(This is the third of a series of articles by Mr.Chaitkin,well-known New York attorney ,on the legal effects of the unti-Nazi boycott in the United States and elsewhere.)
In the absence of specific statutes and direct precedents,the court will decide the legality of the anti-Nazi boycott by balancing the conflicting social,economic and political factors involved (33 Columbia Law Review 1439; Mr. Justice Holmes on Privilege,Malice and Intent,8Harvard Law Review,pp.1,9)
In other words, were the question to arise before an American count the boycotters would be called upon to show their justification and purpose,and against these the court would weigh the harm or prejudice,if any ,resulting from the boycott activities to the interests and welfare of the people of the United States.
The boycott’s justification: The defense of the Jewish people against a campaign of extermination within Germany and of vilification and hatred without; the answer of organized labor in American to the death-blow administered to organized labor in Germany; the protection of democratic institutions and human rights everywhere from the fate that has engulfed them in the Reich.
And as against these hight purposes: The threat of non-payment of German bonds held by American in vestors; disturbance of trade relations between American and Germany; the threats of Germany reprisals in the form of boycotting American goods.
Let us look somewhat more closely at these considerations which on their face would seem to militate against the boycott.
The argument most frequently advanced against the boycott is that it would react unfavorably on the repayment of the huge private loans floated by Germany in this country in the years immediately precedng the depression.
The obvious reply to this argument is that the holders of German bonds in this country constitute a comparatively small group whose private interests are not to be identified with the interests of the country at large. the bondholders the argument lacks merit.The boycott bears no relation to Germany’s debt policy.
The dervish-dance of the Nazis in the glow of the Feichstag pyre; the anti-Jewish and anti-intellectual orgies of last spring; the wave of protests and boycott resolutions that swept the outside world; all took place long after Germany had suspended payment on her long-term obligations.To be exact,the deccree of the German government declaring a moratorium on private debts owed to foreigners was promulgated on May 23,1932.Since that time the German Reichsbank has steadily pursued the Policy of depressing the value of German private obligations by defaults in the payment of interest,and of buying back these bonds at bargain prices. ” Of the $1,200,000,000 of German dollar bonds originally issued here, Germany has repatriated $450,000,000,and each day that passes sees teh remainder steadily whittled down”(Edward J. Condlon ink the New York Times,Jan.12,1934).
The German bonds have been and are being repurchased by Germany at an average cost of 50 cents on the dollar. This cost is further diminished by the depreciation of the dollar in terms of the mark. Thus,a $1,000 bond for which the Germans received $1,000,or 4,200 marks in 1927,is repurchased by them at a cost of $500,which at the current rate of exchange is equivalent to approximately 1,333 marks just one-third of the original loan !
It would have been impossible for Germany to effect these enormous savings without a continuing default in the payment of private obligations; which results in the depreciation of her securities in Wall Street. In the light of the subsequent events,the default may be considered as an integral part of the repatriation schems,and is obviously unaffected by any consideration of boycott activities in the creditor countries.
It is also argued that the boycott disturbs German-American trade relations,impairs Germany’s ability to buy in America,and may result in a counter boycott on her part.
A proper understanding of the true nature of German-American trade relations dispels the apparent plausibility of this argument.
#States consist overwhelmingly of raw materials.The report of the Bureau of Foreign and Domestic Commerce for 1932 shows that in that pre-Hitler year this country exported to Germany $84,000,000 worth of crude materials,$13,000,000 worth of “semi-manufactures” and only $34,000,000 worth of finished products,including manufactured foodstuffs, a proportion of nearly three to one of unfinished to finished products.
Of the raw materials,by far the most important single item is cotton,of which over $68,000,000 worth was exported in 1932-over 50% of Germany’s total imports from the U.S.This cotton is undispensible to Germany’s textile industry,and is of the short-staple variety,which cannot be obtained everywhere.Morever,German textile machinery is adapted for this short-staple cotton,and it would cost Germany a staggering sum of money in new machinery if she desired to chang to the long-staple product.
Such materials as cotton,scrapmetals and raw furs are bought by Germany in the U.S.not for consumption but because they are a vital necessity to her industrial life.She converts them into finsihed products and resells them to other countries,including the United States,in ruinous competition with American manufacturers.