Evening star., 1934-09-23
GERMAN FOREIGN TRADE
MOVE is THREAT TO u. S.
Schacht Economic Dictatorship Is Gull
mination of Ban Put ON Paying
Reparations i'm Goods.
BY FRANK II. SIMONDS.

man dictatorship mas taken
in investing DR.. Schacht with
L absolute power over the
Reich'S foreign trade marks
the logical end of a process which
began a decade and half ago. The
first step was taken by the British
who insisted that Germany should
pay huge reparationS but declined
to accept payment in goods or serv-
ices. The second was taken by the
United States when it demanded that
war debts should be paid, but closed
the American market to the goods OF
the debtor nations which were COM
petitive with its own. The third was
the long series of currency devices of
various countries all designed to pro-
mote foreign sales and restrict for
eign purchases.
Now the situation has become SIM
pie in the extreme, for what Germany
has done all other countries will
probably be compelled to do. In ef-
feet the German government now
undertakes to regulate the trade OF
It's nationals by the simple device of
refusing to permit them to buy abroad.
save as the sales of German goods
provide the funds for purchases.
Actually, therefore, Germany comes
down to the barter system.
Bears on U. S. Most Heavily.
That is, however, only the first
stage Along with this goes the in
evitable second stage. Not only will
German importers be forbidden to
buy more than German exporters
sell but also they will be compelled
to buy exclusively from those coun-
tries which, in turn, buy from Ger
many. Thus the aim is to create
both a state of balance between the
aggregate sales and purchases of the
Reich abroad and a similar balance
in the trade of Germany with indi-
vidual states.
Patiently it is upon the United
States that such system must bear
down most heavily, because we have
the greatest export balance. both in
the world generally and in our trade
with Germany in particular. Great
Britain and France, by contrast, sell
less than they buy both in the world
and in Germany. They can then, by
adopting the German method-which,
of course, the Soviet Union has al
ready been pursuing-occupy an ad-
SantageouS position.
Germany imports primarily raw
materials and foodstuffs, cotton, iron,
copper, fats, etc. She sells manufac-
tured goods and chemicals. The
things that she needs-with the pos
sible exceptions of cotton, rubber,
tin and nickel-she can get in many
places. Since she already sells Britain
more than she buys from her, she
can continue to take rubber and tin
from there. She may indeed, increase
her purchases in the British Empire
at the expense of the United States.
Britain, who normally buys five
times as much from the United
States as she sells to it. can turn
elsewhere for her raw materials pro-
vided the United States refuses to
increase its purchases in the British
Empire. France, who takes from us
twice as much as she sells us, can
do exactly the same thing. This
process has already been in partial
operation through manipulation of
currency, not by trade regulation.
Must Decide on Sacrifice.
If countries adopt this barter
system. as seems inevitable now. then
the United States will have to face
the fact which it has thus far evaded,
namely, that it must not only
abandon all hope of any considerable
recovery of its foreign trade, but.
moreover. it must either resign itself
to a further rapid and considerable
decline in that trade or reorganize
its whole domestic economy. We
shall either have to decide what
part of our production we will sacri-
fee in order to buy abroad or how
we shall reorganiZe our domestic
economy to get along with a restricted
and comparatively inconsiderable
foreign trade.
During the years before the great
depression the United States got
around the whole difficulty of COL
lecting the debts and maintaining an
export surplus by lending other coun-
tries enough to make up the differ
ence between what we were paid for
debts and exports and what we paid
for foreign purchases. The net
effect of this operation was that
while we collected some S2.000,000, 800
in interest on the war debt, we built
up new private debt account Of
$l5,000 100000 more. Now payment
has stopped on both, to a very large
extent. and it will not start again
ever. unless we start lending or open
our markets.
What is going to happen now is
that all governments will sooner or
later be dragged into the regulation
of foreign trade. All the old effects
of the laws of supply and demand
will be eliminated. Dr. Schacht in
Berlin and NJ. Rosengoldt in Moscow,
looking at their respective problems,
will determine how much each coun-
try buys of the Reich and the Soviet
Union. respectively. They will then
permit their own nationals to buy
Just that amount-and no more-of
each of these countries. They will
then say to the governments of these
countries. lend us money or in
crease your purchases of our goods
and we will buy that much more
of you"
U. S. Powerless to Act.
Broadly speaking, too, there is moth
ing that any country can do in this
situation provided it sells Germany
more than it buys from it. That was
why we were powerless when the Ger
mans arbitrarily refused to pay us the
interest on the Dawes and Young
loans. But when they attempted to
employ the same methods with the
British, the Dutch and the Swiss they
we're brought up short by the threat of
the governments of these nations to
stop payment on German sales. And
as these German sales were in excess
of the German purchases in these
countries, the Germans had to sur
render and pay up.
The treaties which Secretary Hull
Is negotiating with Latin America are
all very well in their way and as we
do buy more than we sell in the coun-
tries below the Rio Grande, something
may be accomplished, but not much