Evening star., 1940-07-26
Reich Barter Plan
Regarded as Path
To Poorer World
Funk Trade Program
Is Termed Political
Stroit Jacket
Ry CLAUDE A. Jaeger,

NEW YORK. July ga vast
trade system covering much of the
world based on barter. as outlined
by German Economics Minister
Funk yesterday, can only mean a
poorer world, in the opinion of
economists.
Because of the very great economic
advantages of a rreer movement of
goods, permitted by freely traded
currencies based on gold. some lead
ing experts asserted. German state
ments that the United States $40
100000 900 in gold might become
useless, could be taken with several
grains Of salt.
In a world of barter. it was ex-
planned, non-industrial country
dependent on. say, exports OF coffee,
must make its purchases of ma
chinery in a country that will buy
its coffee If that country were
Italy, the coffee country-say Costa
Rica-would have to take whatever
the Italians could offer, regardless
of the fact that it might find British
or American machinery much more
efficient.
In other words, barter places
political strait jacket on trade.
If you sell to. say, Italy. on barter
basis and want automobiles. you
must take automobiles, even if you
might believe American automobiles
to be vastly superior. Even though
Americans develop an automobile
SO revolutionary as to leave the
Italian product entirely out of the
running. still if Costa Rica can find
a market for its coffee only in Italy,
under barter it must take what it
can get in Italy.
The question arises. why did not
the coffee country sell its coffee to
the United States, so it could get
dollars to buy the American prod
uct? Maybe it could not do so be-
cause American coffee requirements
were fully met. Suppose the coun-
try is primarily a wheat exporter
The situation is worse because the
United States does not need wheat
Free Market Differs.
In non-barter, free world
market, the seller would autO......-
cally receive Italian currency in
exchange for coffee. which could
be Immediately swapped in the
foreign exchange market for dollars.
Transactions in goods settling this
might be sale of coffee to Italy, sale
of Italian olive oil to the United
States, sale of American automobiles
to Costa Rica.
Defenders of gold say it remains
the only basic medium for reckoning
the value of currencies in relation
to each other and for settling differ
ences in balances of payments be-
tween countries. Since the depres-
sion years, movement of gold has
been highly restricted. 1t has not
been permitted to circulate as cur
rency even in the United States.
But the chief reason why its move
ment has been taken under control,
they explain, is that there developed
an enormous demand for it in the
period of economic disturbance and
uncertainty.
Economists say that clearly, gold
cannot perform its old function
properly, as long as there remains
a one-way movement of it to the
United States, but the chief force
driving gold here in the past years.
they continue, has been the quest
of safe haven for it in an aggres-
SION threatened world, and in recent
months the need of exceptional
means of payment for war ma
terials desired from America.
AS a matter of fact, Economics
Minister Funk may have left loop
hole in his comment on gold He
said gold will cease to be the basis
of European currencies," and that
the Reich would not pursue policy
making it dependent on gold" He
did not say that the Reich would
not in any way use gold in settle
ment of balances with other parts
of the world.
Gives Different Slant.
A quite different slant on the at
titude toward gold appeared in
recent issues of Facts in Review, a
German government sponsored pub
Iication of the German Library of
Information in New York. After
discussing what it described as mis-
use of the gold standard in the years
Since 1914 1T said.
when the time comes for a re-
sumption of normal relations be-
tween principal nations of the world,
greater Germany will not hesitate to
participate with an open mind in