Widening Gap

U.S. business last week was given a chance to take a good hard look at the present state of U.S. foreign trade. What it saw was 1) proof of a big wartime accomplishment but 2) the omen of a big peacetime problem.

In 1942, according to figures released by the Department of Commerce, the U.S. exported some $7.8 billions of goods while importing only $2.7 billions. The exports, representing around 70% Lend-Lease shipments of food and munitions, were bigger than in 1917 (see chart) but somewhat smaller than in 1919 and 1920, when the U.S. exported a record $7.9 and $8.2 billions.

This year the U.S. may Lend-Lease as much as $10 billions to other nations (an alltime export record), while imports may be expected to decline still further. So long as Lend-Lease lasts (and it may continue for several years into the peace), this discrepancy between imports and exports may continue. But soon or late, unless the U.S. wants to continue giving away goods without return from the rest of the world (or resume the acceptance of useless amounts of gold as in the '30s), exports and imports will have to be brought back into something approaching balance.

One way to do this is to cut exports. But in peacetime this normally implies drastically cutting profit margins, since for many a firm exports mean that extra margin of volume on which profits very largely depend. The alternative is for the U.S. willingly to accept imports. This means eliminating tariffs and trade barriers which special groups defend.

To many an observer last week's foreign trade figures were a measure of just how big the job of rehabilitating U.S. imports is going to be. Best news of the week was Wendell Willkie's bold plea not just for Free Trade in the abstract but for reaffirmation of reciprocal trade treaties this summer by Congress.

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