Evening Star Newspaper, May 19, 1935, Page 35

Editorial Page Civic Activities Part 2—12 Pages U. S. YIELDS AS CREDITOR TO GAIN GOLD SUPPLY Process of Becoming Debtor Nation Holds Out Hopes to Farmers of Recovering Market. BY FRANK H. SIMONDS. T A MOMENT when the ap- A proach of another due date for war debts forecasts an- other default by all the debtor countries save Finland, the whole subject of war debts and for- eign trade bas been called to public attention by the recent report of George N. Peek, special adviser to the President on foreign trade. Like Sec- retary Hull and Secretary Wallace, Mr. Peek is worried about the ques- tion of foreign trade; but like them, he has his own line of approach. What troubles Mr. Peek is that as a result of our gold purchases we are losing our position as a creditor Na- tion. He sees that the debts—that is, the war debts—have become an asset of dubious value. He sees that other countries are getting rid of their pri- vate debts to us by paying back on the securities their citizens purchased. He sees that at the same time foreign investors are acquiring American se- curities. From all this he concludes, quite reasonably, that at no distant time we shall have no foreign holdings save the doubtful war debts and that foreign investors may have a substan- tial amount of holdings in our securi- ties. What Mr. Peek does not tell his fel- low countrymen is that under the cir- cumstnces this is precisely what was always bound to happen once the United Sates refused to play the game as a creditor country. And that re- fusal dates back to the early post-war years and found final expression in the Hawley-Smoot tariff law, later re- inforced by the Johnson foreign loan law. Taken together, these two en- actments made inevitable the return of the United States to the situation it occupied in 1914, that of debtor coun- try. Britain Played the Game. Great Britain, which has played the role of a creditor country for nearly three-quarters of a century, began her game by repealing the corn laws and destroying her own agriculture. There- after she could take payment for her manufactures in the foodstuffs and raw materials which were not raised or mined at home. When she found she could not absorb as large a quan- tity of raw materials and foodstuffs as her customers could take of her manu- factures, she lent them the difference. Always, however, the British ran their domestic economy in such a fashion as to be able to collect their foreign investments. Even when in 1931 they went off free trade they | made special arrangements with their debtors—and with the Dominions and Argentina in particular—giving them preference for their foodstuffs and raw materials in the British market and thus continuing to collect their debts by accepting payments in kind. That is why the British have lost so much smaller proportions of their foreign investments than have we. When the war suddenly transformed us into a creditor country, we refused to make over our domestic economy to enable us to collect our foreign debts. Actually the thing was impossible. We could not do in 1919 what the British had done 70 years before and throw our agriculture overboard, for that would have ruined one-third of our people. Nor could we have scrapped our industry, for that would have wrecked an even larger part of our population. collect our debts, the $10,000,000,000 of war debts and the $3,000,000,000 of private investments abroad? How also were we to continue to sell more abroad than we bought? There were two ways—we could ac- cept payment in gold or we could lend our debtors and customers the differ- ence between what they paid in inter- est and for imports and the sums we paid them for their exports to us. But in the first post-war years the gold was not available to the debtors, who were employing it as the founda- tion of their domestic currencies. There remained, therefore, only loans and, as a result, between 1920 and 1930 we lent abroad something like $7,000,000,000, which came back to us as payment upon war debts, private debts and our exports surpluses. Lending Stopped in 1930. After 1930 foreign lending stopped. ‘Then presently the war debts were de- faulted. Nevertheless, payments on our private investments, although re- duced a third, continued and we also still sold more abroad than we bought. How was the difference adjusted? By gold payments: Foreign countries, apart from the gold blec, now having abandoned the gold standard, began to release their gold to us. Thus, last year we took in upward of -$750,000,- 000 in gold, which represented the excess of our interest collections and our exports over our imports. In ad- dition, another $500,000,000 in gold came in partly as a result of the re- purchase of American securities by Americans who had sent their money abroad during panic times, partly from foreign purchases of American se- curities. 2 Mr. Peek recognizes that now, with the war debts dead, and as a result of our devaluing the dollar—although he tactfully ignores that detail—for- eigners will be able in no long time to liquidate their debts to us and that will wipe out our creditor position. Meantime, he sees foreigners also using their gold to buy our securities as well as to bridge the difference between their sales to us and our purchases to them. One day, then, if the process continues, we shall have no foreign holdings and we shall, moreover, be paying interest upon alien investments in-our securities. All of this is possible and even probable, but what Mr. Peek does not say is that it is the only way in which the traditional American economy can be made to function. For if, on bal- ance, Europe presently holds $10,000,- 000,000 of our securities and thus can collect $500,000,000 annually in in- terest, then it will have to collect that sum by taking that amount of our ex- ports in excess of what we import from it. Then we shall be back in the same situation we occupied before the ‘World War, when we sold more abroad than we bought and, being a debtor country, did not have to worry, be- cause to receive payment our creditors had to take our exports. Put very simply, what it all means is that the world is going to get rid of our foreign investments by paying us gold for them at bargain prices. The war debts will be allowed to die unless we are ready to accept a small token payment for them. In addition, h European'investors, also for gold, yll plan | face the practical problem of foreign | of our stuff than we do of theirs, So | whether we take the world's gold for How, " then, were we to | take our securities. At the end of the process we shall have no more for- eign investments of any sort, Europe will have a large amount of our se- curities and we shall have most of the world’s supply of gold. But what can we do with that gold? We do not need it to buy foreign cannot take all of these our exports could pay for as it is. We shall have the gold in the Treasury vaults, but all other countries will have demone- tized because they have parted with all or most of their supplies to us. ‘Then that gold will be just like the war debts—without any practical value. Then at last we shall have to trade and investments. We dodged the issue.the first time when we undertook to collect foreign debts and maintain an export surplus by lending to the world the difference between what it paid us in goods and what we should have had to take to balance our debt collectfons and ex- port surplus. We are dodging it again \now by taking gold payments. But |in the end the war debts were re- pudiated and the gold will be de- | monetized. Then we shall be able to | sell abroad to a value equal to what we buy of foreign goods and what we then owe foreign investors. Where Peek Is Right. Now Mr. Peek is right about one | detail—our war debtors could pay us in gold up to the amount which they | | hold, if they chose. But once they did that they would have to renounce the gold standard permanently be- cause they could not get the gold back, and to undertake such a process would be to do something which, if not dishonest, would hardly be straightforward. Permitting their na- tionals to liquidate American holdings in their securities comes to the same thing, but it is less direct and obvious. The trouble with Mr. Peek’s thesis is that none of the debtor countries has enough gold to discharge its debt to us, save the French, and once it had been used for that purpose up to | the limit of possibility, there would be no means of continuing to take more | war debts, private investments or ex- port surpluses, when we have taken it the result is the same. To sell more than we buy abroad we must, in the long run, sacrifice all of our war debts and foreign invest- ments generally and permit foreigners to build up a holding of American se- curities. We tried to lend them enough to keep our war debts, our foreign in- vestments and our trade surplus going, but that broke down. We are trying | to keep the thing going by taking their gold, but the supply of gold is limited and when we get it all it becomes one more commodity that we can dispose of only for the goods of other coun- tries. Wallace Has Different View. Secretary Wallace sees the situation a little differently. He recognizes that | unless the United States buys more | foreign goods it cannot sell enough of | its agricultural products to keep any- thing like the present acreage at work. In his words “America must choose,” but in point of fact it has chosen— instinctively it has resolved not to buy more goods. Secretary Hull from | Lis angle sees war as a probable con- sequence of economic nationalism everywhere. Fundamentally his theory i= as sound as Wallace’s, but his pro- tests are equally futile. Neither to save the farmer at home nor to pre- vent the next war in Europe is Con- gress going to reduce the tariff; in- stead, under pressure from all direc- tions, it is likely to stop up the holes. ‘What it comes down to, then, is that the United States is going to sac- rifice some $15,000,000,000 or $20,000,~ 000,000 in foreign holdings, war debts included, in an effort to perpetuate its pre-war economic position. In all probability it is also going to part with some $10,000,000,000 of its do- mestic securities to the same end. Eventually it will have to show for this operation something like $15,000,- 060,000 in gold, which will be without current value because no one will be | able to offer for it anything that the | United States will want. And the Treasury will be unable to lend it be- cause of the Johnson law. ‘What not a few of the better in- formed observers in Washington fear is that as we pile up a larger and larger share of the gold of the world we shall presently be swept away in another credit inflation with conse- Guences impossible to forecast. How- ever, that is beside the fact of Mr. Peek and his discovery that we are trading in our creditor nation posi- tion for a mess of pottage, otherwise the world’s gold supply. But Secre- tary Wallace should be reassured, be- cause, as Mr, Peek says, the process will make us a debtor nation and then the Western farmers will recover their foreign market. For Secretary Hull, however, Mr. Peek’s has no comfort, because countries like Germany, which have neither gold nor raw materials, are not likely to take ruin lying down. (Copyright. 1835.) France Offers Prize For Fastest Airplane PARIS (#).—Ten million francs await the French builder of a Diesel- engined plane or seaplane which can capture the international speed rec- ord. The franc is currently quoted at around 6% cents. Gen. Victor Denain, air minister, has offered the award on behalf of the government and a committee of nine, headed by M. Wateau, president of the Aero Club of France, has been appointed to supervise the building competition. The record must be made over a closed circuit without landing. The present world’s record for land planes is 316 miles an hour, held by Delmotte of France. Warrant Officer Agello of Italy holds the seaplane mark, 440 miles an hour. If no plane of French construction succeeds inecapturing the record by December 30, 1936, the award will be giveri the constructor whose plane will cover the course at an average speed of at least 112.5 miles per hour. The government reserves the right to participate in the competition with motors built in its arsenals, and will receive absolute title to the winning e, EDITORIAL SECTION he Swndiwy Stare WASHINGTON, D. C, SUNDAY MORNING, MAY 19, 1935. What Will Revive Trade? New Deal Deepening Our Foreign Commercial Slump, Says Observer—Must Break Shackles. goods and raw materials because we | : BY WILLIAM R. CASTLE, Jr., Former United States Undersecretary of State. EARLY everybody admits that to achieve anything like our former prosperity we must somehow restore our foreign trade. And at that point &ll agreement ends. Official Washington s0 busily wrangles over details of method that results are lost sight of. One bureau publishes statistics to prove, through the increased sales abroad of some commodity which most | of us never heard of, that we are getting back our pre-war volume of trade; and another bureau shows that the sales of some other commodity have fallen off and that we therefore are still on the down grade. Nobody ever, so far as I know, takes into account the difference in the number of dollars bought with an equal amount of foreign exchange— | and, after all, that difference shows startlingly in volume of goods. The Secretary of Agriculture tells us earnestly that we cannot expect to sell unless we buy—he insists on it with such solemn determination we begin to feel that only our import statistics have any value, that if we sell anything it is out of pure kindness of heart. The Secretary of State assures us that there can be no successful for- eign trade unless we cling with all our might to the general-most- favored-nation principle. Mr. Peek, the President’s adviser on foreign trade, asserts with equal vigor that | in these difficult days the principle | supported by Mr. Hull is quite unim- portant and that only through a bi- lateral exchange, through separate agreements with the various nations which have something to sell us and went to buy from us, is there any | hope of restoring trade. Silver Distresses China. The Secretary of Commerce un- doubtedly “wants to give the whole matter very serious study”; and the Secretary of the Treasury triumphant- ly adds to the month’s total of pur- chases by buying silver abroad at such progressively high prices that China sinks under the blows of deflation, thinks sbout the possibility of going on the gold standard, and in any case is too distressed either to buy from us or to sell to us. Another mercifully small group in- sists that the only way to carry for- ward international trade is to inaugu- rate in America a managed currency which can be induced to meet all fluctuations. When you ask “which fluctuaticas?” they get very annoyed and call you a tory or something. ‘There are followers for every theorist now, except for the advocates of really sound money and of the law of supply and demand. Although it is generally unwise to be dogmatic, there can be no danger in the assertion that we shall not see any substantial revival of internation- al trade until we have something ap- proximating stabilization of currencies and until we recognize that the world is not going to buy what it does not really want and that it will not buy from us what it can buy cheaper elsewhere. The idea in Washington just now seems to be that you can somehow circumvent these elementary truths, that you can trick trade into flowing through unaccustomed or un- natural channels. It simply can't be done. Curiously enough, many people seem unable to understand why currency stabilization should be necessary. It is clear that a nation with devalued currency will normally find it easier to sell and harder to buy. It now takes more dollars to buy 1,000 francs’ worth of goods than it did a couple of years ago; and it takes fewer francs to buy $100 worth of goods than it did a couple of years ago. But these difficulties always settle themselves in time, and the question is raised as to why discrepancies of this nature are so vitally important; they might change the currents of trade, but would hardly lessen the flow. As a matter of fact, it is not the' difference in the values of currency that causes the troudle it is the un- certainty as to what the value may be from day to day. Take an individual case. You go into a shop and buy a hat for $9. You pay down your $9 for both buyer and seller. But it is not so simple when you are buying from another nation or selling to an- other nation. Here is an actual, in- dividual case: RETARDED Talks With Mexico, BY GASTON NERVAL. OVIET RUSSIA may soon have diplomatic relations with' other American republics besides the United States. President Car- denas of Mexico has just dis- closed conversations seeking an early resumption of Mexico-Russian rela- tions. These conversations, though un- successful so far, reveal an interest on the part of thd Mexican government which may well be considered a good omen. Besides, the obstacle reported | in the way is only a secondary one, as may be learned from President | Cardenas’ own statement. | “There has been no lack of good will on Mexico’s part,” says the Mexi- can chief executive, “nor has her attitude been affected by any exterior influences. The negotiations have not been successful because Russia insists on certain satisfactions regarding the manner in which some Russian diplo- mats were obliged to leave this coun- try.” First to Recognize Russia. Mexico and Uruguay, two Latin American republics which had ais- tinguished themselves for their lib- eral political ideas and progressive so- cial legislation, were among the first to recognize Soviet Russia, long before, the possibilities of Russian recognition were even considered seriously in the United States. Later on, however, the Mexican government, alarmed by the growth of radical labor organizations in the country, gave their passports to Ambassador Kollontai and her as- sistants, charging them with dissem- inating Communist propaganda, and severed diplomatic relations with the Kremlin. It is for the rather undiplomatic manner in which the Soviet diplomats were forced to leave and for the perse- cution of Russian sympathizers which ensued that the red government now demands satisfactions. The mere fact, however, that this should be the only barrier preventing a renewal of rela- tions shows how far the situation has improved and how little there remains —in Mexico, at least—of that imagi- nary fear of the “red menace” which for so long has been the nightmare of conservative Latin American govern- ments. Feared Red Propaganda. This fear of Communist propaganda, this suspicion that the Soviet diplo- matic and consular agents might use their influence in spreading bolshe- vism and bringing about a proletarian revolution, has been, précisely, the chief objection to Russian recognition in Latin America. At one time, when Communism was tantamount to world revolution and the Soviet authorities openly backed the Third International in its struggle against the capitalistic regimes of all lands, such fear might have been justified. Particularly so, in some of the smaller Southern and Central American republics, where local governments would have had a difficult time in preventing such propaganda and where ‘vm masses | and that is the end of the transaction | | When the English pound was worth | 83 or thereabouts, a friend of mine thought he would be forehanded and ordered several suits of clothes from | London. By the time they arrived the pound was worth about $5. My friend remarked that it would take him a year of saving from his salary to make up the difference, and added that he would buy nothing more abroad until currencies were stabilized. RECOGNITION OF SOVIET BY RED FEAR However, Regarded as Good Omen for Relations With Other Latin American Countries. jcould have been easily influenced by revolutionary ideas. But now that the Soviet govern- | ment has completely abandoned its | goal of world revolution and has sub- | stituted for it a policy of live and let | live; now that the Soviet government | has chosen the road of national com- munism instead of that of world com- munism and it is more concerned with | the internal upbuilding of Russia than | with the overthrow of capitalism | abroad, the fear of subversive propa- ganda by Soviet officials is childish. | Tactics Reversed. More than that: The Soviet gov- | ernment is so thoroughly engaged to- | day in the construction of che new Russia and the industrialization of the country in record time, and 1t real- izes so fully that external peace is essential to the fulfillment of these plans, that it not only has reversed its previous tactics of world propa- ganda for revolutionary communism, but it has, also, become one of the most consistent advocates of interna- tional peace. The sincerity of Soviet Russia’s peace intentions is beyond doubt. Ethically, the Soviet leaders have to be, of necessity, pacifists. They are individually against war. They proved it so by refusing to carry on ihe war against the central powers when they assumed the reins of government in Russia. More pragmatically speaking, from the point of view of material considerations, they also have to be pacifists. External complications would, at the present time, hinder tre- mendously the great experiment at home. It is this dual pacifism—ideal- istic and practical—which has placed Soviet Russia on the vanguard of the peace movement of the world. The pre-eminent role played by Foreign Commissar Litvinoff in recent years, from the days of the London Eco- nomic Conferertte, from which he emerged with eight non-aggression pacts with Soviet Russia’s principal neighbors, to the latest European crisis and the strengthening of the League of Nations, is still fresh in the memory of newspaper readers. U. S. Policy Cited. How, then, can the Latin American governments any longer fear the con- sequences of diplomatic intercourse with Soviet Russia? Besides, the sus- picions of the most skeptical ones among them could be overcome by the conclusions of agreements similar to that signed in Washington by Pres- ident Roosevelt and Commissar Lit- vinoff. in which both the United States and Russia pledged to each other absolute non-interference with domestic affairs and mutual respect for their institutions and their par- ticular form of government. There is, really, no excuse for the Latin American governments to per- sist in closing their eyes and refusing to recognize, officially, the existence of a regime whose stability has stood the test of 18 years of almost world-wide opposition. (Copyright. 1836.) ¢ If this is true of & man-to-man purchase amounting to a few dollars, how much more is it true of business transactions running into the millions. | It would be & strong firm which could | stand the loss if it ordered $3,000,000 | worth of cutlery from Sheffield and found, by the time it arrived, that the traders can-seldom afford to take the risk of buying abroad, since they must sell at home in dollars, and therefore must estimate the cost in dollars—and since the value of the dollar in relation to any foreign cur- rency may change overnight. Of course, the same thing is true of foreign purchases in the United States. It can fairly be said, in fact, that until currencies are stabilized in their relation to each other there will | be no international trade on a large scale except in goods which must be had by the purchasing nation—as England, for example, must have wheat—or in goods which can be pro- duced abroad so cheaply as compared to home costs that there is virtually no danger of fluctuation so great that the margin of profit will be wiped out—a good example of this being the cotton piece goods being imported from Japan. Such trade, which is the absolute minimum, will never bring a return of prosperity. All this has nothing to do with a return to the gold standard, although I have yet to hear an argument against that standard which is based on anything except emotion. There may be a better standard, but what- ever the base eventually chosen it must be as nearly as possible im- mutable—something which cannot be changed in accord with the whim of some particular nation. Heaven knows that international trade would always be at a minimum if the poli-| tician standard were substituted for the gold standard. Leader Needed for Stabilization. So long as we in America jockey with currency in the hope of getting a favorable trade balance at the ex- pense of the other fellow, just so long will our international trade, both ex- port and import, languish. We could lead the world in bringing about sta- bilization, in pushing forward an in- ternational currency conference—un- less, of course, the world remains dis- trustful of our good faith since we destroyed the London Economic Con- ference by refusing to consider this very issue. Take another elementary principle. You cannot make veople buy at & high price from one shop exactly the same goods which can be bought from another shop at a lower price. The same things is true internationally. Just so long as our present masters insist on maintaining at home an artificial price level substantially above the world price, we shall be unable to sell any large part of our surplus goods abroad—only those, in fact, which happen to be unprocur- able elsewhere at any price. Unfortunately we have no such goods, and it is almost true to say that there are none such anywhere, except authentic works of art. The British once thought they could make the world pay their price for rubber. The price skyrocketed; then it crashed because the Dutch, after all, had a lot of rubber—and the rubber industry has been sick ever since. U. S. Cotton Trade Lagging. It seems that our own Department of Agriculture believed American cot- ton to be a necessity to the rest of the world, but the artificial American price set the rest of the world to raising cotton, just as the artificial British price set the Firestones to raising rubber in Liberia. We all know that the American cotton market sags like a pricked balloon. No—it ought to be clear to any man who is willing to give just a few minutes to consideration of the matter, that foreign trade cannot long survive the handicaps of disorganized currency and price fixing. 1t is so obvious that foreign trade is cost would be $5,000,000. American | The Special Ar ticles Travel — Resorts ECONOMIC CRISIS SEEN AS WORLD TRADE DROPS Imports and Exports of 160 Nations Less Than in 1933—Gold Bloc Gives Evidence of Cracking. BY ALBIN E. JOHNSON. ENEVA —Despite protestations of politiclans and profes- sional “Pollyannas” to the contrary, the world’s eco- nomic situation, as a whole, is not improving, and in many re- spects new low levels in commerce, production and consumption were reached during 1934. Official and complete reports of imports and ex- ports of 160 countries and territories have been received by the intelligence } (economic and financial) sections of | the League of Nations and Interna- tional Labour Office, and the com- | posite picture charted by expert stat- isticians is not particularly bright. World trade—imports and exports combined of 160 countries—totaled only $23,375,000000 (gold) in value | last year, according to official figures. | ‘That was less than the 1933 total by | 859,000,000 gold dollars. When com- i pared with the pre-crisis or 1929 to- | tal the shrinkage is startling. The value in gold of the world’s trade in | 1929 was $68,606,000,000. Enter Military Service. It is true that there has been an upturn in many countries and that the downward tendency has slowed somewhat or halted in others. But these usually are small and non-in- | dustrial countries. It is also true that | the number of unemployed today is | less than it was a year ago. But hun- [' dreds of thousands of formerly idle | men have entered military service | in' Italy, France, Germany, Russia, | Poland, Czechoslovakia and even in | England. Other tens of thousands | have been reabsorbed in industry en- | tirely as a result of orders for war | materials—a stimulation which every | one admits is artificial. In Germany, | for example, where the Nazis boast that there are 388,000 less idle now | than there were a year ago, it is re- liably reported nearly 30 per cent of | the nation’s workers are engaged in the manufacture of war materials, | directly or indirectly. Before 1914 | only about 15 per cent of Germany's workers were engaged in the manu- facture of war potentials. Lumped together the gold dollar | value of world exports in 1934 was ap- | proximately $11,364,000,000, or $376,- 000,000 less than 1933; the value of imports was $12.011,000,000 gold as against $12,484,000,000 the previous year. When compared with the last “normal” year, or 1929, the world's ex- ports have declined by three-fifths and its imports by about one-third of former values. The decrease in 1934 over 1933 may not have been as great as those of previous years, but a smaller decline last year may mean more than a much greater drop two years before. irreducible minimum is rapidly approaching. The coming Summer, it is predicted, will tell whether the nations of the world are to embark upon & suicidal (economically and commercially speaking) financial and currency war or if some sort of a working agreement on stabilization is | to be reached. Gold Block Cracking. There are indications aplenty that the gold bloc is cracking badly. The Czechoslovaks first deserted the Pranco-Swiss-Dutch combina- tion, which was intent upon main- taining the gold standard until such & time as the currency systems of the world would be reorganized. Then a few weeks ago the Belgians, faced with growing unemployment, shrink- ing foreign commerce, budgetary difficulties, etc., followed suit.' The Bank of France offered a large loan to support the belga, but the Brus- sels government decided to avoid going deeper into debt. Now Switzerland is wavering, Un- able to manipulate the Swiss franc without consent of the people, the Swiss government has called for a popular plebiscite on June 2. The voters will be asked to authorize the government to take the necessary measures to “combat the crisis.” That means to maintain wages, lower prices if possible, preserve the in- tegrity of the franc, maintain the standard of living, revitalize industry and bring tourists (who annually left hundreds of millions of francs in the country) to Swiss resorts. Conservative and reactionary au- thorities interpret the referendum to mean that the gold parity of the franc will remain inviolate; others, however, who seem better informed, point out that deflation has failed to remedy matters and that abandon- ment of the gold standard is the only alternative open to the government. A “controlled inflation” officials say, will not impair the franc and will be better than leaving it to the tender mercy of speculators and shifting economic winds. Gold Leaves Swiss Banks. An unmistakable sign is the fact that gold continues to flee from Swiss banks. In three weeks more than 326,000,000 gold francs (about $109,- 000,000) was withdrewn. The gold reserve of the national bank was 1,783,000,000 gold francs on April 1. On April 15 it had dropped to 1,457,~ 000,000 francs. Financially considered, the situation of Swiss banks is good. There is a gold coverage of over 90 per cent, which is the highest of any country in Europe. France's gold reserve covers 80.23 per cent of the paper, bronze and silver money issued. But the steady drying up of business, clos- ing of hotels, failures of small es- tablishments and increasing unemploy- ment makes some sort of political action imperative. For example, com- mercial bank deposits decreased from 593,000,000 gold francs to 349,000,000 francs between March 15 and April 15. Switzerls.id’s exports and imports also have been badly affected. Im- port values, in gold dollars, dropped from $515,800,000 in 1929 to $272,- 600,000 in 1934. Export values fell from $400,700,000 gold in 1929 to $158,700,000 gold last year. One-third of Switzerland’s indus- tries are reportedly “in the red.” The other two-thirds claim to have paid average dividends on 4.5 per cent in 1934 and promise slightly higher returns in 1935. However, it must be remembered that most of these con- cerns are engaged in the manufacture of chemicals and drugs, and precision instruments which are indispensable for the manufacture or armaments. ‘The present war psychology in Europe has been a godsend to many concerns which otherwise would long since have Bot improving that. I am- inclined o (Continued on Third Page.) N gone into bankruptcy, | improvement. | were valued at $365,800.000 gold, in As in France, Holland, Italy and Belgium (before Brussels went off gold) the unemployment problem is serious in Switzerland. With foreign trade off 462 per cent of what it was in 1929, it is natural that busi- ness should be at a standstill. The hotel industry has been down-and-out almost since the crisis began. Not being an agricultural country, the Swiss naturally import a great deal in the way of foodstuffs, but the fact that they get a big advantage through their appreciated francs does not help. For every cheap commodity im- ported—grain, butter, meat, etc.—a Swiss peasant farmer suffers. The Swiss government also has been unable to balance its budget for sev- eral years and the mounting deficits have brought political difficulties. The last three budgets have shown dficits have brought political difficulties. The last three budgets have shown deficits of 25, 72 and 41 millions of gold francs. For a nation the size of Switzerland the amount is consid- erable. If the Swiss leave the gold standard it is going to be increasingly difficult for the French, Italians and Dutch to hold out. The Italian lira is known to be supported almost entirely by the Bank of France, while the condition of Dutch banks is said to be solid. The contrary was the case in Belgium. “We abandoned the gold standard to save the Belgian banks,” said Prime Minister van Zeeland. “The price of their salvation, however, will be volun- tarily subjecting themselves to a cer- tain amount of government control.” In France the financial erisis is largely political. The budgetary deficit this year will be between five and six billion francs, officials admit. Unoffi- cial and non-political observers fore- cast a deficit of much more—10 bil- lions at a minimum and maybe 15. If the Italians follow the Swiss then the situation for France (politically at least) will be critical. The Italians will want to follow Berne and Brussels in order to avoid internal financial chaos, while the Dutch have repeatedly shown signs of having had enough. The inroads made by British and Japanese commerce in their East In- dian markets have been catastrophic. Japan Shows Improvements. Japan seems to be the only large industrial country which shows steady Her exports for 1933 1934 their value was $377,000,000 gold. | Her imports at the same time rose from $379,700,000 gold in 1933 to | $397,900,000 gold last year. In South America the Argentine re- ports a gain in exports but a decline in imports. Argentine’s 1934 imports totaled $222,000,000 and her exports reached $288,400.000 gold. Imports and exports for 1933, respectively, were | $228,900,000 and $285,900,000 gold values. Brazil, the next largest South American trading nation, suffered de- creases both in imports and exports during 1934. Soviet Russia has at last hit the toboggan. Her economic condition at first improved with the deepening of the world crisis. While Britain, the United States, Japan. Italy and other countries were in difficulties back in | 1631, Russian trade reached its peak. But times have changed. The Soviet's | exports for 1934 were down to $216,- 1 400,000 in gold values, a considerable | decline from the 1933 figure and 'way low when compared with the $533,- 300,000 gold doliar value of her ex- ports in 1930. The U. 8. §. R. im- ported $568,600,000 zold value in goods in 1931; last year their imports to- taled in gold dollar value only $119,700,000. Germany still continues to live on her own flesh, as she did during the four years of war blockade. Her un- favorable balance of trade continues to increase. In 1933 her imports were valued, in gold, at $1,001,300,000; in 1934 at $1,046,400,000. Her exports, which in 1933 totaled $1,160,400,000 gold values, dropped to $979,600,000 in 1934. How Germany is going to pay, either her back debts or those she is contracting these days, is an enigma. Her gold reserve is negligible, amount- ing .to only $36.000,000 gold dollars at the beginning of April. Against that figure France, her potential war rival, had a reserve of $3,238,000,000 in her treasury on the same date. France’s trade situation, however, is & good index of her industrial stag- nation. Her imports last year were (still quoting gold values) $904,000,000, as against $1,114,500,000 in 1933; her export figures stood at $698,600,000 in 1934 and $724,200,000 in 1933. Her unemployment, although decreasing | now because of seasonal demands for agricultural and building workers, stands 100,000 higher than at the same period a year ago. Fascist Italy found herself slipping again in 1934 with her exports drop- ping to $267,000,000 zold as compared with $312,000,000 gold in 1933. Her imports on the other hand rose by about four millions. They were val- ued at 387,200,000 gold dollars in 1933 and $391,800,000 gold in 1934, Unemployment topped a million at the beginning of the year but the Fascist claim, through nation-wide adoption of the 40-hour week, they have reduced it by 200,000 to 955,553 at last official reports. Great Britain continues to muddle along, but despite her budget surplus her trade continues to shrink Fx- ports in 1933 were valued at $1,217,- 200,000 gold; in 1934 at $1,190,100,000 gold. Imports for last year were $2,- 047,500,000 as against $2,070,300,000 in gold values the year previous. The unemployed still number well over 2.200,000, with 1,913,133 wholly unem- ployed, according to last official fig- ures furnished to the League. Across the Atlantic, as a whole, conditions are improving if statistics can be believed. But while Canada showed good gains in both imports and exports during 1934 the United States’ trade reached the lowest point (yearly total) since the depression started. 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