Evening star., 1934-04-15

cancel In their own fashion. And they
are proceeding to do it in various ways
which conform TO their own practices
or circumstances. But when this huge
sum Is finally liquidated the problem
WILL sun remain, If then, as now, we
are selling more abroad than we buy.
Then at last we shall come up against
the real problem. Then we shall come
to the real situation covered by the
Johnson bill.
| suppose at that moment we are
selling S500,000,000 more abroad than
We are buying, how shall we then be
paid? The answer is, of course, that
we can't be paid. But since we cannot
legally lend abroad to enable our Gus
toners to pay, they will have to reduce
their purchases Of our goods until they
Just equal what We buy in the world.
And that will mean a prospective
reduction of our exports of $500 ,OOO, 900
| annually. Senator johnson would say
that it was better to have our trade
reduced by that amount than to ac-
quire S500,0OO,OOo annually in new
| debts. He may be right about that.
but the difficulty he and all other
statesmen will have to face is the
prospective S500,000,000 drop in trade.
How to Dissipate Fog.
If it were only possible to make the
public see that they can only sell as
much as they buy abroad, that they
can only collect foreign loans, whether
private or public, in goods, then all
the fog surrounding the question of
foreign trade and debts would be dis
sipated. But SO far that has been
hopeless. When you talk about yam
kee trading" in the matter of the pres
ent tariff bill bargaining, too, you
come at once to a fresh paradox. If
the President made a fine bargain and
got other countries to buy more Of
our goods than we bought of theirs, it
would be the worst possible bargain
because it would lessen their resources
for paying.
If We could make up our mind to
sacrifice our agriculture to our indus
try, then We could take payment for
foreign debts in foodstuffs and raw
materials. If We could decide to
sacrifice industry, we could take our
pay in manufactured articles. But
since we export more than we import
OF both, We can only take payment in
a few things which We do not produce,
like coffee, rubber nickel and man
ganeSe, along with wines and luxury
articles. Thus the very wealth of our
natural resources and the magnitude
OF our industrial development together
cut us off from world trade to an un-
imaginable extent. We have food to
sell, raw materials to sell, machines
! to sell, but that is all our prospective
customers have to sell us in return
and they can only take as much of
our goods as they sell us of their own.
Senator Johnson's bill represents a
means of satisfying our claims against
our debtors. 1t is a rather crude
means. 1t enables us to condemn
them publicly for non-payment of
debts. They will resent it, because
from their point of view the respon-
Sibility is ours, since we refused to
provide a means by which they could
pay. We declined to open our market
to their production. But in the long
run it will not have any particular
result. 1t is conceivable, but not likely,
that the British will now default alto
gether like the French, but as the
amount involved is so small-at most
s20,000000 year, hereafter perhaps
only $l0,0000G0-they are likely to
take their resentment out in public
speeches and go on with the tokens,
which are, after all. designed to coddle
their own pride and not contribute
to our income.
Obligations Cancelled.
For all practical purposes the allied
debtors have now Cancelled the war
obligations by unilateral action, since
the United States refused to consent
to such elimination. At the moment
they are engaged in scaling down the
private loans by similar unilateral
action. Under present conditions
these, too. will shortly reach the van
ishing point. But We shall still be
selling more than we buy and the do
mestic regions dependent upon the
foreign market will desire to go on
selling.
Faced, however, with the fact that
such selling cannot continue unless
foreign lending is resumed, then at
last We shall see Congress seized with
measure for the repeal of the john
son law as a way to help the Ameri-
can farmer or industrialist. And, of
course. as a relief measure it will
be repealed, for after all it simply
amounts to an expression of the naive
popular conviction that in some way
we got stung by our foreign associ-
ateS of the war and want them to
know how we feel about it. 1t will
salve our injured vanity and irritate
their pride.
What the johnson bill will not do,
however. is drive the foreign debtors
to pay or persuade the American pub
lie to accept payment in the only way
possible. Thus for a generation we
shall go on denouncing the wicked Eu-
ropeans as defaulters and Europe will
continue % Sneer at the naivette of
people who think they can collect
debts without receiving goods and play
the role of creditor nation without
making loans. Neither side is ever
going to see the situation as the other
views it.
But the one possible disturbing de-
tail about the action of Congress is
IIldI ~ oCCIIlo W lIlulCdIe IIldI Lie IdI III
law is to be applied-assuming it does
become LAWN the spirit of the john
son act. Congress, it would appear,
expects the President to go out and
make good bargains, sell more than he
buys, buy more cheaply than he sells
and thus raise the same old problem
in a new form. For the only success
full negotiations the President could
conduct would be those which struck
an exactly equal balance and increased
our imports in exact ratio with our
exports.
Similar Cotton Operation.
Between burning cotton in the fields
and sending it to Europe to be paid for
in paper which is necessarily worth-
less, there still seems in the American
mind vast difference. Yet in reality
the operation is the same. 1t Is an
other variety of an identical economic
delusion. International trade Is q
swap at evens in principle; in prac-