the wav of
any such vastly increased foreign
trade, is the defensive tariff wall
which practically every nation in
the world has now adopted. Re-
cent practice has been to reply to
an influx OF cheap goods from a
country whose currency has sud-
denly deprecated, by raising the
tarlt, slapping on quota or throw
ing up some other kind of trade
barrier.
1t was for this very reason that
British exports failed to respond
as expected when the pound went
OIL gold in 1891 and lost IS per cent
OF its value on foreign exchanges.