Evening star., 1940-02-04
Allies Draw Heavily
on American Goods,
BIZ OUen L. Scott.


that this involvement will grow greater
rather than less as time goes on.
A favorite idea in Congress is that the
United States, simply by stating an in
tention to remain neutral, can escape
any part in the troubles of the rest OF
the world. A much more practical idea
is held in the executive branch Of the
Government where there is rather real
istic attitude toward the present situa-
ton.
The simple facts of the situation are
these:
Contrary to popular opinion the allies
in Europe already are heavily dependent
upon the United States for goods needed
by them to fight the war. Exports Of
war materials to Great Britain and
France are much greater at the end OF
five months Of this war, proportionately,
than they were at the end Of five months
of the war in 1914. Those nations are
cutting down drastically in their pur-
chase Of American foodstuffs-reversing
the trend of the last war-but they are
increasing sharply their purchases Of
American industrial products. Official
figures for December reveal a large scale
war business.
Furthermore:
China are SO heavily dependent upon the
United States for the products needed to
fight that war that they would be faced
with disaster If the markets of this coun-
try were closed to them-particularly If
the market for war materials were closed.
AS matter of more simple fact, those
persons, who advise the President on eco
nomic matters, look to war business to
keep this country out of severe busi-
ness setback in the months Just ahead.
They see in war orders the source Of
new buying that will Offset the rapid de-
cline in orders from many lines of busi-
ness at home. Their estimate is that this
war buying will amount to at least
81, 500 900 900 in 1910.
Purchases of this size are expected to
Offset, in part, the decline in Government
spending and the decline in spending by
business and industry to build up inven-
tories of goods Much of the record
breaking activity in the last three months
of 1899 was based upon anticipation Of
a price rise, due to war, that did not
come The record level Of industrial
production resulted in large accumula-
ton of inventories that now will have to
be worked off, or at least maintained
without further increase.
If war business failed to expand, the
country now would be faced with quite
a tailspin. AS it is, the Governments
appraisers look for no more than a mod
crate setback that will add not very
greatly to the volume of unemployment.
But war abroad is the factor that is
influencing the course Of business at
home.
Congress had been Of the opinion that
this influence could be avoided. The
Neutrality Act told foreigners, engaged
in war, that they would have to come to
this country with cash to make any pur-
chases and then would need to carry
those purchases away in other than
American ships. The thought was that
this attitude might cut down war buying
and thereby keep this country far from
economic involvement in war. Actual
experience now shows that Congress
guessed wrong on that point.
Experience is tending to show more.
This country's relations with Japan are
strained, due to japanese interference
with American rights in the Far East,
where Japan is engaged in war with
China. The long-standing Japanese
American trade treaty now is ended.
The way is clear for the United States to
impose penalties on the import Of goods
from Japan and to restrain exports of
American goods to Japan. There are
threats of an embargo on exports that
would bring the japanese to their knees.
That nation has been increasingly wor-
ried over the potentialities Of this situa-
ton.
But now comes word that this worry
is being tempered. The reason is that
Japan is confident this country will not
upset big war trade that would produce
something of a depression on the West
Coast. The Japanese point out that they
are buying an important proportion OF
the California oil production and are
taking large quantities of other goods
produced in that area. They doubt that
an American Government would dare
interfere with that trade or with the
trade in cotton. They also count on labor
opposition to any interference with the
import of silk-the basis of an important
volume of employment in the textile in
dustry-to prevent boycott against this
basic japanese product.
There is one catch, however, that is
likely to develop as the wars go on IN
Europe and in the Far East.
This catch grows from the limited sup
ply of dollars that these warning nations
have or are able easily to get. The Japa-
nese already have used up most of their
gold supply in paying for American prod
ucts. Their trade is not yielding them
enough dollars to pay war bills. The re-
suit is that a finance problem is likely
to develop sooner or later. Legally, Japan
could borrow in this country to get need
ed money. The trouble is that the
Japanese today would find few lenders.
Britain and France are better supplied
with money, or with what goes for money,
than they ever were. In the last war
they borrowed heavily from the United
States to pay for their purchases here so