The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-07-26

Americas Role in
Muddled Trade
Situation.
by VINCENT LYONS
Times Financial Editor

by VINCENT LYONS
Times Financial Editor
THE story appearing in his
Il space yesterday. which told of
the ingenious scheme concocted by
Rumania to increase exports and.
at the same time. to curb imports.
may very we'll serve as a prelude
to the gospel which currently is
being preached by the Carnegie
Endowment for international
Peace.
The Carnegie group sees the in
stability Of currencies and the
chaotic condition of exchanges as
among the chief causes of many
Of the trade barriers, such as ex-
change restrictions, compensation
and clearing treaties, quotas and
many of the increases of tariffs.
T.'ere will be little disputing of
this contention.
In a pamphlet printed for the
Crmegie Endowment and written
by Theodore w. Schultz the argi-
cultural situation is surveyed in
the light Of international trade.
The farm plant of the United
States, Mr.. Schultz holds, is too
large for a national Self-sufflcient
economy; too large for strict and
full adherence to a policy Of Buy
American; too large to operate
profitably under Americas present
policy of maximum restriction on
incoming foreign trade.
SPECIFICALLY, during the pc
- Rod from 1925 to 1929" the
writer points out. crop and animal
products equivalent to so million
acres of crop land we're exported.
It can be concluded, therefore, that
with the uses that are at present
being made of our agricultural re-
sources and under the prevailing
price and-profit system, most farm
ers in America must continue to
sell a part of their produce abroad
or face widespread liquidation.
Farm depression spreads. Farm
ers who have lost foreign outlets
turn to products that have home
market. Soon these, too, are bur-
dened with excessive supplies and
low prices. Under a sufficient
national policy. our cities must alb
sorb either the surplus farm prod
ucts or the farmers who produce
them.
Had there been no AAA reduc-
ton program, the intense, liquidat-
ing economic pressure that bore
down so ruthlessly on most of
American agriculture which ordi-
narily sells part of its production
abroad, in all probability. would
have continued to date, except for
those crops cut sharply by the
drought Farm prices of export
products dropped much more than
did farm prices of other agricul-
tural products.
TODAY. most European coun-
i tries are trying to produce as
much of their own food as possible.
Everywhere, and in an endless
number of ways, the peasant OF
Europe is being subsidized. Appar-
emily, quite regardless of cost. the
tendency is distinctly and unmis-
takably toward self-sufficiency."
This situation is markedly diff
ferent from the pre-war inter
change of foodstuffs and industrial
wares, when the leading food deficit
countries willingly accepted and
found it relatively easy to obtain
dollar exchange with which to buy
our exportable farm surplus. Why
has all this changed? Mr. Schultz
holds that the inability of debtor
countries to make payments in
merchandise due to increasing
tariffs has been one of the doml-
nant factors underlying the dis
ruption of international commerce.
The war brought about a his
torical shift in the status Of the
United States; it transformed it
from the worlds largest debtor ma
ton to the second leading creditor.
Thus, if interest and principal pay
mentS on government loans to for
eign countries and on private in
veStmentS in foreign securities were
to be made, imports of merchandise
and services had to exceed the ex-
port Of these items.
"THE tradition of protectionism
il and of a favorable balance
of trade" MIR. Schultz declares,
had become deeply ingrained in
the minds of the American people.
II was, and is, therefore, only
natural to view restriction on in
coming trade with favor. Tradition
ally this nation is debtor-minded
and our postwar actions bef1t a
debtor
IF the present policy of
maximum restrictions on incoming
trade is continued, then grave adj
justments lie ahead for American
agriculture. Tariff bargaining
under the reciprocal tariff act is
not enough. 1t will not succeed
in correcting the lack of balance in
Americas foreign trade accounts.
Agriculture, however, can not wait.
Temporarily. the drought and AAA
have given it relief. But soon it
Will again be faced with liquidating
prices unless it can sell abroad at
profitable prices"
The alternative course is curtail-
ment. which would mean finding
new uses for millions of acres of
farm land, shifting thousands of
farm families into new employ
ment. benefit payments and proc
eSSing taxes. But most important
Of all. Mr. Schultz concludes, it
means that American consumers
will have to pay more for their
food than they would under a
foreign commercial policy which
would permit a reasonable volume
Fl EcTRIcITY 0IITPUT