Evening star., 1939-01-15
Methods Short of War Hint
Disturbs Totalitarian States
Americas Great Financial and Economic Strength
Could Be Effectively Welded by President
To Punish Aggressor Nations
By Joseph H. Baird.

and Berlin's bilateral bargaining policy
do, in fact, constitute discrimination
against American exports. The Presi-
dents power under the Tariff Act, how
ever, is discretionary rather than man.
datory and the administration thus far,
for political reasons, has not chosen to
exercise the provisions of Section 338.
Tariff experts, however, hold that the
President could legally place virtual
embargo on German goods whenever he
chooses without the necessity of seeking
additional power from Congress-
The case against Japan and Italy-the
two other totalitarian powers-is not so
clear-cut. Japan has obviously discrim-
mated against American trade in terri
tories under its control, such as Man.
chukuo and certain recently conquered
parts of China. Indeed, in some Sec
tions Japan has virtually wiped out all
American business. From a legalistic
point of view, however, it is not certain
that the provisions of Section 1888 can
be employed against country unless it
is discriminating against American i'm
ports in its own immediate national
territory.
Further, Japan and the United States
have in effect most characterization
commercial treaty which, thus far, has
been respected on both side No such
treaty exists between the United States
and Germany.
Aside from the powers which Mr..
Roosevelt already possesses, however, it
would always be possible, in an emer-
gency, for him to ask Congress to lay
down complete embargo on the goods
Of any nation against whom the United
States wished to apply economic pres
sure.
Exchange Control Weapon.
AS an Immediate, hard-hitting weapon
however, the Presidents financial power
probably Is even more effective than his
control over tariffs. For, under the
Emergency Banking Act of 1888, he has
firm grasp on foreign exchange. Purely
by administrative action, experts say,
he could block the transfer Of American
dollars to any foreign country. In the
case of countries which have built UP
large dollar balances in the United States
or which customarily receive substantial
remittanceS for their exports, this power
might be used to cut off their supply of
foreign exchange from America and thus
considerably limit their ability to buy
needed war supplies abroad.
Under the existing administrative set
up the Treasury Department issues
licenses for foreign exchange transac-
tions. Hence the export of dollars can
be stopped by simple decision of the
Secretary of the Treasury, acting on ad-
vice from the White House
The ability of the United States to use
economic and financial power for punt
tive purposes surpasses that of any other
country, with the possible exception Of
Great Britain. Not only does it control
more than one-half of the worlds supply
of gold, the ultimate basis of interna-
tional credit, particularly in time of war,
but it also is the largest or one of the
largest, markets for some of the ex-
ports upon which the totahtarian pow
ers depend to obtain foreign exchange.
| 1wo-Edged Sword.
In 1887, for instance, the United States
| imported from Germany goods worth
| S91 1855 900. The character of this trade
| Is more important to the Reich than
its monetary value would indicate, for
of the total amount, 502 per cent repre-
sented finished manufactured goods and
| 34.4 per cent semi-manufactured goods.
Germany is highly industrialized ma
ton which depends for its prosperity on
using its giant industry to process raw
materials and sell them abroad as man
ufactured goods.
| American imports from Japan during
the same year were worth $195 095 900.
The greater part of this-57.5 per cent
was accounted for by raw materials,
mostly silk, although Japan's expanding
industrial plant sent manufactured goods
to America accounting for 26.2 per cent
of its exports here.
The economic sword is two edged and
may hurt the nation that wields 1t as
well as the one against whom its blows
are aimed. That is well recognized by
the administration and is probably one
reason why this weapon has not been
used earlier against treaty-breaking
powers.
However, it is we'll recognized by the
administration that the harm which
foreign countries could inf1ict upon the
United States would be trivial compared
to what they would suffer. America Is
more nearly self sufficient than any
country in the world and is better pre-
pared to stand the gan"