Trade v. Inflation

Manager of the Retail Trade Board of the Boston Chamber of Commerce since 1923 has been a ruddy, white-crested lawyer of 47 named Daniel Bloomfield. A relative by marriage of both the Morgenthau and Filene families, Dan Bloomfield began his career as Lincoln Filene's associate in Boston's big Filene department store. In 1928 he conceived an idea which seemed unlikely to set the world afire: a Conference on Distribution to parallel the conference on national and international problems held annually by the Institute of Human Relations at Williamstown, Mass. But under two enthusiasts, Dan Bloomfield and President Patrick Augustin O'Connell, of Boston's Retail Trade Board, conferences have been held every year since then. Last week when the ninth annual conference met in Boston, it proved rather conclusively that Mr. Bloomfield had had a good idea.

For Williamstown's conferences are generally attended by earnest souls who would like to see something done about the ills of the world, rather than by the heads of governments who might actually do something. But Boston's conference on distribution had for its rank-&-file attendants some 750 business men actively engaged in distribution, had such headline speakers as President Percy Straus of R. H. Macy & Co., General R. E. Wood, president of Sears, Roebuck & Co., President Oswald Knauth of Associated Dry Goods Corp., Cosmetician Elizabeth Arden, Professor Paul H. Nystrom of Columbia University, President Karl T. Compton of Massachusetts Institute of Technology and not least of all, Secretary of State Cordell Hull. To garnish this group as chairman of the first day's luncheon session, Director Bloomfield had little difficulty in getting the services of James Roosevelt, who for his own reasons always likes to have a finger in Boston goings-on.

High-spot of the two-day conclave was the aggressive speech of Professor Nystrom. Introduced by Chairman Roosevelt Mr. Nystrom, an authority on business trends, lashed out at irresponsibility of labor unions in a way which just as visibly embarrassed the President's son as it delighted the audience. Said he: ". . . There is resistance [on the part of employers], not to collective bargaining per se, but to what lies behind it. Unfortunately, to many employers, it looks as if any invitation, either of labor to management or of management to labor, to sup at a common table is likely to result noc only in the disappearance of the food but also of the dishes, and in the destruction of the table as well."

Of more lasting import were the remarks of three other speakers which, like chapters of a book, unfolded as clearly as has yet been done the most important basic problem of distribution, international trade.

Hull. In his gentle old voice Secretary of State Cordell Hull reiterated his best-known belief, that the world's woes will remain until tariff barriers are reduced. He reinforced it with up-to-date facts: "In 1936 our export trade with 14 countries, with which trade agreements were in effect all or part of that year, increased by 18.2% over 1935, while our trade with non-agreement countries in creased 9.2%." Not on the platform but at a press conference Cordell Hull underscored his belief still further by a prediction that a general war or economic catastrophe is inevitable within two years unless selfish nationalists give international trade a chance to function.

Copeland, Picking up where Secretary Hull left off on the subject of world chaos, dry Dr. Melvin T. Copeland* of Harvard's Graduate School of Business Administration dwelt long and lovingly on commodity prices as a reflection both of U. S. trade and of the state of the world. Be cause of trade barriers and the nationalistic spirit, commodity prices began a general decline in 1925 which continued after the crash of 1929. On war demand and business revival early this year they had a strong comeback until the speculative collapse in commodities in England coupled with President Roosevelt's statement that certain U. S. commodity prices were rising too fast. Now commodity prices are nearing the 1926 level. Four years ago President Roosevelt was said to favor maintaining the 1924-25 level by varying the gold content of the dollar. So the New Deal is now at the crossroads where it may soon, have to abandon its determination to hold commodity prices down, or to give up all its other inflationary policies.

Professor Copeland concluded: "The continued deficit of the Federal Government . . . tends to have a two-barreled effect in shooting up the prices of commodities. First, the bonds serve to expand credit and to increase the amount of paper money in circulation. Secondly, the need for financing the deficit calls for easy money and the avoidance of those checks on credit expansion which might prevent an abnormal rise in commodity prices. . . . If past experience in this country and abroad were still of any significance, and if our affairs were not in the hands of a genius of unparalleled resourcefulness, I should expect commodity prices to go up at least another 50% or so, with some zigzags in their course."

Nadler. For the dilemma posed by Professor Copeland, burly Marcus Nadler, a onetime foreign division chief of the Federal Reserve Board, now vice president of the American Institute of International Finance, suggested a remedy. Picking up the theory of Secretary Hull that the tie-up of international trade is the kernel of world troubles, Speaker Nadler set out to show the immediate relation between the international movements of capital and of trade. Said he: "The adverse political situation prevailing at present throughout the world is reflected in the abnormal and nervous movement of capital. Capital is being shifted in huge amounts from countries which need it to such countries as the U. S., Great Britain, Holland and Switzerland which are already suffering from an oversupply. . . . In such cases the movement of capital is not only unproductive but is actually destructive. It narrows the credit base of the countries losing the gold and creates inflationary conditions in countries receiving the gold."

To right this economic wrong Mr. Nadler advised a means as forthright as in these days it is daring: a resumption of foreign loans, not to Europe for that is forbidden by the Johnson Act prohibiting loans to nations in default, but to South America. The object: to provide a useful outlet for the huge credit reservoir now threatening to cause U.S. inflation, to ease stringent foreign exchange restrictions now enforced by South American central banks, to provide a much-needed market for U. S. products.

* Not to be confused with New York's anti-New Deal Senator, Dr. Royal S. Copeland.

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