Evening star., 1941-01-01
u. 5. Likely TO Adopt
Barter Methods 10
Save Trade
CBy Cambridge Associates }

Among the minor interpretations
in the State of New York in No
yember. 1910, was the Pan-AmeriCan
Barter Corp. Although the business
conducted by this organization may
never receive wide public attention
the name is nothing short of pro-
phetlC. For how otherwise is the
trade of the United States with its
Southern neighbOrS, and indeed with
the whole world, to be conducted
after international hostilities have
ceased than by the -honored
swapping process?
The blocked mark has long been a
familiar device in international
trade and is recognized as the
method by which Germany, with
out gold to export, secured neces-
Sary commodities by issuing credit
for purchases in Germany.
As other countries are faced with
the drain on gold (the normal me-
dium Of exchange from their re-
sources, they must adopt similar
devices to keep the exchange of
goods in motion. And the United
States, with 10 per cent of the
worlds gold in its possession. is
likely to find it necessary to play
the same game or withdraw from
world commerce.
Gold Not Obsolete.
This does not mean. however. that
the gold for which We have paid
other countries in goods and serv-
ices has now or is likely to become
useless. 1t still remains the most
suitable medium of exchange for
international settlements, and our
gold will come into use when, as
and if we develop a balance of
trade unfavorable to the United
States.
Unfavorable in the sense that the
value of goods imported exceeds
the value exported.
Thus our huge gold stock is a
cushion against the effects of a
possible excess of imports which
could prevent it from becoming a
problem for many years.
Two Choices Seen.
While this is a comfort from the
long-term standpoint. the fact re-
mains that present necessity die
tateS either: Cd exchange of a
part of our gold for something
Ix-loipl ic 1Icofirl ta nc ~ 20, roeio
nation to growing dependence
on barter as a principle Of inter-
national trade, with all its incon-
VenlenCeS and restrictions.
Many great minds have worked
on the first problem without pro-
duClng an answer which is ac-
ceptable to the American public at
large. The nearest approach to date
is the extension Of credit to South
American republics for various pur-
poses Il. @, temporary relief of
exchange problems, financing of
imports from the United States,
lOng-term capital for the develop
ment of natural resources. Even
i4I4t I4lC 4CSOL VI vi kJIINdlt lIINtSlOI >
in seeking profitable investment has
been so discouraging that such ex-
tension Of credit by the Government
must have hemisphere defense as
its primary motive.
Barter Now, Gold Later.
The American dollar accordingly
stands alone as a measurement of
international exchange values, and
yet the drift of the world is more
and more rapidly towards tempo
rary substitutes. The pressure will
be relieved somewhat when hostili-
ties are over. 1t is estimated that
more than 3l2 billions of dollars are
now in this country seeking refuge
from unpredictable changes and re-
StriCtiOns in foreign countries. When
things settle down, this gold will be
withdrawn to its home countries
and thus will become available for
facilitating international trade on
the gold standard or as close a fac
Simile as the postwar world can
produce. This withdrawal is not eX-
pected to embarrass the banking
system, as it is already regarded
as hot money" on deposit, against
which practically 100 per cent of
cash reserves are kept on hand.