Scandinavia Closed

On the day when Denmark awoke last week to find scuttle-helmeted Nazi infantrymen patroling its streets the U. S. awoke minus a $500,000-a-day export trade. Choking off the seaborne trade of the three Scandinavians as the U. S. S. R. had already choked the commerce of Good Customer Finland, Adolf Hitler had over night cut more than 5% from U. S. export trade, nearly 4% from her imports.

How else Blitzkrieg would affect U. S. business no man could say. Scandinavian trade is a complicated network which taps world ports from the Thames to the Weddell Sea, from Hammerfest to Antarctica. The tireless tramps of Norway, No. 4 world seafarer, carry the bulk of Cuban sugar shipments to the U. S., play a bigger part in Philippines-U. S. traffic than the ships of any nation. South America, with an export balance of $20-25,000,000 annually to Scandinavia, has often used Scandinavian proceeds to buy U. S. goods. Great Britain got 50% of her bacon and eggs and 25% of her butter supply from Denmark, and Denmark's animals were fed in part by corn, cottonseed cake, etc. from Great Britain, Brazil, Argentina, the U. S.

Exports. Since World War II began, U. S. exports to Scandinavia and Finland have rocketed 81%, for January-February of this year hit a total of well over $30,000,000. For 1939 biggest item of U. S. sales was automobiles and accessories worth $22,210,000. To Scandinavia went $24,102,000 in U. S. metals and manufactures, $28,853,000 in coal, petroleum products and other nonmetallic minerals, $12,624,000 in tires, rosin, soybeans, tobacco; other millions in food, machinery, textiles, aircraft. Scandinavia might well have doubled its 1939 U. S. purchases, if World War II had not moved north.

Imports. No. 1 U. S. import from Scandinavia is newsprint and wood pulp. Of 3,550,000 tons of newsprint used in the U. S. last year, 300,000 came from Scandinavia and Finland. Of 9,003,000 tons of pulp used by U. S. manufacturers of kraft, newsprint, book papers, 1,305,000 came from Sweden, Norway and Finland.

This week, the U. S. contract price of newsprint still hung at $50 a ton as it had for two years, and big International Paper soothed apprehensive buyers by announcing its price would be maintained at $50 at least to Oct. 1. But papermen could see complexities ahead, for the Northern European group was an important supplier of British newsprint, and Britain will have to call on No. 1 Newsprint Maker Canada for more of her supply. Last year, Canada supplied 2,206,000 tons of the newsprint used in the U. S. If Canada's paper mills, now at about 70% of capacity, should have to extend themselves for Britain's new needs, U. S. newspaper publishers might see a repetition of the days after World War I, when newsprint hit a top of $135.

U. S. papermen were more immediately worried about pulp. Expanding their facilities, improving their technology, reaching into Southern pine forests for raw material, U. S. pulp manufacturers now have enough potential capacity to supply basic U. S. needs. But with Canada's mills already working at capacity to supply Empire needs, Britain may look to U. S. pulp mills to supply her Scandinavian and Finnish deficit. Speculators were quick to appreciate the fact. Jumping into the market the morning after Scandinavia's invasion, they bought shares in integrated paper companies, made market leaders out of such stocks as International, Union Bag, Crown Zellerbach.

Next day, on the prospect that Denmark's exit from the world butter, bacon and fat market might bring business to U. S. packers, such stocks as Armour and Wilson came to life. Commodity prices went into a mild boom. But investment was cautious: Britain, by tightening its breakfast belt, drawing more heavily on the farmers of the Empire, may still be able to stay out of the U. S. bacon-and-egg market, save her foreign exchange for military materials. Meanwhile, Scandinavian dollar bonds hit the skids, with declines up to almost 50%. Washington issued an order, generally welcomed by importers, that reduced confusion: Norwegian and Danish credit transfers were put under Federal control (see p. 13).

This week the speculative blush in paper and foods had spread to sugar and shipping stocks, but without developing a very high color. For U. S. business was as bewildered by the turn of events as any Norwegian soldier. One thing was certain: the U. S. had lost an export market. And none pulled out of it faster than Moore-McCormack Lines, No. 1 U. S.-to-Scandinavia ship-operator. Day of Blitzkrieg's beginning, Moore-McCormack got busy on the radio. To Mormacstar and Mormactide, far out in the Atlantic, Scandinavia-bound, went orders to [ turn about, keep steerage way with their bows pointed west, pending further orders. Few hours later the orders went out: head for home. Later, to the freighters Mormacsea at Trondheim and Flying Fish at Bergen, caught in the middle of the shooting, went welcome news; the U. S. State Department had notified belligerents it expected U. S. ships to get safe passage out of the newest segment of the President's combat zone. This week anxious Moore-McCormack heard that Mormacsea had shoved off from Trondheim with her U. S. flag flying.

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