Capital Comment

Washington.

As a result of intensive activities among those who desire to move greater quantities of cotton into export channels, a barter agreement between the United States and Germany now seems inevitable. Announcement of conclusion of negotiations is expected any day.

The deal is expected to involve an oulet for at least 500,000 bales of American cotton, and perhaps 800,000 bales. Around $30,000,000 is involved. In return Germany will send to this country nitrates, now being obtained from Chile, and such other products as American importers think they can dispose of in the United States.

At first it was reported that the Treasury Department looked upon barter between the United States and Germany, especially as regards to nitrates, as constituting dumping. The German nitrates would replace those bought now from Chile at the price ordinarily paid for Chilean nitrates. This price is said to be below the domestic price in Germany.

The Treasury Department has been making an intensive investigation. The latest information is that Treasury lawyers were drafting an opinion which would say, in effect, that the trade of cotton for nitrates with Germany would not violate anti-dumping statutes.

The southern cotton boys are particularly pleased over the way things are developing. At first they feared they would be left with all of the cotton in their laps. What made the situation worse for them was the prospect of further increased production next year, and a greater cotton carry-over. George Peek, president of the Export-Import Bank, is doubly pleased because barter with countries unable to pay in cash is a pet idea of his.

In the event the cotton barter arrangement with Germany does go through, and there is but little likelihood now that it will not, the next problem will be the actual collecting of what is due, whether it be in the form of goods or cash. At the present time a number of European countries are having great difficulties with Germany in getting her to pay for what is received.

The Netherlands and the United Kingdom are having their troubles in getting Germany to pay for recent purchases. British cotton yarn producers recently refused to make further deliveries until overdue accounts were paid up. While an arrangement has been worked out to make some sort of settlement, in the meantime the business went to Belgium, where cash orders were placed for practically all available stocks of yarn.

Trade relations between the Netherlands and Germany are reported to the United States Department of Commerce as being “in an unfavorable state. The clearing agreement negotiated in September was denounced November 1, in part because of the alteration in the trade balance with that country (Germany) and because protest developed from its subordination of past-due current accounts. “This situation is resulting in new negotiations between the Netherlands and Germany. Meanwhile, however, “an important part of the capital of trading firms has been frozen in Germany.”

Negotiations between France and Germany over the Saar Valley came as a pleasant surprise to Washington because it removes one of the dangers of another European conflagration. In view of the agreement between the two countries there is no doubt now who will be in possession of the Saar after the January 13 plebiscite.

Although a large proportion of the Saar population is German, a great number would like to see a continuation of the present status, under the administration of the League of Nations. These people have in mind their own comfort, and have the feeling that under Berlin rule they will have to bear a heavier share of the burden of taxation, contribute for increased German arms expenditures, and eventually engage in compulsory military service.

Hitler has been extremely anxious to get possession of the rich Saar Valley, and Europe knew he was not bluffing when he said the Saar must be returned to Germany. The propaganda campaign and events that went with it showed this to be true.

American arms manufacturers may find themselves under more rigid governmental regulation as a result of the Senate munitions investigation now under way. A number of senators believe that legislation should be introduced during the coming session of Congress to place armaments makers under government control.

The Senate Committee is irked at the movement of arms into Germany in spite of the Treaty of Versailles. The committee has revealed that the rearming of the Hitler government was used as a lever to increase military appropriations in other European countries.

Senator Vandenberg has pointed out that the rearming of Germany involved not only direct profits to the munitions industry, but indirect profits resulting from the fear in other countries of a rearmed Reich. British as well as American armaments manufacturers have sold arms to the Nazis in violation of treaties made effective after the World War.

When the new Congress convenes the munitions investigating committee will request more funds with which to carry on the probe. The original fund of $50,000 has been spent and committee workers are now working without pay. Committee members say that in spite of the many revelations already made public they “have only scratched the surface.”