The outcome of an impending struggle between sectional interests will in the near future determine whether or not the United States enters into a trade agreement with Germany. The anticipated clash will be between the cotton interests of the south and the industrial interests of the north and west.
King Cotton has been losing ground in the American export markets for several years. The recent decline has been sharp and a further drop is expected. Much of the loss in cotton exports is being attributed to this country’s refusal to buy more goods abroad. The south views the current situation with great alarm.
American cotton has been a leader in the world market. Normally, about 60 per cent of the cotton produced in the United States is exported. The south does not want to lose out to the foreign cotton producing areas. The staple is the best crop and the money crop of the south.
Cotton consuming countries are seeking cotton, not on a price basis primarily, but are buying first from countries with which they may have favorable trade relationships. These countries say that unless the United States is willing to buy goods from them, they are not in position to buy American cotton and other products.
Germany has been quite outspoken on this phase of the situation. She is in dire need of American cotton, but under present conditions is unable to pay for it. German representatives have indicated to officials in Washington that if the United States bought more German goods. then Germany would have the means with which to pay for the American cotton which she sorely needs.
Last season Germany bought about ten per cent of the total American crop. Recently representatives of German interests were in Washington and pointed out to officials that unless Germany could through some arrangement sell more goods to the United States, German purchases of cotton from this country would decline 50 per cent.
While southern cotton interests are just beginning to demand that the United States buy more goods from other countries so that more cotton may be sold to them, northern and western industrial interests are afraid that importing more manufactured goods from abroad will work injury on their enterprises. The whole conflict may not come out in the open until after Congress convenes in January.
Secretary of Agriculture Henry A. Wallace has pointed out that Germany “has cut down on her lard purchases even more than on cotton purchases, and that falling off in the German demand may account for the greater part of the falling off next year.” Secretary Wallace said a continued decline in exports of American goods is anticipated and “a very large part of the decline in exports will be “due to the German situation.” He said, “I don’t know just what we could do except in a broad trade way to remedy that situation.”
In the meantime, Germany has given the United States a year’s notice that she intends to abrogate her most-favored-nation treaty with this country. Since her monetary troubles became acute, Germany has been bargaining with other nations and has failed to extend to the United States the same concessions granted these nations as required under the treaty. The Hitler government explained that as long as it was impossible for Germany to sell more goods to the United States, it was impossible for her to extend to the United States concessions granted to other countries through bargaining arrangements under which these countries would take more German goods. To add to the effectiveness of this position, Germany is exercising rigid control over her exchange.
An example of what is happening, may be found in the Egyptian-German bargain which has just been completed. Under this agreement, Germany will take large supplies of cotton from Egypt and in return supply that country with fertilizers. This transaction means that Germany will have to buy less American cotton. At the same time Germany will have an outlet for her fertilizers with which she will be able to pay for the cotton obtained from Egypt.
Secretary of State Hull and George N. Peek, head of the Export-Import Bank and special adviser to President Roosevelt on foreign trade, have some differences between them on this foreign trade situation. Hull is a strong believer in the principle of reciprocity with respect to trade agreements to improve world trade. Peek believes that if this country cannot increase exports through the sale of goods, it should increase its exports through an exchange or barter of goods.
Germany has proposed that the United States enter into a barter agreement with her. In keeping with his stand on reciprocal agreements, Secretary Hull turned thumbs down on the proposition. Peek looks with favor on the barter scheme as a means of increasing trade.
Since the Hitler government gave notice of intention to abandon the most-favored-nation treaty with the United States, and at the same time stated that Germany was ready at any time to discuss new trade arrangements with this country, Peek has said publicly that, “Where general trade agreements cannot be reached or are subject to long delay, specific agreements may be negotiated independently and in advance of the general trade agreements.” He also said that “in the case of countries exercising exchange controls against us, the satisfactory solution of the exchange problem should be made a prerequisite to the negotiation of any general trade agreement.”
The Export-Import Bank, according to Peek, stands “ready to handle sound business in the foreign trade field, to assist in barter transactions, and to cooperate with the commercial banks and other financial institutions in handling business which on account of its maturity, its size or other unusual conditions can qualify for consideration” by that institution.
During the next few months there will be much talk about stimulating foreign trade. As far as the State Department is concerned, Germany is not in a very favored position. But, there are others in Washington who favor a trade pact with the Hitler government. There are strong agricultural and certain business interests who are backing the idea of a trade agreement with Germany.
On the other side of the picture, are the large industrial interests who have developed this country’s high tariff policies and who are opposed to bringing greater quantities of foreign-made goods into this country. These interests are opposed to an agreement with Germany, largely on the basis that the United States would have to import considerably more goods from Germany than would be sold to that country.
While the different groups are arguing this whole foreign trade question, as far as Germany is concerned an important factor to be reckoned with is the opinion of those in the United States who are supporting the boycott against German goods. This boycott is being supported by such organizations as the American Federation of Labor in addition to hundreds of thousands of people in this country who are opposed to the Hitler government’s policy of persecution of individuals because of racial or religious differences. This vast group holds a balance of power which no doubt will be exercised when the proper time comes.