Evening star., 1938-07-17

| are millions OF Germans and Italians who
are good citizens Of Brazil, Argentina, Chill,
and other republics, with only 4 handful
OF American settlers
Economic Weapon Welded.
But the principal instrument Of persua.
sion which Hitler and Mussolini are WELD
ing Is the economic weapon. Despite the
efforts Of Mr.. Hull, who Is endeavorins to
reach closer economic cooperation with
the southern continent, the Germans and
the Italians are tops" As importers and
exporters in South America. The barter
system Is common in countries where there
Is an excess Of raw materials and shortas re
OF cash or foreign exchange The totali-
tartan method of international trade Is ia
swap the manufactured products OF the two
relationships against the raw materials and
what have you" OF the industrially unde-
Veloped countries. The United States il
operating under the old economic system
based on cash payments with short credits,
And this system does not work we'll In thess
days OF political and economic anarchy
For example, We buy about IS per cent of
Brazil's coffee production. yet Brazil pre-
fers, by necessity, to purchase most of its
manufactured products from the totali-
tartan states. The reason for this. and It
applies to the rest Of the Central and South
American republics, Is that. the American
exporters cannot give the long term credits
the German and the Italian exporters can
offer.
The ofieials who worry over the South
American situation wish to follow 4 keep
ing up with the Joneses" policy They sug-
gest that the administration take out Of
the Public Works Administration or some
other spending agency an amount necessary
to establish radio stations which would de-
vote their time exclusively to Latin Aneri.
can propaganda. They maintain that
money should be spent to subsidize Latin
American newspapers and that lecturers
and goodwill emissaries should be hired
and sent over to soften the hearts Of our
good neighbors. Many plans for Intellectual
cooperation are being set forth-all ad-
mirable If We had 50 years ahead Of us.
fortunately, these costly and useless
schemes remain in the files Those re-
sponsible for our South American policy
intend to Use the money for more practical
purposes. They realize that . closer eco
nomic cooperation. based on credits a.
liberal if not more liberal than the dictators
can offer would be the best guaranty for
pan-American friendship. In ordinary
everyday life there Is close bond of
friendship between the merchant around
the corner and the customer If the former
deals fairly with him, caters to his taste
and needs and does not poster him for pay
ment when the customer happens to be in
q tight spot for q short while. This same
relationship necessarily exists between ma
tions-even If these nations have defaulted
some Of their obligations, as is the case
with most Central and South American re.
publics.
Credit Record Not FhwIess.
The credit record of our neighbors is not
good. Bonds have been defaulted and, in
many instances, the interest as we'll has not
been taken care OF, but their record, as far
As commercial honesty is concerned. Ia In
comparably better than that Of our friends
on the other side Of the Atlantic. The
Latin American republics which have de-
faulted were compelled to do 20 because of
economic hardships created by the world
depression. The European debtor nations
have not paid their debts because they did
not feel it was right to pay them. Several
years ago all Of them, without exception,
were in position to continue the payments
OF the two installments . year. They pre-
ferred to put that money into tanks, war
ships and bombing planes.
1t is true that commercial debts incurred
by European governments or their political
subdivisions have . better record. OF the
81, ,622, ,o6S, $50 Of bonds issued on the Ameri-
can markets, only $754,051, ,235 are in de-
fault. The South American republics have
borrowed from our financial markets ST.
5s3,575, ,s3S, and the amount defaulted up
to date is 1,356, ,6s5, 1913. The European
provincial, departmental, municipal or gov
ernment guaranteed corporate bonds could
be paid because Europe has the necessary
exchange and because the financial struc-
ture Of Europe is such that these subdi-
visions Of the states feel they must meet
their obligations.
Tive Types Of Default.
To offset this. however, we must remem-
Der that the European countries which were
our associates during the last war still owe
the people of the United States no less
than &l1,s77, ,26o. 1855, . sum which they
politely but firmly have refused to pay
because 1t Is "uneconomical to make such
payments" Whereas South America has
defaulted its commercial obliga tions be-
cause it could not muster the necessary
cash amounts to meet the contracted obli-
cations. Herein lies the chief difference
between the two defaulters.
The next article vii, deal with the meas
ures the administration now Is being urged
to adopt to meet the totalitarian challenge
in the southern continent by streamlining
our existing export policy and credits.
tcer,rishs 1881