Evening star., 1939-01-01

alize on those investments If we refuse
to allow an adverse balance of trade, and
instead insist on ever larger favorable
or, export balances of trade?
And If our debtors cannot or will not
pay us what they already owe us, what
chance is there of their repaying addi-
tional loans? Thirty-seven per cent of
all foreign dollar bonds are now in de-
fault; and the worst offenders are in
Latin Americans, to whom we loaned
the most.
More Than $4,000,OO0,OO
American long term investments in
Latin America totaled more than $4,000,-
100000 at the end of 1887, or more than
in any other area This sum- exceeding
even our great investments in Canada,
was over 81 per cent of our total long
term investments abroad.
OF the five leading foreign debtors to
our bondholders, three are Latin Amer
ican countries--Brazil, Chile and Ar
gentina. These three countries alone
owe one-fifth of all foreign bonded in
debtedness to private American in
vestors
Much of Latin Americas bonded debt
to United States investors is in default.
In no other continent-the war debts
and certain individual countries like
Germany excepted-is the ratio of de-
faults to total investments" so high. Ac-
cording to the Commerce Department,
55 per cent of European dollar bonds
| were in default as to interest in 1887.
In Central America the corresponding
ratio was 66 per cent and in South Amer
lea 68 per cent. un Canada this ratio
was only 2.6 per cent and in Asia less
than per cent?
Rich Brazil is in complete default on
Its debt here. Surely, if there were will,
some payment could have been made.
Should We now lend more to Brazil?
! Does Brazil, indeed, ask for any further
loans?
Lesson in the 1920s.
The unWise economics of exports
stimulated by too lavish loans was amply
illustrated following the halcyon 192Os.
True, those exports made jobs for
Americans And they increased our
national income produced" But this
proved of no value to us, since the in
crease was consumed by foreigners and
much will never be paid for.
In referring to foreign defaults one
must not overlook the good record of
the Argentine federal government. Nor
should we overlook the culpability of our
own economic policies, such as the 1880
tariff, which made it difficult for for
eigners to pay us in goods. Our re-
luctance to accept foreign goods has not
vanished with the change in 1882 from
Republican to Democratic administra-
tlons. There is no more ardent pusher
for subsidized exports than the Secre-
tary of Agriculture, who reflects the
farmers viewpoint. We are still a ma
ton of mercantilists, who think selling
is superior to buying goods.
From the standpoint of a contribu.
ton to healthy revival of interna-
tional trade, an increase in our import
trade would be more important than a
simultaneous increase in both imports
ana exports. Typical of our export
mindedness are the annual reports of
the Export-Import Bank of Washington
Their only mention of imports appears
in the banks title
Noted in 1892 Campaign.
Let's not forget the references to our
earlier foreign loans policy in the 1882
campaign, when the Democratic candi-
date stated:
1t was already obvious even to the
administration that the forced pro-
ductlon OF our industry was far too
great for our domestic markets. The
President had to meet this fact and he
did meet it by an audacious and fate
full suggestion. We were to sell what
he called "the constantly increasing
surplus" abroad. But how could this
be done in the collapsed state of
world finance? He answered. 1T is
an essential part of the further ex-
pansion OF our foreign trade that we
should interest ourselves in the de-
velopment of backward or crippled
countries by means of loans.'
Obedient to this suggestion, the
United States, which had already
loaned IA billions abroad, was lending
overseas at rate of $4,000 0OO, 900
per year. Thus was produced, in fact,
the crop of foreign bonds which
American investors know to their
cost. The old economics had gone out
of business; to the suggestion that
mass and machine production ulti-
mately must destroy employment, the
President simply observed, This is the
reecho of century ago." And the
new economics went merrily on.
Today the curtain seems about to
rise on a similar venture The roles
are the same; only the actors have
changed. Instead of private bondhold-
ers the American public is to poney up
Instead of solely foreign governments
American export firms and foreign i'm
port firms are cast in the role of bor-
rowers. Witness the $25 ,OO0O 900 credit to
the Universal Trading Corp, just Gre
ated as dummy for the government
of China, or the $10,OO0,0OO of r. F.
C. money loaned to an old-established
American communications enterprise &C
tive in Latin America.
Those who urge long term credits to
finance American exports to Latin
America speak in terms of or 10 years
"The Germans offer long-term credits;
why shouldn't we?"
Events happen so rapidly nowadays
that long-term credits involve desperate
risks. Looking backward, the five years
between 1888 and 1888 were not a lone