Evening star., 1939-01-01
Desire to Woo Latin America
Risks Defaulted Loans Trap
Sound Business Judgment Held Essential in
Bid to Corner Export Trade on
Southern Continent
Bv Herbert NJ. Braffer

to developments in Latin America. "Con-
tinental solidarity" the slogan at Lima,
has become a cardinal point of our for
eign policy. Our refurbished merchant
marine, radio broadcasts, the interde-
partmental program for cooperation
with Latin America, the establishment
in the State Department of Division
of Cultural Relations, the travels south
ward of State Department., Agriculture
Department, Export Import Bank and
other officials-these are just some of
the signs of our keen concern over for
eign penetration in Latin America.
The announcement that the Treasury
Is earnestly studying financial co-opera
ton with Latin American treasures cou-
pied with reports of the intention to
seek great expansion of the lending pow
ers of the Export Import Bank, etc, por
tend an important development in our
foreign policy. In the international push
ball contest which is shaking the world,
Uncle Sam is putting his shoulder be-
hind the "anti-Fascists."
This active participation in Latin
Americas destiny must be regarded as
a manifestation of what the National
Peace Conference terms the current
wave of hysteria" over our national de-
fense. 1t may be worth our while to
pause and reflect before We enter race
with other lands to curry favor among
our Latin American neighbors. Just
what is the goal, and how good is the
chance of reaching it? If we would
only imagine ourselves in the Latin
Americans place. we might well wonder
whether that old saying about fearing
1.-The Greeks and those bearing gifts is
not still applicable. Friendship is not
to be bought by mere lavish generosity.
Mexico has taught us that. We our
selves should be the first to realize that
our Southern gestures are purely selfish
in object. They are not Community
Chest donations.
Price on Good Will?
Latin Americans might be very fool
ish to refuse our handouts of friend
ship our fine ships and free broadcasts,
our silver purchases and our super
highway, our Government technical eX-
perts-and our cash. But we would be
naive to assume that by such gestures
we can buy good will, prevent national
ization of American investments, or sever
Latin Americas economic and cultural
ties with Europe.
Such indeed may not be the precise
object of the new Pan-American eco
nomics. yet it is certainly in the minds
of good part of the United States
public. To them word of caution may
not be out of place: Judge the proposed
business arrangements by business stand
ards
Consider the suggested government
stabilization loans to Latin American
treasures. In many Latin American
lands our exporters trade under severe
limitations. Foreign exchange is scarce
and trade is therefore controlled by II
governments. Exporters in Europe are
often in preferred position in Latin
American countries, because their own
importers buy more in such Latin Amer
lean countries than we do, and the
Latin American countries concerned
tend to buy correspondingly more from
them than from us. If we will lend dol
lars to such countries, thus supporting
their currencies, they will be able to buy
more from us; such loans will stimulate
trade, it is now argued
Bondholders Might Intervene.
Theoretically, there is place for ex-
ange-stabilizations loans to Latin
America. Actually it might prove i'm
possible to earmark the proceeds for such
purpose. If we loaned dollars to Latin
American governments, American hold
ers of defaulted securities will naturally
endeavor to secure recognition of their
just due. 1t would therefore seem neces-
sary that the government now in de-
present American bondholders before
borrowing from the United States Gov
ernment. To some extent, therefore, the
process would constitute case of WASH
ington "bailing out" the bondholders.
Don't forget that in several Latin
American countries our brand of democ-
racy does not exist. Loans to such gov
ernments would be loans to finance in
digenous relationships.
If loans are made by Washington to
Latin America, they are sure ultimately
to engender bad feeling on both Sides
In view Of this country's obvious anx-
1ety to counteract European progress in
Latin America our southern neighbors
will be likely, right from the start, to
suspect us Of Yankee imperialism" 1t
would be bad enough if overeager Wall
Street representatives again Travelled
the Spanish Main with offers of loans
as in the 1920s But for Uncle Sam now
to send similar frock- coated financiers
would not only be no better; it would
be distinctly worse.
Inevitably, as business again swings
into a down cycle. Latin America would
find 1t difficult or inconvenient to meet
the payments. The trans Atlantic bit
terness and recrimination over the war
debts are a warning of the kind of feel
ing new trans-Caribbean defaults would
awaken.
Undoubtedly the lending of dollars to
Latin America would enable it to buy
more American goods, If we assume that
the money is not all used for the nqui-
dation of previous debts to American
bondholders. 1t would stimulate our ex-
ports. That is part of the idea. But in
stimulating exports we should look be-
yond the immediate effects.
Exporting is not an end in itself. Ex-
porting is sending wealth to foreigners.