Open Door

"The U. S. for some years has been the leading exporter among the nations of the world. . . . We export, on the average, more than one-third of our total production of leaf tobacco, half of our cotton, half of our phosphate rock and between a fourth and a half of our total production of canned and dried fruits. Among manufactured products, we export from a fourth to a half of our total production of sewing machines, printing and bookbinding machinery, office appliances, agricultural implements and aircraft. One out of ten of all American-made automobiles normally goes abroad. . . . Likewise, substantial quantities of our petroleum products, foodstuffs, wood-pulp and copper--to mention only a few items--are produced for the foreign market. . . ." Author of this exposition is ruddy President Warren Lee Pierson of the Export-Import Bank of Washington, official guardian and nursemaid of this enormous trade. Last week his bank made one loan, was at work on another, which heralded a new spurt in efforts to help the U. S. exporter cultivate the particularly fertile field of South America.

Assistance for U. S. exports was made necessary by three great post-War changes --the building of huge tariff walls, the U. S. shift from a debtor to a creditor nation and the establishment by competing nations of export credit agencies. With almost every foreign nation in debt to the U. S., none had money to buy U. S. products; and the U. S. banking system, developed for a debtor nation, had no machinery for providing foreign buyers with long-term credits. The first Export-Import Bank was created by Franklin Roosevelt in 1934 to fill the need for Russia alone. Pending debt settlements between the two countries, this bank did nothing and the Second Export-Import Bank was set up to handle credits for Cuba. When negotiations with Russia finally broke down, the two banks were merged with power to lend to all nations except Russia.

Since then the Export-Import Bank. $20,000,000 of whose $21,000,000 capital stock is held by RFC, has lent on three bases: to U. S. exporters of agricultural products, to U. S. exporters whose capital has been pinched by foreign exchange restrictions (i. e., blocked marks in Germany), and, most important, to U. S. exporters who wish to sell capital goods to foreigners who lack cash. Sample deal took place year ago when China bought 20 locomotives and equipment with credits of $1,500,000, half supplied by the Export-Import Bank, half by American Locomotive Sales Corp. and Baldwin Locomotive Works. Despite the war, China has punctually met all payments on this debt, as have virtually all the bank's creditors. Up to last week they had already paid back $29,191,254.32 on total loans of $44,746,015.38.

These deals have ranged over the globe from Iran to Venezuela. Henceforth, there is likely to be an increasing volume in South America, for there the export credit bureaus of Germany and Italy have lately raised havoc with U. S. trade by government-sponsored credit leniency. Thwarting these two dictatorships is close to Franklin Roosevelt's heart (see p. 8) and in this instance it fits perfectly with the bank's purpose. Last-week, therefore,

Export-Import President Pierson, a 40-year-old California lawyer with a sense of humor and a vast love of travel, was pleased to reveal that he had agreed to discount notes of the Haitian Government for $5,000,000 worth of public works to be handled by J. G. White Engineering Corp., that he was discussing a substantial order of railroad equipment for Brazil, that the door was open to South American nations in general.

Last week the U. S. Government also did the following for and to U. S. Business:

P: Awaited a test of the constitutionality of the new AAA as it applies to tobacco. The five-month-old crop law was designed to keep up prices by sales quota for each tobacco region. On all tobacco sold over the quota there are penalty taxes of 50% of the market price or 3-c- a Ib. if the excess tobacco sold goes for less than 6-c-. Last week saw the opening of 1938 tobacco auctions in Georgia and Florida with the crop larger than last year (88,047,000 Ib.) and substantially higher than the quotas. Angry planters in both States immediately got injunctions suspending collection of the penalties, promised to take the case to the Supreme Court if necessary. Two years ago the Court ruled the similar Kerr-Smith Act unconstitutional.

P: Reaffirmed with slight modifications the hours of service restrictions for the trucking industry as drawn up last December. Originally scheduled to go into effect July 1, these rules were postponed upon protests from Labor, which wanted a maximum 8-hr, day, 48-hr, week. The ICC's truck division had specified a maximum 60-hr. week with 15 hr. of duty and twelve of work in any 24. Last week, pointing out that the Motor Carriers Act was designed for safety reasons, not for "economic or social ends," the ICC. clung to the 60-hr. week but specified that there be at least eight hours off duty in every 24 and immediate relief from duty after every ten hours. Effective date: October 1. P: Bought some $8,000,000 worth of men's and boys' clothing, first batch under the $10,000,000 kitty set aside by WPA simultaneously to lance the clotted clothing inventory and to aid the needy. Handled by the Treasury's Procurement Division, the purchases were scattered through big U. S. cities, with New York leading with about 50%. All goods bought were made before May 1, will be held until September, then given away. Meanwhile, the clothing industry reported rejuvenation; in Manhattan 70% of clothing manufacturers were back on full time. P: Cracked down on the American Medical Association as Assistant Attorney General Thurman Arnold charged it with monopolistic practices (see p. 24).

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