Evening star., 1938-04-24
Fiscal Policies Jeopardize
Success of Trade Pacts
Sale of American Dollar to Foreigners at Bargain
Price of 50 Cents Is Held to Be Thinly Masked
Form of Exchange Dumping.
BY HERBERT M. BRATTER.

servance Of Foreign Trade Week
under the sponsorship of the Cham
Der Of Commerce Of the United
States. The disruption Of world COM
mercial and financial ties beginning in
1929, the numerous attempts abroad to at
tain large measure Of national economic
self-sumcency and the persistent efforts
OF the present administration to reverse
the disruptive trend through its trade
agreements program have served as con-
slant reminders Of the significance of for
eign trade
International commerce has been largely
haphazard development. Like Topsy, 1t
Just grew, and then shrank In this post
prosperity world in which we now live 1t
requires governmental guidance and as
slstanoe, II 1t Is not to become further
atrophied and deformed. Such trade as
exists Is to surprising extent a reflection
OF morbid sentiments Just as the last
great war gave rise to abnormal shipments
Of goods. so the great war of tomorrow
already garners its sustenance in advance
and sends cargo ships furrowing across the
seven seas.
Many Comforts Imported
The far-reaching effects of foreign trade
are easily overlooked From the morning
tooth brush and soap, made of imported
bristles and coconut oil, to the evening
demi-tasse We come in direct and personal
contact with the cargoes of ships Aus
tralian wool and japanese silk in our cloth
ing. Brazilian coffee. African cocoa, Philip
pine sugar. and Guatemalan bananas
these but suggest the long list of items
which We get largely or entirely from
abroad. and without which life would be
much less comfortable. Even the glue on
the lowly postage stamp. the silk threads
IN our dollar bills and the gold reserve
behind them are entirely or mainly OF
foreign origin
Export trade, too, is far-reaching. The
great value of foreign markets to some
OF our industries is surprisingly large, al
though in some cases their Importance is
declining as the years pass. In 1887, "A
per cent Of our cotton crop, SO per cent
OF our tobacco, about 80 per cent of our
lubricants and copper, 10 per cent of our
automobile production and similar
amount Of various machinery and chemical
products found their markets outside our
borders. To such industries, disappearance
OF the export markets in a time of narrow
profits would be calamitous.
While export trade is thus highly i'm.
portant, its significance to many indi.
v1dual industries and in various individual
areas is, on the other hand, sometimes ex-
0u1r
China In the year 1895 amounted to only
sixteen-one hundredths of per cent of our
total production of movable goods. The
China trade is then not 50 vital" to our
welfare Its Importance is readily over
stressed
Dropped to 7 Per Cent.
Since the depression low in 1882 about
per cent Of our total output of movable
goods has gone abroad. Last year the ratio
was IN per cent, since the business situa-
ton abroad was better than here, and de-
mand for war supplies well maintained.
Before the World War about 10 per cent
of our production was exported. During
the war and postwar period the propor-
ton exported grew-thanks largely to
heavy governmental loans-to 16 per cent
In 1919. During the '20s the lavish ex-
portation of American capital represented
by foreign bonds hoated in our market
kept our export business humming Ameri-
cans sent out goods and other Americans
paid for the goods by buying the foreign
]. o. U.s. which yielded such handsome in
terest payments for a while. Naturally,
when the great depression struck and
American lending ceased, export trade
diminished to less inflated volume
In examining the trend of the recent
years, however, We should observe that we
have still been subsidizing our exporters in
various ways. When We devalued and
otherwise deprecated the dollar, we cheap
ened the value of American labor. True,
we sought to raise wages in terms of dol
lars, but by selling the dollars to foreigners
at bargain basement price, we really
embarked on policy of sweating Ameri-
can workers, policy of exchange dump
ing. A dollars worth of American cotton
or machinery still cost the American buyer
q dollar, but to the foreigner we offer it
at SO cents. Hence, foreigners sent us
much gold, and we bought the gold
which we didn't need at all-with our
visible exports Of merchandise and with
less tangible securities and bank deposits.
S625,ooo,0oo for Silver.
In a different way we undertook to
cheaper the dollar and stimulate exports
by buying endless millions Of imported
silver for which we have not the slightest
need. In 1861 we paid foreigners a
total Of $625, ,0O0, 900 for silver, and we are
still importing 1t. When we pay for the
silver we really turn it into dollars" for
the foreign seller. Then he may use the
dollars to buy American goods, or to invest
here. Naturally the former also tends to
swell the merchandise export figures, and
will continue to do so.
As already indicated, recently the fervid
preparations for war abroad as well as
actual conflicts have created a heavy de-
mand for American scrap iron, chemicals
and other raw materials, as well as ma
chinery, vehicles and airplanes. This situ-
alton Is conspicuous in the latest statistical
bulletin prepared for the Bureau Of Foreign
and Domestic Commerce by Grace A.
Witherow
The largest increases Of major export
groups were in the sinews of war: Iron and
steel scrap, up 22l per cent; wheat and